S.C.C. File No. 35923 IN THE SUPREME COURT OF CANADA (ON APPEAL FROM THE COURT OF APPEAL FOR SASKATCHEWAN) A TTORNEY GENERAL FOR SASKATCHEWAN APPELLANT (Respondent) - and- LEMARE LAKE LOGGING LTD. RESPONDENT (Appellant) - and- ATTORNEY GENERAL OF ONTARIO, ATTORNEY GENERAL OF BRITISH COLUMBIA, ATTORNEY GENERAL OF ALBERTA INTERVENERS FACTUM OF THE ATTORNEY GENERAL FOR SASKATCHEWAN (Filed Pursuant to s 42 of the Supreme Court Rules) SASKATCHEWAN MINISTRY OF GOWLING LAFLEUR HENDERSON JUSTICE LLP Constitutional Law Barristers and Solicitors 820 - 1874 Scarth Street 160 Elgin Street, Suite 2600 REGINA SK S4P 4B3 OTTAWA ON KIP lC3 Tel: (306) 787-6307 Tel: (613) 786-8695 Fax: (306) 787-9111 Fax: (613) 788-3509 Email: [email protected] Email: [email protected] Thomson Irvine D. Lynne Watt Katherine Roy Counsel for the Attorney General for Ottawa Agents for Attorney General for Saskatchewan Saskatchewan - 2 - MACPHERSON LESLIE & TYERMAN DENTONS CANADA LLP 1500,410 - 22 nd Avenue East 99 Bank Street, Suite 1420 SASKATOON SK S7K 5T6 OTTAWA ON KIP 1H4 Tel: (306) 975-7136 Tel: (613) 783-9600 Fax: (306) 945-7145 Fax: (613) 783-9690 Email: [email protected] Email: [email protected] Jeffrey M. Lee, Q.c. K. Scott McLean Kristen MacDonald Corey A. Villeneuve (Law Clerk) Counsel for amicus curiae Ottawa Agents for the amicus curiae MINISTRY OF THE ATTORNEY BURKE-ROBERTSON GENERAL OF ONTARIO 441 MacLaren Street Constitutional Law Branch Suite 200 4th Floor - 720 Bay Street OTTA WA ON K2P 2H3 TORONTO ON M7 A 2S9 Tel: (416) 326-0131 Tel: (613) 236-9665 Fax: (416) 326-4015 Fax: (613) 235-4430 Email: [email protected] Email: [email protected] Michael Dunn Robert E. Houston, Q.c. Daniel Huffaker Counsel for the Attorney General of Ontario Ottawa Agents for the Attorney General of Ontario BRITISH COLUMBIA MINISTRY OF BURKE-ROBERTSON JUSTICE 441 MacLaren Street Legal Services Branch Suite 200 P.O. Box 9280 Stn. Provo Govt. OTTAWA ON K2P 2H3 VICTORIA BC V8W 917 Tel: (250) 356-5597 Tel: (613) 236-9665 Fax: (250) 356-9154 Fax: (613) 235-4430 Email: [email protected] Email: [email protected] Richard Butler Robert E. Houston, Q.C. Counsel for the Attorney General of British Ottawa Agents for the Attorney General of Columbia Ontario - 3 - ATTORNEY GENERAL OF ALBERT A GOWLING LAFLEUR HENDERSON 4th Floor, 9833 - 109 Street LLP EDMONTON AB T5K 2E8 160 Elgin Street, Suite 2600 OTTAWA ON KIP lC3 Tel: (780) 422-9221 Tel.: (613) 786-8695 Fax: (780) 425-0307 Fax: (613) 788-3509 Email: [email protected] Email: [email protected] Lillian Riczu D. Lynne Watt Counsel for the Attorney General of Alberta Ottawa Agents for Attorney General for Alberta TABLE OF CONTENTS Page I. OVERVIEW OF POSITION AND STATEMENT OF FACT A. Overview of Position 1 B. Statement of Facts 5 II. ISSUES 9 III. ARGUMENT 10 A. The Legislative Framework 10 (1) Constitutional Basis for the SFSA and the BfA Provisions 10 (2) Outline of the Mediation and Revision Process under Part II of 12 the SFSA (3) Other Provisions of Part II Are Not in Issue in this Appeal 15 (4) Outline of the Receivership Provision Under Part XI of the BfA 16 (5) Court-Ordered Receiverships are Always Discretionary 20 (6) The Federal Farm Debt Mediation Act 22 B. The Paramountcy Issue 23 (1) Outline of the Paramountcy Doctrine 23 (2) First Branch: There is No Operational Conflict Between the 26 Mediation and Review Provisions and Section 243 (3) Second Branch: The Mediation and Review Provisions Do Not 29 Frustrate the Federal Purpose (a) Restrained Approach to Frustration of the Federal Purpose 29 (b) Section 243 is Not a Complete Code and Must Be 32 Interpreted Consistently with Provincial Law (c) Delays for Mediation and Review are Consistent with 34 the Purpose of Section 243 (d) Section 243 is Discretionary 36 (4) Summary 38 - 11 - C. The Constitutional Question is not Moot 39 IV. COSTS 44 V. ORDER SOUGHT 45 VI. TABLE OF AUTHORITIES 46 VII. STATUTORY PROVISIONS 48 TAB Bankruptcy and Insolvency Act A The Saskatchewan Fann Security Act B APPENDIX A: Summary of Provisions of Part II of the SFSA Which Were C Not Raised in the Courts Below PART I OVERVIEW OF POSITION AND STATEMENT OF FACTS A. Overview of Position 1. The Saskatchewan Farm Security Act ("SFSA,,)i is a significant piece of provincial legislation in Saskatchewan. It is designed to protect the farming sector in Saskatchewan, which historically has been a major part of the Saskatchewan economy and culture, and continues to be so. 2. Part II of the SFSA contains a mixture of provisions relating to the legal rights of farmers with respect to their land. Some of these provisions date back to the Great Depression, having been carried forward into the SFSA. Others have been enacted more recently, in response to economic developments in the farming sector. 3. The two key provisions of Part II in issue in this appeal are ss 9 and 11 of the SFSA. These two provisions are the entry point for a mandatory mediation and review process between a farmer and a mortgagee seeking to enforce its rights under a mortgage on farm land. The mortgagee cannot institute court proceedings to enforce its claim until after the review and mediation process has been completed, which can take at least 150 days. The purpose of this mediation and review process is to ensure that all prospects for a mediated settlement are fully explored. While this process is in operation, court proceedings cannot be instituted. If the mediation and review process does not lead to a settlement, the creditor can then begin the court proceedings to enforce its security. I The Saskatchewan Farm Security Act, SS 1988-89, c S-17.1. - 2 - 4. This appeal raises the issue whether the mediation and review process applies when a mortgagee applies under s 243(1) of the Bankruptcy and Insolvency Act ("BIA,,)2 for the appointment of a receiver against the farm land of an insolvent farmer. The Saskatchewan Court of Appeal has held that the mediation and review process governed by ss 9 and 11 of the SFSA frustrates the purpose of s 243(1), triggering the doctrine of federal paramountcy. The Court of Appeal therefore concluded that " ... Part II of the SFSA is inoperative in circumstances where an application is made to appoint a receiver pursuant to s 243(1) of the BIA.,,3 The Court of Appeal rejected the alternative argument that there was an operational conflict between the provisions, holding that both laws could operate together.4 5. The Attorney General for Saskatchewan respectfully disagrees with the finding that the impugned provisions are inoperative, and submits that the SFSA process does not frustrate the purpose ofs 243(1) of the BIA. The Attorney General submits that the receivership provision is a discretionary provision. A secured creditor is not required to proceed under s 243( 1), and s 243 expressly recognizes that a creditor could instead apply for a receivership under applicable provincial law. The BIA receivership is simply one tool that may be available to a secured creditor. Its primary purpose is that an order for a receiver under s 243 takes effect nationally, so the creditor need only make one application for a receiver, rather than make separate applications in each province where the debtor may have assets. In other respects, a receiver under s 243 is much the same as a receiver appointed under provincial law. The Attorney General submits that Parliament did not intend to exclude other remedies under provincial law, but simply to provide one more option for creditors, particularly valuable for a national receivership order. 2 Bankruptcy and Insolvency Act, RSC 1985, c B-3, s 243(1), as enacted by SC 1992, c 27, s 89 and amended by SC 2005, c 47, s 115 and SC 2007, c 36, s 58. 3 Reasons for judgment of the Court of Appeal, para 67 (Appeal Record ("AR"), p 052). 4 Reasons for judgment of the Court of Appeal, para 42 (AR, P 042). - 3 - 6. The receivership provision under s 243 is discretionary in another way: the court has considerable discretion whether to grant the receivership, depending on whether it is "just and convenient" to do SO.5 The secured creditor does not have a right to a receivership, even if the debtor is insolvent and in arrears. The decision of the Court of Appeal in this very case demonstrates this point. Having found that the appellant in that appeal, Lemare Lake Logging Ltd. ("Lemare Lake") did not need to comply with the SFSA, the Court nevertheless ruled that Lemare Lake was not entitled to a receiver under s 243. The Court concluded that Lemare Lake should proceed" ... by way of the usual process - by way of foreclosure.,,6 That foreclosure process would then be subject to the review and mediation provisions of the SFSA. 7. That outcome demonstrates that the receivership provision designed by Parliament is a discretionary provision. Whether the court will grant a receivership is discretionary, and will be based on the court's assessment of what is "just and convenient" in all the circumstances of the particular case. 8. This Honourable Court has held that in cases raising a possible paramountcy issue, a federal law should be interpreted in a manner that avoids a conflict with the provincial law, if at all possible under the principles of statutory interpretation. That admonition plays a particular role in this case, where the federal and provincial laws both regulate different aspects of the same process.