REGINA – A Saskatchewan Liberal MLA has introduced legislation to help farmers stay on their land.
Last week Glen McPherson, MLA for Shaunavon, introduced a private member’s bill to amend the Saskatchewan Farm Security Act. McPherson said the legislation is needed to plug a loophole that allows lending institutions to repossess the leaseback rights of farmers who are in bankruptcy proceedings.
McPherson is using two cases to illustrate why changes need to be made.
In January, Val and Kim Lorenz of Wilkie obtained a lease on four quarters of land after a hearing with the Farm Tenure Arbitration Board. The board ruled that the bank was to remove a clause in the lease which said the Lorenzes could not declare bankruptcy, according to documents from the Lorenzes.
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Val Lorenz did not go to the bank to sign the lease until Feb. 22 because the bank manager was on holidays, and, in the meantime, both he and Kim had filed for bankruptcy.
Lorenz told McPherson that the manager said he could not sign the lease because they had declared bankruptcy, even though the Farm Tenure Arbitration Board had ordered the clause removed.
Also Feb. 22, the Saskatchewan Court of Appeal ruled in a case of the Toronto Dominion Bank versus Mulatz that statutory leaseback rights have a value and can revert to the bankruptcy trustee. The bank can then evict the farmers and sell the land.
Bank proceeding with action
In the legislature, McPherson said the trustee who received the Lorenzes’ leaseback rights has returned them as he is not a farmer. The bank is still proceeding with action to evict the family and sell the land.
Provincial legislation states the lending institutions must give farmers a six-year leaseback option. McPherson said both the Mulatz and Lorenz cases show that it’s not protecting farmers because they can still lose that option.
Under the legislation, leaseback rights can be assigned to a spouse or son or daughter over the age of 18. But in the Lorenz case, their four children are under 18 and both adults have filed for bankruptcy.
McPherson’s amendment says farmers would keep their leaseback rights even if they declare bankruptcy.
“The intent of the amendment is to prevent the courts from assigning the leaseback rights to the trustee in the event of bankruptcy,” McPherson told reporters. “What we’re trying to prevent is having a precedent set here in the province because I believe around 1,300 farmers are in the leaseback program as we speak. ACS (Agriculture Credit Corp. of Saskatchewan) alone has somewhere in the neighborhood of 11,000 people in trouble.”
Justice minister Bob Mitchell said the government is aware of the problem, but believes changes to the federal Bankruptcy Act would take care of it.
However, McPherson said the federal law allows farmers to keep machinery and tools when they declare bankruptcy, while the Saskatchewan legislation means they might not have any land to farm.
Private member’s bills do not often proceed past first reading and McPherson made a motion last week calling on the government to introduce its own legislation. Debate on the motion was adjourned without a vote.
