ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: CV-09-00004633-0000
Date: 20120221

B E T W E E N:

BASSWOOD FARMS INC.

Jonathan M. Quaglia, for the Plaintiff

Plaintiff

• and -

MICHELLE KERR and MICHELLE KERR as Estate Trustee of the Estate of Ronald Kerr

Robert B. Gray, for the Defendants

Defendants

HEARD: February 14 th & 15 th , 2012

REASONS FOR JUDGMENT

Morissette J.

OVERVIEW:

[1] This is an action arising from the sale of the “family farm” [1] by Ronald Kerr Jr. (Ronny) and his wife, the defendant Michelle Kerr on January 20 th , 2009 followed by the sudden and tragic suicidal death of Ronny on February 22 nd , 2009.

[2] The plaintiff is the deceased’s father’s corporation. The defendants are the deceased’s widow and his estate. The plaintiff is one third partner in Kerrwood Farms, an unregistered partnership with Joseph Kerr (brother of Ronald Kerr Sr.) and Bryon Kerr (nephew of Ronald Kerr Sr. and Joseph Kerr).

[3] The amended statement of claim seeks $48,000 in unpaid rents for the possession of the farm by Ronny commencing in 2000. In addition, the plaintiff claims the sum of $21,000 owing pursuant to a contract dated December 22 nd , 2008.

[4] The amended counter-claim seeks damages in the amount of $50,000 for the conversion of a skidder, being a logging machine.

[5] Although the pleadings have claimed a myriad of issues, the main issue is whether the defendants owe a sum of money for the soil preparation conducted on the land in question in the spring and fall of 2008 for the 2009 crop. As well, is whether the ownership of the skidder allowed the plaintiff to amass profits to the detriment of the defendants.

[6] For oral reasons provided, the claim for unpaid rent is dismissed as being statute barred. No claim for the rent was ever made by the plaintiff against Ronny.

FINDINGS OF FACTS:

[7] In July of 2004, Ron Sr. and his wife Madeleine (deceased’s step mother), purchased a van for the defendants for $8,900. The intent was that the defendants would repay them for this loan.

[8] In November of 2006 a skidder was purchased for the sum of $15,000 plus GST. Basswood paid half of that cost, while Joseph and Bryon paid each a quarter. At the time of purchase Ronny was present and wanted to be a part owner. Since Ronny did not have the money to pay for his quarter share, Ron Sr. agreed to pay his share as long as Ronny could repay Basswood, when Ronny could. The evidence clearly establishes that Ron Sr. certainly wanted to assist his son in any way he could.

[9] In March of 2008, the plaintiff sold the property in question the “family farm” to Ronny and Michelle Kerr for $388,000. According to the agreement of purchase and sale the plaintiff would continue to be a tenant farmer on the land in question. The crop was farmed as usual in 2008 by Kerrwood Farms as had been done for over 30 years. Ron Sr. obtained accounting advice as to what would be the lowest price he could sell his property to his son, without attracting Revenue Canada’s concerns in dealing with a non-arms’ length transaction.

[10] In December of 2008, while Ron Sr. was away in Arizona for his winter getaway, Joseph Kerr approached Ronny to inquire as to whether there was any truth to the rumors that he was going to sell the “family farm”. Ronny would have confirmed that rumor and as a result Joseph asked Ronny to sign an agreement that he would reimburse Kerrwood Farms for the money expanded on the land in preparation for the crop for 2009. The sum agreed to at the time was $21,000. I accept the evidence that this sum was a reasonable sum for the work done and that Ronny brought that agreement home to his wife, Michelle, at lunch time to get her to sign (as a co-owner of the land). Ronny would have brought back a newly drafted agreement in his own handwriting which specified that “Kerrwood Farms will take off $3,000 for Ron’s share of the skidder. So Ron Kerr Jr. will pay Kerrwood Farms $18,000.”

ANALYSIS:

[11] So the issue is whether the defendants had already paid their share of the skidder by the end of December 2008 so as to be in a position to sell it back to Kerrwood now that the farm was to be sold. The evidence is clear that the defendants no longer had any use for the skidder.

[12] When Joseph signed the December 22 nd agreement agreeing to credit $3,000 for the skidder, he did so binding Kerrwood Farms under the belief that indeed Ronny had paid Basswood Farms his quarter share of the skidder. It was not until Ron Sr. came back from Arizona in January 2009 (for their nieces’ wedding), that Joseph learned that, according to Ron Sr., Ronny had not reimbursed Basswood Farms for the skidder.

[13] So in order to make a finding of fact to answer whether indeed Ronny and Michelle had paid or not for the skidder, a review of the banking records is required. For that purpose, the evidence came from Madeleine, the deceased’s step-mother who controlled the banking of Basswood Farms Inc. and from Michelle who wrote out the cheques in evidence at tab 3 of Exhibit 2 for the defendants. From April 12 th , 2007 to January 17 th , 2008, there were twenty cheques provided of $500 each. It is conceded that four of these cheques were returned with insufficient funds.

[14] At issue is whether these four cheques were replaced by cash or not and whether more cash payments were provided. Madeleine’s evidence is that she never ever received any cash from Michelle. Michelle’s evidence is that she gave Ronny $500 cash for each NSF cheque to give to his father at the shop (where they both worked) and also paid two more cash payments.

[15] A further issue is cheque #651 dated September 9 th , 2006. I accept that this cheque was not endorsed by Mr. Kerr Sr. nor was it deposited in Madeleine’s account, but rather it was deposited in the defendant’s account on September 11 th , 2006 and therefore was not provided to the plaintiff.

[16] On a balance of probabilities, I accept as fact that the following cash payments were made to the plaintiffs, perhaps not to Madeleine but certainly the intent was to pay for the loan for the van and the skidder before the transaction for the purchase of the farm property could be entertained in March of 2008:

November 30 th , 2006;

December 13 th , 2006;

May 30 th , 2007;

January 21 st , 2008;

January 31 st , 2008;

August 14 th , 2008 for a total of $3,000.

[17] I therefore accept that $11,000 was provided in cheques and in cash to the plaintiffs.

[18] Accordingly, I find that both the payment for the van and skidder were substantially paid for and that therefore the skidder was properly credited in accordance with the agreement of December 22 nd , 2008. As a result, the counter-claim for conversion is hereby dismissed.

[19] I further accept that indeed the work done on the land was indeed expanded by Kerrwood, whom in turn verbally assigned that debt over to Basswood. Clearly, Ron Sr. wanted to take on the responsibility to collect the money owed to Kerrwood from the defendants.

[20] The last question is whether the agreement of December 22 nd , 2008 was induced by economic coercion or not. Michelle testified that Ronny would have told her that he was going to lose his job and not get his pay cheque from Joseph if she did not sign this agreement.

[21] Joseph testified that he did not threatened in any way but rather wanted Ronny to continue to work for the company. Ronny gave Kerrwood two weeks’ notice that he was going to go work for TWD a contractor and so his last pay cheque was December 28 th .

[22] Michelle’s evidence is that she did sign the December 22 nd , 2008 agreement after lunch but wanted to get a credit for the skidder which she said had been paid, or at least substantially paid.

[23] After the sale of the “family farm” and before Ronny’s death, Bryon spoke with Ronny about the $18,000 to be paid, in which he told Bryon [2] that if he had to write a cheque for $18,000 that his wife would divorce him.

[24] Counsel for the defence, argues that there was economic duress on both Michelle and Ronny for them to sign the December 22 nd , 2008 agreement. Counsel for the plaintiff suggests there was no such duress and it was only fair and equitable to have this money reimbursed as evidenced from the suicide note left by Ronny who stated that he wanted the $18,000 paid over to Kerrwood.

[25] I am unable to find on the evidence before me that the test for duress is met. [3] First Michelle never spoke to anyone else about this agreement other than her husband. To enter into this agreement is not illegitimate but rather quite reasonable given the years of prior experience with the land. Michelle never protested to the plaintiff or the others involved with Kerrwood. Even though Michelle did not have independent legal advice, it does not render the agreement invalid for duress.

[26] In conclusion, the defendants sold the “family farm” on January 20 th , 2009 for the sum of $600,000, for a profit of $212,000 less than a year after their purchase. The defendants did purchase another property shortly thereafter in joint names for $200,000, leaving them with no mortgage or very little if any given the profit they obtained from the sale of the “family farm”.

[27] I find that the payment of $18,000 to the plaintiff is a just and reasonable amount for reimbursement for the monies that the plaintiff has lost.

[28] I grant a judgment as against both defendants Michelle Kerr and the Estate of Ronald Kerr Jr., jointly and severally for the sum of $18,000.

[29] I further grant pre-judgment interest from February 22, 2009 at the rate of the Courts of Justice Act .

[30] Should the parties be unable to agree on the issue of costs, I may review brief written submissions for same within 30 days hereof.

Original Signed “ Justice Morissette ”

Johanne N. Morissette
Justice

Released: February 21, 2012

[^1]: 2817 Burman Line, R.R. #1 Wilkeport, Ontario
[^2]: Hearsay evidence admitted on consent of defence.
[^3]: Wallace v. J. Rivington Associates Inc. 2011 CarswellOnt 7236, 2011 ONSC 4481