A recent decision of the Ontario Superior Court of Justice tells a sad tale of sisters fighting over the family farm. The 100-acre farm with a two-storey farmhouse and bank barn had been in their mother’s family since the 1920s. By the time the father died in the late-2000s, the mother was living in a long-term care home, incapable of managing her property. Her four daughters held power of attorney for property, but could not agree on how to manage the property including the farm. For five long years, the sisters engaged in “bitter litigation”, launching court actions back and forth.
Things looked up by the end of 2015 when the sisters resolved their litigation through Minutes of Settlement. They agreed to structure their mother’s property so that it would be divided equally among the sisters consistent with the wording of their mother’s will. With respect to the farm, though, the will and a codicil to the will directed that the farm not be sold for one year after the mother’s death “to enable one or more of my children to find a way to keep it in the family, failing which the farm shall be sold and the proceeds shall form a part of the residue of my estate. It is my fervent wish that my children will assist one another in ensuring that, if at all possible, the farm will remain in the ownership of one or more of them.”
The sisters’ mother passed away in late-2020, triggering a countdown of sorts towards dealing with the farm property. By the mother’s date of death, the farm was valued at approximately $1.9 million. However, in 2014, the farm had been appraised at $890,000 and the sisters had already agreed in their Minutes of Settlement that two of the sisters would pay the other two sisters $422,750 for the farm (being one-half of the $890,000 less $44,500 real estate commission). Each sister was entitled to one-quarter of the value of the farm property. Title to the property was to be transferred to the purchasing sisters by a closing date to be the later of a date in February, 2016 and the date on which certain of the mother’s investment assets were to be disbursed.
The farm transaction was not completed in February, 2016. By March, 2018, the transaction had still not been completed. The selling sisters wrote to the purchasing sisters stating: “the agreement was not intended to extend over a period of time and needs to be fulfilled”. They set a deadline of April 15, 2018 for completion of the deal failing which they would conclude that the purchasing sisters didn’t “intend to fulfill the Minutes of Settlement” and would “take the appropriate course of action.”
Fast-forward to 2022 and the purchasing sisters commenced a court application asking the Court to order that they could pay $422,750 to the selling sisters and that the selling sisters would have to transfer to the purchasing sisters title to the farm. Again, as at the time of the mother’s passing in 2020, the farm had been valued at about $1.9 million – a $422,750 purchase price would represent a discount on the 2020 value of the farm of more than 50%. It was the court application brought by the purchasing sisters that culminated in the recent Superior Court decision.
Madam Justice C. D. Braid heard the application and concluded the following: 1) the Minutes of Settlement were a contract between the sisters; 2) the purchasing sisters “repudiated” the contract by failing to complete the transaction with the selling sisters; and, 3) the selling sisters accepted the repudiation of the contract, bringing their agreement to accept $422,750 in exchange for the farm to an end. As such, the purchasing sisters were no longer entitled to purchase the farm pursuant to the terms of the Minutes of Settlement.
While the purchasing sisters had never expressed an intention not to complete the transaction as required by the Minutes of Settlement, Justice Braid found that the purchasing sisters’ “extreme delay” meant they repudiated (or disavowed) their contract with the selling sisters. Where a contract contains sufficiently clear terms about price, the property, and the parties, the Court will infer that the parties expect a transaction to be closed “within a reasonable period of time”. Where a contract doesn’t stipulate a specific time of performance, the law implies a term that the contract is to be performed “within a reasonable time”. Where delay in performance “becomes so long as to go to the root of the contract”, the contract will be considered repudiated or fundamentally breached and the party suffering the delay will be excused from performance.
Faced with repudiation of the Minutes of Settlement by the purchasing sisters, the selling sisters could have chosen to keep the contract alive and have sought to enforce the deal. However, it was their option to accept the repudiation and end the contract. With the Minutes of Settlement now unenforceable, Justice Braid ordered that the family farm be sold on the open market and the net proceeds from the sale be divided equally between the sisters in accordance with their mother’s will. Her Honour did specify that the purchasing sisters were not prohibited from making an offer to purchase the farm once it was listed, but the purchasing sisters had lost the opportunity to buy the farm at the 2014 price.
Read the application decision at: 2024 ONSC 603 (CanLII).
UPHELD ON APPEAL: 2024 ONCA 791 (CanLII).
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