REMINDER: CAFA - Farm Tax & Legal Update - Thursday, October 17, 2019 - Waterloo, ON

The Canadian Association of Farm Advisors will hold its Annual Farm Tax & Legal Update for 2019 at St. George's Banquet Hall in Waterloo, Ontario on Thursday, October 17, 2019.  For the agenda and registration information, visit:
2019 Farm Tax & Legal Update.

This year, I will be making a presentation on "Sowing the Seeds of Litigation - What's Trending in Farm Property Disputes".

Farm Tax Update for Professionals - October 22, 2015, Guelph, ON

Please join CAFA for an exclusive one-day seminar:

Farm Tax Update for Professionals

Thursday, October 22, 2015 

Hanlon Convention Centre, Guelph.

Learn from industry leading farm professionals on the latest developments in farm tax and farm law.

Space is limited so be sure to send in your registration as soon as possible.

Get more information Register Now! I can't make it If you have any questions about the event or wish to learn more about CAFA, please contact Liz Robertson, CAFA's Executive Director. 1-877-474-2871 info@cafanet.com @CAFANET www.cafanet.com

Estate Trustees took wrong turns with family farm after mother's passing

In a recent application to pass accounts in an farm estate matter, the Court heard about how one of five children was able to purchase the family farm at a reduced rate.  Children H and J had been named estate trustees in their mother's will.  Child F farmed the mother's 98-acre farm.  The mother's will provided that the residue of the estate (comprising mainly the farm or the proceeds from the sale of the farm) would be divided into five equal shares for the five surviving children: H, J, F, N and K.  H and J obtained a valuation of the farm at $450,000 and then sold the farm to F for only $300,000.  K and N were not notified in advance about the sale of the farm.

Needless to say, K and N had concerns about the sale and retained legal counsel to pursue those concerns.  Child F and the estate trustees, H and J, resolved to implement remedial measures to address the concerns of K and N.  They did not reverse the sale, but agreed that F and his family would list the farm for sale through a professional real estate broker and transfer the proceeds of the sale into the estate.

The farm was then sold for $450,000 and the purchase funds were directed to the estate.  The estate then reimbursed F for the $300,000 he had paid earlier for the farm. 

H and J then applied to "pass their accounts" as estate trustees.  K and N objected to the accounts provided by H and J on a number of levels: they objected to the executor compensation to be paid to H and J; they objected to a proposed further payment to F for additional out-of-pocket expenses he incurred as a result of his original purchase of the farm; they submitted that H and J should be personally responsible (i.e. not the estate) for a number of expenses, including those resulting from the original sale of the farm to Child F; and they submitted that H and J should be personally responsible for all legal costs incurred.

Justice Leach found that H and J had clearly breached their fiduciary obligations as estate trustees.  These obligations include an obligation to obtain "fair market value" for assets that are being liquidated.  Justice Leach found that H and J "initially acted in complete disregard of their obligation to act for the benefit of the estate, and all of its beneficiaries, by not making efforts to liquidate its primary asset for fair market value" and, "no person of ordinary prudence, in managing his or her own affairs, would readily part wiht such a significant asset for such an inappropriately depressed price."

And the breach of fiduciary duty was compounded by also conferring "an effective gain on one estate beneficiary to the significant detriment of all other estate beneficiaries."

Justice Leach accepted a number of the objections of K and N.  He suggested that if H and J wished to compensate F for his out-of-pocket expenses, they could do so from their own shares of the estate.  Costs incurred that were not for the benefit of the estate were treated as damages and Justice Leach ordered those repaid to the estate by H and J.  H and J's executor compensation was also reduced from the $36,000 claimed to $15,000. 

Read the decision at: In the Estate of NB.

Alta. Court rules lawyer negligent in drafting will meant to bequeath farmland

The Alberta Court of Queen's Bench has ruled that a solicitor was negligent in drafting a will for a client after the intended gift to a beneficiary failed.  The deceased owned land, including four quarter sections he wished to pass onto his brother through his will.  In drafting the deceased's will, the lawyer did include the bequest.  However, it was not actually the deceased who owned the four quarter sections.  Instead, the property was held by the deceased's company.  The intended gift failed and the brother sued the lawyer for negligence.

The Court found first that the lawyer owed the brother, as an intended beneficiary, a duty of care.  Next, the Court found that the lawyer had fallen below the standard of care required in failing to address the fact that the land was owned by the company: "A reasonably competent solicitor in those circumstances would, at a minimum, have asked who owned land to be gifted in the will or done a search to ascertain in ownership."

The Court awarded damages to the brother in an amount equal to the value of the land as of the date of the death of the deceased testator.  Added to that amount was some $11,200 which would have been earned by the brother as surface lease income had he received the properties.

Read the decision at: Meier v Rose.

Canadian Association of Farm Advisors (CAFA)



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CBC's The Current - Keystone vs. Landowners

"In its bid to move unrefined bitumen from the oilsands of Alberta to refineries in Texas, TransCanada pipeline is finding some of its toughest opponents aren't environmentalists or regulators but the ranchers and farmers whose land the pipeline will cross."

This morning, the CBC Radio One program The Current looked into the relationship of landowners with the proposed Keystone XL pipeline in the United States (click here to see the program page and a link to the archived broadcast). 

 

I was asked by the program to comment on the existence of "eminent domain" law in Canada (here known as expropriation), as well as any differences between the challenges faced by pipeline landowners in Canada and those in the United States.  My comments come at the end of the program, just before the host notes that TransCanada declined an invitation to speak on the basis that it is still involved in eminent domain proceedings in the U.S.

2011 Ontario Farm Tax & Business Seminars announced

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Keystone XL pipeline faces new challenge in Canada

The Keystone XL pipeline, already approved by regulatory authorities in Canada but facing continuing approvals challenges in the U.S., is now facing a new challenge in the Canadian regulatory arena.  On September 23, the Communications, Energy and Paperworkers Union of Canada (CEP) wrote to the National Energy Board (NEB) to raise concerns about whether Keystone XL has complied with the sunset clause in its Canadian approval certificate.  Condition 22 of Certificate OC-56 reads:

Unless the Board otherwise directs prior to 11 March 2011, this Certificate shall expire on 11 March 2011 unless construction in respect of the Project has commenced by that date.

In its letter to the NEB, the CEP says that it understands:

that the Board made no direction prior to March 11, 2011, and that no construction in respect of the Project had commenced by that date.  Accordingly, OC-56 expired on March 11, 2011, and there is no current approval that would allow TCPL to proceed further with the Keystone XL pipeline. 

The CEP says that when it asked about the apparent expiry of the Certificate, Ms. Saunders of the NEB advised that TCPL had undertaken some earth moving activity and, in doing so, commenced construction of the pipeline.  CEP challenges this assertion in its letter, reminding the NEB that various requirements to be carried out at least 60 days prior to the commencement of construction have also not been completed by TCPL.

The NEB has now issued a letter to the CEP and to TCPL saying that it would like to gather more information about the situation before responding to CEP's letter.  TCPL has the opportunity to file responding comments by October 14.  CEP may file reply comments by October 21.

An interesting development in a controversial pipeline project.  Worth keeping an eye on.

Ambiguity in will leads farm case to Saskatchewan Court of Appeal

The Saskatchewan Court of Appeal has upheld a lower court decision regarding the meaning of "oil well rights" in the will of the late Frederick J. Wernicke.  The problem was that Wernicke didn't have any rights in an oil well.  He did own an undeveloped freehold mineral title of nominal value in Alberta.  He also owned five quarters of farm land in Saskatchewan on which he received surface rental payments for gas wells.  In his will, Mr. Wernicke bequeathed 1/2 of his "oil well rights" to one son and 1/2 of the rights to another son.  On the basis of these bequests, the executors of the will, including one of the sons, transferred the Alberta mineral title to the two sons.

Other parties interested in the will sued the two sons over the Alberta property.  The trial judge ruled that "oil well rights" in the will meant freehold mines and minerals on the Alberta property.  The other interested parties then appealed that decision to the Court of Appeal, arguing that the ordinary meaning of "oil well rights" could not be mines and minerals.  The two sons argued that the expressed intentions of Mr. Wernicke were "clear, unambiguous and without equivocation".  The mineral title in Alberta included the rights to oil beneath the ground and it was his intention that the mineral title go to the two sons.  The Court of Appeal agreed.

Read the decision at: Wernicke v Quirk.

Ontario Expropriation Association - New Information Page for Expropriated Landowners

I am a member of the Ontario Expropriation Association (OEA), a group made up of lawyers, appraisers and other professionals whose work involves the expropriation of land in Ontario.  The OEA has recently created a new page on its website directed at landowners who are facing expropriation: Information for Expropriated Landowners.  Landowners can also search the listing of OEA members on the website to find professionals to assist them with the expropriation process.

Landowner boycotts hearing of drainage appeal; costs awarded against him

After a series of recent adjournment requests were denied by the Agriculture, Food and Rural Affairs Tribunal, landowner Richard Gosselin decided to boycott the hearing of his Drainage Act appeal.  A letter from his lawyer stated:

... in light of the actions and behaviour of the Tribunal and, in particular Vice-Chair O'Kane, and the recent actions by the Township and its counsel which we feel are highly prejudicial to the Appellants and have resulted in a complete lack of procedural fairness in these proceedings Mr. Gosselin will not be in attendance at this morning's hearing.

Richard Gosselin and others appealed the July 12th, 2002 report under s. 48 and s. 54 of the Act. The Tribunal held that first appeal hearing November 8th, 2002 and released interim decisions on February 20th, 2003 and May 12th, 2003, and a final decision on September 29th, 2003.
The Engineer sought a review of that September 29th, 2003 decision under s. 29 of the Tribunal's Rules. The request for review resulted in a second hearing on June 25th, 2004 and a further Tribunal decision dated October 8th, 2004.

In January 2005, Richard Gosselin and others appealed the assessments in the Report under s. 54 of the Act to the Court of Revision.

In February 2005, Richard Gosselin and others started a proceeding before the Drainage Referee under s. 79 of the Act to compel drain repairs associated with the original 1980 report that created the drains.

On May 25th, 2005, the Tribunal heard the assessment appeals of Richard Gosselin and others from the decision of the Court of Revision. The Tribunal released a decision on June 10th, 2005.

On July 4th, 2005, Richard Gosselin and others attempted an appeal of the Tribunal's June 10th, 2005 decision to the Drainage Referee, even though under s. 101 of the Act that Tribunal decision was a final decision.

During the summer of 2005, Richard Gosselin and others requested the Tribunal review its June 10th, 2005 decision. On August 17th, 2005, the Tribunal declined to grant Richard Gosselin's requested review.

In 2007, Richard Gosselin started a Superior Court of Justice lawsuit against the Township. The lawsuit was over the Township's alleged failure to do necessary repairs and improvements to the drain and it alleged that because of the Township's negligence and breach of statutory duty, Mr. Gosselin had suffered damages. The Court dismissed that 2007 lawsuit (SCJ File No. 55048/07) without costs, on a consent basis by an Order of the Honourable Justice McGarry on March 25th, 2009.

Also in 2007, Richard Gosselin started expropriation proceedings before the Ontario Municipal Board under the Expropriations Act. The essence of Mr. Gosselin's claim for compensation was his assertion that the municipal drainage works resulted in an expropriation of his lands. The Tribunal understands that Richard Gosselin subsequently withdrew that expropriation proceeding.

In the Drainage Act appeal before the Tribunal, the Tribunal concluded that, in these circumstances, Richard Gosselin should pay costs to the Township totalling $10,000.  The Township incurred the legal, engineering and staff costs associated with responding to Richard Gosselin's appeal. The Township incurred wasted costs associated with the adjourned appeal hearings of May 26th-27th and June 24th-25th. The Township incurred costs associated with being ready to respond to Richard Gosselin's appeal on July 21st-22nd even though Richard Gosselin did not appear.  The costs incurred by the Township are ultimately borne by the landowners on the drain as part of the assessment of the costs of the drain project or borne by the taxpayers in the municipality. In either event, it would be unfair to burden landowners on the drain or taxpayers in the municipality with costs incurred because of the tactics of Richard Gosselin that caused needless waste and expense. Therefore, the $10,000 costs assessed against Richard Gosselin will be credited against the costs of the drain before calculating the final assessments of the landowners on the drain.

Also, importantly, the Tribunal noted that had it had the jurisdiction to do so, it would have ordered part of the costs against Gosselin to be paid by his lawyer based on her "unreasonable, frivolous or vexatious" conduct:

Ignoring Tribunal Orders, disregarding Rules, ignoring the Act, seeking to circumvent the Tribunal's jurisdiction under the Act, writing to the Tribunal in the way Ms. Neil did multiple times, serially trying to re-argue already decided issues in correspondence outside a hearing, attempting to intimidate the Tribunal with threats of reviews and judicial review are conduct that individually might be worthy of a "bad conduct" cost award. However, when viewed collectively in the context of this case there is no question that a "bad conduct" cost award is necessary. Ms. Neil failed to attend a scheduled appeal hearing. Ms. Neil filed to cooperate with the Tribunal and opposing counsel at almost every opportunity. Ms. Neil changed her client's position about the grounds for adjourning the appeal hearing on several occasions. Ms. Neil changed her client's position about attending the appeal hearing twice. Ms. Neil tried to circumvent the Tribunal with her strategy to take all her client's issues before the Referee when the Act does not permit that. Ms. Neil sought to adjourn the appeal hearings on multiple occasions, ostensibly in pursuit of irrelevant documentary disclosure. Throughout all of these actions, Ms. Neil failed to provide any evidence that supported her client's position on a balance of probabilities.
This conduct encompasses every one of the Rule 28 examples listed that support an award of costs.

The Tribunal is unaware if Ms. Neil was the architect of this conduct or merely allowed herself to become the puppet in her client's strategy. In either case, Ms. Neil's conduct was unreasonable, frivolous or vexatious.

Read the decision at: Hambly Sabourin Drain.