ONTARIO

SUPERIOR COURT OF JUSTICE

Court File No.: CV14-29 Brt

Date: 2014-08-21

B E T W E E N:

William Leroy Green

P. Amey, for the Applicant

Applicant

• and –

Cecil Laverne Green, Dennis Milburn Green, Marvin Cecil Green, by his Estate Trustees and Velma Ellen Green, by her Litigation Guardian

G. Smits, for the Respondents

Respondents

Heard: July 4, 2014

The Honourable Mr. Justice J. C. Kent

RULING ON MOTION and CROSS-MOTION

Background

[1] William Leroy Green, Cecil Laverne Green and Dennis Milburn Green have been carrying on a farming operation in the County of Brant pursuant to a written Partnership Agreement made 20 March 1990. They are now 69, 71 and 70 years of age respectively. They have agreed that their farm property will be sold. They have already sold their milk quota and the majority of their herd of cattle. A multiplicity of issues arise, some of which can be addressed in the context of an interpretation of the Partnership Agreement by this court. Other issues, in the absence of an agreement by the parties, will no doubt need to be further addressed by the court as those issues arise.

Observations and Findings

[2] On 15 April 2009, William wrote to Dennis indicating intent to retire from his work “to all care of cows, heifers and calves housed at Sunny Acres Farms, and at any other location, effective October 15, 2009”. He stated further “I am willing to discuss the possibility of field work should the farmland remain in our possession.” Clearly, that letter did not terminate the partnership and this court so finds.

[3] On 17 June 2013, the solicitor for Laverne and Dennis advised the solicitor for William that Laverne and Dennis were terminating “their interests as partners”.

Paragraph 12 of the Partnership Agreement dated 20 March 1990 provided for termination upon 6 months written notice. The partnership, therefore, terminated on the 17 day of December 2013 as a result of the notice given by Laverne and Dennis and this court so declares.

[4] Without William’s agreement and without any specific authority, Laverne and Dennis purported to terminate William’s partnership draw by notice delivered in writing on 17 June 2013. William’s draw should have been continued to the date of termination and this court so declares.

[5] Without William’s agreement, Laverne and Dennis have continued their own draws after the termination of the partnership. Absent an agreement, all partnership draws should have ceased as of the termination of the partnership on 17 December 2013 and this court so declares.

[6] The Partnership Agreement provided at paragraph 15 that partners who occupied homes on the farm operated by the partnership (Laverne and Dennis) were granted a licence to occupy their homes “provided that such partners shall be responsible for the costs of regular maintenance and upkeep of such premises”. Paragraph 15 of the Partnership Agreement provided further that upon “retiring from the partnership they shall receive credit for any improvements they have made to the premises and shall be allowed to remain in possession of the said premises upon the payment of fair market value rent to the partnership”.

[7] Both Laverne and Dennis alleged that they have made considerable improvements to the homes that they have occupied. Their claims, however, are not supported by adequate evidence. In fact, many of the “improvements” claimed are more in the nature of regular maintenance and upkeep than on projects that have enhanced the value of the farm and this court so finds.

[8] Paragraph 15 of the Partnership Agreement makes it clear that upon a partner retiring from the partnership, the partner would be allowed to remain in possession of a house occupied by the partner “upon the payment of fair market value rent to the partnership”. Laverne and Dennis, therefore, are required to pay fair market value rent to the partnership from the date of termination, 17 Dec 2013, until the affairs of the partnership are wound up. This court so declares. The only evidence before this court as to fair market value rent is that for 299 Oakhill Drive that rent would be $1200 per month plus utilities and for 301 Oakhill Drive it would be $950 per month plus utilities and this court so finds.

[9] Paragraph 38 of the Partnerships Act, R.S.O. 1990 cP5, provides that upon the dissolution of a partnership, partners may continue to act “despite the dissolution so far as it is necessary to wind up the affairs of the partnership”. Laverne and Dennis appeared to be carrying out that responsibility. Consistent with the execution of that responsibility Laverne and Dennis should be permitted to continue to occupy their homes until the affairs of the partnership have been wound up. They will, however, as indicated above be responsible to pay fair market value rent from the date of termination to the date of the final wind up of the partnership.

[10] Laverne and Dennis, in their counter application, sought some significant relief. In particular, at paragraph (k) of their amended notice of counter-application, they seek an order requiring that funds be set aside to enable them to purchase suitable building lots or, alternatively, at paragraph (l), they seek an order requiring that they each be provided with a suitable building lot from the existing partnership property. As this court expressed in the course of submissions, there does not seem to be anything in the Partnership Agreement entitling them to such relief and there appears to be no other legal entitlement to such relief.

[11] Laverne and Dennis also sought an order dissolving and winding up the partnership. This appears to be in process and it would appear to be reasonable to conclude, on the evidence, that all of the remaining cattle, all of the farm equipment and the farm property will be sold in one year or less.

[12] Accordingly, an Order is made that all farm equipment is to be sold within 9 months from 1 August 2014. All remaining cattle to be sold within 9 months from 1 August 2014 and the farm property shall be listed for sale to be sold with a closing date no later than 31 July 2015.

[13] If further direction is required, the parties should arrange to have further submissions made to this court on a date to be fixed by the trial co-ordinator at Brantford on the application of counsel.

[14] Based on the above declarations and findings, it is appropriate that Laverne and Dennis be able to occupy their homes until the completion of the sale of the farm property or 31 July 2015, whichever comes first. Order accordingly.

Costs

[15] There appears to be divided success here and counsel may wish to postpone their submissions as to costs, bearing in mind that further directions may need to be sought from this court. However, if either counsel wishes to make any submissions concerning costs at this time, such submissions shall be made in writing within 30 days of the release of this ruling with response within 15 days thereafter and reply, if any, within a further 10 day period.

Kent, J

Released: August 21 , 2014