COURT FILE NO.: FS-18-56 and CV-18-49 (Walkerton) DATE: 2022 02 15 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Aurelia Urness Applicant

-and-

Larry McDonald and Jamie Nicholas McDonald Respondents

Counsel: Michael H. Murray and William Clayton, for the applicant G. Edward Oldfield, for the respondent Larry McDonald Julia M. Fischer, for the respondent Jamie McDonald

Heard: June 14, 15, 16, 17, 18, 21, 22, 23, 24, 25, 30, 2021 by video conference, with written submissions July 15, 16 and 21, 2021 and a further hearing on November 22, 2021 by video conference and consent affidavit evidence received December 17, 2021

Justice R. Chown

REASONS FOR DECISION

[1] These reasons detail my findings in the first portion of the bifurcated trial in this matter and further address the applicant’s motion for partition and sale which was argued at the outset of the trial.

[2] Multiple issues exist between the applicant wife and respondent husband in these divorce proceedings. However, the parties previously agreed to bifurcate the issues and this trial was to deal only with valuation of the farm properties and farm equipment on the date of marriage and the date of separation or current date, as appliable. These are the largest financial issues.

[3] This decision is divided into four sections:

a. Background b. Equipment Valuation c. Farm Valuation d. Sale of the Jointly Owned Properties.

[4] This trial was conducted entirely by videoconference. The parties prepared a pdf six-volume joint book of documents (“JBD”). Not all tabs of the JBD became exhibits. With the agreement of counsel, to streamline things, the entire six volume set of the JDB became Exhibit B and when a document became an exhibit, I simply ordered that the applicable tab from the JBD would be the next numbered exhibit and no new document was filed. There were a few exceptions for documents which were not in the JBD and in these cases the pdfs of the document were filed and became a numbered exhibit.

[5] In this judgment, where I refer to page numbers, I am referring to the page numbers of the JBD.

[6] For simplicity I refer to Larry McDonald as “the respondent.” I refer to his son, Jamie McDonald, who is also a respondent, as “Jamie.”

Background

[7] The parties were married on August 8, 2009 and were separated on December 1, 2017. The respondent is a fifth-generation farmer. The parties ran the farming operation during the marriage. The farming operation runs on the seven properties in issue. Rental farm properties are also used in the operation. The farm is a cash crop operation. The matrimonial home is on the home farm. The home farm is located at the eastern edge of southern Bruce County, in the former Township of Elderslie, between five and seven kilometres north of Chesley.

[8] I have issued previous endorsements in this matter which provide further background.

The Seed Cleaning Plant

[9] Processing facilities were added to the home farm in approximately 2016. The respondent decided to invest in processing to reduce the farm’s exposure to a volatile land rental market. In addition, the ability to operate a processing facility in the off season would allow the farm to provide employment which was less seasonal and therefore more reliable and more desirable for its workers.

[10] There are two elements to the processing that has been installed. There is a drying system which dries soybean or corn, for instance, before storing these crops in storage bins. This eliminates the need to pay someone else to dry it. Storing dry crops allows the respondent to wait until January or February before selling a harvest. This allows him to obtain a better price, because traditionally prices decrease during harvest due to the abundant supply at that time of year and increase after harvest. Having on-site storage eliminates the need to rent storage for this purpose.

[11] The other element to the processing is cleaning. The seed cleaning plant cleans the crops and seed so that a premium price can be recovered. The respondent described that the farm sells seed both retail to local farmers as well as to larger companies (presumably distributors). 90% of the soybeans and 10% of the wheat grown by the farm are used for seed.

[12] The respondent testified that the long-term plan for the farm is to expand the seed cleaning operation and to produce seed for other farmers.

Equipment Valuation

[13] The parties agreed on a list of farm equipment that requires valuation as at the date of separation. This list is made up of 86 items set out in the equipment chart in the agreed statement of facts (exhibit 1). Some of the equipment was owned by the respondent at the date of marriage and also requires valuation as at the marriage date.

[14] Through oversight of Mr. Oldfield, the applicant failed to obtain valuations for the equipment as at the marriage date. An order had been made regarding the timing of service of expert reports. Over the objection of the respondent, I ruled that the determination of the valuation of the equipment owned as at the date of marriage would be determined at the next phase of the trial. I did not see any prejudice to the applicant that could not be remedied through costs. As a result of this, I ordered that I am seized of this matter and the second phase of the trial must be heard by me.

[15] The parties were able to agree on the valuation of items 1 through 46 on the equipment chart so I will not address those items.

The Equipment Appraisers

[16] The applicant called two appraisers as witnesses: George MacInnis and Glen Snider. The respondent did not call any competing experts.

[17] Mr. MacInnis is a semi-retired accredited Canadian Personal Property Appraiser. He appraised the trucks and trailers and some other pieces of equipment.

[18] Ms. Snider appraised most of the farm equipment. He is a graduate of the Ontario Agricultural College. His experience includes operating a farm, working at two different farm equipment dealerships, and running his own agricultural distribution business, as well as working as an appraiser. He also has his CPPA designation. He appraised and assigned values to the agricultural related equipment.

[19] Mr. MacInnis attended the home farm on August 10, 2018 and both Mr. MacInnis and Mr. Snider attended on September 1, 2018. They listed the equipment, photographed it, and made notes. Mr. MacInnis prepared an appraisal report which is found at tab 23 of the JBD and which became exhibit 17 in the trial.

Appraisal Methodology and Approach

[20] The method followed by Mr. MacInnis and Mr. Snider to determine values was to use prices derived from auctions, when available, and then from dealer offers for sale and then private offers for sale. When no such information could be found, they took the actual purchase price and applied depreciation. Because the seed cleaning equipment is relatively unusual, all or almost all of it was appraised by applying depreciation to the purchase price.

[21] “Fair market value” for items which could be readily removed and delivered to a buyer – for instance, the trucks and trailers – was defined by the appraisers as “the estimated most probable price expressed in currency to be realized for property in an exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell and both parties fully aware of all relevant facts.” It was also assumed that the buyer would remove the property at the buyer’s own expense. Mr. MacInnis referred to this as “fair market value – removed.”

[22] For items which could not be easily removed – for instance, the seed cleaning plant equipment – the “fair market value – in place” was defined as “the estimated most probable price expressed in currency to be realized for property in an exchange between a willing buyer and a willing seller, with equity to both, neither being under any compulsion to buy or sell and both parties fully aware of all relevant facts, as installed for intended utilization .” If sold, the cost of dismantling the equipment would greatly reduce the value.

The Trucks and Trailers

[23] Mr. MacInnis appraised items 47 through 59 of exhibit 1, being the truck tractors and trailers. These were listed in appendix 2 of Mr. MacInnis’s report (exhibit 18). In argument, Mr. Oldfield acknowledged that there really isn’t any challenge to Mr. MacInnis’s valuation these items. The respondent’s issue with these items is that a number of these pieces existed at the date of marriage so that valuations as at the date of marriage will be required.

[24] Mr. MacInnis’s appraised values for these items was supported by review of comparable sales and sales listings. There was no competing evidence. Accordingly, I find that, as at the separation date, the value of the trucks and trailers listed in appendix 2 of exhibit 18 was $254,500. The valuations of the trucks and trailers are on the basis described in the appraisal report: “fair market value – removed.”

The Farm Equipment

[25] I do not intend to review the evidence for each item of farm equipment that was appraised. I will review a few illustrative examples.

[26] Mr. MacInnis appraised the truck scale and master stoner in appendix 3 of his report (exhibit 18).

[27] The truck scale is located at the home farm. It was purchased in 2016. It includes a 12-foot by 80-foot truck platform. Mr. MacInnis valued the scale at $49,000 by obtaining its purchase price, deducting estimated transportation and set up costs, and depreciating it by 15% in the first year and by 10% per year thereafter. He did not value the scale house which houses some of the equipment. The scale sits in a trench in the ground. This scale was valued “in-place.” Mr. MacInnis acknowledged that if the scale had to be removed for sale purposes, it would be valued at less. In cross examination, he gave the rough opinion that, if removed and sold at a liquidation price, it would lose about 50% of its value, depending on the extent of care taken when removed.

[28] With respect to the master stoner, Mr. MacInnis acknowledged he was not certain what this piece of equipment did. He determined its value by depreciating it from its original price because he could not find any exemplar sale for this or a similar piece of equipment. This item was also valued “in-place.” He said if removed and sold its value would be 50%, again depending on the care taken during removal. He felt this applied to “everything,” by which I inferred he meant all the seed cleaning plant equipment.

[29] Mr. Snider appraised the other items listed in appendix 3 of exhibit 18. He acknowledged in cross examination that he had not previously appraised a similar seed cleaning plant in the past.

[30] All the equipment he evaluated was valued on an “in place” basis. It appeared to him that for some of the larger pieces of equipment, it was likely that the equipment was put in place and then the building built around it. Removal of the equipment would involve dismantling parts of the building.

[31] Mr. Snider was taken through his appraisal calculations for many of the items. In each case, he applied depreciation to the purchase price. Most of the equipment in the seed cleaning plant had been purchased in 2016. He said that most of the items only had one season of use as at the date of separation, but this was not clarified in other evidence. It seems to me that, depending on when they were installed in 2016, the equipment may have been used for two harvests. In any event, for the examples reviewed in his evidence, Mr. Snider applied two years of depreciation. The applicant was able to provide Mr. Snider and Mr. MacInnis the purchase invoices for the components of the seed plant. As she had responsibility for paying the farm bills, she had access to and was familiar with these documents.

[32] Mr. Snider’s approach was simple. He simply took the purchase price of each item, backed out the HST, and applied 20% depreciation for the first year and 15% depreciation for the second year. He said these are the depreciation values that Revenue Canada uses.

[33] By way of example, the first item on appendix 3 of exhibit 18, the Q Sage bean polisher, was $51,345 U.S. when purchased new. This did not include delivery cost. Mr. Snider converted this to Canadian dollars which he calculated at $65,759. He obtained the applicable daily exchange rate from a website. He then applied 20% depreciation for the first year and 15% for the second year, yielding $44,716, which he rounded to $45,000.

[34] In cross examination, Mr. Snider was asked whether the 20% and 15% have any basis in reality. He felt they did, referring to his experience in the industry.

[35] Mr. Snider agreed that the seed cleaning plant would have a substantial labour component to erect. The cost of erecting or dismantling it would have to be included in the overall value and he did not include it. He could not assess this aspect as he had no information on the cost of installation for the various pieces of equipment. Specifically, he did not include in his evaluation the labour involved in erecting the equipment, but he acknowledged that if he was valuing an item on the day it was installed, he would assess its value as the price paid for it plus the labour costs to install it. Its value would then depreciate from that level. He was asked whether the value of the equipment would be reduced if it had to be dismantled and sold, and he agreed with this, and agreed that the valuation would be decreased in the order of 50%.

[36] There were some small items of concern raised by Mr. Oldfield’s cross examination. One example was the LMC Marc 500 grain separator, where Mr. Oldfield questioned whether an invoice from a Strathroy-based company would be in U.S. dollars. Mr. Snider said he relied on the applicant to confirm that the invoice was in U.S. dollars. I note that this is confirmed at the bottom of the invoice where it indicates “American dollars” (see p.170 of exhibit 17). Another example was that a delivery charge of $1800 U.S. was included for the Clipper Ceres seed cleaner (see p .177 of exhibit 17). Through a cross examination question, Mr. Oldfield made the point that delivery costs would add nothing to the value of an item if it was disassembled and sold. Mr. Snider acknowledged that he was not sure delivery should be included in the value before depreciation is applied.

[37] I will interject here that the respondent testified that some of the items were floated ( i.e ., delivered) by Jamie. For instance, he picked up the elevator legs from Tilsonburg. He went as far as Georgia and Indiana for other components. Mr. Oldfield raised this to foreshadow an argument to expect in the second phase of the trial, namely Jamie’s constructive trust claim. However, it also highlights that Mr. Snider’s valuation of the equipment was generous to the respondent in that installation costs were not included for the “in-place” valuations.

[38] With respect to valuation of the items in appendix 3 of exhibit 18, the concerns raised during the cross examination of Mr. MacInnis and Mr. Snider were minor. Valuation of equipment of this nature is bound to be imprecise. No serious objection was taken to the methodology Mr. MacInnis and Mr. Snider used. No alternate methodology was suggested as more appropriate. The depreciation applied (typically 20% and 15%) seemed ample and generous to the respondent’s position. No competing valuations were provided. The respondent’s written submissions even acknowledged that the valuations “will undoubtedly be accepted by the Court in accordance with the evidence of the witnesses.”

[39] In result, I accept the values of the farm and miscellaneous equipment listed in appendix 3 of exhibit 18. These items are duplicated as items 60 through 83 of exhibit 1.

[40] Some small issues were not addressed in the evidence. Specifically, Mr. Snider was questioned in cross examination about the $3,000 Hofmann hoist. This was the last item in appendix 3. On exhibit 1, this hoist is item 83 and was crossed off the list with a notation that it was owned by a neighbour. Also, item 85 on exhibit 1 was not addressed in the evidence to date.

[41] Because there may be unsettled controversy over these small items, I have not provided a total for the value of the farm and miscellaneous equipment but, again, I do accept the valuations by Mr. MacInnis and Mr. Snider.

Farm Valuation

Issue

[42] There are seven farm properties in issue. For this phase of this bifurcated trial, the parties require that I determine the value, as at the date of marriage, of two properties owned by the respondent on the date of marriage.

[43] The parties also require that I determine the value, as at the date of separation, of all seven farm properties. Some of these were jointly owned on the date of separation. However, the parties advise that the value on the date of separation for the jointly owned properties is needed because there is a claim by the respondent for unequal division and because these values may also be relevant to Jamie’s constructive trust claim.

[44] The parties have also asked that I determine the current value of the farm properties, to assist them in their settlement negotiations. This is not required for a determination of the matters in issue. It must be acknowledged that in the current real estate market, and given the delay in the release of these reasons, the 2021 values are out of date. However, as I agreed to provide my opinion on the value as at the date of trial, I have done so.

Nomenclature

[45] Some of the farm properties have lot and concession numbers only and no assigned municipal address. The appraisers assigned their own designations to the properties, but their designations do not correspond. In these reasons, I have used the same numbering that Mr. Murray used in his oral and written argument. I consistently refer to the properties, other than the home farm, with the numbers indicated in the summary below.

Summary of Findings as to Value

[46] The following table summarizes my findings.

Property	Value as of date of marriage August 8, 2009	Value as of date of separation December 1, 2017	Value as of date of trial June 14, 2021
#1 The Home Farm PIN 33177-0143 LT 34-35, CON 7, Elderslie Municipal address: 24 Concession 6	$880,000	$2,465,000	$3,500,000
#2 PIN 33177-0135 N1/2 LT 35 CON 6 Elderslie	$145,000	$415,000	$650,000
#3 PIN 33177-0085 PT LT 31 CON 8 Elderslie	See note 1	$350,000	$555,000
#4 PIN 33177-0067 PT LT 32 CON 9 Elderslie PT 5, 3R2627	See note 1	$370,000	$600,000
#5 PIN 33177-0072 PT LT 31 CON 9 Elderslie as in R326591 Municipal address: 196 Concession 8	See note 1	$770,000	$1,125,000
#6 PIN 33177-0093 Lot 30, Concession 7, Elderslie Municipal address: 230 Concession 6	$307,500 See note 2	$820,000	$1,200,000
#7 PIN 33177-0071 Part Lot 32, Concession 9, Elderslie	See note 1	$400,000	$640,000

Notes:

1. These properties were acquired by the parties during the marriage.
2. The parties agreed on this figure.

The Properties

[47] The seven farm properties in issue would all fit within a circle that is about four kilometres in diameter. Four of the properties are vacant land. Three contain dwellings. The properties are used for general cash crop production of corn, soybeans, and wheat.

[48] The parties have prepared a helpful and detailed statement of facts, which includes the following statement:

Most land uses in the area consist of agricultural uses including general cash crop, beef, hogs and a few dairy, poultry and hog producers. The area has a strong Amish and Mennonite community. There are no larger urban centres within the municipality and there is limited demand for upper end rural residential properties. Most of the properties, both agricultural and residential, have modest and mostly older improvements. Non-agricultural uses are limited mostly to area highways and urban centres.

[49] The agreed statement of facts contains details about each property. These appear to be based to some extent on consensus elements in the appraisal reports. I will not recite the agreed facts in these reasons but have reviewed them carefully.

The Farm Real Estate Appraisers

[50] The applicant and the respondent each called two expert real estate appraiser witnesses. The parties agreed that each of the witnesses was qualified to give opinion evidence on the values of the farm properties. In submissions, counsel agreed that the experts were all honest and lived up to the duties the court requires of experts.

[51] The applicant called as witnesses Dale Mitchell and Steve Mitchell. The Mitchells are father and son. They operate The Appraisers Network, a real estate appraisal business based in Owen Sound, Ontario. They both have AACI designations. They both do a wide variety of real estate appraisal work, other than residential real estate. They both do a significant amount of farm appraisal work. On behalf of the respondent, they were urged as better positioned to provide opinions because of their closer connections to Bruce and Grey counties. Neither of them had testified as an expert witness before.

[52] The respondent called Ryan Parker and Marleen van Ham. Mr. Parker is a principal of Valco, a real estate appraisal business based in London, Ontario. He has his AACI designation. He only does appraisals in the agricultural sector, across a wide geographic area in Ontario. He had never testified as an expert witness before.

[53] Ms. van Ham is the owner of Agri Choice Real Estate Appraisals Inc. based in Tilsonburg, Ontario. She only does appraisals of farm properties. She has an ARA (Accredited Rural Appraiser) designation from the American Society of Farm Managers and Rural Appraisers (ASFMRA). She has been qualified and has testified as an expert witness in agricultural real estate several times.

[54] Based on some of their remarks before the trial and in their opening statements, and in their closing submissions, I think counsel anticipated a strong possibility I would simply prefer one of the experts and go with that expert’s numbers. However, it was not that easy for me.

[55] All four expert witnesses were highly qualified. They were all strong witnesses. They had substantially different opinions of value for some of the properties. The differences in some instances are at least partially explained by the different effective dates for their appraisals. In other instances, they just used different comparable properties and applied different adjustments to the comparables. They each had reasonable justifications for their respective choices of comparables and their respective adjustments. I found merit in much of what each of the appraisers said. They all exercised their professional judgment. The critique reports that they wrote about each others’ reports were of little assistance and, frankly, mostly nit picking. They of course each defended their positions over the opinions of the others.

[56] Appraisal is not a science. Some variability is to be expected. Most of the time there is no way to tell how accurate an appraisal is because the property is not sold on the open market immediately after the appraisal. There are undoubtedly occasions when this occurs; however, it does not seem to be part of the culture among appraisers that they keep track of statistics along those lines. I specifically asked Ms. van Ham about this, and she claimed to have a good record, but neither she nor any of the others gave me any objective statistics in this regard.

[57] Prior to preparing their initial reports, the appraisers were not given copies of the competing reports. This was intended to prevent the experts from gauging or tailoring their reports to other opinions.

[58] In the end, these witnesses were all professional and reasonable. They all spend most of their professional lives estimating the values of real estate and thinking about how that should be done. They have tremendous experience doing so.

[59] Appraisal is similar to prediction. A current appraisal is a prediction of what a property would sell for if it were listed for sale now. A retrospective appraisal is not a prediction of the future but still involves resolution of matters of intractable uncertainty. The appraisers acknowledged that the dynamics at play in any particular sale contain so many different variables, many unknowable, that even the most competent evaluator can only approximate the market.

[60] As will indicate below, there were instances where I preferred the evidence of one of the appraisers over another, but in general I have found that the fairest approach is to give some weight to each of their opinions, with more weight in cases where the evidence warranted it.

Selection of Comparable Sales

[61] One of the major points of controversy between the experts on each side centered on the selection of comparables. They all agreed that the ideal comparable would be a property with identical features that is right next door, sold at approximately the same time as the appraisal date. Except in cookie-cutter residential subdivisions, such comparables are never available. As a result, it is almost always necessary to find comparable sales that are as similar as possible.

Use of Post Valuation Date Comparable Sales

[62] All appraisers agreed that proximity in time for the comparable sale is important, due to the variability of the real estate market over time. In some periods, values fluctuate more significantly than others. Thus, when comparing sales which took place more than a few months from the date of appraisal for the subject property, judgment may be involved in assessing how much to adjust the sale price to reflect the passage of time.

[63] Mr. Parker’s evidence was that a retrospective appraisal should not use sales data from sales which occurred after the valuation date. In his first reports, Dale Mitchell used multiple comparable sales that occurred after the valuation date in question. Mr. Parker criticized these comparables as “unusual.” He said that appraisers should avoid the use of sales which occur after the valuation date. Dale Mitchell disagreed, and said it is acceptable to use sales after the effective date. However, in his “second round” reports, Dale Mitchell cited only “prior effective date sales.” In cross examination, Dale Mitchell said he removed the “post effective date sales” from his report because it was a concern for Mr Parker. He said his opinion was still influenced by all the sales he looked at, but that using only the “prior” sales did not change the outcome once appropriate adjustments were applied. In other words, he responded to Mr. Parker’s criticism and used only pre-effective date comparable sales, but this did not change his conclusion.

[64] Despite the considerable time that was spent on this point, I did not hear a good explanation for avoiding the use of post effective date comparable sales. Mr. Parker did not provide a good explanation for the practice, but simply said it was the recommendation of the Appraisal Institute of Canada.

[65] I agree that in some cases the use of subsequent sales would be inappropriate. An example is found in Heon v. Heon (1989), 69 O.R. (2d) 758, where competing marriage-date appraisals of a nursing home were under consideration. The nursing home industry became subject to new regulations which were announced after the marriage date. The new regulatory regime significantly impacted nursing home values. The court preferred the appraiser who assessed value without taking the subsequent development into consideration. The court said fair market value must be determined based on facts known at the time and not facts subsequently known. That is clearly correct.

[66] However, here there was no reason to think that the market changed in the immediate months after the valuation dates. In my view, for our purposes, a sale which took place the day after the valuation could be a very strong comparable sale as it would reflect what was happening in the market at the time.

[67] I did not consider the value of Dale Mitchell’s conclusions to be diminished by this criticism.

Proximity in Location v. the Principle of Substitution

[68] All appraisers agreed that proximity in location for the comparable sale is important, although the respondent’s experts placed greater emphasis on this as a factor. The respondent’s experts felt strongly that the market for farm properties varies considerably by location. Buyers tend to be farmers from the immediate neighbourhood looking for more land to work. Buyers will therefore be most influenced by other sales from the neighbourhood. The size of the property can be adjusted by price per tillable acre and the buildings on the property do not typically add much value for the neighbouring farmers who are likely to be the buyers. Thus, Mr. Parker and Ms. van Ham considered location to be of utmost importance when selecting comparables.

[69] The Mitchells agreed that location is very important and that buyers of farm properties are often other local farmers. However, they gave greater emphasis to the principle of substitution. This principle is that the best comparable is one which a buyer would consider as a close substitute for the subject property. In their view, a 50-acre parcel of vacant land is not a good substitute for a 200-acre farm with a residence and significant other buildings or improvements on it. As a result, in their view, it is acceptable to go farther afield to find a property that has features that are similar to the subject property, and then adjust for location. In contrast, the respondent’s experts say it would be better to select the nearby 50-acre parcel and adjust for size and the improvements.

[70] I find merit in both arguments.

[71] In cross examination, the respondent admitted that he rents several farm properties including ones that are about 22 km and 24 km away respectively. The applicant argued that this shows immediate proximity is not essential.

[72] There is an argument that smaller properties will sell for a higher price per acre because there is a larger pool of potential buyers. Many buyers simply won’t be able to afford the high cost of a larger property but could afford a smaller one. Therefore, there will be more demand for smaller properties. Also, in some areas, buyers from the city looking for a recreational property will influence the market and will be more interested in the smaller property, perhaps with a residence on it, than the larger property.

[73] Further, some people just prefer a rural environment so are willing to commute to jobs in cities, so these types of purchasers can influence the market for smaller farm properties.

[74] However, “recreational” and “commuter” buyers are more likely to influence the market in areas close to urban centres or in areas where there are other recreational properties. The respondent’s experts felt there was no market for recreational properties in this area, and the properties were too far from any major centre to be influenced by commuter buyers. They did not accept that there was a price-per-acre premium for smaller properties. They also said their experience and study of this issue suggests that while this was an observable factor in the past, more recently, there was no price-per-acre premium for smaller properties.

[75] The applicant’s experts felt that the subject properties were close enough to Bruce Power, the largest employer in the area, that commuter buyers might influence the market. This thinking is no doubt influenced by their familiarity with the local circumstances.

[76] Again, both arguments are reasonable. No peer-reviewed research or academic papers on the topic were introduced by either side. I am not able to reject either point of view. My conclusions are influenced by both points of view.

Consistent v. Inconsistent Comparables

[77] The Mitchells criticized Mr. Parker and Ms. van Ham for using the same comparables to evaluate all seven of the subject properties. In turn, the Mitchells were criticized for not doing so. The difference in approach stems, in part, from the Mitchells’ emphasis on following the principle of substitution and the respondent’s experts’ emphasis on selecting close-by properties. The Mitchells sought to find comparables that were the closest substitutes for the property under evaluation by customizing their selection of comparables for each property.

Drainage

[78] Well drained farmland is more valuable than farmland where pooling of water occurs. One reason for this is that poorly drained land cannot be worked as early in the spring. This effectively shortens the growing season and reduces crop yield.

[79] Drainage can be improved with drainage tiles. Farmland is classified as untiled, randomly tiled, or systematically tiled, depending on the extent and pattern of drainage tile installed. Tiles are expensive to install. Installing them only in the wettest areas in an effort to prevent ponding is helpful. The word “random” is used for this type of tiling. Installing tiles in systematic rows is best, but more expensive.

[80] Once installed in the ground, it is typically not obvious to observers whether a field has tiles, or if so, the extent of tiling. At certain times, the pattern of tiling is visible, especially in aerial photos, because the soil above the tiles will be visibly drier.

[81] There is a mapping service which records tiling on farm fields, but the data is not always accurate.

[82] The respondent argues that one reason why the Mitchells valuations are too high is that in some cases they have counted drainage tile that does not exist. The mapping service they were using overstates the tile drainage compared to the respondent’s evidence. The respondent claimed to have better information about where the land is tiled, simply because he knows where he installed it and where his parents installed it, and because he works the land. He passed this information on to his experts. The Mitchells relied on the database.

[83] I am asked by the applicant to discount the respondent’s evidence on this point because he is not a disinterested witness. It serves his interest to understate the amount of drainage tile.

[84] Despite this submission, I accept the respondent’s evidence about the drainage tile. However, he did not purport to provide highly precise evidence on this point. He gave evidence of a more general nature about what properties were randomly tiled and what areas had no tile at all. I should note that for properties 1, 2 and 3, the agreed statement of facts indicates these are randomly tiled.

[85] The impact of this is small. All the experts agreed that drainage tiles improve property values but none of them quantified the effect. I infer that as long as a property is not subject to extreme flooding, the effect of drainage tile is material but qualitive and subjective upon the buyer.

The Solar Panels

[86] Two of the properties have income-generating, sun-tracking solar panels installed, which come with contracts for the purchase of the electricity generated by the solar panels. The panels are fixed to the ground and not moveable in practical terms. The contracts go with the land, not the landowner. The solar panels were installed in 2011. Dale Mitchell assumed the contract to sell power from the solar panels will expire in May of 2031. This assumption was not supported with documentary evidence, but also was not challenged. The solar panels do require maintenance, and there is some small variability to the income stream, but the contracted price for electricity generated is set for the life of the contract. They are consistent income earners. The income was supported with documentation (exhibit 3).

[87] There is no convincing evidence whether, when the contracts expire, the electricity regulator will continue to buy the electricity or, if so, at what rate. The residual value of the solar panels at the end of the contract is unknown.

[88] The appraisers took different approaches to valuing the solar panels. Dale Mitchell has taken a course on how to value solar panels. He used an income approach, essentially determining a present value of the income stream from the solar panels using assumed capitalization rates. His capitalization rates were not strongly supported by studies or evidence. He assumed zero residual value and no further income stream for the solar panels at the end of their current contracts.

[89] Mr. Parker essentially ascribed no value to the solar panels, based on his experience that they do not materially influence the price a farm will sell for. This view was based on his experience and was not supported by any peer-reviewed research.

[90] Ms. van Ham specifically did not provide an opinion on how the solar panels influenced the value of the properties. She left consideration of this issue out of her evaluation.

[91] Throughout the appraisal evidence, it was common for the appraisers to refer to “the typical buyer” or “the typical seller,” and then to ascribe views and preferences to these imaginary individuals. I borrow from this approach but acknowledge it necessarily involves some speculation. In my view, not many buyers would simply add the present value of the income stream from the solar panels to the amount of their offer to purchase one of the subject properties, as suggested by Dale Mitchell. By the same token, I think most buyers would pay more for a property knowing that an almost guaranteed $15,000 per year in income would be generated during the life of the contract. It would be a subjective influence on the value of the property, and I do not think it is right to include nothing for the value of the solar panels and the income stream they produce. However, I am influenced by Mr. Parker’s evidence to conclude that the impact of the solar panels would be a small fraction of the income stream that they generate.

[92] In my view, the right approach is to consider the solar panels as a subjective factor influencing the value of the properties, and to adjust the estimate of value to reflect the fact that there are solar panels on the property. I will not ascribe a specific amount for the solar panels, just as I do not do so for any of the other improvements, but my findings for the values of the home farm and 230 Concession 6 include an upward adjustment for the value of the solar panels.

Approach to Appraisal

[93] I am taking the approach to valuation that I understand the parties have agreed upon. I am valuing the land and buildings as if they were sold on the open market at the time in question. I am assuming the buyer and seller are not exceptionally motivated. For the solar panels, I will assume these would be included in the what was sold with the properties, and I will adjust the sale price of the property accordingly to reflect the fact that an income earning solar panel is on the property. With the exception of the solar panels, I am not including the value of the equipment in the appraised values, or the cost of removal of the equipment. I am disregarding the potential impact of the equipment on the value of the land. That is, I am assuming that the presence or removal of equipment will not affect the value of the properties.

Comparing the Appraisers’ Methodologies

[94] Because their approaches differ, comparison among the appraisers is not straightforward.

[95] There were two comparable sales that all appraisers used. Examining these comparables gives insight into their different methodologies. One of the sales was a sale of vacant land. I will discuss that sale below.

[96] The other comparable sale was a sale of an approximately 100-acre farm on September 1, 2017 (three months prior to the separation date). Hachey sold the property to Zook for $900,000. The farm is less than 10 km east of the home farm, in Chatsworth Township. It had a 1.5 storey farmhouse with attached garage and an old bank barn. The soil was 60% class 1 and 40% class 2. All three appraisers estimated that the property had 71 tillable acres.

[97] In Ms. van Ham’s table of comparables at p.638, the Hachey to Zook sale is comparable #17. Her analysis of the property is at p.706. As she does for all her comparable properties, Ms. van Ham breaks down the value of the comparable property into components which contribute to value: tillable land, non-tillable land, and improvements. For this comparable, she estimated that there are 71 acres of tillable land, 2 acres used for the buildings on the land, and 27 acres of woods. She valued the tillable acres and the land which housed the buildings to have a value of $9,500 per acre and the woods to have a value of $700 per acre. She estimated that the dwelling contributed $170,000 to the value of the property and the barn contributed $17,600. She then used the $9,500 per tillable acre figure to inform her judgment as to the value to be ascribed to the subject property. Ms. van Ham did the same exercise for multiple comparables. She then used her judgment to determine a price per tillable acre of the subject properties. She then determined a contributory value for the non-tillable acres of the subject properties and the contributory value of the buildings on the subject properties. For the buildings, she uses a replacement cost per square foot which she obtains from available data, and she applies depreciation using her judgment.

[98] There is a pretense of precision in this exercise but little about the component valuations can be precise. The building valuations and woodlot valuations are suspect. At the same time, the process provides a structure for analysis. It involves exercises of judgment and relies on the appraiser’s experience. Given the depth of Ms. van Ham’s experience and knowledge, the approach and the result is reasonable.

[99] The Hachey to Zook sale is comparable #8 in Mr. Parker’s two valuation reports, found in his table at p.399 and p.475. Mr. Parker estimates the contributory value of the buildings at $200,000, although he does not specifically use this figure elsewhere. It becomes an element in his qualitative analysis. Mr. Parker noted that the sale price per acre was $9,000 ($900,000 ÷ 100), and the price per tillable acre was $12,676 ($900,000 ÷ 71). Mr. Parker does the same exercise for his other comparables. Mr. Parker then does a qualitative assessment to determine a price range per total acre for each of the comparable sales. Among other factors, he considers:

a. the date of the comparable sale and whether prices were generally stable, increasing or decreasing between the date of the comparable sale and the valuation date. b. The location, including what is in the neighbourhood, whether the roads are paved, and whether there are other farmers in the area who might be motivated purchasers who wish to expand their operations. c. The extent and quality of the structures on the property or other improvements on the property. d. The percentage of land that is tillable. e. The fertility, drainage, and topography of the land.

[100] After the qualitative analysis, Mr. Parker comes to a range of values per total acre for the subject properties and applies that value per acre to the number of acres to determine a range of values. In each case, he took the middle of the range as his estimated value of the property. The process Mr. Parker follows involves an exercise of judgment and relies on his experience to assess how much of an impact each element should have on the price per acre of the property.

[101] The Hachey to Zook sale is comparable #3 (or Index No. 3) in Dale Mitchell’s (p.232). He used the sale as a comparable for his appraisal of property #5. As already discussed, unlike Mr. Parker and Ms. van Ham, Dale Mitchell customized his selection of comparables for each of the improved properties. However, he did use the same comparables for all the vacant land properties. Dale Mitchell did valuations using both the cost approach to value and the direct comparison approach, but he relies on the direct comparison approach and uses the cost approach for verification. For the direct comparison approach, his methodology was similar to Mr. Parker’s. He does a qualitative comparison of the subject property to the comparables he has found. Unlike Mr. Parker, he adjusts to price per tillable acre rather than price per acre. This method, however, is not materially different when the adjustments are made. Adjusting to price per tillable acre may seem to ignore the value of the non-tillable land and the buildings which would increase the value of the property, but his adjustments have factored this in. In Mr. Parker’s approach, he multiplies his price per total acres by the total acreage of the subject property. This may seem to ignore the fact that some of the land is non-tillable and therefore much lower in value to a farmer, but again, his adjustments factor this in. Both approaches involve exercises of judgment.

[102] In the end, the approaches of all the appraisers appears valid but in each case there are exercises of judgment involved.

Price Per Acre

[103] The determination of an appropriate price per acre is a key element in the farm appraisal process. A detailed review of the appraisal reports reveals that a significant contributor to the differences in the appraisals is the price per acre of tillable land that each appraiser determined.

[104] The following table sets out the price per tillable acre assessed by the appraisers for each appraisal they performed.

$/Tillable Acre	2009			2017			2021
	Mitchell	Parker	van Ham	Mitchell	Parker	van Ham	Mitchell	Parker	Van Ham
1	2,700	2,995	3,000	9,300	8,198	7,500	14,250	11,015
	p.1140	p.341	p.648	p.69	p.341	p.652	p.1157	p.1211a
2	2,700		3,000	8,750	8,627	7,500	14,000	11,176
	p.1059		p.648	p.318	p.341	p.652	p.1041	p.1211a
3		3,000		9,400	8,750	7,500	14,500	12,000
		p.649		p.318	p.431	p.653	p.1042	p.1211a
4		3,000		9,400	8,605	7,500	14,500	12,093
		p.650		p.318	p.431	p.654	p.1040	p.1211b
5		3,000		9,400	8,214	7,500	14,500	11,071
		p.649		p.223	p.431	p.653	p.917	p.1211b
6		3,000		9,000	8,537	7,500	14,000	11,098
		p.651		p.146	p.342	p.655	p.815	p.1211a
7		3,000		9,000	8,125	7,500	14,500	12,083
		p.650		p.318	p.431	p.654	p.1039	p.1211b

Notes:

1. Where no data is shown, the appraiser did not do an appraisal for the property for the given time frame.
2. Here, as elsewhere in this judgment, for simplicity I refer to some of the appraisals as “2017 appraisals” appraisals but Mr. Parker’s “2017 appraisals” had an effective date of May 3, 2018 and Dale Mitchell’s had an effective date of August 17, 2018. Ideally, these would have had an effective date of the date of separation, which was December 1, 2017.

[105] As can be seen, the Mitchells’ value in 2009 was lower than Mr. Parker’s and Ms. van Ham’s. In 2017 and 2021, the opposite is true. Each appraisers’ value consistently benefited the party that hired them (relative to the determinations of the appraiser(s) on the other side).

[106] If the columns in the table above are averaged, the difference between the highest and lowest average price per tillable acre determined by each appraiser is only 10% for the 2009 appraisals but climbs to 22% and 24% for 2017 and 2021 respectively.

[107] Ms. van Ham used the same value for price per tillable acre for all properties on the theory that the properties were close in the characteristics which drive fertility, so should be close in value per tillable acre.

[108] The Mitchells’ and Mr. Parker’s values are not the same. There are small differences in the properties that might justify a difference in price per tillable acre. For instance, as discussed above, soil quality and drainage were considered for each property and were the subject of a great deal of testimony. However, I can discern no pattern to the differences in values among the Mitchells’ and Mr. Parker’s price per tillable acre for these factors.

[109] Because the appraisal price is sensitive to price per tillable acre, I have tried to find ways to determine which appraiser is most correct and what values are fair.

[110] As I mentioned above, there was a sale of vacant land that all the appraisers used as a comparable. It was a sale of an approximately 80-acre farm on November 30, 2017. That is, a day before the separation date. The property was sold by Wagg to Bauman for $550,000 (p.703). The property is located close to the subject properties. It is west of the home farm in the same township, and less than 10 km away. Ms. van Ham estimated it had 70 tillable acres (p.703). Mr. Parker estimated it had 69 tillable acres (p.467), and Dale Mitchell estimated it had 72 tillable acres (p.306). These differences yielded slightly different values per tillable acre for this comparable as determined by each appraiser, although the results were very close. They ranged from $7,639 ($550,000 ÷ 72) to $7,971 ($550,000 ÷ 69) and averaged at $7,803.

[111] This comparable is clearly a strong comparator, as is evident both from its characteristics and from the fact that all the appraisers selected it.

[112] The appraisers each recognized that the soil was of a lower quality overall than some of the subject properties. Mr. Parker and Dale Mitchell specifically commented that it was poorly drained.

[113] On this analysis, the price per tillable acre for the subject vacant land properties as at December 1, 2017 should be more than $7,803.

[114] The price per tillable acre for the vacant land among the subject properties (for the 2017 appraisals) are isolated in the table below.

2017	Mitchell	Parker	van Ham
2	8,750	8,627	7,500
3	9,400	8,750	7,500
4	9,400	8,605	7,500
7	9,000	8,125	7,500
Average	9,138	8,527	7,500

[115] I recognize that this is only one of many comparables that the appraisers used and focusing on multiple comparables, as the appraisers have done, is more likely to yield an accurate result. Nevertheless, this particular comparable is one that deserves considerable weight and it is useful as a point of comparison among the appraisers. It is a factor in my conclusion that the van Ham price per tillable acre is too low and the Mitchell value too high in the 2017 valuations.

The Vacant Land Properties - #2, #3, #4, and #7

[116] Properties 2, 3, 4, and 7 are vacant land. I have assessed the values with reference to all the appraisers’ opinions and bearing the foregoing considerations in mind.

2009 Valuation

[117] Among the vacant properties, only property 2 needs to be valued as at the date of marriage. The following table sets out the appraisers’ findings and my finding as to value on the date of marriage (August 8, 2009) for property 2.

Property #	Mitchell property # and page reference	Mitchell appraised value	Parker parcel # and page reference	Parker appraised value	van Ham parcel # and page reference	van Ham appraised value	My findings
2	3; p.1050	132,000	2; p.336	160,000	2; p.609	150,000	145,000

2017 Valuation

[118] The following table sets out the appraisers’ findings and my findings as to value on the date of separation (December 1, 2017) for the vacant land properties.

Property #	Mitchell property # and page reference	Mitchell appraised value	Parker parcel # and page reference	Parker appraised value	van Ham parcel # and page reference	van Ham appraised value	My findings
2	3; p.259	430,000 [1]	2; p.336	440,000 [2]	2; p.610	375,000 [1]	415,000
3	4; p.259	375,000 [3]	1; p.427	350,000 [2]	3; p.610	315,000 [1]	350,000
4	2; p.259	445,000 [3]	2; p.427	370,000 [2]	6; p.610	340,000 [1]	370,000
7	1; p.259	435,000 [3]	3; p.427	390,000 [2]	5; p.610	355,000 [1]	400,000

Notes: [1] Valuation date was December 1, 2017 [2] Valuation date was May 3, 2018 [3] Valuation date was August 17, 2018

2021 Valuation

[119] The 2021 valuation involves additional considerations because the real estate market generally saw rapid increases as a result of the pandemic. This phenomenon has impacted farm values as well as the rest of the market.

[120] Mr. Parker’s 2021 appraisal was done with an effective date of March 1, 2021. Steve Mitchell’s was done with an effective date of May 1, 2021. Steve Mitchell had the advantage of two additional comparable sales because his valuation was done two months after Mr. Parker’s. The comparable sales took place in April of 2021 and showed marked increases in land values in price per tillable acre.

[121] One of the sales was for a parcel of vacant land within 2 kilometres of the home farm. It has class 1 and class 2W soil. It is a 100-acre parcel with 81 tillable acres. It is bisected by a stream and has some forested areas and some wet areas but is said to be systematically tiled and randomly tiled in places. It is a relatively strong comparator. It sold for $1,235,000 on April 16, 2021. The sale price per tillable acre was $15,247. This is considerably higher than all but one of the comparators Steve Mitchell used. The other high-priced comparable is a farm well north of the subject properties which sold on April 7, 2021 at $15,277 per tillable acre.

[122] A strong trend of increasing price per tillable acre is apparent through 2020 and 2021 upon reviewing the list of comparable sales that Mr. Parker used (p.1276) and that Steve Mitchell used (p.1024).

[123] The evidence also indicated that, anecdotally, prices were continuing to rise at the time of the trial.

[124] The following table sets out the appraisers’ findings and my findings as to value on the date of trial (June 14, 2021) for the vacant land properties.

Property #	Mitchell property # and page reference	$ per tillable acre	Mitchell appraised value	Parker parcel # and page reference	$ per tillable acre	Parker appraised value	My findings
2	3; p.1041	14,000	690,000	2; p.1211	11,176	570,000	650,000
3	4; p.1042	14,500	580,000	4; p.1211	12,000	480,000	555,000
4	2; p.1040	14,500	670,000	5; p.1211	12,093	520,000	600,000
7	1; p.1039	14,500	700,000	6; p.1211	12,083	580,000	640,000

Notes:

1. Ms. van Ham was not asked to perform 2021 appraisals for the properties.
2. Mr. Parker’s effective appraisal date was March 1, 2021.
3. Steve Mitchell’s effective appraisal date was May 1, 2021.

#1 The Home Farm

[125] The largest parcel of land is referred to as the home farm. It contains the matrimonial home and other structures.

[126] The respondent testified that this property has been in his family for five generations. Property records show that it was transferred to him on July 11, 1994. On November 12, 2010, the property was transferred from the respondent to the respondent and the applicant jointly.

[127] The matrimonial home consists of 3,229 square feet of living area with an attached 2-car garage. Currently, the applicant has exclusive possession of the house on the home farm.

[128] The structures include:

a. A dog kennel used by the applicant in her dog breeding business. This kennel is 1,200 square feet and has an additional 300 square foot office/kitchen area with hot and cold water, hydro and a toilet. b. A 10,880 square foot drive shed built in 2010. c. Grain storage bins with elevator legs having a total capacity of 46,500 bushels. d. A 2,400 square foot shop built in 1982. e. A 1,600 square foot seed washing plant with 28’ eave height, built in 2016. f. A 13,575 square foot feed lot barn (used for storage only). g. A bank barn (used for storage only). h. A pivoting 10 kW solar panel.

[129] As discussed already, this property has the seed cleaning plant which is housed in some of these structures.

[130] The appraisers agreed that the soils on the home farm are excellent farm quality.

Contributory Value of the Dwelling

[131] The applicant argued that Ms. van Ham overestimated the contributory value of the dwelling on the home farm for the 2009 appraisal and underestimated its contributary value for the 2017 appraisal by using inaccurate square footage figures. Actual measurements were taken by Dale Mitchell and were used by both the Mitchells when they prepared their reports.

[132] The house on the home farm was expanded with an addition during the marriage. At the time of the marriage, the house was 1,513 square feet. At the time of separation, it was 3,229 square feet, not including the basement or garage. Ms. van Ham used 2,000 square feet and 2,400 square feet respectively in her calculations.

[133] In cross examination, Ms. van Ham acknowledged that she estimated the square footages and if more accurate square footage values are used, this will impact the appraised values she determined.

[134] By my math, using the more accurate square footage figures would decrease Ms. van Ham’s August 8, 2009 estimate of value by $38,960. It would increase the December 1, 2017 figure by $59,688. I am relating the precise mathematical outcome because the applicant’s written argument covers this in some detail but gets the math wrong. No one suggests such accuracy is possible. I will explain my math for the December 1, 2017 valuation. Ms. van Ham’s building schedule for her 2017 valuation for the home farm (p.642) shows that she used 2,400 square feet at a cost of $180 per square foot, yielding a building replacement cost of $432,000. She then applied 60% depreciation to the building, leaving 40% remaining value. This yielded a contributory value of $172,800 (2,400 x $180 x 40% = $172,800).

[135] If the correct square footage value of 3,229 is used, the contributory value of the dwelling would change to $232,488 (3,229 x $180/sq ft x 40% = $232,488). The difference is $59,688 ($232,488 - $172,800 = $59,688).

[136] The applicant’s written argument suggests that if the 3,229 number is used and the other numbers are left the same, the contributory value of the building is $660,012. I cannot duplicate the applicant’s math, but it is incorrect.

[137] One criticism of Ms. van Ham’s approach on this point was her approach to depreciation. She applied 50% depreciation to the building for her 2009 valuation. That is very high depreciation. Then for the 2017 valuation, she applied even higher depreciation of 60%. But very little depreciation should be applied to the relatively new addition, which doubled the size of the house in 2016 (see p.42). Mostly new windows were installed. It stands to reason that the overall depreciation to the house was less in 2017 than it was in 2009, because half of the house was brand new. But Ms. van Ham used a higher figure for depreciation. In his approach, Dale Mitchell applied a 20% depreciation as an average rate including the new and original parts of the home (p.69). This seems to me to be a more valid depreciation figure.

The Controversial Comparable

[138] Dale Mitchell was criticized for using as one of his comparables a property that is located near Meaford and which was about 50 km from the subject property. It is a property that he was very familiar with as he had previously appraised it. The respondent criticized this selection as being motivated by familiarity rather than logic. Mr. Parker said it was not a reasonable comparable. The applicant argued that, to the contrary, Mr. Mitchell’s familiarity with the property made it a good choice for comparison.

[139] Mr. Mitchell justified this property as a good comparable because it had a similar acreage and because it contained extensive “improvements” or structures on it, just as the home farm contains multiple structures. In his view, if adjusted for location, it was a closer substitute for the home farm than perhaps any of the other comparables. The sale of this comparable was for $2,000,000 on December 19, 2016. It was a 313-acre farm with 225 tillable acres. The value per tillable acre for this property ($8,889) was the lowest of the comparables he used in his evaluation of the home farm. This was, of course, prior to making adjustments for qualitative factors, but it does not appear that Mr. Mitchell cherry-picked this sale in an effort to drive up his valuation. He made upward adjustments to the $8,889 valuation. For example, he adjusted the price per tillable acre upwards for: (1) land quality (the subject property has better soil and is somewhat farther south than this comparable); (2) the size and quality of the residence (the subject property has a larger and better appointed residence); and (3) time (the sale took place a year earlier than the date of interest). He did not need to adjust the property value for the quality and extent of outbuildings on the property. I accept Dale Mitchell’s opinion that this was a valid comparator if appropriately adjusted.

Comparing the Appraisals of the Home Farm

[140] I reviewed above the significant difference in valuation of the price per tillable acre for the vacant properties. The appraisers’ differing views significantly impacted their assessment of value of the land for the home farm. They also had widely different views on the contributory value of the structures on the home farm. The table below illustrates this.

	Mitchell	Parker	van Ham
2009
Value of land	537,300	590,000	612,300
	p.1140	p.341	p.648
Value of structures	308,219	330,000	255,902
	p.1140	p.341	p.648
Appraised value of property	840,000	920,000	870,000
	p.1151	p.420	p.648
2017
Value of land	1,850,700	1,615,000	1,528,000
	p.69	p.341	p.652
Value of structures	1,027,196	705,000	484,080
	p.69-70	p.341	p.652
Appraised value of property	2,820,000	2,320,000	2,010,000
	p.84	p.420	p.652
2021
Value of land	2,835,750	2,170,000
	p.1157	p.1211a
Value of structures	959,428	860,000
	p.1157	p.1211a
Appraised value of property	3,790,000	3,030,000
	p.1176	p.1283

[141] The figures for the 2009 valuation are relatively close. However, the 2017 and 2021 valuations are widely discrepant. The discrepancies appear in the land valuations but appear even more significantly in the valuation of the structures on the property.

[142] Some of the difference in the value of the structure can be easily understood. For example, the 2017 and 2021 Mitchell appraisals include over $100,000 for the full value of the income stream for the solar panels. (By 2021, the income stream from the solar panels is reduced. This is one of the factors that accounts for the decrease in value of the structures from 2017 to 2021 in the Mitchell appraisals.) The Parker and van Ham appraisals include zero for the solar panels.

Conclusion on Value of the Home Farm

[143] I conclude that the appraisers are all reasonable and they have reasonable differences of opinion. What I trust about each of them is that they have wide experience and that they spend their professional lives studying property sales data. They all acknowledge that every sale depends on the circumstances of the buyer and seller.

2009 Valuation

[144] For the 2009 value of the home farm, the appraisers are within 10% of each other. Nothing struck me as significantly better among the appraisers’ approaches to the 2009 land valuation for this property. Ms. van Ham’s assessment of the value of the structures strikes me as low.

[145] Bearing all the foregoing in mind, I assess the 2009 value of the home farm at $880,000.

2017 Valuation

[146] For the 2017 value of the home farm, the highest appraisal is 40% higher than the lowest.

Land

[147] As indicated above, the Mitchells’ price per tillable acre seemed high for the 2017 valuation for the vacant land properties. That appears to have translated into the valuation of the home farm.

[148] Bearing all the foregoing in mind, I assess the land value of the home farm to be $1,615,000.

Structures

[149] The largest differences of opinion rests with the value of the structures. Ms. van Ham’s figure is 45% less than Mr. Parker’s and 112% less than Dale Mitchell’s (89% less than Dale Mitchell’s if the solar panel is fully discounted). Again, Ms. van Ham’s assessment of the value of the structures strikes me as low.

[150] Assessing the contributory value of the structures is extremely difficult. The wide gap in the appraiser’s assessments evidences how difficult the task is. It would likely take a special purchaser to be interested in the seed cleaning plant, but to the right purchaser the seed cleaning plant will generate revenue and add significant value to the farming operation.

[151] In determining the contributory value of the structures, I have weighed the considerations already discussed and have also been influenced by the following:

a. Dale Mitchell’s $1,027,096 valuation of the structures includes the solar panel, which he valued at $128,906. For the reasons discussed above, that amount should be heavily discounted. b. Ms. van Ham’s calculation of the value of the house is inaccurate due to the inaccurate assumption about square footage already discussed. c. Ms. van Ham’s depreciation of the house is excessive for the reason already discussed. d. Mr. Parker did a detailed analysis of the building replacement cost and depreciation, and added further depreciation based on external obsolescence (see p.386 and 387). He explained that:

In analysing sales of agricultural and agri-business properties, it is typically apparent that buyers do not pay fully depreciate in value for buildings employed in agricultural use. The typical range for this type of depreciation for agricultural buildings is 10% to 40%. However, there are various exceptions where the depreciation can be more or less than this typical range. The variance can depend on age, size and quality of the subject building, as well as the current and future use to which they may be put. Also, an important factor is the business which is operated from the subject buildings. Some agri-business properties carry an inherent risk which is recognized by purchasers, while some properties have business / operations which create increased demand for buildings in use.

e. The respondent’s evidence about the processing operations (drying and seed cleaning) that were added in 2016 impressed me and made me think that these facilities must add real value to the home farm. f. Mr. Parker applied 20% to 30% depreciation for external obsolescence. This analysis yielded contributory value of $650,000 to $750,000. g. In light of the respondent’s evidence, the newness of the processing operation, the usefulness of the seed cleaning operation and its suitability for the farm market in the area, it seemed to me that the low end of the range for Mr. Parker’s depreciation for external obsolescence was appropriate. h. Mr. Parker applied external obsolescence to the house, which had been expanded significantly with a new addition in 2016. In his report at p.381, it is noted that obsolescence can, to some extent, be cured with replacement. This again points towards the low end of the range for external obsolescence. i. It may take a special kind of purchaser to be interested in the seed cleaning operation.

[152] Weighing these considerations, I evaluate the contributory value of the structures on the home farm to be $850,000 on the separation date.

[153] I therefore find the value of the home farm to be $2,465,000 ($1,615,000 + $850,000) on the separation date.

2021 Valuation

[154] Ryan Parker appraised the value of the home farm to be $3,030,000 as at March 1, 2021 (p.1206). Steve Mitchell appraised the value of the home farm to be $3,790,000 as at May 1, 2021 (p.1080). The $760,000 or 20% difference in these figures can be partially explained by the difference in valuation dates. As discussed above, Steve Mitchell had the advantage of two additional comparable sales because his valuation was done two months after Mr. Parker’s. The comparable sales took place in April of 2021 and showed marked increases in land values in price per acre or price per tillable acre.

[155] I find the value of the home farm to be $3,500,000 on the date of trial.

#5 - 196 Concession 8

[156] Property records show that this property was acquired by the parties on May 1, 2015, or 6 years after the parties were married. This property consists of 100 acres, of which 83 acres (p.864) or 84 acres (p.449) or 88 acres (p.621) are tillable. It contains a 1¾ storey farmhouse with a total living area of 2,032 square feet (p.887). The house was renovated in 2015. The respondent currently resides in this house. The property also has a drive shed, a former broiler barn, a former rabbit barn, a feed lot, a grain bin, and a bank barn.

[157] The respondent says this property is randomly tiled. Mr. Parker noted that these lands would benefit from being systematically tile drained given the soil type. Dale Mitchell also noted that the land ranges from “poorly drained” to “imperfectly drained.”

[158] Many of the comparables identified by the appraisers contained a farmhouse and older barns or drive sheds, although not as many buildings as this property. In studying the comparables identified by the appraisers, it struck me as easier to follow the principle of substitution when evaluating this property than it was for the home farm. Mr. Parker and Dale Mitchell selected comparables which were more focused as substitutes for this property (although two of Mr. Parker’s comparables were vacant land). I therefore preferred Mr. Parker’s and Dale Mitchell’s evaluations over Ms. van Ham’s.

[159] The appraisers again had widely different views on the contributory value of the structures on this farm, as can be seen in the table below.

	Mitchell	Parker	van Ham
2017
Value of land	780,200	690,000	693,500
	p.223	p.431	p.653
Value of structures	301,811	80,000	45,873
	p.223	p.431	p.653
Appraised value of property	1,060,000	770,000	740,000
	p.237	p.431	p.653
2021
Value of land	1,203,500	930,000
	p.917	p.1211b
Value of structures	311,828	120,000
	p.917	p.1211b
Appraised value of property	1,490,000	1,050,000
	p.935	p.1283

[160] For the 2017 appraisal, Dale Mitchell’s valuation of the structures is almost four times that of Mr. Parker’s, and over six times that of Ms. van Ham’s. For the 2021 appraisal, Steve Mitchell’s valuation of the structures is more than double Mr. Parker’s.

[161] The nature of the structures on this property is such that external obsolescence will play a large role in their market value. They are older structures and do not have the same obvious utility as is the case with the seed cleaning plant.

[162] In my view, for this property, Mr. Parker’s approach to valuing the buildings is the fairest.

2017 Value

[163] Bearing all the foregoing in mind, I assess the value of this property at $770,000 on the date of separation.

2021 Value

[164] I assess the value of this property to be $1,125,000 as at the date of trial.

#6 - 230 Concession 6

[165] Property records show that this property was acquired by Margaret McDonald, the respondent’s mother, from Carl McDonald, the respondent’s father, on September 25, 2009. Carl McDonald had passed away in 1984. Margaret McDonald was his heir but no steps were taken at the time to update title records. The respondent’s evidence was that the September 25, 2009 transfer was initiated to regularize title so that his mother could then sell the property to the respondent. Prior to this, in July of 2009, the respondent and his mother had reached an agreement on the purchase and sale. This was a month before the marriage. It took the respondent some time to put the financing in place. The transfer of title to the respondent from his mother was registered on November 17, 2009, about three months after the respondent and the applicant were married. Title to this property is held in the name of the respondent alone.

[166] Both sides reviewed this evidence in their arguments but acknowledged that determining the implications of this evidence is not part of my task in this part of the bifurcated trial.

[167] This property has a “house and old outbuildings” (per Mr. Parker at p.339). The outbuildings consist of a 1,272 square foot century old barn, a 3,250 square foot century old bank barn, and a 1,745 square foot insulated barn (p.126). Dale Mitchell described these as providing “minimal utility” for a farm and said they provide “some storage use only.”

[168] Jamie resides on this property. It consists of 99.5 acres, of which 82 acres are tillable. This property also has a solar panel.

[169] In this case, the Mitchell and Parker appraisals are quite close, apart from their difference of opinion about the solar panel.

	Mitchell	Parker	van Ham
2017
Value of land	738,000	700,000	643,000
	p.146	p.342	p.655 [1]
Value of structures	237,080	100,000	51,150
	p.146	p.342	p.655
Appraised value of property	970,000	800,000	690,000
	p.158	p.342	p.655 [1]
2021
Value of land	1,148,000	910,000
	p.815	p.1211a
Value of structures	222,210	140,000
	p.815	p.1211a
Appraised value of property	1,370,000	1,050,000
	p.833	p.1283

[1] Ms. van Ham’s report at p.655 contains an error on the number of tillable acres. Prior to testifying, she noted the error. The actual tillable acres for this property is 82 not 72. Ms. van Ham corrected this in her testimony. When this correction is worked through, the correct numbers are as shown in this table and not as shown in her written report.

[170] The Mitchells again included their valuations for the solar panel in the figure for structures. Mr. Parker did not allow anything for the solar panel. Dale Mitchell evaluated the solar panel at $126,000 in 2017 (p.146). Steve Mitchell evaluated it at $102,000 in 2021. Again, in my view these figures should be heavily discounted.

[171] As with the previous property (#5), many of the comparables identified by the appraisers contained similar improvements and similar features to this property. Again, it struck me as easier to follow the principle of substitution when evaluating this property than it was for the home farm.

2009 Valuation

[172] The parties agreed that the value of this property on the date of marriage was $307,500.

2017 Valuation

[173] Bearing all the foregoing in mind, I assess the value of this property at $820,000 on the date of separation.

2021 Valuation

[174] I assess the value of this property to be $1,200,000 as at the date of trial.

Sale of the Jointly Owned Properties

[175] The applicant’s motion for partition and sale of the five jointly owned farm properties was heard on the first day of the sittings, just prior to the start of the bifurcated trial. In my ruling, I said:

On the evidence in the motion records, it must be concluded a sale of the Home Farm would seriously impair the operation of the farm operation. With less confidence, I also think it is appropriate to conclude that if all four of the other jointly owned properties are sold, this would seriously impair the farm operation. However, it is unfair to conclude that none of the properties can be sold without seriously impairing the farm operation.

[176] My ruling also said:

To respect the imperative of s. 11(1) of the FLA, I must decide which properties can be sold without seriously impairing the farm operation. The evidence in the motion records on this point is thin. We are about to embark on a bifurcated trial in which I will be hearing appraisal evidence as to the value of the properties. I will not be determining equalization; however, I anticipate that I will develop a better understanding of the properties and the extent to which a forced sale of some of the jointly owned properties will “seriously impair” the operation of the farm. I anticipate learning not only the sizes and values of the farms, but what buildings are on them and how they are used.

I do anticipate making an order that some of the properties will be sold. However, it is in my view wise to make the decision after hearing and applying the evidence from the first part of the bifurcated trial.

I therefore reserve my decision on the request for partition and sale.

[177] All counsel subsequently confirmed that they had no objection to me applying evidence from the trial to the issues in the motion.

[178] Mr. Murray invites me to reconsider my conclusions and order the sale of all five of the jointly owned farm properties, including the home farm. If I decline to order the sale of the home farm, he argues that I should order the sale of the four other jointly owned farm properties. I accept that I have the authority to revisit my conclusions based on the additional evidence and argument.

[179] As I was preparing my decision on which properties, if any, I should order sold, the decision in White v. White, 2021 ONSC 6018 came to my attention. As White was released after argument in this matter, I have decided I must give the parties an opportunity to make any further submissions they may wish to make arising out of White. I apologize for the additional delay this will introduce.

[180] I anticipate the parties are anxious for my decision, and I do not think the additional submissions will be an onerous task. I will therefore put a tight timeline in place for further submissions. All parties who wish to provide submissions shall serve and file them by February 25, 2022; however, counsel may write to me through my judicial assistant if they require more time.

[181] Counsel are asked not to repeat the submissions they have already made on this issue. I anticipate being able to provide my decision quickly after receiving the additional submissions.

Chown J. Released: February 15, 2022