In Wenkoff v Wenkoff Estate, 2021 SKCA 5, the Saskatchewan Court of Appeal considered the enforceability of a contract for the sale and purchase of a family farm that was arguably subject to the father/seller obtaining independent legal advice. In the circumstances of the case, the father was of advanced age and the buyer/son was one of several siblings. The buyer was the only sibling that had continued to work on the farm though, and the only one apparently interested in taking it over.
A purchase and sale agreement for the son’s acquisition of the family farm was prepared in 2017 but was left unsigned pending the father obtaining independent legal advice on the transaction in order to insulate it from potential challenge by the buyer’s siblings. Unfortunately, as not infrequently happens, delay crept in, and the parties’ plans were overtaken by events when the father became seriously ill and passed away in early 2018. Despite the omission of the final formalities, the buyer/son wished to enforce the contract and sued to obtain a declaration that the contract was effective and enforceable despite not having been signed, and an order of specific performance against the estate. The matter was first heard in Chambers at the Saskatchewan Court of Queen’s Bench, where the Chambers judge determined that the alleged contract was unenforceable because the agreement was inter alia conditional on the father obtaining independent legal advice and that this condition had not been satisfied. On appeal, the son argued that the Chambers judge had made a palpable and overriding error with respect to this conclusion. The SKCA however, confirmed the decision of the Chambers judge and concluded that the contract was contingent on the receipt of independent legal advice by the father because the parties had apprehended that the contract would have been readily open to challenge by the other siblings otherwise, and that their attempt to contract for sale and purchase of the farm would have thus been potentially pointless without independent legal advice for the father. The Court further concluded that the contingency could not be unilaterally waived by the son since it was for the benefit of both the father and the son in order to protect their transaction from attack.
This case is instructive for children or younger family members seeking to acquire business assets from parents or older relatives. If independent legal advice for the older (and presumably vulnerable) person is discussed as a prerequisite to a transaction, the parties are well advised to move with speed and to make sure that the older relative receives the independent legal advice as soon as possible. The result otherwise may be that the contract for the transaction is deemed to have been subject to the receipt of the advice, as happened here, and that the contract will be unenforceable even if the transaction would not otherwise have been challenged.
By Xiyuan Feng – Supervised by Professor Maharaj