Merry Christmas!

Merry Christmas to everyone, and a Happy New Year! 



OEB launches Energy East consultation

The Ontario Energy Board has set up a website with information about its pending public consultation on the TransCanada Energy East Project.  Although the project falls within the federal jurisdiction, the Province of Ontario intends to participate in the approval process as an intervenor and is seeking comments on the positions it should be taking on the following four areas of "potential impact":

The impacts on Ontario natural gas consumers in terms of rates, reliability and access to supply, especially those consumers in eastern and northern Ontario

The impacts on pipeline safety and the natural environment in Ontario

The impacts on local communities as well as First Nations and Métis communities

The short and long term economic impacts of the project in Ontario

Public meetings will be scheduled for February and March, 2014.

The website can be accessed at: The Ontario Energy Board Energy East Consultation.

 

Joint Review Panel Report on Northern Gateway Pipeline to be released on December 19

The Joint Review Panel (NEB) will release its report on the proposed Enbridge Northern Gateway Pipeline on December 19, 2013 at 2:30 Calgary time. 

Ontario MOE: Company fined $50,000 for manure discharge

From the MOE Court Bulletin:

Warwick Company Fined $50,000 for Discharging Manure into Woods Creek

Sarnia – A Warwick company was fined $50,000 for discharging a mixture of cow manure and leachate into Woods Creek that could have impaired the creek’s water quality, contrary to the Ontario Water Resources Act.

“Polluters should be aware that the ministry’s Investigations and Enforcement Branch will vigorously pursue charges when our environmental laws are broken”, Environment Minister Jim Bradley.

Eusi Farms Ltd. operates a beef feed lot located on Rawlings Road in the Municipality of Lambton Shores where approximately 3,000 cattle are housed. Manure is stored on site until applied as a nutrient to 14 other Eusi farms.

On November 19, 2011, a resident of Lambton Shores reported to the ministry that Woods Creek was black and smelled like manure. The caller also reported seeing dead fish, crayfish and several frogs in the creek. The Municipality of Lambton Shores staff attended the site and reported a strong odour, discoloured water and dead fish.

An inspection conducted by ministry staff revealed the source of the contamination in the creek was a leaking manure pit located at the Eusi Farms about seven kilometres upstream of Lake Huron.

Ministry staff remained at the site until the leak was fixed and clean-up work completed. .

Eusi Farms Ltd. was fined $50,000 plus a victim fine surcharge of $12,500 and was given 60 days to pay the fine.

Ontario MOE: Hog Farm Fined $4,000 for having no nutrient management strategy and plan

From the MOE Court Bulletin:

Hog Farm Fined $4,000 for Nutrient Management Violations

Cornwall – A hog farm was fined $4,000 for operating an agricultural farm without the required nutrient management strategy, contrary to the Nutrient Management Act.

“Charges and convictions remind us all that we need to take care not to damage the environment as we go about our business”, Environment Minister Jim Bradley.

6093744 Canada Inc. owns and operates a pork agricultural operation located on County Road 18 in the Township of South Dundas. In 2004, the company added two hog barns and a manure storage lagoon in addition to the two barns already on the property.

In October 2003, a letter was sent by a Ministry of Agriculture and Food engineer advising the company that its intention to build two additional barns to house about 5,000 feeder hogs on the farm would result in the farm being classified as generating over 300 nutrient units and therefore would be subject to the Nutrient Management Act on July 1, 2005. The letter further indicated that a plan had to be submitted at least two months prior to this date for approval.

In June 2012, in response to a complaint, a provincial officer of the ministry conducted an inspection at the company’s farm. During the inspection, the officer observed that the company had not applied for or received an approved Nutrient Management Strategy and Plan. A subsequent investigation determined that pork operation involved about 5,000 feeder hogs that would generate over 300 nutrient units annually and therefore an approved strategy and plan was required and was not obtained.

The company was fined $4,000 plus a victim fine surcharge of $1,000 and was given six months to pay the fine.

"Playing in the mud"

Here are the opening paragraphs from a recent Saskatchewan Provincial Court decision about off-road recreation in farm country:

A favourite pastime for many people living in rural, northern Saskatchewan is off-roading or “playing in the mud” as the accused [...] likes to call it. That is, at least until he found himself stuck in the mud and charged with impaired driving, over .08 and resisting a peace officer on May 20, 2012.

The accused had been out “playing in the mud” with his buddies on a neighbour’s back forty the afternoon of May 20, 2012. This was a common form of recreation and sporting event for them. He had specifically purchased his Ford F-250 3/4 ton truck for this purpose. He had the truck lifted and placed large mud tires on it. The object of the game was to see how far out in the mud and bush they could take their trucks and get back out without getting stuck. The accused acknowledged that he faired quite poorly that day.

He had consumed two or three beers that afternoon while out 4x4ing with his friends. He then went for supper with a friend and after supper, drove to Smeaton, Saskatchewan for a house party. The accused did not like driving his 4x4 truck with its larger, more aggressive and expensive tires on the pavement as it tends to shred them. So, along the way he drove in and out of ditches alongside the road and into farmers' fields tearing around a little bit, until he eventually ventured into one ditch too deep and ended up getting stuck in the mud and water around 8:00 p.m. that evening.

In the end, the accused was found not guilty of impaired operation of a motor vehicle and of operating a motor vehicle while over .08 blood alcohol.  He was found guilty of resisting arrest.

Read the decision at: R v Brown.

City of Pickering wild boar case goes on

The Court of Appeal for Ontario has confirmed that negligence claim against the City of Pickering in connection with a wild boar operation can proceed.  The respondent in the appeal raised a herd of wild boards on a 10-acre property he occupied as tenant within the City's boundaries.  The City relied on a by-law restricting the keeping of animals to force the respondent to dispose of his herd.  He then sued the City for damages suffered as a result of the loss of his business.  One of his claims was that the City was negligent in its actions, and the Court of Appeal was to decide whether that claim could proceed.

Justice Epstein summarized her decision as follows:

The viability of Mr. Rausch’s negligence claim turns on three issues: first, whether the City may be said to owe either a statutory or common law duty of care; second, if a common law duty of care may be said to exist, whether Mr. Rausch has pleaded such a duty; and, third, if so, whether it is statute-barred. In my view, the statutory framework imposes no explicit duty of care. That said, I would not foreclose the possibility that Mr. Rausch may be able to establish an implied statutory duty of care. I am also of the view that Mr. Rausch’s amended pleading advances a viable common law duty of care – one that is not out of time. I would therefore confirm the order of the Divisional Court and dismiss the City’s appeal.

The Court of Appeal did not decide whether the claim against the City was successful - it decided whether there was a possibility that it could be successful.  As the decision was in the affirmative, the Court confirmed that the negligence claim could proceed to trial.

It is important to note, however, that the Court of Appeal did find that there could be no negligence claim based on the alleged breach of the Farming and Food Production Protection Act, which prevents a municipal by-law from restricting a normal farm practice that is part of an agricultural operation.  The Court found that the legislation, in the specific circumstances of this case, imposed no explicit statutory duty on the City.  However, the Court noted that its decision "does not foreclose the possibility that there may be an implied statutory duty of care arising out of the statuory scheme."

The negligence claim was allowed to proceed on the basis that the city may owe the respondent a common law (rather than a statutory) duty of care "to exercise its considerable power over farmers in a manner that reduces the risk of unwarranted harm".

Read the decision at: Rausch v. Pickering (City).

Divisional Court comments on OEB approval of forms of landowner agreements

As part of its decisions to approve energy transmission projects, the Ontario Energy Board (OEB) approves the form of agreement to be offered to landowners affected by the approval.  Recently, the Ontario Divisional Court decided an appeal of a decision to approve the construction of electricity transmission lines for a wind energy project in which the appellant argued that independent legal advice (ILA) clauses in the approved landowner agreements were "confusing, misleading and unfair".

The OEB may only approve a project where the applicant has satisfied the Board that it has offered or will offer to each landowner affected by the approved route, an agreement in a form approved by the Board. 

The party that appealed the OEB decision was Conserve Our Rural Environment (CORE) Inc.  It argued that the ILA clause in some of the 6 forms of land agreement to be approved was false and misleading because it gave the impression that the party requiring ILA was the tenant (the project proponent) rather than the landlord (the landowner).  ILA was to be obtained by the tenant even though it was the tenant who had prepared the agreements.

The Divisional Court determined that the appeal was not on a question of law or jurisdiction, which was the only basis on which the appeal could be made.  The OEB's authority to approve the form of contract is discretionary, and an arguably unreasonable exercise of discretion is not an error of law or jurisdiction.  Therefore, the Court dismissed the appeal.

In the event that it was wrong in this determination, the Divisional Court also went on to decide the appeal as if a question of law or jurisdiction had been raised.  It found that the applicable standard is one of reasonableness, and it found that the decision of the OEB was reasonable.  The Court stated, "It is important to understand that what the Board approved was a form of agreement which is the subject of subsequent negotiation between the parties.  It represents terms from which the party propounding the project may not unilaterally resile."

Read the decision at: Conserve Our Rural Environment v. Dufferin Wind Power Inc.

Oil and Gas Lease: Operate at a loss or nominal return or lose your lease?

This case involves five freehold petroleum and natural gas (PNG) leases that cover most of a section of land in Alberta.  The Plaintiffs are some of the current owners of the land plus a top-lessee, whose lease will only become effective if it is determined that the five existing leases have terminated.  The main issue in the case was whether those leases terminated as a result of the stoppage of operation and production from a well on the land between 1995 and 2001.  More specifically, the Court asked whether the Defendants (or their predecessors) were required to operate the well at a loss or nominal return during those years in order to preserve and continue the leases.

The Alberta Court of Queen's Bench heard evidence from a number of factual and expert witnesses about the decision made to shut-in the well in question for economic reasons.  In the end, the Court ruled that the well was shut-in for reasons permitted under the leases, and the leases did not terminate as a result of the cessation in operations and production.  The Plaintiffs' action was dismissed as a result.

Read the decision at: Stewart Estate v TAQA North Ltd.

Is the pipeline provincial or inter-provincial?

Every so often, the question of whether a pipeline is subject to provincial regulation or to federal regulation (by the NEB) comes before the courts.  The issue is now before the courts in Manitoba according to a recent decision of the Manitoba Court of Appeal.  A number of landowners affected by a proposed pipeline filed applications for leave to appeal a decision of the Surface Rights Board of Manitoba to the Court of Appeal.  They then brought a motion seeking to adjourn the leave to appeal applications pending a decision of the Manitoba Court of Queen's Bench regarding a judicial review of the decsion by Mantioba's Minister of Innovation, Energy and Mines (the "Minister") to grant a permit to EOG Resources Canada Inc. (EOG) to construct the pipeline.

The intended purpose of the pipeline, which would cross through the landowners' properties, is to link up to another proposed pipeline that would cross the Manitoba-Saskatchewan border (the "MIPL Pipeline").  The MIPL pipeline project requires approval from the NEB as it is an interprovincial (federal) pipeline.

EOG maintains that, although its pipeline would connect directly to the interprovincial MIPL Pipeline, its pipeline is intended to be wholly within the province of Manitoba.  Therefore, the EOG pipeline would be subject to provincial approval, as was granted by the Minister.  The landowners contest the jurisdiction of the Minister and brought an application for judicial review of the Minister's decision to approve the pipeline on constitutional grounds.

EOG opposed the adjournment of the leave to appeal applications, asserting that a delay would cause it prejudice.  The Court disagreed.  It found that it was not a practical use of judicial resources to have two cases ongoing with respect to the same issues.  It also reasoned that the Court of Queen's Bench proceeding may result in additional evidence necessary to determine the constitutional issue (i.e. the jursidiction of the proposed pipeline).  The Court of Appeal found that these reasons outweighed any potential prejudice to EOG.

Read the decision at: EOG Resources Canada Inc. v. Saskitoba.

Corn delivery case turns on witness credibility

The Plaintiff company in this case from New Brunswick claimed that it had delivered 8 loads of wet corn to the Defendant company at harvest and that the Defendant company failed to pay for the corn.  The Plaintiff valued the claim at over $33,000.  The Defendant company denied that there was a contract calling for payment to the Plaintiff company at all.  Instead, the Defendant said that it had agreed to purchase the corn from an entirely different third party; the price to be paid for the corn was to be credited to the outstanding account the third party had with the Defendant company.

The judge at trial commented: "There are two starkly different versions of the facts of this case.  Ultimately, the disposition of this case will turn on findings of credibility."  The judge determined that neither the representative of the Plaintiff company nor the third party (an uncle and his nephew) were credible witnesses and found as follows:

Based on my findings of fact, it is clear that there never was a contract between the plaintiff and the defendant for the sale of corn. The arrangement was that the third party, KT, would deliver bulk wet corn to the plaintiff’s premises in Centreville to be picked up by the defendant, the value of which would be applied by the defendant to the third party’s outstanding account. There being no contract of purchase and sale between the plaintiff and the defendant, the plaintiff’s action is dismissed. Given that there is no liability on the defendant, the defendant’s third party claim is dismissed.

Read the decision at: Taylor’s Feed & Tires Ltd v Brennan Farms Ltd.

NS Farm Practice Board decision on overspray upheld

Justice Scanlan of the Supreme Court of Nova Scotia heard an appeal of a decision of the Farm Practices Board (FPB) involving the following facts:

The matter arose as a result of two instances where [JW] sprayed a field directly across the road from the [N] property with what I understand to have been a herbicide. The Appellants argue this was done at a time when the wind speed and direction caused an overspray to spread onto their property, allegedly damaging raspberry canes and allegedly causing personal injury to both Mrs. [N] and to her horses. In addition, the Appellants complain about the impact of ditch excavation, as carried out by Mr. [W], and as to the placement of bales of hay or straw in the ditch, the escape of organic materials onto their property together with the impact or the potential impact that might have had on their well water. I emphasize repeatedly the word “allegedly.” The Appellants also allege, as I noted, that the herbicide impacted the health of their horses, specifically mares in foal. They say the mares were impacted and perhaps may have aborted as a result of the overspray. They allege, as I understand it, although I'm not reviewing in any great detail the allegations in the statement of claim, that it was not just the existing pregnancies that were impacted but the fertility of the mares on a go forward basis.

The issue that had been before the FPB was whether or not the farmer in this case complied with normal farm practices, in which case the practice would be protected from certain civil actions for damages or injunctive relief.  However, the farm protection legislation does not address "the potential impact of chemical use or misuse, including the impact on neighbouring properties."

In the end, Justice Scanlan determined that the FPB decision was reasonable, but pointed out its limitations - it did not deal with all of the allegations made by the complainants, including allegations about overspray.  Those other allegations would still have to be dealt with, if at all, in the civil action that the complainants had also commenced against the farmer in this case.  That action had been stayed pending the outcome of the FPB proceeding.

Read the decision at: Nauss v. Nova Scotia (Farm Practice Board).

Southwest Middlesex drainage case back in Court

The law decided in a recent case involving a municipal drain in the former Township of Ekfrid is not as interesting as the facts of the case.  Justice Rady made a few rulings about the applicability of limitation periods and decided that only the municipality could be the subject of a claim under Section 79 of the Drainage Act.  However, it is her rendition of the facts that will be of most interest.

Here is an excerpt with the background for the case:

[9] In 1964 the plaintiffs, who are farmers, purchased a farm of more than 100 acres located on the north side of Irish Drive in the former Township of Ekfrid. The Township has since been amalgamated into the Municipality of Southwest Middlesex.

[10] Since approximately 1897, the southerly portions of their property and the adjacent lot to the west drained into the Saxon drain. The Saxon drain was originally constructed as an open ditch, approximately eight feet deep and twenty feet wide, which travelled south from Irish Drive toward Kings Highway No. 2. The Saxon drain crossed the lands of the defendants, John Wolfe and Grant Wolfe.

[11] A second branch of the Saxon drain extended easterly along the north side of Irish Drive to the southwest corner of the plaintiffs’ property and provided the connection between the southwest portion of the plaintiffs’ property and the main drain. The Saxon drain had been effectively draining the southwest portion of the plaintiffs’ property and the southeast portion of the adjacent lot since 1897.

[12] In or about 1973, the plaintiffs applied under the Drainage Act to deepen and improve their outlet and the main drain. The Township appointed an engineer, the defendant, A.M. Spriet and Associates.

[13] John Wolfe and Grant Wolfe are said to have proposed to Spriet that a portion of the Saxon drain be filled in and replaced with a closed tile. Spriet endorsed the proposal and provided a report to the Township in February 1974, which was approved and passed as by-law number 8-74.

[14] Spriet then designed a tile system to replace a substantial portion of the open ditch. When they expressed concern, affected property owners were assured that the final plan to be prepared by Spriet would include a ditch, spillway or waterway of some kind along the course of the drain that would take excess surface water from the plaintiffs’ property and the adjacent lot.

[15] The work proposed in the Spriet report was performed by Grant Wolfe (one of the property owners benefitting from the ditch’s elimination) and supervised by the Township and/or Spriet.

[16] From 1966 until 1974, the plaintiffs had no complaints about the drainage of their land. However, after the tile was laid and the ditch filled in, they noted that no ditch, spillway or waterway had been constructed and that the plaintiffs’ property and the adjacent lot were no longer draining properly. In particular, during spring runoff and after heavy precipitation, ditches adjacent to that area of Irish Drive would fill and surface water from the adjacent lot would back up onto the plaintiffs’ property, instead of flowing into the Saxon drain, something that occurred several times a year until approximately 2001. The plaintiffs sustained damage to their property and home as a result.

[17] In 1975 and unbeknownst to the plaintiffs, Spriet had advised the Township of a“grievous” error made by Grant Wolfe when he constructed the drain because it had been installed almost one foot too high to provide an outlet for proper drainage of the plaintiffs’ property.

[18] Subsequently, Spriet and the Township authorized the construction of a connection from the plaintiffs’ tile to the main drain beneath the land owned by John Wolfe for a distance of approximately 700 feet, which was to be constructed at Grant Wolfe’s expense. This “relief drain” was intended to remedy the earlier defective construction and provided a benefit to John Wolfe. The plaintiffs were not advised of the error nor told about the construction of the relief drain until 1996. Neither the Spriet report nor by-law number 8-74 was amended to reflect the change. Notwithstanding the error, Spriet certified to the Ministry of Agriculture that the drain had been constructed generally in accordance with the plans and specifications.

[19] The plaintiffs subsequently retained an engineer, who confirmed that a deep rather than shallow waterway was required along the old course of the ditch to take away excess surface water.

[20] The initially constructed waterway in or before 1978 was billed to the plaintiffs and other property owners upstream from the Saxon drain although those costs would not have been incurred had a proper waterway been constructed in the first place. Because the waterway had not been included in the Spriet report, it was characterized as a maintenance item and did not become part of the drainage works of the Saxon drain. The waterway gradually filled in as a result of erosion and cultivation and affected property owners had no means to enforce maintenance.

[21] Unfortunately, the plaintiffs continued to experience flooding and property damage and they repeatedly complained to the Township. The Township is said to have taken no steps to advise the plaintiffs of what it knew about the source of the problem or to have it investigated and corrected.

Read the rest of the decision at: Ward v. Southwest Middlesex Municipality.

Court of Appeal confirms gas storage rights expired - farm still owns rights

The Ontario Court of Appeal recently confirmed that a farm operation (through a related company) owns the right to inject and store gas into and under its lands.  As a result, the gas storage company that wishes to commence storage operations is going to have to pay compensation for those rights.  In most cases, landowners have already transferred the storage rights to an oil and gas extraction company for less than the current market value of those rights. 

In this case, the Court of Appeal confirmed a lower court decision that found a 1998 gas storage lease between Tribute Resources Inc. and the landowner had expired because Tribute had not taken the issue of designation of the lands as a Gas Storage Area had not been taken to the Ontario Energy Board within 10 years of the date of the agreement:

This Gas Storage Lease Agreement shall terminate on the tenth anniversary date, if an only if, the Lessee or some other person has not applied to the Ontario Energy Board to have the said lands or any part thereof designated as a Gas Storage area on or before the tenth anniversary date hereof.

In spite of that clause, Tribute had argued at first instance and on appeal that its gas storage rights were not limited to the 1998 agreement.  There were earlier agreements (an Oil and Gas Lease and a Unit Operation Agreement) that mentioned gas storage rights.  However, both levels of court ruled that the 1998 agreement was intended to and did replace the earlier agreements.  When that agreement expired, Tribute retained no gas storage rights.

The issue of compensation for the storage rights will be determined by further agreement or by the Ontario Energy Board pursuant to the Ontario Energy Board Act.

Read the Court of Appeal decision at: 2195002 Ontario Inc. v. Tribute Resources Inc.

Shared water, good neighbours?: Costs Decision

Here's the cost outcome for the shared waterline case: $153,225 awarded to the Plaintiff.  75% was payable by the vendor of the property.  25% payable by the neighbour who sought a declaration of a prescriptive easement.  The Plaintiff had claimed total costs of the matter in an amount of more than $300,000.

Read the costs decision at: Hanisch v. McKean 2.

Judge: "Shared water does not necessarily make good neighbours ..."

Justice DiTomaso's remark seems pretty obvious - shared boundaries and shared resources are quite often the subject matter of litigation.  In this case, the Plaintiff organic farmer purchased a farm from a retired dental surgeon in 1998.  In 2007, she learned from a neighbour not only that the neighbour's water was contaminated with e-coli bacteria, but also that the neighbour's water was sourced from the Plaintiff's farm.  The judge noted: "This was surprising and disturbing news to her."

 

As a result of the discovery, the Plaintiff sued the retired surgeon for fraudulent or negligent misrepresentation.  She also sought a declaration against her neighbour that the neighbour has no prescriptive easement to use the waterline that originates on the Plaintiff's property and services the neighbour's property.  The neighbour counterclaimed for a declaration that she does have a prescriptive easement and for an injunction preventing the Plaintiff from doing anything that would interfere with the quantity or quality of the water running through the (alleged) easement.

 

At trial, a number of factual findings were made, including:

• neither the dental surgeon nor anyone on his behalf disclosed the shared waterline to the Plaintiff at any time prior to the purchase of the farm in 1998
• another farmer who had looked at purchasing the property was not told about the waterline either, and testified that had he known of it, he would not have purchased the property
• the Plaintiff received absolutely no notice of the shared waterline from the vendor prior to closing, and the first notice she had was from the neighbour in 2007
• surveys of the farm did not show the shared waterline, and would not have assisted a prospective purchaser or realtor in understanding that there was a shared water system
• the assertion by the vendor's real estate agent that notice of the waterline was not included in the property listing because there was no room for it was "incredible"
• the waterline to the neighbour's property was in use since October, 1967
• the evidence of the dental surgeon was that he consented to the use of the waterline from the time he purchased the farm property in 1975

The Court dismissed the claim by the neighbour for a prescriptive easement on the basis that use of the water line had been by consent (during the period relevant to determine the easement - in this case, 1967 to 2000, when the land was converted to Land Titles) and on the basis that the use was not "open and notorious".  The waterline was not visible and could not be discovered by the Plaintiff except from disclosure by another party. 

 

The neighbour's claim for an injunction was also dismissed.  There was no evidence of irreparable harm to the neighbour if the injunction was not granted - she could drill her own well for water. 

 

Justice DiTomaso then ruled that the waterline was a latent defect in the property and that the vendor, the retired dental surgeon, "misrepresented the nature of the property for sale by failing to notify or inform [the Plaintiff] that the water supply from the Farm supplied properties and residences to the north by way of the waterline."  The judge did not find that the misrepresentation was fraudulent (i.e. intended to mislead), but did find it was negligent and gave rise to liability.  The Plaintiff was awarded $25,500 in damages plus interest.

 

Read the decision at: Hanisch v. McKean.

Court declines to require farmer to forfeit tractor over driving convictions

The Crown brought an application seeking forfeiture of a leased New Holland Tractor and Loader after the lessee was convicted of two counts of driving while disqualified under the Criminal Code.  One of the offences occurred when the lessee was observed by the OPP operating the tractor in question on a roadway.  The lessee was stopped for suspicion of alcohol consumption and because the OPP officer was aware that the lessee's driver's licence was subject to a prohibition order.  The lessee failed a breathylzer test, but before he could be arrested, he ran into a nearby bush.  He was ultimately caught.

 

At Court, all parties conceded that the tractor was "offence related property" and could be subject to forfeiture to the Crown as part of the penalty against the offender.  The father of the lessee participated in the hearing on the basis that he held an interest in the tractor, having been a partner of the lessee in a farming operation and a contributor to the down payment on the lease.  The leasing company also participated, but did not take a position on the assurance that its interest in the tractor would be protected by the Crown in the event of a forfeiture.

 

On review of the evidence, the Court determined that the forfeiture of the tractor would be disproportionate in relationship to the "offence related property".  The Court said: "The item in question is an essential component of the operation of this family farm and is relied upon by [the offender's father] and his family in addition to the offender to perform all essential farming operations.  Since the seizure of this equipment, this farming operation ... has sustained a serious economic detriment.  A forfeiture of essential farming equipment will detrimentally affect, not just the offender, but the viability of this farm.  I cannot agree that a punitive impact of forfeiture on a legitimate enterprise such as farming was the intention of Parliament as being necessary in the public interest."

 

The Court also found that the farm tractor and its operation in the offence has no logical connection to the offence of driving while disqualified. 

 

The Application for Forfeiture was dismissed.

Read the decision at: R. v. Pendleton.

Court of Appeal upholds conviction for dangerous tractor driving

The appellant in this case before the Ontario Court of Appeal was convicted of dangerous operation of a motor vehicle (in this case, a tractor) under the Criminal Code.  The evidence at trial included the following:

• the appellant was driving a tractor at 30-35 kilometers per hour along a rutted gravel and dirt road, causing the tractor to bounce along the road;

• the appellant was driving in a deliberate manner, and appeared determined to return to his property, heedless of those who were in his path or were attempting to stop him;

• without slowing, the appellant drove the tractor through a narrow opening between two trailers, one of which was moving, barely missing both;

• the appellant drove toward a police constable, ignored his motions and shouts to stop, and drove within a few of meters of his vehicle before making an evasive manoeuvre to avoid it;

• he continued along the road at top speed toward another police constable, who feared for his own safety, to the extent that he nearly drew his own service revolver, before the appellant abruptly veered away at the last minute to avoid striking him;

• he drove up onto the narrow berm, adjacent to and above a third police constable in his cruiser, putting the officer in fear for his own safety, before the tractor did in fact roll off the berm; and

• the evidence of several witnesses, including the officers, who testified that the appellant’s driving caused them to fear for their own safety.

 

The Court of Appeal granted the appellant leave to appeal the decision from a summary conviction appeal judge because the appellant had been self-represented for that appeal (and may have misunderstood the procedure).  The appellant argued to the Court of Appeal that the trial judge was wrong to find that the appellant had the required mental element or intent (mens rea) for the offence charged.  He argued that the determination of the mens rea element required a determination of whether the manner of driving was a "marked departure" from the standard of care.  The appellant submitted that a lay person, lacking specialized knowledge of the operation of a tractor, is not able to appreciate the risks of operating a tractor in the circumstances or the measures a reasonable person would take to avoid them.  This, he said, would call for expert evidence.

 

The Court of Appeal disagreed.  It found that the risks of the appellant's driving and the means of avoiding those risks were "plain and obvious" and did not call for expert evidence: "While there may be cases in which expert evidence is required to establish the standard of care in the operation of a tractor and whether the accused's driving was a marked departure from that standard, this case is not one of them."  The appeal was dismissed.

 

Read the decision at: R. v. Clare.

Equity ensures farm goes to intended beneficiary after codicil failed

This was an estate case involving a horse farm.  The farm had been owned jointly by Mr. and Mrs. von Hopffgarten before the husband died in 2006.  In 2011, Mrs. von Hopffgarten died - her will said she left the farm to a Ms. Rommel.  However, the von Hopffgartens had for a long time taken a man named Jesse Sabey under their wings and intended to leave the farm to him.  They both executed codicils to their wills (changing the beneficiary from Ms. Rommel to Mr. Sabey), but the codicils were invalid under the Wills Act, R.S.B.C. 1996, c. 489 because they were witnessed by only one person.

Sabey commenced an action the B.C. Supreme Court to claim ownership of the farm based on proprietary estoppel - statements made to him by the von Hopffgartens.  Alternatively, he made claims based on unjust enrichment and trust.  He alleged that he had worked extensively on the farm, with less remuneration than other workers, with the promise that he would someday take over the farm.  Interestingly, Sabey was not aware of the codicils that the von Hopffgartens had attempted to make (and, therefore, the codicils couldn't assist in making the case of proprietary estoppel). 

The Court accepted Mr. Sabey's evidence; no one challenged his credibility about the statements made to him.  The Court concluded that he had made out the case for proprietary estoppel and that "equity must be satisfied" by granting Mr. Sabey the farm. 

Read the decision at: Sabey v. Beardsley.

Shippers complain: Does Enbridge have enough insurance?

On May 9, 2011, Enbridge Pipelines (NW) Inc. discovered an oil release near Willowlake Creek, NWT from its Norman Wells Pipeline.  Between 750 and 1,500 barrels (between 119,243 L and 238,485 L) of oil were released.  Enbridge charged repair and clean up costs arising from the spill to its shippers on the pipeline.  One of the shippers, ISH, contacted Enbridge to enquire why insurance coverage on the pipeline was not used to cover the spill costs.  Enbridge did not provide a response.

ISH has now brought a complaint before the National Energy Board (NEB) asking the NEB to compel Enbridge to explain why the spill costs were not paid by insurance and to determine whether Enbridge failed to comply with certain sections of the NEB Act.  In its books, Enbridge designated most of the spill costs as standard costs of operating the pipeline. 

ISH has noted that, at the time of the Norman Wells clean-up, Enbridge may have already exhausted its insurance coverage in dealing with the Line 6B rupture in Marshall, MI.  ISH says that it is "concerned that ENW's insurance coverage, under the comprehensive insurance coverage, had been exhausted at the time of the Pipeline leak, and that ISH, and the other shippers on the Pipeline, were accordingly denied the benefits of insurance coverage."  ISH raises questions about the cross-subsidization of pipelines and its effect on shippers: "exhaustion of insurance by ENW's affiliated entities should not entitle collection of Spill Costs from its shippers, while such Spill Costs would have otherwise been covered by insurance."

Read the complaint at: Letter from ISH to NEB re Enbridge Pipelines (NW) Inc. 2011 Willowlake Pipeline Spill Operating Costs Complaint.

Ontario judge rules that, under "changing nature of farming", ATV was "self-propelled implement of husbandry"

A farmer used an ATV to travel on a public gravel road for approximately 30 seconds to get to a pasture to check on his sheep.  He was struck from behind by a truck and suffered permanent cognitive and physical deficits which amounted to a catastrophic injury for accident benefits purposes.  The driver of the truck was convicted of careless driving and other charges; the farmer was not charged.

The farmer sued the truck driver and his own insurance company (which apparently denied him benefits) and a motion was brought before trial to determine whether or not the ATV was a motor vehicle requiring insurance or was a "self-propelled implement of husbandry" which did not have to be insured in order to be used legally on a public highway.  This question arose as a result of arguments made by the Defendants: 1) the truck driver argued that the farmer's claim for damages for bodily injury was barred by the Insurance Act where the injured party was in contravention of the Compulsory Automobile Insurance Act (i.e. driving a vehicle without insurance); and, 2) the insurer argued that certain benefits were not payable to its insured because the Insurance Act made an exception where the driver knew, or reasaonably ought to have known, that he or she was operating an automobile while it was not insured. 

There is a statute in Ontario called the Off-Road Vehicles Act which generally requires an ATV to be insured in accordance with the Compulsory Automobile Insurance Act.  However, a regulation to that statute specifically excludes "self-propelled implements of husbandry", which are defined as self-propelled vehicles "manufactured, designed, redesigned, converted or reconstructed for a specific use in farming and used for farming purposes."  The farmer argued that the ATV had been designed and manufactured for farming use.

The Court agreed, providing the following analysis of the test applicable to self-propelled implements of husbandry:

I find it to be matter of common sense that to accurately, objectively, discern that the character of a self-propelled vehicle demonstrates that it was designed for a specific use in farming, and used for farming purposes, would require that the person making such objective assessment of that character, or use, be reasonably well informed about agricultural life, specifically animal husbandry. It is, again, only common sense that to objectively discern the character or function of any implement related to agriculture requires an understanding of farming. That objective discernment may not accurately exist in the person of a Bay Street lawyer living in Rosedale, or in a downtown high rise condominium, in Toronto. I find that such objective, accurate discernment does exist, not just in Arthur Matheson, but in the other persons well versed in the agricultural community in Eastern Ontario, such as Gary Whyte, Paul Carson and Shawn Gardiner, as well as the investigating officer, Dennis St. Louis, who is a member of the Ontario Provincial Police in this rural region.

The same lack of informed objective, accurate, discernment may also not be present in a fulltime farmer from Lanark County if he were asked to provide an opinion on an issue specifically related to urban living in a major Ontario city.

 

The issue, in this case, relates to the changing nature of farming, with which the statutory and regulatory definitions have not kept pace. While ATVs are also purchased by many people strictly as recreational vehicles, that is not true of the fulltime farming community, based on the evidence in this case. These vehicles are clearly now an integral part of virtually all fulltime farming operations. They need to be recognized as such and responded to appropriately by our laws.

 

The Ontario Ministry of Transportation “Farm Guide: Farm Equipment on the Highway” publication does not provide an exhaustive list of self-propelled implements of husbandry, but it does provide some examples. The definition of “implement” is also not exhaustive and includes items that are never, or extremely rarely, self-propelled, such as balers, ploughs, wagons, etc. It is of no real assistance in resolving this case, particularly the references to conversion of equipment which is not the issue here.

 

I find that any reasonably informed person about farming in Ontario, particularly beef and sheep husbandry, would readily discern the character and function of the vehicle driven by the Plaintiff, Arthur Matheson, on October 11, 2008, as being an implement manufactured and designed for a specific use in farming and animal husbandry. This is not a question of a specific use intended by this Plaintiff only. Based on the evidence provided in support of the Plaintiff, as referred to above, these machines are marketed and sold widely to farmers, as confirmed by the affidavits of people in the business of actually selling these machines, along with other farm implements.

Read the decision at: Matheson, et al, v. Lanark Mutual Insurance Company, et al.

Manitoba Court of Appeal upholds convictions for maintaining illegal trenches

Employees from the Department of Natural Resources (DNR) in Manitoba had investigated the unauthorized draining of wetlands on a farm in 1998.  The landowner obtained licenses from DNR for four specific wetlands, but the licence for Wetland #1 prohibited any drainage.  In 2000, a man-made trench draining Wetland #1 was discovered.  A charge was laid by the DNR, but subsequently stayed.

 

By 2008, it was discovered that both Wetlands #1 and #2 had been completely drained with two man-made trenches, neither of which had been authorized by DNR.  Wetland #1 appeared to have been cultivated and worked through with farm machinery.

 

The landowner was charged under the Water Rights Act with two counts of establishing or maintaining illegal trenches without a licence.  The trial judge convicted the landowner and fined him $1,500 on each count.  Although he determined that there was no evidence that the landowner had established, constructed or actively maintained the trenches, the trial judge decided that the fact that the landowner knew about the existence of the trenches and did nothing to eliminate them was evidence of passive maintenance sufficient to support the convictions.

 

On summary conviction appeal, the appeal judge determined that passive acts of maintenance were not sufficient to support convictions, but nevertheless upheld the convictions because: 1) for the first trench, there was evidence that a crop was planted and harvested there, meaning that the trench was actively maintained; and, 2) for the second trench, because it had not previously existed, the only reasonable inference was that it had been established or constructed by the landowner.

At the further appeal before the Court of Appeal, the Crown conceded that the summary conviction appeal judge had erred by upholding the convictions on the basis of facts not supported by the trial record.  There was simply no evidence that the appellant landowner had constructed or established the second trench in the time period cited in the charge or that he had planted and harvested in the first trench.  The question on the appeal therefore turned on the effect of "passive maintenance".

The appellant landowner argued that the prohibited act or "actus reus" of the offence required proof of active maintenance of the trenches; the Crown argued that keeping the trenches in existence without active maintenance would be sufficient.  The Court of Appeal agreed with the Crown's position and ruled that "maintenance" included keeping the trenches in existence without active maintenance.  The Crown did not need to prove that the landowner knew the trenches were on his land or that he actively maintained them.

Read the decision at: R. v. Dickson (W.A.)

Dairy farm fined after renovating barn without renewing expired nutrient management strategy

From the Ministry of the Environment:

Dunnville Company Fined $5,000 for Violation of the Nutrient Management Strategy

Cayuga - A Dunnville company was fined $5,000 for constructing a building or structure to house farm animals or store nutrients without a nutrient management strategy having been prepared, contrary to the Nutrient Management Act.

"Environmental protection legislation protects communities and the environment. Breaking these rules can result in serious penalties and is an offence the ministry takes very seriously," said Environment Minister Jim Bradley.

Huigen Bros. Farms Ltd. operates a dairy farm in Dunnville in the County of Haldimand. Ministry staff notified the company that their original nutrient management strategy had expired and would need to be renewed. An inspection of the site revealed an existing barn was renovated to house dairy cattle without an approved nutrient management strategy in place.

The company was fined $5,000 plus a victim fine surcharge of $1,250 and given 60 days to pay the fine.

Company fined for manure discharge into municipal drain

From the Ministry of the Environment:

Shedden Company Fined $25,000 for Manure Discharge

St. Thomas - A Shedden company was fined $25,000 for discharging pig manure into the Kerstan Municipal Drain causing impairment to the quality of water.

"Polluters should be aware that the ministry's Investigations and Enforcement Branch will vigorously pursue charges when our environmental laws are broken," Environment Minister Jim Bradley.

G.H. Pennings Farms Inc. owns and operates a pig farm located in Southwold Township. The Ministry of Natural Resources received a call from a local resident regarding manure impacting a creek. The tip was relayed to the Ministry of the Environment and ministry inspectors attended the site. During the inspection, staff traced the source of the manure back to a holding lagoon located on the farm. The lab results of the water samples taken at the site showed impairment to water quality.

The company was fined $25,000 plus a victim fine surcharge of $6,250 and was given six months to pay the fine.

Chicken farmer fined over improper disposal of dead animals

From the Ministry of the Environment:

Thorold Resident Fined $7,000 For Improper Farming Practices

St. Catharines – A Thorold resident was fined $7,000 for failing to comply with a ministry order and for failing to properly dispose of dead farm animals.

“Environmental protection legislation protects communities and the environment. Breaking these rules can result in serious penalties and is an offence the ministry takes very seriously,” said Environment Minister Jim Bradley.

Tom Sarantakos operates a chicken farm located in Thorold. The chickens are raised for about eight to nine weeks and are then taken for slaughter.

The ministry received a number of complaints of manure runoff, foul odours, excessive insects and escaping chickens. Following a number of inspections by ministry staff, Mr. Sarantakos was issued a ministry order requiring him to take various measures to manage the manure on the farm. The final order required Mr. Sarantakos to provide proof of manure removal. Mr. Sarantakos failed to comply with the order.

Mr. Sarantakos lives at a second farm location. An inspection of this farming operation revealed numerous dead farm animals, namely chickens that appeared to have died well in excess of the 48 hour duration permitted, following the death of an animal for proper disposal.

Mr. Sarantakos was fined a total of $7,000 plus victim fine surcharges of $1,750 and given 90 days to pay the fine.

Who owns the tree that straddles the property line?

One neighbour contended that a Norway Maple Tree straddled the property line.  The other neighbour wanted to cut the tree down.  She applied to the Court for an order stating that she was the sole owner of the tree (and, therefore, could proceed to take it down).  The neighbours on the other side of the property line disputed the ownership issue in an effort to save the tree.

According to the Forestry Act, every tree whose trunk is growing on the boundary line between adjoining lands is the common property of the owners of the adjoining lands. 

The Applicant argued that the tree at ground level was only situated on her property.  The Respondents insisted that the situation at ground level didn't accurately reflect the true location of the tree; the level of the ground adjacent to the trunk is variable depending on how much fill is placed against the trunk.  Instead, they argued that the base of the tree must be measured at the point at which the trunk meets the roots of the tree.

The Superior Court of Justice ruled that, for the purposes of the boundary tree provision in the Forestry Act, "the meaning of a treek trunk growing on a boundary line [includes] the entire trunk from its point of growth away from its roots up to its top where it branches out to limbs and foliage."  The Court added, "In any event, it is not only the arbitrary point at which the trunk emerges from the soil that governs."

According to the legislation, "in circumstances where the trunk is growing on the boundary line, co-ownership follows, no matter who planted the tree."

Read the decision at: Hartley v. Cunningham et al.

Court of Appeal upholds decision requiring municipality to honour drainage agreement

In a previous post (January, 2013), I reported on a Superior Court decision requiring a municipality to honour a drainage agreement from 1953.  The agreement required the municipality to maintain and repair in perpetuity part of a storm sewer drainage system that it had constructed on and near the lands of a local farmer.  60 years later, the successor landowners wanted the municipality to honour the agreement; the municipality ceased all maintenance and repair work, and the matter ended up in court.

The Ontario Court of Appeal has upheld the lower court decision requiring the municipality to honour the agreement.  The municipality appealed on three issues: (1) the landowners' claims concerning the agreement are statute-barred; (2) the landowners have no standing to enforce the agreement since they have no privity of contract with the municipality; and (3) the agreement is contrary to public policy and, hence, unenforceable.

On the limitation period issue, the Court of Appeal agreed with the lower court judge that there was insufficient evidence that the municipality's repudiation of the agreement had been accepted by the landowners or their predecessors in title.  Instead, the contract (repudiated by the municipality) was affirmed by the landowners and treated as subsisting and on-going.  If the contract in this case was still in effect, then the municipality was under a perpetual obligation to maintain and repair the drain.  No limitation period had expired to free the municipality from this obligation.

On the issue of standing, the Court of Appeal disagreed with the strict application of the doctrine of privity of contract (i.e. only the parties to the contract have standing to sue for breach of the contract) for this case.  To apply the doctrine would have allowed the municipality to escape the stated purpose and express terms of the contract (which provided that it would "inure to the benefit of and be binding upon the parties hereto and their respective heirs, administrators, successors and assigns").  Here, the Court of Appeal was prepared to allow the current landowners to enforce the contract as they stood in the shoes of the original contracting party.  The Court would also have applied the principled exception to the privity rule if necessary.

Lastly, the Court of Appeal rejected the municipality's argument that the agreement was void on public policy grounds.  The Court noted that the municipality's factum (written argument) did not address one part of this argument and that it would not be fair for the landowners to have to deal with it.  The Court also rejected the argument for lack of evidentiary support.

Read the decision at: Brown v. Belleville (City).

Divisional Court upholds OMB on question of reduction in market value for contamination

The City of Toronto appealed an OMB decision awarding more than $3.3 million for market value on the expropriation of a contaminated property.  The property in question was the former site of a soft drink manufacturing plant; the expropriation was required in order to install an underpass at Dufferin Street in Toronto beneath a rail corridor.  Through testing, a City consultant had identified various contaminants on the property, including vinyl chloride (VC) and tetracholorethylene (TCE).

Although there was no requirement to remediate the property, the City's expert witness at the OMB hearing suggested that remediation might be warranted based on a risk assessment and that the cost of remediation of the TCE would be $355,000.  To deal with the VC, a $40,000 upgrade to basement ventilation would be required.  As a consequence of these findings, the City's appraiser estimated that market value of the property should be subject to a reduction of $580,000.

The OMB accepted the evidence of the landowners that there was no risk to human health or to the environment from the presence of the contaminants and that no remediation was needed.  However, the OMB did deduct $20,000 from the market value for air sampling and $10,000 for the drilling of additional bore holes. 

The City appealed the market value award (as well as an award of business losses) arguing that the OMB should have deducted something for the contamination because the land was not "pristine" and that the OMB erred in relying on 2009 environmental standards when the valuation date for the expropriation was in 2005.  The Divisional Court ruled that it was reasonable for the OMB to reject the City's expert's evidence about a "potential 'ball park' worst case scenario" concerning the contamination.  There was no basis on which to find that the market value should be reduced on account of the contamination present.  Also, the Divisional Court found that the landowners' expert witness testified on the basis of standards that were available in 2005, even if he made reference to the 2009 standards as well.

The Divisional Court dismissed the City's appeal and awarded the landowners' costs of $25,000.

Read the decision at: City of Toronto v. Simone Group Properties Limited.

Wheel off wood chipper case sent back for new trial

Ontario Ministry of Transportation (MTO) officers investigated a truck stopped along a highway.  Attached to the truck was a wood chipping machine that was missing its right wheel.  The hub of the wheel was located at the end of a scrape mark in the pavement, but the wheel was not found.  The wheel hub had the eight wheel-fastening bolts shorn from where the wheel should have been attached.

The truck belonged to a tree services company.  The MTO charged the company and the person that was present with the truck with offences under the Highway Traffic Act (HTA) - the company was charged with a "wheel-off" offence and the individual was charged with driving an unsafe vehicle.

The Justice of the Peace at trial acquitted both defendants, finding that the wood chipper was not a vehicle (an essential ingredient of each charge).  A wood chipper was being towed, but was not a "thing used for transporting people or goods on land".  The Crown appealed the decision, arguing that the JP erred in not taking a purposive or purpose-based approach to the interpretation of the charging provisions. 

On appeal, a judge of the Ontario Court of Justice agreed that the purposive approach is to be applied and results in a finding that the wood chipper was, in fact, a vehicle for the purposes of the HTA.  However, the judge also noted that there were other defences that could have possibly been raised by the defendants at trial, but that were not necessary for the trial judge to deal with (given the ruling on a wood chipper not being a vehicle).  Both charges were sent back for a new trial.

Read the decision at: Ontario (Ministry of Transportation) v. Tsapoitis.

Tribunal upholds rejection of milk from farm's bulk tank

The Ontario Agriculture, Food and Rural Affairs Tribunal has dismissed an appeal by an Ontario dairy farm from the rejection of milk from its operation by the Dairy Farmers of Ontario ("DFO").  The farm has operated for 30 years and, in the fall of 2010, was carrying out three milkings a day.  A transport company picked up the milk from a farm bulk tank on every second day, representing six milkings.

On November 28, 2010, the transporter (a certified Bulk Tank Milk Grader) arrived to pick up milk.  He rejected the milk "because of an off odour "malty" smell".  He took two samples and declined to pick up the milk, leaving a "Red Tag" at the farm.

The farm appealed the rejection of the milk on the basis that the DFO had not followed the proper procedure.  However, the Tribunal ruled that procedural errors made by DFO and its agent, the transporter (not properly filling out the Red Tag and not proving that DFO had adopted a policy of "no second opinions" with respect to the rejection of milk), did not negate the determination that the milk should be rejected. 

Read the decision at: La Gantoise Inc. vs. Dairy Farmers of Ontario (DFO).

OHSA conviction of farm operation upheld on appeal

An employee of a chick hatchery operation was injured when she fell climbing down from a storage trailer used to house paper liners used in shipping crates.  The employee broke her leg.  The hatchery was charged under the Occupational Health and Safety Act for failing "to take the reasonable precaution of ensuring that adequate access and/or egress was provided for a transport storage trailer".  The hatchery was convicted at trial and appealed the conviction.

Justice Nadel of the Ontario Court of Justice upheld the conviction, finding that, "while the set of steps may once have worked well and may once have been adequate to their purpose that was no longer the case after the trailer had been moved. ... A gap of two feet between rungs of a ladder or a rise of two feet between the treads of a set of steps is, in my view, self-evidently unsafe.  Likewise, a gap of two feet between the top of a set of steps and the platform those steps are intended to give access to is equally self-evidently unsafe and inadequate to the purpose."

The defendant had taken the position on the appeal that, "there is no offence known to the law of Ontario that requires an employer in a farming operation to take the reasonable precaution of ensuring that adequate access and/or egress is provided for a storage facility where the employee's task requires her to work at a height that is less than three metres" (as paraphrased by Justice Nadel).  This was rejected by the Court.

Read the decision at: Ontario (Ministry of Labour) v. Stratford Chick Hatchery Ltd.

NOVA/TransCanada withdraws application to "decommission" 266 km line

In August, 2012, NOVA Gas Transmission Ltd. (part of TransCanada Pipelines) applied to the National Energy Board (NEB) for permission to "decommission" a 266-km stretch of pipeline.  Essentially, the application would see the abandonment of the line in place, but NOVA contended that it was "decommissioning" the line because service on its "pipeline" would continue.  The NEB disagreed and directed that it would consider the application as one to abandon a pipeline.

On February 8, 2013, NOVA wrote to the NEB to withdraw its application, saying that it was reviewing its proposal in light of the NEB's comments: February 8, 2013.  The NEB confirmed this development in its letter to NOVA dated February 25, 2013.

Landowners should keep an eye on these developments.  It appears that pipeline companies are taking the position that, as long as they continue to transport materials somewhere on their pipeline systems, none of their abandonments are actually "abandonments" within the meaning of the NEB Act.  Instead, the companies will suggest that they are "decommissioning" pipelines, depriving landowners and other interested parties from public hearings, participant funding, etc.

Natural severance granted to two landowners by Superior Court

Owners of two different properties in the Hamilton, ON area brought applications to "clarify or determine title" to the bed of a waterway that traverses each of the properties.  If the waterway was determined to be navigable, then the bed of the waterway would remain the property of the Crown and would effect a severance of the properties involved.  Section 1 of the Beds of Navigable Waters Act provides: 

"Where land that borders on a navigable body of water or stream, or on which the whole or a part of a navigable body of water or stream is situate, or through which a navigable body of water or stream flows, has been or is granted by the Crown, it shall be deemed, in the absence of an express grant of it, that the bed of such body of water was not intended to pass and did not pass to the grantee."

The Crown Patent for both properties was issued on January 11, 1816 to a single owner.  The original Patent did not contain any express grant of the bed of the watercourse.  Therefore, if the watercourse was found to be navigable as of the date of the grant, then title to the bed of it would remain vested in the Crown.

On the basis of evidence presented by the parties, the Court concluded that it was probable that the waterway was navigable for significant periods of the year in 1816.  Title of the bed of the waterway remains in the Crown (resulting in the natural severance of the Applicants' properties).

Read the decision at: O’Donnell v. Ontario (Attorney General) and Obratoski v. Ontario (Attorney General).

NEB to introduce Administrative Monetary Penalties

The National Energy Board (NEB) has developed draft Administrative Monetary Penalties Regulations (AMP Regulations) and published them in the Canada Gazette, starting a 30-day public comment period. 

Under the proposed regulations, the NEB can issue a Notice of Violation to landowners who construct a facility or excavate without leave under Section 112(1) of the NEB Act or who fail to obtain leave of a pipeline company to drive vehicles or mobile equipment over a pipeline right-of-way under Section 112(2) of the NEB Act.  These violations are designated as Type-B violations and will result in a monetary penalty of between $4,000 and $100,000 for a corporation and between $1,000 and $25,000 for an individual.

NEB Abandonment Cost Estimates: Will there be enough money?

The National Energy Board released its decision in the Pipeline Abandonment Cost Estimates proceeding yesterday (click here).  An oral public hearing was held in Calgary last October and November.  For pipeline landowners, the key ruling by the NEB was its finding that basing cost estimates on an assumption of zero removal of pipelines in agricultural lands was unreasonable.  The NEB has already decided that companies must begin collecting tolls now to cover the future costs of pipeline abandonment; the question is how much is to be collected.  Companies argued that the amounts should be based on the assumption that nearly all pipelines in agricultural lands should be abandoned in place.  Not surprisingly, this was oppposed by pipeline landowners.

In an earlier hearing, the NEB had rejected the landowner proposal for a 100% removal assumption for all medium and large diameter pipelines in agricultural lands.  Instead, the NEB created a "base case" assumption calling for 20% removal and 80% perpetual maintenance, though giving companies the opportunity to provide justifications for a departure from this base case.  In its most recent decision, the NEB found that the companies had failed to justify their proposed departures from the base case and ordered that abandonment funding amounts be set based on the 80/20 split:

The Applicants have not successfully justified their deviation from the Base Case assumption for medium and large diameter pipe in these two land-use sub-categories. During the course of the MH-001-2012 hearing, all Applicants made submissions to the Board as to why the Base Case assumptions of 80 per cent abandonment-in-place and 20 per cent removal should not be imposed. The Board considered these comments but does not find them convincing. In addition, the Board also considered Applicants’ responses to a Board request made during the course of the hearing. Applicants were asked to provide recalculated cost estimates for three theoretical scenarios – 10, 20 and 30 per cent removal on "Agricultural, Cultivated" and "Agricultural, Cultivated and Non-Cultivated" sub-categories, using their own methodologies. Finally, the Board considered the issues described above regarding easement agreements, landowner surveys, and the lack of provision for any site-specific issues that may necessitate removal. The Board has exercised its judgment in determining a reasonable assumption for medium and large diameter pipelines in the "Agricultural, Cultivated" and "Agricultural, Non-Cultivated" sub-categories. In the Board’s view, 20 per cent removal for medium and large diameter pipe in these land-use sub-categories is a reasonable, prudent and adequate starting point for estimating purposes.

For the landowners and landowner groups who participated in the hearing process (at their own cost, given that there is no mechanism for cost recovery in the NEB hearing process and no participant funding available), this decision is a victory.  However, it remains to be seen whether the 80/20 split and the companies' actual estimates of abandonment costs will be sufficient to protect landowners from the costs of pipeline abandonment in the future.  The positions taken by the pipeline companies in the proceeding demonstrate that they will likely do everything in their power to avoid having to remove their abandoned pipelines from the ground. 

Federal Court denies Monsanto default judgment over patent infringement

Monsanto Canada Inc. and Monsanto Company have been denied an order for default judgment by the Federal Court of Canada in a patent infringement case.  The farmer involved did not file a defence.  Monsanto alleged that the farmer signed a licence with and obtained patented seeds from Monsanto; that the licence permitted the farmer to grow one crop, not to save seeds, and not to replant a new crop from those seeds; and that, notwithstanding the terms of the licence, the farmer saved seeds and planted a crop containing the patented gene. 

The rules required that Monsanto file affidavit evidence in support of its claim.  In other words, although there was no defence filed, the Court would not simply accept the allegations in the claim without some proof.  Monsanto attempted to circumvent this requirement by serving a "Request to Admit", a series of allegations put to the opposing party.  Where the opposing party fails to answer (either by admitting or denying the allegations), as in this case, that party is deemed to have admitted the allegations.

The Federal Court declined to accept this "evidence" as a sufficient basis for a default judgment order:

I am sceptical of such an attempt to “bootstrap” the requirement to provide the necessary evidence to support a default judgment by procedural manoeuvring. While it is true that, particularly in contested proceedings, the Request to Admit process is useful in eliminating the need to prove certain facts, I am satisfied that such a Request cannot be a substitute for affidavit evidence required on a motion for default judgment. Rule 210(3) states that a motion for default judgment shall be supported by affidavit evidence which evidence, in the context of the Rules, I take to be directed to the substance of the claim and not just an affidavit of service. I agree that the Court might even have discretion in respect of certain of the practice and procedural provisions of the Rules. In this case, because there is no affidavit evidence, whatsoever, to support the allegations in the Statement of Claim, I will not exercise any discretion, even if I have it, to accept the unanswered Request to Admit in lieu of such affidavit evidence.

Read the decision at: Monsanto Canada Inc. v. Verdegem.

Landowners seek to rely on 60-year old drainage maintenance agreement with municipality

Landowners and a municipality disagreed over the continuing effectiveness of an agreement made in 1953 that required the municipality's predecessor to maintain a drainage system and to make good any and all damage caused to the landowner (property owner).  The agreement had been made at a time when the local Township wished to construct a drainage system along a road.  In exchange for a right of access to the neighbouring property belonging to the predecessor-in-title to the current landowners, the Township gave the undertakings respecting maintenance and repair of damages.  The agreement was not registered on title, but the current landowners were aware of it.

When the current landowners asked the current municipality (the successor of the original Township) to meet its obligations under the agreement, the municipality responded that it was no longer bound by the agreement.  The parties then agreed to have the Court decide the question in a "Special Case" under Rule 22 of the Rules of Civil Procedure.

The result was the following series of declarations by the Court in favour of the landowners:

1. A DECLARATION that the Agreement on April 27, 1953, properly interpreted, did impose a perpetual obligation of the Township of Thurlow to maintain the drainage system it had installed in good working condition at all times and to make good any and all damage caused to the property owner whoever that may be from time to time as a result of lack of repair or of acts done at any time by the corporation in maintaining and repairing the system.

2. A DECLARATION that as a result of the amalgamation of the Township of Thurlow and the Defendant City in 1998, the Defendant City is bound by the contractual obligations of the former Township which are found to have been created by the Agreement.

3. A DECLARATION that the Agreement is valid and binding notwithstanding that it was not entered into or, the system was not constructed, under or in accordance with legislation such as the Drainage Act.

4. A DECLARATION that the Agreement can be enforced against the Defendant City although it was not registered on title under the Registry Act and/or the Land Titles Act.

5. A DECLARATION that the Plaintiffs are not barred from enforcing the Agreement by s. 449 of the Municipal Act, 2001.

6. A DECLARATION that the Defendant does not have a valid defence to the Plaintiffs’ claim on the basis that the conduct of the Defendant amounts to the exercise or non-exercise of a discretionary function resulting from a policy decision.

7. A DECLARATION that the Plaintiffs are successors of the Agreement and thus, are entitled to enforce the Agreement without an express assignment.

8. A DECLARATION that the Defendant does not have a valid defence to the Plaintiffs' claim on the basis that the Plaintiffs are trying to enforce a positive covenant in regard the land.

9. A DECLARATION that the Agreement, which imposes a perpetual obligation upon the City, is not invalid as contrary to public policy because it does impose a perpetual obligation.

10. A DECLARATION that there is sufficient description of the property and easements in the Agreement to create an enforceable agreement.

11. A DECLARATION that the Defendant does not have a valid defence to the Plaintiffs’claim on the basis that the Plaintiffs did not inquire about the Agreement and/or its status before they bought the land, and/or by reason of the defence that the Plaintiffs did not rely on the Agreement when they bought the land.

12. A DECLARATION that the Agreement is not void as against public policy as fettering the Defendant City’s discretion with respect to future uses of roads and road allowances.

13. A DECLARATION that there is no statutory limitation period that acts to bar an action by the Plaintiffs.

14. A DECLARATION that the Plaintiffs’ claim for damages for breach of the Agreement is not defeated by the doctrine of laches.

Read the decision at: Brown v. Belleville (City).

Divisional Court upholds land registry freeze in face of apparent "scheme"

The Ontario Divisional Court has upheld a decision of the Director of Land Titles to place a freeze on the land records for a piece of property in Bruce County.  Krystal Summer Williams had sought to register a "self-to-self" transfer of the property, which was still administered under the Registry Act system of land registration.  Under the registry system, a person dealing with the property only has to trace the chain of title back for forty years.  The property in this case had not been dealt with since 1936 and Ms. Williams applied to become the registered owner of the land.

Ms. Williams admitted that she did not own or have any interest in the property prior to registration, and the Director alleged that she was involved in a scheme to convey title to property that she does not own. 

The Divisional Court agreed and ruled that the Director had authority to impose the freeze in order to determine the propriety of the self-to-self transfer.  In the Court's view, this was "merely a scheme to create an interest in land where none exists." 

Read the decision at: Williams v. Ontario.

Can a right of first refusal bind non-parties?

That general question was at the heart of a recent Ontario Court of Appeal ruling on an estate matter.  Parents owned a property; they wanted to sell it to one of their three children, but the other two kids opposed the sale; in order to appease everyone, the parents proposed an agreement that would allow the property to go to the one child, but with a right of first refusal on the part of the other two kids in case the property-owner child ever decided to sell.  The other two kids wanted to keep the property in the family.

The agreement was executed by the three children, including the right of first refusal and a provision stating that notice of the agreement could be registered on title to the property.  Later, the property was transferred from the one child to her and her husband as joint tenants, with the husband having agreed to be bound by the previous agreement (including the right of first refusal).  The agreement was subsequently registered on title to the property, with the undertaking of the husband appended.

The whole situation ended up in Court because of disagreement between the siblings and their children over what could happen with the property on the death of the property-owner sibling (and her husband).  Was the agreement binding on the heirs of the property-owner?  Those heirs raised the issue of privity of contract, which was described by the Court of Appeal as follows:

The doctrine of privity of contract stands for the proposition that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it. This doctrine has two very distinct components or aspects. On the one hand, it precludes parties to a contract from imposing liabilities or obligations on third parties. On the other hand, it prevents third parties from obtaining rights or benefits under a contract. See London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), [1992] 3 S.C.R. 299, at para. 200.

 

There are established exceptions to the second aspect of the doctrine. In certain situations, the courts will permit strangers to enforce the contract and take the benefit of its provisions. The established exceptions are agency, trust, assignment or assumption, exceptions established by statute, and restrictive covenants. See Greenwood Shopping Plaza Ltd. v. Beattie et al.,1980 CanLII 202 (SCC), [1980] 2 S.C.R. 228, at para. 11.

The Court noted that, at first blush, it might seems as if privity of contract applies in this case and that the heirs of the property-owner sibling are not bound by the right of first refusal.  However, death does not terminate a contract unless the contract is "based on personal considerations, skill or confidence (a personal contract)."  The estate of the owner would be in the position of the owner, bound by the agreement.

What if the property is then conveyed by the estate to the heirs?  The Court found that the heirs, too, would be bound by the right of first refusal.  The estate would pass title to the property to the heirs subject to the requirements in the agreement.  Not only do those heirs have actual notice of the agreement (in this case), but they "are volunteers in the sense that they give no consideration for title to the Property".  The heirs cannot stand in a better position than did the estate.

The Court of Appeal also ruled that the Agreement containing the right of first refusal was properly registrable against title to the property under the Land Titles Act.  The Court says the following with respect to the nature of the interest held by a holder of a right of first refusal:

What did the holder have before crystallization? The holder had an interest in the unregistered equity that arose at the point of crystallization. To be sure, the holder is not entitled to the equity, as that entitlement arises on crystallization. But the holder has an interest in it, in the sense that the holder has something more than a mere spes or hope. The holder, prior to crystallization, has the recognised legal interest that will swell into an equitable right on crystallization. In the language of s. 71(1), the holder is a person “… interested in [an] unregistered … [equity] in registered land…”. Accordingly, rights of first refusal over land can be protected by registration under s. 71(1).

Read the decision at: Benzie v. Hania.