Court of Appeal for Ontario

Date: 2019-01-22 Docket: C63407 Judges: Brown, Paciocco and Zarnett JJ.A.

Between

Randy Drew and Paul Shaughnessy Plaintiffs (Respondents)

and

Linda Huskinson Defendant (Appellant)

Counsel

M. John Ewart, for the appellant

William F. Kelly, for the respondents

Heard: January 16, 2019

On Appeal

On appeal from the judgment of Justice Stephen T. Bale of the Superior Court of Justice, dated February 28, 2017, with reasons reported at 2017 ONSC 592.

Reasons for Decision

[1] The appellant, Ms. Linda Huskinson, owns farm property. On April 12, 2012 she signed a lease permitting the respondents, Randy Drew and Paul Shaughnessy, to operate their farm business on about 120 acres of her property for the 2012, 2013, and 2014 crop years at a stipulated rent (the "Lease").

[2] The respondents did so during the 2012 crop season. However, by letter dated December 12, 2012, the appellant informed the respondents that she was scrapping the Lease and called upon them to sign a new agreement that "meets the needs of both the above tenant farmers and landlord equally." She stated that before concluding a new agreement, "it will be necessary to agree in writing that the existing written agreement signed April 12, 2012 is null and void." In her letter, the appellant did not specify any conduct of the respondents upon which she was relying to end the Lease.

[3] The respondents offered to engage in discussions with the appellant, but by letter dated February 15, 2013 she advised that she was not prepared to continue renting her farmland to them.

[4] This action for breach of the Lease ensued.

[5] The appellant asserted two defences. First, she took the position that the Lease was not enforceable because she entered into it under duress. The trial judge did not accept her plea of duress. The appellant does not appeal that finding. Second, she argued that she was entitled to terminate the Lease because the respondents had failed to provide information about chemical fertilizer application rates in the form she contended was required by the Lease.

[6] The trial judge found the appellant was not entitled to terminate the Lease. He awarded the respondents damages of $64,051.02, representing their lost profit from the property for the 2013 and 2014 crop seasons.

[7] The appellant appeals. At the hearing we dismissed the appeal, with reasons to follow. These are those reasons.

Ground of Appeal

[8] The appellant advances a single ground of appeal: the trial judge erred by finding that any failure by the respondents to provide her with the chemical fertilizer application rates in the form she contended was required did not entitle her to terminate the Lease.

The Lease Provision

[9] The Lease contains a provision that states: "Supply copy of application rates for fertilizer and chemical by 3rd party once available." At trial, the appellant testified that she understood that a third party would provide her with the information. Instead, in September 2012, Mr. Drew provided her with a handwritten document that identified the type and quantity of fertilizer used and the details of chemical spraying that occurred on May 23, 2012.

[10] The appellant did not take the position that the information provided by the respondents was incorrect or disclosed that they had applied chemicals and fertilizer in a way which damaged her property. Instead, the appellant argued that because the respondents did not provide her with application rate information in the manner she contended the Lease required – i.e. a document from a third party – she was entitled to terminate the Lease.

Trial Judge's Reasoning

[11] The trial judge did not accept the appellant's position. He wrote, at paras. 9 and 10:

The defendant acknowledges that her letter had the effect of repudiating the lease, but argues that she was entitled to terminate the lease, because the plaintiffs failed to comply with a term of the contract which required them to "Supply Application Rates of Fertilizer & chemicals by 3rd party." Her position is that she was entitled to some sort of formal document from the third parties who applied the fertilizer and chemicals, but that all she got was a handwritten note from Randy Drew advising her of the fertilizer and chemicals applied. The plaintiffs' evidence is that the third parties were unable to provide the sort of document that the defendant was requesting, because they applied the fertilizer and chemicals to multiple farms that were farmed by the plaintiffs, and provided a single invoice only, for all of those farms.

Whether the information provided to the defendant relating to fertilizer and chemicals satisfied the relevant term of the contract or not, she was not entitled to terminate the lease. Failure to provide the information relating to fertilizer and chemicals in the form requested by the defendant would in no way amount to substantial non-performance. The benefit for which the defendant contracted was the payment of rent. If there was a breach, her remedy would lie in damages.

Court of Appeal Analysis

[12] At its core, the appellant's criticism of the trial judge's finding is that he did not properly consider whether a failure by the respondents to provide chemical application rates from a third party amounted to a substantial failure of performance by them: Place Concorde East Limited Partnership v. Shelter Corp. of Canada Ltd., 270 D.L.R. (4th) 181 (Ont. C.A.), at para. 52.

[13] We are not persuaded by this submission. The trial judge's interpretation of the Lease as not giving the appellant a right of early termination in the event the respondents failed to provide information relating to fertilizer and chemicals in the third-party form she requested was a reasonable one in light of several factors:

(i) the Lease did not contain a provision that defined the events of default that would permit the appellant to terminate the Lease prior to the expiry of its three-year term;

(ii) the trial judge considered the proportional effect of any breach on the total value of performance and concluded that the benefit for which the appellant contracted under the Lease was the payment of rent, which the respondents duly paid; and

(iii) the appellant did not identify any inadequacy with the content of the respondents' handwritten disclosure of the chemical application rates in her December 12, 2012 termination letter.

[14] Consequently, we see no palpable and overriding error in the trial judge's interpretation of the Lease or in his finding that there was no breach of the type which relieved the appellant of the obligation of further performance. He did not err in concluding that the appellant was not entitled to terminate the Lease at the end of its first year.

Disposition

[15] The appeal is dismissed.

[16] The appellant shall pay the respondents their costs of the appeal fixed at $8,000, inclusive of disbursements and all applicable taxes.

"David Brown J.A." "David M. Paciocco J.A." "B. Zarnett J.A."