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

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

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

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

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

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

Read the decision at: Drew v Huskinson.

Rogers Communications loses cell tower lease over move to sub-lease space to a third party

A Nova Scotia forestry company leased land to Rogers Communications for a cell tower.  The original 1988 lease was renewed several times and provided that renewals would be "upon the same terms and conditions" as the original lease.  In 2012, Rogers asked for the lessor's consent to a "co-location" agreement where Rogers would sub-lease space on the tower to a third party.

Although no agreement was reached and no consent was given, Rogers went ahead with the co-location arrangement.  The lessor sought a declaration from the Court that the lease was terminated as a result of Rogers' failure to obtain consent.  The lessor also sought damages.

In court, there was a dispute between the parties over whether the lease had been renewed in 2012 for a further five-year term.  Rogers argued that it had given notice as required by the lease to renew under the same terms and conditions and, therefore, it was entitled to the renewal of the lease (which would be more or less automatic as long as Rogers exercised its option to renew).  The lessor, on the other hand, contended that Rogers' proposed renewal amounted to a counter-offer (which it rejected).  The proposed renewal lease included the co-location arrangement and additional rent as compensation for the addition of a sub-tenant to the tower.  Rogers took the position that it was its right to include the additional provisions in the renewal.

The Court determined that the lease had not been renewed and ordered Rogers to vacate the lands within 8 months of an order to be issued setting out the terms of the decision.  Also, the lessor was awarded any rent not paid during the period after the lease had terminated.

The Court then proceeded to consider the lessor's request for damages for breach of contract, breach of duty of good faith and trespass.  The Court ruled that Rogers did not have the right under the lease contract to allow a third party to sub-let or co-locate - the lease provided rights to Rogers to erect, maintain and operate its tower, but it did not allow it to host a third party's services.  Also, the Court noted that Rogers had sought consent from the lessor to allow the co-location.  The lessor was awarded the sum of $3,000 in rent for each year in which the third party co-located on the tower.

Read the decision at: Atlantic Star Forestry Ltd. v. Rogers Communications Inc.

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.

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).

Soybean quality dispute goes to Ontario Court of Appeal

The Court of Appeal for Ontario recently released a decision in a case involving a Chatham area farm operation and Thompsons Limited related to quality grading of soybeans.  For more than two decades, the farm operation, "Triple P", had purchased crop inputs from Thompsons and Thompsons had contracted with Triple P to buy grain.  Thompsons had also hired Triple P to provide custom spraying to some of its other customers.

In 2007, the relationship took a turn for the worse when Thompsons concluded that one batch of seed beans from Triple P did not meet quality standards necessary for a seed premium of $1.35 per bushel.  Then Thompsons advised Triple P that it would not be awarding its 2007 spraying contract to Triple P, even though Triple P was of the view that an oral contract was already in place.  Triple P then threatened that it would not deliver other futures contracts for 2007 and 2008 grain.

Thompsons sued Triple P and Triple counterclaimed.  The trial judge concluded that: (1) Thompsons had established its claims in respect of the Futures Contracts; (2) Thompsons was not obliged to pay the claimed seed premiums under the Soybean Contracts because the Renwick soybeans “fell below grade” and Triple P had sold the Respond soybeans to a third party; and (3) no binding 2007 Spraying Contract had been entered into by the parties.  The trial judge awarded Thompsons damages in the amount of $108,046.39, inclusive of prejudgment interest, on account of Triple P’s breaches of the Futures Contracts, together with costs in the sum of $60,000. She dismissed Triple P’s counterclaim.

The Court of Appeal dismissed Triple P's appeal of this decision.  Read the decision at: Thompsons Limited v. 617987 Ontario Inc.

Canadian Wheat Board loses appeal in negligent misrepresentation case dating from 1982

In late August 1982, widespread frost damage occurred to Western Canada’s premier Canada Western Red Spring wheat (CWRS), resulting in significant degrading of the crop. The Canadian Wheat Board (the CWB), along with the Canadian Grain Commission (the CGC), elected to market the damaged wheat under the specification “Wheat – Ex. Special Bin” (WSB) on the basis, despite its visual degradation, that it “possesses what is known as ‘fair’ milling quality and would be quite suitable for milling purposes.”

Pagnan S.p.A., an Italian corporation, purchased a large quantity of WSB from ConAgra Limited (Agro), an accredited CWB exporter. When the first cargo of wheat was delivered to Italy, it was found to be inferior and not of fair milling quality. Pagnan and Albionex together (Pagnan having sold, then repurchased the cargo from the other plaintiff, Albionex (Overseas) Limited) commenced an action in 1985, claiming against Agro for breach of contract and against the CWB based on the representations made with respect to the characteristics and quality of WSB. Agro crossclaimed against the CWB, asserting that it too had relied upon the CWB’s representations.

The trial judge in the Manitoba Court of Queen's Bench delivered lengthy reasons for decision in July 2009, holding Agro liable to the plaintiffs for breach of contract and the CWB liable for negligent misrepresentation. Agro’s crossclaim against the CWB was allowed. Judgment was eventually entered in favour of the plaintiffs and against the defendants jointly and severally in the amount of $4,642,392.40, inclusive of interest to the date of judgment, plus costs. Judgment was also entered (in favour of Agro) in a similar amount against the CWB.

Agro and the CWB then appealed their liability and damages, and the CWB appealed Agro’s crossclaim judgment. The plaintiffs also cross appealed, arguing that damages should be increased.  None of these appeals or cross-appeals succeeded at the Court of Appeal.

Read the decision at: Albionex (Overseas) Ltd. et al. v. Conagra Ltd. et al.

Pipeline landowner who sold land for highway not in breach of Statutory Right-of-Way

Terasen Gas Inc. (now FortisBC Energy Inc.) has lost its attempt to draw one of its pipeline landowners into a legal battle with the City of Surrey.  The dispute between Terasen and Surrey relates to Surrey's project to widen a portion of the Fraser Highway.  The highway crosses a Terasen high-pressure gas pipeline, which will require upgrades to permit the widening. 

Terasen expects to be on the hook for at least part of the cost of the upgrades, but contends that the City of Surrey should be responsible.  In addition, as part of an ongoing court case, Terasen claimed damages from Angus Properties Ltd.  Terasen says that Angus, which agreed to sell certain lands to Surrey for the road widening project, breached the terms of the 1957 Statutory Right-of-Way ("SRW") that applied to the lands in favour of Terasen:

In its Amended Statement of Claim filed March 30, 2010, Terasen alleges that Angus was aware of, consented to and cooperated in Surrey’s conduct of the highway project on the Additional Lands, and that Angus was aware of Terasen’s position that the project would interfere with the safe and efficient operation of the pipeline. It says that Angus nevertheless entered into the Purchase Agreement and granted Surrey a licence to enter the Additional Lands to prepare the site, in breach of the SRW. It claims that Angus breached the SRW by permitting Surrey to proceed with the highway project. It says that Terasen has suffered damage as a result, including the pipeline upgrade costs.

Angus brought a motion for summary judgment to strike out Terasen's claim against it.  The Court allowed the motion, finding:

Terasen says that Angus breached the SRW simply by entering into the Purchase Agreement with Surrey, since that agreement removed Angus’s ability to prevent Surrey from doing work on the Additional Lands which would endanger the integrity of the pipeline.
Counsel for Terasen placed some reliance on Terasen v. Utzig, a case with very different circumstances from those here. Angus agreed to sell the Additional Lands to Surrey and to facilitate Surrey’s highway widening project by permitting it to enter the lands for preliminary preparatory work prior to transfer. It did not agree to permit, and there is no evidence that it ever permitted, activities that would reasonably be seen to endanger the pipeline. In contrast, that is what the defendant in Terasen v. Utzig was found to have done.

I agree with counsel for Angus that Terasen v. Utzig, and the other cases upon which Terasen relies, are distinguishable.

I further agree that, as a general proposition, it cannot be the case that the owner of land breaches a statutory right of way simply by granting an interest in the land to another party, unless the terms of the particular statutory right of way so prohibit. The SRW here does not prohibit sale or other transfer of interests in the land. [emphasis added]

I find that Angus did not breach the SRW by entering into the Purchase Agreement.

Did Angus breach the SRW by permitting Surrey to perform its work on the Additional Lands? Angus had granted Surrey a licence to “access, use and enter” the Additional Lands to facilitate “preliminary site preparation, pre-engineering and highway construction” and to “perform such tests as the City deems appropriate, including soil tests”. However, no work was done on the Additional Lands in connection with the highway widening project, by Surrey or any other party, until after the Consent Order of June 30, 2008 had been made. The work was done only after Terasen had prepared the pipeline so that it would not be endangered, and had given permission, in the Consent Order, for Surrey to proceed with the preloading.

Thus, when Surrey actually came onto the Additional Lands and performed the work, it was with Terasen’s consent and it was in circumstances in which the integrity of the pipeline was not endangered. Angus’s failure to prevent Surrey from doing the work, in these circumstances, did not in itself constitute a breach of the SRW.

I find that Angus did not breach the terms of the SRW either by entering into the Purchase Agreement or by failing to prevent Surrey from performing the work on the Additional Lands.

The Court found nothing wrong with Angus' agreement to sell its land to Surrey.  Implied in the Court's ruling, however, is that Angus may have been in breach of the SRW by allowing the preliminary work for the road widening to take place on its lands.  But for the consent for that work already granted to Surrey by Terasen, it is possible that the Court would not have granted the summary judgment motion, leaving the issue of whether or not Angus breached the SRW by allowing for the endangerment of the pipeline to be decided at trial.  That said, the Court found in any event that the damages sought by Terasen were not recoverable in any event because they did not "flow naturally from the breach" of contract alleged by Terasen:

The damages sought by Terasen do not flow naturally from the breach it alleges (Angus’s entering into the Purchase Agreement and removing its own ability to prevent Surrey from doing work on the Additional Lands). If Terasen in the end is found responsible for the costs of the pipeline upgrade, or for more of those costs than Terasen thinks it should bear, that will be a result of the legal framework governing pipeline operators and municipalities, and of the legal relationship between Terasen and Surrey, and not a result of Angus’s entering into the Purchase Agreement.

Read the decision at: Terasen Gas Inc. v. Surrey (City).

Court says neither party to cow-calf lease agreement conducted himself appropriately

Between 2004 and 2006, a cow-calf lease agreement was in place between Terry Pogson and Claude Martin.  Pogson owned about 76 cows, but took a job in the city and decided to lease out the cows to another operator.  Martin took the cows on the basis of an oral agreement that was later reduced to writing.  Pogson leased the cows and provided some pasture at his farm.  He was to receive 1/3 of the calves and would pay 1/3 of the expenses.

Problems arose as calving began and Martin realized that there were a number of open cows (that would not calf).  As a result, Pogson and Martin agreed that Martin would not be charged for the pasture use and would not be charged for 76 bales for which he had previously agreed to pay $20 each.  Martin was also concerned when he discovered that Pogson's cows had been vaccinated against Bovine Viral Diarrhea (BVD) in or about 2001 when a cow purchased from a neighbour tested positive for the illness.  The Court accepted the evidence of Pogson that the vaccinated cows were free of BVD given that any infected cow would have died as a result of being given the live vaccine.

At some point later in the contract, Martin sold some of the cattle that had been leased to him.  The overall result of the problems was a lawsuit in which both parties claimed various damages from the other.  The trial judge concluded the following about the parties and their agreement:

It is very easy to draw the conclusion that the plaintiff was a very disinterested owner-lessor. He did not look in on his herd as often as he should have. He never demanded an annual accounting. When the lease was terminated, he could only guess at the number of calves which should have been coming to him. Given the nature of this type of agreement which gives the lessee total authority over the cows, which remain the property of the lessor, the plaintiff should have been more diligent in ensuring that his investment was protected. It is impossible for him to complain when a dispute arose that the number of calves he is entitled to should be higher than the numbers put forward by the defendant.

Respecting the defendant's evidence, I must say I was very unfavourably impressed by it.

The defendant testified that he was treating the agreement as “null and void” within three months from the time he took the cattle. This is prior to the written agreement which the defendant himself prepared on his farm letterhead. The written agreement reflected the terms of the oral agreement. This spoke volumes to me as to the defendant’s attitude. Based on this testimony and the defendant’s later actions (as outlined below), it was clear to me that the defendant never had any intention of living up to his part of the agreement. He wanted all the benefits due to him and more but expected to pay little or nothing to the plaintiff.

In the end, the Court credited Pogson certain amounts for pasture used and cows sold and credited Martin for the value of some calves, transport costs and vaccine costs.  The end result was a judgment in favour of Pogson in the amount of $3,736.00.

Read the decision at: Pogson v Martin.

Court finds tenant who didn't pay rent cannot claim termination payments under leases

The Provincial Court of Saskatchewan has dismissed a claim brought by Mylyn Chamberlin against his former landlords for payment of termination fees under various leases.  Chamberlin had leased four quarter-sections of farm land from a group of brothers under separate, but virtually identical agreemnents.  The agreements each provided that rent was to be paid for the farm land, and that if the landlord terminated the agreement, a payment of up to $40.00 per acre would be owing to Chamberlin.  The four quarter-sections together comprised 520 acres and Chamberlin claimed $20,400.  From this amount, he deducted $8,000, which was the amount of rent he had failed to pay for the land.

The brothers wanted to sell the land and terminated the leases.  However, the Court ruled that Chamberlin had repudiated the agreements by failing to pay rent.  It was determined that Chamberlin could not rely on the termination clauses in the agreements.  The Court also dismissed a claim made by Chamberlin for input costs he had allegedly invested in the land, finding that there was no evidence produced that would allow an assessment of these costs to be made.  The Court did, however, acknowledge that costs had been incurred and on that basis declined to award court costs against Chamberlin.

Read the decision at: Chamberlin v Larson.

Saskatchewan Court of Appeal awards farm to son

In a recent decision, the Saskatchewan Court of Appeal has ordered that parents, Barbara and Alfred Raymond transfer their one-quarter interests in a quarter section of land to their son, Barry.  The trial judge in the proceeding had instead ordered the payment of damages as opposed to specific performance of a transfer agreement that was found to have been in place between parents and son.

Barbara and Alfred are deceased, but their estates were respondents in the appeal.  The action by Barry arose out of a broader dispute between him and his brother, Alan, as to their succession to the farm land owned by their parents.  The trial judge found that a valid sale agreement for one-half of one quarter section of land had been in place between the parents and Barry and should be enforced.  Barry already owned another one-quarter interest in the property.  However, the judge declined to award specific performance of the agreement (i.e. the transfer of the land) because it was found that the land involved was not "unique or irreplaceable in the sense that it cannot be compensated by damages."  Instead, the trial judge awarded $70,500, which was one-half of the appraised value of the property.

The Court of Appeal decided differently and awarded the land to Barry.  The Court commented on the change in the law that took place in 1996 following a Supreme Court of Canada decision:

Until 1996 it had long been a tenet of our law that each parcel of real property was inherently unique. Given this inherent uniqueness, our courts made the equitable remedy of specific performance readily available to a plaintiff purchaser who claimed the vendor had breached a contract for the sale of real property. In 1996, Sopinka J.’s majority decision in Semelhago v. Paramadevan, 1996 CanLII 209 (SCC), [1996] 2 S.C.R. 415 (“Semelhago”), questioned these longstanding, rudimentary elements of our law of real property. His comments, although obiter, were thereafter generally accepted as law. However, Sopinka J. did not so much make new law as remind us that a basic legal rationale based on the presumed inadequacy of expectation damages has always underpinned the availability of specific performance as a remedy in cases involving real property. Unfortunately, post-Semelhago there has been some confusion as to when the remedy of specific performance will be made available to an aggrieved prospective purchaser of land. For this reason, Semelhago has been criticized for founding legal uncertainty in once settled law. This appeal results in part from that uncertainty.

The Saskatchewan Court of Appeal says that the SCC decision in Semelhago does not stand for the proposition that the presumption of uniqueness has been supplanted by a presumption of replaceability.  Judges must not longer presume the inadequacy of damages (i.e. a monetary payment rather than the land itself) as a remedy whenever real property is involved, but instead a judge must decide whether, in the cirucmstances, damages would be an inadequate remedy.  The Court of Appeal described the inquiry as follows:

In practical terms, this means the prospective purchaser bears the burden of adducing evidence that the subject property is specially suited to the purchaser and that a comparable substitute property is not readily available. These evidentiary points are necessarily intertwined because, on the basis of the evidence, the prospective purchaser must discharge the overall burden of persuading the judge that the subject property is so different from others that damages is an inadequate remedy and that justice dictates the purchaser should have the subject property. The judge, in turn, must conduct a critical inquiry on the evidence as to the nature and function of the subject property in relation to the prospective purchaser. The evidence and analyses will necessarily overlap, but the overall question the judge must answer is whether the justice of the matter calls for an award of specific performance because damages would be inadequate.

In the circumstances of this case, the Court of Appeal found that the land held unique value for Barry and was not simply a commodity.  It commented on Barry's specific case and on the unique value of family farm land in general:

It cannot be said that the Land is, or that Barry treated the Land as, more akin to a commodity than a tract of land having special attributes not found in any other farm land. The Land is immediately across the road from Barry’s home quarter. Barry already owns an undivided one-quarter interest in the Land. The Land once belonged to his grandfather and is home to his parents’ yard-site. Barry used the Land for over 40 years, with his parents, his brother, and his deceased son. These factors or attributes are cogent and impossible to value precisely. On this basis, I would find that an award of damages cannot restore Barry to the position that he would have been in had the Parents’ Estates performed under the agreement for sale of the Parents’ Interests. Furthermore, Barry’s evidence was also that there are no “reasonable yard-sites” located in close proximity to his home quarter. Whether or not reasonable yard-sites are available, no other yard-site could have the attributes of the Land. In other words, there is no comparable substitute property, let alone one that is readily available. If there is any farm land in respect of which compensatory damages is inadequate, it is typically that farm land which sits directly across the road from a farmer’s home quarter. This is especially so where the farmer has an existing legal interest in it, strong emotional and familial ties to it, and sound economic reasons for making it part of his farming operations. Whether pre- or post-Semelhago, such farmland is “unique” and the appropriate remedy in such a case is an order for specific performance.

Read the decision at: Raymond v Anderson.

City of Thunder Bay fighting with wind developer over location for leased wind farm lands

The City of Thunder Bay entered into an option agreement with Horizon Legacy Energy Corp. for the construction of a wind farm on city property.  Although the option included a copy of the lease, it did not specify the exact location of the farm.  That was to be worked out between the City and the company.  The City had the ultimate power to make the decision, but after City Council turned down the location that had been put forward by the company and endorsed by a City committee, the company commenced a legal action to require that the City comply with the option and locate the farm as requested.

The City brought a motion to the Court asking that the court action be thrown out in favour of arbitration.  Under the lease, which the City signed, disputes were supposed to be resolved through arbitration and not in the Courts.  However, the Court found that this was not an issue about the lease; it was an issue about the option, which did not include an arbitration clause.  On that basis, the Court did not determine the issue of whether the lease could actually be a lease at common law if the location of the leased premises was not defined.

Read the decision at: Horizon Legacy Energy Corporation, et al v. The Corporation of the City of Thunder Bay.

"A contract to make a contract is not a contract"

In a recent decision, the Ontario Superior Court of Justice dismissed a breach of contract claim by one farmer against another in connection with the sale and purchase of wheat.  The Court noted that, "Because of the rapid price fluctuations in the grain market, oral contracts are the norm. Once the oral contract is completed it is normally followed up by reduction to written form, although not always." 

Mr. Kuratli, the plaintiff in the case, and Mr. Hefti, the defendant, had done business with one another in the summer of 2007. At a party for people of Swiss descent Mr. Kuratli asked Mr. Hefti if he had any corn available. Mr. Hefti had approximately 35 tonnes of corn. He agreed to sell it to Mr. Kuratli for $175 a tonne. Mr. Kuratli picked up approximately 20 tonnes near the end of September 2007 and paid Mr. Hefti for the load, but failed to pick up the balance of the tonnage at the agreed price. Mr. Hefti had to sell it at a loss. Thereafter Mr. Hefti decided that he would not do any further business with Mr. Kuratli unless he had a contract in writing.

The wheat purchase at the heart of the case before the Court was first arranged orally.  Then, as the Court found, Mr. Hefti's intention was that a written contract would be executed.  On the basis that no written contract was executed, the Court dismissed Mr. Kuraltli's claim for damages for the failure by Mr. Hefti to deliver wheat according to the arrangement.  The Court stated the law on the issue:

Where the intention of the parties is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original or preliminary agreement cannot constitute an enforceable contract. A contract to make a contract is not a contract: see Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 CanLII 2734 (ON C.A.), [1991] 79 D.L.R. (4th) 97 (O.C.A.), and the cases cited therein.

Read the decision at: Sonibrand-Farm Inc. v. Ferme Rudolf Hefti Inc.

Claim against CN over sale of contaminated property going forward, in part

This is another decision on motions for summary judgment.  The action involves land owned in North Bay by Canadian National Railway Company (CN) that was sold by Canadian National Railway Properties (CNRP), a special purpose subsidiary of CN that was used to sell the lands, to Drosophilinks Consulting Inc. (DCI). It is alleged that there were environmental problems with one of the parcels sold by CN known as the Main Street lands. Damages are claimed by DCI for breach of contract and by the plaintiff Aldo Forgione under the Occupiers Liability Act, at common law and for breach of an alleged duty of good faith owed to him.  Forgione was involved because the property had come to DCI through an agreement between CN and Forgione "in trust" (for DCI).

The plaintiffs claim that in late July 2005, Mr. Forgione discovered a trailer on the Main Street property that contained transformers containing PCBs that exceeded federal and provincial guidelines. It is accepted that these transformers were there when the sale to DCI closed, although CN says that at the time of the sale, it thought that the property had previously been successfully decommissioned of environmental problems. It is claimed that DCI has incurred substantial expenses to comply with an order of the Ministry of the Environment, that Mr. Forgione has suffered personal damages as result of coming into contact with the PCBs and that he has suffered damages by reason of a lessening in value of the other properties that he purchased from CN in North Bay due to the notoriety of the PCB problem at the Main Street property.

The Ontario Superior Court declined to dismiss the DCI claim for breach of the agreement of purchase and sale, finding that there were genuine issues for trial.  The Court did, though, dismiss all of Forgione's personal claims, ruling that: 1) CN could not be liable under the Occupiers Liability Act when it had already sold the property to DCI; 2) Forgione provided no evidence of personal injury or harm; 3) Forgione provided no evidence of damage caused to other neighbouring properties purchased by companies he owned; 4) Forgione has no claim for a breach of the "duty of good faith":

Moreover, Canadian law has not recognized a general duty of good faith independent from or contrary to the terms of contract.

Even if Forgione were a party to the contract, which he wasn't, a breach of the contract by CN could not give rise to a cause of action for Forgione based on a separate breach of the "duty of good faith".

Read the decision at: Drosophilinks Consulting Inc et al v. Canadian National Railway Company.

"Devastating admissions" by defendant in cattle case leads to summary judgment

Though the test may vary from province to province, a judge may grant summary judgment generally when there is no genuine issue for trial.  That is, if there is no legal issue that needs to be determined at trial in order to dispose of a case, one of the parties to a lawsuit may apply to the Court to have the case decided by way of a motion for summary judgment.

In a recent decision on a summary judgment motion brought by the plaintiff, Master Harrison of the Manitoba Court of Queen's Bench found that "devastating" admissions made by the defendant in the case during examinations for discovery were determinative of the case.  For that reason, there would be no purpose in going to trial and summary judgment was granted.

The case in question involved an "arrangement" where the plaintiff would receive on a regular basis requests or orders from the defendant to purchase cattle.  The plaintiff would go out and buy the cattle, usually at auction, and then deliver the cattle to the defendant and render bills to the defendant.  Eventually the defendant refused to pay and the arrangement ended.  The plaintiff sued for some $80,000.  The defendant counter-sued for $12,000.

Summary judgment was granted in the plaintiff's action because the defendant admitted during examinations for discovery that he had acknowledged the debt to the plaintiff and told the plaintiff that he would pay:

Yes. I offered him that because I lost so much money. And I said, ‘Okay. You know what? I will pay you so much a month until it’s paid, until you are paid.’ But that’s it for us. We are done.”

On the defendant's countersuit, the Court could not grant summary judgment.  The Master ruled that:

This court is not prepared to spend twenty pages of time and space in terms of a detailed analysis of the issues arising in the counterclaim. The evidence of the corporate representatives of the parties is so conflicted that only a trial, in my opinion, would resolve the substantial credibility issues outstanding within the counterclaim. It is true that the affidavit evidence before the court regarding the faxing of invoices concerning the counterclaim cattle does put the corporate defendant in an unfavourable light. However, the overall calibre of the said evidence is simply not strong enough show that the plaintiff has met the legal burden.

Read the decision at: ADJ Livestock v 4486413 Manitoba Ltd.

Siblings, the family farm, and nasty litigation

Here's how a recent decision of the Alberta Court of Queen's Bench begins:

It is unfortunate that at this stage of their lives siblings are involved in nasty litigation. Mr. Chemerinski is the brother of Susan Richter. Anne Marie Chemerinski was their mother. She died on November 1, 2009. Before her death, she was unable to look after her own affairs. Her son William held a Power of Attorney and looked after her affairs. Calvin Richter is Susan’s husband. In 2002 The Richters started an action for damages against these Respondents and the estate of Anne’s late husband Carson based on breach of contract, unjust enrichment or quantum meruit arising out of a joint farming operation near High Prairie, Alberta. In another action, Susan was named the Defendant by Anne. This action dates to 2002. Anne claimed repayment of an alleged $40,000.00 loan to her daughter. In another Queen’s Bench action dating from 2006, Susan is a Plaintiff along with her sister Christine and Bill and Anne are two of the Defendants. In this action two sisters are pitted against their brother and mother. This claim relates to the ownership of a joint investment account held by the Plaintiffs and their mother at CIBC Wood Gundy.

This multifaceted litigation has been disastrous for this family on two levels. It has been emotionally and financially crippling. The litigants are in their late 50s and early 60s. Any vestiges of family harmony have been destroyed. The litigation has accomplished very little other than to create bitterness and deplete resources. It is a prime example of what can happen if litigants possess an abundance of bile and resources.

Read the rest of the decision at: Richter v. Chemerinski.