Rainbow

Rainbow

Tuesday, June 27, 2017

Seller's Family's remorse not grounds to set aside farm transaction, says Alberta Court

Several years ago, a young couple purchased farm land from an 86 year old man, a bachelor most of his life (the "Vendor").  The couple had leased the land for a number of years, and paid about $600,000 for two quarter sections (160 acres x 2).  The Vendor's youngest brother more recently commenced an action in the Alberta Court of Queen's Bench on behalf of the Vendor to set aside the land transaction based either on the exercise of undue influence by the purchasers or on the notion that the transaction was unconscionable.  At the time the case was heard, the Vendor was 93 years old and living in a care facility.  He died between the time of the hearing and the release of the Court's decision.

The Vendor's family was upset that the land purchased for $600,000 in 2010 was later appraised at a value of between $1.67 million and $3.9 million.  And, moreover, within two years of purchasing the two quarter sections, the young couple subdivided out a 43-acre parcel and a 79-acre parcel that they then listed for sale at $835,000 and $1.38 million, respectively.

On the issue of undue influence, the Court cited the test set out by the Supreme Court of Canada in the case of Geffen v. Goodman Estate:

What then must a plaintiff establish in order to trigger a presumption of undue influence? In my view, the inquiry should begin with an examination of the relationship between the parties. The first question to be addressed in all cases is whether the potential for domination inheres in the nature of the relationship itself. This test embraces those relationships which equity has already recognized as giving rise to the presumption, such as solicitor and client, parent and child, and guardian and ward, as well as other relationships of dependency which defy easy categorization.
Having established the requisite type of relationship to support the presumption, the next phase of the inquiry involves an examination of the nature of the transaction. When dealing with commercial transactions, I believe that the plaintiff should be obliged to show, in addition to the required relationship between the parties, that the contract worked unfairness either in the sense that he or she was unduly disadvantaged by it or that the defendant was unduly benefited by it. ...
Once the plaintiff has established that the circumstances are such as to trigger the application of the presumption, i.e., that apart from the details of the particular impugned transaction the nature of the relationship between the plaintiff and defendant was such that the potential for influence existed, the onus moves to the defendant to rebut it. As Lord Evershed M.R. stated in Zamet v. Hyman, supra, at p. 938, the plaintiff must be shown to have entered into the transaction as a result of his own "full, free and informed thought". Substantively, this may entail a showing that no actual influence was deployed in the particular transaction, that the plaintiff had independent advice, and so on. Additionally, I agree with those authors who suggest that the magnitude of the disadvantage or benefit is cogent evidence going to the issue of whether influence was exercised[Emphasis added]
[Emphasis added]
The Court found that the relationship between the Vendor and the young couple was not one in which there was potential for domination of the Vendor by the young couple.  Their relationship was one of lessor and lessees, and of friends and neighbours.  The Vendor was not dependent on the young couple, they were not family, there was no position of trust, and the Vendor was not in a position where he had to sell his land for financial reasons.

And even if the Court had found the relationship to be one in which undue influence could be presumed, the Court would not have found that actual undue influence was exerted in this case.  Instead, the Court found that the Vendor was someone who was not coerced into selling his land.  He had no children of his own and had no family who wanted to purchase or farm his land.  He wanted to sell the land and for the land to remain in agricultural use.  He sold the land at what amounted to a discounted price in relation to the actual market value, but the Vendor had expressed his willingness to sell at a discount knowing that the land would remain agricultural.

Of course, very shortly after the young couple purchased the land, they proceeded to apply for consent from the municipality to subdivide the land.  It appears that the young couple had discussed the possibility of subdivision with the Vendor for the purpose of family planning.  The Vendor provided a letter in support of the application and mentioned that the purpose was for "future ranch planning" for the young couple and their three children.  The decision by the young couple to put two parcels up for sale outside their family at a price that far exceeded the original purchase price of the entire two quarters came as a disappointing surprise to the Vendor's family.

However, the Court did not find that this made the transaction between the Vendor and the young couple unconscionable and subject to being set aside.  The Court found that none of the following elements of the test for an unconscionable transaction were satisfied:
1. a grossly unfair and improvident transaction;
2. that the victim lacked independent legal advice or other suitable advice;
3. that there was an overwhelming imbalance in bargaining power caused by the victim's ignorance of business, illiteracy, ignorance of the language of the bargain, blindness, deafness, illness, senility, or similar disability; and
4. that the other party knowingly took advantage of this vulnerability.
Cain v Clarica Life Insurance Company2005 ABCA 437 (CanLII)384 AR 11, at para 32.

The action to set aside the transaction was dismissed.  As the Court noted in conclusion: "seller's remorse, or seller's family's remorse, is not grounds to set aside the transaction".

Read the decision at: Burby v Ball.

Wednesday, June 7, 2017

Submit Comments on Proposed Changes to the Conservation Authorities Act



Conservation Authority Act changes are coming - Landowners beware






The Ontario Government has recently introduced Bill 139, the Building Better Communities and Conserving Watersheds Act, 2017.  While the proposed legislation has been in the news on account of the major changes to be made to land use planning, replacing the Ontario Municipal Board with the Local Planning Appeal Tribunal, the legislation would also make significant changes to the Conservation Authorities Act.  The summary notes for Bill 139 explain:
The provisions regulating activities that may be carried out in the areas over which authorities have jurisdiction are substantively amended (sections 28 and 29). Section 28 of the Act is repealed.  That section currently gives authorities certain regulation-making powers, including the power to regulate the straightening, changing and diverting of watercourses and development in their areas of jurisdiction and to prohibit or require the permission of the authority for such activities. The re-enacted section 28 prohibits such activities so that the previous regulation-making power is no longer required. Furthermore, new section 28.1 gives the authorities the power to issue permits allowing persons to engage in the prohibited activities and section 28.3 allows authorities to cancel the permits in specified circumstances. New regulation-making powers are set out in section 28.5 in respect of activities that impact the conservation, restoration, development or management of natural resources.
Sections 30 and 30.1 are repealed and sections 30 to 30.4 are enacted in relation to the enforcement of the Act and offences. Authorities are given the power to appoint officers who may enter lands to ensure compliance with the Act, the regulations and with permit conditions. The officers are also given the power to issue stop orders in specified circumstances. Offences for contraventions of the Act, the regulations, permit conditions and stop orders are set out in section 30.4 and the maximum fines under the Act are increased from $10,000 to $50,000 in the case of an individual and to $1,000,000 in the case of a corporation. An additional fine of $10,000 a day for individuals and $200,000 a day for corporations may be imposed for each day the offence continues after the conviction. Section 30.6 expands the existing powers of the court when ordering persons convicted of an offence to repair or rehabilitate any damage resulting from the commission of the offence.
As drafted, the new legislation would prohibit "development" (without a permit) in the same areas currently covered by the Conservation Authorities Act and the individual CA regulations made under it, as well as in "other areas in which development should be prohibited or regulated, as may be determined by the regulations."  Whether that amendment makes much practical difference is debatable, but another related change will most likely have a practical effect for landowners in Ontario.  Whereas in the current Act, terms like "development" and "wetland" are defined, the new legislation says that those essential terms will be defined by regulation to be made by the provincial cabinet (and, more particularly, the Ministry of Natural Resources).  It's not clear at this point how the terms will be defined.

If Bill 139 passes, then landowners should take great interest in the development of the regulations to be made pursuant to the Act.  Those regulations could effect significant change in the way that the use of land, including farm land, is restricted in Ontario.

Read the Bill at: Bill 139, Building Better Communities and Conserving Watersheds Act, 2017.

Friday, June 2, 2017

NEB making CSA Standard Z662 (Oil and Gas Pipeline Systems) available to public in pilot project

The National Energy Board has posted information on its website about how the public can access the CSA Standard Z662 (Oil and Gas Pipeline Systems) at no cost during a pilot project that will run until March, 2018.  Many important NEB regulations about safety and the protection of the environment in connection with pipelines adopt provisions in the CSA standard.  The problem, at least for the general public, is that the cost of obtaining a copy of the standard is several hundred dollars.  In other words, outside an initiative like the one being undertaken by the NEB, finding out exactly what standards are required of pipeline companies in Canada can be an expensive exercise.

The NEB says that its pilot project will run until March, 2018, and then will be reviewed.
Hopefully the open and free access to the CSA standard will continue beyond the current pilot project.  Canadians should not have to pay an organization like the CSA in order to know what the law is.

Here is the link to the NEB portal to the CSA Standard: How to access the CSA Standard Z662 Oil and Pipeline Systems.

Tuesday, May 23, 2017

Court of Appeal overturns Gilmor v. NVCA decision - confirms discretionary powers of Conservation Authorities

The Ontario Court of Appeal has now released its decision in the Gilmor v. Nottawasaga Valley Conservation Authority case, which was on appeal from the Divisional Court.  This decision is an important one in defining the power of Conservation Authorities in Ontario to decide when landowners may or may not develop properties that fall within the geographic jurisdictions of the Authorities.  In this particular case, a husband and wife wanted to build a house on a property at the edge of a floodplain and were denied permission by the NVSA (and, on appeal, by the Commissioner), even though there was already a garage on the property and houses built on neighbouring properties.

The main reason stated by the Commissioner for denying permission was that the driveway that would have led to the house might not be safe (in certain possible severe flood conditions, although there was already a existing driveway on the property).  The Commissioner's view was that safety was part of the regulatory authority to control flooding under the Conservation Authorities Act, and that her discretion to approve the development proposal in this case should not be exercised because of safety concerns.

The Divisional Court had disagreed with the Commissioner on both fronts.  The Divisional Court was of the opinion that safety could not be an overriding factor in the decision to approve or deny permission to develop where there were no concerns about flood control (and the landowners' proposal in this case would not have an effect on flooding).  Furthermore, the Divisional Court disagreed with the Commissioner that there was any sufficient reason for concern about safety in connection with the proposed development.  I reported on the Divisional Court's decision in an earlier blog post: Divisional Court Decision.

In its rejection of the Commissioner's decision, the Divisional Court also put forward its own interpretation of the development permission provisions in the Conservation Authorities Act legislation and regulations.  Importantly for landowners, the Divisional Court confirmed that there is not necessarily an absolute prohibition on development within areas regulated by Conservation Authorities.  The prohibitions in the legislation and regulation are generally subject to the possibility of obtaining permission from the Conservation Authorities.  For instance, the regulation in this case provided:
2. (1) Subject to section 3, no person shall undertake development or permit another person to undertake development in or on the areas within the jurisdiction of the Authority …
3. (1) The Authority may grant permission for development in or on the areas described in subsection 2 (1) if, in its opinion, the control of flooding, erosion, dynamic beaches, pollution or the conservation of land will not be affected by the development.
In the opinion of the Divisional Court, it was in fact a prerequisite of the prohibition on development stated in Subsection 2(1) that the Conservation Authority be of the opinion that the development would affect the control of flooding, erosion, dynamic beaches, pollution or the conservation of land.  In this particular case, since those potential effects were not present, the Conservation Authority (and, on appeal, the Commissioner) had no authority to prohibit development.  Again, safety concerns alone could not justify the prohibition.

The Court of Appeal has now overturned the decision of the Divisional Court and restored the Commissioner's original decision.  Writing for the Court, Justice Huscroft makes the following points:

  • the Divisional Court's reading of Subsection 3(1) of the Regulation as being a prerequisite to the prohibition on development in Subsection 2(1) is wrong; the starting point is that development within certain regulated areas is prohibited; but a person wishing to develop may apply to the Conservation Authority for permission to develop and the Conservation Authority must exercise its DISCRETION to approve or deny a development REASONABLY;
  • the listing of specific relevant factors (effect on control of flooding, etc.) in Subsection 3(1) does not mean that related factors such as safety for persons and property (which is related to and is a reason for flood control measures) cannot be the basis for the exercise of the discretion;
  • the standard of review on appeal from the Commissioner is a standard of "reasonableness", not "correctness" as was applied by the Divisional Court, and the Commissioner's findings on safety in relation to the property and the development were entitled to deference;
  • The Divisional Court's task in conducting the reasonableness review was "not to weigh the evidence, reach its own judgment, and then use that judgment as a benchmark for assessing the reasonableness of the Commissioner's decision";
  • "It may be that, as the Divisional Court noted, a Timmins storm is unlikely to occur, but it cannot be said that the Commissioner's concerns about access to and egress from the site in the event of such a storm were unreasonable."

Where does that leave landowners?  Conservation Authorities will no doubt be emboldened by this reaffirmation by the Court of Appeal of the discretionary authority to approve or deny development permits.  The exercise of discretion must be reasonable, but the Court of Appeal has likely signaled that the range of possible reasons for denying a development permit is broader rather than narrower.  The reasons cited for denying permission may go beyond the factors named specifically in the regulations (i.e. control of flooding, erosion, dynamic beaches, pollution or the conservation of land); the question will be what level of relatedness there will have to be between those enumerated factors and the factors considered by a Conservation Authority for a decision to be "reasonable".

The Court of Appeal's decision also signals that it may be very difficult in the future to bring a successful appeal against a decision of the Commissioner.  In most situations, the standard of review that can be applied by the Divisional Court on such an appeal will be the "reasonableness" standard.  It won't be a question of whether the Commissioner got the decision right; it will simply be a question of whether it was a decision that could have reasonably been made in the circumstances.  Not necessarily the right decision; just a reasonable decision.

Read the Court of Appeal's decision at: Gilmor v. Nottawasaga Valley Conservation Authority.

Tuesday, May 16, 2017

What will NEB Modernization mean for landowners?

The Expert Panel appointed by the Minister of Natural Resources to provide recommendations on the future of the National Energy Board ("NEB") has now released its report: "Forward, Together - Enabling Canada's Clean, Safe, and Secure Energy Future".  Comments on the report will be accepted by the federal government until June 14, 2017.  You can submit your comments at the following link:  COMMENTS.

What the Expert Panel's recommendations will mean for pipeline and energy transmission line landowners is difficult to glean from the report; obviously, it's not possible to know at this point whether the recommendations of the panel will be adopted and/or implemented.  However, it doesn't appear that there will be much of benefit for landowners in any shift to a new Canadian Energy Transmission Commission ("CETC") framework.  The NEB may be getting a change in name, but the CETC seems likely to be more of the same for landowners.

The Report includes recommendations on changes to the way in which various project proposals are reviewed.  Without knowing how these changes will be implemented in legislation to replace the NEB Act, we can only speculate on the effect on landowners at this time.  Landowners should be concerned, though, about the potential for the erosion of the procedural rights that they do have under the current legislation.  The NEB Act is far from landowner-friendly, but it guarantees certain rights for landowners when faced with new project applications or the operation of existing facilities.  Will the Expert Panel's clear focus on the engagement of Indigenous peoples and the general public result in the further watering down of landowner involvement in the regulatory process?  

The addition of a Landowner Ombudsman is not likely to change anything for landowners in terms of navigating the regulatory processes; the NEB already has personnel assigned to assist those affected by energy infrastructure and projects in dealing with various processes.  There's mention of the possibility of funding for landowners to access relevant legal advice, but there is still no sign of any system of cost recovery for landowners who must participate in the regulatory process to protect their property interests.  Government should not be (under)funding landowner legal advice and participation in regulatory processes - energy transmission companies should be paying the costs actually incurred by landowners as a result of the companies' projects and operations.  

That "Respect for Landowners" is the last section in the Expert Panel's report, and consists of only 4 pages out of 100 in total, is telling.  The impression left is that the role of landowners in the review process is an afterthought or an add-on, and that is exactly where landowners have been in the NEB process all along.  Landowners should just hope that the current review process doesn't erode what few protections they have under the existing regulatory system.

NEB Modernization Report recommends creation of Canadian Energy Transmission Commission ("CETC") - Comment on the Expert Panel Report until June 14, 2017

The Expert Panel established by Canada's Minister of Natural Resources has now released its report of recommendations and advice on the modernization of the National Energy Board ("NEB"): "Forward, Together - Enabling Canada's Clean, Safe and Secure Energy Future".  The public is invited to comment on the report for 30 days until June 14, 2017.  Comments can be submitted through the following link:  COMMENTS.

Recommendations put forward by the Expert Panel include:

  • The creation of a "formal Canadian energy strategy which plots the course for the future of energy in Canada, balancing environmental, social and economic objectives";
  • High level inter-governmental coordination on all energy-related matters in order to realize the federal government's vision of the future of energy in Canada;
  • Establishment of an "independent Canadian Energy Information Agency" with a mandate to collect and disseminate energy data;
  • Transformation of the NEB into the Canadian Energy Transmission Commission ("CETC");
  • Shifting of responsibility to make public recommendations to the federal cabinet on whether a preliminary major project proposal (for federally-regulated energy transmission) is in the public interest to the Minister of Natural Resources;
  • Enshrinement in regulation of the definition of the "national interest", to be updated on a "reasonable schedule" to keep pace with societal change;
  • The new CETC to continue to review project applications for transboundary pipeline and electricity transmission line projects, but major projects must first pass through the "national interest" review by the Minister of Natural Resources and cabinet;
  • Joint Hearing Panel process for review of "major" and "significant" projects, the panel to consist of two CETC commissioners, two representatives of the Canadian Environmental Assessment (CEA) Agency, and one independent Commissioner.  One of the five commissioners must be Indigenous;
  • Once major projects have passed through the "national interest" approval stage, the CETC to have full authority to approve or deny projects, restoring the authority that was taken away from the NEB and given to cabinet several years ago;
  • The elimination of Section 58(1) of the NEB Act (exemption from the Certificate of Public Convenience and Necessity requirement for certain projects) and designation of three classes of projects - 1. Projects of National Consequence, requiring review by the federal cabinet; 2) projects of significance that require a Joint Review Panel review but not review by cabinet; and, 3) "smaller" activities that require review and approval but not a full Joint Panel review;;
  • Enshrinement in legislation of two core principles: 1) no regulated activity shall proceed without proper approval; and, 2) all regulated activities must undergo environmental assessment commensurate with the scale and risk of the proposed activity;
  • Establishment of a Board of Directors of the CETC responsible for strategy and oversight of the CETC, separate from the Commissioners of the CETC who would sit on hearing panels and make regulatory decisions.  Currently, the NEB consists of members who perform both functions;
  • Minister of Natural Resources to define how to meet the commitment to ensure Indigenous peoples have a nation-to-nation role in determining Canada's national energy strategy;
  • Government funding for an Indigenous Major Projects Office, under the governance of Indigenous peoples, which will define clear processes, guidelines and accountabilities for formal consultation by government on projects;
  • For project hearings, the repeal of tests for standing, allowing for a wider array of input into project reviews (from simple letters to the provision and testing of evidence).  Letters of comment to be accepted without qualification;
  • Establishment of a Public Intervenor Office to represent the interests and views of parties who wish to use the service, and to coordinate scientific and technical studies to the extent possible;
  • Establishment of Regional Multi-Stakeholder Committees, open to all interested parties, with a mandate to review all aspects of the regulatory cycle and operational system;
  • Establishment of a Landowners Ombudsman to review and make recommendations on improving relationships with landowners, provide advice and best practices on how to navigate the processes, enable better mediation, and potentially administer a fund so that landowners can access relevant legal advice;
  • CETC Hearing Commissioners to take on alternative dispute resolution, with support from ADR staff as appropriate;
  • Review of compensation practices and outcomes, resulting in a public report on the matter, so as to better understand and deal with compensation issues large and small.

Thursday, May 11, 2017

Saskatchewan landowners challenging RM by-law that would expropriate gravel pit property

Two sisters own a quarter section of land in Saskatchewan adjacent to a gravel pit owned by their Rural Municipality ("RM").  The RM's current gravel pit is nearly exhausted, and the RM has been interested in obtaining the sisters' property - the property is ideally located next to the existing pit, and demand for gravel in Saskatchewan is currently very high.  In November, 2015, the RM offered to purchase the land, which has been in the sisters' family for generations, for $1.5 million.  The sisters rejected the offer.

The sisters then entered into a gravel extraction lease agreement in February, 2016 with a private company.  Later that month, the RM upped its offer by $17,000, and served a notice of expropriation along with its purchase offer.  The sisters again rejected the RM's offer.  The RM moved ahead and passed a by-law authorizing the expropriation of the property in May, 2016.

The matter has ended up in the Court of Queen's Bench.  The RM applied to have the compensation determined on the expropriation.  The sisters applied to the Court for determination as to whether the RM was lawfully expropriating the land for a purpose authorized by the Municipal Expropriation Act.  The Court has deferred the RM's application and allowed the sisters' application to proceed as an application to quash the by-law.

The sisters do not challenge the RM's authority to expropriate land where necessary to ensure that the RM has an adequate source of gravel to fulfill its duty to build and maintain roads within the municipality.  They argue that the RM's true purpose in passing the expropriation by-law was not to ensure an adequate source of gravel; instead, according to the sisters, the RM wants their property to acquire a source of gravel that the RM can sell at a profit in the context of the current high demand for gravel in Saskatchewan.

This will be an interesting case to watch.

Read the decision at: Rural Municipality of Edenwold No. 158 v Murray.