A farmer, a logging road and economic duress

The British Columbia Supreme Court has just decided an interesting case involving a defence of "economic duress".  A B.C. farmer held permits for a road across Crown land allowing him access to his farm.  The road extended across his farm, and in exchange for the Crown permits, he granted the government a right-of-way across his farm.  A logging company with harvesting rights in the area required access to the road and approached the farmer about a road access agreement.  The two sides could not reach a deal, but the logging company was making use of the road.  That is, until the farmer parked an excavating machine across the road to block access.

Following this move, negotiations continued and a contract was ultimately signed.  On this basis, the farmer allowed access to resume.  However, the logging company refused to pay on the contract and the farmer sued for breach of contract.  The logging company argued in its defence that the contract signed with the farmer was signed under "economic duress".  The B.C. Supreme Court notes some of the history of the defence:

Early this century the law recognized that improper payments made involuntarily, for the purpose of avoiding some threatened action, were not voluntary payments but were payments made preserving the right to dispute the legality of the demand. Such payments were made under the compulsion of urgent and pressing necessity, analogous to duress. Maskell v. Horner (1915), 84 L.J.K.B. 1752, [1915] 3 K.B. 106 .

The Court also cites a test for economic duress:

There is no issue between the parties as to the law which applies to a claim of economic duress. The concept is discussed in the case of Gordon v. Roebuck reflex, (1993), 9 O.R. (3d) 1 (Ont. C.A.). At para. 3 of the Reasons of McKinlay J.A., it is stated:

To succeed on the ground of economic duress, the plaintiff must prove that his will was coerced and the pressure exerted to do that was not legitimate. Lord Scarman [in Pao On v. Law Yiu, [1979] 3 All E.R. 65 at 78] has set out four factors to consider in determining if a party's will has been coerced. They are:

1) Did he protest?

2) Was there an alternative course open to him?

3) Was he independently advised?

4) After entering the contract did he take steps to avoid it?

In the B.C. case, the Court found that economic duress was not made out.  The logging company signed the contract and resumed use of the road knowing that the farmer's belief was that it would pay the amount owed under the contract.  It continued to use the road, but did not move to resolve the dispute it had with the landowner over the rate to be paid.  Under those circumstances, the logging company could not avoid the contract by pleading economic duress.

Read the decision at: Schneider v. Mid Mountain Ventures Ltd.

Berendsen seeking leave to appeal to Supreme Court of Canada

In January, I reported on a decision by the Ontario Court of Appeal overturning a decision in favour of a farm family worth over $2.3 million.  At issue in the case was whether the Ontario government was liable for damages resulting from its deposit of asphalt on a dairy farm in the 1960's during highway construction.  The Court of Appeal ruled that the damages alleged were not reasonably foreseeable and were not recoverable.  My original post is at: Berendsen decision overturned by Ontario Court of Appeal.

The Berendsens are now seeking leave to appeal this decision to the Supreme Court of Canada.  Reply submissions were filed on March 8, so the next step will be the Supreme Court's decision on whether or not to allow the appeal to be heard. 

Lake Huron Water Pipeline Rupture Video available

Go to the following link to see video posted by the London Free Press from the "clean up" of the rupture on the Lake Huron to London water pipeline - LFP Video.  Photos can be viewed at : LFP Photos.  At least it's water and not oil.

When the landowner affected visited the site this afternoon, he was ordered off site by the Ministry of Labour.  Work being undertaken included "stripping" the topsoil. 

Water emergency as pipeline breaks - Londoners asked to use less for at least one day

THE LONDON FREE PRESS IS REPORTING:

Londoners are being urged to reduce their water consumption for at least a day while engineers struggle to fix a huge break in the pipeline that supplies drinking water to most of London and Huron and Middlesex counties.
More than 350,000 people in a host of communities are served by that pipeline, which broke at about 2 a.m. this morning near Mount Carmel, in western Huron County.

Water from the pipeline break has formed about a five-acre lake in a farmer's field near Mount Carmel and is flowing across Blackbush Line road north of Mount Carmel.

The road has been closed as work crews survey the site of the rupture in the farm field.

Rick Grenier, a City of London supervisor on the scene, said crews are now isolating the line, shutting valves on either side so workers can move in.

Grenier estimated they might have to excavate as much as three metres of soil to repair the line.

If it is a single section that has ruptured, repairs could be completed this evening, he said. The line would have to be disinfected before it was put back in operation.

The early impact of the break:

-- A precautionary boil-water advisory is out for communities from Grand Bend to Crediton. The precaution is based on low water pressure rather than unclean water samples, said Barbara Leavitt, spokesperson for the Huron County board of health. Some customers, she said, have reported having no water at all.  They include customers in Ailsa Craig and some areas north of Parkhill.

— Also included in the appeal to cut consumption are the municipalities of Bluewater, South Huron, Lambton Shores, Lucan Biddulph, North Middlesex (all North Middlesex Customers on the municipal system are out), Middlesex Centre, and Strathroy Caradoc.

- Four schools in Middlesex are closed because of low water pressure: McGillivray, East Williams, Parkhill West Williams and North Middlesex High School. Thames Valley District school board spokesman Richard Hoffman said if any child is already at the school and parents can't be reached, the child will be kept at school.
Andrew Henry, who is in charge of managing the Lake Huron water supply, said it will take 24- 36 hours to repair the break. "People should prepare for at least one day," he said. "We're still asking for everyone to conserve water," he said.

The Lake Huron pipeline serves a population of about 350,000 people.

It has the capacity to treat 340 million litres of water a day — the equivalent of more than two million showers.

Henry said the reservoirs are being kept as full as possible and London's drinking water is now coming from the Elgin pipeline, from Lake Erie.

Henry speculated that high water pressure and the age of the pipeline – it's 45 years old — were factors in the break.

North Middlesex Mayor Mayor Wes Hodgson said he is “pissed off” because officials have been talking about twinning the line for years and nothing’s been done.

“If London had got off its ass and so had OCWA (Ontario Clean Water Association) we wouldn’t have had this problem,” he said. “Somebody’s got to get going on this because it’s critical.”

Parkhill has about four or five hours of water left in its reservoir, he said. Ailsa Craig’s water is shut down entirely.  Hodgson said a lot of livestock and poultry farms in North Middlesex are hooked into the water system and are now shut down. Those farms with tanker trucks and urgent need can truck clean water in from Grand Bend, he said.

Strathroy has a 50-hour supply of water in its reservoir, said Strathroy-Caradoc Mayor Mel Veale.  "I made it clear this morning, even if we have water for 2 and a half days, we need to conserve water today," he said.
"Bottom line is we're going to conserve water as best we can."

Veale said a rupture and loss of service is "one of the risks you take" when you move from municipal wells to a pipeline.

Ironically, an environmental assessment — the first stage of a watermain replacement - was just about to begin because of concerns about the age of the pipe, Henry said. "Unfortunately, it broke before we could do it," Henry said.

Crews are now building a temporary road through the farmer's field to the huge pond that has been created by the break of the high-pressure, 48-inch pipeline. "There's a lot of water (there)," Henry said.

Farmers who rely on the pipeline to feed their livestock are scrambling now to find alternate sources.

Van Osch Farms, an 8,000-head beef operation just south of the line break at Mt. Carmel, went to a system of drilled wells two years ago, said co-owner Fred Van Osch.  Even so, one barn of 500 cattle is on lake water only and operators are looking at a contingency plan that would truck water into that barn by tanker. One head of cattle can drink as much as 20 gallons (90 litres) per day, he said.

For the duration, residents with municipal water all along the pipeline are being asked to:
- Limit or postpone indoor residential use of water and consider using dishwashers and clothes washers after the emergency period has ended.
- Take a brief shower rather than a bath, or consider delaying until after the emergency period has ended.
- Reduce toilet flushing as much as possible. Consider flushing the toilet every second use.
- Suspend unnecessary use of water for industrial or commercial establishments, as well as construction sites, such as washing operations.


Check back for updates http://www.lfpress.com/.

E-mail john.miner@sunmedia.ca, or follow http://twitter.com/Johnatlfpress on Twitter.
E-mail deb.vanbrenk@sunmedia.ca, or follow Debatlfpress on Twitter.

Deal struck to build $345M wind farm

CBC News - Manitoba - Deal struck to build $345M wind farm

Construction on the 138-megawatt wind project — the second major one in the province — will begin immediately, Premier Greg Selinger announced Monday.  The project's go-ahead was made possible because of a 27-year power purchase deal between Manitoba Hydro and San Francisco-based Pattern Energy Group.  Pattern will invest $95 million and Manitoba Hydro will loan the company up to $260 million to be repaid over 20 years.

Last September, The Winnipeg Free Press reported on the transfer of the project from Babcock & Brown, a failing Australian investment company, to a new entity called Pattern Energy: Wind farm out of breath.  The paper provided the following information about the project's specifications at the time (note the significant difference in the proposed size of the project):

Canada's biggest wind farm?


Location: Southern Manitoba, between St. Joseph and Letellier

Size: 300 megawatts -- 100 megawatts more than the much-touted Wuskwatim dam

Cost: $800 million, at last count

Turbines: 130 turbines pumping 2.3 megawatts each

Scheduled completion date: 2011

Next biggest wind farm in Canada: Ontario's Wolfe Island farm, near Kingston. It's 197 megawatts

Challenger: Quebec, which has a 300-megawatt wind farm slated to open in 2012 or 2013

Read CBC's original November 2008 story about the project: Canada's largest wind farm to be set up in Southern Manitoba.

Texas towns sue over right to block gas pipeline expropriations

Noel Griese of Energy Pipeline News reports:

DALLAS, Texas - Two local municipalities are seeking to protect their right to block natural gas companies use of eminent domain (expropriation) to construct pipelines across public property in the Barnett Shale.  "This will be a landmark decision in Texas," said Tom Hayden, a member of the Flower Mound Town Council. "It will decide whether a municipality trumps a utility or vice versa."

Read the rest of his article at: Energy Pipeline News.

Sales barn operator convictions termed a ‘coincidence’

Better Farming reports:

The manager of regulatory compliance in the Ontario Ministry of Agriculture, Food and Rural Affairs denies that there has been a spate of fines against sales yard operators and calls it a “coincidence” that sales barn operators in New Liskeard and in Aylmer were convicted of similar offenses within a couple of weeks of each other.

“We don’t get a lot of incidents where they end up in court, that’s for sure,” Rodger Dunlop says.

On Feb. 25, Bill Stewart, manager of the Temiskaming Livestock Exchange was fined in the Ontario Court of Justice in Haileybury after pleading guilty to one count under the Livestock Community Sales Act and two counts under the Food Safety and Quality Act. The charges related to October and November 2009 incidences involving moving a sick or injured cow in an inhumane manner, failing to euthanize a fallen animal promptly and failing to dispose of other livestock within 48 hours of death.

Read the rest of the article at: Better Farming.  You can also find links to Better Farming headlines on the side bar of this blog.

NEB takes away Alberta landowner's contractual right to removal of pipeline

The National Energy Board ("NEB") has granted Nova Gas Transmission Ltd. ("NOVA") a Right of Entry order allowing it to continue the operation of its pipeline on lands owned by Albertan Randolph Hill.  Hill purchased the property from a railway company which had negotiated with NOVA and its predecessors a favourable agreement that allowed the company to require removal of the pipeline on notice.  NOVA went to court to argue that Hill was not assigned rights such as the right to require removal when he purchased the land, but the Court disagreed.  Hill issued the notice to NOVA, and NOVA went to the NEB to ask it to intervene and prevent Hill from exercising the contractual right to require removal.  Previously, the pipeline was regulated by the province of Alberta, but was recently transferred to NEB regulation by a decision of the NEB.

The terms of the Right of Entry order significantly expand NOVA's rights over the land beyond what had been agreed upon previously in contract.  This decision of the NEB confirms its willingness to override the terms of validly executed contracts between pipeline companies and landowners.  The interesting question arising out of the decision will be: what was the contract worth?  Mr. Hill is entitled to be compensated for the rights taken in the Right of Entry order.  What was his right to require removal of the pipeline worth?  What was his right to compensation under the contract worth?

Read the Board's decision and the RoE order at: NOVA Ferrier South Lateral.

Federal Government does away with Joint Review Panel for NEB Act projects

The National Energy Board has announced that it will be conducting all environmental assessments under the Canadian Environmental Assessment Act (CEAA) of projects that fall within its jurisdiction.  The federal government has ordered the move in an effort to streamline the oil and gas project approval process.  Previously, the government, on its own initative or in response to a request by the NEB, could order that a joint review panel be established to review certain projects.  The joint review panel would consist of persons who "are unbiased and free from any conflict of interest relative to the project and who have knowledge or experience relevant to the anticipated environmental effects of the project". 

What changes for landowners?  Not much.  In practice Joint Review Panels have consisted mainly of members of the NEB and have been appointed only in a very limited number of projects.  Limited funding for participation in the Joint Review Panel process has been available, and the NEB suggests that it will continue to be available, but gives few details:

A participant funding program is being established which will provide financial assistance to support the timely and meaningful engagement of Aboriginal groups, landowners, Environmental Non-Government Organisations, and other interested parties in the regulatory review processes for major projects. The NEB participant funding program is being modeled on the existing CEA Agency program. [emphasis added]

No funding is available for landowner participation in the Board's regulatory review process of projects that are deemed not to be "major".  For instance, for pipeline projects where less than 75 km of the proposed line is not adjacent to an existing utility corridor or road, the only way landowners can gain access to funding under CEAA is if the government (through request by the NEB) refers the project to a joint review panel.  Neither the NEB nor the government have been receptive to requests for referral and, not surprisingly, very few proposed projects end up with more than 75 km of "new" pipeline (even those where the total length of the project exceeds 1000 km). 

Read the NEB announcement at: NEB Environmental Assessment.

Saskatchewan father and son convicted of altering shoreline

Last week, the Provincial Court of Saskatchewan convicted a father and son of having "without a valid permit authorizing the activity" altered or caused to be altered "the configuration of the bed, bank or boundary of any river, stream, lake, creek or marsh or other watercourse or water body, contrary to s.361(1)(a) of The Environmental Management and Protection Act, 2002, S.S. 2003, c. E-10.21." 

The son, "Willy" Kozub, owns land at the west end of Round Lake.  His father was the previous owner of the property.  While the son was in Alberta during the winter of 2007-08, his father decided to "clean up" part of the shoreline on the property, which was being proposed for subdivision by the Kozubs.  The father removed large amounts of debris that had built up on the area with a skidsteer, but in the process of doing so, altered the shoreline. 

When the son returned to the property in the spring, he was upset to find what had occurred.  He was concerned that the work done on the property would upset neighbours and the Ministry of the Environment.  Kozub Jr. then went out and tried to put the shoreline back into the shape it had been before his father's intervention. 

Both father and son were charged and convicted for having altered the shoreline without permission from the Ministry of the Environment.  Once it was established that they had done the alterations without permission, a conviction was likely.  The offence under the Act is one of strict liability, which basically means that if the facts required for the offence are proven (i.e. that you did what was not supposed to be done), then you're guilty unless you have a defence of due diligence (you took all reasonable steps to avoid committing the offence or you believed in a mistaken set of facts which, if proven true, would render the act or omission innocent).

Read the decision at: R. v. Kozub.

Holland Marsh project most costly Drainage Act project in Ontario history

The Ontario Agriculture, Food and Rural Affairs Tribunal has, with minor changes, approved the Holland Marsh Drainage System Canal Improvement Project, the most expensive Drainage Act project in Ontario history.  The Tribunal described the project in its decision as follows:

The project started in 1997 when preliminary studies were done on improving the Holland Marsh Canal System which then culminated in a preliminary report in 2003 on repairing the dykes and canals of the Holland Marsh Canal System.

The final report on the project, which is the subject of this hearing, was commissioned in May 2003 and proposes the following work:

• improving 16.95 kilometres of canal by shifting the canal locations laterally;
• improving another 11.0 kilometres of canal with bottom cleanout and minor widening in some areas;
• 9.8 kilometres of graded berms beside dyke roads;
• repairing scattered lengths of dyke;
• addressing numerous irrigation inlets through the dykes that have service from the canals;
• addressing drain outlets and well overflow outlets that discharge to the canal;
• addressing 13 bridges that cross the canals;
• providing for minor works of buffer construction, lateral channels and drainage along canals roads; and
• providing for better and easier future maintenance of the canals.

The Report estimates that the total cost of the proposed repairs to the canals and dykes, inclusive of financing, engineering and administration to be $26,385,640.

Of the total cost of the project, the Engineer gave less than $500,000 in allowances to landowners for the taking of land and disturbance.  More than 7,000 properties were assessed for costs of the project, but only 12 appeals were made to the Tribunal claiming that assessments were too high or allowances were too low.  For areas outside the Holland Marsh itself (the appeals only related to this land), the Engineer allowed $10,000 per acre for standard cultivated agricultural land required for the project.  This gives some indication of the value of the land involved in the case.

Read the Tribunal's decision at: Holland Marsh Drainage System Canal Improvement Project.

B.C. farm defies court ruling on raw milk

CBC News - British Columbia - B.C. farm defies court ruling on raw milk

CBC News reports:

Members of a cow-sharing collective in B.C.'s Fraser Valley say they will continue distributing raw milk, despite a court ruling.  The Supreme Court of British Columbia ruled the Home on The Range co-op in Chilliwack is "willfully causing a health hazard" by supplying its members with unpasteurized milk. The collective was formed to get around a B.C. law prohibiting the sale of raw milk.  The 400 members own shares in 21 cows and pay the operator, Alice Jongerdon, to take care of them.  "The key point is that it's not in commerce. It's not for sale, it's never for sale," said co-op member Gordon Watson.  "Therefore we got around the idea in the Milk Industry Act [that] if milk is for sale in British Columbia, then the government has oversight over it. And so we just went ahead and took our property home and we paid Alice to look after the cows for us." 

However, the provincial government wants to stop the distribution, saying it's against the law and dangerous.  "[We have seen] many, many, many, many, many cases of diseases ranging from tuberculosis to Streptococcal poisoning to E. coli, et cetera, associated with the consumption of raw milk," said provincial health officer Dr. Perry Kendall.  But despite the risks of raw milk, Watson thinks the benefits are far greater. He said the pasteurization process kills vital enzymes in the milk.  Watson said he expects the court will order Jongerdon to stop distributing the milk. If that happens, Watson said he will take over distribution himself.

In her decision in the case, Madam Justice Gropper of the B.C. Supreme Court compared the Jongerden distribution set up to that of Michael Schmidt in Ontario, who was recently acquitted of charges under the Milk Act:

The respondents rely on Schmidt. In that case, the defendant, Michael Schmidt, a dairy farmer, was charged with 14 counts of possessing, distributing or selling milk and milk products which were not pasteurized or sterilized; two counts of operating a plant or distributing fluid milk products without a license under the Milk Act, R.S.O. 1990, c. M.12, and three counts of failing to obey a public health inspector’s order under the Health Protection and Promotion Act, R.S.O. 1990, c. H.7 [HPPA] by storing and displaying unpasteurized milk and milk products. He was acquitted of all charges.

The respondents assert that Schmidt ought to be binding on this court. They say that it stands for the proposition that cow share programs, where raw milk and raw milk products are available only to members of the cow share, are not embraced by s. 15 of the Public Health Act and s. 7 of the Transitional Regulation.
While the cow share program undertaken by Mr. Schmidt in Ontario is the same or similar to that undertaken by Ms. Jongerden in British Columbia, that is the only similarity to be found. The provisions of the Ontario Milk Act are not similar to the provisions of the B.C. Public Health Act.

There is no provision in British Columbia’s Public Health Act which creates a rebuttable presumption like that contained in s. 25 of the Ontario Milk Act. It is the view of Kowarsky J.P. that Mr. Schmidt had rebutted the presumption that his milk or milk products were related to marketing within Ontario, because his products were only available to members of the cow share. The Transitional Regulation, on the other hand, is quite clear that milk for human consumption which has not been pasteurized at a licensed dairy plant in accordance with the Milk Industry Act, is a health hazard.

The question of whether the milk or milk products are distributed to the public or to members of the cow share is of no relevance in British Columbia. Raw milk is deemed to be a health hazard by regulation, and s. 15 of the Public Health Act “prohibits a person from willingly causing a health hazard”.

Further, the B.C. legislation does not provide the court with the opportunity to consider whether or not raw milk is a health hazard. It does not require that samples of the raw milk be taken or tested or provided to the court. Raw milk is presumed to be a health hazard under s. 7 of the Transitional Regulation.

There is a further significant distinction between the matter before me and that before Kowarsky J.P. Mr. Schmidt was charged under the provisions of the Ontario HPPA and Milk Act and the crown was required to prove the charges beyond a reasonable doubt. The case at bar, however, is a civil matter where the petitioner seeks an injunction in relation to a breach of a statutory provision.

Based on the foregoing, I decline to follow the Schmidt decision of the Ontario Court of Justice, Provincial Offences Court.

Read the Court's decision at: Fraser Health Authority v. Jongerden.

Pipeline Saint-Laurent to go ahead between Quebec City and Montreal

Valero Energy Corporation (Ultramar) is planning to build a 100,000 barrel per day gasoline pipeline between its refinery outside Quebec City and a storage site in Montreal.  Construction is proposed for late-summer or early fall of this year.  The project received environmental approval from the Quebec government last October, but construction permits are still required from eight municipalities. 

There is some interesting information on the pipeline project website (Pipeline Saint-Laurent), including the following technical information:

TECHNICAL SPECIFICATIONS


•Total length of underground pipeline: approximately 240 km

•Maximum operating pressure: 10,200 kPa (1,480 pounds per square inch)

•External diameter of pipeline: 406.4 mm (16 inches)

•Minimum thickness of pipeline wall: 6.26 mm

•Permanent easement width: Ultramar favoured 18 metres, but this width must be increased to comply with the CPTAQ decision stipulating a deeper soil cover than what was originally proposed

•Width of temporary work area: ±10 additional metres in woodland areas and ±15 additional metres in cultivated land areas, when required, on either side of the permanent easement

•Minimum soil cover: The standard usage in the pipeline industry is 1.2 m in farmland areas and 0.9 m in woodland areas. However, under the decision delivered on June 25th, 2008, the CPTAQ requires a depth of 1.6 metres in farmland areas and 1.2 metres in woodland areas. In the event that the bedrock is encountered before these depths are reached, they could be revised respectively to 1.2 and 0.9 metres. This requirement by the CPTAQ will also have an impact on the width of the right-of-way and work areas during the construction phase.

•Number of pumping stations: 2 (with the first one located on the Lévis refinery site)

•Aboveground structures: ±20 block valves, 5 pigging stations

The CPTAQ, Quebec's agricultural land protection commission, is requiring the pipeline to be installed at depth of 1.6 metres or roughly 5 feet.  This is consistent with requirements in some U.S. jurisdictions and with other constructions that have taken place in Canada. 
Also of note is the agreement reached between Ultramar and the UPA (L'Union des producteurs agricoles, Quebec's farm industry organization), which is accessible in French at: October 2006 Agreement. 

Private Member's Bill targets GM crop danger to export markets

CBC News - Manitoba - Genetically modified flax target of bill

Federal NDP Agriculture Critic Alex Atamanenko has presented a private member's bill to Parliament that would tighten regulations surrounding the sale of genetically engineered seeds on the world market. If passed, the CFIA would be required to analyze the potential harm to export markets "before the sale of any new genetically engineered seed is permitted".  First reading of the bill took place on March 30, 2010, and debate on the bill is set for next Wednesday.

Read Bill C-474 at: An Act respecting the Seeds Regulations (analysis of potential harm).

Atamenenko earlier proposed a bill to ban the use of terminator seeds.  Bill C-353 bore the official name, "An Act to prohibit the release, sale, importation and use of seeds incorporating or altered by variety-genetic use restriction technologies (V-GURTs), also called “terminator technologies”, and to make a consequential amendment to another Act".

Read Bill C-353 at: Terminator Seeds Ban Act.

Court allowing negligent misrepresentation suit to proceed against Tobacco Marketing Board

An Ontario Superior Court Judge has dismissed most of the claims brought by tobacco growers against their marketing board, but is allowing a claim of negligent misrepresentation to proceed.  Justice Thomas Heeney found that the following claims related to the dismantlement of the tobacco industry in Ontario raised no reasonable cause of action (i.e. there is no legal basis for the claims):

• Refusal to share information: It was alleged that the Board was privy to information that it did not share with the producers that was critical to the survival of the industry.
• Negotiating an exit strategy: It was alleged that the Board shifted its emphasis from its duties as a regulator and marketer of tobacco to one that it is not authorized by statute to do: that is, to negotiate with the federal and provincial governments for a compensation package for tobacco producers that would result in tobacco production ceasing permanently in Ontario. This involved seeking compensation for the lost value of tobacco quota, lost income, lost property values and transitional assistance.
  
• Failure to properly negotiate annual crop sizes and to seek other markets: It was alleged that the Board called for an end to tobacco production in Ontario in 2006, and initially refused to negotiate the size of the 2006 crop. This had a negative effect on the actual crop size that was ultimately arrived at. In so doing, the Board acted negligently.
  
• Passing a regulation that prevented renting or share-growing quota: It was alleged that, in 2006, the Board wrongfully and without statutory authority passed a regulation which prevented the plaintiff from renting or share-growing its production quota if it sold the tobacco kilns located on its farm.
  

The one claim that did survive the motion to dismiss brought by the Marketing Board was related to a kiln conversion program.  In 2001, the manufactures told the producers, through the Board, that the burners in their tobacco kilns had to be converted from direct to indirect heat, to eliminate cancer-causing nitrosamines in the cured leaf.  This would involve an expenditure on the part of the producers of approximately $7,000 per kiln.  Producers were told by the Board that 25% of the kilns had to be converted in 2001 and the remainder in 2002. Producers were given three year projections in relation to crop size and, based upon this, the plaintiff made its business decision to make the required investment.  The Board neglected to get a signed commitment from the manufacturers in relation to crop size, with the result that they ended up being significantly less than the plaintiff had been led to believe, and insufficient to justify or pay for the cost of conversion.

Justice Heeney found that the Statement of Claim issued against the Marketing Board did disclose a cause of action for negligent misrepresentation and ruled that this part of the claim could proceed toward trial.  One important difference between the surviving claim and those that were dismissed was that the kiln conversion decision by the Board was an operational decision as opposed to a policy decision.  Government bodies cannot generally be held liable for bad policy, but they can be held liable for negligently putting the policy into action.


Read the decision at: Marlor Farms Inc. v. The Ontario Flue-Cured Tobacco Growers' Marketing Board.

De Facto Expropriation claim being advanced in B.C.

What is "de facto" expropriation?  Justice Cromwell (then of the Nova Scotia Court of Appeal, now a member of the Supreme Court of Canada) wrote in Attorney General of Nova Scotia v. Mariner Real Estate Limited et al. (1999) 177 D.L.R. (4th) 727 (N.S.C.A.) that:

While there is no magic formula for determining (or describing) the point at which regulation ends and taking begins … The question is whether the regulation is of 'sufficient severity to remove virtually all of the rights associated with the property holders interest'.

Normally, expropriation of property may only occur in accordance with expropriation legislation.  However, in some cases government action may effectively (or "de facto") result in a taking of property, which may entitle a property owner to compensation for the taking.  Justice Cromwell suggested that the government action must "remove virtually all of the rights of associated" with the owner's interest in the property.

In Morriss v. British Columbia, the plaintiff Morriss is advancing such a claim.  He alleges that he was deprived of mineral rights associated with a mine when the mine became part of a provincial park.  It remains to be seen whether the claim will be supportable either by the facts or the law.  As the B.C. Court of Appeal recently wrote:

In my opinion, there is no maintainable objection to the rest of the numbered paragraphs. I do not see allegations of wrongdoing by the Province in any of them. They are perhaps not as clear and articulate as they might have been, but I see them as doing nothing more than continuing the chronological narrative of facts that Mr. Morriss hopes will ultimately support his claim that there was a de facto expropriation by the Province of the mineral claims that he staked. Whether the factual allegations are supported by the evidence ultimately presented, and whether a claim of de facto expropriation exists in law, or on a proper application of the law in this case, are matters to be determined. [emphasis added]

 Read the Court of Appeal decision at: Morriss v. British Columbia.

National Energy Board signals that LMCI is the only place to deal with abandonment funding

The National Energy Board (NEB) has issued a letter regarding the Tolls and Tariffs application made by Enbridge Pipelines Inc. for its Line 9 pipeline (located in Ontario).  The application for approval of tolls was originally brought a few years ago by Enbridge, but was dropped when the NEB voiced its intention to deal with the issue of pipeline abandonment funding as part of its hearing.  Following that development, the NEB commenced its Land Matters Consultation Initiative (LMCI) which includes Stream 3 dealing with post-abandonment funding.

Recently, Enbridge has ressurrected its Line 9 tolls application and in a letter issued yesterday, the NEB has confirmed that it will not deal with the abandonment funding issue in its hearing of the application:

In its letter to Enbridge accompanying the Hearing Order, dated 29 January 2010, the Board noted that it would consider whether to add the issue of funding for abandonment after interventions were filed. The Board has now considered the matter and is of the view that funding for abandonment is being appropriately considered through the on-going process that was laid out in the LMCI Stream 3 (RH-2-2008) Reasons for Decision. Accordingly, the issue of funding for abandonment will not be included in the List of Issues to the RH-1-2010 proceeding.

As noted in yesterday's posts on this blog, landowner participation in the LMCI continues to be at the landowner's own expense (as would landowner participation in the Line 9 tolls hearing).

Read the Board's letter at: RH-1-2010 Hearing Location, List of Parties and List of Issues

NEB's February LMCI Action Reports Released - Still No Action on Costs Recovery

The National Energy Board (NEB) has released its February "progress" reports related to its Land Matters Consultation Initiative (LMCI).  No change is reported with respect to the issue of costs recovery for landowner participation in Board processes:

If NRCan decided to examine this policy area, the NEB would work with NRCan to assess, and if appropriate, implement any changes. Estimated timing to complete the Action: no date established.

Read the report related to "improving the accessibility of NEB processes" at: LMCI Stream 2 Actions Progress Report.

NEB Approves TransCanada Keystone XL Pipeline Project

Last Thursday, the National Energy Board (NEB) released its Reasons for Decision approving the application by TransCanada Keystone Pipeline GP Ltd. for the Keystone XL Pipeline Project.  Once constructed, the pipeline will run from Hardisty, Alberta to the Gulf of Mexico carrying tar sands oil to Texas and Louisiana for refining. 

From a landowner perspective, the decision provides little information.  There appears to have been minimal landowner participation in the hearing and, therefore, there is minimal attention paid by the Board to landowner issues in its decision (if you don't raise the issues, the Board is not going to raise them on its own). 

One exception was the participation of the Sierra Club of Canada (SCC), which addressed the pipeline abandonment issue in its submissions:

SCC submitted that the Keystone XL application failed to assess pipeline decommissioning and
that failure to do so was not in the public interest. SCC further indicated that full disclosure for the public interest would require that Keystone assess the decommissioning or abandonment and impending financial liability of the Keystone XL Pipeline. Without this critical information, SCC was of the view that Keystone could not provide an assurance to Canadians that they will not have to cover the costs associated with the decommissioning and abandonment of the Keystone XL Pipeline.

As it does on a consistent basis, the Board declined to address the issue of abandonment of the proposed pipeline during the project approval process, stating:

With respect to abandonment, an application needs to be filed pursuant to the NEB Act if and when facilities are to be abandoned. As a result, the NEB provides regulatory oversight during the abandonment phase and Keystone will be required to comply with applicable regulatory requirements at that time, as well as any conditions attached to any approval for abandonment. The Board has committed to further address the physical and financial issues related to abandonment through its Land Matters Consultation Initiative Stream 3 and 4 actions.

Of note, there is no provision in the National Energy Board Act by which directly affected landowners may recover costs of their participation in Certificate of Public Convenience and Necessity hearings (such as the Keystone XL hearing), in pipeline abandonment hearings or in the Land Matters Consultation Initiative.

Electricity Conservation on Ontario Farms - Winter 2010 Edition released

The Ontario Power Authority has just released its Winter 2010 edition of "Electricity Conservation on Ontario Farms", its newsletter designed to "provide information about energy conservation and efficiency and innovative applications to help Ontario farmers better manage their electricity costs."  In this issue, OPA discusses the opportunity to generate and sell solar energy under the province's micro-FIT program. 

I attended the Western Fair Farm Show in London last Wednesday.  Although most of what I saw was much the same as in previous years, the one change I noted was the proliferation of solar energy businesses participating in the show.  These companies obviously see an opportunity to supply solar energy technology to farmers with the micro-FIT program in place. 

Does anyone else who attended the show have comments about the solar energy options being presented?

Exeter Municipal Diversion Drainage Report set aside by Appeal Tribunal

On appeal by agricultural landowners R. & D. Hamather and G. & J. McBride, the Ontario Agriculture, Food and Rural Affairs Tribunal has set aside an engineering report prepared for the Municipality of South Huron.  The Municipality had petitioned a drain to divert water runoff from the appellants' farms which has flowing into the Town of Exeter.  The estimated cost of the drain was nearly $1.5 million, much of which would be assessed as a benefit to the landowners. 

Three issues were raised on the appeal: 1) did the administrative process carried on by South Huron comply with the Drainage Act?; 2) was the proposed design and location of the drain appropriate and was the cost of the drain commensurate with the benefit to be derived; and, 3) do the Planning Act and the Provincial Policy Statement (PPS) trump the Drainage Act in this situation?

The Tribunal allowed the landowners' appeal on the basis that the administrative process was severely deficient and that the cost of the drain was not commensurate with the benefit.  Firstly, the Municipality simply did not follow the process required under the Drainage Act.  Secondly, although the Tribunal found that the proposed design and location of the drain were appropriate, it could not find that the cost was appropriate in light of the benefit to be derived because no Cost Benefit Statement had been prepared by the engineer (who happened also to be the Municipality's Drainage Superintendent). 

The Tribunal did not agree with the appellants that the Planning Act and PPS were relevant in this case and trumped the Drainage Act.  Tribunal stated the following with respect to drainage in rural Ontario:

Findings and Analysis - Planning Act versus Drainage Act

Drainage is an integral and necessary part of successful agriculture.

The Appellants have enjoyed good drainage of their lands for many years by allowing the surface water to flow downstream lands within Exeter.

The Tribunal is satisfied on all the evidence that the source of the runoff is predominantly from agricultural lands, including those of the Appellants. Therefore, we find the proposed Works will benefit the Appellants' lands for their continued use growing crops and livestock. We also find the proposed Works are not storm water management facilities for the sole benefit of the urban lands within Exeter.

Under Common Law, the Appellants have no assurance they can continue to discharge runoff onto downstream lands and roads.

The Tribunal is satisfied that an appropriately designed drainage works is necessary for the Appellants' agricultural land use to collect and direct runoff from the agricultural properties to a good and sufficient outlet in the Ausable River.

Accordingly, the Tribunal finds that an appropriately designed drainage works is not a land use planning matter that engages the Planning Act and the PPS.

Read the decision at: Exeter Municipal Diversion Drain 2009

Natural Heritage Systems are coming - so are land use restrictions

"Natural Heritage Systems" are being implemented across Ontario through local Conservation Authorities and municipalities and land use restrictions are coming.  Land use planning in Ontario is guided by the Ministry of Natural Resources' Provincial Policy Statement (PPS - the current edition is from 2005), which includes policies intended to protect the natural heritage of the province (which may affect areas including fish habitat, woodlands, marshes, meadows, etc.).  Individual municipalities implement these policies through their official plans and zoning by-laws following the completion of natural heritage studies.  For example, in 2006, the Upper Thames River Conservation Authority and the County of Oxford completed the Oxford Natural Heritage Study.  The report included the recommendation that the County proceed to designate significant natural heritage areas and to regulate the use of these areas through the Official Plan. 

Although the PPS says that nothing in the Natural Heritage Policy is "intended to limit the ability of existing agricultural uses to continue", there is no similar protection for proposed changes in use or urbanized or other development of land.  In some situations, therefore, a natural heritage designation may remove the possibility of developing a property beyond agriculture (or expanding an existing agricultural operation) and thereby decrease its value on the market.  While the designation may not affect the current use of a property, landowners should be aware that the incoporation of natural heritage designations into municipal planning may affect future use of their land.  In some areas of the province, natural heritage systems have already been established.  In other areas, the study and planning process is still underway.

Guiding the planning process is the MNR's Natural Heritage Reference Manual.  Read the MNR's Draft 2009 Second Edition of the Natural Heritage Reference Manual at: Draft 2009 Manual.

Another DFO Dairy Quota Transfer Assessment Appeal dismissed

Ferme Benoit Lachaine Inc. (FBL) sold its entire milk production quota in six separate transactions.  Under the 15% quota transfer assessment policy of the DFO, FBL did not receive $367,055.21 from those six quota transactions.  An appeal to the DFO was unsuccessful and so FBL appealed to the Agriculture, Food and Rural Affairs Tribunal.  The Tribunal decided the case on the following basis:

While we are not bound by the several previous Tribunal exemption decisions, we feel it appropriate to list the factual differences between the FBL circumstances and those previous cases:

Benoit Lachaine continues as an active farmer

Benoit Lachaine was not killed in an accidentenoit Lachaine did not suffer a catastrophic injury that ended his farming career

Benoit Lachaine does not have a terminal disease

Benoit Lachaine did not have a plan to exit the industry interrupted by the November 2006 policy

A significant part of FBL's case was based on financial hardship. Without deciding that financial hardship could be the basis for an exemption, we find no evidence of financial hardship.

Based on all the evidence we find that FBL has not satisfied us that there is anything sufficiently "special" about Benoit Lachaine's foot condition to warrant an exemption from the 15 percent quota transfer assessment.

Read the decision at: Ferme Benoit Lachaine vs Dairy Farmers of Ontario (DFO)

Creditors and CAIS payments

Government contributions under the former Canadian Agricultural Income Stabilization Program (CAIS) are not assignable to another party by agreement.  For that reason, a farmer entitled to payments under the program could not grant a security interest in a CAIS payment.  However, in PEI at least, it was standard practice where a farmer was indebted and wished to make use of his or her interest in a CAIS account to provide a Letter of Direction by which the government agency involved would forward to a creditor the funds otherwise payable to the farmer.

The Court of Appeal in PEI recently decided a case between two competing creditors looking to lay claim to CAIS payments owing to a potato farming corporation called Rural Realty.  A PEI Crown Corporation called P.E.I. Lending Agency loaned money to Rural Realty and, as a condition of the loan, required Rural Realty to execute a Letter of Direction requiring the proceeds of CAIS to be sent to it directly.  In 2004, Rural Realty owed its creditors over $2 million.  It was decided, however, that it was in the best interests of the Lending Agency and a crop input supplier called McCain Produce (also a creditor) that a crop be planted that year.  The three parties, the creditors and Rural Realty, entered into an agreement whereby the Lending Agency agreed, among other things, "that McCain shall rank in priority to the Lending Agency with respect to one-half (50%) of all receivables/proceeds generated by the 2004 potato crop". 

The question on appeal was whether the CAIS payment to be made to Rural Realty, which was to be directed to the Lending Agency, constituted a "receivable" or "proceeds" of the 2004 potato crop.  On application to a lower court, McCain had been successful in obtaining a 50% interest in the CAIS payment.  The Lending Agency appealed the decision to the Court of Appeal.  The 2004 CAIS payment to Rural Realty was $690,000.  Therefore, $345,000 was at stake in the appeal.

The judge hearing the original application decided that the CAIS payment did constitute proceeds of the 2004 crop because, but for the planting of the crop, no payment would have been made under CAIS.  However, the Court of Appeal did not agree that this relationship between the crop and the CAIS payment meant that the CAIS funds were proceeds of the crop.  The CAIS funds were not traceable to the proceeds of the sale of the potato crop, and were based on a formula for calculating income over a period of time. 

Also, the Court of Appeal found that the parties involved, the Lending Agency and McCain Produce, were sophisticated business entities and, if they had intended to split the CAIS proceeds, they would have done so explicitly in the agreement with Rural Realty.

For these reasons, the Court of Appeal allowed the appeal, giving the Lending Agency the full $690,000 CAIS payment.

Read the decision at: PEI Lending Agency v. McCain Produce Inc.

NEB Approves NOVA Groundbirch Pipeline Project

The National Energy Board has released its Reasons for Decision in GH-1-2009 approving NOVA Gas Transmission Ltd.'s application for the Groundbirch Pipeline Project that will run between Alberta and British Columbia, just north of Dawson Creek.  Of note to landowners in the decision, the NEB ruled:

• "With regard to depth of cover, the Board notes that the proposed design meets or exceeds CSA Z662-07 requirements, which, in the Board's view is sufficient to accommodate ordinary agricultural practices."  The CSA standard for depth of cover is 2 feet.  The Board provided no explanation of its use of the term "ordinary agricultural practices";
• With respect to pipeline abandonment, the Board says that it "has committed to address issues related to abandonment through its Land Matters Consultation Initiative", and required no commitments on the part of NOVA;
• The Board is allowing NOVA to implement Alternative Integrity Validation (AIV) to check the integrity of the pipeline before it is placed into operation and then to apply for a partial exemption from hydrostatic testing requirements (where water is pumped through the pipe).  It is not yet, therefore, allowing full use of AIV as requested by the company;
• The South Peace Landowners Association (SPLA) raised concerns with the Board over NOVA's use of a confidentiality agreement in its consultation with landowners.  NOVA was requiring landowners to enter into a confidentiality agreement before presenting certain offers to them.  In its decision, the Board makes no ruling about the appropriateness of the confidentiality requirement, other than to say that it finds that "the impact of the Confidentiality Agreement on certain landowners and their representatives has, in part, frustrated" the objectives of NOVA's consultation program;
• In its discussion of land matters, the Board acknowledged SPLA's concerns about the confidentiality requirement and the conduct of land agents for NOVA, but impose any changes in NOVA's practices.  The Board encouraged NOVA to instruct its land agents on appropriate conduct.

Read the decision at: NEB Reasons for Decision GH-1-2009

Source water protection plans and agriculture

Better Farming asked Ontario Cattleman's Association water quality specialist Chris Attema about new source water protection reports being completed.  Seven reports from 36 zones have been completed and released, and Attema suggests that agricultural drainage is being treated much differently than urban drainage.  Read the article at: Better Farming - "Water Protection Plans will hammer agriculture warns expert"

Under the Clean Water Act, 2006, the provincial government and municipal governments have extensive powers to develop and implement programs aimed at protecting the sources of drinking water.  Through the implementation of source water protection plans (based on the reports that are released for each zone), agricultural activity may be restricted and/or made more expensive.  The Act gives the government the ability to restrict land use and to inspect premises without landowner consent or a warrant. 

The Clean Water Act, 2006 also expressly provides that there will be no compensation or damages and no remedy for basically anything done under the Act.  While lands can be expropriated for the purposes of source water protection according to the Expropriations Act (which requires that compensation be paid), nothing else that is done under the Clean Water Act, 2006 can constitute expropriation or injurious affection.  In other words, there is no compensation for the imposition of land use restrictions and additional costs for landowners.  Unless the land is actually taken, the best a landowner can hope for is funding for necessary changes through a related government program.

For more information on the Clean Water Act, 2006, vist the Ontario Ministry of the Environment webpage.

Agriculture, Food and Rural Affairs Tribunal speaks out on exemptions from dairy quota transfer assessment

Lucien and Murielle Martel operated a dairy herd of about 60 cows until April 2008.  At that time they sold their entire milk production quota of 66.17 kgs. at a price of $31,505.00 per kg.  Under the Dairy Farmers of Ontario (DFO) 2006 regulatory policy, the sale was subject to a 19.06 percent transfer assessment.  In this case, the assessment to be paid to DFO was more than $337,000. 

The Martels requested an exemption from the transfer assessment because they asserted that they were forced to sell the quota because of Lucien's back condition.  He alleged that he could no longer do the job of a dairy farmer and was told that his back condition would not improve. 

After the DFO rejected the request for an exemption, the Martels appealed to the Agriculture, Food and Rural Affairs Tribunal.  At the hearing, the DFO confirmed that it has received about 80 exemption requests since the transfer assessment was introduced in November, 2006.  Of those requests, DFO has granted 4 exemptions, and one other exemption was given as a result of negotiations during an appeal.  I have also already posted this year at least 2 decisions of the Tribunal granting full or partial exemptions where the exemptions had been refused by the DFO.

In this case, the Tribunal found it important that Lucien Martel continued to carry out cash cropping activities on his farm.  On that basis alone, the Tribunal decided, the exemption request must be denied.  In dismissing the appeal, the Tribunal provided some guidance to the DFO on what circumstances might engage the "special consideration" exemption from the transfer assessment:

• death of the primary dairy operator;
• catastrophic accident ending the farming career of the primary dairy operator;
• fatal disease of the primary dairy operator;
• ongoing plan to exit the dairy industry interrupted by the November 2006 policy;
• undue hardship;
• other compassionate grounds

Overall, there must be something unique or extraordinary to warrant an exemption from the policy.

Read the Tribunal's decision at: Ferme Martel Inc. v. Dairy Farmers of Ontario

Suit seeks to bar genetically modified sugar beets

Suit seeks to bar genetically modified sugar beets - Winnipeg Free Press

The Winnipeg Free Press is reporting on a lawsuit in the U.S. by organic farmers hoping to halt the planting this spring of genetically modified sugar beets.  After only two years of use, the Roundup Ready beets already comprise 95% of beets being planted.  The organic farmers are concerned about cross-pollination.

The article also refers to a successful 2007 U.S. lawsuit over Roundup Ready alfalfa.  Monsanto is appealing the decision in that case to the U.S. Supreme Court, but a date for hearing has not been set.  Tom Lutey of the Billings Gazette in Montana is reporting that Supreme Court Justice Stephen Breyer has recused himself from (taken himself out of) the case because his brother heard the alfalfa case in a lower court.  Supreme Court Justice Clarence Thomas, who was a former staff attorney in Monsanto's herbicide division, is not recusing himself.

The Alberta Government's take on the no annual compensation decision

Court Decision Regarding Annual Compensation for Pipelines in Alberta

Click on the link above to read the report posted by Alberta's Department of Agriculture and Rural Development about last week's Court of Queen's Bench decision on annual compensation for pipeline landowners. The government's take on the decision:

What does this all mean?  Bottom line is that the arguments for annual compensation, were not supported at the court level.  This means that while landowners may continue to negotiate for annual compensation, there is now a greater requirement for cogent evidence to depart from the pattern.  Landowners continue to have a right to bring other arguments to regulatory proceedings and they may continue to pursue policy or legislative change if they wish.

What do farmers think of this response?

Pipeline clean up tax in South Dakota being opposed by TransCanada

Noel Griese of the Energy Pipeline News is reporting on a move by South Dakota to charge an environmental clean up tax on pipelines carrying oil.  The tax rate would be 2 cents per barrel for pipelines carrying more than 10,000 barrels per day.  The money collected would go into a fund to cover costs of cleaning up oil releases, but the fund would be capped at $30 million. 

TransCanada Pipelines Limited, which plans to build the Keystone XL oil pipeline through South Dakota, opposes the tax.  TransCanada suggests it will lose an estimated $38 million in tax incentives.  Wayne Ortman of The Oklahoman reports that Dennis Duncan, a lobbyist for TransCanada, says that the company would be paying $20 million in property taxes annually on the pipeline and that the new tax bill could damage South Dakota's pro-business and tax friendly image.

Read the articles at the following links:
Noel Griese Article at Energy Pipeline News
Wayne Ortman article at NewsOK