The federal government should act fast to stop creditors from getting
into farmers’ Net Income Stabilization Accounts, say prominent farm and
rural leaders.
If it doesn’t, the NISA will no longer be an effective safety net.
“Instead of taking out a judgment and applying it against your land or
something, if they think they can seize this, it’ll be the first place
they go because it’s cash,” said Don Dewar of Keystone Agricultural
Producers.
“You’re taking that safety net away if you take that to pay a debt,”
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said the president of Manitoba’s general farm lobby.
A judge sent shivers down the spines of farmer representatives across
Canada when he ruled that a creditor could seize a Manitoba farmer’s
NISA funds.
He said there’s nothing different about that money than other money
farmers have in the bank.
“Parliament has not seen fit to exempt the NISA accounts from seizure.
The provincial legislature has not seen fit to exempt the NISA accounts
from seizure. It is not for this court to provide an exemption where
none exists,” wrote judge John Menzies in his Dec. 10 ruling.
The specific case involved a farmer who had gone bankrupt but still had
money in his NISA account. In 1999 the creditor, Mini G Enterprises
Ltd., obtained a writ of seizure against farmer Gary Kendrick. In
December 2000, the creditor instructed a sheriff to seize Kendrick’s
NISA account, which was held by the Toronto Dominion bank. The bank
refused to turn over the money.
Menzies ruled that the farmer’s share of the account, the government’s
share and the interest, could have been seized, though the creditor had
requested only the farmer’s portion.
Under NISA, farmer contributions are matched by government
contributions.
The federal government had argued that NISA money should be exempt from
seizure because it is set up to protect farmers. The government argued
that it had similar public policy importance as for registered
retirement savings plans.
The decision came out of the blue, said Manitoba agriculture minister
Rosann Wowchuk.
“That wasn’t the intent of the money.”
The decision refers to a provincial law that creates the legal room for
creditors to seize NISA money, but Wowchuk said she thinks this ruling
would apply outside Manitoba too.
“I expect this would be a problem across the country,” she said.
That’s what scares Sinclair Harrison, president of the Saskatchewan
Association of Rural Municipalities.
He doesn’t want to see a safety net for farmers become a safety net for
creditors.
“Once you open the door to this, what’s the next step?” said Harrison.
“We feel this money should be protected.”
Wowchuk said the Manitoba government is waiting to hear whether the
federal government will appeal the decision. She also wants to know
whether federal or provincial laws need to be changed to protect
farmers.
Dewar said governments should make sure NISA is not subject to seizure.
They should ensure it remains safety net money that farmers can use
with some flexibility, including deciding how and when to pay
outstanding debts.
“Lots of farmers owe money. Lots of farmers have judgments against
them,” said Dewar.
“In the long term you can probably cash flow your way out of them. NISA
isn’t something you can protect forever, but we always thought it was
up to our discretion to use it when we wanted to.”
