Terry Blaine Gustafson v. Input Capital Corp.

(Saskatchewan) (Civil) (By Leave)


Contracts - Contracts — Unconscionability — What is the governing test for the unconscionability doctrine — Whether the agreements were unconscionable — Whether the Court of Appeal erred in its review of the trial judge’s decision?.


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The application for leave to appeal stems from an offer by the respondent, Input Capital Corp. (ICC), to purchase canola from the applicant, Mr. Gustafson, and related farming corporations (together, Gustafson Farms). That bargain was struck early in 2014 and amended over time to provide for the delivery of canola in 2014 and into the future. The parties entered into a series of agreements for Gustafson Farms to deliver 1,790 tonnes of canola in 2014 and 6,240 tonnes in 2015, with an ongoing annual delivery requirement of 2,490 tonnes, in consideration for an upfront payment of $4.5 million from ICC as well as future payments at times of delivery. By the fall of 2015, Gustafson Farms had defaulted under all but the First Spot Contract by failing to deliver the canola ICC had purchased.

The trial judge was satisfied that, in the circumstances of this case, the Purchase Agreement, the Streaming Contracts, the Amending Agreement, the Collateral Mortgage, the Collateral Security Agreements and the Mortgage Amending Agreement were unconscionable and must all be set aside. The Court of Appeal held that the trial judge erred in his interpretation of the Agreements and misapprehended the contractual relationship between the parties leading him to erroneously conclude the Agreements were unconscionable and that the Agreements were void and unenforceable in their entirety. The Court of Appeal set aside the trial judge’s findings and allowed the appeal.