Agricultural Law Netletter Aug 14th 2017

Issue 377

Issues added on the 7th and 21st of every month.

HIGHLIGHTS

The British Columbia Court of Appeal has issued a decision setting limits on when unpaid labour contributed by farm children to their parents may constitute grounds for an unjust enrichment claim. Four farm children had provided significant uncompensated labour to their parents when they worked on their parents' dairy farm in their teenage years, with a vague promise that some day it would be theirs. The parents later gifted their interest in the corporate family dairy farm (now valued at over $12 million) to one of the 4 children and left the remaining 3 children with preferred shares in the dairy farm which had a total estimated value of approximately $900,000.00. The Court concluded that public policy provided a "juristic reason" for denying compensation to children who were required to do chores, unless the chores could be characterized as exploitative. The Court suggested that exploitation might be established by economic benefits provided to parents that are gross disproportionate to the benefits received by children as members of the family, or if the work is manifestly detrimental to the health or well-being of the children. The Court also considered the "value received" and the "value survived" approaches for assessing unjust enrichment damages. The Court of Appeal set aside a trial judgment which awarded each of the 3 children $350,000.00 in damages (less the value of the preferred shares), and concluded that the amount of the damage claim was not warranted, in any event. (McDonald v. McDonald Estate, CALN/2017- 053, [2017] B.C.J. No. 1352, British Columbia Court of Appeal)

NEW CASE LAW

CALN/2017-053,

Full text: [2017] B.C.J. No. 1352;

2017 BCCA 255,

British Columbia Court of Appeal,

Unjust enrichment -- Value of Work Done by Farm Children.

Sylvia McDonald ("Sylvia") and Sylvia McDonald as Executor of the Estate of Samuel

Alexander McDonald ("Samuel" and the "McDonalds") appealed to the British Columbia Court of Appeal from a Supreme Court trial decision which awarded 3 of the McDonalds' children - Brian, Dean and Julie McDonald ("Brian", "Dean" and "Julie") judgments of

$350,000.00 each for work they had done on the McDonalds' dairy farm while they were teenagers.

The McDonald family had operated a dairy farm on Nicomen Island, near Mission, British Columbia since the 1860's. Samuel took over the farm's operations in the 1940's with the hope that he would ultimately acquire title. He made payments to his surviving siblings to compensate them for the loss of an opportunity to acquire the farm. In 1958, Samuel married Sylvia, who had lived on a neighbouring farm.

Between 1959 and 1965 Samuel and Sylvia had 4 children - Julie, Brian, Dean and Robert McDonald.

In 1968, Samuel and Sylvia acquired a nearby 30 acre parcel which had been owned by Sylvia's mother.

In 1974, Samuel's mother transferred title to the dairy farm, which was then 100 acres, to Samuel and Sylvia.

In 1983 Samuel and Sylvia incorporated McDonald Landing Farms Ltd. They transferred all of their assets to the company except for a 15% interest in the 100 acre farm which they continued to own personally. In exchange they received preferred shares with a redemption value of $907,000.00 and indebtedness by way of shareholders' loans of $300,000.00. Samuel and Sylvia continued to hold the common shares in the company.

The dairy farm was modernized by the construction of a new milking parlour in 1987 which was financed, in part, by $35,000.00 loans from Brian, Robert and Dean which they had obtained as an inheritance from Sylvia's mother. These loans were eventually repaid. The farm expanded in 1989, and again in 1996 with the acquisition of the farm on which Sylvia had grown up.

In 1986 Samuel and Sylvia prepared Wills. They wished to ensure that the family farm survived and for this purpose they left it to Robert. Their Wills provided that on the death of the survivor, the preferred shares would be divided equally between Julie, Brian and Dean who could redeem these shares over a period of time. The residue of the Estate (including the common shares and the 15% interest in the 100 acre parcel) were bequeathed to Robert.

In...