Gillis v. Smith Date:, 2015 BCPC 350

Citation: Gillis v. Smith Date: 20151202 2015 BCPC 0350 File No: 39999 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims Court) BETWEEN: ROSEMARY GILLIS CLAIMANT AND: JULIE SMITH and MARC SMITH DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S.D. FRAME Appearing for the Claimant: Mr. Kenneth Gillis Counsel for the Defendants: Mr. Ryan Schubert Place of Hearing: Kamloops , B.C. Dates of Hearing: June 25 and October 19, 2015 Date of Judgment: December 2, 2015 [ 1 ] Rosemary Gillis owns lands legally described as: The Agricultural Land Reserve farmland described as: S/W ¼ SEC. 16, TWP

[ 1 ] Rosemary Gillis owns lands legally described as: The Agricultural Land Reserve farmland described as: S/W ¼ SEC. 16, TWP 23, RANGE 10, W6TH MERIDAN, excluding that area used by the Lessor as residential (the land). [ 2 ] Ms. Gillis leased the land to Marc and Julie Smith, the Defendants. The lease commenced on May 1, 2012 and was to be for a five year period ending May 1, 2017, with an option to renew for a further five years. [ 3 ]

Article 4 of the lease provides: As a provision of terms #2 and #3 of this Lease it is agreed that during the first year May 1 st , 2012 to May 1 st , 2013 that the Lease shall be subject to a mutual review in which one or both parties may wish to withdraw and end the Lease without further action. [ 4 ] The rent was $1,600 per year payable on the first day of May each year. This was subsequently changed to September 1 each year to accommodate the Smiths. [ 5 ]

Article 6 of the lease describes the purpose which the lessee “may” use the land for. It is not an imperative phrase and therefore there was no obligation created in this term to actually use the lease for its purposes: Purpose of the Lease: That the Lessee may cultivate, seed, harvest and use for crop production the farmland described, and that he may do so for his own purpose and at his own expense. [ 6 ] The next article,

Article 7, does contain imperative language: The Lessor and the Lessee agree that use of the described farm land shall proceed in the following manner: (see attached sketch) The fields described as “TOP, FRONT, CENTRE, BOTTOM and LINE 17” will be: Thoroughly cultivated, seeded, harvested, and cultivated again, left to lie fallow at times and all fields will be seeded to a suitable dry-land hay mixture as soon as the land is deemed well enough prepared, and before the lease expiry date. [ 7 ] There are no other imperatives contained in that article. [ 8 ] At

Article 10, if the Smiths failed to perform the obligations of the agreement then the lease, at Ms. Gillis’ option, would “cease” and the current year’s rent would become due and payable. There is no term that she would be entitled to any other payment. [ 9 ] At

Article 11, if the Smiths wanted to terminate the lease, then the lease would “cease” and all of the remaining rent for the remainder of the term would be due and payable immediately. On the other hand, if Ms. Gillis wished to terminate the lease then the lease would “cease” and all prior lease monies would be repaid to the Smiths. [ 10 ] It seems an odd outcome that Ms. Gillis would be entitled to less remedy upon a default than upon a termination by the Smiths, but that is the bargain she made. [ 11 ] Ms. Gillis prepared the lease.

She did not reserve for herself any right to control when the Smiths seeded the lands, prepared the lands or otherwise what they grew on the lands except as provided in

Article 7. [ 12 ] On November 12, 2013, Ms. Gillis wrote to the Smiths with concerns. She was concerned that the farm land cultivated with the deep digging farm implement be cleared of the big stones that had come up. She had asked the Smiths not to use the implement again. However, she had no right to make this request, not having reserved any right on her part to do so. Further, there were nearly four more years under the lease during which time the Smiths were able to determine when they would be removing any large rocks. [ 13 ] Also in that correspondence, Ms.

Gillis expressed concern the Smiths were growing canola crops. While she purported at trial to say that she was making a request, the correspondence clearly makes a demand that they supply proof the seed they were using was not genetically modified. There is a veiled threat that if they did not do so, their right to farm the land would be put at risk. In that letter she says “I am keen that you continue to farm here and I am genuine in my wish that you harvest good crops that contribute to a profitable operation for you and your family”.

It should be noted that, at that point, the Smiths were also already overdue in their lease payments. [ 14 ] Apart from the unpaid lease payments, Ms. Gillis’ only option with respect to the deep cultivating and the canola crops was to terminate the lease and refund all of the money to the Smiths that they had paid. It was not her option, under the lease, to tell them to stop the nature of cultivating they were performing or planting the seeds they were planting. [ 15 ] On January 10, 2014, upon receiving no response from the Smiths, Ms.

Gillis wrote with respect to the unpaid lease payments - which she was entitled to do under the lease. However, she also advised that she would be demanding payment of land restoration pursuant to the lease. She did not terminate the lease but told the Smiths that it was her view they had fundamentally breached the lease agreement. Nothing in the letter accepted a repudiation of the agreement nor terminated the lease. Had she done so, she would only have been entitled, at most, to the lease payment due May 1, 2014. [ 16 ] On November 3, 2014, it is clear that the lease had continued.

There had been a settlement conference pursuant to the Small Claim action Ms. Gillis had started. That settlement conference was on May 6, 2014. A settlement conference record was prepared stating only “to await outcome of 2014 growing season”. The file was adjourned generally but the terms of any expectations for the 2014 growing season were not set out. [ 17 ] Ms. Gillis wrote to the Registry referring to the settlement conference record indicating the following: The 2014 growing season has concluded without the rocks and weeds in one of the fields being addressed.

I have photos which now illustrate two full years of weed growth and farmland neglect. This is in spite of Marc Smith’s verbal promise and agreement with Judge Harrison and myself May 6, 2014 that the weeds and rocks would be removed and the land would be cultivated and re-seeded to a hay

crop by this time. Further, the other two fields in my original Claim have had an unsatisfactory level of rock removal and weed control, although theSmiths have taken grain crops from the land and have taken hay crops from all the other farm lands. There has been no communication from Marc and Julie Smith to provide any indication as to their intentions. As of this date November 3, 2014, I find myself forced to request that Claim 39999 be re-activated. Thank you, [18] While not specifically stating so, it is evident that Ms.

Gillis is pursuing the original claim and not the settlement agreementmade at the settlement conference. [19] On November 26, 2014, the Smiths made it clear that it is their view Ms. Gillis is the one in breach of the lease. They claimedthat she is not entitled to expect them to re-seed land that is in fallow. They claimed that they have suffered income loss because she hasinterfered with their ability to perform accepted Canadian agricultural practices.

They made it clear that they did not feel her unilateralterms set out after the lease were binding upon them. [20] There was a lot of discussion about whether weed spraying would be permitted or not, but it is not addressed in the lease norwas it addressed in any of the correspondence. It may have been a point of contention, but it was not a valid basis for a claim. [21] By letter dated March 18, 2015, Ms.

Gillis sets out what she believes were the terms of an agreement reached at the settlementconference on May 6, 2014 whereby the Smiths apparently agreed to restore the field prior to the end of the 2014 growing season. Sheinaccurately characterized this as “yet another breach of the lease”. In this letter she accepted notice of their intention to terminate thelease by reason of that breach. She is in error. There is nothing in the lease requiring them to restore the field as agreed in the settlementagreement.

Further, she had already elected to pursue her original claim under the lease and not the agreement reached at the settlementconference. She cannot have both. [22] Mr. Smith agreed that there was an agreement at the settlement conference to restore the barn field by the end of the 2014growing season. However, he said the weather became really wet so the equipment would not work with those conditions. His intentionwas to repair the field the following season. He noted there were many variables in farming which Ms.

Gillis ought to have known. [23] At trial, there was considerable difference of opinion with respect to whether the manner of cultivation the Smiths engaged inwas an accepted agricultural practice. “Accepted agriculture practice” is not a term of the lease. Ms. Gillis argued that it was an impliedterm. [24] The claim before me was for the outstanding lease payments which, at the commencement of the trial, were down to $3,200 forthe balance of the lease term, and for the reparation work which was now at $13,074.48. [25] When asked on cross examination why Ms.

Gillis did not withdraw her claim once she was paid for the then outstanding leasepayments, her response was that she felt there was a good reason for her to maintain her claim. She was in error. [26] With respect to best farming practices, there is very little reliable evidence before me about acceptable agricultural practices inthis area. Ms. Gillis testified that she was busy and unable to farm the land. She agreed in cross examination that her prior tenant hadnot used all of the land and that some of the weed growth had been there when the Smiths took over farming. A neighbour farmer, FrankRiley, and Ms.

Gillis both testified that neither one of them were familiar with the deep ripping cultivation practice, but neither one ofthem were established as farming experts on what is acceptable agricultural practices in this region. [27] Frank Riley, the farmer who testified on behalf of the Claimant, has lived in Celista for 57 of his 67 years. He is a logger andfarmer. He did the reclamation work on the Gillis field. He had heard of deep tillage but had not seen it used in his area until recently. Nor had he seen canola grown in the North Shuswap until the Smiths grew it.

When asked on cross examination if he was an expert inagriculture, he conceded that he was not, and just considered himself knowledgeable. I cannot rely upon Mr. Riley as an expert. [28] Ms. Gillis, through her representative Kenneth Gillis, argued that there had been degradation to the land, refusal by the Smithsto remedy it and therefore liability under the lease. He referred to a number of cases. [29] Elias v. Dube’s Furniture Warehouse

(1984) Ltd. (1992) (NB KB), 125 N.B.R. 2d 150, was offered for thepurposes of establishing that the doctrine of constructive termination is applicable to a lease. Ms. Gillis argued that abandonment of herfarm field was a fundamental breach amounting to a termination. There is no evidence the Smiths abandoned the farm field. They leftafter it become clear they would not be permitted to engage in their farming without interference. At that point, they were also in defaultof payment. [30] Keefe v. Fort (1998) (NS CA), 89 D.L.R. (3d) 275, stands for the proposition that Ms.

Gillis was entitled totreat the conduct of the Smiths as repudiatory and she was therefore entitled to terminate the lease. Had there been a repudiation, thatwould be true. The Smiths were delinquent in payment. She opted to continue to accept payment without termination. [31] Clausen v. Canada Timber & Lands Ltd. (UK JCPC), [1923] 3 W.W.R. 1072, was offered for the propositionthat repudiation can be by words or conduct. Ms.

Gillis’ letter of January 10, 2014, she argued, set up the repudiation which she, by herconduct in her letter of January 10, 2014, accepted and the lease was terminated. [32] Canada Egg Products Ltd. v. Canadian Doughnut Co. (SCC), [1955] 3 D.L.R. 1, were provided for theproposition that issuance of a writ is sufficient communication of the termination.

[33] Ms. Gillis also relied upon the Baker v. Hammond

(2007) S.K.Q.B. 424 decision which provides that there are implied terms toevery agricultural lease that the farm will be farmed in a husband-like manner. Even if implied terms can be read into a lease thatalready has explicit terms, there is no adequate evidence before me that the land was not being farmed in a husband-like manner. [34] Skrypnek v. Huculak (AB KB), [1947] 1 W.W.R. 713, follows in a similar line providing there is an impliedcovenant of proper husbandry in accordance with the area in which the farm is situate.

That case also provides that the measure ofdamages is the additional work made necessary by the breach. [35] The lease in Baker, supra was a verbal agreement, not a written one as in the case before me. The court was required todetermine what the terms of the lease were in that case. What I take the decision to be saying in Baker, is that absent any other term tothe contrary, cultivation in a husband-like manner is implied.

In this case, the very specific terms of what would be cultivated and whenpreparation of the land would be done as well as seeding for the turnover of the lease were specifically set out in the lease. No impliedterm can negative these covenants. [36] In Skrypnek, there was a written lease. One of the terms of the lease was that the Defendant would farm the land to the best ofhis ability, use good seed free from noxious weeds and to keep any noxious weeds from going to seed.

The court held that a covenant ofhusband-like manner was implied in the absence of an express covenant or a negative covenant. [37] As I have said, this lease specifically provides for the cultivation, preparation and returning of seeded land. I cannot imply acovenant in the face of such specific language. In the event that such a covenant ought to be implied, there is no evidence before me thatthe Smiths cultivated this land in any manner other than a husband-like one. [38] Ms. Gillis argued that deep ripping was a practice to remedy soil compaction.

There was no such evidence before me that deepripping was restricted to this use. She argued that the Smiths were determined in their pursuit of deep ripping which resulted in thewelling up of rocks amounting to a “virtual mountain”. Without any evidence, Mr. Gillis argued that a field that yields rocks like thatannually would be non-arable. [39] Mr. Gillis described this as a marked departure from the norm, although there is also no evidence of that before me. Toestablish this standard, Ms. Gillis ought to have brought expert agricultural evidence. It is her claim to prove. She failed to do so. [40] Ms.

Gillis denied that her request to stop the deep ripping and to provide proof that the canola was not genetically modified,was in any way interfering with the Smiths’ use of the land. She denied that she expressed any concerns about spraying the weeds aswell. Mr. Gillis argued that if the Smiths felt she was interfering, they ought to have called, responded to her correspondence or visitedher, but they did not do so. However, Mr. Smith’s uncontroverted evidence at trial was that Ms. Gillis was difficult to deal with anddetermined in her position. [41] Mr.

Schubert, who was retained by the Smiths only for the argument, submitted that the lease was to farm land for rent. Theclaim was started because of non-payment of rent. The farm practices were not the main issue. Mr. Schubert argued that the Smithscontinued to pay pursuant to the lease. At trial, the Smiths had paid the rent and those amounts had been accepted. The trial becameabout a conflict between the parties with respect to what were the best practices. [42] Mr. Schubert argued that the letter of March 18, 2015 constituted the final termination of the lease.

The Smiths took this tomean they were to leave the property. They paid rent to May 1, 2015. Rent was no longer an issue at that stage. [43] Mr. Schubert also argued that there was in fact no agreement made at the settlement conference. No order was made accordingto the forms that were completed at the time. All it provided was that the parties would await the outcome of the season. If there was anorder with which the parties were to comply, then there ought to have been an affidavit filed by Ms. Gillis to the effect that the settlementagreement had not been complied with. [44] Mr.

Schubert referred to the decision of Kiff v. Lundquist, 2006 BCPC 446 , 2006 B.C.P.C. 0446, which sets out theproper procedure under Rule 7(20) providing: If a settlement is recorded on a court record as an agreement and not as a payment order and a party does not comply with the recordedterms of the agreement,

a) the agreement is cancelled, and

b) after filing an affidavit of non-compliance, the claimant may file a paymentorder in the amount that a judge directed at the settlement conference or, if no direction was made, in the amount of the claim. [45] There is no recorded agreement in the settlement conference record. The parties are in agreement that some form ofarrangement had been reached at the settlement conference. That arrangement was not met by the Smiths. Ms. Gillis elected to pursuethe full amount of her claim, regardless of the procedure she followed. [46] Mr.

Schubert argued that there was no obligation on the part of the Smiths to cultivate the land as required by Ms. Gillis or toprepare the land until the end of the term of their lease. The term of the lease was for five years, renewable at the option of the parties. That time has not yet come. The time for performance and to cure obligations was a certain term. I was referred to Non-MarineUnderwriters, Lloyd’s of London v.

Scalera, 2000 SCC 24 , 2000 S.C.C. 24, at paragraph 71: [71] Where a contract is unambiguous, a court should give effect to the clear language, reading the contract as a whole: Brissette Estate,supra, at p. 92; Parsons v. Standard Fire Insurance Co. (1880), 1880 CanLII 4 (SCC), 5 S.C.R. 233. Where there is ambiguity, this Courthas noted "the desirability ... of giving effect to the reasonable expectations of the parties": Reid Crowther, supra, at p. 269 (citing Brownand Menezes, supra, at pp. 123-31, and Brissette Estate, supra). See also Scott v.

Wawanesa Mutual Insurance Co., (SCC), [1989] 1 S.C.R. 1445, at p. 1467; Wigle, supra. Estey J. stated the point succinctly in Consolidated-Bathurst Export Ltd. v.Mutual [page592] Boiler and Machinery Insurance Co., (SCC), [1980] 1 S.C.R. 888, at pp. 901-2: [L]iteral meaning should not be applied where to do so would bring about an unrealistic result or a result which would not becontemplated in the commercial atmosphere in which the insurance was contracted. Where words may bear two constructions, the more

reasonable one, that which produces a fair result, must certainly be taken as the

interpretation which would promote the intention of the parties. Similarly, an

interpretation which defeats the intentions of the parties and their objective in entering into the commercial transaction in the first place should be discarded in favour of an

interpretation of the policy which promotes a sensible commercial result... . Said another way, the courts should be loath to support a construction which would either enable the insurer to pocket the premium without risk or the insured to achieve a recovery which could neither be sensibly sought nor anticipated at the time of the contract. [ 47 ] The plain meaning of this lease is that the expiry is in 2017. There is no specific requirement for what the Smiths are required to do except to cultivate the land at their expense and to return it at the end of the lease as specifically provided.

There is nothing absurd or complicated about the meaning of the language in the lease. The only term of the lease that may be subject to some uncertain

interpretation is when the lands are “deemed well enough prepared” and “before the lease expiry date”. [ 48 ] To that end, Mr. Schubert referred me to Guarantee Co. of North America v. Gordon Capital Corp. , [1999] 3 S.C.R. 424 , 1999. He argued the only absurd

interpretation here would be to suggest the Smiths would have to cultivate the land regardless of the conditions and factors. [ 49 ] Mr. Schubert also referred me to Johnson & Moorman Contracting Ltd. v. Graves , 1996 CarswellBC 2114, [1996] B.C.W.L.D. 2691, [1996] B.C.J. No. 2220 (B.C. Prov. Ct.) , for the principle that a party to a contract cannot plead non-fulfilment of a condition if [she] deliberately frustrates its fulfilment. Mr. Schubert argued that Ms.

Gillis should not be rewarded for her actions when she interfered with how and when the Smiths were exercising their right to cultivate the land under the lease. [ 50 ] To this, Mr. Gillis responded that Ms. Gillis had a reasonable apprehension of the condition her land would be in if the Smiths continued. He argued there was no breach forced by her. She only asked that the Smiths not continue their behaviour until they had cleaned up the results of the deep ripping. [ 51 ] I find that the Smiths breached the lease by failing to make the payments in accordance with the lease terms.

This was a persistent situation regardless of any interference by Ms. Gillis. Ms. Gillis did not accept this breach as a repudiation or terminate the lease for failure to pay. She continued to accept those payments but ultimately terminated the lease because of her concerns about the manner in which the land was being cultivated. In terminating the lease on that basis, she also breached the lease. In doing so, she frustrated the contract to the end that the Smiths were unable to cultivate the land to the end of the lease or to prepare the land for return to Ms. Gillis.

Both parties were in breach of the lease on fundamental terms, which breaches were not linked to one another. In other words, the breach by one party did not lead to the breach by the other. [ 52 ] The lease specifically provided what Ms. Gillis’ options were in the event that the Smiths failed to perform the obligations of the lease which are contained at

Article 10. At her option, the lease would “cease and the current year’s rent will become due and payable immediately”. On the other hand, if the Smiths wished to terminate the lease, then all of the remaining rent of the five year term would become due and payable. The Smiths did not terminate the lease. They continued to pay under it, albeit delinquently, and Ms. Gillis continued to accept payment. Had Ms. Gillis terminated the lease for non-payment, and had they been in default, the Smiths would have been liable to her only for the remainder of 2015 lease payments.

The end result is that she did terminate the lease and the Smiths had been in default. [ 53 ] Had Ms. Gillis not frustrated the contract by her interference with the manner in which they were farming the land, she would also have been entitled to have the Smiths prepare the land and seed it for hay as provided under the lease. She effectively prevented them from doing so and cannot now claim from them the costs she incurred to fulfil their obligations other than those specified in the lease. [ 54 ] I find that Ms.

Gillis is entitled to the outstanding lease payment in the sum of $1,600 representing the lease payment that was due on September 1, 2015, representing the damages to which Ms. Gillis is entitled upon a breach of the lease by the Smiths. [ 55 ] Ms. Gillis is not entitled to her claim for the reparation of the field because I am not satisfied that the Smiths would not have returned the land prepared as they were required to do.

However, she is entitled to recover the costs of the seed she had to plant, being $1,242.45; the barn field weeding costs of $863.63; and the time for seeding and rolling which amounted to 20.5 hours. I am satisfied that the amount charged by B.V.R. Contractors Ltd. was a friendly rate and therefore allow that cost at $75 per hour for a total $1,537.50. [ 56 ] The remainder of Ms. Gillis’ claim relates to the disking and rock pulling which is a product of her interference with the lease.

I do not allow that part of the claim as I am satisfied that if the Smiths had been permitted to prepare the land for transfer over to Ms. Gillis without interference with their farming practices, this would have been done by them. [ 57 ] Unless there are formal offers extended under the Rules , I do not allow costs to either party. _____________________________ S.D. Frame Provincial Court Judge