Kurtis R. Andrews

No parent wants to think about the possibility of their son’s or daughter’s marriage failing. However, it may be necessary to think about it to avoid having half of the family’s farm legacy lost in a messy divorce.

A pre-nuptial agreement may be the first thing that comes to mind when considering ways to protect farm property. However, while a pre-nuptial agreement may be an effective legal mechanism, there are other more subtle ways to protect property. These ways may even be preferable to avoid any animosity that might arise from proposing a pre-nuptial agreement.

Ontario’s Family Law Act sets out many of the rules governing separation and divorce in this province. Among them are the rules for the division of matrimonial property. This includes two rules that should stand out with respect to the transfer of farm property to a son or daughter:

  1. The division of family property excludes the value of property, other than the matrimonial home, owned by a spouse as of the date of marriage (after deducting debts and liabilities); and
  2. The division of family property excludes property, other than a matrimonial home, that was acquired by gift or inheritance from a third person (i.e. parent) after the date of the marriage.

In other words, some property (or the value of same) may not be claimed by a spouse upon a divorce – if it was transferred to a son or daughter in certain ways. For example, if a farm was transferred to a son or daughter before marriage, half of the value of the property (as of the date of marriage) would not be lost upon divorce (excluding the value of the house, if the spouses live on the farm).

In another example, a farm or farm property (i.e. quota) could be preserved and otherwise not divided in half if it was gifted to a son or daughter. In this case, it has to be a true gift with no strings attached. To qualify, it cannot be part of a larger transfer of property where consideration is paid, and it cannot include other consideration such as a lifetime interest or free rent in favour of the parents. In such cases, there should be some sort of paperwork issued to confirm the intentions of the parent(s).

As you can see, unlike a pre-nuptial agreement, taking these steps does not require any prior agreement from the soon to be son or daughter in law. The parents have control, at least initially. Keep in mind that the parents’ intentions can be undermined where a gift is concerned if the son or daughter voluntarily transfers partial interest (i.e. joint title or ownership) into their spouse’s name at any point after the gift is made.

A word of caution: there are also exceptions to the exclusions. It is too complicated to fully cover in a short article. For example, an exclusion of a gift can also be lost if the property is sold and the proceeds are not sufficiently kept separate from other jointly held assets (i.e. a jointly held bank account).

As is always the case in any farm transfer, proper planning is important. But do not assume that the planning should stop with tax advice – legal advice may be just as important.

Doing chores on the farm without any financial compensation may still be a time-honoured tradition in Ontario, but the courts do not necessarily see it that way. This is especially true when it involves an adult-labourer working for free or being insufficiently paid on a farm. It makes no difference if the adult-labourer also happens to be the son or daughter of the farm owner.

With life expectancy continually on the rise, it is more and more common to have middle aged “children” working on a farm that is still owned by their parent(s). In many cases, the work being done is being chalked up as the son’s or daughter’s duty, and is otherwise not being paid for or is being underpaid.

While such an arrangement might be legally acceptable in cases where the farm is going to be eventually passed on the son or daughter, the courts do not assume that anyone will simply agree to work for free. In other words, if the farm is not eventually passed on to the child who has worked on the farm for no or little wages, the son or daughter may be in a position to sue for unpaid or underpaid wages. If it involves a lifetime of work, such claims can be significant.

The legal principle involved is called a “constructive trust”. What this means is, the courts will consider the unpaid /underpaid wages as being held in trust by the parent – presumably to be paid out at some point in the future. In situations where the assets of a deceased parent have been willed to other people, the claims of the son or daughter can survive and be made against the estate or beneficiaries. Put another way, the wages held in trust by the parent do not belong to them and therefore cannot be legally given to someone else.

It is important to note that any lawsuit must be formally made in a timely manner. Ontario’s limitation period is two years. A person who has a constructive trust claim must file a claim no later than two years after first being denied their claim to a trust by their parent, estate or beneficiary. This rule is strictly applied by the courts.

Last year, I wrote about how a promise to pass on a family farm could constitute a legally binding contract. While this is still true, it is also true that, even where there are no promises made, years of service on the farm are still compensable.

As always, litigation should be avoided at almost any cost – especially within family. The best way to avoid intra-family litigation respecting family farms is to communicate and establish a farm succession plan. However, if all of this fails, it is also important to know your legal rights and obligations.

Remember: there is no such thing as a free lunch, and the same can be said about labour on the farm.

Many believe that agricultural tenants have little or no rights. This is simply not true.

It is true that agricultural tenants do not enjoy the same rights as residential tenants, who are afforded a comprehensive package of rights through the Residential Tenancies Act, but this does not mean that agricultural tenants are completely vulnerable.

Agricultural leases are governed by a combination of the Commercial Tenancies Act and the common law. The law provides various rights to both tenants and landlords in the context of agricultural land leases, as well as legal procedures to settle disputes.

Where a landlord and a tenant agree to terms respecting the lease of agricultural land, a binding and enforceable contract is formed. Where the contract is in writing, the terms set out in the written agreement are binding. Where the contract is oral, the terms are not binding until the parties commence ‘performance’ of the contract (i.e. rent is paid and accepted, the land is consciously made available to plant the crop, etc.).

In the case of annual crops, the lease is likely to be deemed a year-to-year lease unless there is clear intention to enter into a multi-year lease (preferably set out in writing). In the case of perennial crops, absent any clear understanding to the contrary, the term of the lease is likely to be deemed equal to the reasonable expected life-span of the crop. In such cases, however, where the landlord and tenant share differing views about the life expectancy of the crop, the case gets complicated and may ultimately depend on an objective view of the matter as determined by the courts. With this in mind, it is wise to enter into a written agreement with a landlord before planting a crop, and it is especially critical to have the terms set out in writing before planting a perennial crop; otherwise, the farmer may find him or herself (fairly or unfairly) put off the land before he or she expects it. In addition, if a perennial crop is planted without the knowledge of the landlord, there may be no entitlement to the land of any kind beyond the planting year (notwithstanding notice requirements, as described below).

Recently, I received a question with respect to notice requirements when a landlord decides to end a year-to-year lease. The Commercial Tenancies Act sets out notice requirements for week-to-week and month-to-month leases, but it is silent on year-to-year leases. I eventually found the answer in the common law as part of a 1948 decision. According to the case, minimum notice to end a year-to-year lease is six months. I note that the case indicated that notice could be provided orally or in writing; however, I believe that the common law should have evolved since then to require all such notices to be in writing, especially given that notice to quit week-to-week and month-to-month leases must be in writing to be valid.

All of this is not to say that landlords do not also enjoy protection under the law. For example, the Commercial Tenancies Act provides landlords with procedures and remedies in cases of overholding tenant farmers and when rent is not being paid. For example, crops and livestock may be seized and sold by a landlord in certain circumstances when rent is in arrears.

Keep in mind that the best remedy to any dispute is reasonableness and cooperation. Litigation to enforce rights should always be a last resort and, in most cases, will rarely produce a satisfying result from a financial perspective. Having said this, reasonableness is a two-way street, and tenants /landlords should at least know their rights if a dispute regarding an agricultural land lease should happen to arise.

The above article expresses the personal opinions of the author, and does not necessary reflect the opinions of any of his clients.

-Kurtis R. Andrews
Farm & Animal Welfare Lawyer

Depending on the circumstances, the short answer is “yes”.

If mom or dad promises to pass on the family farm to his or her son or daughter in exchange for dedication and years of labour on the farm, it may be deemed a binding and enforceable contract. As a result, even if there is a later falling out between the parties, the contract can be enforced and the son or daughter may be entitled to take possession of the farm. This is true even if, for example, the farm is willed to another sibling or some other third party.

These situations are incredibly common and are described in Canadian court cases going back over a hundred years. It is fascinating to read decisions from the 1800s that detail the same family farm-disputes that are common today. It seems that such disputes are as old as the industry itself.

When picturing these sorts of situations, one might be tempted to imagine a parent nearing retirement age, with the “kid” somewhere in his or her 30s. The reality is, however, that today it is just as common to have the “kid” at or past retirement age, and the parent in his or her 80s or 90s. In such cases, depending on the circumstances, the Courts are understandably sympathetic to the interests of the “kid” in his or her 50s or 60s who has worked their entire lives in order to realize their parents’ promise to receive the farm.

In addition, while these types of disputes might have involved a modest value of assets in the past, today the cases involve millions of dollars. It is not surprising that some siblings, who left the farm decades ago in order to pursue other career choices, may now look at a sibling who stayed on the farm with considerable envy. In the eyes of the law, however, the value of the assets make no difference. A person is entitled to the bargain that they strike, regardless of whether or not it turned out to be a good one.

Having said this, while the principles of contract law are relatively straightforward, individual cases never are. What happens when there is no physical proof of a deal when mom or dad passes on? Or what happens if mom’s or dad’s memory is diminishing, and they now deny that any promises were ever made? These become challenging circumstances for the affected son or daughter, since it is his or her onus to prove the contract in order to be entitled to the farm.

Furthermore, what happens if there was never any clear promises made? What happens if the son or daughter continued to work on the farm without any express promises, simply expecting that they will one day be rewarded for their efforts, only to be left with nothing when mom or dad sells or passes away? While he or she may not be entitled to receive the actual farm, the courts are again generally sympathetic and will award some sort of compensation for unpaid or insufficiently paid labour (by way of a legal principle called “constructive trust”).

There have been plenty of articles written about the financial benefits of drawing up and executing a properly considered farm succession plan. Such articles generally set out the benefits from both a financial and family-harmony perspective (of which there are many). In addition to these benefits, it should be noted that farm families can also avoid the complicated and often messy legal consequences that may result from the circumstances described above.

The above article expresses the personal opinions of the author, and does not necessary reflect the opinions of any of his clients.

-Kurtis R. Andrews

Farm Lawyer

So-called “investigations” by radical animal rights organizations have been well publicized by major media outlets over the past few years. I am reluctant to use the term “investigation” to describe such activities, however, because it almost lends a degree of legitimacy to the practice. Their activities are illegal and, given its effects, I see more similarities to terrorist conduct.

A radical organization operating out of the United States has been responsible for the most publicized instances of such activities in Canada. This organization is very well organized, well-funded, and features a sophisticated communications strategy. A pro-vegan agenda is at the heart of its mission, and it is clearly mandated to do as much damage as possible to livestock operations and the industry as a whole.

What is most frustratingly hypocritical and misleading about their operations is the fact that the operatives who are collecting video of alleged abuses are, themselves, responsible for the welfare of the animals. Instead of doing their jobs, and ensuring that the animals’ welfare is being looked after, they choose to neglect their duties and videotape the results.

In addition to being misleading with its messages, its so-called “investigations” at livestock farms are illegal in Ontario.

Through my work as legal counsel in the farming community, as well as my personal connections there, I have learned that multi-national activist organizations are not alone in breaking the law by entering upon livestock farms. Seemingly emboldened by highly publicized activists’ stunts (I believe that television programs that prominently feature the product of activists’ operations lend perceived legitimacy to such practices and encourage others to do the same), individual people are now also boldly entering upon farms and into barns without permission. Not only do these actions cause farmers security and privacy concerns, they also raise biosecurity risks.

First and foremost, entry onto a farm or into a barn without consent is trespassing – in both the civil and statutory contexts. If consent to enter is obtained by way of false pretenses (such as if a farm unknowingly hires an activist operative), it is still trespassing because the ‘license’ (permission) provided to enter the farm’s facilities was issued only for employment purposes, not to take videos or cause damages.

In addition, in the context of a situation where an activist organization sends an agent to obtain employment for the purpose of conducting a so-called “investigation”, they are committing fraud by either expressly or impliedly indicating that the purpose of the job application is for anything other than taking video or causing damages.

Lastly, it is simply illegal to carry out a private investigation in Ontario without a license issued pursuant to the Private Security and Investigative Services Act. This Act regulates who can be licensed and the conduct of licensees. These radical animal rights organizations, and their operatives, are not licensed. I note that, even if they were licensed, the Act’s Code of Conduct prohibits public dissemination of private investigations, which certainly includes sensational media releases and internet smear-campaigns.

So, what should be done about all of this? Well, to start, farmers and companies who have been victims must report activists’ activities to the police and /or Ontario’s Private Security and Investigative Services Branch. Without a complaint, nothing will be investigated, the perpetrators will not be charged and, worst of all, they will likely become bolder and more confident to break the law again. From there, we must trust that the police and Crown Attorney’s office will do the right thing and lay charges.

I note that, in addition to pursuing action by the authorities, an aggrieved farmer may also independently pursue civil remedies against a trespasser. There are a number of civil options available in this regard.

If you are subjected to the circumstances described above, I recommend contacting a lawyer for advice. Do not hesitate to seek out advice, even if you are merely suspicious about some sort of situation that you find yourself in. If you choose to contact me, I will provide a free consultation and a summary of your options.

One thing is for sure, inaction caused by complacency or fear will only encourage the activists to take bolder and bolder actions against the industry. It is time to say “enough is enough”.

The above article expresses the personal opinions of the author, and does not necessary reflect the opinions of any of his clients.

-Kurtis R. Andrews

Farm Lawyer

It has been almost four years since we successfully argued at the Federal Court of Appeal to limit the scope of damages available in two post-Schmeiser seed patent cases. While admitting infringement and offering to pay damages, four farmers stood up to Monsanto and proved that they only owed money attributable to Monsanto’s patented GMO technology, and not profits earned from growing the underlying soybeans. The cases set an important precedent that affected not only the farming industry, but also all patent law.

Since then, it has been eerily quiet on the seed-litigation front, with nary a whisper of litigation involving farmers in Ontario. That quiet, however, might soon be over – albeit not involving patent rights, but rather with respect to plant breeders’ rights.

Canada’s Plant Breeders’ Rights Act has been in effect since 1990. At the time it was passed, the Act was the federal government’s answer to protect plant breeders’ intellectual property [IP] rights after the Supreme Court confirmed that Pioneer Hi Bred could not patent a new soybean variety (unlike in the U.S., where such patents are available). Overseen by CFIA, the Act instituted a registry system for plant varieties, and specifically prohibits unauthorized sales of registered seed varieties for propagation purposes (note: farmers are still allowed to save their own seed for their own planting purposes). Many if not most varieties of certified seed are registered with CFIA.

Interestingly, almost 25 years after its implementation, the Plant Breeders’ Rights Act has seen almost no legal action, and has not resulted in a single case actually going to trial. It is difficult to say exactly why (especially in light of what appears to be a virtual free-for all in the seed business), but I suspect that it probably stems from evidentiary challenges combined with minimal or no available compensatory damages (due to the facts that margins on certified seed sales are minimal). In other words, it would be difficult to prove infringement under the current legislation and, even if infringement was proven, compensable losses could be near non-existent.

Recently, however, I have heard of at least one secret investigation of a seed dealer with respect to alleged ‘brown-bagging’ (sale of generically labelled common seed), and chatter at big-firm IP law offices indicating that Ag-Chem-Biotech companies, such as Monsanto and Pioneer Hi Bred, may see plant breeders’ rights as the new preferred method to protect IP rights. With many ground-breaking Biotech patents now expired, and ongoing market share losses for certified seed, it also seems timely for such companies to explore new legal avenues to protect their bottom line.

What does this mean to seed dealers and farmers? Well, if you carry on the common practice of ‘brown-bagging’, you could find yourself being sued for infringing plant breeders’ rights if that seed is a registered variety with CFIA.

Why a more aggressive approach now? Perhaps seed companies are gearing up for the passing of Bill C-18, which will, among other things, amend the Plant Breeders’ Rights Act to make it easier to sue unauthorized seed dealers who sell registered varieties.

Regardless of the reason, brown-baggers should beware. Given all the circumstances described above, a seed dealer somewhere might soon find themselves as a target to be made into an example or test case. It is important to remember that, even where a defendant is successful, the costs and stress of a lawsuit can be punishment enough. My advice is to make sure that any brown-bag sales do not involve a registered variety. If you are unsure, find out if it is a registered variety or simply do not take the chance.

Meanwhile, if you get a letter threatening you with legal action in relation to IP rights and the Plant Breeders’ Rights Act, hire a lawyer with IP experience and hope you can resolve your issues as quickly (and inexpensively) as possible.

On April 30, 2014, Ontario’s new Provincial Policy Statement [PPS] will come into effect. With it will come countless business opportunities previously prohibited in Agriculture zoned areas.

The importance and effect of the PPS is generally underappreciated from a municipal law and land use perspective. It is common to discover municipal officials being totally unaware of its contents – especially as it relates to agriculture.

Simply put, the PPS has great importance and effect. Section 3(5) of the Planning Act compels municipalities to make decision and enact bylaws which are consistent with the PPS. In other words, municipalities have no choice but to follow the PPS.

Both the new and previous PPS expressly states that permitted uses in prime agricultural areas include: (1) agricultural uses, (2) agriculture-related uses and (3) on-farm diversified uses (previously described as “secondary uses”). In other words, business operations that fall into one of these three categories are deemed legal uses on lands zoned Agriculture. A municipality cannot prohibit such uses.

So, what types of businesses fall into these categories? As usual, the devil is in the details (which, in legal terms, can be found in the definitions section).

The most significant change featured in the new PPS involves the definition of “agriculture-related uses”. This change will effectively legalize many types of farm-based businesses that were previously not permitted in agriculture zones.

The 2005 PPS defined agriculture-related uses as: “farm-related commercial and farm-related industrial uses that are small scale and directly related to the farm operation and are required in close proximity to the farm operation”.

The 2014 PPS defines agriculture-related uses as: “farm-related commercial and farm-related industrial uses that are directly related to farm operations in the area, support agriculture, benefit from being in close proximity to farm operations, and provide direct products and/or services to farm operations as a primary activity”.

As you can see, the new definition is far broader, allows larger businesses and, perhaps most significantly, uncouples business ventures from necessarily being tied to the farm operation located on the same property. Finally, agriculture-related uses need only be related to farm operations in the area. Agriculture-related uses no longer need to exist as an island in the community, and this change will undoubtedly encourage more collaborative business ventures amongst farm-operators in agricultural areas.

I always felt that the old PPS shamefully, and seemingly purposely, discouraged entrepreneurism and business initiatives in rural areas – areas which often desperately need more diversified employment opportunities. Sadly, municipalities have also been too happy to oblige – charging such entrepreneurs with zoning by-law offences and shutting down their business operations.

Upon reflection of the new PPS, I cannot help but think back to one of my first cases which happened to involve zoning by-law charges and a family farm-based business (the business served soil-mixing needs of local greenhouses and nurseries). We lost at trial and, while I thought we still had a good crack at an appeal, the clients understandably elected to cut their losses and simply close down the business. I still fume at the thought of our governments seeing some sort of merit in closing down a family’s business, as well as turning away the inevitable tax revenues. I have to assume that, if the new PPS was in effect back then, we would have certainly won and the family’s business would still be in operation.

Does the new PPS finally mark a change in attitude toward better promoting business initiatives in rural areas? I certainly hope so. While I assume that new farm-based businesses will eventually emerge in the wake of these changes, I also expect that it will take time for the changes to sink in.

Nevertheless, I believe the new PPS is a step in the right direction. No doubt there will be some municipalities still living in the past after April 30; however, if they continue to say “no, you can’t do that”, entrepreneurs should at least have greater legal recourse to protect their ag-business ventures.

I was extremely pleased to see Kristen Kelderman of Farm & Food Care Ontario at the Ontario Bar Association’s annual Animal Law conference; which she wrote about and was published in the February 25, 2014 Ontario Farmer.

As pointed out by Ms. Kelderman, the debate presented by the OBA was shamefully imbalanced in favour of PETA-type activist views with no counter discussion representing the realities or merits of an efficient and affordable food system.

Sadly, it was not a total surprise. There are simply too few lawyers in practice with an agriculture or even rural background, and even fewer entering law school to practice in the future.

I hope Ontario’s farm organizations, commodity groups and marketing boards take special note of the last two paragraphs of Ms. Kelderman’s article – it is true that anti-farm animal activist groups are well-funded and well-represented in the legal community. Such groups have a war chest of resources specifically aimed at changing the law to suit their agendas, meanwhile individual farmers find themselves abandoned and fighting alone, often without access (financially or otherwise) to suitable representation.

To the best of my knowledge, Ontario’s farm organizations have taken no active steps to affect animal welfare law at the judicial level. I have seen no strategic litigation and, as far as I know, there is no funding directed at legal education (such as scholarships directed at students with farm backgrounds, or funding for agriculture-law student associations). I have personal experience with this deficiency, after being denied my local federation’s scholarship when I was accepted to law school – on misguided grounds that my education would not serve agriculture (despite my farm background and involvement in 4-H, Junior Farmers and the local federation).

I hope Ontario’s farm organizations take Ms. Kelderman’s report to heart, and recognize that the merits, practicality and affordability of Ontario’s current food system will not matter when the gavel strikes and normal farm practices are deemed illegal.

Kurtis Andrews

Latest Postings

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There is no such thing as free labour on the farm – even within family

Doing chores on the farm without any financial compensation may still be a time-honoured tradition in Ontario, but the courts do not necessarily see it that way. This is especially true when it involves an adult-labourer working for free or being insufficiently paid on a farm. It makes no difference…

What are Agricultural Tenants’ /Landlords’ Rights?

Many believe that agricultural tenants have little or no rights. This is simply not true. It is true that agricultural tenants do not enjoy the same rights as residential tenants, who are afforded a comprehensive package of rights through the Residential Tenancies Act, but this does not mean that agricultural…

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