The Irving Family Apparently Broke the Law – and Government’s Main Legal Counsel (Stewart McKelvey) Apparently Helped

Loophole GamesThe public revelation earlier this week that 2,200 acres of farmland in the Bedeque area was acquired by Rebecca Irving – one of Mary-Jean Irving’s two daughters – came as a shock to many Islanders.

Using a secretive corporation acquisition and/or transfer scheme to avoid submitting a second application to IRAC to purchase the land may seem like a shrewd legal maneuver to exploit a “loophole” in the Lands Protection Act; however – and notwithstanding a growing consensus that the problem is a “loophole” in the Lands Protection Act that needs to be plugged [today’s Guardian editorial was titled “Close the Loop”] – it seems to me that this errant line of thinking is only diverting attention away from what actually happened. It appears to me that the Irving family brazenly broke the law, and the PEI government’s main legal counsel (Stewart McKelvey) helped.

If there’s a loophole in the Lands Protection Act, why hasn’t someone pointed out what it is?

Consider the outcome of Irving’s first bid to acquire the 2,200 acres following established rules, regulations and legislation, along with the rationale provided by government for not approving the application.

On February 5, 2019, Rebecca Irving incorporated a new company (Galloway Farms) then submitted an  application to IRAC two days later to purchase the 2200 acres in conjunction with two other Irving-owned companies (Indian River Farms & Long River Farms).

IRAC recommended to the previous Liberal government’s Executive Council that the Irving application not be approved. Executive Council followed that advice and declined approval.

On the same day the election was called (April 2nd) the Minister then responsible for IRAC and the Lands Protection Act, Hon. Richard Brown, stated clearly what the rationale for the rejection was:

“It was not political,” Brown said. “The decisions and the recommendations come out of IRAC. That’s an independent body.”

Brown said the purchase was denied because the size of the land holdings was substantial.

“We applied the rules of the Lands Protection Act,” Brown said. “The beneficial owners are one family, basically.” [Guardian, April 3, 2019].

And “one family” translates into “one corporation” under the Act, no matter how many companies may have been involved.

A very precise definition of “corporation” can be found under section 1(d) of the Lands Protection Act that should remove any confusion on this key point, regardless of how many corporations are established, or how assets may be shuffled around between the individuals in the same group,  it must still be deemed to be just one corporation:

1 (d)  “corporation” includes a partnership, cooperative association or body corporate whether formed or incorporated under the law of this province or any other province or of Canada or outside of Canada, and for the purposes of this Act a corporation and other corporations directly or indirectly controlled by the same person, group or organization shall be deemed to be one corporation.

By saying “…a corporation and other corporations directly or indirectly….controlled by the same…group….” the Lands Protection Act is clarifying that it doesn’t matter how many independent corporate entities are involved in determining whether the applicant seeking to purchase or lease land is still within the 3,000 acre limit of arable land specified in the Act for corporations; but rather, the particular individuals involved in the transaction and their relationship to one another. More precisely, the issue is whether the land in question is, or will be, controlled by “…the same person, group or organization.” 

The fact that three Irving-owned companies first sought these 2,200 acres of land helps to see how the interconnected nature of the family business constitutes a “group”.  The fact that this more recent second strategy to acquire the land only involved one Irving family member [Rebecca] from the original three applicants [Rebecca; Elizabeth and Mary-Jean] changes nothing, especially considering the purchase price was over 5 million.  Just think about it for a minute: how does a person in their mid-twenties amass that kind of capital?

How much clearer can the letter of the law be? It says that a group of companies with the same people controlling them shall be deemed to be one corporation.  One corporation means a 3,000 acre limit of arable land.  That’s exactly what we have in play in this case: one “corporation” controlled by the same group – the Irving family.     

This is the reasoning provided by former Liberal Minister (Richard Brown) to explain why IRAC and Executive Council turned down the three-company Irving application for this same 2200 acres in April, 2019. Despite the fact that three corporations were involved in the purchase, in consideration of the legal definition of “corporation” found in the Act, IRAC determined that – as Brown put it – “The beneficial owners are one family, basically.

The Irving spokesperson on the matter, Geoffrey Connolly, totally ignores this line of reasoning rooted in both the spirit and letter of the Lands Protection Act, and is quick to subscribe to the vague “loophole explanation” theory for Irving’s purchase; but again, Connolly doesn’t say what that loophole is.

In a Guardian article with the title “‘Loophole’ in Act allowed sale of P.E.I. land to Irving-affiliated company,” we read:

“Geoffrey Connolly, a Haslemere Farms representative, did not dispute that the transaction was allowed due to a “loophole” in the Lands Protection Act.

Keep in mind that Connolly is not only a partner in the Stewart McKelvey law firm, he is also a shareholder in Irving-owned Indian River Farms, and an corporate officer with Irving-owned Long River Farms.

I’m sure that Connolly and select members of the Irving family would much prefer  a loophole in the Lands Protection Act that can be exploited to their advantage: that way, although perhaps still not very savoury or ethical in the eyes of most Islanders, at least the purchase would be”technically” legal.

But what if there is no loophole in the Lands Protection Act to explain Irving’s purchase without government approval? What if the law was broken?   That’s a whole lot more serious for both the Irvings and Connolly.

So I’m throwing out a challenge to Geoffrey Connolly or any member of the Irving family, or perhaps a senior member of the government (e.g., Minister or Premier): If Irving acquired the 2,200 acres as a result of an existing “loophole” in the Lands Protection Act, can you please point out exactly what that loophole is, and where it can be found in the Act?

From where I’m looking, it appears you didn’t exploit a loophole in the Lands Protection Act for your client Mr. Connolly, you helped your client break the law.

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2 Responses to The Irving Family Apparently Broke the Law – and Government’s Main Legal Counsel (Stewart McKelvey) Apparently Helped

  1. Checker says:

    Excellent point !

  2. William Lea says:

    I’d be totally surprised if Geoff Connolly had done or advised anything that would amount to “breaking the law”. He’s a very competent, ethical and totally honest lawyer. The Lands Protection Act is old and full of “loopholes”. I have no idea of what part, if any, he took in the transaction, but I know that it was entirely appropriate, because he’s not the kind of person who would act otherwise.

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