Part 2 of The Bovine’s countdown to Michael Schmidt court appearance this Thursday July 26th at Osgoode Hall, in Toronto.
47. Justice Tetley concluded in paragraph 51 of his decision that the contract between Michael Schmidt and the cow-share members was “in reality” something other than it purported to be: in effect, a sham contract.
48. The leading case on sham contracts is the 1967 English case of Snook v. London and West Riding Investments Ltd., where Lord Diplock wrote as follows:
“I apprehend that, if it [“sham”] has any meaning in law, it means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the Court the appearance of creating between the parties legal rights and obligations different from the actual rights and obligations (if any) which the parties intend to create. But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v. Maclure and Stoneleigh Finance Ltd. v. Phillips) that for acts or documents to be a ‘sham’, with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating.” [emphasis added]
49.The Supreme Court of Canada has accepted the Snook definition of “sham” as correct in at least two cases: Stubart Investments Ltd. v. Canada, and Minister of National Revenue v. Cameron.
50. The Snook definition of “sham” contract was applied by the B.C. Supreme Court in B.C. (Milk Marketing Board) v. Bari Cheese Ltd., which in turn was approved by the B.C. Court of Appeal. In that case, the defendant Bari Cheese Ltd. had contracted with 34 farmers to act as their agent in processing milk into cheese and selling the cheese outside the province on their behalf. The B.C. Milk Marketing Board alleged that the contracts were “shams” and that the farmers were actually selling milk to Bari, who was in turn re-selling it within British Columbia. If the Marketing Board’s allegation were correct, the farmers would have had to pay (and Bari should have withheld from them) substantial levies to the Milk Marketing Board. The court found “a great deal of ignorance and confusion” among the farmers about many aspects of their agreements with Bari. Although Bari failed to comply with several terms of the agreement, many of the farmers simply assumed that Bari was complying, or else did not care whether or not Bari was complying. However, there was no proof that the parties on both sides of the contracts had signed them without intending the terms of the contracts to govern, or that they had actually intended something different. Accordingly, the contracts were not shams. Even though lack of sophistication, ignorance and indifference as to the terms of the contract were proven, these were insufficient to prove fraud or to make the contracts “shams”.
51. English common law has long recognized contracts of agistment: namely, contracts under which the owners of livestock arrange for the care and boarding of their animals by another individual (the “agister”) on the agister’s land. The manner of paying for services of the agister varies from one contract to another. Canadian courts have recognized and enforced contracts of agistment; see, for example, the cases of Macleod v. Brown, Langstock (Med. Hat) Ltd. v. Gyorfi, and Deeg v. Jacques.
52. All of the evidence regarding the nature of the cow-sharing contract in the case at bar (both from Michael Schmidt and from cow-share member Eric Bryant) was consistent with the existence of a contract of agistment. There was no evidence that the parties to the contract intended to give an appearance of having created legal rights or obligations different from the actual rights or obligations under their agistment contract. Therefore, there was no basis on which Justice Tetley could validly conclude that the contact was something different than what it purported to be.
From Lawyer Karen Selick (CCF litigation director, and author of the above) via Facebook: if people would like to show their appreciation for what the Canadian Constitution Foundation is doing for Michael Schmidt and food freedom, their renewed financial support would be welcome. This case takes a lot of our resources to handle. Donate here: http://www.canadianconstitutionfoundation.ca/toc.php/40
Michael Schmidt’s court appearance will take place at the Ontario Court of Appeal, Osgoode Hall, 130 Queen Street West (at University), Toronto. Court will start at 9:30 a.m. Spectators are permitted. People who wish to attend should be aware that they will have to go through security to enter the building.