This is the second blog in a series that covers the latest developments in agriculture and food-related law, including litigation, legislation and regulations.
Foreclosure allows lenders to recover debts by selling the property of defaulting borrowers. In Saskatchewan, this process provides special protections for farmers.
The Saskatchewan Court of Appeal considered the suspension of limitation periods during the Saskatchewan farm foreclosure process in MFI Ag Services Ltd. v Farm Credit Canada, 2023 SKCA 30.
In this case, the lender commenced foreclosure proceedings by serving a Notice of Intention to Foreclose (“NOI”) under section 12 of The Saskatchewan Farm Security Act, SS 1988-89, c S-17.1 (“SFSA”) in March 2010. The farmer made a number of payments to the lender following service of the NOI and negotiated a repayment agreement. As a result, the lender did not proceed with an application pursuant to the NOI within the three-year period for doing so and the notice expired in March 2013.
The farmer eventually defaulted on the repayment agreement and the lender served a second NOI in February 2015. The farmer opposed subsequent foreclosure proceedings, arguing that the limitation period continued to run following service of the first NOI and immediately elapsed on expiry of the first NOI in March 2013. The lender, in response, argued that the limitation period was suspended until the first NOI expired and that the two-year limitation period commenced following expiry of the first notice.
The Saskatchewan Court of Appeal found that the SFSA’s goal of facilitating negotiated resolutions of farmers’ indebtedness would be undermined if lenders were pressured to proceed to initiate Court action by looming limitation period expiry dates while NOIs are outstanding. The Court concluded that limitation periods are suspended by service of a NOI under the SFSA. Accordingly, lenders have two years following the expiration of a NOI to serve a second notice.
For more guidance on the farm foreclosure process in Western Canada, our Agriculture & Food practice group and Insolvency & Restructuring practice group would be happy to hear from you.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.