Japp Farms Ltd. v. Kozicki Farms Ltd. et al., 2012 SKQB 191

• Judge: Keene, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: May 10, 2012
• Jurisdiction: Saskatchewan
• Citations: 2012 SKQB 191;(2012), 398 Sask.R. 81 (QB)

Japp Farms Ltd. v. Kozicki Farms Ltd. (2012), 398 Sask.R. 81 (QB)

MLB headnote and full text

Temp. Cite: [2012] Sask.R. TBEd. MY.065

Japp Farms Ltd. (plaintiff/defendant by counterclaim) v. Kozicki Farms Ltd. and Nick Kozicki (defendants/plaintiffs by counterclaim)

(2010 Q.B. No. 100; 2012 SKQB 191)

Indexed As: Japp Farms Ltd. v. Kozicki Farms Ltd. et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Swift Current

Keene, J.

May 10, 2012.

Summary:

Japp Farms Ltd. sued Kozicki Farms Ltd. and Kozicki for damages for breach of contract, asserting that there was a lease between the parties granting Japp Farms a tenancy for the 2010 crop year that the defendants refused to honour. The defendants denied that there was a lease for 2010 and asserted that Japp Farms had a duty to mitigate its alleged loss. The defendants also counterclaimed for rock picking and cleaning of grain bins that they claimed Japp Farms was responsible for.

The Saskatchewan Court of Queen's Bench held, inter alia, that there was an agreement to agree which resulted in a contractual relationship between the parties that Japp Farm could lease the same five quarters in 2010 that it had leased in 2009 and the defendants breached that contract by terminating it on or about March 15, 2010. However, the court dismissed Japp Farm's claim where it had failed to mitigate its loss. The court dismissed the counterclaim.

Contracts - Topic 1444

Formation of contract - Agreements that are not contracts - Agreements to agree - In 2009, Japp Farms Ltd. planted durum on two of the five quarters of property that it leased from Kozicki Farms Ltd. - By June it was apparent that the durum was doing poorly because of a drought - Japp Farms' owner (Japp) decided that instead of waiting for rain, he would get paid crop insurance which required chemfallow (using herbicide to kill the vegetation) provided that Kozicki Farms's owner (Kozicki) would agree to lease the same two quarters to him in 2010 - In July 2009, with the crop insurance deadline approaching, Japp contacted Kozicki who indicated that he would lease "the land" to Japp in 2010 - The rental amount was not discussed - Japp chemfallowed the two quarters - Kozicki advised Japp by letter dated March 15, 2010, that he would not be leasing Japp the land in 2010 - Japp Farms sued Kozicki Farms Ltd. and Kozicki for damages for breach of contract - The Saskatchewan Court of Queen's Bench concluded that the July 2009 conversation resulted in an agreement to agree and that it fell into that "place on the spectrum" where it was enforceable - Kozicki knew, or should have known, the importance of the conversation - Even though not specified, it was understood that the land referred to was the five quarters that had been leased in 2009 - The only outstanding term was the rental rate - Based on the parties' relationship over the previous four years, it was not unreasonable for Japp to rely on Kozicki being prepared to negotiate that point - It was reasonable for Japp Farms to rely on that agreement - However, the court dismissed the action where Japp Farms had failed to mitigate its damages by accepting the defendants' April 5, 2010 proposal (or at least attempting to negotiate a reasonable compromise) which set out reasonable terms for a new one year lease - Japp's only excuse was that he had lost trust in Kozicki - He refused to lease without having a good reason - See paragraphs 59 to 91.

Damages - Topic 1002

Mitigation - General principles - Duty to mitigate - [See Contracts - Topic 1444 ].

Damages - Topic 1006

Mitigation - General principles - Excuses for failure to mitigate - [See Contracts - Topic 1444 ].

Damages - Topic 1037

Mitigation - In contract - Effect of failure to mitigate - [See Contracts - Topic 1444 ].

Landlord and Tenant - Topic 1061

Classes of tenancies - Tenancy from year to year - Defined or what constitutes - In 2009, Japp Farms Ltd. planted durum on two of the five quarters of property that it leased from Kozicki Farms Ltd. - By June it was apparent that the durum was doing poorly because of a drought - In late June or July, Japp Farms' owner (Japp) decided that instead of waiting for rain, he would get paid crop insurance which required chemfallow (using herbicide to kill the vegetation) provided that Kozicki Farms's owner (Kozicki) would agree to lease the same two quarters to it in 2010 - With the crop insurance deadline approaching, Japp contacted Kozicki who indicated that he would lease "the land" in 2010 - There was no discussion about the rental amounts for 2010 - Japp chemfallowed the two quarters - Kozicki advised Japp by letter dated March 15, 2010, that he would not be leasing Japp the land in 2010 - Japp Farms sued Kozicki Farms Ltd. and Kozicki for damages for breach of contract - The Saskatchewan Court of Queen's Bench held that the facts rebutted any presumption that there was a year to year tenancy that could only be terminated with proper notice - The lease was renegotiated each year - The amount of leased property changed each year - The rental was negotiated each spring - The renegotiations were not a "tacit renovation of the lease" - There was no understanding that this was a year to year lease situation - See paragraphs 56 to 58.

Landlord and Tenant - Topic 2206

The lease - General - Effect of agreement to enter a lease - [See Contracts - Topic 1444 ].

Cases Noticed:

Opseth v. Getz et al. (2004), 249 Sask.R. 151; 325 W.A.C. 151; 2004 SKCA 70, appld. [para. 56].

Saskatoon Business College Ltd. v. 607113 Alberta Ltd., [1997] 1 W.W.R. 583; 149 Sask.R. 174 (Q.B.), refd to. [para. 70].

Canlin Ltd. v. Thiokol Fibres Canada Ltd. (1983), 40 O.R.(2d) 687; 142 D.L.R.(3d) 450 (C.A.), refd to. [para. 75].

Authors and Works Noticed:

Swan, Angela, Canadian Contract Law (2nd Ed. 2009), §§ 4.156 [para. 65]; 4.160 [para. 67]; 4.172 [para. 68]; 6.274, 6.275 [para. 80].

Counsel:

Murray K. Walter, Q.C., for the plaintiff/defendant by counterclaim, Japp Farms Ltd.;

Stuart A. Busse, Q.C., for the defendants/plaintiffs by counterclaim, Kozicki Farms Ltd. and Nick Kozicki.

This action and counterclaim were heard by Keene, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Swift Current, who delivered the following judgment on May 10, 2012.