Docket: 1668 Barry Alfred Raymond (Plaintiff) Appellant - v. -, 2011 SKCA 58

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2011 SKCA 58 Date: 20110518 Between: Docket: 1668 Barry Alfred Raymond (Plaintiff) Appellant - and - Beverley Barbara Anderson, as Executrix for the Estate of Helen Barbara Raymond, and Beverley Barbara Anderson, as Executrix for the Estate of George Alfred Raymond (Defendant) Respondent Coram: Vancise, Richards & Caldwell JJ.A. Counsel: Karl P. Bazin, Q.C. for the Appellant William J. Herle, Q.C. for the Respondent

Appeal: From: 2008 SKQB 278 Heard: November 10, 2010 Disposition: Allowed Written Reasons: May 18, 2011 By: The Honourable Mr. Justice Caldwell In Concurrence: The Honourable Mr. Justice Vancise The Honourable Mr. Justice Richards Caldwell J.A. I. Introduction [ 1 ] The appellant, Barry Raymond (“Barry”), appeals from the remedy awarded in his favour by the trial judge, see 2008 SKQB 278 .

At trial, the judge found that Helen Barbara Raymond and George Alfred Raymond (“Barbara” and “Alfred”) had entered into a valid agreement to sell their respective undivided one-quarter interests as tenants in common (the “Parents’ Interests”) in S½ 27-7-10 W3M (the “Land”) to Barry, their elder son. The judge awarded Barry the remedy of damages on the breach of that agreement by Barbara and Alfred. [ 2 ] For the reasons below, I would set aside the damages award and substitute an order of specific performance requiring the transfer of the Parents’ Interests to Barry. II.

Background [ 3 ] Barry is one of three children born to Barbara and Alfred. Barbara and Alfred are deceased but their estates are respondents in this appeal (the “Parents’ Estates”) and are represented by Beverley Anderson (“Beverley”), their daughter and executrix. Alan Raymond (“Alan”) is Barbara and Alfred’s younger son. Like their parents, Barry and Alan are farmers and ranchers. Alan is also a veterinarian. [ 4 ] Each of Alfred, Barbara, Barry and Alan are registered owners, as tenants in common, of a one-quarter undivided interest in the Land.

The Land includes Barbara and Alfred’s home quarter, being SE 27-7-10 W3M (the “Home Quarter”), on which their house, barn and other outbuildings and structures are located. Alan’s house and his veterinary clinic are also located on the Home Quarter, but Alan’s primary farming and cattle operations are on SW 26-7-10 W3M, being the quarter

section immediately to the east of the Home Quarter. Barry and his wife, Gladys Raymond (“Gladys”), live and have their farming and cattle operations on the quarter

section immediately to the south of the Home Quarter. Both Alan and Barry have used the Land in their respective farming and cattle operations. Alan’s son, David Raymond (“David”), currently lives in Barbara and Alfred’s house. [ 5 ] This action arose out of a broader dispute between the Raymond brothers as to their succession to the farm land owned by their parents. The dispute arose prior to the deaths of Barbara and Alfred and continues.

Indeed, counsel advised this Court that there is a separate action in the Court of Queen’s Bench, which has been in abeyance pending the outcome of this action, for partition of the Land. [ 6 ] At trial in this matter, the judge disposed of the question as to whether a sale agreement existed between Barry and his parents and then addressed the appropriate remedy for the breach: [85] Based upon these findings I have no hesitation in concluding that the Agreement for Sale dated May 3, 2002 is valid and should be enforced in the plaintiff’s favor.

I also agree with the plaintiff’s submission relating to compliance with The Homesteads Act , 1989 . I have no doubt that Barbara gave her consent freely to the disposition of the property. …

[87] I am aware of the attachment that farmers have to their land and I have carefully considered the plaintiff’s reasons for requestinga transfer of the defendants’ interest to him. [88] Against this I must also consider that Barry has basically not used the property for a number of years and has been able to getalong. I feel compelled to take into consideration that Barry is in his late sixties and question the sincerity of his motive to set up hiscattle operation on the property. Had Barry pressed his claim in 2002 after the Agreement for Sale was prepared I might have looked at itdifferently.

At this point, six years later, so much has happened between Barry and Alan that I cannot shake the feeling that Barry’smotive may not be as genuine as it once was. [89] In essence, I have not been convinced that the property is unique or irreplaceable in the sense that it cannot be compensated bydamages. In my view a damage award will adequately compensate Barry for the purchase. The amount is $70,500.00 which representsone-half the appraised value of the property. The Parents’ Estates do not dispute the finding that a valid and enforceable agreement for the sale of the Land existed between Barry andhis parents.

This appeal is limited to whether the judge, having found breach of that agreement, properly awarded compensatorydamages, not specific performance, as the remedy for that breach. This appeal gives rise to a single question: Did the judge err in findingthat compensatory damages was an adequate remedy? III. Analysis [7] Until 1996 it had long been a tenet of our law that each parcel of real property was inherently unique.

Given this inherentuniqueness, our courts made the equitable remedy of specific performance readily available to a plaintiff purchaser who claimed thevendor had breached a contract for the sale of real property. In 1996, Sopinka J.’s majority decision in Semelhago v. Paramadevan, (SCC), [1996] 2 S.C.R. 415 (“Semelhago”), questioned these longstanding, rudimentary elements of our law of real property.His comments, although obiter, were thereafter generally accepted as law.

However, Sopinka J. did not so much make new law as remindus that a basic legal rationale based on the presumed inadequacy of expectation damages has always underpinned the availability ofspecific performance as a remedy in cases involving real property. Unfortunately, post-Semelhago there has been some confusion as towhen the remedy of specific performance will be made available to an aggrieved prospective purchaser of land. For this reason,Semelhago has been criticized for founding legal uncertainty in once settled law.

This appeal results in part from that uncertainty. [8] Some background on the Semelhago decision is necessary. In Semelhago, Sopinka J. expressed dissatisfaction with the way inwhich the courts had been approaching the availability of specific performance as a remedy in matters involving real property: [20] … While at one time the common law regarded every piece of real estate to be unique, with the progress of modern real estatedevelopment this is no longer the case. Residential, business and industrial properties are all mass produced much in the same way asother consumer products.

If a deal falls through for one property, another is frequently, though not always, readily available. [21] It is no longer appropriate, therefore, to maintain a distinction in the approach to specific performance as between realty andpersonalty. It cannot be assumed that damages for breach of contract for the purchase and sale of real estate will be an inadequateremedy in all cases.

The common law recognized that the distinction might not be valid when the land had no peculiar or special value.… [22] … Specific performance should, therefore, not be granted as a matter of course absent evidence that the property is unique to theextent that its substitute would not be readily available. The guideline proposed by Estey J. in Asamera Oil Corp. v. Seal Oil & GeneralCorp, (SCC), [1979] 1 S.C.R. 633, with respect to contracts involving chattels is equally applicable to real property.

Atp. 668, Estey J. stated: Before a plaintiff can rely on a claim to specific performance so as to insulate himself from the consequences of failing to procurealternate property in mitigation of his losses, some fair, real and substantial justification for his claim to performance must be found.[emphasis added] It is important to note that the real property at issue in Semelhago was a house under construction on a bare lot in Toronto that was“interchangeable in all likelihood with any number of others” (at paras. 7 and 23).

Further, at the time, a line of cases had emergedinvolving aggrieved prospective purchasers who had sought the remedy of specific performance which distinguished investmentproperties from other real properties, as examples see: Heron Bay Investments Ltd. v. Peel-Elder Developments Ltd. (1976), 2 C.P.C. 338(Ont. H.C.) (“Heron Bay”); Chaulk v. Fairview Construction Ltd., (1977), 3 R.P.R. 116 (Nfld. C.A.) (“Chaulk”); McNabb v. Smith(1981), (BC SC), 124 D.L.R. (3d) 547 (B.C.S.C.), aff’d (1982), (BC CA), 132 D.L.R. (3d) 523(B.C.C.A.); and Domowicz v. Orsa Investments Ltd. (1993), 36 R.P.R. (2d) 174 (Ont. Gen.

Div.). [9] What Heron Bay, Chaulk and Semelhago all speak to is the general goal of the law of remedies as it applies to breach of contract,which is to put the plaintiff in the same position that the plaintiff would have been in had the defendant performed under the contract.With this goal in mind, the courts typically awarded a successful plaintiff the common law remedy of compensatory damages. However,where damages will not make the plaintiff whole, the courts may resort to equity and may award a successful plaintiff the discretionaryremedy of specific performance.

An order for specific performance requires the defendant to perform under the contract, thereby makingthe plaintiff whole. In this context, specific performance is an alternative, equitable remedy made available to a plaintiff only where acommon law award of damages would be inadequate. Robert J. Sharpe in Injunctions and Specific Performance, looseleaf (Aurora:

Canada Law Book, 2010), describes this interplay between the primary and alternative remedies (at para. 7.180): Where ordinary damages will not meet the goal of protecting the plaintiff’s expectation, the added cost of specific performancebecomes worth incurring. The assumptions which lie behind expectation damages as an adequate level of protection are that the injuredparty is in the position of a commercial trader, motivated to enter the contract with the aim of maximizing profit, and that the subject-matter of the bargain is a fungible good or service for which there is readily available alternate performance.

The notion of “inadequacyof damages” as a rationale for specific performance reflects the desire to avoid the harshness which would result from the application ofthe ordinary rules where these assumptions are not met. Where expectation damages fail to reflect the interest of the plaintiff, specificrelief ensures that the plaintiff gets exactly what was bargained for and, whatever the nature of the plaintiff’s interest in performance, itis protected.

This will usually increase the cost of breach imposed upon the defendant and the court’s task should be to weigh thedisadvantage of increasing the defendant’s burden against the advantage of affording more complete protection to the plaintiff’sexpectation.… [10] The general approach of courts faced with a breach of contract claim has been to assess the adequacy of damages before resortingto the remedy of specific performance, but then only if compensatory damages proved inadequate.

However, prior to Semelhago, courtsrecognized a general exception to this approach when the contract in question involved land and courts understood specific performanceto be the primary and accepted remedy in that circumstance. For example, in Kloepfer Wholesale Hardware and Automotive CompanyLimited v.

Roy, (SCC), [1952] 2 S.C.R. 465, Kerwin J. summarily dismissed an argument akin to Sopinka J.’s obiter inSemelhago when he wrote (at p. 472): Finally, as to the suggestion that damages would be sufficient because it is contended that the plaintiff desired to use the property asan investment, it is sufficient to say that generally speaking, specific performance applies to agreements for the sale of lands as a matterof course. [emphasis added] [11] Similarly, in Flint v. Corby (1853), 4 Gr. 45, Esten V.C. succinctly set out this presumption as to remedy as follows (at p. 52): ...

The specific performance of an agreement respecting land, is enforced because the court intends in every particular instance thatthe estate, which forms the subject matter of the contract, possesses a peculiar value for the purchaser, and that pecuniary damages willfurnish no adequate equivalent for the loss of his bargain.

In this case, the peculiar value, which attracts the jurisdiction of the court, isimplied and needs not be proved.... [emphasis added] [12] Yet, as these passages indicate, even though specific performance was the presumed remedy, underlying that presumption was anacceptance of the general inadequacy of damages as a remedy in the circumstances of breach of contract for the transfer of land. RobertJ.

Sharpe in Injunctions and Specific Performance, supra describes the rationale underlying that presumption as follows (at para. 7.220): An award of damages presumes that the plaintiff’s expectation can be protected by a money award which will purchase substituteperformance. If the item bargained for is unique, then there is no exact substitute. The lack of an available substitute produces twoproblems. First, it makes the purely monetary loss caused by the defendant’s breach very difficult to measure.

There are no comparablesales to which reference may be made in order to establish an objective estimate of the value of the promised item or performance.Secondly, even if an objective value of some sort can be found, the effect of denying specific performance and granting damages is toforce the plaintiff to settle for some inexact substitute. The plaintiff may, however, have attached to the particular item bargained for avalue, sometimes called the “consumer surplus”, which is not reflected by objective measurement.

In such a case, the value of the item tothe plaintiff exceeds the market value (even if it can be established) and it is difficult to justify forcing the plaintiff to accept only thelesser objective value. It might be argued that money relief could also be awarded to compensate the plaintiff for this loss above themarket value but, because of its subjective nature, that extra value is extremely difficult to assess. However, if no account is taken of thisaspect of the plaintiff’s interest in performance, the expectation will not be protected and one of the basic aims of contract remedies willnot be fulfilled.

By requiring performance of the defendant’s obligations in specie, the court can avoid the expensive and time-consuming task of translating the effect of the breach into money terms and, more importantly, avoid the risk of inaccurate assessmentand thereby achieve a virtual guarantee of remedial adequacy in favour of the plaintiff. [footnotes omitted] [13] In effect then, Sopinka J.’s obiter reminded us that, notwithstanding the subject matter, the factual circumstances of a thwartedpurchase of real property should be examined to see whether the facts are consistent with the assumptions that underpin expectationdamages as adequate protection, i.e., do the facts disclose a prospective purchaser whose motivation for purchase is maximization ofinvestment profit and a subject matter that is a fungible for which there is a readily available substitute?

And, where the facts are such,Semelhago reminded us that damages is the appropriate remedy as it will meet the goal of protecting the prospective purchaser’sexpectation. [14] Semelhago does not, however, stand for the proposition that the presumption of uniqueness has been supplanted by a presumptionof replaceability. See: 904060 Ontario Ltd. v. 529566 Ontario Ltd., 1999 CarswellOnt 378 (Gen. Div.) at para. 14, [1999] O.J. No. 355(QL) and John E. Dodge Holdings Ltd. v. 805062 Ontario Ltd. (2001), (ON SC), 56 O.R. (3d) 341 (S.C.J.)(“Dodge”).

The only change wrought by Semelhago is in the approach of the courts to determining the appropriate remedy; judges mustno longer presume the inadequacy of damages as a remedy whenever real property is involved. But, this assessment is not a search foruniqueness. Rather, it is appropriate to characterize a judge’s assessment in cases of this nature as an inquiry into whether, in thecircumstances, damages would be an inadequate remedy. As Lax J. said in Dodge:

[55] … The danger in framing the issue as one of uniqueness (a term that carries with it a pre-Semelhago antediluvian aroma) is thatthe real point of Semelhago will be lost. It is obviously important to identify the factors or characteristics that make a particular propertyunique to a particular plaintiff. The more fundamental question is whether the plaintiff has shown that the land rather than its monetaryequivalent better serves justice between the parties.

This will depend on whether money is an adequate substitute for the plaintiff’s lossand this in turn will depend on whether the subject matter of the contract is generic or unique. [15] In practical terms, this means the prospective purchaser bears the burden of adducing evidence that the subject property isspecially suited to the purchaser and that a comparable substitute property is not readily available.

These evidentiary points arenecessarily intertwined because, on the basis of the evidence, the prospective purchaser must discharge the overall burden of persuadingthe judge that the subject property is so different from others that damages is an inadequate remedy and that justice dictates the purchasershould have the subject property. The judge, in turn, must conduct a critical inquiry on the evidence as to the nature and function of thesubject property in relation to the prospective purchaser.

The evidence and analyses will necessarily overlap, but the overall question thejudge must answer is whether the justice of the matter calls for an award of specific performance because damages would be inadequate. [16] The post-Semelhago case law in Saskatchewan has, for the most part, followed the foregoing approach to determining whethercompensatory damages is an adequate remedy for breach of an agreement for sale of farm land. In Stefan v. Lichter, 2005 SKQB 383,270 Sask.

R. 124, Dawson J., assessed the evidence on these two basic requirements (i.e., special suitability to the purchaser and lack ofavailable comparable substitutes) and found that the farm land in question was so different from other farm land that damages was aninadequate remedy. While she uses the language of uniqueness, Dawson J.’s approach is consistent with Semelhago and Dodge: [92] I am satisfied that the land in question here is unique to the extent that its substitute would not be readily available.

The landswhich are the subject of this Agreement have the unique character of virgin prairie grass (with the exception of the NE 1/4 27). Suchgrassland requires lower maintenance, is more drought tolerant and has a higher protein content. The evidence before me was that thereis no other such pastureland for sale in the area. As well, these lands are in a proximity reasonably close to the plaintiff's ranch, allowinghim to achieve a more economically viable unit.

Further, the Agreement for Sale included a condition that the plaintiff obtain thedefendants’ Crown leases, and there is no evidence which suggested that the plaintiff would be entitled to obtain these Crown leases ifhe purchased other lands. I am satisfied that damages would not compensate the plaintiff in this case and I am satisfied that he is entitledto an order for specific performance. [17] Similarly, in Morsky v. Harris, (SK KB), [1997] 6 W.W.R. 557 (Sask. Q.B.) (reversed on other grounds (SK CA), [1998] 8 W.W.R. 340 (Sask.

C.A.)), Dielschneider J. assessed the objective attributes of the farm land inquestion (at para. 40) as well as the subjective factors articulated by the prospective purchaser (at para. 41) and concluded that damageswas an inadequate remedy as follows: [40] This land is unique. Land of the nature and quality in issue in this action is rarely for sale on the open market. When it isavailable for sale it is quickly purchased by neighbours in the vicinity. The topography of this land slopes gently and the soil is stonefree and ranks among the most productive.

Most convincing is the statement of Betty Harris that her land was unquestionably some ofthe best land in Saskatchewan. [41] Furthermore, the Morsky family owns the land in the close vicinity, and the land purchased here would enable them to achieve amore economically viable unit. [42] I am satisfied damages would not compensate Morsky and I find him entitled to an order for specific performance. [18] On the other hand, in Ligtermoet v.

Wellington (Rural Municipality) No. 97, 2002 SKQB 474, [2003] 3 W.W.R. 339 (reversed onother grounds 2003 SKCA 48, [2003] 10 W.W.R. 191), Foley J. appeared to take the traditional land-is-inherently-unique approach, butstill concluded that, since the farm land had acquired an enhanced uniqueness by reason of having been in a family for decades, damageswas an inadequate remedy: [44] … [L]and has historically been viewed as a unique asset and where, as here, the land is farm land held by a family for decades, itacquires a special unique significance which cannot readily be measured in dollar terms or readily compensated for in damages.Consequently, I conclude that the loss of these particular lands to the Ligtermoets would constitute irreparable harm and they should notbe confined to a damage remedy.

See Miramichi (City) v. Concerned Citizens of the Bathurst Highway (1995), (NBKB), 175 N.B.R. (2d) 253 (N.B. Q.B.). [19] In each of these cases, the judge assessed the evidence to determine whether damages was an adequate remedy and, only uponfinding damages inadequate, granted the remedy of specific performance.

Albeit that they are few in number, these cases indicate thatspecific performance remains the principal remedy for breach of contract involving the sale of farm land in Saskatchewan; but, sinceSemelhago, it is neither a presumptive nor automatic remedy. [20] To bring this back to the matter at hand, the judge summarized Barry’s reasons for wanting his Parents’ Interests as follows:

[56] The plaintiff claims that the property in question is unique for the following reasons: − Barry already has an undivided one-quarter interest in the property; − the land is also the historical yard-site that Barry has operated his cattle and farming operation on for over 40 years, with his parents; − Barry has an emotional attachment to the land because he farmed out of the yard-site as did his father and grandfather; − Barry farmed out of the yard-site with his son Vincent prior to Vincent being accidentally killed.

This represents another emotional connection for Barry; − there are no reasonable yard-sites located in proximity to Barry’s home, which is immediately across the road; - replacement values as to the buildings on the land would make it economically unfeasible to build these facilities on his own property at his age and stage of farming; and − purchasing land not located within the vicinity of the primary cattle and farming operation would not be a financially viable option for Barry.

The Parents’ Estates did not tender much evidence to counter Barry’s evidence nor in respect of the existence or availability of farm land comparable to the Land. [ 21 ] As noted at para. 6 above, the judge’s assessment of whether damages was an adequate remedy is sparse. I find sufficient error in the judge’s assessment to warrant appellate intervention in this matter. Principally, the judge failed to actually assess whether Barry’s expectation interest under the agreement for sale could be protected by a monetary award of sufficient value to allow him to purchase substitute performance.

This error is comprised of two omissions: (

a) the judge failed to assess whether the Land was specially suited to Barry; and (

b) the judge failed to assess whether a comparable substitute property was readily available. [ 22 ] The judge did acknowledge that farmers have an attachment to their land in general and did say that he had carefully considered Barry’s reasons for seeking specific performance. However, the judge failed to conduct a critical inquiry as to the nature and function of the Land in relation to Barry. Rather, the judge focused on Barry’s “motive” for pursuing his Parents’ Interests, from which I take him to mean an ulterior reason for pursuing specific performance.

While a judge’s inquiry must involve a critical examination of the motive of the prospective purchaser, “motive” in this sense refers to the nature and the authenticity or cogency of the subjective and objective factors articulated by the prospective purchaser. Barry’s reasons for deciding to acquire his Parents’ Interests at the time he entered the agreement for sale are highly material; but a supposed ulterior “motive” for pursuing his claim for breach of that agreement is not.

Furthermore, the judge erred by grounding his inquiry into the genuineness of this motive on a misapprehension of the facts dating from a time after Barry and his parents had entered the agreement for sale. [ 23 ] The judge erred by relying on Barry’s supposed motive for pursuing his claim to ground his conclusion that a damage award would adequately compensate Barry. This approach to determining the appropriate remedy was in error as it did not address Barry’s expectation interest in performance under the agreement for sale.

In light of this conclusion, it is necessary to consider afresh whether Barry’s expectation interest would be adequately protected by an award of damages. [ 24 ] It cannot be said that the Land is, or that Barry treated the Land as, more akin to a commodity than a tract of land having special attributes not found in any other farm land. The Land is immediately across the road from Barry’s home quarter. Barry already owns an undivided one-quarter interest in the Land. The Land once belonged to his grandfather and is home to his parents’ yard-site.

Barry used the Land for over 40 years, with his parents, his brother, and his deceased son. These factors or attributes are cogent and impossible to value precisely. On this basis, I would find that an award of damages cannot restore Barry to the position that he would have been in had the Parents’ Estates performed under the agreement for sale of the Parents’ Interests. Furthermore, Barry’s evidence was also that there are no “reasonable yard-sites” located in close proximity to his home quarter. Whether or not reasonable yard-sites are available, no other yard-site could have the attributes of the Land.

In other words, there is no comparable substitute property, let alone one that is readily available. If there is any farm land in respect of which compensatory damages is inadequate, it is typically that farm land which sits directly across the road from a farmer’s home quarter. This is especially so where the farmer has an existing legal interest in it, strong emotional and familial ties to it, and sound economic reasons for making it part of his farming operations.

Whether pre- or post- Semelhago , such farmland is “unique” and the appropriate remedy in such a case is an order for specific performance. [ 25 ] I would, therefore, grant the appeal, set aside the award of damages and substitute therefor an order for specific performance requiring the Parents’ Estates to transfer the Parents’ Interests to Barry. [ 26 ] As Barry has had success in this Court, I would order the respondents to pay his costs in this appeal.

DATED at the City of Regina, in the Province of Saskatchewan, this 18 th day of May, A.D. 2011. “Caldwell J.A.” _____________________ CALDWELL J.A. I concur. “Vancise J.A.” VANCISE J.A. “Richards J.A.” RICHARDS J.A.