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.

Wednesday, May 10, 2017

Court finds farm lease not signed under duress - owner ordered to pay lost profits

In the fall of 2011, a couple of farmers ("D&S") asked an area landowner ("H") whether she would lease her farmland to them.  After a couple of meetings, H agreed to lease the land for three years at a set rental amount.  However, a few months later in April, 2012, on the day set by D&S to begin field operations on the rented land and a couple of days after D&S had provided H with a draft written lease, H blocked her driveway to prevent D&S from entering the land.  The OPP was called; the parties discussed the situation and made several changes to the draft lease at H's request, and the lease was signed.

In December, 2012, according to D&S, H then unlawfully terminated the lease.  D&S sued her for loss of profits that they would have earned had they been able to farm H's land during the two years remaining on the lease.  In her defence, H pleaded that she had signed the lease (on the day in April, 2012 when the OPP attended at her property) under duress.  In addition, H pleaded that D&S had breached the terms of the lease, which entitled her to terminate it.  At trial, Justice Bale rejected both defences and awarded D&S damages of just over $64,000 for lost profits.

Justice Bale did not accept the plea of duress because the presence of the OPP at the property (although the officers were called by D&S) was for H's benefit as well; H had already agreed to the material terms of the lease even before the written agreement was made in April, 2012; the only changes made to the lease agreement that day were changes that were requested by H; H testified that she though she was only signing a one-year lease that day, which she could put up with, but that demonstrates that she was signing the lease voluntarily (and, in any event, the judge did not accept H's claim that she didn't know the lease was for three years); and, after signing the lease, H allowed D&S to go into possession of the farmland and carry out their farming operations.

H also argued that she was entitled to terminate the lease because D&S had failed to "Supply Application Rates of Fertilizer & chemicals by 3rd party."  While D provided H with a handwritten note advising her of the fertilizer and chemicals applied, H claimed that she was entitled to some sort of formal document from the third party chemical suppliers.  D&S said they couldn't provide that document since they received only a single invoice from their supplier for the several properties they farmed.

Justice Bale ruled that it didn't matter whether the information provided by D&S satisfied the contract or not, at least not in the determination of whether H had a right to terminate the contract.  H would only be able to treat the contract as terminated if there was a fundamental breach of the contract.  Failure to provide the fertilizer and chemical information in the form demanded by H would not constitute a fundamental breach of the contract (as would a failure to pay rent).

Read the decision at: Drew v Huskinson.

Thursday, April 27, 2017

Environmental Obligations and Bankruptcy - Alberta Court of Appeal says bankruptcy trustee can disclaim orphaned wells

The Alberta Court of Appeal has released a split decision on the following question:  can the trustee administering the estate of a bankrupt oil and gas company renounce or disclaim the company's interest in orphan oil wells (i.e. wells for which the cost of remediation required for abandonment exceeds the value of the well), but keep and sell off other valuable wells in order to maximize the recovery of secured creditors?  Justices Slatter and Schutz ruled that the trustee is permitted to disclaim the orphan assets.  Justice Martin, writing in dissent, sided with the Alberta Energy Regulator ("AER") and would have ruled that a portion of the sale proceeds from valuable wells must be set aside to meet the expected costs of remediating orphan wells.

The case involved Redwater Energy Corporation, a publicly traded oil and gas company. In 2015, Redwater's principal secured creditor, the Alberta Treasury Branches ("ATB"), commenced enforcement proceedings after Redwater couldn't meet its financial obligations.  On May 12, 2015, Grant Thornton was appointed Receiver for Redwater under the Bankruptcy and Insolvency Act ("BIA").

In July, 2015, Grant Thornton told the AER that it would be taking control of only 20 of the 127 Redwater oil and gas licences.  The AER responded by issuing orders, "for environmental and public safety reasons", requiring the abandonment and remediation of the 107 wells that the Receiver was looking to disclaim.  In October, 2015, a bankruptcy order was issued for Redwater.  In November, 2015, Grant Thornton, now trustee in bankruptcy for Redwater, disclaimed the assets it had previously renounced in its capacity as Receiver, and indicated to the AER that it did not intend to comply with the environmental remediation orders.

The AER and the Orphan Well Association ("OWA") brought court applications for declarations that the disclaimer was void.  They also sought an order compelling Grant Thornton, as trustee, to comply with the abandonment and remediation orders issued by the AER.  Grant Thornton brought a cross-application for approval of the sale of certain assets, and ruling on the constitutionality of the AER's position.

The Chambers Judge hearing the matter ruled that the claim of Redwater's secured creditor, ATB, has priority over Redwater's obligation to reclaim its wells.  The Court of Appeal heard appeals of that ruling focusing on "whether a receiver or trustee in bankruptcy must satisfy the contingent liability inherent in the remediation of the worthless wells in priority to the claims of secured creditors."  The appeal involved questions of law for which the standard of review is correctness (i.e. it's not enough for the lower court decision to have been reasonable - it has to have been correct on the law).

As noted above, the majority of the panel hearing the appeals upheld the decision of the Chambers Judge, ruling that the bankruptcy trustee is not bound to comply with the abandonment and remediation orders and does not have to divert the value from valuable assets to cover the environmental costs related to other assets.  The reasons are extensive, and include discussion of the interplay between the provincial environmental legislation (the oil and gas regime) and the federal BIA regime.  The majority concluded that, "Under the proper interpretation of the BIA, the Regulator cannot insist that the bankruptcy trustee devote substantial parts of the bankrupt estate in satisfaction of the environmental claims in priority to the claims of the secured debtor.  To the extent that the interpretation of the provincial legislation leads to a different result, the [federal] paramountcy doctrine is engaged."

The majority also pointed out that the provisions in Alberta's Oil and Gas Conservation Act and Pipeline Act that purport to make receivers and trustees personally liable for the duty to abandon oil wells and pipelines, the costs of remediation performed by other persons, and the duty to obey orders of the Regulator, are in operational conflict with the BIA.  For example, the BIA contains provisions that exempt a trustee and a receiver from personal liability and that allow them to disclaim assets.  As such, the majority concluded, the personal liability provisions in the Alberta legislation are unenforceable against BIA receivers and trustees.

In her dissenting opinion, Justice Martin disagreed with the majority that the provisions of the Alberta oil and gas legislation actually conflict with the BIA.  She found that the BIA does not permit the trustee to renounce the end of life obligations imposed by the provincial regulatory regime. Therefore, the BIA does not release the trustee from its ongoing regulatory obligations with respect to the Redwater wells.  If there is no entitlement to renounce those obligations under the BIA, then there is no conflict between the BIA and the enforcement of the regulatory obligations (to abandon and remediate wells).

Justice Martin was also of the opinion that the abandonment and remediation regime in Alberta does not frustrate the purposes of the bankruptcy legislation (which include providing for the orderly liquidation and winding up of the insolvent debtor, distributing realizable assets fairly among the creditors, having regard to the legal priority of various types of debt, and providing the bankrupt with a "fresh start"):
The cost of abandoning licensed wells and reclaiming well sites is an ongoing regulatory obligation and an inherent part of the licensed asset, well known and understood by the debtor licensee and the licensee’s lenders. The record makes clear that it was well understood by the respondent ATB, the primary lender here. The end of life obligations associated with licensed assets, being compliance costs to generally applicable laws, are factored in to the lender’s risk assessment and its decision to lend on the strength of the debtor’s collateral. 
The continued application of the regulatory regime following bankruptcy does not determine or reorder priorities among creditors, but rather values accurately the assets available for distribution. The value of the debtor’s estate must take into account the end of life obligations associated with the licences that form a part of that estate. If this means that, in the end, there is less value available for distribution to the creditors, that is part of the bankruptcy scheme and the risk that the creditor takes when lending on the basis of the debtor’s assets, with their associated obligations. [emphasis added]
We'll have to see whether this case goes to the Supreme Court for a further review.

Read the decision at: Orphan Well Association v Grant Thornton Limited.

Tuesday, April 25, 2017

Court grants injunction to Enbridge over interference with maintenance digs

Back in March, 2017, Enbridge Pipelines Inc. ("Enbridge") was in court seeking injunctions against two individuals to prohibit them from interfering with maintenance work being conducted on Lines 10 and 11, two adjacent oil pipelines near Hamilton, Ontario.  Enbridge asserted that the individuals had been regularly interfering with its work crews since January, 2017, including the tearing down of snow fences and gates and verbally demanding that work be shut down.  Enbridge also alleged that, after two weeks of obstruction, the individuals placed rabbit traps to obstruct access to the dig sites and then asserted treaty hunting rights.

In their defence, the individuals involved in the case alleged that they are Haudenosaunee citizens with the ability to exercise rights upon Haudenosaunee traditional treaty territory.  They served Notices of Constitutional Question stating their intention to question the constitutional validity of the following: 1) the Trespass to Property Act as it may apply to a Haudenosaunee person undertaking harvesting activity pursuant to treaty rights; 2) any interim or interlocutory injunction which would directly or indirectly impair, infringe and/or interfere with the exercise of treaty rights where the Crown has not discharged its obligations to uphold the Honour of the Crown (duty to consult and accommodate); and, 3) the granting of any easement (i.e. Enbridge's pipeline easements) where treaty rights would be impaired, infringed and/or interfered with where the Crown has not discharged its obligation to uphold the Honour of the Crown (duty to consult and accommodate).

Justice Broad of the Ontario Superior Court of Justice reviewed the constitutional arguments and concluded that, "the question of whether the Crown has made efforts to comply with its duty to consult and accommodate is not relevant to the exercise of the court's decision to deny an injunction sought by a private party such as Enbridge with an interest in land on discretionary grounds."  Also, Justice Broad noted, "The defendants have been unable to point to any cases where a precondition involving the exhaustion of efforts to consult and find negotiated or legislated resolutions has been recognized or applied where an injunction is sought at the instance of a private property owner where aboriginal treaty rights are claimed or exercised."

Having disposed of the constitutional issues, Justice Broad reviewed Enbridge's request for injunctive relief on the basis of the standard three-part test for injunctions:

1)      the plaintiff must establish a serious question to be tried;
2)      the plaintiff must show that it will suffer irreparable harm if the injunction is not granted; and
3)      the balance of convenience favours the granting of an injunction. This involves a consideration of which party will suffer greater harm if the injunction is granted or refused.
Justice Broad ruled in favour of Enbridge on all three parts of the test.  With respect to the defendants' treaty right claims, he concluded: "The defendants' claim to relevant interests or rights may be advanced by appropriate parties or groups having the requisite standing through lawful avenues.  The defendants' resort to unlawful self-help should not, however, be countenanced ...".

Read the decision at: Enbridge Pipelines Inc. v. Williams et al.

Friday, April 21, 2017

Bachelor farmer dies in accident in 2009 - Court tasked with interpreting holographic will from 1992

Farmer P was 60 years old when he died in an accident on his Saskatchewan farm in March, 2009.  He had no spouse and no children, and was survived by his 95-year old mother, a brother and sister-in-law, and a sister.  After P's death, his family discovered that he had made a holographic will in 1992 that provided as follows:


Last Will and Testament of [P]
I leave all my farming assets to [my brother and sister-in-law].
I leave 50% of my personal assets to [my brother and sister-in-law].
I leave 50% of my personal assets to my sister [K].
All household personal assets (those that Mom can use) I leave to [my mother].

A holographic will is one that is made entirely by the testator's own handwriting, without formality, and without the presence, attestation or signature of a witness (e.g. the mythic will written on a napkin).

For almost 8 years after P's death, his siblings were engaged in acrimonious disputes about the administration of P's estate and their entitlement to his assets.  The assets included farmland, farm equipment, grain and inputs inventories, etc.  The debts owing by P's estate included substantial income tax owing, a tractor loan, a mortgage, etc.  The questions left by the holographic will included which assets were farm assets and which assets were personal assets, and which debts were to be paid by the Estate and which debts were to be paid by individual beneficiaries.  In January, 2017, Justice Ball of the Court of Queen's Bench in Saskatchewan issued a decision in which he wrote: "Hopefully, this decision will do something to bring an end to the litigation."

Justice Ball noted that, "The court's only objective in interpreting a will is to ascertain and give effect to the intention of the testator, as expressed by the language of the will, at the time the will was executed."  After reviewing the law applicable to the interpretation of wills, Justice Ball then reviewed the evidence about the information known by P at the time he made his will in 1992 that provides the context for the will.  Having reviewed the context, Justice Ball concluded, among other things, that "farming assets" included all farmland, farm implements and inventory, and unsold grain on hand; "Personal assets" included all household effects in P's home, personal motor vehicles, and personal bank account balances.

At the end of the decision, there were still some assets that could not be assigned to a specific category based on the evidence before the Court.  These assets included surface lease annual payments and farm subsidies or other government payments.  Further evidence would need to be filed with the Court before any decision could be made on those assets.

As with most estate law cases involving farms, the lesson to be drawn from this case is that it pays to have a clear and fully-documented succession plan in place as soon as possible.  Farmer P did have a will at the time of his fatal accident, but that will was not sufficiently instructive to his family to avoid nearly a decade of litigation.

Read the decision at: Ellingson v Ellingson Estate.

Tuesday, April 18, 2017

Court of Appeal confirms inconsistent use requirement for adverse possession in Ontario

In a recent post, I wrote about a B.C. adverse possession case that made it all the way to the Supreme Court of Canada - Nelson v. Mowatt.  The Ontario Court of Appeal has now released a decision in which it comments on the Mowatt decision and the question of whether an Ontario adverse possession claimant must satisfy the "inconsistent use requirement" (by demonstrating that his or her use of disputed lands was inconsistent with the intended use of the "true owner").  Here is what the Court says:
A note on Mowatt
[29]      After this appeal was heard, the Supreme Court released Mowatt, a decision concerning the law of adverse possession in British Columbia. We refer to Mowatt in para. 20, above. In Mowatt, the Supreme Court also noted, citing Masidon and other cases, that the inconsistent use requirement appears in the jurisprudence of Ontario.  It held that the law of British Columbia governing adverse possession does not require a claimant to demonstrate that his or her use of disputed lands was inconsistent with the intended use of the “true owner”. At para. 27, Brown J., for the court, wrote: “Whether the requirement is properly applicable in other provinces remains an open question subject to examination of their respective legislative histories, the wording of their particular limitation statutes, and the treatment of these matters by the courts of those provinces.”  
[30]      In supplemental submissions following the release of Mowatt, the appellants effectively urge this panel to overrule Masidon and eliminate the inconsistent use requirement in Ontario, without regard to whether there is mutual or unilateral mistake.  However, this panel is not in a position to overrule Masidon.
So, it seems that the question left open by the Supreme Court has (relatively) quickly been answered by the Ontario Court of Appeal: inconsistent use remains a requirement of the law of adverse possession in Ontario (see Masidon Investments Ltd. v. Ham).

Read the Ontario Court of Appeal's decision at: Sipsas v. 1299781 Ontario Inc.

Friday, March 31, 2017

Road Access Act saves landlocked neighbour from conviction on trespassing charge

Landowner W was charged with trespass, a provincial offence under the Trespass to Property Act, after he used a road he had constructed through a neighbour's property to reach his own landlocked property.  In her decision acquitting W of the charge, Justice of the Peace MacKinnon described the properties involved as follows:
This case involves three parcels of land, two of which front on Highway 609. Highway 609 is a two lane secondary highway in a rural area of Northwestern Ontario and runs in an east-west configuration.
On the south side of Highway 609 there is a parcel of land belonging to [M]. The west side of the [M] property fronts on the Wabigoon River. To the east of the [M] property is property belonging to [B] which is the North part of Lot 5, Concession 5. Its north boundary is Hwy 609, and its south boundary is on the north side of the defendant’s ([W]’s) property.
The defendant’s property is to the south of both the [M] and [B] properties. Its western boundary includes grasslands and the shore of the Wabigoon River. North is the [B] property and east is another property.
It is not disputed that the defendant purchased his lot as a landlocked property. He arranged for an easement over the [M] property from Highway 609, and received authority from the province for an entrance from the highway. He built a road south from Highway 609 through the [M] property but eventually turned southeast onto the [B] property and crossed it to his lot. [emphasis added]
A dispute arose surrounding the portion of this road on the [B] property.
At trial, W admitted that he had purchased his landlocked property as having water access only; it was his intention to purchase access from his neighbours (which he did from neighbour M, but not neighbour B).

The fact that W had constructed a road in part on lands owned by B and the fact that W had used that road were not in dispute.  What was at issue in the trial was whether W had a right or authority conferred by law which allowed W to go on the road through B's property.

Justice of the Peace MacKinnon examined whether W had a right or authority based upon the Road Access Act.  She noted:
The Act sets out strict prohibitions against landowners taking matters into their own hands and blocking or obstructing access roads, and requires an application to a Superior Court judge for an order closing the road. Landowners may only block a road when there is an alternate route for the landlocked owner to access their land. Such alternate routes must be in existence contemporaneously. A charge against a landowner who violates the Act, is a provincial offences matter with fines of up to $5,000 (s.61 POA).
MacKinnon, J.P. then found that W's road through B's property was a "road" for the purposes of the Road Access Act, meaning that W had a legal authority to use the road at the time for which he was accused of having trespassed.  The road was not owned by a municipality or dedicated as a public highway.  The road served as an access to landlocked property.  W had a "limited and temporary statutory right to use the road".  In fact, MacKinnon J.P.'s decision says that until such time as a closing order is obtained by B from the Superior Court as required by the Road Access Act, W would not be a trespasser on the road.

On top of the prosecution for trespass, W also faced (or faces) a civil claim from B related to the road through B's property.  It would be interesting to know how the decision to dismiss the trespass charge will affect the civil proceeding.  Was it correct to find that W could establish a right to trespass on B's property by building his own road, even after he had asked for and was denied permission to do so? The Road Access Act may protect use of existing roads, but does it effectively empower a landlocked landowner to use a new road as long as that landowner can manage to get the road built on the neighbour's lands?  And will the court hearing the civil claim be bound by the ruling made by the Justice of the Peace in the trespass case, even if it is incorrect?

Read the decision at: R. v. Weber.

Thursday, March 30, 2017

Normal Farm Practices Protection Board examines tree clearing as a normal farm practice

Pursuant to Section 6 of the Farming and Food Protection Act (the "Act") in Ontario, municipal by-laws do not to apply to restrict a normal farm practice carried on as part of an agricultural operation.  Farmers or other persons wanting to engage in a normal farm practice (that is part of an agricultural operation) can apply to the Normal Farm Practices Protection Board (the "Board") for a determination as to whether a specific practice is a "normal farm practice" for the purposes of Section 6.  If the Board makes a determination that a specific practice is a "normal farm practice", then the municipal by-law in question, by operation of the Act, would not restrict the practice.

Recently the Board heard an application by landowners in the County of Norfolk who contended that the removal of trees from an irregularly shaped bush to "straighten up a field" was a normal farm practice.  On that basis, the landowners argued that the County of Norfolk's Forest Conservation By-Law did not apply to restrict the removal of trees for that purpose.

The County disagreed.  The County had already issued a stop work order to the landowners previously when a portion of the bush on their property was removed in 2013.  It advised the landowners at that time that, in the future, an application for a permit would be required for any future removal.  Late in 2015, a complaint was received about further removal of trees and a second stop work order was issued to the landowners.  The landowners appealed that stop work order to the By-law Appeals Committee for the County, but were unsuccessful.

The Board determined that, in this case, the tree clearing activities proposed by the landowners did not constitute a "normal farm practice".  The landowners did not call expert evidence on the question of whether tree removal to straighten a field is a normal farm practice.  They did not call evidence from any other agricultural operators to demonstrate that similar tree removal had been done under similar circumstances.  Absent evidence to support the notion that the tree removal was a "normal farm practice", the Board found that the landowners failed to prove on a balance of probabilities that it was a "normal farm practice".

Also, the Board went on to find that, in any event, the landowners' tree removal would not have been a "normal farm practice" because they had cleared more trees than "would be reasonably expected to be necessary to straighten a field line and, in fact, it amounts to an attempt to clear cut a portion of the bush."  And further, the Board noted as an aside (obiter dicta) that the County's tree by-law does not actually restrict a "normal farm practice" to the extent that straightening a field is a normal farm practice.  The Board referred to the fact that the by-law provides for a permit process and that the requirement of a permit, the application fee and any condition of reforestation or payment in lieu "are reasonable and would not be restrictive."

On that point, it is worth noting the following evidence given by the County's By-Law officer at the Board hearing:

Mr. [B]’s evidence was that Mr. and Mrs. [M] would have required a permit under Section 4 of the by-law in order to authorize the tree removal that they had done and wished to continue, that approximately 80% of exemption permits are supplied with respect to agricultural operations and that he has not seen any denied when they went to Council.

The present application fee for a permit for a Council Exemption is $255.00.  The permit may come with conditions requiring reforestation or a fee payable to the Municipality in lieu of reforestation in the approximate amount of $1,900.00 per acre.  These monies are placed in a separate fund and are used for reforestation elsewhere in the County. [emphasis added]

Landowners who intend to remove trees from woodlot and woodland areas need to be aware of any applicable municipal tree by-laws or other regulations.  While compliance with by-law or regulatory requirements may seem a nuisance to farmers and landowners who have no intention of clear-cutting bush and only want to "straighten up a field", the price of obtaining necessary permits is often much less expensive than the consequences of non-compliance.  Although the Board's decision does not indicate that any prosecution was launched against the landowners, failure to comply with tree by-laws may result in the laying of charges and, in the case of a conviction, in greater restrictions on future tree removal than would have been applicable in the first place.

Read the decision at: Meijaard v Corporation of Norfolk County.

Wednesday, March 22, 2017

Neighbour loses claim for damages from biosolid application on field next door

The Plaintiff in this case sued her neighbour over concerns that her well water had been contaminated by the agricultural field application of municipal sewage waste or biosolids.  The neighbour actually leased the land to a farm operation, so he commenced third party claims against both his tenant (the farm operation) and the company that applied the biosolids.  The Plaintiff's claims were based on nuisance and negligence.

Justice Heeney of the Ontario Superior Court of Justice dismissed the Plaintiff's claim on the basis that the application of biosolids did not cause the Plaintiff's well to become contaminated.  Put another way, the Plaintiff failed to prove, on a balance of probabilities, that the application of the biosolids caused contamination of the well.  In his decision, it was not necessary for Justice Heeney to address the question of who might be liable for what.

Evidence in this case was heard over 6 days of trial, and included testimony concerning the application of the biosolids.  The application project had been approved by the Ministry of the Environment ("MOECC") following extensive soil testing and other measures.  The biosolids were to be applied to 90 acres of wheat stubble.  The Plaintiff had a 14-foot dug well just a few feet north of the southerly boundary of her property, in close proximity to the neighbouring field.  On the day that the biosolid application commenced, the Plaintiff said water from her shower was "brown and stinky", and smelled like "vomit material".

The Plaintiff's water was tested following the application of the biosolids.  There was some detection of coliform, but there had been positive readings of coliform in the well water prior to the biosolid application project.  No e.coli was detected.  The absence of e.coli in the water was, in Justice Heeney's opinion, the single most significant fact in the case.  There was opinion evidence that, if biosolids had entered the well, there would have been a very high level of e.coli in the water that would have been detectable when the water was tested.  E.coli is specifically used in water testing as "being the most accurate indicator of fecal contamination - sewage or fecal contamination".  Justice Heeney concluded that the biosolid application did not contaminate the Plaintiff's well.

Read the decision at: Marshall v. Shaw.

Wednesday, March 8, 2017

Supreme Court of Canada discusses the law of adverse possession in recent case

Property law cases do not often reach the Supreme Court of Canada, but a recent adverse possession case out of British Columbia did make it to Canada's highest court.   While certain aspects of the decision are limited in application to British Columbia, the Supreme Court does review the law of adverse possession generally in its reasons.

The Claimants in the case in question claimed title to a parcel of land in Nelson, BC that is adjacent to a separate parcel they purchased in 1992.  The registered owner of the disputed parcel was the provincial Crown.  The Claimants alleged that they and their predecessors in title had continuously possessed the disputed parcel since the early 20th century and, therefore, that ownership had transferred to them by the passage of time.  The Claimants commenced an action for a declaration that the provincial Crown was not the owner of the parcel (and could not transfer it to the City of Nelson), and also brought a petition for judicial investigation of their title under the BC Land Title Inquiry Act.

The headnote from the Supreme Court's decision describes the law of adverse possession as follows: 
"Adverse possession is a longstanding common law device by which the right of the prior possessor of land, typically the holder of registered title, may be displaced by a trespasser whose possession of the land goes unchallenged for a prescribed period of time. To meet the test of establishing adverse possession, the act of possession must be open and notorious, adverse, exclusive, peaceful, actual and continuous. The adverse possessor who successfully obtains title need not always be the same person whose adverse possession triggered the running of the limitation period."

At first instance, the judge hearing the matter granted a summary dismissal application by the City of Nelson, having found that there was an evidentiary gap with respect to the question of continuous possession.  A claim for adverse possession of someone else's property must rest on possession of land by a claimant for a specified period of time that open and notorious, adverse (vis-a-vis the registered owner), exclusive, peaceful, actual and continuous.  The judge at first instance found that there was an interruption in continuity of adverse possession from 1916-1920, resulting in the dismissal of the claim.  The Court of Appeal for BC reversed the decision to dismiss the claim, finding that there was evidence of continuous adverse possession from 1909-1923.  On that basis, the Court of Appeal remitted the matter back to the BC Supreme Court for final determination of the proceedings.

On further appeal, the Supreme Court of Canada reversed the Court of Appeal decision and restored the dismissal of the adverse possession claim made by the judge at first instance.  The Supreme Court found that the original finding of an evidentiary gap could not be set aside by the Court of Appeal based on the evidence.  While the Court of Appeal's finding that there was continuous adverse possession from 1909-1923 was reasonable, the Supreme Court found that the original judge's finding of the gap from 1916-1920 was not open to second-guessing by the Court of Appeal.  Absent a palpable and overriding error, the factual findings of the original judge hearing the matter could not be disturbed.

In this particular case, the time period in the between 1909 and 1923 was important because the claimants had to prove continuous adverse possession of the land either for a period of 20 years leading up to 1930-31 (the date at which the disputed parcel was escheated to the Crown because the company that was at the time the registered owner was dissolved) or for a period of 60 years leading up to the 1970s (when the law in BC was changed to prevent adverse possession going forward).  The onus was on the Claimants to prove continuous adverse possession during the relevant periods, and any gap in the evidence would be fatal to the claim.  A gap was found and the claim failed.

In its reasons, the Supreme Court of Canada also addressed the issue of inconsistent use.  At Common Law, there has been a requirement that a possessor's use of the disputed land must have been inconsistent with the "true owner's" present or future enjoyment of the land.  To be truly adverse, the possession must "entail a use of the property that is inconsistent with the true owner's intended use of the land."  However, while that inconsistent use requirement has appeared in the jurisprudence in Ontario, it has formed no part of the law in British Columbia.

The Supreme Court also commented on the distinction between "continuous possession" and "continuous occupation".  The Claimants suggested that the judge at first instance had erred in finding the evidentiary gap by confusing possession and occupation.  They argued that proof of continuous occupation of land is not required to prove continuous possession of land.  The Supreme Court acknowledged that "possession" does not require continuous occupation - a person may possess land in a manner sufficient to support a claim to title of the land while choosing to use the land intermittently or sporadically.  However, the Supreme Court found that the apparently interchangeable use of the terms "possession" and "occupation" by the judge at first instance did not change the outcome of the case.  The only evidence of "possession" before the judge was "occupation" (no form of possession less than that was posited to the judge).

Read the decision at: Nelson (City) v. Mowatt.

Thursday, March 2, 2017

Court of Appeal overturns summary judgment, allows historical contamination claim to proceed

D Corp. owned a property that was used as a gas station until 2004.  C Ltd. purchased a nearby property on April 10, 2012 and, on April 28, 2014, commenced an action against D Corp. and the former owners of D Corp.'s property for damages resulting from hydrocarbon contamination.  The contamination was alleged to have migrated from D Corp.'s property to C Ltd.'s property.

After the exchange of pleadings (the Statement of Claim and Statements of Defence by the parties), the Defendants moved for summary judgment to dismiss C Ltd.'s claim on the basis that the applicable limitation period had expired.  They asserted that C Ltd.'s claim had been discovered more than 2 years prior to the commencement of its action.  The judge hearing the motion granted the dismissal, finding that C Ltd. had become aware of sufficient material facts by March 9, 2012.  Alternatively, the motion judge held that C Ltd. had a sufficient basis for an action by March 30, 2012 when soil and groundwater sampling results were made available to C Ltd.  In the further alternative, the motion judge found that, even if C Ltd. did not know about drilling results showing contamination until May, 2012 (i.e. within 2 years of the commencement of the action), C Ltd. should have known of its claim but did not exercise due diligence.

Also, the motion judge rejected C Ltd.'s suggestion that there was a continuing tort that suspended the operation of the limitation period.  The judge saw no evidence that there was ongoing damage or nuisance.  Where there is such ongoing damage or nuisance, the limitation period will not act to bar a claim entirely since the tort (the wrong being done by the party causing the contamination) is ongoing.  The limitation period might still act, though, to limit how far back the claimant's damages claim can extend (i.e. the damages might still be limited to those sustained no more than 2 years before the commencement of the action).

The Court of Appeal reversed the dismissal of the action.  It found that the motion judge was wrong to find that C Ltd. knew or ought to have known of its claim for contamination damages more than 2 years prior to commencing the action.  First, C Ltd.'s knowledge of potential contamination or its suspicion (based on a Phase I ESA) should not have been equated with actual knowledge that its property was contaminated.  Second, the Court of Appeal found that the motion judge improperly ignored relevant circumstances surrounding C Ltd.'s purchase of its property (which was part of a multi-property purchase involving 22 properties).  The Court found that once C Ltd. had waived its conditions on the purchase, it was not reasonable to expect C Ltd. to have sought out information about potential contamination (the test results it obtained in May, 2012); by that point, C Ltd. was bound to complete the purchase of the property.

In making its decision, the Court of Appeal did not rule on C Ltd.'s continuing tort argument.

Read the decision at: Crombie Property Holdings Limited v. McColl-Frontenac Inc. (Texaco Canada Limited).

Wednesday, February 22, 2017

BC Court of Appeal rules surveyor hired by one neighbour didn't owe duty of care to other neighbour

If a surveyor hired by one property owner in a boundary dispute gets it wrong, does the neighbouring owner have a claim in negligence against that surveyor?

In 2002, Owner B purchased a property and was aware that a fence at the back of the property might not align with the actual boundary line.  In 2007, Owners K bought the property directly behind B's property.  The Ks disputed the location of the fence, arguing that it was 12 feet inside their property line.  The Ks had hired a surveyor.  He'd already surveyed the property in 1990 and surveyed it again in 2007.  In both surveys, he found that the fence was 12 feet inside the property line.

In 2008, under cover of darkness, Mr. K tore down the fence.  B immediately commenced an action in trespass against the Ks.  Following a summary trial, the B.C. Supreme Court found that the Ks' surveyor was correct (that the fence was within the Ks property) and dismissed the trespass claim.  However, that decision was overturned on appeal.  A second trial took place and the Supreme Court this time ruled in favour of B.  The Court concluded that the Ks' surveyor was not correct and that the boundary was actually in the location of the fence.  That decision was upheld on appeal.

As is usually the case, B was awarded part of her costs payable by the Ks, leaving her out of pocket the difference between the costs awarded and her actual legal costs.  So B commenced an action against the Ks' surveyor, arguing that his errors resulted in her financial loss.  In response to B's action, the surveyor made an application to strike the claim on the basis that B had no cause of action against the surveyor.  That application was dismissed by the Supreme Court and the case ended up again before the Court of Appeal.

The Court of Appeal reversed the lower court decision and allowed the surveyor's application to strike B's claim on the basis that it failed to disclose a reasonable cause of action.  In summary, the Court wrote: "[B]'s pleading is fundamentally flawed. It fails to advance facts that reveal the necessary relational proximity to establish a duty of care. It does not allege that she had direct dealings with [the surveyor] or relied on his representations. Nor does it set out facts that would reasonably support a conclusion that [the surveyor] inferentially assumed responsibility for her beneficial interests. [B]’s claim must therefore be struck."

To recover damages in a negligence claim, it's not only necessary for the claimant to prove that the defendant (in this case, the surveyor) fell below the required standard of care and was negligent, but the claimant must also show that there was a relationship between the claimant and the defendant that created a "duty of care".  Making a mistake doesn't mean that someone will be liable to everyone in the world for any sort of loss that might somehow result from the mistake.  In this case, B had not hired the surveyor.  The Ks hired the surveyor in the context of an adversarial dispute with B, and the Court found that the surveyor did not assume responsibility for B's interests and did not owe her a duty of care.  

Read the decision at: Burke v. Watson & Barnard (A Firm).