VI. EQUITABLE INTERESTS
Origins of Equity [Unit 6.1]
Equity and Law
 Two justice systems developed side by side in England: law and equity
o Law was dispensed by the royal courts, equity by the king’s Chancellor
o The law courts administered the emerging system of common law, as modified by
statute
 Rigid, formalistic, limited to a narrow range of established writs (causes of
action)
 Refused to allow disposal of land by will
 Continued to enforce feudal incidents long after they degenerated into a form
of financial extortion
 Wealthy landowners (aristocracy) looked for ways to escape the law’s
restrictions. One of the things they came up with was the conveyance to use.
Conveyance to Uses:
 Ex 1: Before leaving for a foreign war, an English nobleman conveys his land to a trusted
friend in fee simple, with instructions to hold it for the nobleman’s use until his death,
thereafter for the use of whomever he designates by will. The nobleman dies abroad,
leaving a will that gives the land to his second son, still a minor.
 Ex 2: A lord’s younger son joins a monastic order. The order wants a monastery and the son
wants to live in comfort, but his vow of poverty bars him from owning property and the order
can’t get a royal licence to hold land. The nobleman conveys land to a trusted friend in fee
simple, directing him to hold it for the order’s exclusive use and benefit as a monastery.
o Religious order gets exclusive use of the land and son gets material comfort, all
without violating vow of poverty or obtaining royal licence
Formula for a conveyance:
 In a typical conveyance to uses, X conveys land to a trustworthy person to hold in fee simple
for the use of other persons designated by X
o “X grants to [person] in fee simple, to the use of [person]”
o Various language, same effect: “to the use of,” “for the exclusive use, benefit and
enjoyment of,” “in trust for”
o Person to whom land conveyed = foeffee to uses (trustee in modern parlance)
o Person for whose benefit land held = cestui que use (beneficiary in modern parlance)
Why do this?
 Conveyor’s (X’s) reasons:
o 1) Leave land by will to circumvent primogeniture
o 2) Circumvent restrictions on landholding by religious bodies
o 3) Insulate cestui que use from feudal services & incidents such as wardship, relief,
escheat
 Only the party seised (ownership and the right to possession/person who
holds the current freehold estate in the land) of the land was liable for these
 Common law considered only the foeffee to uses to have seisin; cestui que
use was not liable because not seised of the land
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

Ex: of the cestui que use is a minor, technically the trusted friend owns
the land and not the minor, so others can’t take it away from the minor
o Cestui que use thus enjoyed all benefits of ownership without
burdens (burden falls on the trusted friend/seisin)
Conveyor’s reasons, continued
o Avoid some services & incidents altogether
 By conveying to 2 or more foeffees to uses as joint tenants, conveyor could
avoid relief and escheat altogether
 No relief was due upon death of a joint tenant because the deceased joint
tenant’s interest went to surviving joint tenant(s) automatically by right of
survivorship, not by inheritance (we will cover this under Co-ownership)
 Relief (one year’s profit to the Crown owed in taxes) & escheat could be
postponed indefinitely by reconveying to additional foeffees as joint tenants, to
ensure there were always at least 2 foeffees
o Foeffee’s reasons?
 Initially salvation, loyalty & gratitude; later, profit
What happens if foeffee reneges?
 What if foeffee did not honour the terms of the conveyance?
o Law courts refused to enforce the promise because only the party seised of land
counted
o Aggrieved parties petitioned the King for ad hoc relief
o King delegated to his confessor, the Lord High Chancellor, who was his conscience
 Decided on basis of conscience (fairness, justice)
 Court of Chancery later emerged to administer the principles of what became
known as equity
Basic Features of Equity
 Equitable remedies (eg declaration, injunction, rescission, restitution, specific performance)
are always discretionary
o Equity is ALWAYS in the court’s DISCRETION, whereas legal remedies are a
MATTER OF RIGHT if P can prove all the elements of the wrong
 “equity varies with the length of the Chancellor’s foot”
o equity supplements common law
 but prevails in case of conflict
o equity supplements common law
 but prevails in case of conflict
o courts of law and equity had different causes of action, remedies, procedures
o courts were fused in 19th century
 fusion was only procedural at first; equity and law persisted as separate
systems administered by the same courts; but fusion may now be complete –
however, equity is still discretionary and not a matter of law
Equity and the Use
 Chancellor enforced conveyances to uses against foeffees by binding their conscience:
o Unconscionable to disregard terms of the use
o Ordered foeffee to exercise legal rights consistent with terms or convey legal title to
beneficiaries
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
And enforced beneficial interests against all others who could not in conscience
disregard them, eg. (anyone in good conscious ought to be bound to them)
o 1) Those acquiring legal title for no consideration (eg gift)
o 2) Purchasers for value who knew or ought to have known of the use
o 3) But not against a bona fide purchaser for value without notice
 someone who purchases a legal interest in the land, for value, and have no
notice of the preexisting equitable interest, they will NOT be bound by the
interest (subjective or objective standard)
Equitable Interests
 A new type of proprietary/property interest emerged: equitable as opposed to legal
o Ownership could be divided into legal and equitable interests
 But what was the nature of beneficial/equitable ownership?
o Chancellors applied doctrine of estates by analogy: beneficiaries held equitable fee
simple or life estate
o But Chancellors were not bound by rigid rules of law, allowed creation of interests not
known to law
o This flexibility became the most important feature of land law, causing the
conveyance to uses to persist long after disappearance of tenurial incidents
What the Crown losses and what they did
 King Henry VIII’s revenge
o He wanted his feudal revenue back
 Forced Statute of Uses on Parliament, 1535
 Where a person is seised of land to the use of another person or corporation,
the latter is deemed to have legal title to the same estate that s/he/it would
have held in equity
 ***this is the law in BC
Operative language of the Statute of uses
 “Where any person or persons be seized of and in any lands, to the use, confidence or
trust of any other person or persons, or of any body politic”
o two parties to an ownership arrangement. One is the foefee to uses and the other is
cestqui que use
 “every such person and persons, and bodies politic (cestui que use), that have or hereafter
shall have any such use, confidence or trust, shall from henceforth be seised of and in the
same lands”
o now they are the legal owner
 “in such like estates as they had or shall have in use, trust, or confidence.”
o The beneficiaries who used to hold the equitable estate, now hold a legal estate
 “And the estate that was in such person or persons that were, or hereafter shall be, seised
of any lands to the use, confidence or trust of any such person or persons, or of any body
politic, be from henceforth in him or them that have or hereafter shall have such use,
confidence, or trust, after such quality, manner, form, and conditions as they had before, in
or to the use, confidence, or trust that was in them.”
o Foefee to uses no longer has any interest at all, interest they held is shifted to the
person who had the equitable interest
Effect of the Statute
 Foeffee drops out of the picture, beneficiary’s equitable interest becomes legal
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
Before: “X to F and his heirs (foefee) to the use of A and his heirs (cestqui que use)”
o Before Statute: F held legal FS as trustee, A held equitable FS as beneficiary
o After: Statute executes the use, leaving A with legal FS, F with nothing
o A was now seised of the land in fee simple, responsible for incidents and services of
tenure
 After: “X grants to A and his heirs”
More Effects
 X to F and his heirs to the use of A for life, then to the use of B and her heirs
o Before: F = legal FS, A = equitable LE, B = equitable FS remainder
o After: A = legal LE, B = legal FS remainder, F = nothing (“X grants to A for life, then to
B and her heirs”)
 When A dies, relief is going to be owed, then when B dies, relief is going to be
owed
 X to F and his heirs to the use of A for life
o Before: F = legal FS, A = equitable LE, X retained equitable reversion
o After: A = legal LE, X = legal FS reversion, F = nothing; (“X to A for life)
 Statute executed resulting uses (X’s reversion)
Limitations on the Statute of Uses
 The Statute of Uses does not apply:
o Where feoffee to uses has active duties to perform
 X to F and his heirs in trust that F should collect rents and profits and pay them
to A and her heirs
 Statute only applies to bare uses
o Where feoffee to uses holds a leasehold estate
 X to F for 99 years in trust for A and his heirs for 99 years
 X to F and his heirs to use of A for 99 years
 Statute only applies where foeffee is seized of land
More Limitations
 The Statute of Uses does not apply:
o Where foeffee to uses is a corporation (“body politic” – legal person/corporation)
 Before: X to ABC Trust Co in trust for A and her heirs
 After: X to A and her heirs
o To uses of personal property – Statute of Uses only applies to land, not personal
property. Personal property can be through simple conveyance.
 X’s cash, securities and artworks to F in trust for A
o Where feofee is seised to his own use
 X to F and his heirs to the use of F and his heirs
 F holds legal FS by virtue of common law, not Statute
More limitations
 Statute does not apply to a use upon a use
o Ficticious 3rd layer of ownership; 2-layers = 1 equitable title and 1 legal title
 In 3rd layer, the equitable title is passed twice
o Before: X to F and his heirs to the use of A and her heirs to the use of B and her heirs
o After: X to A and her heirs to the use of B and her heirs
 Before Statute: F = legal FS, A = equitable FS, B = nothing
 After: A = legal FS, F & B = nothing
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But after Tenures Abolition Act 1660, when Crown’s financial interest in
prohibiting equitable ownership ceased, Chancery changed its mind and
began to enforce B’s use so that: F = nothing, A = legal FS, B = equitable FS
 Statute of Uses only applies once – “exhausting” the statute of uses
o By an obvious ruse, equitable interests could be created just as freely as before 1535
 As long as you “get the drafting right” you can get around the Statute of Uses
But beware a use after a use – this ISN’T an exception, the Statute DOES apply
o Before: X to A and her heirs to use of B for life, then to use of C and his heirs
o After: X to B for life, then to C and his heirs
 B has a life estate and C has a fee simple remainder


Modern Trust Emerged
 Language of “use” was replaced by “trust”
o “Use” was reserved for interests meant to be executed
o Before: X to F and his heirs to the use of A and his heirs in trust for B and her heirs
o After: X to A and his heirs in trust for B and her heirs
 A holds legal title in trustee (FS) and holds for B in trust who holds equitable
title (FS)
 Terminology was compressed over time
o Before: X to A and his heirs to the use of A and his heirs in trust for B and her heirs
became
o After: X to A and his heirs in trust for B and her heirs became
o Compressed to: X unto and to the use of A and his heirs in trust for B and her heirs,
which became
o Further compressed to: X to the use of A and his heirs in trust for B and her heirs
 So, X to the use of A in trust for B creates a valid trust of land, but X to A in trust for B does
not
 UK repealed the Statute of Uses on 1925 but CANADA has not, it is still part of law in BC
 If you convey a trust and want to get around the difficulty of language created by Statute of
Uses is to add active duties
Modern Trust continued
 Devises were legalized by the Statute of Wills, 1540
o Before then landowners could not devise land; conveyance to uses was best way to
designate heir
o Statute of Uses limited this, prompting widespread landowner anger
o Statute of Wills allowed landowners to devise land freely, abolished primogeniture
 Statute of Uses eventually repealed in places
o Repealed in UK 1925, but still in force in BC and most other Canadian common law
provinces
Equity and Women
 “Even the disabilities which the wife lies under, are for the most part intended for her
protection and benefit” (Blackstone)
 Doctrine of coverture: at common law, wife’s legal identity merged into her husband’s
o She could not own property, sue or be sued,
o She had no rights over her children or to her own earnings
o Even if long separated from her husband
 Did equity help women avoid these constraints?
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o A woman’s property could be conveyed to trustees before marriage, for her sole and
separate use
 Only helped wealthy women
o But trusts were often used to disadvantage women
 “Strict settlements” were used to deprive women of their common law
inheritance rights
 Trusts were also used to deprive widows of common law dower (1/3 income of
husband’s real property)
o Equity did little to help divorced or separated women
o Doctrine of coverture was ultimately abolished as part of wider reform & suffrage
movements, not by the courts of equity
Resulting Trusts [Unit 6.2]
Contemporary Trusts
 3 types:
o 1. Express trusts are created expressly where a settlor transfers property to a
trustee to hold for someone’s benefit
 Purposes: minimize tax liability, provide for dependents or loved ones, manage
family property, pursue charitable objects, acquire land by stealth, conserve
nature, etc.
 Must be drafted to avoid Statute of Uses
 Must satisfy the three certainties (intention, subject matter, objects)
o 2. Resulting Trusts arise by operation of law in favour of a person who transfers
legal title to another but retains a beneficial interest
 usually in accordance with the parties’ intentions
o 3. Constructive trusts are imposed where demanded by justice, often against legal
title holder’s intentions
Resulting Trusts
 Arise by operation of law in favour of one who transfers legal title to another but retains a
beneficial interest, for example:
o Failure to dispose of all beneficial interests in an express trust [ex: “hold this for my
children until they die” – but doesn’t say what happens after – this is a resulting trust]
o Gratuitous transfer of assets or gratuitous contribution to the acquisition of assets (2
forms)
 1) Previously owned the asset and transferred it to another person without
consideration. [gratuitous transfer]
 2) Provide the resources to acquire an asset that is held in the other person’s
name [legal title is in other person’s name] – [ex: you pay for a car at a
dealership but the title of the car is in child’s name] [aka: gratuitous
contribution]
 Traditionally, grantor/contributor was presumed to retain beneficial rights
(presumption of resulting trust) – co-ownership
 2 exceptions: 1) Where a husband makes a gratuitous transfer to wife
2) Father makes a gratuitous transfer to minor child. In these scenarios,
the presumption is reversed – (presumption of advancement). It is a
legal gift [give away beneficial rights] and the full and equitable title
is transferred to the recipient.
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
If you make a valid gift that satisfies the elements of a gift, than the
presumption of resulting trust does not apply. [Resulting trusts is a
presumption that can be rebutted by evidence].
o Benefical ownership results back to the first person
o Usually a matter of ascertaining true intentions
Pecore v Pecore [2007] SCC – Resulting Trusts
Facts
In 1994, a father transferred hundreds of thousands of dollars of his own money into
accounts held jointly with his daughter. In 1996, concerned to avoid capital gains tax, he
informed the banks that he was “the 100% owner of the assets and the funds are not being
gifted to” the daughter (P). He controlled the accounts and paid all taxes on them. The
daughter cared for her disabled husband (H), worked part-time low-paying jobs and had no
financial security. The dad worried about the daughter and often helped out financially. He
died in 1999 leaving most of his estate to the daughter and the residue (assets reminaing in
the estate after the debts were paid and specific bequests distributed) to P and her husband
in equally. His will didn’t list the accounts because he thought they were taken care of. The
daughter didn’t turn the joint accounts over to the estate. The husband divorced the
daughter, remarried, and demanded ½ of the joint accounts. Pecore v Pecore, SCC 2007
H argued that the accounts were part of the residue to be divided. P argued that the
accounts were hers entirely, by the right of survivorship (the right of the surviving holders of
property held in joint title to the the share of the deceased joint holder, so they don’t
become a part of the estate).
Issue
1) Did the father intend to make a gift of the beneficial interest in the accounts to his
daughter alone by right of survivorship (Presumption of Advancement POA); or did he intend
that the daughter hold the assets in the account in trust of his estate to be distributed
according to the will (RT)? Former.
(2) Who owns the money in the bank accounts? Daughter alone.
Where only one person puts money into a joint account and that person dies first, the
question arises whether that person intended the funds to go to the other joint account
holder alone or to be distributed according to his/her will
Rule
 Depending on the circumstances, there will will either be a POA, or a presumption of RT.
They are rebuttable, meaning that the court will only make the assumption if there is
insufficient evidence to displace it. The presumption places the burden of proof on the
rebutting party. (Standard: Balance of Probabilities).
 Presumptions allocate the burden of proof/persuasion; they guide decisisons where
the transferor’s intention is absent or unpersuasive, and they provide certainty and
predictability for those who put their money in joint accounts or make gratuitous
transfers. They put the duty on (or prompts) one party to adduce evidence (but, in
reality, once that is done, both parties adduce evidence)
GENERAL RULE: There is a presumption of RT in the case of gratuitous transfers, but there
are exceptions. The general presumption also will NOT arise depending on the nature of
the relationship between transferor and transferee. (equity presumes bargains, not gifts).
 Parents to minor children: presumption of advancement
1. Traditionally, it was only from father to child, but today, women also have
their own obligations to support children, so they are no less likely than
fathers to make gifts to their kids. So, it is a Presumption of RT equally for
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both, because all parents have a duty to provide for their children.
 Parents and independent adult children: presumption of RT.
1. Presumption of advancement for this relationship CANNOT be justified by
parental affection, BUT, evidence of the quality of the relationship between
transferor and transferee, like affection, CAN be considered when
determining whether a presumption has been rebutted.
2. Because elderly parents often do this so their kids can help manage their
money. Dissent disagrees and says POA.
 Parents and Adult dependent children: presumption of RT too
1. But, evidence of dependency CAN be strong evidence for rebutting the
presumption, even though dependency cannot justify a presumption of
advancement.
 Siblings: presumption of RT
 Spouses: statutory presumption of RT.
1. Exception: Explicit joint-tenancy situations. In cases where the the property is
held in the name of spouses as joint tenants. This serves as proof, in the
absence of contrary evidence, that the spouses intended to own property as
joint tenants (POA)
2. In the past, husband-wife was a POA, on the basis of dependence, love, and
duty, but this basis no longer really applies today (RATHWELL v. RATHWELL)
3. Inter-spousal property transfer has been settled by statute, in many provinces.
 These are REBUTTABLE PRESUMPTIONS. In cases of a presumption of RT, rebutting
requires adducing evidence of intention, in this case to gift the right of survivorship. If they
cannot do this, the assets will be treated as part of the estate and distributed according to
the Will.
For evidence to rebut, Cts can consider:
 Personal relationship and affection between transferor and transferee,
 Dependence
 Statements by transferor in will
 Extrinsic evidence.
How do courts base their conclusions on whether there is a presumption?
Dependency, duty, love, commonality, evidentiary difficulty.
Btw parent to child: father to minor child [presumed a gift – based on idea that minor
children are dependent on father, parental affection and love, father is responsible for
advancing child]; mother to minor child [presumption of resulting trust – however, criticised,
mothers now have a statutory obligation just like fathers, they typically have the material
means to do so, bonds of affection, therefore, rules should be the same for mothers and
fathers]; parent to adult independent child? [court asks: 1) what are the social realities
today? Aging population, more parents making gratuitous transfers to adult child to help
manage their assets, NOT to gift to child] 2) Obligations from parents? Courts notes that
statutory obligation to materially support child ends when child turns 19 or when they cease
to be a dependent. In BC, obligation continues if child is incapacitated and unable to provide
for themselves. In the case of independent adult child, the social practice is not in line with
presumption that it was a gift/[by reason that there is a presumption of advancement].
What about parental affection? Not a basis for presuming a gift. Parent to adult dependent
child? Courts will not switch presumption because dependency is a contextual phenomenon
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Conclusion
and so this will have to be determined on a case-by-case basis. Statutory obligation to
provide doesn’t determine the presumption – will still switch to resulting trust.
Finding for Paula
Constructive Trusts [Unit 6.2]
Common law relationships that aren’t governed by family law legislation; unjust enrichment
as a result of this [in married relationships, there may be statutory legislation that already
addresses this]
What is it?
 Trusts imposed by equity regardless of legal owner’s intentions
o Institutional constructive trusts
 Arise automatically to hold parties in certain relationships to high
standards of trust and prevent them from retaining property they should
not in good conscience keep, even absent unjust enrichment, e.g. where
trustee meddles with trust property, agent breaches duty of loyalty to principal;
or vendor refuses to perform a valid contract to sell land
 Have been around for centuries
o Remedial constructive trusts
 New and evolving tool imposed by courts to remedy unjust enrichment,
mainly in family law disputes, e.g. where spouse without title contributes
substantially to property’s value
 Usually het couple; man holds legal title to something [like family home],
woman made substantial contribution to acquisition, maintains, etc to
that home.
 Only emerged in 1980 in Canada (Pettkus v. Becker)
Rapid Legal Change
 Upon separation, does a woman have property in assets held only in man’s name?
o 1973: Married wife who works on but contributes no money to acquisition of ranch
has no equitable interest in it via resulting trust (Murdoch v Murdoch [1975], SCC);
so wife lost out [example of remedial constructive trust]
 Dissent (Laskin) suggested unjust enrichment constructive trust as alternative
o Mid to late 1970s: Provincial legislation gives married but not unmarried partners an
equal share in family property upon marriage breakdown (BC: 1979)
o 1978: Married wife who works on & contributes $ to acquisition of ranch has equitable
½ interest in it via common intention resulting trust (Rathwell, SCC); if she works
on and contributes to the interest, is entitle to ½ of it
 minority (Laskin +2) would award constructive trust too
 see page 494 2nd paragraph
o 1980: Common-law wife who works on beekeeping farm & contributes $ but not
directly to its acquisition has equitable ½ interest in property via constructive trust
but not common intention resulting trust (Pettkus, SCC) – 1st time a constructive
trust was awarded to a wife in context of marital breakdown
o 1986: Common-law wife who works on and thereby helps maintain & increase value
of farm husband brought into relationship, but contributes no $ to its acquisition, has
equitable 1/3 interest in property via constructive trust (Sorochan, SCC)
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
SCC extended the doctrine to include contributions to maintain or increase the
value of property acquired prior to the commencement of the intimate
relationship
 Common-law wife who works on and thereby helps maintain and increase
value of farm husband brought into relationship, but contributes no money to
its acquisition, has equitable 1/3 interest in property via constructive trust
o 1993: Common-law wife who does domestic work at home husband brought into
relationship but contributes no $ to its acquisition and makes no direct contribution to
its maintenance has equitable 100% interest in property via constructive trust (Peter
v Beblow, SCC); McLachlin J said when you deal with marital break-down cases, you
don’t just look at the things they are fighting over, you look at the entire assets and
she made a contribution to it, which was the equivalent to the home – she leaves with
the home and he leaves with everything else
 Contribution to the household well-being through housework and child care,
without contributions of cash or other labour, could provide the basis for a
beneficial interest in property
 No distinction between ordinary and extraordinary contributions
 Awarded the wife the entire beneficial interest in the home which her intimate
partner had purchase prior to the commencement of their 12-year relationship,
as a remedy to prevent the partner’s unjust enrichment
 The constructive trust is an appropriate remedy only when the claimant can
establish a direct link between the contribution and the property, that the
contribution was substantial and that a monetary award would be
inadequate

Common-law wife who does domestic work at home husband brought into
relationship but contributes no $ to its acquisition and makes no direct
contribution to its maintenance has equitable 100% interest in property via
constructive trust
 Don’t just look at the asset but the whole family venture, 100% of the
house (what the wife has directly contributed to) is considered 50% of
the whole joint family venture
o Rawluck v Rawluck SCC
 Applied constructive trust doctrine to determine beneficial ownership of a farm
property that would be shared equally between the former partners under the
applicable family property legislation
 The court had no difficulty fitting the constructive trust into the statutory
entitlements set out it Ontario's Family Law Act (prevails common law and
equity, but does not cover unmarried couples)
Typing up Loose ends
 Vancouver secretary Margaret Kerr and longshoreman Nelson Baranow separated in 2006
after living together 25+ years. K sued for a share in family home based on her financial and
other contributions. B counter-claimed for housekeeping and personal care after K became
disabled in 1991. (Kerr v Baranow)
 Ottawa CSIS employee Michele Vanasse and IT entrepreneur David Seguin separated in
2005 after living together for 12 years, during which V left her job so S could pursue his
business in Halifax, V cared for kids and home, S made millions. V sued for share in family
home and investments.
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Issues
 Kerr v Baranow:
o Was Baranow unjustly enriched and if so, is Kerr entitled to a share of the family
home by way of a resulting or constructive trust?
 Vanasse v Seguin:
o Conceding that Seguin was unjustly enriched, should Vanasse be entitled to a share
of the net family wealth or just be paid for services rendered? – how should the
magnitude of the remedy be determined? Is she entitled for a share in the net family
wealth or just the value of her contribution? Hired help v coventurer
Unjust Enrichment – Elements
 Three elements of a successful claim:
o 1. Enrichment of or benefit to the defendant
o 2. A corresponding deprivation of the claimaint
o 3. Absence of a juristic reason for the enrichment
 Elements:
o Am enrichment of or benefit to the defendant
 Economic approach
o A corresponding deprivation of the plaintiff,
 Economic approach
o the absence of juristic reason for the enrichment
 There is no reason in law or justice for the defendant’s relation of the benefit
conferred by the plaintiff, making its relation unjust in the circumstance
 Moral and policy
 Two step test (Garland) :
 Applies the established categories of juristic reasons
o Burden is on claimant to show no juristic reason from an
established category
o Donative intent (without any expectation to reward), contract
(prenup), statutory requirement

If no juristic reason from established category, burden shifts to
defendant to show another reason
o In their absence, permits consideration of the reasonable
expectations of the parties and public policy considerations to
assess whether recovery should be denied
o Parties’ reasonable and legitimate expectations
o Public policy considerations BUT: Spouse’s supposed duty or
natural love and affection are NOT juristic reasons to allow
defendant to retain benefit of domestic services (this notion that
the wife has a duty to labour in home or her natural love and
affection cancels unjust enrichment) (Peter v Beblow, SCC 1993)
Elements 1 and 2
 Determination of enrichment and corresponding deprivation is a straightforward economic
calculus, not a moral or policy question- what matters is if you can put a dollar value to their
work
o Childcare, cleaning, household management, labour in family business, etc.:
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

Enrich other spouse by sparing cost of paid service and freeing him to
advance his own career/business; corresponding deprivation because the
woman is deprived from opportunity to pursue other things that could better
herself (opportunity costs); personal factors applies (like your credentials and
your potential)
 Seguin’s increased wealth was due to Vanasse’s equal contribution to
the family venture
Corresponding deprivation by preventing her from pursuing education, career,
paid work, etc.
Step 3: No juristic reason
 There must be no reason in law or justice for the defendant to retain the benefit
o Step 1: Burden is on claimant to show no juristic reason from an established category
 Donative intent (did she intend to donate those services without
compensation?), contract (is there a pre-nup?), statutory requirement
o Step 2: If no juristic reason from established category, burden shifts to defendant to
show another reason (the man will need to show why he is entitled to keep the assets
himself)
 Parties’ reasonable and legitimate expectations
 Public policy considerations
 BUT: Spouse’s supposed duty or natural love and affection are NOT juristic
reasons to allow defendant to retain benefit of domestic services (Peter v
Beblow, SCC 1993) – domestic services offered by wife in an intimate
relationship should be treated like any service
Remedies
 Purpose: restitution—repay or reverse the unjust enrichment
 Two main kinds of award:
o 1. Proprietary award: imposition of a constructive trust giving plaintiff beneficial title to
assets legally owned by defendant
 Proportional to plaintiff’s contribution to the assets
o 2. Monetary award (at issue in Kerr/Vanasse) [our focus]
 Quantum meruit [what you meruit – you get paid for wage value for services
you rendered] (payment for value given) vs share of increased value of the
asset? (covert)
 Covert – monetary value that is a share of the net value
 Being treated as a coveturer leads to more gains than being treated as
“hired help”
3 Categories - how to distinguish between “hired help” and “coventure”
12




1st category: can show evidence of a link through a bank account or business name etc. On
balance, the jurisprudence seeks to find this link [hired help/value received]
2nd and 3rd category: [coventure]
1st and 2nd category: [monetary]
3rd category: [proprietary]
Vanasse v Seguin [2011] SCC – joint family venture
Facts
 Unmarried couple together for 12 years
 Ms. V cared for the children and the home
 Home purchased under the names of both parties as joint tenant
 Mr. S later made a lot of money from further investment
 Ms. V
o Claimed entitlement based on unjust enrichment
o ½ of the family home and investment
 Ms. S
o He had been enriched
o He was working outside the home full time
o There was no link between her contribution and the property in his investment
Issue
 Were V and S engaged in a joint family venture?
 Did V contribute to the family’s wealth accumulation?
o At least an equal contributor to the family venture
o S could not have built up the company but for V’s assumption of household &
childcare responsibilities
 What is the appropriate remedy?
o Monetary award representing the value of V’s services minus compensation
already paid by S? (CA)
o Monetary award representing half of S’s increased wealth, minus the real estate
13
Analysis
& RRSPs S had given her? (trial judge)
o Constructive trust? (Not at issue on appeal)
 Mr. S was enriched to the extend that has increased wealth was due to her efforts as an
equal contributor to the family venture
 3 elements:
o Satisfies the enrichment of other spouse by sparing cost of paid service and
freeing him to advance his own career/business (monetary)
o Corresponding deprivation by preventing her from pursuing education, career,
paid work, etc, factors in potential (monetary)
 Joint family venture
 Remedies:
o Monetary award representing the value of V’s services minus compensation
already paid by S? (CA) [crossed out]
o Monetary award representing half of S’s increased wealth, minus the real estate
and RRSPs S had given her? (TJ)
 Only to the extent that the monetary value of her services to the dam
exceeded the compensation already provided by him
 Constructive trust not an issue on appeal
 TJ determined that S was enriched to the extent that his increased wealth was due to
V’s efforts as an equal contributor to the family venture. TJ gave V ½ interest in the
prorated increase in S’s net worth during the period of the unjust enrichment, minus
the value of her interest in the family home and her RRSPs.
 ONCA: S was enriched to the extent that the monetary value of V’s service to the family
exceeded the compensation already provided by S.
o Issue: how to quantify a monetary aware for unjust enrichement.
o Restored TJ’s judgement
 SCC: allowed V’s appeal and restored TJ’s order
Joint Family Venture (not exhaustive or determinative)
 Open, overlapping list of factors
o Mutual effort (yes in this case)
 Did the parties work collaboratively toward common family goals?
 Economic integration (yes in this case)
o Were the parties an interdependent and integrated economic unit?
 Actual intent (yes in this case)
o Did the parties actually intend to share the wealth?
 Priority of the family (yes in this case)
o Did the parties give priority to the family, e.g. by making sacrifices for the sake
of the family?
Kerr v Baranow [2011] SCC – joint family venture/unjust enrichment
Facts
 Unmarried couple together for more than 25 years
 Ms. Kerr sued for declaration that she was entitled to share in the residence in which
the couple lived since 1986, which is under the title of Mr. Baranow
 Ms. Kerr:
o Held part of the title on trust for her
o Unjustly enriched if he keeps the property entirely to himself
14

Issue and
analysis
Conclusion
After this
case
Mr. Baranow:
o Ms. Kerr has been unjustly enriched by his housekeeping and personal care
services since she a had a major stroke
 Was there unjust enrichment of B? Yes.
 Was there a joint family venture? Yes.
 Did B’s contributions unjustly enrich K?
o Both conferred benefits on the other, to their detriment
 What is the appropriate remedy?
o Monetary award representing the value of services rendered? (hired help)
o Monetary award proportional to respective contributions? (co-venturer) This
one.
 Ms. Kerr was entitled to 1/3 interest in the property by way of
resulting trust to reflect her contribution to the property
 Monetary award worth ¼ of B’s sole-owned realty
o Constructive trust? (Not at issue on retrial)
 Also by way of a remedial constructive trust remedy for her claim in
unjust enrichment
 TJ: K entitled to 1/3 interest in property by way of resulting trust to reflect
contribution to property and remedial constructive trust as a remedy for her
successful claim in unjust enrichment. TJ rejected B’s claim of unjust enrichment.
 SCC: Ordered new trial of K’s unjust enrichment claim, as well as affirm the Court of
Appeal’s order for a hearing of B’s counterclaim
o On issue of spousal support, the Court restored TJ’s order that B was to pay K
$1739 per month in support payments from the date she commenced action
against him
 SCC was unable to determine any of the above, ordered new trial
 Abolished common intention resulting trust
 New trial: Concluded that parties were engaged in joint family venture, working as a
team to build their lives together, and both conferred benefits on the other to their
detriment
After this case:
 Family property division apply to any spouse other than just married couples by
statute
o No longer needs to go through the UE analysis anymore

Family Law Act, SBC 2011, c 25
o 3 (1) A person is a spouse for the purposes of this Act if the person (a) is
married to another person, or (b) has lived with another person in a
marriage-like relationship, and (i) has done so for a continuous period of at
least 2 years…

81 … (b) on separation, each spouse has a right to an undivided half interest in all
family property as a tenant in common, and is equally responsible for family debt.
Constructive Trust
 That the equitable interest comes into existence when the contribution was made, and is not
created but rather confirmed by the declaration of constructive trust
15


Establishes that the beneficial owner to enforce the ownership right, against 3rd parties or
the co-owner
No priority over a bona fide purchaser for value without notice, but priority over claims of
general creditors against the legal title holder
2 kinds in Canadian Law:
 Institutional Constructive trust:
o imposed in circumstances in which a person has acquired property for his or her own
benefit, at the expense of another to whom the person owes a fiduciary duty.
o Soulos v Korkontzilas: Example of institutional constructive trust. Imposed in
circumstances in which a person has acquired property for his or her own benefit at
the expense to another to whom the person owes a fiduciary duty.

o Arise automatically to hold parties in certain relationships to high standards of trust
and prevent them from retaining property they should not in good conscience keep,
even absent unjust enrichment, e.g. where trustee meddles with trust property, agent
breaches duty of loyalty to principal; or vendor refuses to perform a valid contract to
sell land
 Has been around for centuries
o Land sale
 See later notes
Remedial Constructive Trusts – see above
Joint Family Venture (not exhaustive or determinative)
 Open, overlapping list of factors
o Mutual effort
 Did the parties work collaboratively toward common family goals?
 Economic integration
o Were the parties an interdependent and integrated economic unit?
 Actual intent
o Did the parties actually intend to share the wealth?
 Priority of the family
o Did the parties give priority to the family, e.g. by making sacrifices for the sake of the
family?
Mutual Benefits
 What’s the relevance of mutual conferral of benefits?
o In joint family venture cases:
 Once claimant shows contribution to family venture and wealth accumulation,
parties’ respective contributions are considered in determining claimant’s
proportionate share
o In provision of services (quantum meruit) cases:
 Mutual conferral of benefits may be evidence of contract or of
reasonable/legitimate expectations at juristic reason stage of analysis
Relevance in BC
 Family Law Act, SBC 2011, c 25
o 3 (1) A person is a spouse for the purposes of this Act if the person (a) is married to
another person, or (b) has lived with another person in a marriage-like relationship,
and (i) has done so for a continuous period of at least 2 years…
16
o 81 … (b) on separation, each spouse has a right to an undivided half interest in all
family property as a tenant in common, and is equally responsible for family debt.
Resulting Trusts
 the underlying principle that contributions to the acquisition of a property, which were not
reflected in the legal title, could nonetheless give rise to a property interest
 resulting trust could be based on “common intention” of the parties that the non-coder was
intended to have interests
 a promising vehicle to address claims that one party’s contribution was not reflected in the
legal title
 Farewell to the common intention resulting trust
o Arose, in theory, where parties had common intention that beneficial interest in
assets in one partner’s name would be shared by both
o Problems:
 Only contributor’s intention should matter
 Only contributions to acquisition should matter
 Commonality of intention often highly artificial: constructive trust masquerading
as a resulting trust
 Unjust enrichment provides more realistic, comprehensive, principled and
flexible remedy
o Abolished by SCC in Kerr
More on Remedial Constructive Trusts:
 The emerging law of unjust enrichment
 The claimant must show that the def has neem enriched, the claimant suffered a
corresponding detriment, and no “juristic reason” for the enrichment
 Concerns
o The role of common intention has no further role in the resolution of property claims
bt domestic partners on the breakdown of their relationship
o Both parties have worked together for the common good, with each making extensive
but different contributions to the welfare of the other and have accumulated assets
o Requiring clarification relates to mutual benefit conferral
o What role of the parties’ reasonable or legitimate expectations play in the unjust
enrichment analysis. Whether there is a juristic reason for the enrichment
o The appropriate date for the commencement of spousal support
 Unmarried couple:
o Could be more controversial
o Kerr, neither party relies on the presumption of advancement, that's all can be said
 It is the intention of the grantor or the contributor alone that counts
o Resulting trust based solely on the inventions without transfer of the property is
impossible
o Intention is at the time of acquisition, how would it arise from contribution made over
time
 Common intention is highly artificial especially in domestic cases

Peter:
o
A spouse or a domestic partner generally has no duty, at common law, equity or
statute, to perform work or services for the other
17
o
o
o
A straightforward economic approach
No reason to distinguish domestic services from other contributions
Applies to
unmarried couples
Institutional Constructive Trusts
 What happens after you conclude a valid and binding real estate purchase and sale
agreement, but before the deal closes and legal title is formally transferred?
 2 Stages:
o 1) Agreement of Purchase and Sale
 Both parties sign a contract specifying the agreed terms of sale and setting a
date, typically 60-90 days hence, when vendor will transfer title and purchaser
will pay balance of purchase price
 Purchaser tenders deposit (typically 5%-25%)
o 2) Closing or completion
 Vendor executes title documents and hands over possession, purchaser pays
balance of purchase price, purchaser’s lawyer registers title documents
 Between agreement and closing
o Purchaser arranges:
 Financing
 Title search
 Property insurance & utilities to be in place at closing
 Funds to cover closing costs
 Adjustments (property tax, utilities), land transfer tax, legal fees
o And perhaps
18




Inspection, if sale conditional thereon; sale of her current property, if sale
conditional thereon; survey, if needed
What could possibly go wrong?
o Building could be destroyed; vendor could die; vendor could find someone else willing
to pay a higher price; market could crash; purchase financing could collapse…
o Leading vendor or purchaser to renege
But all is not lost… The moment there is a contract:
o Valid agreement of purchase & sale does not convey legal title, but:
 “The moment you have a valid contract for sale the vendor becomes in equity
a trustee for the purchaser of the estate sold, and the beneficial ownership
passes to the purchaser” Lysaght v Edwards, Ch 1876
o The vendor only has the right to collect the purchase price unless it is paid in full
o Vendor holds title on a constructive trust
 Retains only a right to the purchase price, a charge against the real
estate to secure payment, and a right to retain possession until the
purchase price is paid
 Must take reasonable care of the real estate
“Valid Contract”
o Lysaght: “’Valid contract’ means in every case a contract sufficient in form and in
substance, so that there is no ground whatever for setting it aside as between the
vendor and purchaser”
o 1. Generally valid (offer, acceptance, consideration; no fraud, unconscionability, etc)
o 2. Vendor’s title proven by vendor or accepted by purchaser
o 3. Terms sufficiently precise to support decree of specific performance
o 4. In writing and signed by the party against whom enforcement is sought
Why Shift Equitable Title?
 Every piece of land was thought unique, damages inadequate remedy for breach of contract
o Therefore specific performance was always available to purchaser to compel
performance
o since equity would always award specific performance to purchaser in event that
vendor failed to convey the legal estate in accordance with terms of contract, courts
of equity considered beneficial ownership to pass with the contract itself.
 But is this still true?
Is all Land Unique?
 What if vendor reneges on suburban home sale in rising market in hope of selling for a
higher price?
o Land is unique, can’t make more of it; this type of constructive trust [that is,
institutional CT relating to the interm period before the deal to transfer title of a home
“closes”] is premised on the availability of specific performance of the contract of
purchase and sale of land
o In the past, a purchaser could generally count on a court of equity to conclude that
the uniqueness of a parcel of land would point to specific performance as appropriate
remedy
o Samelhago v Paramadevan [1996] SCC:“It is no longer appropriate…to maintain a
distinction in the approach to specific performance as between realty and personalty.
It cannot be assumed that damages for breach of contract for the purchase and
sale of real estate will be an inadequate remedy in all cases.”
 Samelhago v Paramadevan:
19



F: vendor reneged on sale of home in a rising market, purchaser
successfully sued for damages for difference between contract price
and FMV at time of trial (i.e., value of a decree of SP)
 A: Sopinka J suggested that special rules regarding specific
performance of contracts for purchase and sale of land should no
longer apply, and same “uniqueness” standard should apply to realty
as is applied to personal property
 “It is no longer appropriate… to maintain a distinction in the approach to
specific performance as between realty and personalty. It cannot be
assumed that damages for breach of contract for the purchase and sale
of real estate will be an inadequate remedy in all cases. Specific
performance should therefore, not be granted as a matter of course
absent evidence that property is unique to the extent that its substitute
would not be readily available”
 however, this was obiter
When will specific performance be awarded?
o When there is no comparable substitute property
 The property is especially suitable for the purchaser’s purpose and can’t
reasonably be duplicated elsewhere
 Cookie-cutter, mass-produced properties v special, personally
significant places
 Key question is not uniqueness but adequacy of damages
 Specific performance may not be available for a unique property held
solely for investment purposes
Implications
o Institutional constructive trust in favour purchaser upon execution of valid contract for
sale was premised upon automatic available of specific performance for all land
o If specific performance not automatically available, unclear that valid contract still
transfers beneficial ownership
VII. QUALIFIED TRANSFERS AND FUTURE INTERESTS
Basic Concepts [Unit 7.1] – What are the limits on an owner’s freedom to control the future
ownership and use of property?
Overview of 7.1
 1. Future Interests
o Recall remainders and revisions [Unit 5.2]
o They are future interests
o Future interests are vested or contingent
 2. Qualified Transfers
o some qualifications make an interest contingent: these are called estates subject to a
condition precedent
o other qualifications defeat a vested interest: these are either
 defeasible interests, which are called estates subject to a condition
subsequent; or
 determinable estates
20
Stuartburn (Municipality) v Kiansky [2001] (Man QB) – future interests
Facts
 In Manitoba, an elected local official must be an “owner of land” in the municipality. A
town Reeve sold his home and moved out of the municipality, but held a remainder
interest in land in the municipality that would take effect when his grandmother died.
Was he eligible for office? Stuartburn (Municipality) v. Kiansky (Man QB 2001)
o Elected official must be “an owner of land” but the only property interest he
holds is a remainder interest in land that will take effect when his grandmother
[life tenant] dies
o Is he an “owner” of land in this municipality? So is he eligible to hold office?
 Freehold estate: a measure of the nature and degree of a person’s interest in land.
Includes life interest and fee simple.
 “Estate” when used in conjunction with “freehold” can be thought of as synonymous
with “right” “title” and “interest”
Issue
 Was Kiansky an “owner of land”?
o Was he the present owner of a currently existing freehold estate in land?
 Yes: his remainder was a presently existing, vested estate in land even
though he was not yet entitled to possession
 The remainder interest is a present right. It co-exists with the life estate
even though enjoyment and possession of the real property is postponed
until termination of the life interest.
 Was Forrestall “seised of land”? [seised = possession of land by freehold]
o Only an owner entitled to immediate possession is seised [who is responsible for
the feudal incidents and tenure];
 in order to be seised of land, you must be entitled to immediate
possession; in cases of life tenant and remainder, as long as life tenant is
alive, life tenant is seised of the land
 therefore, F is not eligible to be senator bc he wasn’t seised of land
o A remainderperson is not entitled to immediate possession until the life tenant
dies
Analysis
 Defining future interests:
o A future interest is an interest in property in which the right to possession or
enjoyment is postponed to a future time
 Nevertheless a presently existing interest and part of the total ownership
of the property
 Allows present owner to determine when and on what conditions future
owners will possess and enjoy property
 Vested or contingent [mutually exclusive and binary things]
o All estates in land or personal property are either vested or contingent
 Vested estates are either vested in possession or vested in interest
 An estate is vested in possession if the holder is entitled to immediate
possession
 (Even if s/he has delegated the right of possession to a lessee)
o contingent interests are more vulnerable to being invalid than vested interests
21
[Cumulative, all 3 must exist]
When A dies, B is vested in both interest and possession. Or you can say it switches from
interest to possession. Once the life estate ends, B’s fee simple is vested in possession.
Ex: To A for life, remainder to A’s firstborn child (A is alive but has no children): this makes it
contingent [not necessarily invalid; just means not certain to take effect]. This becomes vested
interest the moment A has a live birth. Also, once the child is born, it is clear that it is first. If the
child is born but subsequently dies, that counts.
Ex: To A for life, remainder to A’s widow (A is alive and married to C): The problem with a gift to
a widow, at what point in time do you ascertain the identity of the widow? [when A dies]. You
can’t know who is a widow in advance. So who has the interest? We don’t know who has the
contingent interest at this time [“the widow’s remainder is contingent/the holder is contingent]
Ex: The person who holds the remainder is alive and IDed – known as “condition precedent.” To
B if and when she is admitted to the practice of law (B is alive but has not been admitted).
Admission to the bar is something that has to be satisfied when it takes effect. At that point it is
vested in interest and possession. Therefore, contingent.
What if an estate (or other property interes) is not vested?
 By default, it is contingent
Relevant
Info
3 Types:
 1) Vested in possession – immediate [not future] interest [current]
 2) Vested in interest – must meet 3-pronged test [even though they are not yet entitled
to possession, we are certain that they will get possession] [future interest]
 3) Contingent – [future interest]
Senate Packing:
 F: In 1990, PM Brian Mulroney appointed new Conservative senators to ensure passage
of the GST. The Constitution requires Senators to be “seised of land” [have land?] worth
$4000. One appointee, Michael Forrestall, held only a remainder interest in land. Was
he eligible for Senate?
o According to Constitution, Senate must be made up of landowners
o In this case, he owners a remainder after the life tenant dies [similar to
stuartburn]
22
McKeen Estate [1993] NBQB – future interests // interpreting conditions
Facts
 Dr. McKeen left his estate to his widow for life, then equally to his two sisters “if they are
both alive at the time of the death of the survivor of me and [my widow]. If only one of
my said sisters is alive at [that time], I direct my Trustees to deliver the residue of my
estate to the surviving sister, the same to be hers absolutely.” The sisters died 8 years
later, then the widow 3 years after them. McKeen Estate (NBQB 1993)
o If they are both alive when the widow dies, they share it
o If only 1 of them is alive, the surviving one gets everything
o However, both the sisters died before the widow
o What was the problem?
 Unforeseen outcome: both sisters predeceased the wife
 Issue: Was the gift contingent upon them surviving her?
 If so, what would happen to the property?
Issue
 Is the remainder interest contingent upon survival – that is, the sisters surviving the
widow. If it was contingent, who gets the property?
o If it really is contingent upon one of them surviving the widow, than the entire
estate falls into intestisy [in testate] and goes to whoever is statutory next of kin.
Analysis
 General principles for interpreting wills
o 1. Remember the Prime Directive—Give effect to testator’s intention
 “of paramount importance is determination of the actual and subjective
intention of the testator”
 General principles for interpreting wills
o 2. Presumption against intestacy
 In cases of doubt, courts presume testator did not intend to die wholly or
partially intestate
o 3. Construction in favour of vesting
 Courts prefer to hold a gift vested rather than contingent, where the will
permits such an interpretation
 Conditions precedent
o A condition precedent makes an interest contingent upon the prior occurrence of
an event that may or may not occur
 To A for life, remainder to B in fee simple when and not before B turns 25
(B is 5)
 The condition of turning 25 renders B’s remainder contingent.
o When will it vest in interest? In possession?
o Vested in interest: When B turns 25. Vested in possession:
When A dies and B turns 25.
 Is A’s death a condition precedent to B’s interest?
o No: death of life tenant is not a CP, because it is inevitable
 An interest is prima facie [on its face, but rebuttable] vested if
postponement is simply to allow for a prior life estate (Browne v.
Moody)
 An interest is prima facie contingent if the reason for
postponement is personal to the donee, e.g. to marry, become a
citizen or lawyer, or attain a specified age
 Conditions Subsequent:
o A condition subsequent defeats a vested interest upon the occurrence of an
23
event that may or may not occur
 X to A and her heirs on condition that she not remarry, but if she
remarries, the interest shall revert to X
 A has a FS vested in possession, subject to divestment if she
remarries
 What does X have?
o A contingent right of re-entry (a right to recover the fee
simple) that will vest in interest and possession if and when
A remarries (A’s remarriage = condition precedent to X’s
interest) [if the condition is broken, it gives the right of
owner the right to re-entry]
o Even if someone else buys the interest, the condition is still
attached
Back to McKeen:
 To widow for life, then to the sisters equally if they both survive the widow, but if only
one sister survives the widow, to the surviving sister absolutely
o What kind of condition is “if they are both alive at the time of the death of the
survivor of me and my said wife”?
o What kind of condition is “if only one of my said sisters is alive at [that] time”?
 Are these conditions precedent? Are they conditions subsequent? Or are they not
conditions at all and the wording doesn’t reflect his intentions?
o [do they have to survive the widow in order to get something at all?]
Deciphering McKeen
 1. What was the testator’s intention?
o “Dr. McKeen wanted mainly to provide for his wife during her life and also
ultimately to deliver the bulk of his estate to benefit his sisters. He also didn’t
intend to die intestate [intended to dispose of his entire his estate through this
will]”
 If surviving the widow is a condition precedent – than he dues intestate
 He subjectively wanted the residue to go to the sisters one way or the
other – “I want the residue of my estate divided btw my sisters, Alice and
Beatrice, or the survivor of them”
 2. Courts will interpret will as vested rather than contingent if there is room for
ambiguity
o Does the “construction in favour of vest apply?” Yes. – “There most certainly is a
good amount of ambiguity or doubt in this case which is not at all an easy one to
rule upon.”
 3. Do the provisos render the gift contingent?
o No: surviving the widow is not a condition precedent, the gift vested in interest
for both sisters immediately on T’s death (rule in Browne v Moody)
 Courts interpreted all this to mean that surviving the widow is NOT a condition
precedent. The remainder interest was vested as soon as he died [they were
guaranteed of that remainder taking in effect]. Doesn’t matter that they both died
before the widow.
 Do they render it defeasible [if only one sister is alive, than she gets everything]?
o Yes: Gift is subject to the condition subsequent that one sister’s interest will be
24
divested if she predeceases the widow and the other sister survives the widow
o When testator dies, remainder vests in both sisters. At this point, both sisters are
in a vulnerable position. Condition subsequent is one sister dying before the
widow and the other sister surviving the widow. If sis 2 dies than they both
continue to have the share and the moment the widow dies, their respective
interests become absolute. If one sister has died and the widow dies while the
second sister is alive – that will defeat the first sister’s interest – the second
sisters interest is enlarged to get everything but the 1st sis interest sinks down to
0.
o Their estates are equally vested and entitled because they both died before the
widow – that moment it was no longer possible for the CS to take effect. When
sister 2 died, they became indefeasible vested in the remainder
o It is impossible for divestment to occur because now that both of them died
before the widow, there’s not possibility that the divestment will occur.
o If both sisters survive the widow or both die before the widow, than it is
IMPOSSIBLE for the condition subsequent to occur
Recap:
 All property interests are vested or contingent
o An interest is vested in possession if the holder is entitled to immediate
possession (not a future interest)
o An interest that is not yet vested in possession is a future interest
o A future interest is vested in interest if the holder is alive, ascertained, and there
is no condition precedent
o Otherwise a future interest is contingent
o A condition precedent makes a future interest contingent
o A condition subsequent makes a vested interest subject to divestment
o It can be hard to tell which is which
But there’s more
 A condition subsequent is not the only kind of qualification that defeats a vested interest
Two types:
 1. Estates subject to condition subsequent
o Eg. the sisters’ interests in McKeen
o Usually use words like “but if,” “on condition that,” etc.
o Holder’s estate is vested until the divesting event
 Automatically get it back
o The other person holds a contingent right of entry
o Offends rule of perpetuities
 2. Determinable estates
o Usually use words like “so long as,” “until,” “during,” etc.
o Holder’s estate is vested until the divesting event
o The grantor retains a possibility of reverter, which is considered vested in Canada
 Usually original grantor who has the right to retain their property
 Not automatic getting it back
o Does not offend rule against perpetuities
 Contingent right of entry is more vulnerable to invalidation than a vested possibility of
25
reverter
[see Caroline v Roper]
Caroline (Village) v Roper [1987] QB – future interests // condition subsequent v
determinable estates
Facts
 In 1949 Rosina Roper gave 1 acre to the village of Caroline, Alberta on condition that it
would revert to her “if used for other than a community centre.” The centre burned
down in 1982. The town had no intention to rebuild; it wanted to sell the land for
development
 Document: it is understood by everyone concerned that if it’s not used as a community
centre, it reverts to husband’s estate
 ***Note: This is not a will. When interpreting inter vivos transfers, courts will be less
liberal in interpreting documents.
Issue
 Answer depends on whether the village received a fee simple subject to a condition
subsequent or a determinable fee simple
 If the former, the divesting condition is void for violating the rule against perpetuities;
if the latter, it is valid and enforceable
o Rule against perpetuities gives you 75 years from date the instrument takes
effect for contingent interest to vest
Analysis
 Determinable estates:
o The estate terminates automatically upon the determining event
o Grantor retains a possibility or right of reverter: estate automatically reverts to
grantor upon determining event
o Possibility of reverter is considered a vested interest in Canada
 Therefore not subject to the rule against perpetuities [which only
applies to contingent interests], which only applies to contingent
interests
Estates subject to a condition subsequent
 CS is an independent clause added to a complete estate, and operates to defeat it
o The estate does not terminate automatically upon the divesting event
o Grantor retains a right of entry for condition broken; estate terminates and
reverts to grantor if and when grantor exercises right of entry
o Right of entry is considered a contingent interest
 Therefore subject to the rule against perpetuities
How do you tell them apart? – look to determinable event
 Determinable estate:
o “the terminating event is an integral and necessary part of the formula from
which the size of the interest is to be ascertained”
o “While,” “during,” “until,” “so long as” [usually followed by permitted use]
 Estate subject to a condition subsequent
o “the terminating event is external to the limitation, … a divided clause from the
grant”
o “provided that,” “but if,” “if it happens that,” “on condition that” [usually
followed by what not allowed to do]
26
Ex: “To the school board so long as it shall be used and needed for school purposes and no
longer” was held to create a determinable fee simple: Re Tilbury West Public School Board,
ONHC 1966. – determinable estate
 “on condition that it is used for school purposes” – condition subsequent
Back to Caroline
 “This acre… shall revert… if used for other than a community centre”
o Written on a separate document from the title transfer
o Seems an independent addition to a fee simple absolute, operating to defeat it
if a future event occurs
o Does not seem like an integral and necessary part of the formula from which
the size of the estate is to be ascertained
o Therefore held to be a condition subsequent, void as against the rule against
perpetuities [could happen any time in the future so void]
o Since void, condition is struck out and goes on as if condition didn’t exist – so
they can do whatever they want with the land
 However, courts took pity on the lay people who drafted it to reflect their intentions
o What’s more, even though the condition was void and unenforceable, court
took pity on the laypeople who drafted the document, rectified it to make it a
determinable fee simple & ordered the property returned to the Ropers!
Conclusion Reverted back to Ropers
State Limitations on Private Power: Public Policy [Unit 7.2]
 When will the law overrule a property owner’s desire to control how and by whom property is
enjoyed in the future?
o Intro
o Violation of public policy
o Uncertainty
o Restraint on alienation
o Remoteness [too far into the future]
When will the law condemn bigotry? [Publc Policy]
Re Leonard Foundation Trust [1990] ONCA – limitations on private power // public policy
Facts
 Reuben Wells Leonard: Railway engineer, military officer and philanthropist.
Beneficiaries of his largesse included Queen’s U, U of T, Girl Guides, Boy Scouts, Art
Gallery of Ontario. Created Leonard Foundation in 1916
 Leonard Foundation Trust: Key Provisions:
o White Race is best qualified by nature to be entrusted with development of
civilization
o World progress depends on maintenance of Christian Religion, independence
and prosperity of British Empire
o British Empire’s affairs should be in hands of Christians of British Nationality who
are not hampered by allegiance to any power outside the British Empire
o All who are not Christians of the White Race, of British Nationality or Parentage,
or owe allegiance to any Foreign Government or Pope are excluded from
27
Issue
Analysis





management and benefits
o Scholarships may only be held at universities/colleges not controlled by people
excluded by preceding condition
o Preference given to children of clergy, teachers, soldiers, engineers, and miners
o Scholarships for females limited to ¼ of annual total
Does this violate contemporary public policy?
If so, is the trust saved by the cy-pres doctrine?
ONCA said the operative provisions are so closely tied to the recitals [preamble] that
you must read both together
1. Does the trust violate public policy? Yes.
o Robins JA:
 Why should public policy be invoked cautiously?
 Judicial idiosyncrasy – concern that judges apply personal views
and biases in the guise of public policy
 Public policy should only be invoke in very clear cases where
almost everyone would agree that the instrument involved is
problematic
 What propositions does the Foundation stand for?
 (P.548) 1) White race is most entrusted 2) The attainment of
world peace is attained by white race in protestant form
 Do they contravene contemporary public policy?
 Racism and religious superiority contravenes public policy, it
expatiates the obvious; against democratic rights in our pluralistic
society; multi-cultural nature of Canada
o Tarnopolsky, JA:
 Is the court breaking new ground?
 1940 – [pg. 550] Refusal to serve a black man - SCC said doesn’t
violate PP
 1948 Nobleman v Wolf: racially restrictive covenants on
ownership of land – SCC said this didn’t violate public policy
 What is the evidence of the public policy against discrimination?
 Things have changed since then. He recites examples of
provincial human rights legislation, all of which prohibit
discrimination based on [sex, religion, etc], Ontario Human Rights
Code, Canadian Bill of Rights, legislation that explicitly prohibits
discrimination in various contexts. Also refers to Constitutional
human rights provisions. Proliferation of international
conventions and declarations on issue of human rights.
 Does this trust violate it?
 Yes. To the extent that they discriminate on several of these
grounds.
2. Is the trust saved by the cy-pres doctrine?
o If it becomes impossible or impracticable to carry out a charitable trust that was
valid when created, the court may revise the trust to carry out the settlor’s
intentions “as nearly as possible”
o Trust must have been valid at the time it took effect? 1) Terms were
28
Test
sufficiently certain 2) And didn’t violate the public policy at the time? But this
has changed over the years.
o If it violated public policy when it took effect, no point in trying to save it
under cy-pres doctrine
o Applies only to charitable trusts
 What is a charitable trust?
 Must have been established for 1 of 4 purposes: 1) Relief of
poverty 2) advancement of education 3) advancement of religion
4) or other purposes beneficial to the community as a whole
 Also: must satisfy 3 conditions: 1) must have as its object one of
the 4 purposes stated above, 2) its purpose must be wholly and
exclusively charitable and 3) it must promote a public benefit [the
trust must be beneficial not harmful to the public, and its
benefits must be available to a sufficient cross-section of the
public]
 Is this a charitable trust? What is its charitable purpose?
 Advancement of education [yes]
o Has the trust become impracticable?
 “It was practicable when it was created, but changing social
circumstances and hence has become impracticable.”
o How should it be altered? – Since we have concluded that it is a charitable trust
and that it is no longer practicable.
 Which parts have to go?
 All the references to religion, ethnic origin, sex and color [both
beneficiaries and those who administer the trust]
 Which parts should remain, and why?
 Things like sons and daughters of clergymen, military, miners,
engineers, school teachers etc.
o Is this okay? Because of parentage provision, there is a
classist dimension to it. But human rights codes don’t
protect economic class.
o Would this unreasonably restrict scholarship parameters?
o Affirmative action: Equality-enhancing?
What is the test?
An owner's attempt to control the future ownership or use of property will be void as against
public policy when…
 1. The instrument contains conditions or qualifications that discriminate on a
proscribed ground (race, religion, ethnicity, nationality, sex, etc)? AND [go to 2]
 What if it discriminates in favour of members of groups that are
currently or historically disadvantaged in society?
 This will probably not be struck down on the basis of PP.
o “To pay to the Board of Governors of the University of Prince Edward Island
one-half of the rest and residue of my general estate for the purpose of
founding … University scholarships, or bursaries, … to be awarded to protestant
students….” Re Ramsden Estate, PEISC 1996
o PEI court held that this is okay; this was decided after Leonard foundation and in
light of Leonard foundation
29
o Not cloaked in so much white supremacist language in the Leonard foundation
o “TO TRANSFER … to the UNIVERSITY OF VICTORIA, as a bursary for a practicing
Roman Catholic student in the third or fourth year of Education; [and] for a
bursary in music to be given to a Roman Catholic student preferably interested
in the liturgy of the Roman Catholic Church.” University of Victoria Foundation
v BC (AG), 2000 BCSC 445
o BCSC held that it doesn’t violate PP bc no blatant supremacism
 2. An owner's attempt to control the future ownership or use of property will be void as
against public policy when…
o 1. The instrument contains discriminatory conditions or qualifications that
favour advantaged groups
o AND
o 2. The instrument transferring ownership contains blatantly racist or
supremacist motivations or goals?
Blathwayt v Baron Cawley (UKHL 1975)
 F: Robert Wynter Blathwayt’s will left his real estate to a series of beneficiaries
provided that they not be or become a Roman Catholic
 H: In 1975, public policy argument rejected. “It was said that as matters then stood,
there was no express legislative edict or impact policy forbidding this kind of private
selection.”
Re Tuck’s Settlement Trusts [1977] Eng CA
 F: Sir Adolph Tuck settled a trust for future baronets so long as they were married to a
wife “of Jewish blood” and continued to “worship according to the Jewish faith.”
 H: Rejected public policy arg.
What is the test [expanded from above]
 An owner's attempt to control the future ownership or use of property will be void as
against public policy when…
o 1. The instrument contains discriminatory conditions or qualifications that
favour advantaged groups
 AND EITHER
o 2. The instrument transferring ownership contains blatantly racist or
supremacist motivations or goals,
 OR
o 3. The instrument creates an arrangement that has a public character (eg a
charitable trust)?
 Tarnipolsky J: Because of the public nature of the charity that public
policy applies – public policy does not reach the private sphere
Fox v Fox Estate (ONCA 1996)
 F: Ralph Fox’s will made his widow Miriam his executor and trustee, gave her absolute
power to encroach upon his estate to benefit her grandchildren and gave his son
Walter the residue of the estate in the event that he survived Miriam. Walter and his
wife had a bitter divorce, after which Walter married his longtime secretary [mother
essentially sides with his ex-wife]. His kids remained very close to Miriam, their
grandmother. When Miriam learned that Walter planned to remarry, she transferred
the entire residue of the estate to the grandchildren, mainly because she was angry
that Walter’s fiancée was not Jewish [also a problem]. Children, grandmother and exwife on one side and Walter on the other. Grandmother has executive power to
30
deprive Walter of entire inheritance.
o Walter’s position is that grandmother’s motivation was her anger that he was
marrying a gentile. Public policy arg?
o Reminder: In the context of private family arrangements, public policy is not
going to intrude in their arrangement. This is a twist on this application.
 Public policy comes in bc of the status of the person [the trustee].
Trustee’s powers and duties are governed by legislation. So even
though the substance of the will can remain private and out of the
hands of public policy, trustees can still be under public policy
consideration.
 H: PP applies to trustees in the discharge of their powers and duties bc a) they are
governed by legislation b) the trustee is performing a quasi-public function that is
subject to oversight by courts. [in this case there is no separation btw trustee and
executor so this applies to grandma]
Questions: just because the state protects a right, should they be able to infringe on a right? At
what point are public policy applications arbitrary
Back to public/private [policy question]
 Why should only “quasi-the public” trusts be required to conform to public policy?
o Why should “private” family trusts be exempt?
o If one may be a bigot at home and with one’s relatives, why not in a scholarship
trust?
o Does the public-private dichotomy make sense?
 Ziff argues that there is no bright line dividing the 2
 Even in the private, they still rely on the tools of public law to be
vindicated – the state is always standing by ready to enforce
o Does all discrimination in relation to private property actually involve the state?
What is the test? [summary including Fox v Fox]
 An owner's attempt to control the future ownership or use of property will be void as
against public policy when…
o Criteria 1-3 are met OR
o 4. The instrument is unobjectionable on its face but the executor/trustee has
discriminatory motives?
 What if the instrument is unobjectionable on its face but the testator (or
transferor) had discriminatory motives?
 ““I specifically bequeath nothing to my daughter, [Verolin] as she has had no
communication with me for several years and has shown no interest in me as her
father.” Spence v BMO Trust Co, ONCA 2016”
o a father dies leaving a will in which he explicitly says “I give nothing to my
daughter, V, because we have had no communication for several years” – it is
open to a testator to disinherit children or close relatives if they want to.
o V goes to court and leads evidence from outside the will that the real reason he
did this is bc she married a white man
o Does public policy apply? 1) Does have blatant racist language 2) No compelling
evidence this is quasi-public 3)
o H: It was not explicit in his will that his motives are racist. “Must remember that
this is a private rather than public or quasi public nature. Recall Tarnipolsky that
31
Relevant
Case
it must be public nature.” For the ONCA, it was about testamentary freedom –
protects right to dispose of assets at will and choose their inheritors.
 Courts said even if the language was explicitly racist, public policy still
doesn’t apply.
 Courts won’t look behind a will [testator protected from PP,
testamentary freedom applies] but will look to motivations of an
executor/trustee [not protected from PP]
McCorkill v McCorkill:
 F: Harry Robert McCorkill, of St. John, New Brunswick, died in 2004, leaving his entire
estate “to the NATIONAL ALLIANCE, a Virginia corporation, with principal offices at Post
Office Box 70, Hillsboro, West Virginia 24946, United States of America.”
o no obviously racist language but they are a white supremacist, neo-Nazi
organization
 H: National Alliance has documents of its purposes, which has been disseminated since
its inception. Purpose and means to achieve them are criminal in Canada and that’s
what makes the request repugnant.
o Can look at the face of the document of the beneficiary has them and has
disseminated them
 C: Struck down as invalid.
o Precedent-setting: 1) 1st time a Canadian court struck down a testamentary gift
that was an absolute gift with no strings attached 2) The invalidity is precedent
on the recipient. Until this time only 2 categories of recipients deemed
unworthy. One is when the recipient murders the donor to get the gift [longheld grounds for invalidating gift] and another being financing a terrorist group.
Court said apart of them, even the most despicable person is entitled.
 Ziff proposes a test for this:
o Gift should be invalidated if:
 1) At the time, the core and substantial aim of organization is to purpose
a policy that manifestly violates Canadian PP
 2) The donee must have pursued those objectives using illegal means
FINAL VERSION OF THE TEST!
 An owner’s attempt to control the future ownership or use of property will be void as
against public policy when…
 --> any of the above OR
 5. The transfer is absolute and unconditional but the recipient has reprehensible or
illegal aims or activities? – look at how McCorkill extend the law
State Limitations on Private Power, Part 2; Uncertainty and Restraints on Alienation [Unit
7.3]
Uncertainty
 Stipulations cannot be enforced if they cannot be interpreted with certainty
 Degree of certainty required will depend on the stipulation
 When interpreting a condition precedent, one has to know with certainty only whether a
particular claimant has met the condition, [Tarnopolsky J in Leonard] don’t need the
certainty to draw clear line btw all who might qualify and all who might not
32


With a condition subsequent, one must be able to state with certainty what events will give
rise to the grantor’s right of re-entry, and, with a determinable limitation, what will cause the
grantee’s interest to revert back to the grantor
If condition precedent or a determinable limitation is void for uncertainty, the entire
grant fails, whereas if a condition subsequent is void for uncertainty, the condition is
struck from the grant and the grantee receives the interest free of the condition
HJ Hayes Co v Meade [1987] NBQB - uncertainty
Facts
 Father dies an gives gifts to sons. One son is James; on condition he stays on the farm
and cultivates it. If James doesn’t do it, the farm goes to Harold who pays James $1000.
James left the country and lived in the US for decades and returns about 40 years later
and takes residence on the disputed land, then dies. By this time, father, James and
Harold are dead. Beneficiaries under Harold are claiming the land but beneficiaries
under James claimed it was his.
 Problem: James never took residence on that lot until 40 years later, but Harold also
never paid the $1000.
 “I give [land] to my son James … on the following conditions that [he] reside on said
land and cultivate the same. Should [he] desire not to reside on said property or
cultivate same then that portion … to be the property of my son Harold he paying to my
said son James [$1000].”
Analysis
 Is this:
o 1) A condition of acquisition: OR
 condition precedent
o 2) A condition of retention:
 subsequent OR
 determinable limitation
 Why does this matter?
o Reason 1: Different tests for uncertainty:
 A condition precedent is not void for uncertainty if the court can
determine that any particular beneficiary meets the condition on the
particular facts (Re Leonard Fdn.)
 More liberal approach than condition of retention
 A condition of retention (condition subsequent or determinable
limitation) is void for uncertainty unless the court can see from the start,
precisely and distinctly, what event will terminate the interest (Re Down)
 The test here is strict and unforgiving bc the courts will have to
see from the start exactly what events will terminate the trust.
All possible events that might terminate the interest should be
known in advance.
o Reason 2: Different consequences of invalidity
 Condition of acquisition: If a condition precedent is void, the entire
interest is void
 Condition of retention:
 If a condition subsequent is void, only the condition is struck out
and the interest is rendered unconditional
 If a determinable limitation is void, the entire interest is struck
out and void
33

Related
case
Back to Hayes:
o Which do we have here?
 Give effect to the testator’s intentions
 Testator wanted all his sons to benefit. In the case of James, he
wanted James either to get the land or the money  find a way
for James to keep the land or get money. Courts don’t want the
gift to succeed.
 Presumption against intestacy
 If condition precedent and we find it void for uncertainty, the
entire gift to James fails and it will fall into intestacy.
o Which means it doesn’t seem to favour condition
precedent
 Construction in favour of vesting;
 Construction in favour of vesting
 Courts decide that justice is better done by construing this as a
condition of retention
o BUT, is it a condition subsequent or a determinable
limitation?
 Go with condition subsequent because voiding for
uncertainty, only the condition is struck out. [Go
to next stage]
o Is James’ condition void for uncertainty?
 When did he have to take up residency?
 Did settling on the land 40 years later qualify?
 What if he left for some time?
 Through illness, holiday, etc.?
o What’s the result?
Re Down: “… where a vested estate is to be defeated by a condition on a contingency that is to
happen afterwards, that condition must be such that the court can see from the beginning,
precisely and distinctly, upon the happening of what event it was that the preceding vested
estate was to determine.”
 Uncertainty as to the period of time within which the residence requirement must be
met as well as the uncertainty as to whether the beneficiary would forfeit his right if he
left the property for any period of time, either through illness or for a holiday, make it
clear that the condition does not meet the test put forward in Clavering and Ellison.
Fennell v Fennell [2012] Nfld SC – uncertainty
Facts
 Josephine Fennell died in 2008, leaving her home in Plate Cove West, NL to her five
children who didn’t live in NL “WITH THE CONDITION that all of my family can make use
of the said house at any time without costs PROVIDED THAT they share in the upkeep
of the said house.” Fennell v Fennell, NLSC 2012
 She basically gives everything to 5/11 of her children w/ condition that all fam can use
without cost provided they share in the up-keep of house
Analysis
Uncertainty:
 Held: family use and shared upkeep = conditions subsequent
 Void for uncertainty? [main analysis]
o What’s the purpose of the tests for uncertainty?
34


“family” – this is void for uncertainty
“share in the upkeep” – will doesn’t provide any practical standard by
which to determine contribution that is required
 pg. 565 – no method to determine the quantum
 “on condition that X provides home” – this has been held void for
uncertainty
 compare “provide a home” [Re Brace]
Restraints on alienation:
 “condition that all fam can use without cost” held to be void because if they sell this,
the new owners shouldn’t be responsible for allowing the fam to use the home
Relevant Cases:
 “When my son [Harold] arrives at the age of thirty years, providing he stays on the farm, then I
give…all of my estate…unto my said sons [Stanley and Harold]” Re Down, ONCA 1968
o Turning 30 – condition precedent
o “providing he stays on the farm” – void for uncertainty bc there is no way to determine what
that means
o so he turns 30 [satisfies condition precedent] but the second part doesn’t apply due to
uncertainty
 “to my grandson Bruce Greening my dwelling house and all its contents…. It is to be clearly
understood that the said Bruce Greening is to take care of his grandfather…and to see that in the
event of death he is to be decently and properly interred…” Philpott v. Philpott Estate (NLSC 1989)
o Court went through 3 possibilities:
 1) these are not conditions at all, rather they are just wishes [precatory] – not
intended to be a legally-binding obligation
 2) condition precedent – which is void for uncertainty because no one knows what
this precisely means [each element is ambiguous]
 3) condition precedent – satisfied/not void for uncertainty and he fulfilled it [he, in
fact, died]
 “The house at 792 Mapleton Place Victoria to Gerald F. Thomas,…IF he wishes to live in it. If he
doesn’t wish to live here, then it shall be sold and half the money go to him [and the other half to
other named beneficiaries].” Davis Estate v. Thomas (BCCA 1990)
o courts determined this is a condition precedent and not void for uncertainty
o looking at the evidence before it, this was intended to be a decision point right at the time
the will takes effect
 “to Oilme Kotsar of Venevere Side Jaoskond, Poltsamaa Rajoon Estonia N.S.V. if and when she shall
attain the age of 21 provided that upon attainment of such age she shall then be resident in one of
the countries of the British Commonwealth of Nations” Kotsar v. Shattock (Victoria SC 1981)
o Courts held this was sufficiently certain and the reasoning is that this just had to be satisfied
for 1 day – easier to determine that someone has resided there for one day
o Condition precedents 1) turn 21 2) before being entitled to inherent property, on that day,
show they are a resident of a British Common Wealth 3) We can turn to statutes to interpret
residency
 “The payments to my said daughter shall be made only so long as she shall continue to reside in
Canada.” Sifton v. Sifton (JCPC 1938)
o held to be void for uncertainty – what does it mean to continue to reside?
o “so long as” words for a determinable estate – so what’s the test? Same test as for a
condition subsequent; you will reach the same conclusion, that is, it is void for uncertainty
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VIII. LEASES, LICENCES AND BAILMENT
Leases, Licenses and Bailment [Unit 8.1 and 8.2]
Overview:
• 8.1 The Nature of a Lease
– Lease vs licence: what’s the difference and why does it matter?
• 8.2 Landlord’s and Tenant’s Interests & Obligations
– 1) Is a new landlord bound by the previous landlord’s contractual promises?
– 2) When may a landlord refuse a sublease?
– 3) Does the covenant of quiet enjoyment mean anything?
8.1 - Lease or Licence?
 Lease
o A proprietary estate [in land] conferring the right to possess a parcel of land for a
limited time (fixed term, periodic or at sufferance)
 Licence
o Not a propriety estate in land BUT
o A mere permission enter land, with or without additional permission to perform
specified acts there
Name of arrangement
Lease
Licence
Person who owns the
land
Landlord or lessor
Licensor
Person who enters and
uses the land
Tenant or Lessee
Licensee
What is the test for a lease? [see Glenwood Lumber and Street v Mountford and Fatac]
Glenwood Lumber [1904] Newfoundland Privy Counsel – test for lease // leading authority
Facts
 Whether timber licences issued by the Crown were leases or licence
 “In the so-called licence itself it is called indifferently a licence and a demise [creation of
a lease] but in the Act it is spoken of as a lease, and the holder of it is described as the
lessee. It is not, however, a question of words but of substance. If the effect of the
instrument is to give the holder an exclusive right of occupation of the land, though
subject to certain reservations or to a restriction of the purposes for which it may be
used, it is in law a demise of the land itself” Glenwood Lumber, JCPC 1904 (holding a
Crown timber licence in Newfoundland to create a lease)
But first
Street v Mountford, HL [1985]
 Facts: Town of Bournmouth. A solicitor owned property in Bournmuth. Like many
landlords at that time, he entered into a written agreement with the person who was
going to occupy the premises and it was labeled a licence agreement. It was full of
terminology for a licence and not a lease. Reason was this enabled these sorts of
residential agreements to avoid certain tenant protection legislation in UK, particularly
rent acts with dealt with amount of rent a landlord could charge. Called licences to
avoid subject to legislation.
 I: Lease or licence? Lease.
36
Analysis:
o in the course of rejecting line of cases by Lord Denning, who said the fact of exclusion
possession was no longer the determination, rather the key is whether the parties
intended to created “merely a personal privilege” or an estate in land. That was key
consideration.
o In course of rejecting that line of cases, HoL said: “the agreement was only ‘personal’
… if [it] did not confer the right to exclusive possession …. No other test for
distinguish-ing between a … tenancy and a … licence appears to be understandable or
workable.”
o
 (holding a “licence” to occupy rooms in a house a lease and rejecting Lord
Denning’s claim that intention to create a merely personal interest vs an interest in
land is the key, not the fact of exclusive possession)
Fatac Ltd v. Commissioner of Inland Revenue [2002] New Zealand CA
 Facts:
o holding a contract to operate a basalt quarry a licence
o Dealt with a quarry in an area near Auckland NZ which is full of ancient lava
flows and cones. Sacred place. There was litigation in this area, dealt with
arrangement where the owner of this large quarry entered into an agreement
with another company that allowed other company exclusive right to quarry for
basalt. This was already heavily quarried over and they were getting last dregs.
This company was given exclusive access only to small portion of overall site.
 I: Licence or Lease? Licence.
 Analysis:
o “The fundamental distinction between tenant and licensee is that the former
alone has the right to exclusive possession.”
Exclusive Possession
 Effect of the agreement is the key consideration
o In Mountford: “If the agreement satisfied all the requirements of a tenancy, then the
agreement produced a tenancy and the parties cannot alter the effect of the
agreement by insisting that they are only creating a licence. The manufacture of a
five-pronged implement for manual digging results in a fork even if the manufacturer
… insists that he intended to make … a spade.” Street v Mountford
 Parties’ intentions as to “personal” character or legal categorization are irrelevant
o Only their intention as to exclusivity of possession is relevant
Refinements
 Is an arrangement a lease if:
o The parties use typical lease or licence terminology? – labels don’t determine legal
character or arrangement. In UK and NZ, terminology is irrelevant.
 But in Canada, authority is in middle; terminology can be evidence of the
character of the arrangement but not determinative, but fact of exclusive
possession is determinative [terminology can be negated in a particular case]
o No rent is charged? No. Provision for payment of rent favors lease b ut lack of rent
doesn’t presume not a lease.
o There are serious restrictions on the use of the land?
37

Glenwood: as long as exclusive possession is given to occupant, the fact of
serious restrictions doesn’t change the fact that it’s a lease
 Eg certain activities prohibited without owner’s consent; only some activities
permitted; must sell only landowner’s products
o The owner reserves the right to enter?
 This is a problem because at a certain point this is inconsistent with exclusive
possession
 Eg owner’s agents may enter at any time without notice; owner may direct
occupier to relocate on premises; occupier may not impede owner’s
possession or use
 Eg: Owner of land directing occupier to relocate from point to point
 Eg: occupant agrees not to “interfere with landowner’s possession and use of
premises”
 All of these would be enough to not be a lease because they are
inconsistent with right to exclusive possession
o The occupier has exclusive possession only of a small part of the entire premises
covered by the agreement?
 It is difficult to know where the line is drawn but if occupier only has exclusive
possession of a small part of parties’ contract [depends on how small] than it’s
a licence. Where that line is drawn is not clear.
o It is terminable pursuant to another legal relationship (eg employment or office)?
 Eg Housing for employees, students or clergy – this is a licence
Leases [Unit 8.2]
Leases
 Some questions about the nature of the parties’ interests
o 1. When will a new landlord or tenant be bound by her predecessor’s contractual
promises?
o 2. When may a landlord withhold consent to a sublease?
o 3. Does the landlord’s covenant of quiet enjoyment mean anything?
Terminology
 Landlord’s interest = Reversion [revert to landlord at the end of lease]
o Freely transferable (assignment of reversion) [landlord dies at term of lease or sells it
to new owner; lease survives the transfer; the assignee becomes the new landlord]
 Eg where landlord dies or sells freehold to a new owner
 Lease survives transfer; assignee steps into landlord’s shoes
 Tenant’s interest = Leasehold
o Right of exclusive possession, even against landlord [no right to enter at all unless
provided by contract or statute]
o Freely transferable in two ways (subject to contract):
 1. Tenant transfers the entire remaining term of the lease: Assignment
 Assignee steps into tenant’s shoes and takes over lease
 2. Tenant transfers a smaller portion of the remaining term or of the leased
premises: Sub-lease
 Tenant remains landlord’s tenant and becomes sub-landlord with
third party as her sub-tenant
1. Enforcing Promises
38



Scenario 1: Privity of contract
o All promises in a lease agreement are enforceable between the original contracting
parties, due to privity of contract
 If you assign or sublet you are still bound by the contract you made with the
original counterparty; will stay on the hook unless negotiate a release of the
contract
Scenario 2: Privity of estate
o Happens when one party steps out and another steps in
o [only certain covenants are enforceable]: Only real covenants are enforceable
between parties who have only privity of estate
o Parties in a direct landlord-tenant relationship have privity of estate
 If original landlord assigns the reversion, new landlord has privity of estate but
not privity of contract with tenant
 If original tenant assigns the leasehold, new tenant has privity of estate but not
privity of contract with landlord
 Ditto if both L and T assign their interests
Scenario 3. No privity
o No covenants are enforceable between parties who have neither privity of contract
nor of estate
 If tenant sub-lets, the sub-tenant has neither privity of estate nor privity of
contract with head landlord
 Neither sub-tenant nor head landlord may enforce covenants directly against
the other
 Must rely on interlocking chains of privity:
 Eg breach of sub-lease may put sub-landlord in breach of head lease
Real Covenants
 Recall: only real covenants are enforceable between parties that have only privity of
estate
 A real covenant is a covenant that touches and concerns the leased property
o It affects the land itself—its nature, quality, mode of use, or value—or the value of the
land at the end of the term
o Which covenants “touch and concern” is a source of endless dispute…
39
2. Subletting
• At common law tenant has full right to transfer leasehold via assignment or sublease
• Can be and often is limited by contract, eg. “only with the consent of the landlord,
which shall not be withheld unreasonably”
• Some leases also deem certain grounds not unreasonable
• Tenant bears burden to prove consent withheld unreasonably
• Question is not whether a reasonable person would have consented but
whether any reasonable person could have withheld consent [objective
standard]
• Courts in Canada said that where it would harm landlord’s financial
interest, it is not unreasonable to withhold subletting
• Otherwise, not clear what the reasons are
• Refusal is not unreasonable if landlord’s own financial interest would be
harmed
• Unclear whether landlord may rely on any genuine reason or only reasons
known and invoked at time of the refusal
• Highly case-specific inquiry
3. Quiet Enjoyment
 At common law, freedom of contract prevailed
o Very few implied terms, and even those could be negated by agreement
 But one term is always implied and can’t be negated: the covenant of quiet enjoyment
o Eg “Landlord covenants that on paying the Rent and performing the covenants
contained in this Lease, Tenant will peacefully and quietly have, hold and enjoy the
Premises for the agreed Term”
o But what does it mean?
 See next notes
 What does this mean?
o “The flat is not quiet and the tenant is not enjoying it” (Southwark v Tanner, UKHL
2001)
 this was because of excessive noise coming from other apartments
o A covenant that tenant’s lawful and ordinary possession will not be substantially
interfered with by acts of the lessor or those lawfully claiming under her [must
be same landlord]
 Quiet means without interference with possession, not undisturbed by noise
 Enjoy means to have the full benefit of the tenancy, not to derive pleasure from
it
o Quiet means “not interfered with” and Enjoy means “full benefits of tenant”
Substantial interference
 What constitutes substantial interference?
o Direct physical interference—flooding, threats, intimidation, banging on door,
unauthorized entry
o In principle, excessive noise can qualify
 But not if attributable to conditions predating the lease
 Must be attributable to unusual or unnatural activity not fairly in the parties’
contemplation when the lease began, or to a structural change after the lease
began
o In Canada, circumstances in which excessive noise by other tenants will breach the
covenant are unsettled
40


If landlord knows of disturbance but does nothing to fix it?
 One line of reasoning is that if landlord knows about it but doesn’t take
reasonable steps to drop it [Ontario]
If landlord condones or participates in the disturbance?
 Having knowledge and standing by is not enough to breach covenant of
quiet enjoyment. Breach if landlord condones or consents to or even
participates in the quiet enjoyment [Manitoba]
What makes possession exclusive? Lease vs License:
Fatac Ltd [2002] NZ Court of Appeal – Qualities of a Lease // ***the modern test***
Facts
Puhinui owned 10 ha near Auckland, NZ. It granted Atlas the right to operate a quarry on part
of the land for 12 years, reserving a general right of access provided it did not obstruct A’s
permitted activities. P sold the land to Mt. Wellington, which entered a contract with A
reserving for itself the right to quarry everything but basalt, set up a screening plant in the
quarry area, and stockpile and remove materials, provided it did not impede A’s quarrying
operations
Issue
Was Atlas’s interest a lease or licence?
o Why did it matter? Because it will depend on who pays the GST on th land.
 Tax case but outcome depended on whether it was a lease or licence
Analysis
 Did Atlas have a right to exclusive possession?
o No provision for rent
 But this is not determinative as to whether something is a lease or
licence
o Contract was labelled a “Licence Agreement”
 In NZ, say terminology is irrelevant; In Canada, consistent terminology
that something is a lease or licence has effect, but not determinative,
matters more that something grants exclusive possession
o Puhinui had general right of access, Mt. W had right to quarry all minerals
except basalt, stockpile & remove them, set up screening plant, all provided
they did not obstruct A’s quarrying
 This is where they run into problems. The main restriction was that they
weren’t allowed to interfere with Atlas’ basalt quarrying operations.
This sounds more like a shared possession to extent that Atlas has
exclusive possession to basalt quarry [only applies to specific areas
where they were quarrying for basalt] the remaining areas that were
commercial were relatively small. Court said there is no clearly defined
area where they had exclusive use; where there were defined area, it
was small.
o No clearly defined area where A had exclusive use let alone a substantial
portion of the entire premises
Conclusion This is a licence and not a lease.
Metro-Matic, ONCA 1973 (pg. 612, note 1) – Lease or License?
Facts
Apartment building owner enters “Lease Agreement” with Metro-Matic Services Ltd. using
typical lease terminology and providing that premises shall be used only for a laundromat
business; tenant has exclusive right to install & maintain laundry equipment; tenant’s agents
41
Issue
Analysis
have free access to premises at all reasonable times for specified purposes; building residents
have free access to premises at all reasonable times; landlord will obtain agreement from
purchaser of land to be bound by the lease. New owner buys building with full knowledge of
lease, accepts two rent cheques then purports to terminate.
Lease or licence?
o If lease, this would have been a wrongful termination. If licence, it would likely be
within new owner’s power [personal to arrangement including owner of land; if
someone new comes along, they are generally not bound by the licence even if they
are aware of the licence].
 Arguments:
o 6(e): to permit the tenants of the Landlord’s premises to have free access to the
demised premises and to have the use of the machine and equipment at all
reasonable times
 favours not exclusive right – so at face value, this doesn’t look like a
lease
 but who is taking on the burden? Not the tenant; he doesn’t have to
take on the responsibility to keep it open at all reasonable times
 the landlord is the one who cannot “close the doors”
o which strengthens argument that this is a lease
o it is in the nature of a coin-operated laundry that it is open to the tenants of the
building – but at what point does that take away the “exclusivity” aspect of it?
o 5: Covenant of quiet enjoyment, which is a necessary term of every lease;
 reinforces the conclusion that the laundromat operator has exclusive
possession
 but just because you use this terminology, this does not guarantee a
lease
o 1: terminology and formulations that are lease language
o 3. Specifies that rent is payable
o 6(b): the authorized employees and agents of the Tenant shall have free access
to the demised premises at all reasonable times to install, inspect, service,
repair or remove the said machines and equipment and to collect the monies
deposited therein
 suggests that landlord “needs to agree” that the tenants and its agents
have access at reasonable times to do specific things
 which is contrary to right of exclusive possession; this seems to
suggest to restrict exclusive possession and reserve possession
to the landlord
o counterarg: consider those who are renting there, don’t
want maintenance to happen at weird times that would
disturb then; maybe landlord controls front door
o courts says this seems weird but they will interpret it as
clarifying, out of abundance of caution, the right to get
into the premises and carry out their business; so this
isn’t inconsistent with exclusive possession of the
laundomat room – just extra detail to make sure there
was no misunderstanding between them
o “none of these covenants make… any less exclusive…”
42
o 4: tenant covenants and agrees that the demised premises shall be use only for
the purpose of carrying on the business of an automatic laundry
 putting restrictions, even severe restrictions is not inconsistent with a
lease
Conclusion This is a lease and was binding on the new landlord bc it was still in effect. New owner of the
building had privity of estate with the existing tenant. So they couldn’t terminate on a whim.
Other examples:
BA Oil, ONCA 1959 [leading authority in Canada on distinction btw lease and licence]:
 F: Service station operator signed “Service Station Lease” and “Retail Dealer Sales Agreement” that
used typical lease terminology; prohibited operator from any construction, alteration or advertising
without landowner’s consent; allowed landowner (BA Oil) to place signs on premises; and required
operator to sell only BA’s products, provide facilities for storage, display, and sale of BA’s products
 I: Licence or lease?


A: “allows landowner to place signs on the premises” – landowner is reserving, to some degree, a
right to access
H: ONCA said this a lease. The doc is couched in language peculiar to a lease, inconclusive but in
favor. Use restrictions [Glenwood Lumber] are inconclusive [can be ok to restrict]. Contains terms
that give exclusive possession subject to terms that are not unreasonable.
o Placing signs was a limit right
o Other than this, nothing to suggest that landowner intended to retain possession
Shell-Mex, Eng CA 1971:
 F: Service station operator signed “Licence” agreement that allowed operator to occupy premises,
required it to sell only landowner’s products; allowed landowner’s employees to enter premises at
any time without notice, required operator not impede landowner’s right of possession and control.
 I: Lease or licence?
 A: There is a problem in terms of exclusive possession. If landowner to enter without any notice
[anytime] this is not exclusive possession. ALSO, operator not to impede landowner, so this is clearly
not exclusive possession.
o The crucial question is to what degree does the landowner retains the right to enter and
use the land
 Contrary to this case, a right to enter temporarily to erect a sign is okay but a right to
enter any time is not okay
 H: This is not a lease. (it’s a license)
Enforcing Covenants Against New Landlord
Merger Restaurants (Man CA 1990) – covenants
Facts
Two restaurants rent adjacent lots from the same landlord. Expansion on one lot leads to a
parking shortage. The landlord grants one tenant (DME/Bonanza) parking rights on the lot
occupied by the other (Merger/Merk’s), who objects that its lease (with the prior landlord)
gives it exclusive parking rights on the common areas of its lot.
Issue
 Does the covenant for common area parking rights touch and concern the subject
matter of the lease?
o They have privity of estate – so the outcome is whether that covenant
43
Analysis
Conclusion
touches the matter of the estate
 Where parties have privity of estate but not ___, are they real
covenants? Real covenants touches and concerns the subject matter
of the lease/ touches and concerns the demise itself
o [in order to touch and concern] Does it affect the nature, quality, use or
value of the land itself? Or does it affect the value of the land at the end of
the lease [the reversioner]?
 Is the promise of exclusive parking rights personal btw parties or does
it affect the land itself?
 Can you distinguish Kontogonis?
o Covenants that touch or concern the land run with the land and bind
successors in title
 Courts say parking does touch and concern the land because parking is essential to
the nature of a restaurant business AND essential to the nature of the shopping
mall
o “the extent and availability of parking spaces directly affects the value of the
land”
o “… an essential element of nature of shopping centre and economic wellbeing of tenant and landlord”
o without the parking the business “would be doomed to failure” [strong
language]
Right to have exclusive parking touches and concerns the matter of the lease.
Kontogonis: - more on covenants
F: P operate a restaurant. On ground floor of 2-story building. Landlord obligated under lease to provide
reasonable space to provide parking in all business hours.
A: BCSC said doesn’t touch and concern. It’s about business rather than tenant itself. Also part of a separate
contract [even though its in the same lease].
 Distinguishing factors from Restaurant:
o 1. Kon operated a business in a commercial building rather than a shopping plaza. [Why?] –
this is complicated
o 2. In Merger Restaurants, there was a promise that a specific area was reserved for this
exclusive use. In Kon, was that there was suitable space provided [and didn’t grant common
area rights to a specific restaurant].
Withholding Consent to Sublet
Sundance Investments Corp. v Richfield Properties Ltd. [1983] Alta CA – withholding
consent to sublet
Facts
 Sundance, a tenant in Calgary’s Heritage Hill mall, wants to sublet a portion of its
premises for a Swiss Chalet. Its lease says it may not sublet without landlord’s
consent, which shall not be arbitrarily or unreasonably withheld, and refusal shall
not be considered unreasonable if the other major tenant objects to the “nature of
the business”. Landlord withholds consent when the other major tenant, Beaver
Lumber, objects [main summary]
 Sundance is a tenant in Heritage Mall and wants to sublet to Swiss Chalet. Has a
lease which said subletting is not allowed without consent. Said landlord will not
44

Issue




withhold consent unreasonably. Goes on to list circumstances that are deemed not
to be unreasonable.
The anchor tenant [biggest store in the mall] has a say as to which other tenants; in
this cases, that’s Beaver Lumber
o So if Beaver Lumber objected to the nature of the business, that was a valid
reason for owner of the mall to say no to proposed sublease
Did landlord Richfield withhold its consent unreasonably?
1. Was it entitled to rely on Beaver’s objection?
o Did Beaver object to the “nature of the business”?
 Did it object to something inherent in every business or to something
specific to the nature of the proposed business?
 Should contractual limits on the right to sublet be construed
narrowly?
 Was Beaver objecting to the nature of the business or to the location
of its entrance?
2. Was R’s refusal unreasonable independent of B’s objection?
o Who bears the burden of proof? Whenever the landlord withholds consent
to sublease or assignment, the tenant bears the burden of proof that this is
unreasonable
 Ask: Could any reasonable person have withheld consent in those
circumstances?
o What’s the question to be answered?
o May landlord rely on any genuine reason, or only the reason given at the
time of the refusal?
 Beaver’s objection vs. impact on R’s own revenues
o Is refusal unreasonable if landlord’s own financial interest will be adversely
affected?
 Majority: Landlord can rely on any genuine refusal
 Dissent: This is inherent in the risk the landlord is taking
 Did majority misconstrue Coopers & Lybrand? [Alberta case on impact
of landlord’s financial interest]
 Majority: This is like the previous case of Coopers so should be
decided the same way
 Dissent: These cases are fact-specific, don’t follow Cooper
o Are previously decided cases of any help?
What was the outcome? Swiss Chalet can’t move in
45
Analysis
Conclusion

1. Was it entitled to rely on Beaver’s objection?
o [majority] Yes.
 1) A restaurant has static parking [people more likely to stay longer]
which will adversely affect Beaver Lumber, who needs the parking for
customers to load their materials into their car.
 2) Swiss Chalet would also have more seats available to patrons,
which will increase the amount of parking needed
 3) Access point – Swiss Chalet required that their parking would be
near Beaver’s store [the south end]
o majority argues then that the objection by Beaver is not unreasonable
o [dissent] No.
 1) You cannot say that its an objection to the nature of the business
because parking is inherent to any business in a shopping mall.
 2) They not objecting to the nature of the business but rather the
degree to which it is successful.
 3) A restriction on subletting or assignment is a restraint on alienation
[which is frowned upon] so they should be construed narrowly
against those who are imposing it.
 4) This is not an objection to the nature of the business but rather an
objection to the location of the door. Where the doors are on the
Swiss Chalet is not part of the nature of the business.
 2. Was R’s refusal unreasonable independent of B’s objection? [see above]
Held that Beaver’s objective is not unreasonable.
Ontario Inc. v Welbow Holdings:
 Reasons given by landlord at the time of the refusal and not any additional, or different, facts or
reasons provided subsequently to the court – that is material
Covenant of Quiet Enjoyment
Southwark v Tanner [2001] UKHL – on quiet enjoyment
Facts
Social housing tenants in south London complain of excessive noise due to lack of sound
insulation. They claim this violates landlord’s covenant not to interfere with their right to quiet
enjoyment of the premises.
Analysis
 “the time has come to recognize that excessive noise can qualify as a substantial
interference but cannot be attributable by conditions that were already there when the
lease took effect”
o Ex: poor building construction, poor sound
 Must be unusual conditions or structural changes that occurred after the lease began
 In Canada, circumstances in which excessive noise by other tenants will breach the
covenant are unsettled
 If landlord knows of disturbance but does nothing to fix it?
 One line of reasoning is that if landlord knows about it but
doesn’t take reasonable steps to drop it [Ontario]
 If landlord condones or participates in the disturbance?
 Having knowledge and standing by is not enough to breach
covenant of quiet enjoyment. Breach if landlord condones or
46


consents to or even participates in the quiet enjoyment
[Manitoba]
Other grounds were unavailable
o No warranty of sound insulation or habitability; duty to repair does not mean
duty to improve
Did the landlord breach the covenant of quiet enjoyment?
o Were the other tenants unreasonably noisy?
o Was the disturbance due to:
 Structural conditions that predated the lease?
 Acts not in parties’ reasonable contemplation when the lease began
 Structural changes that postdated the lease?
 Such as…? Argument that this should be left to Parliament to legislate
since this is different from the existing law.
o Should the courts step in where Parliament has chosen not to legislate?
Pellatt v Monarch Investments [1981] Ont Co Ct – Covenant of Quiet Enjoyment
Facts
Landlord’s extensive renovations disrupted Anna’s ability to study for the bar admission
course. Landlord offered termination or free alternative housing, but Anna declined and
sues on the covenant for quiet enjoyment.
o Noise and vibration coming from elsewhere as well as the noise, dust and
vibration in her own apartment
Issue
 Did the landlord act reasonably?
 Did it nonetheless breach the covenant?
 Why did a Forest Hill law student succeed where UK public housing tenants failed?
Analysis
 Landlord acted reasonably/politely but that is not a defense. If you do things that
breach the covenant of quiet enjoyment, you breach it.
 In Tanner, the problem was with pre-existing structural conditions whereas in this
case, the renovations happened after she moved in
o Additionally, in this case, the problem existed in her apartment while in
Tanner, it was other apartments
Conclusion
Held in favour of Anna.
Bailment [Unit 8.4] – skipped 8.3
What is a bailment?
 Like lease of a chattel
o Defined by transfer of possession, which distinguishes bailment & lease from licence
[licence is entering land for a particular purpose but don’t get exclusive possession of
land]
 Does not need to be transfer of exclusive possession but transfer of
possession simplicitor
 Person parting with possession = bailor
 Person taking possession = bailee
o At intersection of contract, tort, property and trust law
 Definition of a bailment:
o “Delivery of personal chattels on trust, usually on contract, … that … the chattels be
delivered in either their original or an altered form as soon as a time for which they
were bailed has elapsed.” Punch v Savoy’s Jewellers, ONCA 1986
47

Two main questions that arise in bailment cases:
o 1. Does a bailment exist?
o 2. If so, what are the consequences, especially when something happens to the
bailed item?
o Usually arises when something happens to the bailed item
Letourneau v Otto Mobiles [2002] ABQB - bailment
Facts
Otto Mobiles repaired the Letourneaus’ Triple E Topaz camping trailer. The Ls requested
further repairs. OM’s manager told them to leave the trailer in an adjacent parking lot after
hours, padlocking it and locking the key inside the water compartment, to be picked up the
next morning by OM. This was OM’s standard practice for after hours delivery. The Ls followed
these instructions. The trailer disappeared.
Issue
 Was there a bailment of the trailer to OM?
o Why did it matter?
 If no bailment, L left their at their own risk
 If bailment, OM had a duty to safeguard trailer
o Essential element: was there a transfer of possession to Otto Mobiles?
o Factors to consider: [cases like these: someone bringing a vehicle to someone
else for the purpose of servicing a vehicle itself – vehicle goes missing some time
after the repairs are done but before pick-up by owner]
 1) Alleged bailee’s instructions – in this case, the service manager gave
explicit instructions to L about after-hours delivery. “Bring trailer, park it
beside Intuit parking lot, padlock the hitch and lock the key inside the
water compartment”
 2) Alleged bailee’s established practice
 Why is this relevant as to whether there was a bailment? These
were instructions that were given as to how to effect delivery of
possession. They were given these instructions and they followed
the instructions.
 if you can show that you [owner] were given instructions and you
followed them AND this was the custom practice of the bailee
that then reinforces you claim that there was transfer of
possession.
 3) Alleged bailee’s knowledge – did OM have the requisite state of mind
to take possession? Did the alleged bailee have the intention to possess?
Yes. Here, the instructions that were given can also be a basis by which
to support the fact that baillee had intention to possess the trailer.
 4) Possession necessarily incidental to the service to be performed by
the alleged bailee – [ex: there is a contract to provide services like repair
and the basis purpose of the contract is to effect the repairs. The person
taking possession of the repairs is necessary for the performance of
those services] In cases were possession is necessary for the services to
be performed, this reinforces the argument for possession by the bailee.
 Possession may be inferred where possession is necessarily
incidental to the service agreed upon
 5) Location of the chattel – the trailer was not on the bailee’s premises.
The fact that the alleged bailed item is not on the bailee’s premises is not
48
Analysis
fatal for bailor’s claim [see Heferman]
 all the factors above together led courts to rule that there was a bailment
 but there’s more
 When was the transfer of possession effective? [the morning after when bailee took
possession or the evening before when the bailor finished following the instructions
given to them by the bailee]
o The morning after, when OM was to pick up trailer, or the evening before, when
Ls left the trailer?
 L said transfer is finished when bailor took all the steps
 Courts ruled the transfer of possession was effective the night before when the bailor
took the steps to complete possession – when they left it on the Intuit lot, bailee then
had possession
If bailment, then what?
 Bailee had duty of safekeeping
 What is the standard of care?
o Traditional categorical approach
 Bailee’s sole benefit: bailee liable for slight negligence
 Bailor’s sole benefit (gratuitous bailment): gross negligence
 Mutual benefit (for reward): bailee must take care a prudent owner
would (Punch v Savoy’s Jewellers, Ont CA 1986)
 And is liable for employee’s negligence or theft
o Emerging general reasonableness standard
 Bailee must take same care of goods as would a prudent owner, acting
reasonably in the circumstances
 Considering who was intended to benefit, how bailment came
about, relationship b/w parties, value of item, cause of loss
Duty and Standard
 Who bears the onus of proof?
o If goods are lost or damaged while in bailee’s care, onus is on bailee to prove
either that
 S/he took reasonable care of the goods, or
 Her failure to do so did not contribute to the loss or damage
 Back to Letourneau
o OM failed to provide reasonably safe storage
o This failure contributed to the loss
o Letourneaus took reasonable precautions, no contributory negligence
 When they left the trailer it was still daylight
 They had no reason to question OM’s instructions
 Bc it was still daylight, they had no way of knowing if the area was dark
or lit
o Waiver of liability only applied to earlier work (more on waivers later)
 The trailer had been in for servicing and there was a waiver of liability
attached to it and OM was in the position that this waiver applied to this
situation bc this is seen as a continuation of service
 Courts ruled waivers of liability must be strictly construed
against the party relying on it [especially in contracts of adhesion
where there is an imbalance of power]. So in this case, the waiver
49
of liability applied to the service done previously and not this
one.
Parking Lot Puzzles
 Does a parking lot operator become the bailee of your car or merely grant you a licence to
enter the land to park your car?
o They are granting you a licence to park and leave your car there
o Active supervision and control of car via surrender of keys, provision of attendant,
serially numbered ticket, jockeying of cars, suggests bailment
o Disclaimer that “charges are for use of parking space only” suggests licence
 What kind of factors are we looking for in these parking lot cases?
o Active supervision and control of the car [ex: valet parking; you drive up to the
entrance, you hand the keys over and you walk away. They drive the car somewhere
and park it there. When you want it back, the valet gets your car for you]
 This is a bailment
o But there are lots of arrangement in between parking lot and valet
o What establishes active supervision and control? [support for a bailment] –
consider all of these things together
 Surrender of your keys
 Attendee supervising your car
 Provision of a uniquely-identified serially-numbered ticket BUT you also need
to surrender this ticket to get your car
 Jockey of cars [someone who moves cars around to make space]
o Factors that suggest a licence
 Absence of the above factors supporting bailment
 Disclaimer on the ticket and on signs in the parking lot that charges for use of
parking space only [this has been held by appellate courts in Canada to
negate a bailment even when some of these other factors above are present]
 If this is prominent and clearly brought to the attention to the owner
before parking, this establishes a licence
What’s in the Car?
 Is a bailee liable for loss of the contents of the bailed item (car, coat, purse, etc.)?
 P left car and keys with valet, paid 40¢, told valet there were “valuables in the trunk.” In the
trunk was a briefcase with $16,000 in jewels. The car was stolen from the lot (Minichiello,
BCCA 1978) pg 678 note 9
o The employees denied liability
o There is no question about bailment. The question was whether the bailment covers
loss of items in the car.
 Bailment covers:
o Goods one would reasonably expect to be in the bailed chattel
o Plus other items of which the bailee had actual or constructive notice
 “there are valuables in the trunk” Courts ruled this was sufficient notice.
o Should this cover $16k worth of jewels?
50
What about sub-bailees? – see Punch v Savoy
Punch v Savoy’s Jewellers [1986] ONCA – sub-bailees
Facts
 Lenore left a $11,000 ring with Savoy’s Jewellers in Sault Ste. Marie for repairs. S sent it
to Harry Walker Jewellers in Toronto to do the repairs, by registered mail with $100
declared value (as per usual practice). Due to postal strike, HW sent it back via CN
Rapidex courier. S agreed to this but terms of shipment not discussed. HW sent it with
$100 declared value, no insurance. Shipping form limited CN’s liability to $50 unless
extra insurance bought. Ring disappeared, CN offered no explanation, admitted driver
may have stolen it.
 Punch (bailor)  [bailment] to Savoy’s (bailee)  [bailment] to Walker (sub-bailee) 
[bailment] to CN (sub-sub-bailee)
Issue and
 Is Walker (sub-bailee) liable to Punch?
analysis
o Did it act like a reasonable and prudent owner?
 Is Savoy (bailee) liable to Punch?
 Is CN (sub-sub-bailee) liable to P or S?
o Bailment is mix of contract and tort
o [what are the conditions in which sub-bailee has a DoC?] If sub-bailee is aware of
a bailor who is not party to contract, s/he owes her a duty of care – Standard:
prudent owner acting reasonably in the circumstances
 they were aware of Savoy’s because they had to deliver it to them
 tricky was with Punch (they didn’t know who owned the ring but they
were aware that SOMEBODY owned the ring)
o If bailor consented expressly or impliedly to sub-bailment on specific conditions,
s/he is bound by those conditions
 The case law as evolved such that the sub-bailee has some protection.
 If you can infer such consent than you can imply such conditions
 She would have agreed to the bailment but not to these specific
conditions [if you are using a method that you haven’t tried before and
you’re not sure of the reliability, than you should insure the item for what
its worth to recover damages if lost]
 Bailment can exist without communication any kind between even when
bailee isn’t even aware of who bailor is
o Did Savoy’s consent?
o What about Punch?
 Can bailment arise without consideration or communication of any kind
Waivers of Liability
 ““2.(a)… whether such damage arises through negligence or otherwise…”
 When may a bailee rely on a contractual waiver of liability?
o Was Walker bound by CN’s exculpatory clause?
 Did “or otherwise” clearly contemplate theft by employee?
 Did they lead any evidence that the driver was reliable?
o May bailee exclude liability for fundamental breach?
 Non-return of bailed item on request = fundamental breach of bailment
contract [not examinable]
 Should bailee be able to exclude liability for failing fundamentally to do
what s/he agreed to do?
51
IX. CO-OWNERSHIP; BASIC CONCEPTS AND CATEGORIES
Basic Concepts and Categories [Unit 9.1]
What is co-ownership?
o Another way of dividing ownership rights and obligations amongst multiple parties
o We’ve seen how multiple parties can have different interests in the same thing at the
same time
 Crown and landowner; life tenant and remainderperson; law and equity; lessor
and lessee; bailor and bailee
o Now we’ll see how multiple parties can share the same interest in the same thing at
the same time
 Main forms: joint tenancy and tenancy in common
 Other forms: corporations, partnerships, condos, co-ops, marital property,
aboriginal title, communal property (e.g. Hutterites), commons (e.g. pastures,
Internet?)
Scope of the Topic [we are covering the things in red]
o Co-ownership and property theory
o Traditional common-law co-ownership
o Creation of joint tenancy and tenancy in common
o Severance of joint tenancy
o Rights and responsibilities of co-owners
o Termination of co-ownership
o Statutory co-ownership
o Family property, co-operative property
o Condominium
o Other forms of shared ownership
o Aboriginal property; communal property; Creative Commons
Basic Forms
o Joint tenancy and tenancy in common
o Can exist in real or personal property
o Key features of joint tenancy:
 Each JT “holds everything and yet holds nothing”
 Right of survivorship: when 1 JT dies, her interest is extinguished
automatically and that of the surviving co-owner(s) is correspondingly enlarged
 When one of the co-owners dies, the interests of the deceased coowner is automatically absorbed by surviving co-owner [deceased
co-owner’s rights are extinguished]
o Idea that each owns everything and nothing – if you die, you lose
everything
 In theory, [every joint-tenancy] must have four unities: possession, interest,
title and time
 Unity of possession: they both own it
 Unity of title: each joint tenant’s ownership is traced back to the same
document/instrument
52

Unity of time: to be a joint tenancy, you interest must take effect at the
same time [exception: this doesn’t apply to interests in trusts and wills]
o Key features of tenancy in common:
 Each T in C owns an undivided fractional share of the whole
 They are entitled to the whole thing but their interest is an identifiable
share
 When 1 T in C dies, her interest passes to her estate, it does not pass to
surviving co-owner(s)
 Only requires one unity: possession [unity of interest is purely conceptual]
Creating co-ownership
o Traditional presumptions:
o Where two or more persons became owners of the same interest in real or personal
property,
o Common law presumed joint tenancy with right of survivorship unless contrary
intention shown
o Equity tended to prefer tenancy in common, especially in three cases:
 Unequal contributions to the acquisition of an asset, mortgagees, and
business partners
o Same parties can be joint tenants at law but tenants in common in equity
Modern Presumptions
o Property Law Act, RSBC 1996, c 377
o 11.(2) If, by an instrument executed after April 20, 1891, land is transferred or
devised in fee simple, charged, or contracted to be sold by a valid agreement for sale
in which the vendor agrees to transfer the land to 2 or more persons, other than
personal representatives or trustees, they are tenants in common unless a contrary
intention appears in the instrument.
o (3) If the interests of the tenants in common are not stated in the instrument, they are
presumed to be equal.
o Old presumptions continue to apply to personal property [OPPOSITE PRESUMPTIONS; ITS
ONE OR THE OTHER]
o [Presumption of joint tenancy and you need to show a contrary intention for tenancy
in common]
Re Bancroft Estate [1936] NSSC- shared ownership
Facts
Samuel Bancroft’s will directed money to be paid during his widow’s lifetime in “four equal
shares” to his three kids and to his deceased daughter Minnie’s children (Paul and Jean).
Paul later died, leaving four kids. The widow was still alive.
Issue
o Concrete issue: Do Paul’s 4 children get anything? In other words, did Paul have a
share that devolved to his heirs or did Jean get everything when Paul died?
o Legal Issue: Did M’s kids take as joint tenants or tenants in common?
o Which presumption applied and why?
o The traditional presumption for land and goods is joint tenancy. After
Property Act came in, this presumption no longer applies to land. However,
this is not land, this is personal property. Therefore, old presumption of JT
applies, unless rebutted.
 Transfer of personalty to 2 or more persons without explanatory
words creates a JT unless a contrary intention appears in the
53
Law
Analysis/
application
instrument
o “Anything which in the slightest degree indicates an intention to divide property
must be held to abrogate the idea of a joint tenancy and to create a tenancy in
common.” Jarman on Wills
o any indication of fractional ownership during ownership or some kind of
reference to a division or fraction of the ownership itself
o Any indication of fractional sharing of ownership or of proceeds in the event
of sale
 Terminology is important here: Eg. “equal,” “equally,” “share and
share alike,” “share,” “respectively,” enumeration of fractions or
percentages – these things rebut the presumption of JT
o Are there any words indicating in the slightest degree an intention to divide
Minnie’s children’s interests into fractional shares?
o “Four equal shares;” “pay one of the shares to…” [pg. 698, clause 6B]
o To whom does this language relate?
 Conclusion of clause 6(B) didn’t apply to Minnie’s children: Courts held
Minnie’s children held as joint tenants; no indication that there was an
allocation of fractional shares. That means Samuel’s children get no
money as long as grandma is still alive. Upon Paul’s death, Jean’s
share was enlarged and she got it all.
o So: Minnie’s children held their interest as joint tenants
o Jean therefore extinguished Paul’s interest by right of survivorship
o She is now solely entitled to the money
o But Minnie’s children collectively (now Jean alone) held a ¼ share as Ts in C
with their uncles & aunt
o Clause 6(c): This is about the widow:
o Courts accepted that after grandma (widow) dies, Paul’s line of discent and
Minnie’s line of discent each get an equal share of the money. Per Stirpes:
o Courts wanted to interpret earlier clause to show intent to create a tenancy
in common because it doesn’t make sense. However, 6C provided a clause for
what happens when grandma dies so 6B should be interpreted to be a JT.
54
Percy ¼, Aubry ¼, Florence ¼, Minnie’s kids gets ¼
o Within M, Paul and Jean hold as JT
o When Paul dies, Jean’s share is automatically enlarged – Paul’s kids get nothing and
Jean get the money
Summary: - how to draft the correct instrument
o JT in real estate requires clear words indicating appreciation of distinction
o E.g. to A & B as JTs “with right of survivorship” or “not as Ts in C
 “Jointly” or “as joint tenants” alone probably won’t suffice
o JT in personalty needs no special words
o “Jointly” or “as joint tenants” suffices
o JT is negated by slightest indication to contrary
o Parties may hold as JT in law but T in C in equity
o Eg. A & B contribute 80/20 to purchase price of car, register title in both
names w/ no language to indicate shares. A dies. What is the state of title?
 At law, B is the owner of the car. But B is holding it as a trustee with a
20% share for herself and 80% share for A’s estate. So B is a trustee
for herself for the 20%. In practical terms, that means nothing. The
80% is the issue. They must act in accordance to the interest of A’s
estate.
Severence
When you sever a tenancy, you remain co-owners but you get rid of right of survivorship:
o Why would you want to sever a JT?
o Effect of severance: converts JT to T in C, destroying right of survivorship
 Uncertainty is the motivation. Don’t know who will die first. Want to be able to
pass something to children.
o Severance does NOT terminate co-ownership
 Termination requires further step of partition & sale
o JT is severed if any of the 4 unities are destroyed
o Same principles apply to realty and personalty
o Courts traditionally preferred severance
o To relieve from harsh & unanticipated consequences of the right of survivorship
 Questionable whether this should still apply to land, since JT in land must be
created deliberately
How to do it
o Three ways to sever a JT:
o 1. Unilateral Act by any JT that destroys any of the four unities effects severance of
that JT’s share
o 2. Mutual Agreement among JTs effects severance of their shares
o 3. Course of Dealing sufficient to show that all JTs mutually treated their interests as
constituting a T in C severs all shares
o Onus of proof is on party claiming severance
Sorensen Estate v Sorensen [1977] ABCA – severance [co-ownership]
Facts
o A divorced couple owned land as JTs. In 1971 they agreed to sell part of the land, lease
the house to the ex-wife for her life and place a charge against the husband’s interest
to secure child support payments. In 1974, dying of cancer, the ex-wife executed a trust
55
Issue
Analysis
deed declaring that she held her interest in the land in trust for her developmentally
disabled son, had executed a transfer of the land to him which her solicitor would
register upon her death, and had done the above to sever the JT. She also executed a
will leaving her property to her daughters in trust for the son, and moved for partition
& sale but died before the motion was heard. Ex-husband claimed sole ownership of
land as surviving JT, which would deprive the son’s trust of almost all assets.
o The main asset was the matrimonial home
o Wife tries to sever the joint tenancy that she had with her ex so that the value of the
half-interest in the house goes to her son
o She dies; this goes to court; ex claims that he owns the entire house and the son has no
interest in the house
Has the joint tenancy been severed?
Was anything she did sufficient to unilaterally destroy one of the 4 unities? 3 methods:
o 1. Unilateral Act
o One tenant can sever JT by a unilateral act that destroys any of the four unities
 Eg conveyance to 3rd party or even to oneself
 Did Mrs. Sorensen sever the JT unilaterally?
 By declaring in the trust deed that she was severing the JT? No.
o You can’t just declare it. You need to do something – like
convey.
 By commencing an action for partition? No.
o Merely commencing the proceeding is not enough. Must
have been completed.
 By executing land transfers to her son and delivering them to her
lawyer to hold until she died? No.
o She only gave them to lawyer to hold and didn’t actually
intend for them to take legal effect until she was dead.
Had to take legal effect before she died.
 By executing a will leaving her property to her daughters as
trustees for her son? No.
o Will doesn’t have legal effect until death.The survivorship
took place automatically upon her death before the
execution.
 By declaring in the trust deed that she now held the land as
trustee for her son? Yes.
o If a joint tenant creates an express trust where they say “I
am now hold as a trustee for a 3rd party” that destroys the
unity of INTEREST. She now has a diff interest from her
husband. Her ex didn’t intent to be a trustee. Even though
she still holds legal title, she has severed the JT.
o 2. Mutual Agreement [that joint tenancy is severed]
o Express mutual agreement by all joint tenants to sever the JT severs the JT
 Did the Sorensens’ 1971 settlement sever the JT?
 By agreeing to divide title to the matrimonial home and sell the
vacant lot? No.
o Not sufficient because both parties understood that
further steps were needed for legal partition.
56


By leasing the matrimonial home to the wife for her lifetime? No.
o The act relied on must be inconsistent with the chief
characteristic of a JT, ie survivorship
o The surviving JT would not receive the full benefits of the
survivorship since they will be burdened by the lease
o But wife argued that it was only for her lifetime so the
lease will come to an end when she died
 By charging the husband’s property interest as security for
payment of child support? No.
o Does a charge transfer the legal estate to chargee?
 This charge would remain in existence only one or
the other of them was alive. The moment one of
the husband or wife died, the charge would cease.
Bottom line: JT was severed by wife’s unilateral act of transfering
equitable title to son via trust deed
 Courts said Neither lease to wife during her lifetime nor the
charge to husband’s property was enough to constitute a
severance by mutual agreement.
[infograph is confusing, refer to notes instead]
3. Course of Dealing [not applied in Sorensen]
 JT can be severed by a course of dealing indicating that the interests of all were
mutually treated as tenancy in common
o Negotiations without formal agreement can suffice
57
o Should spousal and non-spousal joint tenancies be treated differently?
o See Havlik case for this type
Havlik, [2000] ABQB
 F: Uncle and niece owned a cottage as JTs. Through lawyers, uncle expressed wish to
sever the JT; niece’s lawyer replied without prejudice that she was agreeable; they
communicated back and forth but never signed a transfer. Uncle died. His widow
claimed the JT was severed.
 A: Courts said this was not enough to show that both parties mutually treated that JT
was at an end. Partly because communications were without prejudice [niece was
reserving her rights in the event that they didn’t reach a final agreement]
Severing a JT
 Do any of the following events effect a unilateral severance?
o A & B are JTs of land. A enters valid contract to sell to C, but dies before closing date
o A, B & C are JTs. A transfers her interest to D.
o A & B are JTs. A murders B.
 Note: Survivorship applies to legal title, but murderer holds victim’s share on
constructive trust for victim’s heirs (Schobelt v. Barber, Ont HC 1966) – is this
the right result?
 Murderer is co-owner with victim’s estate
o A, B & C are JTs. A murders B.
o A & B are JTs. A is adjudged bankrupt.
X. ABORIGINAL TITLE
Introduction
3 bodies of law
 Indigenous Law
o Law of the Indigenous peoples governing relations amongst all of creation [and not
just the resources]
 Includes people, ancestors and descendants; land, animals and Earth as
whole – all of whom are legal persons with equal legal status
 Aboriginal Law
o Subset of settler law governing relations between settler state and Indigenous people
 Aboriginal title, treaty rights, aboriginal rights, federal & provincial powers &
duties, property rights on reserves
 Title created within settler law and exists within settler law system
 Inter-systemic law
o Law governing interaction of settler & indigenous legal systems
 Indigenous-settler treaties; public international law; private international law
(conflict of laws)?
 Ex: treaties
 Private international law: body of law that governs the relationship btw different
legal systems in civil matters
Reconciliation
 What does it mean?
58
o Reconcile prior indigenous occupation with Crown sovereignty? (SCC)
 This presumes that whatever the legal effects of prior Indigenous occupation,
they are secondary to the Crown’s sovereignty and underlying title. In other
words, they constitute a legal burden on Crown title.
 Q: How does Crown get first priority when the Indigenous have prior
occupation and existent of entire legal institutions on the land?
o Restore a nation-to-nation relationship between indigenous and settler peoples based
on mutual respect, a relationship that
 Embraces indigenous peoples’ right to self-determination within and in
partnership with Canadian sovereignty
 Recognizes, repudiates and remedies colonialism? (TRC)
 Key challenge for settler law and lawyers:
o Decolonize Canadian law
Aboriginal Law
 1763: Royal Proclamation
o Only Crown may acquire Indian lands, via public meeting & treaty
 18th-19th C: Historical treaties
 1876: Indian Act
o Subordination, assimilation, criminalization
 1888: St Catherines Milling (JCPC)
o Merely personal & usufructuary right
 1951: Indian Act reforms
 1973: Calder (SCC)
o Aboriginal land title persists unless extinguished [Abo title is a thing]
1982: Section 35(1)
 “The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby
recognized and affirmed.” Constitution Act, 1982, s. 35(1)
 Three classes of rights:
o Treaty rights: specific rights conferred by treaty with the Crown (eg hunting, fishing,
trapping, trading)
o Aboriginal rights to engage in certain activities (eg hunting, fishing, trapping) that
were integral to the distinctive culture of an aboriginal group at the time of European
contact
o Aboriginal title to historic territory not ceded by treaty
A short history, continued
• 1984: Guerin: Aboriginal title is sui generis, inalienable burden on underlying Crown title
• 1990: Sparrow: Test for justified infringement of s 35 rights (pressing objective,
indigenous priority)
• 1996: Royal Commission on Aboriginal Peoples
• Create new relationship based on indigenous self-determination, mutual recognition,
respect, sharing
• 1997: Delgamuukw: Test for aboriginal title
• 2014: Tsilhqot’in: First award of aboriginal title
• 2015: TRC Final Report
• Repudiate doctrine of discovery, re-establish nation-to-nation relationship of mutual
respect
59
Gitxsan Land Law – per Richard Overstall
 “the ownership of territory is a marriage of the Chief and the land. Each Chief has an
ancestor who encountered and acknowledged the life of the land. From such encounters
came power.”
 Questions for discussion:
o What are the nature and source of ownership?
 Marriage between the chief and the land that originates between ancestral
encounter between the land and the people
 This marriage gives rise to power - daxyet [emerges between the chief and
the land]
 1) Leads to respect of land and achievement of balance between the
land and community
 2) Obligation to recreate that power-generating
 Daxyet has 2 components:
o encounter in the feast
o initial encounter
 duty to respect the human and other partners in the relationship
 this power circulates btw the different partners [land, through the chief,
to the people, then comes back through the chief to the marriage via the
spirit]
 Adaawk: song, dance, oral history that describes the relationship of the
house with the spirit and the land; describes ancient movements;
encounter with the power and the land; major events in the house
 Yukw: What Europeans call the potlatch. Institution in which any legal
acquisition of land happens. Formalized through the feast.
o Who holds the ownership interest?
 In Gitxsaan, the holder is the held at the level of the house; matrilineal kinshp
group. Attached to the name that is the highest name in the house.
Delgamuukw, for example [the office, rather than the individual who happens
to hold it].
 Notion of jurisdiction – the authority to govern something. In Gitxsaan, juris is
horizontal; formalized through cooperation; executed through the feast
o What interest do they hold?
 Narrow view: the daxget itself [power between marriage of chief ancestor and
land]
 Includes the adock [song and dances]
 The crests that appear on the houses and poles
 The territories held cannot be sub-divided because they would violate the
marriage [between the chief and the land]
o What are the remedies for breach of rights and obligations?
 A house can’t alienate its interest in the land unless it becomes dyer
circumstances
 Giving up territory can be a remedy for various types of offences
o What sort of legal system is this?
 Ecocentric: Subjects include all creation—people (dead, living, future), land,
water, animals, spirits
 Non-anthropocentric legal system
 Complex, decentralized: Small number of legal rules + multitude of kinship
connections support deep, sustainable culture
60


Relatively small number of legal rules that take place in a small number
of hierarchical relationships
System of both “public” self-government and “private” individual rights and
obligations
What is Richard Overstall trying to Accomplish?
 Educate Canadian legal actors?
 Advance reconciliation?
 Contrast Gitxsan and Canadian legal systems?
Aboriginal Title Litigation:
 Key questions for Aboriginal (settler) law:
o What is the test for proof of Aboriginal title?
o What is the content of Aboriginal title?
o In what circumstances may Aboriginal title be infringed?
Delgamuukw [1997] SCC – Aboriginal Title
Facts
The Gitxsan and Wet’suwet’en nations have occupied an area of what is now northwestern
BC for millennia. They have asserted their sovereignty and jurisdiction over the area since
before first European contact, but settler governments repeatedly refused to acknowledge or
negotiate their claims, granting land ownership and resource rights to thousands of settlers.
In 1984, 48 hereditary chiefs launched a lawsuit claiming ownership and jurisdiction over
58,000 km2 on behalf of their respective Houses.
Disposition
 Delgamuukw claim rejected on a technicality, parties urged to go back to table
o Land claim still unresolved 18 years later
61
Tsilhqot’in [2014] SCC – Aboriginal Title
The Tsilhqot’in nation has occupied an area of what is now the BC interior for centuries. In 1983 BC
Facts
issued a commercial logging licence over part of the territory. The nation sued for a declaration
prohibiting logging on its territory. After a blockade, BC promised no further logging without the
nation’s consent, but talks broke down. In 1998 the nation amended its lawsuit to claim aboriginal
title to around 5% of its territory
Disposition

Tsilhqot’in claim upheld, aborginal title declared
o First court declaration of aboriginal title in Canadian history; Tsilhqot’in nation,
settlers and settler governments continue to work out implications
Proof of Aboriginal Title (Per Delgamuukw and Tsilhqot’in)
 3-part test:
 1. Land must have been occupied prior to British sovereignty (sufficiency)
 2. If present occupation relied on as proof of pre-sovereignty occupation, occupation must
be continuous (continuity)
 3. At sovereignty, occupation must have been exclusive (exclusivity)
1) Sufficiency
 Dual perspective: aboriginal laws, customs, practices + common law occupancy principles
 Before British sovereignty, did group act in way that would signal to 3rd parties that it held
the land for its own purposes?
o Characteristics of group (size, lifestyle, resources)
o Characteristics of land (carrying capacity)
o Site-specific intensive occupation (Cultivation, settlement) sufficient but not necessary
o Regular harvesting, hunting, fishing, or other strong presence sufficient even if
shifting, nomadic
 Questions:
o Timing: what British sovereignty? The date on which the British sovereignty was
asserted? // date of first contact //British crown’s property right is asserted upon
sovereignty – ties into the doctrine of discovery [rejected by TRC and SCC has said
that not based on what Abo title is on]
o Intensity: why should it matter? SCC said you don’t need to show intense occupation
but if you do, it establishes Aboriginal title.
 But why should title be based on occupation?
 Idea of labour and putting work into the land. But how does Crown have
title over massive tracts of land?
2) Continuity and 3) Exclusivity
 Continuity: Present occupation must be rooted in pre-sovereignty times, not necessarily
uninterrupted
 Exclusivity: Group must have had intention and capacity to exercise effective control
o Dual perspective
o Characteristics of claimant & other groups
o Characteristics of land
o Actual exclusion, granting or refusal of permission, laws, treaties
 Shared exclusivity possible
 Questions:
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o Exclusivity: why should it matter? What about overlapping territories? Why should be
accept the premise that exclusivity is necessary for ownership?
Burden of Proof
 Aboriginal title claimant bears burden of proving aboriginal title
o Burdens: why must claimant prove aboriginal title? Why shouldn’t aboriginal title be
presumed from indigenous occupation? Why doesn’t Crown have to prove its title?
Content
 Legal character:
o Sui generis; inalienable except to Crown
o Communal: held collectively by entire nation
o Arises from prior occupancy
o Physical fact of occupation plus aboriginal law
o A burden on radical or underlying Crown title
o Crown retains no beneficial interest
 But they come in through the back door through jurisdiction // can have
economic development and resource extraction
o Crown retains fiduciary duty, jurisdictional authority, power to infringe in the public
interest
 Tsl: all Crown has is a bare legal title and all the enjoyment and rights of the land belongs to
those who hold Aboriginal title – not unlike the relationship btw trustee and beneficiary
o So what could the Crown give to settlers if they have no beneficial interest?
 What does this imply for all the privately-owned land? Or land where there is
any private property right? Timber licences? Resources management
licences?
 Inalienability: Why?
 Underlying Crown title: How?
 No benefit retained: implications for Crown FS grantees?
 Jurisdiction: What about indigenous?
Rights and Limitations
 Rights
o Exclusive use and occupation for variety of purposes not limited to traditional
activities that were integral to the distinctive aboriginal culture
o Decide use; occupy & possess; enjoy economic benefits; use and manage; modern
ways
o Similar to but not same as fee simple
 Inherent limitation
o May not use land in manner irreconcilable with nature of group’s attachment to land
 May not use land in manner irreconcilable with nature of group’s attachment to
land
o The inherent limitation in 1997 was backward looking, but in Tsil [2014] Justice
McLachlin said forward-looking [cannot use land in a way that meets the need of the
present without compromising the future generations of their needs]
 Thoughts on inherent limitation?
o Why is there an inherent limitation on Abo title? Is this a colonial way of thinking in
which Abo people are believed to be frozen to a time period where they were limited
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in what they did? Environmental reasons? Should settlers who have fee simple title
be able to use the land however they want?
Infringement
 To justify overriding group’s wishes on basis of broader public good, Crown must show that
o It discharged its duty to consult & accommodate
o It acted in furtherance of a “compelling and substantial” legislative objective
o It acted consistent with its fiduciary duty
 Infringement: Is it consistent with reconciliation? Why can’t indigenous governments
infringe Crown title?
Duty to Consult
 Before aboriginal title established
o If Crown has real or constructive notice of potential or actual aboriginal title, has duty
to consult and accommodate proportionate to strength of claim and severity of
impact; must preserve indigenous interests pending final resolution
 After aboriginal title established
o Crown must obtain consent or justify infringement, may need to reassess prior
conduct
 Before and after:
o Avoid trouble by obtaining consent
 Preserve interests: Coastal Gaslink? – in this case, pipeline was pushed through but only
after consulting the band counsel and not the chief
o D2C: Just CYA?
Legislative Objective
• Must be compelling and substantial
• Must further reconciliation of prior aboriginal occupation with Crown sovereignty, by
pursuing objectives that are of compelling and substantial importance to ‘broader
community’ as a whole, including aboriginal peoples
• Such as…?
• Development of agriculture, forestry, mining, hydro power, economic development,
protection of environment or endangered species, infrastructure, settlement, fisheries
conservation…
Fiduciary Duty
 Must be consistent with Crown’s fiduciary duty & honour
o Process and substance of government action must reflect group’s prior interest
 Eg aboriginal participation in resource development; preferential terms; fair
compensation
o Must not deprive future generations of benefit of land
o Must satisfy Oakes-style proportionality test
 Crown duty & honour: perpetuating colonial paternalism
XI. SERVITUDES OVER PROPERTY
Easements [Unit 11.1]
Servitudes
 Non-possessory interests that constitute a burden on a landowner’s possessory rights
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o [11.1] Easement: a right annexed to one parcel of land to use another’s land in a
particular manner (positive), or to prevent the owner of the other land from using the
land in a particular manner (negative)
o Profit à prendre: a right to remove minerals or other natural products from land (eg
Tener in Unit 2) (not covered)
o [11.3] Covenant: a contractual promise to perform (positive) or refrain from
performing (restrictive) certain acts in relation to land
o [11.2] Rights of access to public or private property for expressive purposes can be
thought of as servitudes
Easements: - dominant, servient, and accommodating
What is an easement?
 A privilege annexed to one piece of land
o to use another piece of land in a particular manner, other than harvesting produce or
extracting natural resources
 Eg travel over, flood, take water, erect signs, place wires or pipes, excavate
tunnels, deposit effluent, smoke or soot, emit noise, use kitchen or bathroom
[positive easement: right to use a particular land in a certain manner]
o OR to prevent the other owner from using her land in a particular manner
 Eg block light or air, remove support [negative easement]
o for the benefit of the first piece of land [the privilege is annexed to the piece of land
for the benefit of that land]
Elements of an Easement at Common Law
 1. There must be a dominant tenement (land benefitted by easement) and a servient
tenement (land burdened by easement)
 2. Easement must accommodate and serve the dominant tenement
 3. Dominant and servient tenements must not be owned or occupied by the same person
 4. Easement must be capable of forming the subject matter of a grant
1. Dominant and Servient Tenenment
 Easement must relate to two parcels of land
o One that is burdened by the easement (servient tenement),
o One that is benefitted by it (dominant tenement)
 No easements in gross
o Easement that benefits someone other than the owner of a dominant tenement
o Except where permitted by common law (USA) or statute
 Eg public utilities, conservation easements
 Idea of dominant and servient tenement partially abolished in BC…[see Land Title Act]
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2. Accommodate and Serve
 The easement must serve the dominant tenement
Ellenborough Park, Eng CA 1955 – accommodate and serve
Facts
The owner of a park sold nearby lots to builders, agreeing that the purchasers and their
successors would have “the full enjoyment at all times hereafter” of the park as a pleasure
ground. Does access to this local and private park accommodate and serve the residential
house park?
Issue
Is this a valid easement?
Analysis
 Easement must make the dominant tenement a “better and more convenient
property”
o How? By enhancing the normal enjoyment of the property
 Benefitting property itself, not owner personally
 Held: Enjoying a garden (yard) is part of the normal use of a house.
 Alternative example: Cricket ground. Does this count if you give tickets
to your game to the houses surrounding area? No, game is not park of
normal enjoyment of a house. Therefore, giving tix for free is not
connected enough to the normal use an enjoyment of home.
o Dominant and servient tenements must be “neighbouring” [unsettled as to
how far you can push this – same neighbourhood seems to be okay] – there
has to be a geographic proximity to the lands [but don’t have to be adjacent]
 Not necessarily contiguous, but physically near
 Held: these are neighbouring parcels
Conclusion Easement is valid.
3. Different Owner/Occupier
 Dominant and servient tenements must not be owned or occupied by the same person
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

o Because the owner of the servient tenement already has greater rights over servient
tenement than she could grant herself by easement
Completely abolished in BC…
[see Property Law Act]
4. Capable of Forming the Subject Matter of a Grant [Ellenborough still authority]
 Easement must be capable of forming the subject matter of a grant
o Right claimed must:
 Not confer a right of joint possession or deprive the servient owner of
possession, considering that every easement involves some measure of
occupation & interference by easement taker [keep in mind that all easements
involve some measure of occupation and some measure of interference with
the right of servient owner’s property rights – how far can you push this before
it invalidates this?]
 See Shelf Holdings [ABCA] 1989: Does an oil pipeline easement over
an Alberta farm deprive the servient owner of possession?
o F: A farmer in AB challenged validity of oil pipeline easement
registered on his land. Q: Did the oil pipeline easement deprive
the owner of rights on the farm.
o A: Look at what the respective rights and limitations were in the
easement itself. What are the limits on farmer’s rights? [servient
tenement]. Easement said he can’t interfere with subsoil, cannot
erect any works, but is otherwise free to farm [cultivate with crops
and raise livestock on it]. The easement holder were required to
compensate farmer for any damage to crops, livestock etc.
Prevented from interfering with drainage. Required to restore
upon abandonment.
o H: ABCA said not an interference. Farmer retains high degree
of possession with little interference (and entire industry relies on
easements
o Note: The entire oil and gas industry in AB depends on this… so
this might have affected the court’s decision.
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

Not be too vague
Be of utility and benefit – not clear what this requirement means in practice
 In Ellenborough: “no doubt, a garden is a pleasure…but doesn’t have
utility and benefit”
 Ontario law reform commission says this is the court’s way of saying
they’re in charge and gets to decide what counts as an easement.
Whatever it means, maintains that courts retain control entry to the “list”
of what is considered utility and benefit.
o In short, the list of easements isn’t closed, but the courts control entry
Robinson v Pipito BCCA [2014] – capable of forming subject matter of grant
Facts
Robinsons owned 2 lots near Mission. They registered an easement granting owner of lot 1
free and uninterrupted access to and use of 80% of lot 2 for farm and recreational uses, plus
full rights to all timber, gravel and fill, and obliging the owner of lot 2 not to erect structures
or obstruct farm and recreational uses in the easement area. Robinsons sold lot 2 to Pipito.
Relations soured. Robinsons sued to enforce the easement; Pipito claimed the easement was
invalid because it deprived him of possession
Pipito invoked:
Analysis



Line is hard to draw where the interference is too much
Courts are loath to invalidate instruments [that have been registered] and try to
interpret grants not to extinguish servient owners’ property rights
o If reading instrument fairly and it extinguishes servient’s owner’s rights than it
is invalid
But this isn’t a close case:
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Conclusion
o Right to farm entire area + inconsistent use ban = exclusive use of entire area
[in practical use, the Robinsons can plant the entire place with crops so P
cannot step into area. So R has exclusive use]
o Right to remove timber & gravel + inconsistent use ban = dominion over entire
area [said that this right and prohibition on inconsistent use gave R dominion
over entire area. The effect of proported easement was to give R the right to
exclusive use – agreed with TJ on this ]
o ***court doesn’t say whether one of the above alone is enough to cancel the
easement***
o Amounts to complete derogation of servient owner’s rights to proprietorship
or possession
Appeal dismissed, easement cancelled – P now owns the land completely free of the
easement
How to Create an Easement
 1. By express grant or reservation
o Grant of easement may be included with a grant of land
 Eg vendor V severs and sells lot to purchaser P, granting P a right of way over
V’s remaining lot to access P’s lot
 Express Grant:
 The dominant tenement
 The servient tenement
 The nature, scope and duration of the easement
 Parties’ rights and responsibilities regarding the easement
o Or may be independent of any other grant
 Eg owner of lot A grants owner of lot B a right of way over lot A to access lot B
o Reservation of an easement may be included with a grant of land
 Eg vendor V severs and sells lot to purchaser P, reserving for V a right of way
over P’s lot to access V’s remaining lot
 2. By implication [just know that these two things exist, no need to apply]
o Easement may be implied in absence of express agreement in several situations, eg:
 A. Pre-existing quasi-easement
 A grantee of severed land may claim an easement if before severance,
prior owner used one part for the benefit of the later-severed part (eg an
access lane) and the use is necessary to the reasonable enjoyment of
the severed lot. Wheeldon, Ch. Div. 1879.
 B. Common intention
 Grantor or grantee of land may claim implied grant or reservation of
easement necessary to give effect to common intentions [forgot to write
it down explicitly but both parties intended to create an easement]
 C. Easement of necessity [our focus] [Nelson]
 A landowner may claim an easement if the claimed right is absolutely
necessary for enjoyment of alleged dominant tenement (eg a
landlocked lot), and both tenements had a common prior owner whose
disposal of the dominant tenement rendered all use of it impossible
unless the easement is implied
o The dominant tenement must be absolutely inaccessible or
useless without the easement
o Ex: place that is landlocked with no exit without the easement
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Nelson Lands [2011] ABCA – how to create an easement // easement of necessity
Facts
In 1985 Ken Nelson bought land near Edmonton accessible only by a private road over a
neighbouring farm. He developed it into a water ski park without municipal approval [knowing
to public road]. Tried to negotiate easement with owner of private road. The farmer never
granted him an easement to use the road but he and his customers did so for 20 years until
the farm’s new owner barred them.
Issue
1. Did the farmer dedicate the road as a public highway? And as a fall-back,
2. Did Nelson have an easement of necessity?
Analysis
 Q1: It is a high threshold to show that owner of land intentionally opened their land to
the public as a highway. Courts will not infer this lightly. Unlike an easement, you lose
ownership of that strip of land forever. Complete extinguishment of owner’s right.
o 1. Must have actual subjective intention to relinquish right.
o 2. Actus reus – show that they did it and that public used it as a public highway
 in this case, the farmer who was alive and testified that he never
intended the road to be public.
 The fact that the public used this road for decades was not
sufficient to dislodge is actual subjective intention to keep it as
his own land.
 Q2: Necessity?
o Said Nelson should have been more careful and the courts will not get him out.
He is the author of his own misfortune. Bought it even though there was no
oublic access. Once he bought, tried to negotiate access and failed. Went to get
municipal approval who said if and only if he acquired the easement. But he
didn’t get easement. So he developed it without municipal approval
[contingent on getting access by way of easement].
o Inaccessibility: must show 1) that it was absolutely inaccessible 2) and that it
was created by the neighbouring owners
 In this case, he went ahead and developed knowing he was stuck there
 Nelson was unable to show when North East quarter section was
granted away first before the North West quarter section
 Timing of original Crown grant was crucial
Conclusion No easement of necessity.
Access to Public and Private Property [Unit 11.2]
Public arenas?
 Should some private or state-owned properties be considered public arenas open for
expressive activity?
o Are shopping malls, airports or universities spaces from which the owner may
exclude anyone at will?
o Or modern day “market places” of goods and ideas from which owner may not
exclude peaceful gathering and speech, absent otherwise illegal activity?
o Should state-owned and private property be treated differently?
Batty v Toronto, ONSC 2011 [Occupy Toronto] – access to Public and Private Property
Facts
People camp in a downtown Toronto public park as part of Occupy Toronto. City orders them
to dismantle tents & structures, vacate park between 12 & 530 am.
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Issue
Do the campers have a right to use the park in this way? What are the relevant interests and
how should they be reconciled?
Analysis
 Court said the limitation on freedom of expression is legitimate
 Courts said:
o Pg. 787 – although proclaiming message of participatory, they didn’t practice
what they were preaching when they decided to occupy the park – didn’t ask
permission of the other users before setting up there
o Pg. 788 – the Charter offers no justification for their appropriation of a large
portion of public space for an indefinite time
o Charter does not permit them to take space without asking; excluding others
from normal use of that space; and then contend that they are not leaving
o Pg. 789 – without some balancing of what ppl can and cannot do in a park, it
will become a “concrete jungle” – stronger will dominate weaker in
competition to use it
 Ex: if parks can be used without restriction… not fair to others
 Courts said the balancing the city struck was fair in this case
 Consider:
o 1) Did the people appropriate the place for their own exclusive use – city said
yes
 what competing or alternative uses are being excluded?
o 2) How much of the public space did they appropriate? – Court said they took
87-88% of the park
o 3) Duration – Court said they were doing it for an indefinite period [but in
Victoria Adams they were also using it for indefinite period]
o 4) Purpose of the occupation – in Victoria Adams, this was shelter/survival; in
this case, it is not about shelter or need, rather, it is a political statement. This
is an expression.
Policy
o Balancing of interests btw public enjoyment and political statements
o “occupy” is intentional exclusive use – but how does this square with the fact
that this is public space?
o Idea of protesting the law and the law shutting down protesting of the law
o Distinction btw need and use for political purpose
Right to exclude vs freedom of expression or assembly
 Christmas, 2000: Markham shopping mall bans Salvation Army from ringing bells inside mall
 2008: York U bans striking CUPE 3903 members from picketing on University Property
 Were the owners within their rights?
 Should some private or state-owned spaces be open for expressive activity?
Committee of Commonwealth [1991] SCC
Facts
Dorval airport officials prohibited distribution of political pamphlets in public part of stateowned airport.
Analysis

SCC: ban violated s. 2(b), not justified under s. 1, but for diverse reasons (6 opinions!)
o Government cannot assert property right to ban speech
o Airports are contemporary crossroads, open to public (except secure areas),
large numbers pass through, valuable arena since many people choose to be
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there
Airports are like a marketplace; they are open to lots of people and therefore open for
people to communicate their ideas
L’Heureux-Dube’s Approach:
 Consider 6 factors:
o Was the property traditionally open for expression?
o Is the public ordinarily admitted as of right?
o Is the property’s purpose compatible with expression?
o Will availability of the property affect fulfillment of s. 2’s purposes (dem.
discourse, truth, self-fulfillment)?
o Is the place symbolically significant for the message? – link btw message you’re
conveying and the space
o Are other suitable public arenas available nearby?
 Balance against countervailing interests
o Effective delivery of government services
o Other people’s right to be free from forced intrusions
 Ex: not inside plane or bus bc people have no ability to get away from it
 L’Heureux-Dubé J: the more private property is open to public, the more the owner’s
rights are limited by users’ constitutional rights; but…
o If government had discretion to treat its property as would a private citizen, it
could grant access only to those whose messages it approved
McLachlin:
 McLachlin J: “s. 2(b) confers no right to use private property as a forum for expression”
Comparisons:
 Compare:
o Airport public hall, control tower, baggage handling area, passport control,
airplane cabin, cockpit
o Government office public area, back office
o Prison, military base, nuclear reactor
o Bus terminal, highway, public park
Real Life examples:
 May UK ban protesters from assembling peacefully on public highway even if they don’t
obstruct traffic or cause nuisance?
o As long as they’re not disruptive, it should be fine
 May Peterborough ban postering on public telephone poles?
o By-law officer issued a ticket to someone putting up posters on a pole
o Found that it violated s.7 and not saved by s.1 (Peterborough v Ramsden)
 May Montreal ban strip club from using street-front loudspeakers?
o Upheld the ban on broadcasting through loudspeakers. Necessary and proportional
means to prevent disruptive noise and avoid escalating noise war amongst the night
clubs.
 May Vancouver ban Canadian Federation of Students ads on city buses?
o Expression won out on limitation

Private Property
 Recall Harrison v Carswell: owner of privately owned shopping mall may ban assembly &
expression at will
 Did the Charter change this?
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
Examples to think about:
o Shopping malls
o Universities
o Labour camps
o Company towns
Charter Rights
 R v Layton (Ont Prov. Ct. 1986)
o F: Union members were in the Eaton centre, peacefully handing out leaflets in
support of union for Eaton workers. Owners of mall kicked them out. Challenged for
different reasons. 1) labour relations law issue – found to be unfair practice to shut
down [not property or charter issue at thi point]. However, some of the non-union
members were charged with trespass under trespass to property act in Ont. ON prov
court sided with him. Said there was sufficient state action in enforcing trespass
charge to invoke the Charter. Convicting him would violate 2b and can’t be saved by
s.1. “Can’t be asked to bring their wallets in but leave their rights outside.” So private
property owners must respect some degree of individual rights. No courts have
followed this.
o Jack Layton was charged with trespass for peacefully handing out pro-unionization
leaflets to Eatons employees in public area of privately owned Eaton Centre
o Held: Conviction would violate s. 2(b) freedom of expression, not saved by s. 1
because owner who opens property to public can’t ask people to bring their money in
but leave their rights outside; must respect a “bare minimum” of freedom of
expression
o Not followed by other courts
Universities
 Is a private shopping mall or a publicly funded university campus more or less “public” than
a state-owned, publicly-accessible airport terminal?
o May University of Calgary ban homophobic or anti-abortion leafletting of cars in its
parking lots?
o Whatcott Case [optional]
 F: He was banned from university campus for putting up anti-gay leaflets
 H: Courts ruled in his favour. Universities are places for exchange of ideas.
They have statutory mandate to provide a platform for these issues. Censorfree; divergent. Receives public funding. Uni security arrested him, patted him
down and imprison. Said violated s.2 rights and not saved by s.1.
Covenants [Unit 11.3]
What is a Covenant?
 A contractual promise to do or not do something
o Eg. purchaser covenants to use land only for single family dwelling; vendor
covenants to maintain a road
o Covenantor (promisor): bears burden of fulfilling the covenant
o Covenantee (promisee): enjoys benefit of covenant
o Types of covenant:
 Leasehold covenants are given in connection with a leasehold estate
(covered in Unit 8.2)
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


Freehold covenants are given in connection with a freehold estate in land (the
topic of this Unit), and are either:
Restrictive covenants, which require the covenantor to refrain from doing
something
 ex: only for single family dwelling
Positive covenants, which require the covenantor to do something
 ex: must maintain road
Contemporary Relevance
 Widespread private land use planning tool
o To limit competition; share costs of commercial developments; control use and
appearance of a residential community or commercial complex, e.g.
 Size, style, materials, colour schemes of structures or signage
 No solar panels, wind turbines, clotheslines, satellite dishes, basement
apartments, home businesses, parking RVs or unused cars
 Landscaping, grass height, swimming pools, holiday decorations, window
coverings, succahs on balconies
Enforcing Covenants
 Not a problem between original parties
o Covenants are always enforceable between the original contracting parties due to
privity of contract
 Not a big problem between landlord and tenant
o Leasehold covenants may be enforceable against new landlord or tenant due to
privity of estate (recall unit 8.2)
o But there’s no privity of estate in freehold covenants
 Enforcement of a freehold covenant against the covenantor’s successor in title, or by the
covenantee’s successor in title, can be problematic
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Enforcement
 General Rule: Freehold covenants are usually unenforceable in the absence of privity of
contract
o There are exceptions, but the rules are obscure, illogical and often fail to
accommodate parties’ legitimate expectations
 Two distinct questions:
o Running of the burden: When does the burden of a covenant bind the covenantor’s
successors in title so that they may be sued to enforce the covenant? [our focus]
o Running of the benefit: When does the benefit of a covenant pass to the
covenantee’s successors in title so that they may sue to enforce the covenant?
Tulk v Moxhay (Ch. 1848) – General rule for enforcing a covenant
Facts
In 1808 Tulk (owner of the lot) sold Leicester Square Garden to Elms, who covenanted to
maintain it “in proper repair as a square garden and pleasure-ground, in an open state,
uncovered with any buildings.” [Elms sold to Mox] Moxhay later purchased the land with
notice of the covenant, but gave no covenant himself. Moxhay later (1840s) wanted to build.
Tulk (covenantee), who still owned several houses on the Square, sued to stop him
Issue
Is the covenant enforceable against Moxhay? May covenantee Tulk sue covenantor’s
successor Moxhay to enforce the covenant?
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Analysis
At Law
 The burden of a covenant cannot pass, whether positive or restrictive.
o A person cannot be made liable on a contract to which s/he was not party
o If we allow enforcement of covenants in absence of privity of contract, land
might become overburdened that might be hard to discover and might affect
value of land
o But might not be as relevant today with modern registry service
In Equity
 Tulk v Moxhay
 Question for court of equity is not whether covenant “runs with land” but whether a
party shall be permitted to use the land in a manner inconsistent with the contract
entered into by his vendor, and with notice of which he purchased [this is unjust]
 Why would it be inequitable to allow successor with notice of covenant to ignore it?
o The covenant would affect the value of the land and Mox would have
purchased it at the depressed value
o So he buys it at depressed value, and then it would be unjust to turn around
and sell the land at a higher price free of the covenant
Conclusion Tulk got an injunction to stop Moxhay from developing; a small green space was preserved in
central London; and an otherwise inconsequential Lord Chancellor secured his place in legal
history
Equity continued [from Moxhay] ***4-part test***
 Modern Rule: (refinding/narrowing Tulk): Burden of covenant will “run” in equity where:
o 1. The covenant is restrictive [ie negative in substance]
 was the Tulk covenant restrictive?
 What is the test?
 Often tricky to apply, eg any dwelling must be at least 2000sf; must not
cause or permit dilapidation of buildings; all buildings must be
constructed with brick
 In Tulk: “it was in neat and maintain in good order” but how do we know
that this is restrictive (as opposed to positive)?
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
Test: Can you comply with it by doing nothing? If yes, it is a restrictive
covenant. If you must do something (positive) it may be a positive
covenant.
 In Moxhay, he wanted to build and the covenant was not to build. He
could fulfill the covenant by not building.
 ***Note*** must interpret the covenant as a whole. It is either negative
or negative in substance. You cannot sever a piece of it.
o 2. The covenant was intended to run with the land
 to bind successors, not just covenantor personally
 usually straightforward, look to the language in the covenant [ex: to his heirs,
successors and assigns]
o 3. The covenant benefits another, dominant property
 Covenants in gross are unenforceable absent privity
 Eg covenant in favour of municipality, homeowners’ association or
nature conservation group?
 Ex: homeowner’s association for an entire subdivision and everyone
who signs a covenant with them agrees to their terms.
 Covenant must actually be capable of benefiting the dominant land
 Must touch and concern the dominant land, ie. affect mode of
occupation or directly affect value of land
 There must be sufficient physical proximity between the dominant and
servient land
 Does this requirement make sense?
Non-compete clauses – [this deals with part 3 of test, touch and concern issue]
 Do non-competition covenants touch & concern the covenantee’s land? No.
o Oliver Wendell Holmes, 1885: no, they merely increase land value indirectly by
excluding competitors from the market (Norcross)
 Fitting NCAs into a spectrum of business bans:
o Ban on carrying on any business clearly affects value & mode of occupation of
residential land. This touches and concerns the land. Must be residential and not
commercial. Affects market value of this land.
o Ban on specific undesirable businesses (eg big box stores, bars, casinos, strip clubs,
sex shops) might affect mode of occupation & value by preserving character & quality
of a shopping district. A ban on a type of business that is different from the
business of the dominant tenement. But this affects the mode of occupation.
So it touches and concerns the land.
o What about a ban on the same type of business as covenantee? [this is the noncompete]
Proximity [touch and concern in non-competes continued] [see Swan Properties and 880682 Alta]
Swan Properties v Irving Oil [2004] NLSCTD – touch and concern in non-competes
Facts
Swan Properties bought a vacant lot in Clarenville, NL that was subject to a covenant
prohibiting restaurant or confectionary sales, in favour of 12 dominant tenements across
eastern NL owned by Irving Oil, including a Big Stop gas station & restaurant 3.8 or 5.2 km
away depending on your route. Swan wanted to open an A&W franchise and acknowledged
that this would violate the covenant but claimed the covenant was unenforceable against it
Issue
Does this non-competition covenant touch & concern this land a few kilometres away?
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Analysis




Court applies idea of non-competition radius
Competing business 4-5 km away does touch and concern the land
In this case, it is within this radius so it does touch and concern.
Consider mode of occupation/covenantee’s chosen mode of occupation (restaurant)
and the value of the land
880682 Alta Ltd. v Molson Breweries, ABQB [2002] – non-compete // touch and concern
Facts
In 1994 Molson closed and sold its Calgary brewery, taking a covenant from the purchaser
not to use the site for a brewery, for the benefit of Molson’s Edmonton brewery, 300 km
away. Purchaser lost property in foreclosure sale; new owner wanted covenant removed.
They wanted to squeeze every possible value out of it that they could. The non-compete was
depressing the value. So they wanted to remove the covenant. Molson said they are bound.
Issue
Does this non-competition covenant touch & concern this land 300 km away?
Analysis
 Court said 300km is too far, even though it was within the geographic radius (that is,
Molsen served all of Alberta, industry highly competitive, sale by one brewery would
have reduce competition is enough, but this is not enough)
 This could potentially affect anyone in the world (gave example of Microsoft) – if
something this far-reaching can impose covenants, it might affect anyone in the world
who is affected
Ziff’s
 So, when do they touch & concern?
Analysis
o When servient land is in the dominant tenement’s competition radius?
o And would take away a location-specific commercial advantage enjoyed by the
dominant land?
 Due to customer traffic, ease of access, cost of land, locations of
competitors, nearby development plans, supply & distribution costs,
etc
o And would have non-trivial impact on dominant land’s business?
 Due to shortage of alternative sites for competitors, non-saturation of
market, etc.
Back to the test
 The burden of a covenant will “run” in equity where:
 4. Equity is otherwise prepared to step in
o Successor in title must take with notice; covenant is unenforceable against a bona
fide purchaser for value without notice
 Not a problem today due to registry systems
o Also clean hands, no fraud, duress, unconscionability or other standard equitable
concerns
XIII. PRIORITIES AND REGISTRATION
Priorities at Common Law and in Equity [Unit 13.1]
The Problem
 How to rank competing property claims to the same item, often between innocent parties
o Who should prevail as between B (true owner) and E (good faith purchaser)?
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o Criteria: Fairness? Economic efficiency? Ability to take precautions against loss?
Ability to absorb loss? Emotional attachment?
 Fairness: both can claim that justice is on their side – they are innocent and
did nothing wrong
 Economic efficiency: who is in the best position to take precautions against
loss?
 Ability to take precautions: True owner is in best position – so in this case the
risk of loss should have been on his shoulders to minimize risk. But purchaser
in better position to ask questions and make sure the person selling has good
title.
 Ability to absorb loss: Who is it going to hurt more and who is it going to hurt
less if they lose title? True owner better able to avoid risk bc theft insurance is
more available than title insurance to purchasers. Innocent purchaser is in
better position to absorb the loss if they are a commercial purchaser who buys
a lot of these things whereas true owner might just have one of it.
 Emotional attachment? Risk of loss should be borne by party with less
emotional attachment. Person for whom the item is less significant.
o Common law and equity developed their own rules
o Supplemented by statutory systems for registering and ranking property interests,
especially in land
Chippewas of Sarnia, [2000] ONCA - Priorities
Facts
Anishnaabe people occupied much of southwestern Ontario before English settlement. By
1827, they retained only a large tract near present-day Sarnia. In 1839 Malcolm Cameron
(elected politition and big land owner) purported to purchase 2500 acres of this land from the
Anishnaabe (per Royal Proclamation – no settlers can acquire land from FN directly. Land can
only be acquired by Crown and only through treaty). The land was never properly surrendered
to the Crown, but the Crown purported to grant fee simple title to Cameron in 1853. The land
was subdivided, sold and re-sold to many owners, all of whom were unaware of any
irregularity in Cameron’s title. The Anishnabe sued for a declaration of title in 1995 – on the
basis that it was never properly surrendered and Cameron didn’t have proper title, therefore,
all subsequent owners had no valid legal title.
Issue
 Are the Chippewas of Sarnia entitled to a declaration that the 1853 Crown patent is
void and they are entitled to possession of the disputed lands?
o Priority contest btw prior Abo title holders and the subsequent innocent
unsuspecting purchasers
o Who should prevail: prior aboriginal title holders or subsequent unsuspecting
purchasers?
o Analysis gets complicated
 Is Aboriginal title legal, equitable, both, or neither?
 Is the remedy sought equitable?
 Should equitable defences be available to bar success of the claim?
Analysis
Priorities
 At Common Law and in Equity
 Basic priority principle”
o Interests rank in order of creation, or “first in time is first in right”
o Why?
 The earlier created interest will prevail over the later interest. “You
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can’t give what you don’t have”
 Nemo dat quod non habet
o But there are exceptions…
Four conflict scenarios
Scenario
1. Legal interest followed by legal
2. Legal interest followed by equitable
Priority Rule
Prior interest wins
Prior interest wins, if equities are
otherwise equal
3. Equitable interest followed by legal
Prior interest wins unless holder of later
legal interest is a “good faith
purchaser”/equitable doctrine of fair
notice/bona fide purchaser
4. Equitable interest followed by equitable Prior interest wins, if equities are
otherwise equal
In this case, the issues to be decided are scenario 1 and 3
1. Legal v Legal
 Example: B leases land from A for 10 years, then C purchases the same land from A in
fee simple, with or without notice of B’s lease
 Rule: earlier legal interest prevails over later
 Apply to this case:
o Is Chippewas’ aboriginal title legal or equitable?
 Abo title is sui generis, but what does that mean for the purposes of
deciding priorities?
 ONCA says this means Abo title is a mix of legal and equitable
characteristics and bc it is a mix of both, it is appropriate to apply the
rules that apply to equitable interest and not just legal interest
 The characteristics of the relationships between the Crown and Abo
people which is used to protect Abo interest is used here to defeat
them.
 How does this happen here?
 Court says Abo title is closely related to idea of Crown having a
fiduciary duty to Abo people (which is equitable in nature), this
leads to conclusion that this is an equitable/partly equitable so
rules of equity applies which defeats the equitable Abo title. The
later owners are legal bona fide (good faith) owners so they
defeat the equitable interest of the Abo people. (scenario 3)
o Are the landowners’ interests legal or equitable?
 Treated as legal from the start
 Missing piece: if the original interest by Cameron was void, than there is
no later interest to conflict with the Anashaabe interest – the courts
simply treats these later interests as valid interests
 Why? Are courts unwilling to make any ruling that challenges Crown’s
primacy. If they were willing to hold that Cameron’s grant was a nullity,
they would effectively be saying that Crown didn’t have the underlying
sovereignty that was the foundation of the case (policy q?).
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
They defend this by saying people should be able to rely on a
Crown grant
o If legal vs. legal, does nemo dat principle invalidate a defective Crown patent of
land?
2. Legal then Equitable
 Relies on Northern Counties v Whipp Eng CA 1884:
o F: Crabtree borrowed $ from his employer company, secured by a legal
mortgage over his land. The company took the title deeds and placed them in a
safe to which C had a key. C later borrowed money from Mrs. Whipp, handed
her the deeds, executed an equitable mortgage over his land in her favour, and
went bankrupt. She knew nothing of the mortgages in favour of the company,
and the company knew nothing of C’s dealings with her.
o One equitable and one legal title
o Whose mortgage has priority?
 If the equities are equal, the law will prevail
 But a prior legal estate will be postponed to a subsequent equitable
estate where the owner of the legal estate
 (a) assisted or connived in a fraud that led to the creation of a
subsequent equitable estate without notice of the prior legal
estate,
 (b) gave the mortgagor the authority to borrow and mortgagor
improperly represented the resulting equitable estate as having
priority
 (c) was grossly negligent in relation to later estate
 (d) was otherwise estopped from asserting priority by virtue of
representations or appearances
 C: Courts decided in favour of Northern Counties. They decided that
even though Northern Counties was careless by putting the title deeds
where he had access and blindly trusted him, the first 2 exceptions (a)
and (b) must apply. But this doesn’t apply today. Today, holder of prior
legal estate was grossly negligent (c) to help facilitate later equitable
estate, than the later equitable estate is going to win.
3. Equitable then legal
 Ex: A owns land, then concludes valid agreement of purchase and sale of land with B,
then conveys land to C (and closes transaction to C so that C holds legal title) at a
better price before deal with B closes (“gazumping”)
o B has a legal title that was created at one point in time, and at a later point in
time, C has legal title
o So who wins?
 Rule: later legal interest prevails only if acquired by good faith purchaser for value
without notice [1) purchaser: can’t be acquired by gift or inheritance 2) have to have
no objective reason to be aware of prior equitable claim 3) Good faith: clean hands,
no sharp dealings, etc.]
o No actual or constructive notice of prior equitable claim, plus no dishonesty or
unclean hands
 Burden on purchaser to make reasonable inquiries/exercise due
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diligence to uncover details about land. Doing thorough title search and
looking at state of affairs on the ground (is someone on the land who
doesn’t have interest?)
o AKA equitable doctrine of notice
 Chippewas of Sarnia:
o Does good faith purchaser rule apply?
 Courts says there is no evidence to suggest that any of the subsequent
owners after Cameron knew or ought to have known that they were
unsurrendered Indian lands. At the time, it was not really a matter of
whether they knew, rather it was a matter of whether they cared. In the
system at the time, no one had a reason to care.
 The rules about the standard for purchasers doesn’t make a difference if
they had legal advice or not
o Should it be relaxed in aboriginal title cases?
 Even if the good faith purchaser rule applies (prior equitable then later
legal); court says “maybe” if the Abo title taking was egregious but that
didn’t happen in the Cameron transaction (policy?). (is this factually
accurate in the 1800s?)
4. Equitable v equitable
 Prior equitable vs. later equitable claim
o (twist on gazumping situation; neither deals have closed) Eg A concludes valid
land sale agreement with B then concludes another with C, and neither deal
has closed
 Recall that upon a valid contract for sale of land, the purchaser becomes
the owner in equity (institutional constructive trust)
o Earlier interest prevails, if equities are otherwise equal
 But not if equities are unequal (eg holder of earlier interest guilty of
fraud, negligence or undue delay)
 “As between persons having only equitable interests, if their equities
are in all other respects equal, priority of time gives the better equity”
Rice v Rice (Ch. 1853)
Back to this case
 closing thoughts…
 What was the significance of the 150 year delay?
o Should the doctrine of laches bar a remedy?
 Did the Chippewas acquiesce or cause detrimental reliance?
 Looking for equitable remedies; and if looking for equitable
remedies, they are subject to equitable doctrines including
laches and acquiescence
 Were they aware of the key facts all that time?
 Consider historical context, Abo peoples could hire legal counsel
at the time
 Were they in a position to assert their claim earlier?
 ONCA glosses over this
 Does priority depend on character of rights or of remedies sought? [here, courts are
conflating issue of remedies and issue of interest]
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o Does doctrine of laches apply to legal interests?
o Did the Chippewas seek legal or equitable relief?
 Did decision constitute an unauthorized extinguishment of Abo title?
o Controversial
Conclusion The original transfer was not legally effective, but equitable doctrine of laches bars suit 150
years later.
Title Registration [Unit 13.2]
Central dilemma:
 Security of existing interests -- ease of transfer of interests
At common law
 Traditional priority rules applied; purchaser bore risk of defective title
o Had to satisfy herself of vendor’s title by tracing chain of title through all prior
transactions
 Based on examination of the original documents
 Eventually limited to 60 years
 Thorough title searching going back 60 years
 So that if an interest came out of the woodwork that was not revealed,
then you took free of that interest
 This puts a strong burden on the purchaser
o Preferred security of existing interests over ease of transfer
 Exception: prior equitable interest vs later legal interest purchased in good
faith (equitable doctrine of notice)
Common law and equity put the arrow around here:
Deeds Registration
• Began in 18th century
• Title documents were stored in a registry office and listed in a register
• Eased title search but provided no guarantee of title
• Purchaser still had to search the chain of title and determine validity of
interests
• Often modified priority rules, basing priority on date of registration (with varying
exceptions for notice, fraud)
• Still preferred security of existing interests over ease of transfer
• Title insurance emerged to protect purchasers
Shifts the bar a little bit to the right but still heavy towards facilitating easy transfer:
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Title Registration (our focus)
 Spearheaded by Sir Robert Torrens in South Australia in 1858, spread quickly to BC and
beyond
 Torren system: Title is created, not merely recognized, by registration
o Guarantees that the registered holder is the holder
 Three central principles: curtain, mirror and net
 Curtain: the state certifies registered holder’s title, drawing a curtain on past dealings
o Registration creates the interest
o Title is indefeasible upon registration
 But not against a person deprived of land by fraud in which the registered
owner participated
 Fraudster will always lose
 Mirror: the register is a conclusive reflection of all interests
o If it’s in the register, it exists, if it’s not there, it’s not
o Indefeasible title is unaffected by notice of prior unregistered interest (except in case
of fraud)
 Equitable doctrine of notice abolished
 Net: person deprived of title by operation of the Act or administrative error is compensated
o In BC is the Assurance Act, which is funded by a small surcharge on each land
transaction
The Curtain

Registered owner is subordinate to the person they defrauded
The Mirror
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The Net



Compensation fund that compensates them where but for the act they wouldn’t have lost the
title
Covers where innocent people lose title
Is this the right policy?
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Fraud Exception


“Title registration systems do not protect rogues”
o But what about innocent parties who acquire interests from rogues?
o “Principle of indefeasible title protects the person registered on title at the expense of
the person wrongfully deprived of their interest in land”
What if a frauster acquires an interest in land and registers it, then transfers to an innocent
3rd party?
o Different provinces deals with it in different ways
Lawrence v Wright [2007] ONCA – title registration
Susan Lawrence was the registered owner of a house in Toronto (governed by title registration
Facts
Issue
Analysis
[Torren]). Without her knowledge, an imposter posing as her purported to convey the property to
another imposter calling himself Thomas Wright, who obtained a $292k mortgage from Maple Trust.
Maple Trust is registered on title as mortgagee. The transfer was registered with “Wright” as the new
owner. MT’s mortgage was registered later the same day. “Wright” absconded with the money. MT
sued for possession. Lawrence applied to have the fraudulent transfer and the mortgage set aside.
o
The imposter Thomas Wright disappears with the money and never pays the
mortgage
o
The first Susan Lawrence finds out when she gets a letter saying her property is being
foreclosed
 Question is whether Maple Trust, the innocent purchaser, has a valid title or whether only
someone further down the line who acquires the interest from the first innocent purchaser
has valid title. In other words, where do we draw the line around the fraudster situation? Do
we capture the person dealing directly with the fraudster (Fake Susan, Fake Thomas as MT?)
or just the fraudster (Fake Susan, Fake Thomas)?
o At some point in the line of innocent people, someone has to acquire legal title
 Who has better title: original owner (Lawrence) or innocent purchaser/mortgagee (MT)?
o And what about the fraudster and anyone acquiring an interest with notice of the
fraud?
 What would the result be at common law? Why?
o Innocent purchaser bears the full risk of title defects
What’s the result under Title Registration?
 Title obtained by fraud is void even if registered
o The fraudster never wins…
o In BC, see s 23 LTA
 But subject to that exception, purchasers are entitled to rely on the register
o Registered title obtained by fraud can form a good root of title; Title Registration
abrogates nemo dat
 Susan Lawrence argues nemo dat
 Question is whether innocent purchasers may rely on the register immediately when a
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fraudulent title is registered or only after an intermediate transaction
o There are two approaches 
Two approaches
 Immediate indefeasibility
o An innocent party acting in good faith (without notice [actual or constructive] of
fraud), who acquires an interest directly from a fraudster, acquires indefeasible title
upon registration
 This is the scenario in which Maple Trust wins.
 Deferred indefeasibility
o An innocent party acting in good faith, who acquires an interest via a forged
instrument, does not acquire indefeasible title against the original owner, but
registration of its interest enables it to pass valid title to a third party. Indefeasibility is
deferred to a subsequent innocent party who acquires an interest at least one step
removed from the fraud
 This is the scenario where Susan Lawrence wins.
Which is it? – What are the justifications for one position over the other
 Arguments for immediate indefeasibility?
o Whole idea of title reg is to protect people who rely on the register
o Assurance fund protects deferred
o Deferred makes all purchasers look behind register, not just immediate one
 Arguments for deferred indefeasibility?
o MT has opportunity to avoid risk, unlike homeowner
o Fraudster has no title to pass
o Homeowner shouldn’t face risk of eviction
 But so is deferred owners
o Compensation is no substitute
o But comp is okay for commercial lender
 But what about a homeowner?
 It might make sense that a lender can take compensation but what if
the immediate owner is the purchaser thinking they would get that
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
house?
o BC Legislation seems to create immediate for purchasers and
deferred for lenders
****rule in Ontario is deferred****
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