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Agricultural Marketing Programs Act. Canada v. Bezan Cattle Corporation
In Canada v. Bezan Cattle Corporation (Fed CA, 2023) the Federal Court of Appeal briefly explains a program under the Agricultural Marketing Programs Act (AMPA):A. The Federal Advance Payments Program
[4] The Agricultural Marketing Programs Act, S.C. 1997, c. 20, (AMPA) establishes and governs the Advance Payments Program (the Program) which supports agricultural producers. Under the Program, producers of agricultural product may apply for advance payments from certain administrators, including organizations involved in marketing the product. The advances are secured against the agricultural product and are repayable as set out in the repayment agreement between the producer and the administrator. The AMPA mandates certain terms in the agreements between the administrator and the producer.
[5] A corporation is eligible to receive an advance under the Program only if its shareholders agree in writing to be jointly and severally liable with the corporation to the administrator: AMPA, ss. 10(1)(d) and 22.
[6] If the producer defaults in its repayment obligations, the administrator may ask the Minister to repay any outstanding amount to the administrator and, provided certain conditions are met, the Minister must do so: AMPA, ss. 23(1). Once the Minister pays the administrator, the Minister is subrogated to the administrator’s rights against the producer and any person jointly and severally liable with the producer: AMPA, s. 23(2).
[7] As this Court has previously explained, "“[t]he program facilitates access to credit for agricultural producers by transferring a substantial portion of the lending risk to the Minister”" but the "“Minister is nevertheless entitled to be made whole in the event of the producer’s default”": Moodie v. Canada, 2021 FCA 121 at paras. 5 and 6. . Kilback v. Canada
In Kilback v. Canada (Fed CA, 2023) the Federal Court of Appeal summarizes aspects of the federal Agricultural Marketing Programs Act, and some of it's procedures:[1] The appellants, Allen and Denise Kilback, appeal a decision of the Federal Court (2020 FC 981 per Strickland J.) granting the respondent’s motion for summary judgment against the appellants and Kilback Stock Farm Ltd. (Kilback Farm). Kilback Farm has not appealed. In the underlying action, the respondent sought to recover from Kilback Farm and the appellants certain amounts the Minister of Agriculture and Agri-Food Canada (Minister) paid under the Advance Payments Program (the Program) established under the Agricultural Marketing Programs Act, S.C. 1997, c. 20 [AMPA].
I. Background
A. Advance Payments Program
[2] The Program allows producers of agricultural product to apply for advance payments from certain agricultural administrator organizations and facilitates access to credit for agricultural producers because the Minister takes on a substantial part of the lending risk: Moodie v. Canada, 2021 FCA 121 at para. 5. To participate in the Program, the producer must enter into a repayment agreement with the administrator, certain terms of which are mandated by the AMPA.
[3] Importantly for this appeal, a corporation is eligible to receive an advance under the Program only if its shareholders agree in writing to be jointly and severally liable with the corporation for its obligations to the administrator: AMPA, ss. 10(1)(d) and 22.
[4] If the producer defaults in its repayment obligations, the administrator may ask the Minister for repayment and, provided certain conditions are met, the AMPA requires the Minister to pay the administrator on behalf of the defaulting producer. However, the AMPA also authorizes the Minister to order any impending default by a producer stayed for a specified period on any terms and conditions the Minister may establish: AMPA, s. 21(2).
[5] Once the Minister pays the administrator, the Minister is subrogated to the administrator’s rights against the producer and any person jointly and severally liable with the producer: AMPA, s. 23(2). However, the Minister cannot take any action to recover amounts owing after the six-year period beginning on the day the Minister becomes subrogated to the administrator’s rights: AMPA, s. 23(4).
B. Advances to Kilback Farm
[6] In 2008, Kilback Farm applied for advance payments from Manitoba Pork Credit Corporation (MPCC) by completing an application and repayment agreement. MPCC advanced $400,000 (less certain fees deducted at source) to Kilback Farm over the period from April 30, 2008 to May 5, 2008. The repayment agreement stipulated that in all events the advances were to be repaid by September 30, 2009, the end of the 2008-2009 production period. However, it also required that 50% of the outstanding amount be repaid 15 days after the 12‑month period following the day the advance was made, with the balance due 30 days later.
[7] As required by the AMPA, each of the appellants signed a "“Joint and Several Guarantee”" pursuant to which they agreed "“to be jointly and severally liable to [MPCC], or the Minister of Agriculture and Agri-Food Canada, for any amount owing by [Kilback Farm] … pursuant to the [Program]”".In March 2009, the Minister granted a stay of default to cattle and hog producers. By letter dated March 24, 2009, Kilback Farm was advised that, under the stay, qualifying producers were relieved from the obligation to make any repayments prior to September 30, 2010, but were required to repay 50% of the outstanding advances by October 15, 2010, and the balance by November 15, 2010. Kilback Farm was required to sign an acknowledgement indicating that it understood and accepted the terms of the stay and, on April 6, 2009, Mr. Kilback signed it on behalf of Kilback Farm. [8] By letter dated December 3, 2010, Kilback Farm was advised that the Minister had granted a new stay of default effective October 1, 2010, extending the repayment deadline to March 31, 2013, with regular payments to commence in April 2012. The letter asked that each of the shareholders read the enclosed acknowledgment of the stay terms and conditions but stated that, if the producer was a corporation, only the signing authority need sign it before January 31, 2011. The terms of the stay also required Kilback Farm to negotiate an amended repayment agreement with MPCC by March 31, 2012. Mr. Kilback, on behalf of Kilback Farm, signed the acknowledgement on January 24, 2011 and the amending agreement on March 29, 2012.
[9] Kilback Farm did not repay the advances by March 31, 2013. In May 2013, MPCC advised Kilback Farm that it was in default. MPCC then sought repayment of the outstanding amount from the Minister and the Minister paid MPCC in February 2014.
[10] After several failed attempts to collect payment, in January 2019, the Minister brought an action in the Federal Court to recover the amount owing from Kilback Farm and the appellants. In July 2020, the Minister brought a motion in writing seeking summary judgment.
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