Get on with your deal or lose the farm

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

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).

Natural Severance Case Being Appealed

In May, 2015, I wrote about a decision from the Superior Court of Justice in which a property was found to be severed naturally by a navigable watercourse - the Bear Creek (see Court Rules that Bear Creek was navigable in 1831).  The case is now under appeal by the Municipality and a hearing has been scheduled for February 4, 2016 in Courtroom 2 at the Court of Appeal (Osgoode Hall) in Toronto.

GFO Appeal on Neonicotinoid Decision to be heard in March

According to the Grain Farmers of Ontario ("GFO"), its appeal of the decision rejecting its challenge of Ontario's new neonicotinoid regulations will be heard by the Ontario Court of Appeal in Toronto on March 9, 2016.

I commented on this case back in November, 2015: This challenge by GFO still strikes me as an attack on government policy, something in which the courts are loathe to interfere (as was noted by Justice Akhtar in his dismissal of the case).  GFO's news release doesn't provide any details about the "proper grounds" for the appeal(s).  We may need to wait until the appeals are heard (if they proceed) and decisions rendered to see what "proper grounds" are being advanced.

I still think GFO has a very steep hill to climb in challenging what is a policy decision of the Ontario government.  Generally, the Courts will not interfere in policy decisions of the government unless those policies were made without authority or violate some overriding constitutional or other right.  Courts will interfere where government enacts a policy but fails to follow it.  That's not likely the case here.

Grain Farmers of Ontario appealing neonicotinoid decision

Grain Farmers of Ontario ("GFO") is appealing the October 23 dismissal of its challenge to Ontario's neonicotinoid regulations.  That appeal is made to the Ontario Court of Appeal.  GFO is also making a motion to the Ontario Divisional Court for a review of the earlier Superior Court decision dismissing GFO's request for a stay of the regulation.  GFO says that, "We believe there are proper grounds for these steps".  GFO's news release can be found at: GFO Appeal.

This challenge by GFO still strikes me as an attack on government policy, something in which the courts are loathe to interfere (as was noted by Justice Akhtar in his dismissal of the case).  GFO's news release doesn't provide any details about the "proper grounds" for the appeal(s).  We may need to wait until the appeals are heard (if they proceed) and decisions rendered to see what "proper grounds" are being advanced.

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.

Ontario Court of Appeal overturns Antrim Truck Stop expropriation compensation decision

In February, 2010, I wrote about a much anticipated decision of the Ontario Divisional Court on appeal from the Ontario Municipal Board: Antrim Truck Centre Ltd. v. Ontario (Ministry of Transportation).  The facts of the original OMB case were as follows:

• Antrim owned a truck stop in the Hamlet of Antrim on Highway 17, formerly part of the Trans-Canada Highway;
• In September, 2004, a new section of Highway 417 was finished and re-routed the former Trans-Canada Highway (away from the truck stop);
• The Antrim property comprised 13.66 acres and included 947 feet fronting on Highway 17;
• Antrim alleged that the closure of Highway 17 substantially interfered with its use and enjoyment of its property and made a claim for injurious affection - the change in the Highway basically put Antrim out of business (Antrim took steps to mitigate its loss and relocated);
• The business had been generating gross annual revenues of more than $15 million and had employed about 100 people;
• The claim for injurious affection was for over $8.2 million, including the cost of relocation and construction of new business premises;
• The OMB awarded Antrim $393,000 - the MTO appealed the decision - Antrim cross-appealed seeking the additional $7.6 million or so it had originally claimed.

No lands were taken from Antrim.  The Divisional Court agreed with the decision of the OMB and upheld the award of compensation on the basis that the diversion of the highway constituted an actionable nuisance in the form of interference with access. 

 

The Ontario Court of Appeal disagreed with both the OMB and the Divisional Court.  In its June, 2011 decision, the Court found errors in the Divisional Court's analysis of the tort of nuisance.  The Court of Appeal said that the OMB was required to consider two elements of the test for nuisance: was the interference with Antrim's property (access) substantial and, if so, was the interference unreasonable?  The Court of Appeal agreed with the OMB's finding (upheld by the Divisional Court) that the interference was substantial.  However, it found that the interference was also reasonable.  In its view, the Divisional Court had failed to analyze this issue.  The Court of Appeal concluded:

When the board’s factual findings are properly applied to the various elements of the reasonableness analysis, I would conclude, based on the observations made above, that the interference caused by the MTO’s conduct was not unreasonable. As the board reasonably concluded, the interference amounted to a “serious impairment in nuisance”. However, the interference was such that it fell within the boundaries of what the reasonable property owner in the area should be expected to tolerate and was the result of a project that served the public interest – more, was actually essential to public safety. Simply put, the highway was built to save lives. In the light of the substantial weight to be given to this factor in the circumstances, it is difficult to see how this change in the access to the Antrim property, particularly given the fact that it actually brought the Antrim truck stop in line with the access typical of Ontario truck stops, can be viewed as unreasonable.

In failing to properly carry out the reasonableness analysis, the board failed to give effect to the fundamental purpose of the law of nuisance: balancing the competing rights of property owners to use their land as they wish.

On this basis, the Court of Appeal found there was no nuisance and, therefore, no basis for an award of compensation.  Based on agreement between the parties, the Court awarded the MTO its costs of the appeal in the amount of $20,000 and its costs of the unsuccessful cross-appeal by Antrim (seeking higher compensation) in the amount of $20,000.

Read the decision at: Antrim Truck Centre Ltd. v. Ontario (Transportation).

So-called farm land "tax grab" appeal dismissed by Ontario Court of Appeal

Last February, I wrote a post about a Divisional Court decision that overturned a decision of the Normal Farm Practices Review Board involving a former oil refinery site (Normal Farm Practices Board decision overturned by Divisional Court ).  Why would normal farm practices be an issue for a former refinery site?  In the view of the municipality involved, the owners of the development land were attempting to circumvent municipal zoning laws and avoid non-agricultural property tax rates by using the land for agricultural purposes.  The Ministry of the Environment had earlier restricted the use of the .and to industrial or commercial use.  Read Farms, the tenants on the 400-acre parcel of land, were growing cash crops.

Read Farms appealed the Divisional Court ruling to the Court of Appeal, unsuccessfully.  Both the Divisional Court appeal and the appeal before the Court of Appeal determined that the Normal Farm Practices Protection Board did not have the authority in this case to invalidate or overrule the zoning by-law of the Town of Oakville which prohibited the use of the Read Farms land for farming purposes.  As the Court of Appeal wrote:

Therefore, when s. 6(1) [of the Farming Practices Protection Act, R.S.O. 1990, c. F-6] is read in conjunction with the preamble and other provisions of the Act, it is readily apparent that the Board only has jurisdiction to consider the applicability of by-laws to normal farming practices that are carried out on agricultural lands. The Act does not permit circumvention of legitimate municipal planning regarding the land use designations of various lands.

Read the decision at: Oakville (Town) v. Read.