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"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.

National Energy Board releases its Farm Vehicle Crossing Rules

The National Energy Board (NEB) has now released its proposed answer to the question asked by any pipeline landowner familiar with the requirements of the National Energy Board Act: when may I cross the pipeline with my farm equipment?  At present, the NEB Act provides that no one may cross a pipeline with a vehicle or mobile equipment (which covers off just about any agricultural activity) without the permission of the pipeline company.  Now, with the new "guidance" in place, permission must only be sought from the company in specified circumstances.  An exemption order issued by the NEB means that crossings in "low-risk conditions" do not require any further company permission.

Does the NEB's answer satisfy the landowner concerns that have been expressed about the permission requirement?  Probably not.  For instance, permission from the pipeline company will still be required in the following circumstance:

Any use of heavy agricultural vehicles or mobile equipment that may not be able to safely cross the pipeline, especially pipelines with reduced depth of cover or other factors increasing the risk of crossing as identified by the pipeline operator.

"Heavy" equipment or vehicles are described in the NEB guidance document to include "large harvesters" or "large grain transporters".  As with the previous situation, the onus is left on the landowner to decide whether his or her equipment is "large". 

Also, pipeline depth of cover is a factor in determining whether permission is required.  However, pipeline companies are not required by the NEB to provide depth of cover information to landowners as of right.  In fact, it is likely that most pipeline companies are not aware of the depth of cover over top of their pipelines.  Again, the onus is on the landowner to find out what depth of cover is over the pipelines on their lands.  What happens if there is insufficient depth of cover to allow for ongoing farming practices?  The NEB guidance document provides no answers.

Read the full document at: Guidance for Safe Crossings of NEB-Regulated Pipelines Using Agricultural Vehicles and Mobile Equipment.

Farm labourer's "get a motel" constructive dismissal claim dismissed

Mark Isnor had been an employee of the Ueffing Farms Limited from June 22, 1997 to November 2, 2009, as a farm labourer and performed many varied tasks on the company’s hog farm in Canning, Nova Scotia.  Before a labour tribunal hearing, Isnor testified that in early September of 2009, there were two new employees who were hugging and kissing in the barn. He testified he did not say anything to the owners of the business although he did not believe it was appropriate behaviour for employees in the workplace. He testified this activity of hugging and kissing by the two young people went on 2 to 3 times a day, however, on cross-examination he restated and said the activity was frequent, but may not have been that often.

Isnor further testified that he did speak to the couple to say they should get a motel if they were going to do that activity. He testified this behaviour did not bother his work and he did not consider it a major concern other than he thought it was inappropriate behaviour in the workplace and told Donald Ueffing, an owner of the employer company, that it should stop.

Isnor quit his employment and then made a complaint to the Nova Scotia Labour Standards Tribunal in the form of a constructive dismissal claim (i.e. that his work environment had been allowed to become so poisoned that he had no choice but to leave his employment, as if he had been wrongfully dismissed).  The Tribunal dismissed the claim:

The Tribunal finds on the balance of probabilities from hearing the evidence and the testimony, and review of the exhibits, the Complainant quit his employment on November 2, 2009, and there has been no substantive evidence presented by the Complainant to show the workplace environment was so poisoned or destructive that was not remedied by the Respondent, such that he could not do his work. Accordingly, the Tribunal finds without some corroboration of the Complainant’s testimony, which did not occur at this hearing, there is no substantive evidence to support a claim for constructive dismissal from the evidence presented.

Read the decision at: Isnor v. Ueffing Farms Limited.

Amendments to Renewable Energy Approvals in Ontario designed to bring clarity

Amendments to O.Reg. 359/09 (Renewable Energy Approvals)

As a key pillar in supporting the development of Ontario’s green economy, the Ontario government established O. Reg. 359/09 (Renewable Energy Approvals) under the Environmental Protection Act, on September 24, 2009. The regulation governs the approach to regulating renewable energy generation facilities based on transparency and clear, up-front provincial rules, while ensuring that the environmentt and human health are protected.

Since the regulation came into force, certain provisions of the regulation have been identified as needing further clarity or detail to bring them in line with the original intent of the regulation. The Ministry has made amendments to the regulation to strengthen and clarify those provisions.  The amending regulation was filed with the Registrar of Regulations as Ontario Regulation (O.Reg. 521/10) on December 20, 2010.  The regulatory amendments come into force on January 1, 2011.

Public Consultation on the proposal for this decision was provided for 45 Days, from October 07, 2010 to November 21, 2010.  As a result of public consultation on the proposal, the Ministry received a total of 285 comments: 24 comments were received in writing and 261 were received online.

The Ministry considered all comments received during the comment period in response to the posting and made the following revisions to the amendments originally posted in the proposal notice:

Vacant lots

Ontario Regulation 359/09 identified the centre of a vacant lot as a noise receptor for the purpose of determining setback distances for wind energy and other facilities. Since the implementation of the REA process and during the EBR consultation period the Ministry heard a mixed opinion on the best approach to this issue. This amendment changes this approach to make it consistent with the Ministry’s 2008 Noise Guidelines, requiring a consideration of the existing zoning by-law and typical building pattern in the area when determining a more likely location for a future noise receptor. This approach will also allow for consideration of existing municipal zoning permissions and the typical local building patterns.

Definition of noise receptor

Ontario Regulation 359/09 described a noise receptor as a location for “overnight accommodation”. This amendment changes the definition of noise receptors from “overnight accommodation” to “dwelling” to better match the originally intended interpretation of a noise receptor – locations where there is a residence with cooking, eating, living, sleeping and sanitary facilities. In response to comments received in the EBR consultation, the definition of “dwelling” was further modified by replacing the words “intended to be used” with “capable of being used”. The Ministry is also clarifying that a dwelling can be either a permanent or seasonal residence. This definition of dwelling is based on the definition in the Building Code and is premised upon the existence of the infrastructure needed to support someone living in a dwelling.

Setback prohibitions and cumulative noise assessment

The wind turbine setback prohibitions in Ontario Regulation 359/09 required proponents to consider all noise receptors at the time of construction. This approach did not reflect the fact that the surrounding conditions could change between the time of approval and time of construction. This amendment changes the time at which a proponent must consider noise impacts to surrounding noise receptors, requiring proponents to consider all noise receptors at the time they make their site plan public. Proponents then have 6 months to submit an application with the noise receptors defined in that site plan. In response to comments received, the Ministry is adding the ability of the Director to extend the expiry date of the site plan beyond the originally proposed 6 months if the proponent cannot submit an application due to circumstances outside his or her control. This requirement to consider all noise receptors at the time the site plan is made public also applies to existing projects that have made their site plan publicly available prior to the amendment coming into force.

The amended regulation also requires proponents to consider all existing and publicly known projects in the surrounding area when determining their site plan and complying with the noise setback requirements. Considering all publicly known projects in the area may require larger set backs in the noise modeling, and will ensure the Ministry can assess the cumulative impacts of the proposed project.

Public notification of meetings

Ontario Regulation 359/09 required notice of public meetings 30 days prior to the first meeting. This amendment clarifies that public notice must be made 30 days prior to the first public meeting and 60 days prior to the final public meeting. This is to allow for additional consultation where necessary and avoid the need for notice of all public meetings to be made at the very start of the process. In response to EBR comments received, the Ministry has also extended the notice period for the final public meeting from 30 days to 60 days. The 60 day period is consistent with when draft reports must be made available to the public prior to the final public meeting and will enhance public engagement.

Public notification of Renewable Energy Projects

Ontario Regulation 359/09 required written notice of a project to all landowners within 120 metres of the project location. This amendment changes the notification requirements, requiring written notice to all adjacent landowners in addition to those within 120m of the project location. This amendment applies to all renewable energy projects. In response to EBR comments and concerns about wind energy projects in particular, the Ministry has also extended the 120 metres distance to 550 metres in the case of Class 3, 4, or 5 wind energy projects to better align with the minimum setbacks from noise receptors. The extension to 550 metres does not apply to small wind or other types of renewable energy projects such as solar, and does not impact the minimum setback prohibition for Class 4 or 5 wind facilities of 550 metres from the base of a turbine to a noise receptor. These amendments will encourage increased transparency and enhanced public engagement.

Public notification of an application being made to the Director

Ontario Regulation 359/09 did not require final documentation submitted to the Ministry to be made public. This raised concerns about transparency and whether or not the proponent took into consideration the comments received during the consultation. This amendment requires proponents to post all documents that accompany a REA application on the proponent’s website, should they have one. In response to the EBR comments received, this amendment further requires the proponent to provide public notice of their application being accepted for review by the Ministry. Within 10 days of their application being posted on the EBR by the Ministry, the proponent must publish a newspaper notice. The notice must include project information, the website where final documents can be viewed, and a statement that members of the public can submit comments to the Director via the EBR. This amendment will ensure that the public is aware of an application being submitted and of the EBR comment period. This rule does not apply to Class 2 wind facilities or to bio-energy facilities located at a farm operation. These amendments will encourage increased transparency and enhanced public engagement.

Municipal consultation

Ontario Regulation 359/09 required that the Ministry’s municipal consultation form be provided to the municipality 90 days prior to the final public meeting, and draft reports be made available 60 days prior to the final public meeting. While the intent was to give municipalities an early opportunity to learn about the project, without the documentation it proved difficult for municipalities to be meaningfully engaged. This amendment requires proponents to provide a draft Project Description Report and the Ministry’s municipal consultation form to municipalities at least 30 days prior to the first public meeting. Draft reports (but not the confirmation letters from other ministries) must be provided to municipalities 90 days prior to the final meeting. In response to EBR comments the Ministry has removed the requirement to provide the municipal consultation form 90 days prior to the final public meeting to avoid unnecessary duplication. Municipal consultation is an important part of the REA process and these amendments will better ensure municipalities can make informed and timely comments on the project proposed.

Wind turbine specifications report

Ontario Regulation 359/09 requires a wind turbine specification report for Class 3, 4 and 5 wind projects. The amendment requires that the specification report must include acoustic emissions data in accordance with Canadian Standards Association (CSA) standards. As a result of EBR comments received, the Ministry has also added the terms “measurement uncertainty value” and “tonality” to the specification report requirements.

Director discretion

Ontario Regulation 359/09 sets out specific requirements a proponent of each type of renewable energy facility must meet prior to submitting a REA application. This had created the unintended consequence of proponents not technically meeting the requirements where they were responding to public concerns (e.g. changing the public meeting location to accommodate increased public interest). This regulation was proposed to provide discretion in prescribed instances to the Ministry of the Environment Director where the requirement was not necessary for adequate understanding of potential negative environmental effects or satisfactory consultation. In response to EBR comments received, the regulation has been changed to clarify that this discretion can only be exercised if the Director is of the opinion that it will not compromise an adequate understanding of the negative environmental effects of a project, or if it will improve public consultation.

Transition

The regulation provides proponents that have already issued a notice under section 15 of the regulation with the flexibility to use the amended regulatory requirements for applications. The EBR proposal notice proposed to have proponents declare whether they intend to use the amended requirements by submitting written notice within 60 days of this regulation coming into force. In response to EBR comments, this has been changed to allow proponents to identify if they have applied the amended requirements to their project in the publicly available documents at the time of REA application. This flexibility only applies to those that have already issued a notice so as to not unfairly impact project timelines and consultation done to date.

The EBR proposal notice indicated that these transition provisions would only apply to Part IV of the regulation (where renewable energy approval requirements where identified). In response to EBR comments, the Ministry has also clarified that the transition provisions apply to the amendments related to the definition of vacant lots and woodlands.

In addition to the concerns described above, the Ministry received a large number of submissions through the Environmental Registry that were not specifically related to the proposed amendments, but related to the Government’s position on green energy. The most common themes were related to general opposition to the Government’s green energy agenda and wind energy project development in particular. Some specific comments were related to perceived health impacts, setbacks, property values and loss of municipal decision-making authority.

The MOE Statement of Environmental Values was considered in the development of these regulatory amendments. The regulation takes an ecosystem approach and supports the principle of pollution prevention by facilitating the development of renewable energy generation which is a cleaner, less polluting source of electricity than fossil fuel-based generation. These amendments encourage increased transparency and enhanced public engagement. Amendments are in keeping with the principle of continuous improvement, as changes will strengthen and improve existing requirements.

Drainage Appeal dismissed by Agricultural, Food and Rural Affairs Tribunal

The Baird municipal drain comprises a watershed of approximately 245 hectares of agricultural and wooded lands in the geographic municipality of the Township of Turnberry, now in the municipality of Morris-Turnberry. The drain is comprised of an open channel main drain and three branch drains, Branch A, Branch B and Branch C. Pursuant to a drainage petition filed by Bill Fralick, an engineer’s report was prepared providing for the construction of a new Branch D tile drain on the lands of Donald and Marion Eadie. The Eadies appealed the engineer’s report to the Agricultural, Food and Rural Affairs Appeal Tribunal. They asked that the report be amended to provide for the construction of a new drain outside of their lands. In the alternative, if the new Branch D tile drain was to remain on their property, then they asked for certain changes to the set up of the drain. The Eadies also asked that the allowances to be awarded to them as part of the project (the allowances being compensation for land taken and damages caused) be increased.

The Tribunal considered the appellants’ suggestion that the area requiring drainage could be diverted southerly to a different drain watershed.  However, the Tribunal noted that the appellants did not produce any professional evidence to substantiate that suggestion.  Therefore, the Tribunal accepted the engineer’s evidence.  It also considered the appellants’ request to move the proposed catch basis from the top of the drain to another location.  Again, the Tribunal accepted the engineer’s testimony on the reasons for which this proposed change could not be made.

With respect to allowances under Section 29 of the Drainage Act, the engineer testified that he obtained land sale data from Farm Credit Canada to establish a per acre land value of $4,000 used to calculate the allowances.  Mr. Eadie presented a letter from a Mr. Crispin showing the sale for parcels of land for prices higher than $4,000 per acre, but Crispin was not called to testify.  The Tribunal placed limited weight on that evidence.  Ultimately, the Tribunal found that the allowances under Section 29 of the Drainage Act provided in the engineer’s report were fair and equitable and in conformance with the Act. The Tribunal also found that the engineer’s allowances under Section 30 of the Act for crop losses determined to be $500 per acre were fair and equitable and in conformance with the Act.

Read the decision at: Baird Municipal Drain.

B.C. Agricultural Land Commission prohibition on non-farm use upheld

Tree to Me Agricultural Products Inc. applied to the regional district of Okanagan Similkameen to have a 0.75 hectare portion of its lands designated for non-farm use.  The regional district referred the matter on to the Agricultural Land Commission.  The Commission granted the application on specific terms.  However, later the Commission revoked some of the terms and yet left in tact the requirement that Tree to Me register on title to the lands a covenant prohibiting the construction of any structures on the remainder of the property, which measured approximately 15.2 hectares.

Tree to Me applied for judicial review of that decision in the Supreme Court of British Columbia. Tree to Me had plans to develop the property, including plans for a proposed building.  The first floor of the building would be devoted to retail operations related to its production of fresh fruits and vegetables. The second floor of the building would include a residential suite for the manager, bed and breakfast units, and sleeping areas for workers.

The court found that the Commission had the ability to designate the building proposal as a non-farm use given the “excessive number of residential units”.  Also, the Commission found that, “absent sufficient evidence, the Commission is well within its rights to impose no-billed and other covenants, in appropriate cases, as part and parcel of regulating the use and development of agricultural lands in order to achieve its statutory object of preserving such lands.”  The standard of review for the Commission’s decision is one of reasonableness.  The court found, in the end, that Tree to Me had not satisfied the onus of showing that the decision of the Commission was unreasonable.  Therefore, Tree to Me’s petition against the prohibition on non-farm uses on the balance of its property was dismissed.

Read the decision at: Tree To Me Agricultural Products Inc. v. British Columbia (Agricultural Land Commission).

Saskatchewan farm sues Canadian Wheat Board for lost income, defamation

Hudye Farms of Norquay, Saskatchewan has launched a multi-million dollar lawsuit against the Canadian Wheat Board (CWB).  The action in the Saskatchewan Court of Queen's Bench seeks $247,699 from CWB for loss of income and other expenses.  The action also seeks $10 million in damages for breach of fiduciary duty and $15 million in exemplary and punitive damages.  The action seeks a further $25 million in a claim related to alleged defamation resulting from a notice sent out by CWB to Yorkton-area elevators.  The notice specifically named Hudye Farms.

The dispute arises out of a decision by CWB to downgrade 122.5 tonnes of wheat delivered by Hudye.  Hudye had a contract with CWB for delivery of 8,600 tonnes of Canada Western Red Spring Wheat, but CWB found that 122.5 tonnes of the wheat that was delivered contained 23.6 percent 606/Granite wheat, an ineligible variety.

Read an article about the lawsuit at: portageonline.com.