Lonely Oak

Lonely Oak

Tuesday, March 25, 2014

Alberta Court interprets a farmer's "poorly-drafted" will

In this case, B owned and operated a large farm that included 33 quarter sections of land and about 600 cattle.  He had a will and died.  And although he remained married to his wife, D, at his death, he had been living with G for more than 20 years.  The issue in the case was whether a specific bequest of $700,000 in favour of G should be paid only if the specific farm lands in which she was given a life interest were sold, and then only from the proceeds of the sale of those lands.  The alternative was that the bequest was conditional on the sale of other lands that formed part of the residue of the estate. 

In a certain paragraph of his will, B specifically bequested to pay and transfer the amount of $700,000 to G "immediately if the farm lands are sold or at the time of sale if the farm land sells at a later date."  The term "farm lands" is not defined, giving rise to the issues in this case. 

Based on a reading of the entire will as a whole, and in light of the circumstances of the making of the will, the Court ruled that G's interpretation was to be preferred.  An order was made requiring that the will be interpreted as thought it read that the $700,000 was payable immediately when the residue lands were sold or at the time of sale if the residue lands are sold at a later date.  In other words, the lands in which G held a life interest did not have to be sold for G to receive the $700,000 - G did not have to abandon her life interest in order to get the bequest payment.

Read the decision at: Bruce Estate (Re).

Wednesday, March 19, 2014

Lack of an "honest belief": BC Court orders neighbours to remove encroaching barn and shed

One neighbour (G) has a barn and a shed that protrude onto another neighbour's (N's) property.  The barn is used for stabling horses and the shed is used for storage and has an attached chicken coop.  The situation ended up in BC Supreme Court where N proposed two options: 1) shared use of the barn and the shed; or, failing that, 2) an order for removal of the encroaching structures within 6 months.  According to the Court, each neighbour accused the other of being unreasonable and uncompromising about the encroachments.

G sought an order that there is an easement permitting the encroachments.  Although G knew about the encroachment before purchasing the property, G suggested that reliance had been placed on the representations made by the previous owner of N's property when G dealt with the barn and shed (choosing to maintain and improve the buildings, rather than remove them).   The Court ruled that G would not obtain an easement, largely on the basis that G did not have an "honest belief" about having the easement in the first place:
G purchased their property knowing specifically that the barn and shed and surrounding land encroached on their neighbour’s property. They now seek to obtain by court order what they did not bargain for in the first place. In essence, the G position is that the simplest and easiest solution from their point of view is for the court to grant them an easement over the N property or to allow them to buy the encroaching area, for modest compensation.
The Court ordered that the barn and shed encroachments, including buildings and fencing, be removed from N's property within 9 months.  The Court declined to order that half of the cost of doing so be borne by N, finding no reason to do so. 

Read the decision at: Gueldner v. Nichele.

Tuesday, March 18, 2014

Nova Scotia Court of Appeal denies costs to landowner on failed expropriation challenge

A landowner in Nova Scotia challenged the validity of the expropriation of his land.  The challenge was unsuccessful and the landowner was ordered by the NS Supreme Court to pay costs of the challenge to the expropriating authority.  The Court disagreed with the landowner that the costs should be decided under the Expropriation Act as costs related to asserting a claim for compensation (in which case there is no provision for the landowner to pay the expropriating authority costs, and it may be that the landowner would be entitled to costs when compensation is decided).  The landowner appealed the decision on costs to the Nova Scotia Court of Appeal.

The Court of Appeal ruled that there is a distinction between compensation proceedings under expropriation legislation and court proceedings to challenge the validity of the expropriation itself.  Having determined that the Supreme Court judge was not wrong to have applied the normal costs rules under the Civil Procedure Rules, the Court of Appeal upheld the lower court decision. 

Read the decision at: Higgins v. Nova Scotia (Attorney General).

Friday, March 14, 2014

Michael Schmidt loses unpasteurized milk appeal

The Ontario Court of Appeal has dismissed the appeal by Michael Schmidt of convictions on thirteen counts under the Milk Act and the Health Protection and Promotion Act (HPPA) related to the production, sale and distribution of unpasteurized milk and cheese.  Schmidt had tried to comply with the HPPA by creating a cow-share program where members purchased shares in milk cows (so that there was no real sale of unpasteurized milk produced by the cows).  The cow-share agreements were oral in nature, and there was no evidence that the name of the cow in which a member had a share was ever communicated to the member.  There was also no evidence that the agreements formally transferred ownership in the cow from Schmidt to the member.

At trial, Schmidt was acquitted of the charges on the basis that the private cow-share scheme was not caught by the legislation.  On appeal by the Crown to the Ontario Court of Justice, most of the acquittals were reversed, giving rise to Schmidt's appeal to the Court of Appeal for Ontario.  The Court of Appeal dismissed Schmidt's appeal.  With respect to the legislation banning the sale and distribution of unpasteurized milk, the Court wrote: "provided that the legislature has acted within the limits imposed by the constitution, the legislature’s decision to ban the sale and distribution of unpasteurized milk to protect and promote public health in Ontario is one that must be respected by this court."

The Court rejected Schmidt's contention that the cow-share scheme did not fall within the definitions of sale and distribution.  In the Court's view, "the cow-share arrangement is nothing more than a marketing and distribution scheme that is offered to the public at large by the appellant."  The Court also rejected arguments that the ban on the sale and distribution of unpasteurized milk in this case violated the Charter rights of the cow-share members.  The Court ruled that the ban did not constitute an infringement of the members' security of the person and did not infringe on the right of liberty.  As the Court stated, "lifestyle choices as to food or substances to be consumed do not attract Charter protection". 

Read the decision at: R. v. Schmidt.

Wednesday, February 26, 2014

Is a 1960 reservation of the right to take hay still enforceable?

The Nova Scotia Supreme Court has recently heard the case of a farmer looking to exercise a right to take hay that was first created in 1960.  The Court explained:

This application involves the interpretation of a reservation of a hay/crop
right in favour of GC, his heirs and assigns in a 1960 deed from
GC to the respondents predecessor in title ID. An area of some 2.7 acres of GCs 150-acre farm lot in Antigonish County, was conveyed, along with a 100-year old farm house and barn (or its foundation), collectively the S lot. After describing the dimensions of the 2.7-acre lot, which runs through GCs farm lot, the deed then provides the following:
RESERVING however to the said GC, his heirs and assigns the right and privilege to enter upon the said land from time to time for the purpose of removing hay or other crops or improving the land, ...

GC's nephew and successor in title has now come to the Court seeking an order confirming and declaring his right to enter the 2.7 acre parcel "for the purpose of removing hay or other crops or improving the land".

The Court determined that the right reserved to GC when he sold the 2.7 acre parcel was a "profit a prendre" - a right to take the produce or profit from the land.  The Court ruled that GC had reserved to himself and to his assigns (his successors in title) the right to remove hay form a portion of the 2.7 acres and that this reservation was not "repugnant" to the grant of title to the 2.7 acres (i.e. the sale of the land in 1960).

The responding parties (the current owners of the 2.7 acres) argued that the profit a prendre was extinguished years ago "because the purpose for which the condition was created has now expired".  The Court disagreed with this position.  It found that the owners of the GC lands have continued to take hay from the 2.7 acres since 1960 (whether for their own use or by lease to another farmer) and that:

If the profit appurtenant has been extinguished by the permanent alteration of the GC tenement, since it is no longer a cattle farm, then removal of the hay is still held as a right in gross, unaffected by such circumstances. It is a right exercisable by GC, the owner of it independently of his ownership of any land. The reservation is not rendered void or the profit extinguished due to alteration to the GC lot. 

However, the Court agreed with the respondents that the right to take hay on the whole 2.7 acres unreasonably limited their potential use of the property.  The Court made an order allowing the respondents to use the land within a certain tree line, which the Court determined "would not be an actionable infringement of the reservation rights".  The Court did grant the application and declared that the GC land owners hold a profit a prendre.

Read the decision at: Chisholm v. Snyder.

Friday, January 31, 2014

Sask Court of Appeal orders solicitor-client costs for landowner wrongfully expropriated

The appellant succeeded in obtaining an order in the Court of Queen’s Bench quashing a municipal bylaw expropriating a portion of his farm land. In consequence, he asked the Chambers judge to order the municipality to pay him the costs he had incurred in having the bylaw set aside. His solicitor-client costs, he said, amounted to $64,498.92. The Chambers judge declined to award him costs on a solicitor-client basis and instead, awarded him the fixed sum of $3,000 payable by the municipality. He then brought an appeal to the Court of Appeal for Saskatchewan.

Saskatchewan courts had already confirmed that it is within the discretion of the Chambers judge to award solicitor-client costs in the context of expropriation and related matters.  The Court of Appeal in this decision noted that, while there was no authority for the proposition that solicitor-client costs must be awarded in expropriation cases, "there is, however, a substantial body of literature suggesting, as a matter of fairness, that persons whose private land has been taken from them by means not of agreement but of compulsory expropriation should generally be able to recover their reasonable legal and other costs, responsibly incurred, in responding to the expropriation."

The Court of Appeal remitted the matter back to the Chambers judge to assess the landowner's reasonable solicitor-client costs, concluding: "The appellant’s land was taken from him through no fault on his part pursuant to a process in which he had no input. As it turns out, the land was unlawfully expropriated, yet the appellant had to go to court at his expense to establish the wrongdoing and recover his land. As in Sask Water, equity cries out that the appellant should get some relief."

Read the decision at: Goodtrack v The Rural Municipality of Waverley No 44.

Tuesday, January 28, 2014

Inter-generational farm sale agreement rectified by Court of Appeal

A father and mother sold their farming business as a going-concern, including all real and personal property, to their son and daughter-in-law.  Everyone signed a memorandum of agreement outlining the terms of the transfer.  The memorandum listed various ways in which the purchase price could be satisfied, including a vendor take back mortgage for the real property.

Following the father's death, the mother brought an action for rectification of the memorandum on the basis that the total purchase price was incorrectly recorded; it was stated to be $222,444, which was $115,000 less than the fair market value of $337,444.  The mother testified at trial that the sale of the farming business was intended to be at fair market value.  Of note, the mother's action proceeded only against the daughter-in-law, who had by then separated from the son.  The son did not contest the request for rectification, and summary judgment was obtained against him.

The trial judge refused to grant rectification on two bases: 1) the mother had failed to meet the standard of proof for rectification, which was "convincing proof"; and, 2) the parties did not have a common intention as to the amount of consideration for the farm business at the time that they executed the agreement.

The Court of Appeal disagreed and granted the rectification, concluding: "Applying the ordinary civil standard of proof, and considering the surrounding documentary and oral evidence as a whole, in my view, the requirements for rectification based on common mistake are met. The parties had a common intention to enter into a transaction for a total selling price at fair market value, the fair market value is clear, and the fair market value was incorrectly expressed in the documentation. Unless rectification is granted, [the daughter-in-law] will be unjustly enriched."

Read the decision at: McLean v. McLean.

Thursday, January 23, 2014

OMB declines to award landowner pre-expropriation costs where expropriation did not proceed

The City of Hamilton moved successfully for the dismissal of expropriation-related Notices of Arbitration and Statements of Claim on the basis that the Ontario Municipal Board (OMB) had no jurisdiction to hear the matters; no expropriations had taken place.

The proposed expropriations related to construction in Hamilton for the 2015 Pan American Games, and the landowner claimants had retained counsel to advise them with respect to the land acquisition process.  The City and the landowners then entered into negotiations, and when offers were refused by the landowners, a notice of application for approval to expropriate was served.  However, not longer after that notice was sent the City decided that it did not require the properties in question, though it was still open to purchasing the properties for the amounts previously offered.

By that time, the landowners had incurred legal costs and forwarded to the City a Bill of Costs.  They then served Notices of Arbitration and Statements of Claim to commence a claim to the OMB for consequential damages arising from the City's abandonment of the expropriation.

The City asked the OMB to throw the claims out, which the OMB did.  The OMB confirmed that pre-expropriation costs are compensable when there is an expropriation, but found that costs are not generally compensable under the Expropriations Act where there is no expropriation.  The OMB decided that this was not a circumstance in which it could exercise its discretionary powers to find that the term "expropriation" applies to the overall process for the taking of land (as had been argued by the landowners) and not just to an expropriation commenced by way of a formal Notice of Expropriation.

The OMB concluded:

In the absence of a formal registered expropriation, an expropriating authority should not be bound to compensate for damages or costs in a case where there is a potential for an expropriation. Furthermore, in the absence of a taking of land, negotiations for the purchase of the lands does not, and should not, attract a claim for costs, merely because the potential buyer has the power, if fully exercised, to expropriate.

Landowners in Ontario should question whether to engage in any negotiations whatsoever with an expropriating authority prior to receiving a Notice of Expropriation without an agreement in place requiring the authority to pay the landowner's legal costs of the negotiations.

Read the decision at: Marsdin v. Hamilton (City).