Executive Summary: Key Legal and Evidentiary Issues

• The plaintiffs sought a declaration entitling them to set off unpaid levies against a substantial outstanding judgment owed to them by the defendant Board.
   
• An underlying 2020 trial judgment had already found the Board and two individual directors liable for misfeasance in public office.
   
• Alternatively, the plaintiffs asked the court to enjoin the Board from directing third-party hatcheries to pay levies directly to it.
   
• Central to the analysis was the distinction between legal set-off, which requires mutuality and liquidated debts, and equitable set-off, which does not.
   
• Evidentiary issues included whether the levies and the judgment debt were sufficiently connected to justify equitable set-off, despite the Board's position that no mutual debt existed.
   
• Costs were also contested, with the plaintiffs seeking a fixed award in light of the Board's continued refusal to satisfy the judgment.
   

Facts of the case

Pedigree Poultry Ltd. and Ronald Dubois applied to the Saskatchewan Court of King's Bench for a declaration that they were entitled to set off levies owed by them to the defendant Saskatchewan Broiler Hatching Egg Producers' Marketing Board against a substantial judgment the Board owed them. In the alternative, they sought an injunction preventing the Board from collecting those levies from third-party hatcheries. The dispute traced back to conduct in the late 1990s. A trial judgment dated April 3, 2020 (2020 SKQB 100) found the Board and two individual defendants, Mervin Slater and Victor Loewen, liable for misfeasance in public office toward both plaintiffs. The trial judge awarded Pedigree Poultry Ltd. $20,394 for the loss of the June placement, $1,574,518 for loss of income from the Board's failure to allocate expansion quota, and $540,000 for loss of the capital value of unallocated quota, each with associated pre-judgment interest as specified in the judgment. Ronald Dubois was awarded $70,538 for loss of income from the failure to allocate expansion quota and $900,000 for loss of the capital value of unallocated quota, also with pre-judgment interest. A further order made October 18, 2023 fixed pre-judgment interest at $677,649.18 for Pedigree Poultry Ltd. and $417,015.47 for Ronald Dubois. The defendants appealed unsuccessfully (Slater v Pedigree Poultry, 2022 SKCA 113), and the Supreme Court of Canada dismissed the Board's application for leave to appeal with costs to the plaintiffs in May 2023. By the fall of 2023, the defendants collectively owed the plaintiffs approximately $4.2 million plus costs, none of which had been paid. Meanwhile, the Board continued to assess levies against the plaintiffs, including $37,699.36 rendered in September and December of 2024. When the plaintiffs asserted a right to set off these levies against the judgment, the Board's counsel rejected that position and indicated the Board would instead have the relevant hatchery pay the levies directly to it, a mechanism the court likened to garnishment. This prompted the plaintiffs' application.

Policy and legislative provisions at issue

The Board was established under The Natural Products Marketing Act, RSS 1978, c N-3, and The Broiler Hatching Egg Marketing Plan Regulations, RRS c N-3 Reg 1, enacted in 1985. Section 6 of those regulations set out the plan's purpose of ensuring orderly marketing of hatching eggs in Saskatchewan, including maintaining stable prices, ensuring adequate supply, establishing marketing quotas, and supporting research and cooperation with other marketing bodies. Section 8 gave the Board broad powers, including granting, suspending, or cancelling licences, collecting information, inspecting records, and making orders necessary to regulate the industry. The regulatory framework continued under The Agri-Food Act, SS 1990-91, c A-15.2, and later The Agri-Food Act, 2004, SS 2004, c A-15.21, with the Board obliged to provide licensees a hearing before suspending or cancelling a licence. Section 7 of The Broiler Hatching Egg Marketing Plan Regulations, 2015, RRS c A-15.21 Reg 22 confirmed the Board's levy power under s. 7(1)(d) and its enforcement power via court action under s. 7(1)(g). On the procedural side, the plaintiffs relied on s. 3-3 of The King's Bench Act, SS 2023, c 28, which allows a judge to make binding declarations of right, and s. 10-15 of the same Act, which permits injunctive relief where appropriate or convenient. They also invoked s. 114 of The Enforcement of Money Judgments Act, SS 2010, c E-9.22, and King's Bench Rules 3-47 (pleading set-off), 10-18 (enforcement of judgments), and 10-21 (set-off between judgments).

Reasoning and analysis

The court's analysis turned on the law of set-off. Legal set-off, generally arising by statute, requires that both obligations be liquidated debts owed between the same parties in the same capacity. Equitable set-off is available on a broader basis: it applies to both liquidated and unliquidated claims, does not require mutuality, and turns instead on whether the debts are so closely connected that it would be manifestly unjust to allow one party to enforce payment without accounting for the cross-claim. The court drew on this principle as articulated in Scott v Golden Oaks Enterprises Inc., 2024 SCC 32, Holt v Telford, 1987 CanLII 18 (SCC), and Glencore Canada Corporation v FTI Consulting Canada Inc., 2026 BCCA 167, among other authorities, including RIP Beverages Co. Ltd. v Dunn, 2026 SKCA 10 and Saskatchewan Wheat Pool v Feduk, 2003 SKCA 46. The Board argued the levies did not constitute a mutual debt and relied on older authorities, including Cam-Net Communications v Vancouver Telephone Company Limited, 1999 BCCA 751, and Jamieson v Loureiro, 2010 BCCA 52. The court found these cases outdated and less persuasive than more recent decisions emphasizing fairness over strict mutuality. Applying the modern framework, the court concluded the equities strongly favoured the plaintiffs. It pointed to specific findings from the trial judgment describing the individual defendants' conduct, including that Slater had been found neither reliable nor credible, had written false correspondence to producers, and that both individual defendants knew or were reckless as to whether their actions in excluding plaintiffs from a quota expansion were unlawful. The court also noted the Board, as an emanation of the provincial Crown, was expected to operate honestly, in good faith, and according to law, and had instead persisted in refusing to pay the judgment while continuing to assess and pursue levies against the plaintiffs. Given its conclusion on equitable set-off, the court found no need to separately address the plaintiffs' alternative request for an injunction against the Board's collection efforts from third-party hatcheries.

Ruling and overall outcome

The court ruled in favour of the plaintiffs, Pedigree Poultry Ltd. and Ronald Dubois, declaring that they are entitled to apply equitable set-off of the levies assessed against them by the Board against the outstanding balances owed to them under the earlier judgments. The court directed that a copy of the decision be sent to the Minister of Agriculture and the Minister of Justice and Attorney General for Saskatchewan, expressing concern about the Board's conduct and suggesting oversight or restructuring may be warranted, while acknowledging that decision lay beyond the court's jurisdiction. On costs, applying the discretionary factors under Rule 11-1 of The King's Bench Rules, the court ordered the defendants, jointly and severally, to pay one set of costs to the plaintiffs, fixed at $10,000.00, payable in full within 60 days of the decision.