Old McDonald had a Farm and Kids: A Tale of Succession and Unjust Enrichment

Case Comment: McDonald v McDonald

Howard Borlack,
Partner

April 2018

by Howard Borlack

The day-to-day life of a farm kid is exceedingly different from that of a "city" boy or girl. While some children are told to take out the trash, clear the table, and tidy up their bedrooms, children of farmers are expected to be up at the crack of dawn to engage in unpaid, arduous labour to support the viability of the farm and to prepare the next generation to take over. What happens when these children grow up and feel they should now be compensated for their "family chores"?

In McDonald v McDonald,¹ the Court of Appeal for British Columbia decided that as a matter of public policy, chores performed by children in a family setting do not, absent indicia of exploitation, attract a right to compensation under the doctrine of unjust enrichment.

The Facts

The McDonald family farm was acquired in 1865 and was continually passed down from generation to generation. Title to the dairy farm was conveyed to Samuel Alexander McDonald and his wife, Sylvia McDonald, as joint tenants in 1974. Together with their three sons (Robert, Brian and Dean) and one daughter (Julie), the McDonalds operated the farm without the assistance of paid farmhands. The farm did very well and was eventually incorporated under the name McDonald Landing Farms Ltd. (MLFL). At the time of the trial (2014), the market value of the farm's assets was in excess of $12 million dollars.

All of the children performed unpaid chores on the farm up until the time they graduated from high school; each pursued their own path shortly thereafter. Robert was the only child who remained full-time on the farm and eventually took on a management role. Brian was seriously disabled as a result of an injury on the farm which left him in fragile health and competitively unemployable. Dean pursued a career working as a crewmember on a tugboat and returned on his days off where he was compensated for any casual labour completed. Dean was additionally absent from the farm as he did jail time for the murder of his wife. Julie went to work on another farm but also returned periodically to help out and received payment for her services as an adult.

Their parents first created wills in 1996 wherein they left the farm to Robert, in hopes of the farm remaining in the family, as well as the residue of their estate (which included the common shares of MLFL). The other children were bequeathed the preferred shares of MLF. On the advice of a friend and accountant of MLFL, who expressed concerns of will challenges, Samuel and Sylvia made an inter vivos gift of the common shares in MLF and the shareholders' loans to Robert and revised their will directing the survivor's estate to be divided equally among their other three children.

Some years after their father's death, Brian, Dean and Julie became aware that the farm assets had been given to their brother. The siblings were displeased with their parents' decision and commenced an action for unjust enrichment in respect of work they had performed on the farm.

The trial judge analyzed the changing roles and responsibilities of the McDonald children as they grew and matured. He found that the children performed work with significant economic value for a period of seven years during their middle and high school years, allowing their parents to devote the potential cost of a paid labourer towards the expansion of the farm, thus enriching the parents. Brian, Dean and Julie were each awarded $350,000 in damages, which was calculated by the inheritances defined in the 1996 wills.

Sylvia acting in her individual capacity and as the executor of her late husband's estate appealed the decision.

The Appeal

The Court of Appeal granted the appeal and set aside the damages award on the ground that society recognizes chores completed by children in a family setting as positive, as long as they are not exploitative.

At the appeal, the parties conceded that a benefit and corresponding deprivation existed, thus only a juristic reason inquiry was required. None of the established categories of juristic reasons (a contract, a disposition of law, a donative intent, or a valid common law, equitable or statutory obligation) was found. Accordingly, the court considered the farm work along with the reasonable expectations of the parties and public policy, where recovery was ultimately denied.

In this instance, the court did not find that the farm chores exceeded the level of societal tolerance to be properly characterized as exploitative. A broad description of exploitation was provided:

... I would suggest, however, that exploitation may be characterized by economic benefits to the parents that are grossly disproportionate to the benefits that the children have as a member of the family, or by work by the children that is manifestly detrimental to their health and wellbeing.²

The Court further found that the trial judge incorrectly assessed the damages awarded noting that the children's contributions could, at most, be valued at $145,000.

Conclusion:

This is not the first time that unjust enrichment claims for work done by children for their parents appeared before the courts, and it likely will not be the last. As familial enterprises continue to evolve industrially and gain higher valuations, it is not unreasonable to expect that a member of the family will pursue what they feel to be a deserving piece of the pie for their involuntary work performed under the care of their parents.

The Court of Appeal for British Columbia, however, has made it clear that such work must rise above the reasonable level of domestic chores that is accepted and encouraged by society in order to succeed. If the work is not fundamentally exploitative, the courts will deny such claims. At the end of the day, society has not moved away from fostering a strong work ethic and sense of responsibility starting at a young age and the courts continue to uphold and safeguard these views, regardless of a gruelling 5:00 a.m. wake up call to tend to the animals and crop.

¹ 2017 BCCA 255.
² 2017 BCCA 255 at para 79.

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