2. Were the contracts between Michael Schmidt and the cow-share members shams or valid contracts of agistment

Part 2 of The Bovine’s countdown to Michael Schmidt court appearance this Thursday July 26th at Osgoode Hall, in Toronto.

From the applicant’s factum:

Farmer Michael Schmidt at a food freedom event in the U.S.

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.



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21 responses to “2. Were the contracts between Michael Schmidt and the cow-share members shams or valid contracts of agistment

  1. Shouldn’t the parties to the contract be the ones to decide whether or not their contact is acceptable and valid? Was one of the parties to this contract unhappy, and bring it to a court or arbitrator for assistance? If not where does the State have ANY nexus to interfere with the Inalienable Right to contract with others?

    This is a clear case of government rather than protecting rights – of actively trampling them.

    “…That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government…”

    • Nice to quote the US Declaration of Independence, but unfortunately that holds no water in this court’s jurisdiction.

      What about the Canadian Charter of Rights and Freedoms, section 2, which supposedly gives us “right of association?” Even Americans don’t have that in their fundamental documents. I would interpret “right of association” as meaning that it is legal to do collectively whatever it is legal to do individually. You can own a dairy animal and drink its milk. Freedom of association *should* give us the right to own a dairy animal and drink its milk as a collective, no?

      Karen, is there any reason this argument has not been used?

      • Yes. The case law makes it clear that freedom of association means just that, and nothing more. People who want to drink raw milk are free to associate with one another until the cows come home (pardon the expression). The legislation does not prevent you from associating with one another. It prevents you from selling or distributing raw milk.

      • The Declaration applies to all men in all countries if you read it and if a court violates it they need to be abolished. 🙂

        I wish you luck in this – but I think the solution in both of our countries is eventually going to be abolishing much of government. Here it is going to take the form of State nullification http://mises.org/media/1851/The-Principles-of-98 or secession from the Federal government. In Canada you have already come close to the latter.

      • “…Even Americans don’t have that in their fundamental documents….”

        Yes we do, because the bill of rights only lists a few explicit prohibitions to the federal government. We have ALL rights, not a list of them given to us like just about every other government on the planet, (Switzerland may be the exception.)

        The ninth amendment spells this out explicitly: “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people. ”

        But in reality our courts and out government make these finer but important point moot. Words on paper, nor courts can not guarantee you rights. When it comes down to it, the only rights you will retain are the ones you exercise or fight for.

      • Peter

        To add to (and round out) Karen’s comment, “The legislation… prevents you from selling or distributing raw milk” to the public.

      • Peter

        @Jan – there was nothing in the British Commonwealth constitution that provided for American colonies to declare independence. As InalianableWrights suggested, the quote is inherently and necessarily so when you contemplate from where government arises, and for whom it designed to serve. The right to secede is not a function of an explicit document, but there by nature.

      • Peter

        @Jan – Yes, you can own a cow and drink its milk. But you have to understand the varying forms of ownership. Ownership and responsibility go hand in hand. Just because I own shares in Nortel does not make me responsible for the corporate decisions made. Just because I have equitable title in a cow does not make me responsible for the quality of the milk she produces.

  2. What of the common law? Where we (not get our rights) but show that we had them in the past and thus have them in the present. Do Canadians not claim the common law such as the right to contract applies to them?

    • Peter

      Yes, but that is not the issue before the court (even if lay people are making it out to be). Obfuscation is an art employed even by those who appear to be transparent… just like magicians. But at least magicians are honest and openly disclose that they are deceiving you 🙂

  3. Peter

    Yes, we inherently have the right to associate and the right to contract. I don’t believe that is in question here. If there is a valid agreement between the parties, then the government does not have jurisdiction. However, the facts, as laid bare by the Crown in their appeal, imo, exposed it for what it was. I pity Karen for having to try and hide, cover and detract from the plain truth. No wonder the side show called a constitutional challenge. If there is any doubt, just ask a (former?) cow share member a few pointed questions and see for yourself whether it was bona fide or not, or if it was just a superficial play on labels and technicalities.
    Remember that the cry for “our rights” is coming from the same school that is asking the government for licensed raw milk sales and distribution. Confusion, ignorance, ego and political agenda abound. If we stop looking with a filter that sees someone as being our knight in shinning armor, and call things out for what they are, I would suggest we would not be as prone to be deceived or taken for a ride, and therefore less likely to become the victim of others.

  4. Barb

    “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. ”

    Agreed. But isn’t a legal part of the problem that the agister contracts between herdshare members did not have as a preliminary condition being proof of the ownership of the cattle by herd-share members? In 2011, the average auction price of a milking cow was $7,808 (from http://www.dairyinfo.gc.ca/index_e.php?s1=dff-fcil&s2=mrr-pcle&page=holstein). Did the people in the herdshare who had ownership of the cattle pay fair market price between them for ownership of the cow. Let’s say, 20 people own a herd of 10 cows, did they all pay $3904 for each cow and do they have the purchase receipts indicating when they paid this money and how? Do they have the right to sell their share to some one else? If all of them decide to as a group, can they all sell their cattle to Farmer B down the road or take the cattle to auction (no matter what the agister wants)? I’m thinking that the court would look at the original purchase agreement for the cattle at auction or otherwise.

    I think that this problem has to be solved first before the court considers the agreement to be a valid contract, or just a way to make raw milk available for purchase by a “club” of purchasers. We need to be able to see raw milk sales in Canada where “cowshares” are not required, where anyone can drive up to a farm and buy raw milk straight from the farmer.

    • Barb–the mere fact that contracting parties do not spell out the details of every conceivable eventuality does not negate the existence of a contract. For instance, many people rent out apartments with no written lease. Or they hire someone to mow their lawn without putting it in writing. Those oral agreements are contracts. For contracts involving items of small value, it is simply not worthwhile going to all the trouble and expense of thinking through every possibility and documenting it. That does not mean that the terms that HAVE been agreed upon don’t constitute a contract.

      As for your average price of Holsteins, note that in 2006–when the facts of this case were established, milking Holsteins were worth only $5,280, not $7,808. And Michael’s cow-share does not use Holsteins. It uses an obscure breed that produces much less milk than a Holstein. Holsteins are in high demand in the conventional dairy industry because they have been bred to produce extremely high milk yields. So the fair market value of the cows in the Glencolton cow-share may well have been precisely the amount that shareholders were paying, namely $1,200 for a full cow.

  5. Thanks for the clarification Barb. I still think the court is way out of line (imagine that) if there is no angst between the parties.

  6. frustrated farmer

    On this website from Colorado (http://jamesranch.net/milk/), there is a thorough and clear contract between the two parties… just scroll down to the pdfs under the header “How a Herd Share Program Works”.

  7. Gordon S Watson

    Barb – that’s the way it used to be in BC, between 1954 and 1996, according to the Milk Industry Act RSBC. In the meantime, we’re happy that cowsharing works for us

    the price of a purebred Jersey cow, in milk, here in the lower Mainland, was ~$2000. We have paid anywhere from $500 on up, for good cows, to $2500 for the Washington State champion, in a herd dispersal. The prices you refer-to, must be what those who play in the milk racket, charge each other – more proof of how social-ist schemes blight / pervert everything they touch

    It’s simple : all you have to do is have a list of animals in the herd on any given day, alongside a list of the members of the cowshare. That snapshot of the property and its owners is more than enough evidence of people jointly owning an asset, which is what ought to cool-out one of Her Majesty’s Judges on this issue

  8. jhoe

    Mr. Watson ,U know that is not true,that is why this cow sharing program is a scam to get around the law !I wonder why no income tax returns have not been filed with the courts as proof to the arrangements between parties?I QUESTION rather he even files this income as the arrangement is CASH only!Uwould think he would have very detailed record of all the transaction between him and cow share members,as this scam has been going on for years.Like i said this has been going on for YEARS and from what i have read he is not alone !this is well organized likely with government people on side,it is no different than someon e growing and selling pot ,freedomof choice.Mr. Schmidts appeal needs to be dismissed and all raw milk sellorsneed to be STOPPED

    • Level Headed

      No offense, but your comment struck me as wishy-washy. Is the government or the legal system above scrutiny? Any good gov’t began not by being a thorn in the side of citizens with rules & regulations & unfair laws, but began by bolstering the liberty of it’s citizens with fair laws which ultimately enabled said citizens to do well in life and prosper through hard work. You can’t prosper when a heavy burden of red tape weighs on the shoulders of a nation’s people. What is just? What is unjust? Who decides?

      “One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with St. Augustine that ‘an unjust law is no law at all’.” (Martin Luther King – Letter from Birmingham Prison, Alabama)

      Oddly you questioned income tax filings (without facts, yet inferring that someone is breaking tax laws). I’m on the fringes and don’t know all the details, but that seems like mud-slinging. Do you work for a sub-standard newspaper, how foolish to suggest such a thing without facts. I mean, if you have proof please do tell, otherwise if this is the rabbit trail you’re one then it seems equally fair to delve into your own income tax filings when you’re in line at the supermarket. Alice, another diversion, shall we? Alas I digress.

      No offense, just say’in. Please stick to the facts.

    • I think you have it backwards jhoe.

      The contact IS LAW. And the legal system is a scam to get around the contract.

  9. Randy

    OK, OK, here now is the undercut to the legal system; it itself is a sham, a scam, a fraud. The reason why is that NO ONE has any kind of an obligation to endure the fraud of the legal system. Justice must satisfy the APPEARANCE of justice, and since no one but the offended party(ies) can say when they have received justice or not, any court imposed terms of justice are moot at best. WHO has a bona fide contract ANYWHERE?? Look up the definition of contract in any law dictionary and then see if any of the five essential elements that construe what is a contract have been violated to any degree. If any one of them has been violated, then it’s just a contract, it is something less than that. Savvy??


  10. Randy

    Oops!, that should have read “It’s just NOT a contract”

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