0930032 B.C. v. 3 Oaks Dairy Farms, 2015 BCCA 332

JudgeNewbury, Chiasson and Stromberg-Stein, JJ.A.
CourtCourt of Appeal (British Columbia)
Case DateMay 11, 2015
JurisdictionBritish Columbia
Citations2015 BCCA 332;(2015), 375 B.C.A.C. 91 (CA)

0930032 B.C. v. 3 Oaks Dairy Farms (2015), 375 B.C.A.C. 91 (CA);

    644 W.A.C. 91

MLB headnote and full text

Temp. Cite: [2015] B.C.A.C. TBEd. JL.052

0930032 B.C. Ltd. (appellant/plaintiff) v. 3 Oaks Dairy Farms Ltd. (respondent/defendant)

(CA42254; 2015 BCCA 332)

Indexed As: 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd.

British Columbia Court of Appeal

Newbury, Chiasson and Stromberg-Stein, JJ.A.

July 22, 2015.

Summary:

A mother and father invited their son (Robert) and son-in-law (James) to become equity partners in their dairy farm. All four individuals signed a partnership agreement in 1997. The agreement included a provision that no partner would do anything detrimental to the best interests of the partnership or which would make it impossible to carry on the ordinary business of the partnership. In 1999, the parties switched from a partnership structure to a corporate structure. The defendant 3 Oaks Dairy Farms Ltd. was incorporated. The parties transferred their interest in the partnership assets to 3 Oaks in exchange for shares and promissory notes (which became shareholder loans) that purported to be payable within 30 days of demand. James' shareholder loan was for $567,455. In 2005, the mother and father "gifted" their shares in 3 Oaks to Robert and James. In 2012, James proposed that he be bought out of the business. Robert refused. James assigned his shareholder loan to the plaintiff numbered company, who then demanded that 3 Oaks repay the loan. The plaintiff commenced a proceeding against 3 Oaks, seeking judgment in the amount of $444,940.

The British Columbia Supreme Court, in a decision reported at [2014] B.C.T.C. Uned. 1728, dismissed the claim, finding that the withdrawal of James' shareholder loan would endanger the viability of 3 Oaks to carry on as a family dairy farm, contrary to the terms of the 1997 partnership agreement. The court found that the promissory note's provision that it was payable on demand was inconsistent with this context. The plaintiff appealed, arguing that the trial judge erred by implying a term into the promissory note that contradicted its express wording.

The British Columbia Court of Appeal dismissed the appeal. The trial judge did not imply a term into the promissory note. She properly found that certain terms of the partnership agreement were intended and understood to continue in effect notwithstanding the incorporation of 3 Oaks. The "main" or "umbrella" contract consisted of the subsisting terms of the partnership agreement while the promissory note was the "collateral" contract.

Company Law - Topic 1266

Incorporation and organization - Pre-incorporation contracts - Transfer of pre-incorporation contracts to new corporation - See paragraphs 31 to 44.

Contracts - Topic 1484

Formation of contract - Collateral contracts - What constitutes a collateral contract - See paragraphs 31 to 44.

Contracts - Topic 7401

Interpretation - General principles - Intention of parties (incl. reasonable expectations of parties) - See paragraphs 31 to 44.

Contracts - Topic 7406

Interpretation - General principles - Interpretation by context - See paragraphs 31 to 44.

Contracts - Topic 7408

Interpretation - General principles - Understanding of the parties - See paragraphs 31 to 44.

Negotiable Instruments - Topic 6004

Promissory notes - Effect of note being attached to or part of another document - See paragraphs 31 to 44.

Partnership - Topic 5009

Relations between partners - General - Partnership agreement - See paragraphs 31 to 44.

Cases Noticed:

Lindley v. Lacey (1864), 17 C.B.(N.S.) 578; 144 E.R. 232, refd to. [para. 1].

Erskine v. Adeane (1873), 8 Ch. App. 756, refd to. [para. 1].

Perrin v. Shortreed Joint Venture Ltd. (2009), 277 B.C.A.C. 244; 469 W.A.C. 244; 2009 BCCA 478, refd to. [para. 1].

Hawrish v. Bank of Montreal, [1969] S.C.R. 515, refd to. [para. 1].

Carman Construction Ltd. v. Canadian Pacific Railway Co. and C.P. Rail, [1982] 1 S.C.R. 958; 42 N.R. 147, refd to. [para. 1].

Heilbut, Symons & Co. v. Buckleton, [1913] A.C. 30 (H.L.), refd to. [para. 2].

Creston Moly Corp. v. Sattva Capital Corp. (2014), 461 N.R. 335; 358 B.C.A.C. 1; 614 W.A.C. 1; 2014 SCC 53, refd to. [para. 3].

Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada et al. (2006), 348 N.R. 307; 211 O.A.C. 363; 2006 SCC 21, refd to. [para. 3].

Reardon Smith Line v. Hansen-Tangen, [1976] 3 All E.R. 570 (H.L.), refd to. [para. 3].

Prenn v. Simmonds, [1971] 3 All E.R. 237 (H.L.), refd to. [para. 4].

ACLI Ltd. v. Cominco Ltd. (1985), 61 B.C.L.R. 177 (C.A.), refd to. [para. 4].

Ahluwalia et al. v. Richmond Cabs Ltd. (1995), 63 B.C.A.C. 278; 104 W.A.C. 278; 13 B.C.L.R.(3d) 93 (C.A.), refd to. [para. 4].

Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 101 B.C.A.C. 62; 164 W.A.C. 62; 49 B.C.L.R.(3d) 317 (C.A.), refd to. [para. 4].

Chisholm v. Chisholm (1915), 49 N.S.R. 174 (C.A.), refd to. [para. 5].

Hayes Forest Services Ltd. v. Weyerhaeuser Co. (2008), 250 B.C.A.C. 286; 416 W.A.C. 286; 2008 BCCA 31, refd to. [para. 6].

Black Swan Gold Mines Ltd. v. Goldbelt Resources Ltd. (1996), 78 B.C.A.C. 193; 128 W.A.C. 193; 25 B.C.L.R.(3d) 285 (C.A.), refd to. [para. 6].

British Columbia v. Teal Cedar Products Ltd. (2015), 373 B.C.A.C. 211; 641 W.A.C. 211; 2015 BCCA 263, refd to. [para. 7].

Association des parents ayants droit de Yellowknife et al. v. Northwest Territories (Attorney General) et al. (2015), 593 A.R. 180; 637 W.A.C. 180; 2015 NWTCA 2, refd to [para. 8].

Bank of Montreal v. Wilder et al. (1983), 149 D.L.R.(3d) 193 (B.C.C.A.), affd. [1986] 2 S.C.R. 551; 70 N.R. 341, refd to. [para. 34].

Palachek v. Canadian Imperial Bank of Commerce (1991), 79 Alta. L.R.(2d) 159 (C.A.), refd to. [para. 35].

Toronto-Dominion Bank v. Griffiths (1978), 18 B.C.L.R.(2d) 117 (B.C.C.A.), refd to. [para. 37].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract (3rd Ed. 1994), generally [para. 5].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (6th Ed. 2011), pp. 440 to 451 [para. 1].

Hall, Geoff R., Canadian Contractual Interpretation Law (2nd Ed. 2012), pp. 15, 30 to 32 [para. 6].

Counsel:

D.G. Cowper, Q.C., and G. Cameron, for the appellant;

D. MacAdams, Q.C., for the respondent.

This appeal was heard at Vancouver, B.C., on May 11, 2015, with written submissions received on June 30, 2015, before Newbury, Chiasson and Stromberg-Stein, JJ.A., of the British Columbia Court of Appeal. Newbury, J.A., delivered the following judgment for the court on July 22, 2015.

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14 practice notes
  • General Principles of Interpretation
    • Canada
    • Irwin Books The Law of Contracts. Third Edition Interpretation of Agreements
    • August 4, 2020
    ...]. 18 See, for example Martenfeld v Collins Barrow Toronto LLP , 2014 ONCA 625 at para 39; 0930032 BC Ltd v 3 Oaks Dairy Farms Ltd , 2015 BCCA 332 at paras General Principles of Interpretation 807 The most important limiting factor on the admissibility of such evidence, as Lord Hoffman hims......
  • Axcess Mortgage Fund Ltd v 1177620 Alberta Ltd, 2018 ABQB 626
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • August 24, 2018
    ...at paras 24-26: [24] The concept of an umbrella agreement was described by this Court in 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332. In that case the plaintiff sought to enforce a promissory note payable on demand. The trial judge found the parties were bound by the terms o......
  • Intergulf Investment Corporation v. 0954704 B.C. Ltd., 2018 BCCA 337
    • Canada
    • Court of Appeal (British Columbia)
    • September 6, 2018
    ...circumstances must be considered represents the longstanding law in British Columbia: see 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332 at paras. 3–5 [Oaks Dairy]. In Oaks Dairy, Newbury J.A., writing for the court, commented that, “[i]t may be that the Supreme Court in Sattva......
  • Dusanjh v. Appleton, 2017 BCSC 340
    • Canada
    • Supreme Court of British Columbia (Canada)
    • March 2, 2017
    ...circumstances must be considered represents the longstanding law in British Columbia: see 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332 at paras. 3–5 [Oaks Dairy]. In Oaks Dairy, Newbury J.A., writing for the court, commented that, “[i]t may be that the Supreme Court in Sattva......
  • Request a trial to view additional results
13 cases
  • Axcess Mortgage Fund Ltd v 1177620 Alberta Ltd, 2018 ABQB 626
    • Canada
    • Court of Queen's Bench of Alberta (Canada)
    • August 24, 2018
    ...at paras 24-26: [24] The concept of an umbrella agreement was described by this Court in 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332. In that case the plaintiff sought to enforce a promissory note payable on demand. The trial judge found the parties were bound by the terms o......
  • Intergulf Investment Corporation v. 0954704 B.C. Ltd., 2018 BCCA 337
    • Canada
    • Court of Appeal (British Columbia)
    • September 6, 2018
    ...circumstances must be considered represents the longstanding law in British Columbia: see 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332 at paras. 3–5 [Oaks Dairy]. In Oaks Dairy, Newbury J.A., writing for the court, commented that, “[i]t may be that the Supreme Court in Sattva......
  • Dusanjh v. Appleton, 2017 BCSC 340
    • Canada
    • Supreme Court of British Columbia (Canada)
    • March 2, 2017
    ...circumstances must be considered represents the longstanding law in British Columbia: see 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332 at paras. 3–5 [Oaks Dairy]. In Oaks Dairy, Newbury J.A., writing for the court, commented that, “[i]t may be that the Supreme Court in Sattva......
  • Lightstream Telecommunications Inc. v. Telecon Inc., 2018 BCSC 1940
    • Canada
    • Supreme Court of British Columbia (Canada)
    • November 7, 2018
    ...that Lightstream was able to supply qualified manpower. [65] The plaintiff relies upon 0930032 B.C. Ltd. v. 3 Oaks Dairy Farms Ltd., 2015 BCCA 332 [3 Oaks], at paras. 38 to 42 for their argument that an umbrella agreement was in effect between the [66] The defendant submits that the Service......
  • Request a trial to view additional results
1 books & journal articles
  • General Principles of Interpretation
    • Canada
    • Irwin Books The Law of Contracts. Third Edition Interpretation of Agreements
    • August 4, 2020
    ...]. 18 See, for example Martenfeld v Collins Barrow Toronto LLP , 2014 ONCA 625 at para 39; 0930032 BC Ltd v 3 Oaks Dairy Farms Ltd , 2015 BCCA 332 at paras General Principles of Interpretation 807 The most important limiting factor on the admissibility of such evidence, as Lord Hoffman hims......

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