The McDonalds Really Had A Farm And On It Was No Exploitation
On September 28, 2017, the Supreme Court of Canada denied leave to appeal in McDonald v McDonald, 2017 BCCA 255, in which the B.C. Court of Appeal held that the unpaid labour of children in a family setting does not constitute unjust enrichment of the parents absent exploitation.1
In 1974, Samuel and Sylvia McDonald (the "McDonalds") became owners of a dairy farm that had been in the McDonald family for over 100 years. The McDonalds had four children - Robert, Brian, Dean, and Julie (the "McDonald Children") - who each performed unpaid farm chores until graduation from high school. The farm flourished, and the McDonalds incorporated McDonald Landing Farms Ltd. (the "Company") in 1983. The Company acquired the farm assets in exchange for preferred shares with a value of approximately $900,000 and shareholders' loans of $300,000. At the time of trial, the farm assets had a net value of $11,000,000.
Unlike the other McDonald Children, Robert remained on the farm full-time after high school, and began managing some aspects of the farm in the early 1980s. In 2000, the McDonalds decided to transfer the common shares in the farm and associated shareholders' loans to Robert. They also revised their wills so that the estate of the survivor of them would be divided only between Dean, Brian, and Julie. None of the McDonald Children except for Robert knew about this inter vivos transfer. After Samuel died in 2005, Sylvia also transferred her share of the 100-acre farmland parcel to herself and Robert as joint tenants.
In 2009, Dean, Brian, and Julie found out that all of the farm assets except the preferred shares of the Company (equating to roughly 10% of the farm's value) had been transferred to Robert. In response, they commenced an action for unjust enrichment against their father's estate for the unpaid labour that they had performed on the farm as children and teenagers.
The trial judge found that the McDonald Children had made a significant economic contribution to the farm as teenagers, allowing their parents to use the capital that they would...
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