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The Relative Nature of Title: FINDERS
General Rule: Finder has ownership rights over everyone else except for the true owner, or anyone who can
assert a prior right to keep the object, which was subsisting when finder took possession (Parker v. British
Airways).
o Occupier has better right than finder to chattels “in or attached to” land or building, whether or not
occupier aware of object
o Occupier has better right than finder to chattels “on or in but not attached to” premises, if before
chattel found, occupier manifested an intention to exercise control over the premises and
anything in or on it.
Justification of property rights for finders:
o Want finders to try to find true owner, knowing that they acquire right to property if they cannot be
found gives them incentive to look.
o Governed by lost property legislation – turn it over to police, some notice given (e.g. note on
telephone pole)
Trachuk v. Olinek Alta. QB, 1996.
Facts: $75 960 found under the surface of farmland. Four defendants base joint claim on the basis that they
are finders, and are entitled to the property as against the entire world except the real owner. Trachuk had an
agricultural lease, and built a fence to keep cattle away from machinery – claims to be in possession of the
money by virtue of being in de facto possession of the land. Several other parties (3x easements, land sold,
true owner, government- none brought claims). Amoco was the legal occupier of the part of land where $$
found.
Issue: Whether Trachuk has an occupancy or possession of the land where the money was found, so as to
supersede a finders claim to a property right. (Does Trachuk have a better claim than the 4 defendants?)
Reasoning:
 “Finder of a lost chattel, while not acquiring any absolute property or ownership in the chattel,
acquires a right to keep it against all but the true owner or those in a position to claim through the
true owner, or one who can assert a prior right to keep the chattel which right was subsisting at the
time when the finer took the chattel into his care and control”.
 Distinction between circumstances where lost chattel is found on private land (“true finder cases”)
and when chattel is uncovered on private land after having been intentionally placed on or under
privately owned land (“recovery cases”).
o Because the money was deliberately hidden, the general rule that the finder of lost
property is entitled to it against all except the true owner, does not apply
 A recoverer is able to acquire a possessory title to a recovered chattel only subject to the rights of
the owner or occupier of privately owned land when the chattels are under the land or attached
thereto. – if cached, occupier of property has higher right than finder.
o Where a person has possession of a house or land, with a manifest intention to exercise
control over it and the things which may be upon or in it, then, if something is found on or
under that land, the presumption is that the possession of that thing is in the owner of the
location in question. (note this is not exclusive…see Bridges v. Hawksworth)
 Legal possession differs from de facto possession: it relates to the right to possession. Here, de facto
possession means occupation, and only exists where there is a sufficient measure of control to
prevent strangers from interfering. It is a matter of fact.
o The evidence is that in building a fence, Trachuk was not intending to exclude workmen.
The money was not in the possession of Trachuk when it was found by four defendants.
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Held: Evidence does not support de facto possession by Trachuk (he failed his burden to show he had
possession of the premises with a manifest intention to exercise control of them and over things that
may be in them. Defendants have right to possessory title to the money superior to Trachuk.
Precedent:
 Armory v. Delamirie (1722) – A chimney sweep’s boy who found a jewel succeeded against a
jeweler to whom he had offered it for sale, who refused to pay a price acceptable to the boy or return
it.
 Bridges v. Hawksworth (1851) – A finder was entitled against an occupier to a packet of bank notes
found on the floor of a shop.
 Bird v. Fort Frances (1949) – 12 year old boy found a stash of money on private property while
trespassing. Police took money. No claim from property owner or “true owner”. Held boy was
entitled to money.
o Low degree of criminality (trespassing) compared to Barid, below. – State doesn’t invoke
“proceeds of crime” seizure power.
 Baird v. BC (1992) – Baird admitted to stealing money though never charged criminally, Crown
refused to return money to him. Court ruled he was not entitled to the money because he
shouldn’t be allowed to gain from his own wrongdoing (ex turpi causa non oritur actio).
o Distinguished Bird as having a low degree of criminality/immorality, insufficient to support
an ex turpi plea.
Other Scenarios
o Moffatt v. Kazana – New owner of a home finds money in a tin in a chimney flue, which the
previous owner had hidden and forgot about.
o Abandonment requires subjective intent to abandon, someone who forgot about it has a
better claim than Finder.
o Weitzner v. Herman – Husband dies before telling wife about money stashed, discovered after
Widow sells house.
o No argument for abandonment because husband never had chance to tell her about it –
can’t abandon something you don’t know exists (Wife entitled to money).
o Millas v. BC – Off-duty cop discovers $1M in a garbage can in a park
o Off-duty cops are in the same position as any other person regarding finding stuff.
Parker v. British Airways (1982) Leading British Case – Passenger entitled to a gold bracelet found by him
in an executive lounge at Heathrow Airport. He gives it to them and says if you can’t find the true owner, I
want it back. They sell it and he sues.
Rights and Obligations of FINDER (Parker v. British Airways):
1. The finder of a chattel acquires no rights over it unless (a) it has been abandoned or lost and (b) he
takes it into his care and control.
2. The finder of a chattel acquires very limited rights over it if he takes it into his care and control
with dishonest intent or in the course of trespassing.
3. A finder of a chattel, whilst not acquiring any absolute property or ownership in the chattel,
acquires a right to keep it against all but the true owner or those in a position to claim through
the true owner or one who can assert a prior right.
4. Unless otherwise agreed, any servant or agent who finds a chattel in the course of his
employment or agency and not wholly incidentally or collaterally thereto and who takes it into his
care and control does so on behalf of his employer or principal, who acquires a finder’s rights to
the exclusion of those of the actual finder.
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5. A person having a finder’s rights has an obligation to take such measures as in all the
circumstances are reasonable to acquaint the true owner of the finding and present whereabouts
of the chattel and to care for it meanwhile.
Rights and Liabilities of an OCCUPIER (Parker v. British Airways):
1. An occupier of land has rights superior to those of a finder over chattels “in or attached to that
land” and an occupier of a building has similar rights in respect of chattels attached to that building,
whether in either case the occupier is aware of the presence of the chattel.
2. Occupier of a building has rights superior to those of a finder over chattels upon or in, but not
attached to, that building if, but only if before the chattel is found, he has manifested an
intention to exercise control over the building and the things which may be upon it.
3. An occupier who manifests an intention to exercise control over a building and the things which
may be upon or in it so as to acquire rights superior to those of a finder is under an obligation to
take such measures as in all the circumstances are reasonable to ensure that lost chattels are found
and, upon their being found, to acquaint the true owner of the finding and to care for the
chattels mean while.
4. An “occupier” of a chattel (ship, car, aircraft) is treated as if he were the occupier of a building for
these rules.
Transfer of Title Through Delivery: GIFTS
J.B. Baron, “Gifts, Bargains and Form”
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Difference between gifts and bargains, donative transfers and contractual exchanges.
Primary legal goal regarding gifts is effectuate donative intent. Formalities are required to put
that intent beyond question.
o Primary legal goal regarding contracts is to protect expectations and security of transactions.
Consideration shows those promises are customarily understood to be binding.
o Gifts merely redistribute wealth, don’t warrant legal enforcement unless their formality renders
administration of them simple. Contracts create wealth, their substantive importance warrants
enforcement without formality.
o Legal treatment of gifts and bargains is based on assumptions of human behaviour that is at odds
with reality - we are suspected when we give, relied on when we trade (consideration based on trust
in business transactions but the requirement for donative formality assumes that in giving, people are
fundamentally unreliable and deceitful).
o Gifts are socially important and formalities, requiring deliberation, calculation and quantification,
are at odds with the spirit of giving.
Baron’s conclusion:
o The business-related, non-legal pressures that cause most market participants to fulfill their bargains
voluntarily does not eliminate the need for judicial involvement in contracts – why should the social
or psychological pressures (trust, etc.) that underlie gift-exchange require a different approach for
donative transfers?
o In some ways gifts can be considered exchanges (e.g. if the donor acts out of self-interest in a future
expectation of a gain)
o Formal requirements for donative transfers and the reluctance to enforce transfers except on purely
formal grounds, carries the message that gifts are uncommon, unimportant and untrustworthy.
Three recognized methods for making a valid gift: 1) deed, 2) declaration of trust, 3) delivery.
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Nolan v. Nolan & Anor [2003] – Austrailia
Facts: Jinx claimed Sidney (artist/father) had gifted three paintings to Jinx’s mother (Cynthia). Jinx was a
major beneficiary of her mother’s estate but the paintings weren’t included in the estate inventory.
Issue: Was Cynthia given the three paintings via a legally recognized gift?
Held: The plaintiff established neither donative intention nor delivery. Therefore no gift.
Reasoning:
 Equity will not complete an imperfect gift.
 Possession is prima facie evidence of property.  possessory title – good against all but the true
owner. (In this case D has been in continuous possession for 27 years).
 Since donee and donor are deceased, court should approach evidence with caution (Re Garnett,
Thomas v. The Times Book Co – decreased poet allegedly gave manuscript)
Essential elements of a valid gift of a chattel inter vivos, in the absence of a deed of gift or declaration
of trust: (Plaintiff bears the onus of establishing the necessary elements of a gift of chattels by delivery.)
1) Intention to make a gift. (failed here)
o Words of gift not essential but clear donative intention, attended by the requisite
certainty as to object, extent and whether the gift would take immediate effect are
necessary.
o No evidence of words of gift,
2) Intention by the donee to accept the gift.
3) Delivery (failed here)
o Actual physical delivery or “constructive delivery”
 Constructive Delivery:
 Either, when donee is already in possession at time of gift  look for some
evidence of change in the status of donnee (borrower owner)
 OR, where manual delivery is impossible or impractical  look for
transfer of exclusive means of access (e.g. key) 
o Watt v. Watt Estate – provided duplicate key to boat but retained
original = not sufficient delivery.
 Symbolic delivery such as picture of object is insufficient.
o Delivery can precede, accompany or follow the gift, but delivery must occur while the
donative intention subsists.  at any stage prior to delivery, the donor can validly retract
the gift
o Where possession of the chattels by the intended donee precedes the words of gift, the gift
may be perfected without the necessity for the donor to retake possession of the chattels in
question in order to effect a valid delivery.
 Need to establish chattels were in the possession of the donee at the time when the
words of gift were expressed or donative intention was otherwise made manifest
o Must relinquish all control over gifted object – a continuation of control or power is
inconsistent with valid delivery.
o Unauthorized appropriation by the purported donnee cannot constitute valid delivery.
Delivery in Common Establishments
 National Trustees Executors and Agency Company Ltd. v. O’Hea (1905) – master on deathbed
gives servant his coach and horses, which stayed at the deceased’s premises –
o Court ruled requirement of delivery was not satisfied – he was in possession, not as a
bailee but legally, was the possession of the donor, his master.
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Re Cole – husband purchased house and furnished it lavishly, told wife “its all yours”, he went
bankrupt and wife tried to block effort of bankruptcy trustee to seize furniture on the basis it was
gifted to her. – court ruled no valid gift due to no delivery.
Re Ridgeway – Father believed he had made gift of port to his children, referred to it as Tom’s port
– despite clear donative intention, requirement of delivery was not fulfilled = no gift.
Requiring delivery as an independent requirement may lead to courts sometimes not recognizing
gifts that were intended, but avoids greater harm that may result from undue relaxation of the
delivery requirement, particularly in the context of common establishments (proliferation of
claims, increased uncertainty).
Constructive and Symbolic Delivery of inter vivos Gifts
 Symbolic Delivery: instead of the thing itself, some other object is handed over in its name and stead.
 Predominant view is that symbolic delivery is insufficient to make a gift.
 Constructive Delivery: something that is not a delivery is treated as if it were one.
 Two situations:
a. No direct handing over of the subject-matter of the gift, but the means of getting at it and
controlling it is conferred on the donor  e.g. handing over a key.
i. Not sufficient to give access, must also give power and control to the exclusion of
others, including the donor.
ii. May be limited to cases where ordinary delivery is not reasonably possible due to
the nature of the subject-matter or the situation of the parties.
b. No change of actual possession, but there is a change in the capacity in which that person
has possession  e.g. donee already in possession of item.
The Sources of Canadian Property Law and Common Law Estates:
English Common Law:
J. Cribbet & C.W. Johnson, Principles of the Law of Property
Feudalism: both a system of government and a method of holding property. Universality of feudalism in
England led to the consolidation of the law into a systematic whole.
 Tenures were either free or unfree.
Free tenures (four types/needs):
i)
Security: knight service (forty days of armed service to lord per year).
ii)
Splendor: serjeantry tenure (services, cook, butler) was the result.
iii)
Spirit: Frankalmoin tenure: tenant always a priest or religious body
iv)
Subsistence: socage tenure (any tenure not in above three types, often labour services on the
lord’s land).
Rights and Obligations: Incidents of Tenure
1. Arose during lifetime of tenant:
a. Homage: ceremony by which tenant became lord’s man
b. Fealty: Oath taken to promise loyalty to the lord
c. Aids: supply financial support for ransoming of the lord, knighting of his eldest son,
marriage of his eldest daughter
2. Arose on the death of the tenant:
a. Escheat: If tenant dies with no heir, land goes back to lord (term still used today)
i. **If felony committed, tenant would forfeit land
b. Relief: If tenant has heir who had attained majority age and was ready and able to succeed
tenant – pay “Relief” – sum of money to inherit land.
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c. Wardship & Marriage: if someone dies with a minor heir, lord had certain rights until the
ward came of age (e.g. manage land for profit). Also had the right to choose a wife for the
ward.
Unfree tenures:
 Copyhold was an unfree tenure reserves for those who tilled the soil.
Courts, legislation and the decline of feudalism:
 Quia Emptores statute 1290: legislation abolished subinfeudation (long chain of lord-vassal
relationships and provided that all future alienations of land must be made by substitution – eventually
shortening the feudal chain and causing more land to be held directly by the King).
o Lords disliked subinfeudation because it reduced frequency of escheats (reduced their
income)
 Eventually various obligations of tenure were converted to fixed payments, which ceased to be valuable
due to inflation.
 Statute of Tenures (aka Tenures Abolition Act) 1660: abolished remaining incidents and converted all
free tenures to free and common socage (no services, no special incidents)
– All incidents of value destroyed except escheat
– The only kind of tenure ever introduced into Canada
Remaining distinctions between free and unfree tenures abolished in the UK in 1926.
B. Ziff, “Warm Reception in a Cold Climate: English Property Law and the Suppression of the
Canadian Legal Identity”.
 Suggests Canada has adopted, by and large, a pattern of adherence to the British model.
The first explanation is instrumental – a considerable amount of uncertainty would be created if the model
were not followed. It is also convenient (pointless to reinvent the wheel)
A second is normative; that is, confidence that the common law encodes principles of universal justice.
Both Statute of Tenures and Quia Emptores were adopted via statute into Canadian law.
Current Canadian Law:
o Crown has underlying title to all land
o All privately owned land is held directly of the Crown in free and common socage
o The main vestiges of the old system are:
o Modern intestacy statutes (vestige of escheat)
o Modern death duties (vestige of relief)
o Alienation by substitution only, lord’s consent unnecessary (Quia Emptores, 1290)
Common Law Estates and Aboriginal Title
Types of Estates:
1. Freehold Estate:
o  Common law recognizes three forms of freehold estate: the fee simple (closest to absolute
ownership); fee tail (not really considered) (inheritable right of conceptually more limited
duration); and life estate.
2. Leasehold Estate: (Landlord-tenant)
o Main distinction from freehold estates: certainty of duration
3. Aboriginal title
**Unfree (copyhold) Estates  never introduced in Canadian Law
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The Estate in Fee Simple:
R.C. Ellickson, The Fee Simple: The advantages of Perpetual Land Ownership
 Perpetual ownership rights simplify land-security transactions: but preeminent advantage is low
transaction cost device for inducing conservation of resources for future generations.
 A rational fee owner adopts an infinite planning horizon because it’s in his best interests to maximize the
future value of his land (discounted to today’s $).
Fee simple in land “cleverly harnesses human selfishness to the cause of altruism toward the unborn, a
group not noted for its political clout or bargaining power”.
o Agricultural groups in particular “have recognized that perpetual private ownership makes for better
land stewardship”.
”In sum, the inherent efficiencies of perpetual private land rights have led to their spontaneous appearance
on every continent”.
Thomas v. Murphy NB Q.B. 1990
Facts: Plaintiff retained D to act on their behalf as purchaser of a property. D reported they had obtained
marketable title. Terms to grantees said “successors and assigns”, but not “heirs”.
Submissions:
o Plaintiff submits that because grantees in deed did not receive a grant to “themselves and their
heirs”, they could not dispose of a fee simple to the property—thus the title was defective and had to
be repaired by further quit claim conveyances from beneficiaries.
Issue: whether the grantees in the trust deed received a fee simple interest in the property which they could
convey. What words are needed to convey a fee simple estate?
Reasoning:
 use of the word “heirs” in the grant is a matter of limitation of title, not a question of succession to title,
and absent the works heirs the fee simple is found at law not to have been granted.
o Property Act R.S.N.B 1973 s. 12(3) states:
o In a conveyance, it is not necessary in the limitation of an estate in fee simple to use the
words “heirs”, but it is sufficient if the words “in fee simple” are used.
o Ontario Conveyancing and Law of Property Act R.S.O. 1980 c. 90 s.5 provides that if no words of
limitation are used, a deed can pass all the estate or interest held by the grantor, unless a
contrary intention appears in the deed.
o Similar language applies to Devises: Succession Law Reform Act – “except when a contrary
intention appears by the will, where real property is devised to a person without words of
limitation, the devise passes the fee simple or the whole of the interest/estate the testator had
power to dispose of by will in the real property.
o At common law, the word “heirs” was absolutely necessary.
o Rule of law – defeats party’s intentions.
o 19th century relaxed the rules; now there is legislation in all the provinces.
o Ontario: if no words used are used to describe the estate, then the instrument passes
the entire estate held by the grantor, unless there is a contrary intention.
**Application Court considers conveyance as a whole and decides here grantors hold fee simple.
Conveyance as a whole expresses the intention in the deed to pass the fee simple interest of the
grantors.
Ruling: Appeal is allowed, and plaintiff’s action is dismissed (Plaintiffs received fee simple)
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Traditional common law rule
Grant
To create FS, must use specific term Conveyance passes entire estate subject
“heirs” (rule of law). “To A and his
to contrary intention appearing in grant.
heirs” (presumption of life estate, FS requires “To A” (presumption of fee simple, Life Estate
magic word “heirs”)
Devise
o
requires clear language)
To pass FS, must use words indicating Devise passes entire estate subject to
intention to convey FS (e.g. “forever,” contrary intention appearing in will. “To
“and his issue”). “To A absolutely”
A” (Presumption of fee simple, LE requires
(weak presumption of life estate, FS requires
clear language)
o
Current Ontario rule (since 19 C
statutory reform)
clear language)
Grant (sale): Ontario Conveyancing and Law of Property Act R.S.O. 1980 c. 90 s.5 provides that if
no words of limitation are used, a deed can pass all the estate or interest held by the grantor,
unless a contrary intention appears in the deed.
Devises (will): Succession Law Reform Act – “except when a contrary intention appears by the will,
where real property is devised to a person without words of limitation, the devise passes the fee
simple or the whole of the interest/estate the testator had power to dispose of by will in the real
property.
o Under CL Devise passed fee simple as long as language of will clearly indicated that
intention (To A forever, To A and his issue, To A absolutely)
Useful terms:
• Grant or conveyance: transfer of land ownership inter vivos
– Grantor = the person transferring ownership
– Grantee = the person acquiring ownership
• Devise: gift of land after death, by will
– Devisee = the person acquiring ownership by will
• A type of beneficiary (person receiving a benefit under a will)
• Legacy = gift of personal property by will
• Bequest = gift of any property by will
• Testator or testatrix = person who makes a will
•
•
•
•
•
•
•
Executor = the person responsible for executing the provisions of the will
Estate = the deceased person’s property
Intestacy = the condition of dying without a will
or without having disposed of all estate by will
Heir = person appointed by law to succeed to an estate in case of intestacy
Successor = person who succeeds to another’s rights or obligations
Assign = person to whom another assigns rights or obligations
Trustee = person who holds legal title to property in trust for another
D’Arundel’s case 1225  the words “and his heirs” are words of limitation, not words of purchase
indicating to whom an estate was granted. It confers no enforceable claim to the land to the heirs.
Words of Purchase vs. Words of Limitation:
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When a fee simple estate owner dies without heirs  the land escheats to the overlord (the Crown) at
common law. Some jurisdictions regulate escheat process by statute.
The Life Estate:
 Duration of a life estate is determined by reference to continued existence of a life or lives. May be
transferred but initial designation for measuring life (the cestui que vie) is fixed at the time the interest
is conferred.
When someone owns a life estate based on someone else’s life – estate pur autre vie. Modern wills
legislation now allows life estates pur autre vie to devolve along with rest of A’s (deceased) estate.
Basics of the Life Estate:
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Created by words “To A for life”
o This language confers a life estate on A, life tenant
o Duration: usually grantee’s lifetime (pur sa vie)
o Life tenant may convey interest or rent out land
Can be for another person’s life (pur autre vie)
o Assume A transfers her interest to B
 B holds for life of A (the “measuring life” or cestui que vie)
Can also be created by original instrument
o E.g. “to A and B for the life of A”, “to C for the life of D”
 Inheritable life estate (when another party is the measuring life, if owner dies before
measuring life dies, ownership passed on to heirs
X grants “to A for life, then to B and his heirs”
o B acquires a fee simple remainder (owns rights remaining after A’s life estate)
 Fee simple passes to B upon A’s death
 B = remainderperson
o X retains nothing (recall substitution)
Re Walker 1924 Ont. C.A.
Facts: John Walker died on 27 March 1903. Estate was worth around 16,000. He left his assets to his wife,
but wished to give any that she had not disposed of to others upon her death.
-Widow survived until 1922. Her estate was worth around 38,000. Those claiming under husband’s will seek
to have some portion of his estate earmarked as “undisposed of” portion of husband’s estate. Those claiming
under the wife’s content that under the husband’s will, the widow took absolutely.
Issue: Will gives everything to wife, then remainder divided at her death.
Held: Husband’s will has conflicting intention (to confer an absolute estate and control the destiny of the
thing given. What to do: reject the subordinate intention (gift-over) – wife gets fee simple, assets follow
instructions of her will.
Reasoning:
 Key principle—where there is an absolute ownership, that ownership confers upon the owner the rights of
an owner and restrains an alienation; and similar attempts to mold and control the law are void (In re Rosher
1884).
Rule: Give effect to as much of T’s intention as possible by ascertaining dominant intention and giving
effect to it while rejecting subordinate intention,
o Two classes of cases: (1) gift to person first named prevails and gift over fails as repugnant; (2) first
named takes a life estate only, and so gift over (at the end of life estate) prevails.
 Exception: third class of cases. Cases where all that is given to first taker is a life estate, but the life
tenant is given a power of sale, which may be exercised at any time during the currency of the estate.
(Not applicable to this case, and only an apparent exception – no conflict upon the face of the gift).
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o
Here, is an attempt to deal with that which remains undisposed of by the widow in a manner
repugnant to the gift to her. The gift to her must prevail, and the attempted gift over must be
declared to be repugnant and void.
Re Taylor Sask. Surr. Ct. 1982.
Facts: Husband’s will stated, “…to have and use during [wife’s] lifetime”. Wife died 16 years later, and in
her will there was a general direction to her executors to convey her assets to money and establish two equal
funds, one for charity and one to go to five other people.
Issue: whether the testatrix (wife) takes an absolute interest under the will of John Taylor or only a life
interest. More specifically, whether the right to encroach on the capital confers an absolute interest and not
simply a life interest.
Decision: Language of will shows a clear intention to give his wife a life interest coupled with a power to
encroach on capital for her own maintenance.
Argument (rejected) a right to encroach on capital which is not subject to limitation may result in the
depletion of the entire estate, amounts to an absolute interest (court REJECTS this submission). Premise on
which this rejected argument relies is that because the same result can be achieved by an absolute interest,
they are identical.
 Reasoning: Language in this case shows a clear intention to give to the donee a life interest. The words
“during her lifetime” operate as words of limitation.
o Any significance a right to encroach on capital may have as evidencing an intention to give an
absolute interest is displaced by the clear words of the testator.
o Cannot see why a gift over of what remains at the death of the donee should have the effect of giving
an absolute interest to the donee; this is not sufficient to engage repugnancy, which arises where the
testator tries to accomplish two things which cannot logically stand with the other.
o Fundamental rule in construing a will: the intention of the testator is to be ascertained from a
consideration of the will as a whole.
 The possibility that there may be nothing left on which the gift over can take effect does not enlarge
the interest of the donee to an absolute interest.
RATIO: where the testator uses plain language to indicate an intention to give a life interest only, that
interest is not enlarged to an absolute interest because the testator has declared that the donee is to
have the right in her discretion to encroach on capital for her own proper maintenance. There is
nothing in such a provision which can have the effect of displacing the clear intention of the testator.
Court in Taylor distinguishes or dismisses as bad law the following cases.
Re Rankin = to be used by her and at her death if any is left over to X – court says FS. (Distinguished…no
sufficient reference to the life of the donee to trigger a life estate, no such difficulty in Taylor)
Re Minchell’s Will Trusts – To A for her life time, and if anything should be left over, to B – court says FS.
(words “for her life time” are preceded by words which when taken alone would support an absolute gift…bad
law, must interpret entire will).
Townshend v. MacInnis – To A to be used and disposed of as she wishes during her lifetime. Any that is
left at her death to B – court says FS. (Life interest coupled with a power of disposition = absolute
interest…bad law)
o Note that in this case power of disposal was explicit, in Taylor, it was only implicit  subject to CL
doctrine of equitable waste “persons who hold a life estate in real property cannot commit “wanton
or extravagant acts of destruction”  perhaps limitation on power of disposal/encroach upon capital
being for “personal maintenance” in Taylor combined with doctrine limiting her from being
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excessive, she didn’t have power to dispose of entire estate like in Townshend who could just sell it
at any point.
Aboriginal Property Rights
Richard Overstall, “Encountering the Spirit in the Land: ‘Property’ in a Kinship-based Legal Order”
Gitxsan Land Law
 “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 (daxgyet).”
 Two crucial elements to daxgyet (power from encounters with land):
1. Chief’s initial encounter with the spirit in the land
2. Subsequent duty to respect both the human and supernatural partners of the marriage
 The feast (yukw) is the institution through which the people formalize their social, political and legal
affairs. It’s central in recreating the people’s primary relationship with the world.
 Obligations flowing from relationship with land: 1) people respect the land and achieve a balance in
both natural and social life, 2) the power-giving encounters be recreated in the feast hall to maintain
the relationship.
 Political unit – wilp (“House”):
o Membership in a House is formalized in a feast by the taking of a name
o Names indicate holder’s status in the House, highest-ranked chief is the name of the House
itself.
o With a name, the person acquires the right to use specific areas of the House’s territories
that are allocated by the chief and announced by him or her at the feast.
o Head chief is responsible for the actions of the House and each of its members but does not
act alone – consults other chiefs, House elders and on sufficiently important matters, the
chiefs of other Houses.
 Max size of house = 30 families/150 people. Under 50 people = difficulty maintain itself
economically. Houses can merge if they are too small.
 Chiefs may grant rights to specific areas to men who marry members of his or her House – rights
only valid during husband’s lifetime (similar to CL “life estate”). Same applies for children using
husband’s land, in some cases it will be renewed upon his death but certainly not extended as
inheritable privileges beyond his children’s lives.
 Once acquired, a relationship with territory is inalienable unless the House is unable to perform its
feast responsibilities (insufficient wealth) or is required to relinquish a territory as compensation to
repay an offence committed against another House (not aimed at replacing lost value, aimed at
settling the disquiet felt by the other party)
 Laws are not policed; instead, there is a withdrawal of support from the person or group taking the
illegal action
 Narrow perspective: House’s sole possession is the daxgyet. All other possessions are but aids
needed to bring that power to life.
 Broad perspective: Each possession is necessary in its own right for the House to function properly
in Gitxsan society and the world.
 Territorial boundaries are precisely delineated, may rarely change hands but always retain its
integrity (can never be split up as this would interfere with the legal and spiritual reciprocity
between a House and its territory).
 A House’s histories, crests, and territories revolve around one another to recreate the daxgyet
power of the lineage’s original marriage with the land.
 Three types of laws:
o Primary laws: Simple laws of respect and balance – must be followed to carry out one’s
reciprocal obligations to others.
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Secondary laws: rules that enable people to interpret the primary laws
“Strict laws”: constitutional in nature, concerned with establishing and maintaining the legal
framework of the society and its ability to maintain its obligations to the land
 Small number of legal rules + multitude of kinship connections = complex, decentralized legal
order supporting deep, sustainable culture.
 Idea of property arises only out of reciprocal interaction – inclusive vs. Western legal systems’ focus
on exclusivity.
Comparing Gitxsan and Canadian Law
o
o
Gitxsan legal system
Canadian legal system
Small number of rules, effected
through multitude of kin connections
& decentralized, complex legal order
Extremely large number of rules, effected
through hierarchical, simply connected
organizational structures
Kinship based social organization
requires decentralized governance
structures characterized by complex
partiality, consensus, factionalism
Democratic one-person, one-vote political
organization requires centralized,
hierarchical, government by specialists, strict
impartiality
Primary territory-holding, selfgoverning entity is the House
Primary territory-holding, self-governing entity
is the band, corporation or Nation
Property is defined by reciprocal
interaction (of lineage and spirit, host
and guest); preference for inclusive comanagement
Property is defined by exclusion of others
from the thing possessed; preference for
exclusive land title
Historical Developments in Aboriginal Rights
 Terra nullius – presupposed that prior to the arrival of Europeans, many places outside Europe were
“no man’s land” waiting to be settled by civilized peoples.
 Dichotomy between civilized and Aboriginals too “low in the scale of certain organization” to be
recognized was not eliminated from most common law systems until recently.
 1763 – Royal Proclamation – nobody other than the British Crown could validly acquire lands from
Aboriginal peoples. Aboriginal peoples could negotiate over land rights only with the Crown.
o Key source from which the Crown’s current fiduciary obligation towards Aboriginals is
derived.
o Served as a formal recognition of the existence of Aboriginal title
o Following it, Crown negotiated hundreds of treaties with Aboriginals who surrendered land
claims in exchange for financial benefits, rights to engage in traditional hunting, fishing,
harvesting and trading activities, and the creation of reservations.
 Calder v. BC 1973 – SCC held Aboriginal rights in land were not dependent on the Royal
Proclamation but rather predated it, and were probably more robust than the non-proprietary right of
occupation the Privy Council suggested in St Catherine’s Milling & Lumber Co. v. Ontario (AG)
1888.
 R. v. Guerin 1984 – Aboriginal rights identified as sui generis (of its own kind) and inalienable
except to the Crown, therefore its surrender to the Crown attracts fiduciary duties.
 Constitution Act, 1982 – s.35(1) – Aboriginal rights entrenched in constitution.
 R. v. Sparrow 1990 – SCC imported fiduciary duty identified in Guerin into the constitutional
framework, requiring justification of any infringement of Aboriginal rights.
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



R. v. Van der Peet, R. v. Gladstone 1996 – elaborated on the appropriate CL framework for proving
the existence of an Aboriginal right, and for the basis upon which an infringement of such rights by
government could be justifiable.
Delgamuukw v. BC 1997 – SCC detailed the nature and basis of CL Aboriginal Title, the test for
proving whether and where it exists, and the possibility that it can be infringed or extinguished in
certain circumstances.
R. v. Bernard/R. v. Marshall – elaborated on the requirements for establishing a claim to aboriginal
title.
Haida Nation v. BC (Minister of Forests) – dealt with Crown’s duty to consult Aboriginal peoples
where an Aboriginal right is claimed, but not yet proven or formally recognized under law.
Aboriginal title at common law:
Delgamuukw v. British Columbia SCC 1997.
Facts: courts interpreting/applying s. 35(1) of the Constitution Act, 1982.
Issue: what is the nature and scope of the constitutional protection afforded by s. 35(1) to common law
aboriginal title?
i.
specific content of aboriginal title, either at common law or under s. 35(1)
ii.
test for proof of title which is a right in land, and its relationship to the determination of the
aboriginal rights recognized and affirmed by s. 35(1_
iii.
whether aboriginal title, as a right in land, mandates a modified approach to the test of
justification first laid down in Sparrow and elaborated in Gladstone.
iv.
Practical problem in relation to proof of aboriginal title.
v.
Whether BC had from 1871 until entrenchment of s. 35(1) the jurisdiction to extinguish
aboriginal title.
What is the content of aboriginal title, how is it protected by 35(1),and what is required for proof?
(1) Introduction:
“Aboriginal title is a right in land and, as such, is more than the right to engage in specific activity which
may themselves be aboriginal rights. Rather, it confers the right to use land for a variety of activities, not
all of which need be aspects of practices, customs and traditions which are integral to the distinctive
cultures of aboriginal societies. Those activities do not constitute the right per se; rather, they are
parasitic on the underlying title”.
 Range of uses subject to the limitation that they cannot be irreconcilable with the nature of
the attachment which forms the basis of the title; this inherent limit flows from the
definition of aboriginal title as a sui generis interest land—distinct from a fee simple.
(2) Aboriginal title at common law:
a. General features:
o In St. Catharines Milling & Lumber v. The Queen 1888 PC – aboriginal title described
as “personal and usufructuary (a temporary right to use and derive income from
someone else's property (provided that it isn't damaged) right”. Thus, the aboriginal title
is sui generis interest in land—this characterization distinguishes it from normal
property interest.
*Different from fee simple: does not derive from Crown grant.
 Aboriginal Title is a sui generis Interest in Land:
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Inalienability except to Crown: “Lands held pursuant to aboriginal title cannot be
transferred, sold or surrendered to anyone other than the Crown and, as a result, is
inalienable to third parties”.
o Source: (recognized but not created
1. Physical fact of aboriginal occupation of land, derived from CL principle that
occupation is proof of possession in law.
2. Arises from possession before the assertion of British sovereignty.
o Communality: Aboriginal title is held communally. “Aboriginal title cannot be held by
individual aboriginal persons; it is a collective right to land held by all members of an
aboriginal nation”.
o In the Campbell decision Williams J says that the decision-making authority over the
communal interest is governmental in nature and so reveals a right of self-government in
relation to the land.
The Content of aboriginal title
o Two Propositions:
 First, that aboriginal title encompasses the right to exclusive use and
occupation of the land held pursuant to that title for a variety of
purposes, which need not be aspects of those aboriginal practices,
customs and traditions which are integral to distinctive aboriginal
cultures;
 Supported by Canadian jurisprudence, relationship between reserve lands
and lands held pursuant to aboriginal title, and the Indian Oil and Gas Act.
 Second, those protected uses must not be irreconcilable with the nature
of the group’s attachment to the land. (“Inherent Limit”)
Inherent limit.
o Lands held pursuant to aboriginal title cannot be used in a manner irreconcilable
with the nature of the attachment to the land which forms the basis of the groups
claim to aboriginal title.
o Uses of the land that would threaten that future relationship are, by their very
nature, excluded from the content of aboriginal title.
 Similar to CL doctrine of equitable waste “persons who hold a life estate
in real property cannot commit “wanton or extravagant acts of destruction”
 Example: can’t strip mine a hunting ground.
o Idea of surrender to the Crown (for valuable consideration) reinforces this idea –
If Aboriginal peoples wish to use their lands in a way that aboriginal title does not
permit, then they must surrender those lands and convert them into non-title lands
to do so (not full fee-simple, subject to inherent limit)
Aboriginal title under s. 35(1) of the Constitution Act, 1982.
o Aboriginal title at common law is protected in its full form by s. 35(1) – i.e. s.
35(1) does not create aboriginal rights, rather it accorded constitutional
status to those rights “existing” in 1982.
o The existence of a particular aboriginal right at common law is not a sine qua non
for the proof of an aboriginal right that is recognized and affirmed by s.
35(1)…The existence of an aboriginal right at common law is therefore
sufficient, but not necessary, for the recognition and affirmation of that right
by s. 35(1).
o Aboriginal title confers the right to the land itself.
Proof of aboriginal title
o
b.
c.
d.
e.
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i. introduction: s. 35(1) must recognize and affirm both aspects of that prior
presence—1) the occupation of the land and 2) the prior social organization and
distinctive culture of aboriginal peoples on that land.
ii. TEST for PROOF of Aboriginal title: Must satisfy the following criteria:
(1) The land must have been occupied prior to sovereignty;
 must establish occupation of the land at the time at which the Crown asserted
sovereignty in order to sustain a claim for Aboriginal title.
 Act of occupation is sufficient, do not need to prove the land was a distinctive
or integral part of the Aboriginal society before the arrival of Europeans.
(2) If present occupation is relied on as proof of occupation pre-sovereignty,
there must be a continuity between present and pre-sovereignty occupation
 not needed to establish an “unbroken chain of continuity” (Van der Peet).
Also, precise nature of occupation may have changed, and the fact that the nature
of the occupation changed is not fatal to a claim for Aboriginal title.
(3) At sovereignty, that occupation must have been exclusive.
This flows from the definition of Aboriginal title itself, as exclusive use and
occupation of land.
 If other aboriginal groups were present/frequented claimed lands, must show
“the intention and capacity to retain exclusive control”
Joint title could arise from shared exclusivity.
If occupation is not exclusive, it will be possible to establish aboriginal rights
short of title. Thus is it also possible to have shared, non-exclusive, site specific
rights.
o Remember: oral histories are ok; onus of on aboriginal people; how do you
prove this? Demonstrate by evidence they were in exclusive occupation of
land at time of sovereignty; that is when title vests (here, date was 1846).
o Exclusive occupation can be proved by aboriginal law, not only by physical
use and occupation e.g. trespass laws applied within a certain area.
Infringements of aboriginal title: test of justification.
 (1) the infringement of the aboriginal right must be in furtherance of a legislation that
is “compelling and substantial”.
 (2) requires an assessment of whether the infringement is consistent with the special
fiduciary relationship between the Crown and aboriginal peoples. (doctrine of priority)
o Requirements of fiduciary duty are a function of legal and factual context of each
appeal. But, the fiduciary duty does not demand that aboriginal rights always be
given priority – manner in which fiduciary obligation operates will be a function
of the nature of the Aboriginal title: exclusive use, right to choose, economic
component (all aboriginal rights),
Justification and Aboriginal Title:
 Range of legislative objectives that can justify infringement of Aboriginal title
is fairly broad. (development of agriculture, forestry, mining, protection of
environment, building of infrastructure)
o Regarding priority: the government must demonstrate “both that the process by
which it allocated the resource and the actual allocation of the resource which
results from that process reflect the prior interest”
o Always a duty of consultation. Some cases may even require the full consent,
particularly where hunting and fishing regulations are concerned.
o Economic aspect (modern uses) – fair compensation will ordinarily be required
when aboriginal title is infringed.
o
f.
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Extinguishment of aboriginal title (Less important, not really in our version of case) but useful
Can be extinguished through voluntary surrender or transfer to the crown through the treaty process.
There are huge problems over the interpretation of these treaties and what was surrendered. Many
aboriginal groups in the prairies say they didn’t give up subsurface rights. Some say they didn’t give it up at
all, meant to share it.
It used to be able to be extinguished through legislation. This never happened.
The provinces, on the other hand, after confederation, have been unable to extinguish aboriginal title. B/c
it is under exclusive federal jurisdiction. This poses huge problems that have not been resolved yet. E.g. in
BC where there are no treaties, the prov gov’t have been granting land to private individuals and to
corporations. Those interests could not extinguish aboriginal title b/c the province lacks the constitutional
authority to do so. So what is the effect of those grants? Issues around validity of the interests. In the
judgment the SCC says the provinces and the feds can infringe aboriginal title. No clear line b/w
infringement and extinguishment. In fact, it makes infringement to be a very broad power. Eg for
hydro-electric, mining, forestry, agriculture. This seems to be a big inconsistency. How can the prov gov
infringe aboriginal title in this way w/o infringing on federal jurisdiction.
Since 1982, when aboriginal treaty rights were recognized and affirmed in s. 35 of the constitution, they
can’t be extinguished even by federal legislation. Now they can only be extinguished through voluntary
surrender by means of a treaty or other land claims agreements.
**Conclusion and disposition: Allow the appeal in part, dismiss the cross appeal, and order a new trial.
T. Flanagan, First Nations? Second Thoughts 2000. (NOT READ)
 Lamer doctrine defines aboriginal title as collective absent any consideration of contrary argument; in
fact, evidence suggests aboriginal property was often held by families rather than the community.
o Moreover this doctrine presents difficulties in the modern economy.
o Principle of inalienability limits the usefulness—cannot even mortgage to raise capital.
o Inherent limit constrains economic usefulness
o  Doctrine “leaves most of the pressing practical issues unsettled”.
o “The treaties and the Indian Act have conspired to imprison them within a regime that fits badly with
the needs of a market economy.
Equitable Interests
The conveyance to uses
• Landowner conveys land to trusted person to hold for the use of persons designated by grantor
– Person to whom land conveyed = foeffee to uses (held legal title)
– Person for whose use land held = cestui que use (held equitable title)
Applied doctrine of estates by analogy: beneficiaries held equitable fee simple or life estate
Mechanics:
X to F and his heirs, to the use of X for life, then to the use of persons designated in X’s will
– F holds legal FS, X equitable LE, designees equitable interests as specified in will
– Allowed landowners to bypass rule of primogeniture and prohibition against leaving land by
will
X to F1 & F2 and their heirs as joint tenants, to the use of X and his heirs
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–
Allowed landowners to avoid payment of relief
• No relief due when one JT dies because the other takes automatically by right of
survivorship, not inheritance
• No relief due when X dies because X not seised of land
• No relief due when last surviving foeffee dies, provided he first conveys the land to
new joint foeffees
Effect of the Statute of Uses
• X to F and his heirs to the use of A and his heirs
– Before Statute: F held legal FS, A held equitable FS
– After: Statute executes the use, leaving A with legal FS, F with nothing
• X to F and his heirs to the use of A for life, remainder to B and her heirs
– Before: F = legal FS, A = equitable LE, B = equitable FS remainder
– After: A = legal LE, B = legal FS remainder, F = nothing
• X to F and his heirs to the use of A for life
– After: A = legal LE, X = legal FS reversion
The Statute of Uses does not apply:
• Where foeffee to uses has active duties to perform
– X to F and his heirs to the use that F should collect rents and profits and pay them to A and
her heirs
• Statute only applies to bare uses
• Where feoffee to uses holds a leasehold estate
– X to F for 999 years to use of A and his heirs
– Contrast: X to F and his heirs to use of A for 999 years
• Statute only applies where foeffee is seized of land (in second example above but
not first)
• Where foeffee 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
• Statute does not apply to a use upon a use
– X to F and his heirs to the use of A and her heirs to the use of B and her heirs
• Before Statute: F = legal FS, A = equitable FS, B = nothing
• After Statute: A = legal FS, F & B = nothing
– 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
– By an obvious ruse, equitable interests could be created just as freely as before 1535
– But this does not work with a use after a use
– X to A and her heirs to use of B for life, then to use of C and his heirs
P. Butt, Land Law 2001 – The Origins of Equity/Advantages of Conveyance to Uses
The conveyance to uses
o Landowner conveys land to trusted person to hold for the use of persons designated by grantor
o Person to whom land conveyed = foeffee to uses
o Person for whose use land held = cestui que use
o Three advantages of conveying land to uses:
o Feudal burdens could be evaded. Foeffees thus became legal owners of the fee simple
(seised of land) and they alone took were subject to the tenurial incidents.
o Uses could be disposed of by will (foeffee held land for uses declared in conveyor’s will).
Thus bypassed the common law prohibition against devises of land.
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o Uses provided a means of overcoming many rigid rules of common law conveyancing
 Increasing popularity led to fraud by dishonest foeffees.
o Chancellor (court of equity) intervened on the premise that though foeffees not technically legally
bound to observe the terms of use, a breach was unconscionable. (Also bound all others who could
not in conscience disregard them – foeffee’s heirs, devisees, anyone who receives land as gift w/out
consideration)
 Rules of Equity trump Rule of common law although Equitable Doctrine of notice affecting the legal
ownership of land binds all who come to the land, except “bona fide purchasers for value of a legal
interest in the land without notice of the beneficial interest” (purchaser must have acted honestly and
without knowing of the beneficiary’s interest).
repeat of above bullet: An equitable right will trump a common law one, so long as equity
considers that justice is served by doing so. (Except where bona fide purchaser for value of a legal
interest when it was acquired without notice of a prior equitable right (provided reasonable inquires
were made by the purchaser)
 Chancellors regarded themselves as free from rigid rules of common law. This enabled the creation in
equity of interests that had no parallel in the common law.
Statute of Uses, 1535
Purpose to divest the legal estate from the feoffee to uses and vest it in the cestui que use—i.e. the purpose
was not to abolish uses, but to preclude their employment as a revenue defeating device.
 Statute Turns “X to F and his heirs to the use of A for life” to:
“X to F and his heirs to the use of A for life”
Limitations of Statue:  Statute does not apply when:
 Where foeffee to uses has active duties to perform (Statute only applies to bare uses)
o X to F and his heirs to the use that F should collect rents and profits and pay them to A and her
heirs
 Where foeffee to uses holds a leasehold estate
o X to F for 999 years to use of A and his heirs
o Contrast: X to F and his heirs to use of A for 999 years
 Statute only applies where foeffee is seized of land
 A leasee is not seized of the land
 Where foeffee is seised to his own use
o X to F and his heirs to the use of F and his heirs
o F holds legal FS by virtue of CL, not Statute
o Second grant was non-sensical
 Statute does not apply to a use upon a use (see Tyrrel’s Case below)
o X to F and his heirs to the use of A + heirs, to the use of B + heirs
 Before statute: F = legal FS, A= equitable FS, B = nothing
 After statute: A = legal FS, F & B = nothing
Use upon a use: Tyrrel’s Case decided that the statute did not execute a use upon a use.
1660, Tenures Abolition Act abolished the burdensome feudal incidents, Crown lost its financial
interest in prohibiting equitable ownership, Chancellors began to enforce the use upon a use.
 Conveyancers began using the use upon a use for the avowed purpose of creating equitable ownership—
not now to avoid feudal incidents or to acquire the power to devise, but to take advantage of the freedom the
use allowed in manipulating beneficial interest—new relationship became a trust.
Emergence of Modern Trust
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•
Language of “use” was replaced by “trust”
– “Use” was reserved for interests meant to be executed
– X to F and his heirs to the use of A and his heirs in trust for B and her heirs
• Terminology was compressed over time
– X to A and his heirs to the use of A and his heirs in trust for B and her heirs became
– X unto and to the use of A and his heirs in trust for B and her heirs, which became
– Insufficient: X to the use of A in trust for B  would trigger statue and unless trustee
(foeoffe) had active duties to perform, B (intended equitable beneficiary) would be given
legal estate
Formula for Trusts: convey land “unto and to the use of [the trustee] upon trust for [the beneficiary]”
• Review question: why doesn’t To A in trust for B create a valid trust, while To the use of A in trust
for B does?
– To A in trust for B will cause the legal estate to vest in B (“In trust for B” is equivalent to
use of B
– To the use of A… is short for “To A and his heirs to the use of A and his heirs in trust for B”
which causes the first interest to vest (see crossout)
Devises were legalized by the Statute of Wills, 1540
• Before then landowners could not devise land; conveyance to uses was best way to designate heir
• Statute of Uses limited this, prompting widespread landowner anger
– Statute of Wills allowed landowners to devise land freely, abolished primogeniture (firstborn’s right of inheritance)
• Statute of Uses eventually repealed in UK 1925, still in force in Ontario and most other Canadian
common law provinces
M. Conway, “Equity’s Darling?”
Doctrine of Coverture: at common law, wife’s legal identity merged into her husband’s
A married woman could not own property in her own right, she could neither sue or be sued, had no rights
over her own children, was not entitled to her own earnings…
o In terms of rights, married women in England suffered the most severe legal disabilities-she
effectively ceased to exist as far as the common law was concerned, and equity availed her little.
o Applied even if parties long separated.
Three types of trusts in Canada today:
Express trusts are created expressly where a settlor transfers property to a trustee to hold for someone’s
benefit. Must be drafted in light of Statute of Uses.
 Purposes: minimize tax liability, provide for loved ones, minors or incapacitated, prevent squandering of
assets, pursue charitable objects, etc.
1. Resulting trusts arise by operation of law in favour of an owner who transfers title but retains a
beneficial interest, such as where
 Where an express trust fails to dispose of all beneficial rights (e.g. series of life estates granted
but remainder interest stays with X)
e.g. X grants to Trust Co in trust for B for life
e.g. X devises to all of her grandchildren who reach 18
 An owner confers title gratuitously transfers assets to or purchases assets for another (an apparent
gift)
o Grantor/contributor is presumed to retain beneficial rights (presumption of resulting trust),
unless wife or minor child or grantor (presumption of advancement)
 Beneficial ownership “results” back to person who gave or paid for property
 Generally a matter of ascertaining true intentions
2. Constructive trusts: Trusts imposed by equity regardless of legal owner’s intentions,
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2 main kinds
a. Institutional constructive trusts (*not dealing with)
i. Arise automatically in certain relationships when specific conduct occurs, e.g.
trustee meddles with trust property; or vendor and purchaser conclude a valid
contract for sale of land
b. Remedial constructive trusts (Kerr v. Baranow)
i. 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
ii. Arise only on date of judgment as a remedy awarded by the court to do justice in the
particular case.
iii. Only emerged in 1980 in Canada (Pettkus v. Becker)
Constructive Trusts:
 Equity will impress a trust on property in appropriate circumstances – constructive trust. Two main kinds
in Canada:
(1) Institutional constructive trust – refers to the fact that a trust can arise in discrete circumstances.
(2) Remedial constructive trust: it serves as one response to a finding of unjust enrichment.
Kerr v. Baranow (tried with Vanasse v. Seguin) SCC 2011
Facts: K and B lived together unmarried for 25 years. K became paralyzed from a stroke in 1991 and in
2006 B ended the relationship and arranged for K to be sent to an extended care facility. K sued for a
declaration she was entitled to a share in the residence they had lived in since 1986 (title solely in B’s name)
on the basis that he held part of the title on trust for her, and that he would be unjustly enriched if he were
able to keep it. B counterclaimed that K was unjustly enriched by his housekeeping and personal care
services provided after her stroke.
V and S 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
investment.
Issue: What is the proper test for a constructive trust based on the unjust enrichment of one party? Are K/V
entitled to a share of their husbands’ properties based on their non-financial contributions?
Held: Vanasse: restore Trial Judge’s ruling – awarded share of net increase in family’s wealth during the
period of unjust enrichment.
Kerr: New trial ordered to consider joint family venture analysis and Mr. Baranow’s counterclaim.
Analysis:
There is no continuing role for the common intention resulting trust in resolving property and
financial disputes in domestic cases.
 Resulting trusts arose where there had been a gratuitous transfer (relevant to domestic situations) or
where the purposes set out by an express or implied trust failed to exhaust the trust property.
 Presumption that the grantor intended to create a trust, rather than to make a gift. Onus will be on
the person receiving the transfer to demonstrate the gift was intended. (Equity presumes bargains not
gifts)
o Exception: certain relationships, presumption of advancement (that a gift was intended) (e.g.
parent-minor child)
 Common intention resulting trust: where the court is satisfied by the words or conduct of the parties
that it was their common intention that the beneficial interest was not to belong solely to the spouse
in whom the legal estate was vested but was to be shared between them in some proportion or other.
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Issues with common intention resulting trust:
 Common intention is inconsistent with underlying principles of resulting trust law where it is the
intention of the grantor alone that counts.
 Idea that grantor wants property back/an interest in property doesn’t translate well to contributions
that are not clearly associated with the acquisition of property.
 With resulting trust, relevant time for considering intention is the time the property was acquired. It
is hard to see how a resulting trust can arise from contributions made over time to the improvement
of an existing asset, or contributions in kind over time for its maintenance.
 Notion of common intention is artificial in domestic cases.
 Evolved through a misreading of HL cases – simply was a vehicle for reaching what the court
perceives as a just result.
Unjust Enrichment
 Pettkus: SCC rejects Common Intention Resulting Trust and imports that the law of Unjust
Enrichment, coupled with the remedial constructive trust was the appropriate lens to view property
and financial disputes in domestic situations.
 Test for a Constructive Trust based on Unjust Enrichment
a. Enrichment of or benefit to the defendant; and
i. Straightforward economic approach. Must be tangible.
ii. P must show that he gave something to D that D received and retained.
b. A corresponding deprivation of the plaintiff; and
i. Straightforward economic approach.
ii. P must establish that the defendant has been enriched, but also that the enrichment
corresponds to a deprivation, which P has suffered.
c. No juristic reason for the enrichment (Garland v. Consumer’s Gas).
i. No reason in law or justice for D’s retention of the benefit conferred by P (making it
unjust).
ii. Two steps
1. P must show there is no juristic reason from an established category (if
no then prima facie case established).
a. Categories: Intention to make a gift, contract, disposition of law
(where required by law e.g. statute denies recovery).
2. Then D must rebut the prima facie case by showing there is another
reason to deny recovery.
a. Stage 2 considerations: Legitimate expectations of the parties
(Pettkus) and moral and policy-based arguments about whether
particular enrichments are unjust (Peter).
 Peter v. Beblow: the provision of domestic services can support a claim for unjust enrichment.
Court rejected the view that they cannot because they are done out of “natural love and affection”.
o Applies to non-married couples as well (Pettkus). Policy considerations of personal
autonomy dealt with at stage 2.
Remedy
Purpose: Restitution – repay or reverse unjust enrichment. Monetary Award and Proprietary Award
 Not limited to “fee-for-services approach”
3 kinds of unjust enrichment, 3 remedies
1. Where plaintiff makes direct and substantial contribution to the acquisition, improvement,
maintenance or preservation of a specific property, remedy is constructive trust. (value survived)
2. Where plaintiff and defendant are engaged in a joint family venture and their joint efforts contribute to
the accumulation of wealth (more generally than #1 which is specific asset), remedy is monetary award
corresponding to plaintiff’s proportion of contribution (value survived)
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3. Where plaintiff provided unpaid services but can’t link contribution to a joint family venture or
specific property, remedy is quantum meruit (fee for service/value recieved)
 1. Proprietary award (constructive trust) available where:
o P can demonstrate a “sufficiently substantial and direct link”, “a causal connection” or
“a nexus” between her contributions and the acquisition, preservation, maintenance or
improvement of the disputed property.
o AND that a monetary award would be insufficient in the circumstances (e.g. probability
of recovery and whether there is a reason to grant P the addition rights that flow from
recognition of property rights).
 The extent of the constructive trust is proportional to the claimant’s contributions (i.e. 1/3rd, 50%)
 2. Joint family venture  joint efforts of the parties are linked to the accumulation of wealth (not
practical to undergo “balance sheet” analysis of work performed.
o Peter v. Beblow: “it is more likely that a couple expects to share in the wealth generated from
their partnership, rather than to receive compensation for the services performed during the
relationship”.
o No presumption of a family venture – consider each case individually
o Criteria for Joint Family Venture
 Mutual Effort  Pooling of effort/resources to a common pool (incl. one spouse
taking on more domestic work so the other can work for pay).
 Economic Integration  integration of finances, economic interests and economic
well-being.
 Actual Intent  Parties’ actual intent (express or inferred from evidence), not what
“reasonable” parties ought to have intended.
 Priority of the Family  to what extent the family has been given priority in their
decision making. Detrimental reliance on relationship for economic stability (e.g.
forgoing promotion, leaving workforce to raise children, moving for partner’s career)
 A monetary remedy is appropriate where there is an unjust retention of a disproportionate share of
assets accumulated during the course of a “joint family venture” and there is a clear link between the
claimant’s contributions to the joint family venture and the accumulation of wealth.
o Monetary award for unjust enrichment should be calculated according to the share of
accumulated wealth proportionate to the claimant’s contributions.
 Mutual benefits (from PD and DP) may be considered at the juristic reason stage but only to the
extent it provides evidence as to the parties’ reasonable expectations. *Should consider at
Defence/Remedy stage.
 Consider Reasonable Expectations (of parties together, not just one) at stage 2 of juristic reasons test.
In Garland v. Consumer’s Gas, SCC 2004, the court clarified “juristic reasons”
(i) “the plaintiff must show that no juristic reason from an established category exists to deny recovery…if
there is no juristic reason from an established category, then the plaintiff has made out a prima facie case
under the juristic component of the analysis”.
(ii) Prima facie case is rebuttable where D can show another reason to deny recovery (de facto BofP on D to
show why unjust enrichment should be retained). As part of D’s attempt to rebut, courts should consider two
factors:
(a) reasonable expectation of parties
(b) public policy considerations
Court could: find a new juristic reason is established; that there was a juristic reason in the particular
circumstances, though one which does not give rise to a new category; or a determination that there was no
juristic reason for the enrichment. In the latter case, recovery should be allowed.
(This reasoning was reaffirmed in Kinstreet Investments Lts v. New Brunswick 2007 SCC).
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Qualified Transfers and Future Interests
Definition: 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 may enjoy
possession of land
What kinds of future interests are there?
1. Qualified estates: grant ownership of the land to a certain party, but impose a condition that you
might take the land back at a certain date.
 (i.e. “but if alcohol is ever served on the premises, I take it back).
2. Law Against Perpetuities: common law developed a principle that people should not be able to
protect future use of land from far beyond the grave.
 (i.e. overly long future interests will be ignored).
Crucial point on future interest: how can you tell if a future interest is vested (i.e. absolutely certain to take
effect) or contingent (may or may not take effect). Most issues of validity centre on whether the future
interest is vested or contingent.
All property interest are either vested or contingent:
Vested interests are either:
a) Vested in possession: holder is entitled to immediate possession
o “X to A for life, then remainder to B in fee simple”
o A is vested in possession.
b) Vested in interest: an estate is vested in interest if:
1. The holder is alive
2. The holder’s identity can be ascertained and,
3. There is no condition precedent to the interest taking effect.
Contingent is a residual category. If an estate is not vested, of necessity it is contingent.
o An interest is prima facie contingent if the reason for postponement is personal to the donee (e.g.
get married, turn 21) (Re Francis)
o An interest is prima facie vested if postponement is simply to allow for a prior life estate (Brown v.
Moody)
Condition Precedent: Interest is contingent upon the prior occurrence of an event that may or may not
occur.
Condition Subsequent: A vested interest will terminate (divest) upon the later occurrence of an event
that may never occur.
e.g. ”B has FS vested in possession, subject to divestment if she remarries”,
o X has “a contingent right to recover the FS” – a right of re-entry that will vest in interest and
possession if and when A marries.
Suartburn (Municipality) v. Kiansky Man. Q.B. 2001.
 Whether David Kiansky was entitled to hold office under Manitoban election law which stipulates that a
person must, inter alia, be an owner of land which is assessed in the latest revised realty assessment roll, or
else a tenant or occupier of land whose name is entered on the latest roll as the owner of a right, interest or
estate in the land.
 He held a remainder interest in land, subject to a prior life estate in favour of his grandmother.
Issue: whether Kiansy’s remainder interest is sufficient to classify his as “an owner of land” despite the sale
of his residence property and his move from the Municipality.
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Reasoning:
 Section 5(1) means the person must be the present owner.
o Freehold estate can be interpreted to mean a freehold right, title, or interest in land.
o Nature of Kiansky’s interest is of a right to a freehold interest in fee simple. The remainder interest
is a present right—it co-exists with the life estate even though the enjoyment and possession of
the land is postponed.
o Common law requirement that there could be no abeyance of seisin; no abeyance of the ownership
or transfer of the ownership of the freehold interest if the transfer was to be effective. Therefore, an
instant vesting took place. Seisen did not require actual possession, though it did require
possession in the sense of title or ownership.
An estate in possession: when entitled to an immediate life estate X is entitled to enjoy it in possession.
An estate in remainder: created when a person is given an estate but not entitled to possession until the
expiration of a prior estate created by the same instrument.
An estate in reversion: estate retained by grantor when he conveys away a lesser estate.
 Said to be vested in the sense that they presently exist.
Application Thus, Kiansky’s interest allows him to be classified as a present owner, meeting the 5(1)
requirement. Vested in interest v. vested in possession.
Similar case for Michael Forrestall—former Canadian Senator.
Constitution Act 1867—section 23(3) states that he must be seized for “…his own use and benefit”. Must be
seised of lands worth at least $4000. Forestall had only a remainder interest; entitled to possession only once
an existing life estate ended.
 Seisen is synonymous with possession. One must be entitled to immediate possession to be entitled
to the land.  only become seized of the land when he takes possession upon life tenant’s death
o Despite this he was able to keep his seat (only debated, didn’t go to court)
Vested absolutely certain to take effect; there is no contingency.
If not “vested” = contingent (i.e. there is a condition precedent that must be fulfilled in order for
the interest to vest).
Note:
 Not all future interests are vested in interest. Consider: “To A for life, remainder to B when and not
before B turns 25 years of age”. Here the grantor has added a stipulation that before B’s interest is vested –
even vested in interest – B must reach the prescribed age, i.e. it is contingent
 A stipulation may be framed as a condition subsequent: property is first granted, recipient’s interests
vests in interest—though the entitlement may be taken away should the identified even occur. Thus a grant
“to A, but should the land ever be used as a hospital, this interest shall revert back to the grantor” would
appear to give A a vested interest. It is said that the interest is vested subject to being divested.  interest is
vested but subject to being divested.
Examples:
X to A for life, then to B and his heirs (A is still living)
o A holds a life estate, is vested in possession. Has a present right to possess the land
o B holds a fee simple remainder that is vested in interest. How do we know?
o A is alive
o A is ascertained.
o No condition precedent: A dying is not a condition on B. More importantly, the main reason
we know it is vested is because it is certain to occur. A will definitely die at some point.
o No right of possession until A dies, but a present right to future enjoyment.
o When A die’s B’s interest will vest in possession.
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X to A for life (A is still living).
o A holds a life estate, Vested in possession
o X holds the fee simple reversion, vested in interest.
o Just like B’s remainder, X may convey or devise the reversion. When A dies, X (or X’s
estate) will be vested in possession.
TEST for vesting in interest:
1. The person holding the interest must be in existence
o To A for life, remainder to A’s firstborn child (A has no children)
2. Her identity must be ascertained; and
o To A for life, remainder to A’s widow (A could divorce)
o To A for life, remainder to A’s children who survive her
3. There must be no condition precedent to the interest taking effect
o To A for life, remainder to B in fee simple when he turns 21
o To my niece when she shall attain the age of 25.
Contingent interest can be characterized as a condition precedent: it is the existence of a condition precedent
that makes the interest contingent. The interest is vested subject to being divested.
Contingent subsequent – the property is first granted—the recipient’s interest vests in interest – though the
entitlement may later be taken away should the identified event occur.
McKeen Estate v. McKeen Estate 1993 NB Q.B.
Facts:
 Testator Dr. Harry Mckeen died in 1981; will directed that entire estate be held in trust for wife for her
life, and on her death, trustees directed, inter alia, to divide the residue of estate equally between sisters…if
they are both alive…If only one of my said sisters is alive…I direct my Trustees to deliver the residue of my
estate to the surviving sister, the same to hers absolutely.
 Both sisters died in 1989, and testator’s wife died in 1992. Neither sister then survived the testator and his
wife.
-If he intended to make the gifts contingent on his sisters surviving his wife, they can no longer satisfy the
requirements and he is left intestate.
-Alternatively, if the gifts vested in interest upon Dr. McKeen’s death, then the property would pass to their
estates.
Issue: Was there a condition precedent that renders the gift to the sisters contingent on surviving his widow?
If so, Dr. McKeen died partially intestate, and the bulk of the estate reverts back to his estate (and follows
intestate legislation), and sisters’ estates get nothing.
Rules for Interpreting wills:
1. Of paramount importance is the intention of the testator.
2. There is a presumption against intestacy. Where there is doubt, there is a presumption that the
testator did not mean to die intestate.
3. Construction in favour of vesting: the courts are inclined to hold a gift vested rather than
contingent wherever the words used and the will as a whole will admit of a construction that will
result, as is said, in “early vesting”. A construction which gives a vested interest is favoured by the
courts where there is ambiguity.
Held: the estate vested to sisters equally at the date of death of Harry McKeen, subject to the possibility of
divesting of the interest of the deceased sister if only one sister survived the life tenant.
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Were the sister’s interests vested?
 Was it subject to a CP?
o No. Death of a life tenant is inevitable. All life estates come to an end, and that they are not CPs.
o To be CP, must be something that may or may not happen.
o Brown v. Moody (basically same facts except 3 cousins instead of 2 sisters)—rule: a gift is prima
facie vested if the postponement is to allow for the expiry of a prior life estate.
o But an interest is prima facie contingent if the reason for postponement is personal to the donee (Re
Francis) i.e. to marry, become a lawyer, attain a certain age.
o Applied HERE: not a CP; just another way of saying to the widow for life, then to sisters in FS.
Thus if sisters die before widow, it passes to their estates.
 An interest may equally by subject to a condition subsequent
o Example: “To town of S, in fee simple, for the use of a school, but should it cease to be used for a
school, land shall revert forthwith to the grantor”
o Interest is vested subject to being divested
o Here, if two sisters are alive, equal shares. If one dies, other gets all. The dead sister’s interest
is divested.
 Since both sisters died before widow, impossible for either sister to “out-survive” other and claim whole
estate, whole FS remainder goes to their estates when wife died, and sister’s fee simple remainder
kicks in and their heirs get it.
Defeasible vested estates
• There are two categories of vested estates subject to divestment in certain conditions
– Estates subject to condition subsequent
• Eg. the sisters’ interests in McKeen
• Usually use words like “but if,” “on condition that,” etc.
• Holder’s estate is vested until the divesting event
• The other person holds a contingent right of entry
– Determinable estates
• Usually use words like “so long as,” “until,” “during,” etc.
• Holder’s estate is vested until the divesting event
• The grantor retains a possibility of reverter, which is considered vested
– Contingent right of entry vs vested possibility of reverter makes former more vulnerable to
invalidation
State Limitations on Private Property
Proprietary freedom is extensive but not absolute—i.e. a court would not give effect to a transfer conditioned
on the commission of a crime.
 An invalid determinable limitation results in the entire grant failing—both the determinable interest and
the grantor’s possibility or right of reverter are destroyed.
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 An invalid condition precedent to receiving a grant of real property will be voided, and the possible
grant with it.
 An invalid condition subsequent is severed from the grant, destroying the grantor’s right of re-entry and
rendering the gift absolute.
THREE MAIN LIMITS:
o Uncertainty
o Public Policy
o Repugnance (undue restrain on alienation).
o Remoteness (The common law remainder rules and the rule against perpetuities) – not covered.
1. Uncertainty
 In interpreting a condition precedent, one has to know with certainty only whether a claimant has met
the condition; Re Leonard Foundation Trust makes clear that one does not need the certainty to draw a
clear line between all who might qualify and all who might not, as long as one can tell whether a
particular claimant is on the right side of the line.
More stringent test for condition subsequent than condition precedent.
H.J. Hayes Co. v. Meade NB Q.B. 1987.
Facts “I give and bequeath to my son James…on the following conditions that my son James reside on
said land and cultivate the same. Should my son James desire not to reside on said property or cultivate same
then that portion hereby bequeath to be the property of my son Harold he paying to my said son James the
sum of one thousand dollars”.
o Thomas Hayes died in 1929.
o James did not live on property until 1968, when he built a house
o $1000 was not paid to James by Harold
Issue whether the testator intended to create conditions precedent to his son James obtaining the property,
or a condition subsequent for retaining the property.
Submissions:
Plaintiff:
o Harold took property since J failed to fulfill conditions
o Alternatively, Harold and his successors have acquired title by adverse possession.
Defendant:
o James took property either
 Provisos for residency and cultivation are conditions subsequent and void for uncertainty; or
 Conditions have been met.
o Harold has not acquired property by adverse possession.
CS vs. CP: why does it matter?
o 1. Different tests for uncertainty
 Where a condition will defeat a vested estate (CS), the court must be able to see from the
start, precisely and distinctly, what event will terminate the interest (Re Down)
 A CP is not void for uncertainty if the court can say clearly that any particular beneficiary
meets the condition on the particular facts (Re Leonard Fdn.)
o 2. Different consequences of invalidity
 If CS void, condition is struck out, interest is unconditional
 If CP void, entire interest fails
o 3. Presumption in favour of vesting
 In cases of ambiguity, courts favour CS because the interest will vest immediately instead
of being contingent
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Reasoning:
o Conditions precedent must be met before property vests in beneficiary.
o Conditions subsequent allow for immediate vesting of property, subject to loss if conditions are not
subsequently met. If a condition subsequent is uncertain it is said to be void for uncertainty.
o In Sifton v. Sifton Privy Council said if it is unclear whether there is a CS or CP, the court prima
facie treats it as CS, because of presumption of early vesting.
o If it is a CP, property could not vest in James at time of father’s death. Nor in Harold, because $1000
was not paid.
 Thus if treated as CP, bequest fails completely, and there is no residuary clause—thus would lead to
intestacy.
o Justice is more likely to result by interpreting provisos as a condition subsequent – this is consistent
with preference for a vesting construction, the presumption against intestacy, and the testator’s
intention to give each son something.
o Since it has been ruled a condition subsequent, question is now whether provisos are void for
uncertainly. Does building home in 1968 (40 yrs after death) meet CS? If not, what is the limit?
o ****Clavering v. Ellison 1859 H.L.C.—TEST: “where a vested estate is to be defeated
by a condition on a contingency, that condition must be such that 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”.
o Uncertainty with respect to time period to meet residence requirement, and
uncertainty as to whether forfeiture would result if he left for illness or holiday make it
clear CS is void under Clavering test.
 Thus provisos for residency and cultivation are CS void for uncertainty. James took absolute title at
time of father’s death. (Acts of P do not amount to actual possession required for adverse possession).
Plaintiff has no title, defendant gets costs.
Other examples:
Examine the meaning and validity of the following clauses:
“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
o “staying on the farm” CS void for uncertainty (S and H share unconditional ownership…he was 30
yrs old at time of trial – fulfilled CP).
“The house at 792 Mapleton Place Victoria to Gerald F. Thomas,--my husband’s second
cousin, 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. One quarter to go to my cousin, Mrs. Joan Richardson, and One quarter
to the Fairbank Calligraphy Society.” Davis Estate v. Thomas (BCCA 1990)
o Court says CP/ then gave Gerald a certain amount of time to decide to live there. He must also live
there for an “appreciable amount of time” (court creates CS to prevent abuse and given effect to
testator’s intentions).
“I give and bequeath 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 (NLTD 1989)
o has no legal effect at all (it’s a wish/precatory statements): expresses wishes of testator but not
binding. If it does have legal effect either is CS and void for uncertainty, if CP, satisfied. Could be
either, whichever it is, is ok.
“to Oilme Kotsar of, if and when she shall attain the age of 21 provided that upon attainment
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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 If and when attain age of 21- CP, not void for uncertainty
o Provided that upon that age she is a resident of a British country… CP. But Court
doesn’t say. Term “residence” is defined in legislation; “British commonwealth of
nations” is a legislatively defined term too. Residence was ok, because it reside to one
day, the day she turned 21, where did she reside…? But she didn’t meet the requirements
on the facts.
o “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)  void for uncertainty
“$10000 to children’s hospital for White babies”, “My brother, his wife or any of their descendants are not to
get anything”, “If executor wants to sell house he must sell to a young white Australian couple fro a
reasonable price” “Stephen Kay is to get house contents, and any money left after expenses”
o Court adds comma to “house, contents and any money left” to avoid intestacy regarding the house
and respect the testator’s intentions that her brother get nothing.
2. Public Policy
General proposition  Courts have the power to refuse to enforce terms in contracts or transfers in land that
offend against public policy. (i.e. Such as provisions that render the testator’s estate valueless in the hands
of the heirs, prohibitions on carrying out public duties (military service or holding office), prohibitions on
marriage, stipulations that disregard the obligations of spouses and parents).
Re Leonard Foundation Trust Ont. C.A. 1990
Facts Testator died in 1923, direct a fund for scholarships to be set up. Excludes those who are not of the
white race, Christian religion, not British Nationals or of British Parentage, and those who owe allegiance to
Foreign government, prince, pope, etc. Trial judge rule that trust provisions were not invalid.
Issue whether the terms of the scholarship trust in 1923 by Reuben Leonard are now contrary to public
policy.
Reasoning  Instrument must be viewed in its entirety.
o The recitals cannot be ignored. They are intended to give meaning and definition to the operative
part of the document.
o The trust’s discriminatory motive cannot be ignored on application with respect to public policy
issues—there is a clear public aspect to the purpose and application of the Foundation.
o The court “cannot close its eyes to any of this trust document’s provisions”.
o There are cases where society’s interests require the court’s intervention on grounds of public
policy.
o TO BE A CHARITABLE TRUST: (met in this case)
o Must be established for: 1) advancement of education, 2) relief of poverty, 3)
advancement of religion or 4) other purposes beneficial to the community as a whole.
o AND purpose must be wholly and exclusively charitable AND it must promote a public
benefit.
 TO satisfy public benefit requirement:
 The trust must be beneficial and not harmful to the public, AND
 Its benefits must be made available to a sufficient cross-section of the
public.
o  The freedom of an owner to dispose of property however he or she sees fit is an important social
interest firmly rooted in the common law;
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“That interest must, however, be limited in the case of this trust by public policy considerations…the
trust is couched in terms so at odds with today’s social values as to make its continued operation in
its present form inimical to the public interest”
o “To say that a trust premised on these notions of racism and religious superiority contravenes
contemporary public policy is to extirpate the obvious”.
o “The settlor’s freedom to dispose of his property through the creation of a charitable trust
fashioned along these lines must give way to current principles of public policy”.
o It is no longer in the public interest to continue the trust on the current basis.
o Court applies cy-pres doctrine (“If it becomes impossible or impracticable to carry out a trust
created for charitable purposes, the court may revise the trust to carry out the settlor’s intentions “as
nearly as possible”)
o Thus invoke its inherent jurisdiction to propound a scheme to bring the trust in accordance
with public policy, and to permit the general charitable intent to advance education and
leadership through education.
Held:  Strike out recitals and remove restrictions with respect to race, colour, creed/religion, ethnic origin
and sex. (provisions according to children of members of the classes of persons (engineers, clergy, military,
mining) still valid).
o
Concurring judgment:
 Not void on uncertainty (CP will only fail for uncertainty unless it is clearly impossible for anyone to
qualify) – requirements for qualification are sufficiently clear (allegiance condition is a little uncertain but
OK)
 Clearly this is a charitable trust void pursuant to public policy.
o Concerns were raised about other trusts which confine availability to certain classes:
o “…these trusts will have to be evaluated on a case by case basis, should their validity be
challenged. This case should not be taken as authority for the proposition that all restrictions
amount to discrimination and are therefore contrary to public policy”.
 Trusts for the benefit of disadvantaged groups promote public policy of equality.
o “This decision does not affect private, family trusts”.
o “It is the public nature of charitable trusts (tax benefits, applicability of cy-pres
doctrine, exemption from rule against perpetuities) which attracts the requirement
that they conform to the public policy against discrimination.
 Only where the trust is a public one devoted to charity will restrictions that are
contrary to public policy of equality render it void”.
Re Ramsden Estate  distinguished Leonard trust guidelines only void if “blatantly supremacist”.
Protestant students to be awarded the scholarship… in other words, Leonard was “stupid” enough to lay out
his motivations bare for the world to see… therefore there was nothing in the terms of the Ramsden
scholarship itself to indicate any supremacist or racist motivations.
o Trusts for the benefit of disadvantaged groups promote public policy of equality.
o Even if trusts discriminate in favour of historically advantaged groups – they’re probably ok unless
they’re blatantly supremacist (like Leonard)
Fox v. Fox Estate Ont. C.A. 1996.
Facts A, widow of deceased also executor. Broad discretion. Son, B, given residue of capital if he
survived his mother. A exercised her powers in a manner so as to exhaust the residue. Her motivation was to
deprive her son of benefit because he entered into a relationship with a woman of a different religious faith.
Issue whether the mother had improperly exercised her power as executor of the estate.
Held: Yes, she had improperly exercised her power.
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Reasoning:
o “It is abhorrent to contemporary community standards that disapproval of a marriage outside of
one’s religious faith could justify the exercise of a trustee’s discretion. It is now settled that it is
against public policy to discriminate on grounds of race or religion”.
o “…it would be contrary to public policy to permit a trustee effectively to disinherit the residual
beneficiary because he dared to marry outside the religious faith of his mother”.
o “I find compelling [the submission] that if a testator could not do so then his trustee could not do it
for him”.
o Court “…must prevent her from exercising her discretion in a fashion which offends public policy”.
o Stands for the proposition that even in a private setting, a person who is a trustee managing a
beneficiaries estate, these public policy considerations matter.
 Criticism: seems to be at odds with the “public” and “private” distinction in Leonard.
o Same court heard both Fox and Leonard  said in Leonard that it wouldn’t affect purely private
family trusts
o Court points out that: “The exercise of a testator’s right of disposition is not subject to
supervision by the court. But a trustee’s exercise of discretion is subject to judicial control”.
o Perhaps court is trying to follow the testator’s intentions.
 They say that it would be open to the father to have written a new will disentitling
the son but Court had to read will as it was (given the uncertainty of the father’s
intentions were he still alive)
 Executor overruling his intentions (as illustrated in the will) and assuming he
would disentitle the son is a radical move  It is also against public policy…= bad.
Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust
 Individuals have significant property rights that allow them to discriminate (who enters their house,
who they give a gift to, etc.). These are not subject of public policy scrutiny.
 The CA in Leonard, distinguishes between public trusts (Leonard) and private trusts (Family
Trusts).
 Leads to three categories:
1. State action – Subject to Charter and public policy
2. Private conduct in the public domain (such as the conduct of private enterprise & Leonard
Trust) – subject to public policy but not Charter
3. Private conduct treated as being outside of the public arena (such as family life) – no public
policy scrutiny
 Dividing lines are imprecise.
o Private property is dependent on the public system enforcing a bundle of rights. – this
adds public sphere.
 If a single gift were given discriminatorily to a family member, according to Leonard, it would be a
private act and not subject to policy considerations. But what about a trust for “all members of
my family who [same discriminatory language as Leonard]”. In assessing the “publicness” of
such a gift, the difference is purely one of degree (compared to Leonard).
 Result of the attempt to explain the line between permissible and impermissible discrimination by
relying on a distinction between private and public conduct is to create three overlapping
categories that obscure rather than clarify what the law should be.
3. Restraints on Alienation
Basic Rule: A condition that would take away the necessary incident of a fee simple estate, such as the
power to alienate, is void as repugnant to the estate.
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Trinity College School v. Lyons Ont. Gen. Div. 1995.
Facts Application to enforce option to purchase lands adjacent to applicant’s lands. Thomas Bennett and
wife Mildred (optioners) entered into agreements to sell portions of land to TCS and to confer to TCS the
option to purchase more at a fixed price upon the death of the couple and a right of first refusal. Thomas died
in 1978, Mildred in 1991. TCS then served notice to exercise its options; respondents (daughters) assert it
was not exercisable as parents transferred the lot to them by a deed.
Issue: whether the option to buy at a fixed price was unenforceable or void as an improper restraint on
alienation of an estate in fee simple.
Reasoning
o Gift not contemplated in option agreement. For the right of option to survive, it became necessary
for the optionee to request the court to imply a term to the effect that the optionors would not convey
the Option Lands without first offering them to the optionee.
o Since the Statute of Quia Emptores in 1290, the right of alienation has been an inseparable incident
of a fee simple estate.
o Foundational principle enunciated in Stephens v. Gulf Oil: “[a] power of alienation is an inseparable
incident of an estate in fee simple.  Consequently, where there is a condition annexed to a grant or
devise of land in fee simple, which is an absolute restraint on alienation, it will be void as being
repugnant to that estate”.
o Basic Rule: A condition that would take away the necessary incidents of a fee simple
estate, such as the power to alienate, is void as repugnant to the estate
o A pre-emptive provision is valid if the optionee is required to meet any offer received by the
optionor as a condition of exercising his option. VS. If the optionee need pay only a fixed price or a
% of any offered price, it’s void as a restraint upon alienation in substance (“…if the right of preemption at a fixed price substantially deprives the person who granted it of his right of alienation,
then it will not be valid”).
o Here, the court stated, “the right of option triggered by the death of the survivor of the
Bennetts…is void as an unlawful restrain on alienation”.
o Mills J. in Blackburn v. McCallum SCC 1903: “one conveying such an estate to another shall not
have the power to alter its character, and to make it wholly different from what it has been made by
the law”.
Held: Thus, the application is dismissed, option to buy land at set price = void.
How can an option to buy restrain alienation?
 If estate acquires land subject to the restriction that they can only sell to TCS at below market price, this
is void. Too much restraint.
No problem with inter vivos right of first refusal. People are allowed to burden their own estate, but
cannot impose it on others. That is the problem with the option to purchase at fixed price on death.
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It's not OK to transfer ownership of land to one party subject to an option for another party to
acquire it at a fixed price – can’t impose a fixed price purchase option as a condition of
acquiring the estate
o Looking at Mildred’s (wife) estate which is being forced to acquire this property from
Mildred with a fixed price – illegal restraint on estate’s ownership
o It’s OK for a land owner to grant another party a fixed-price option to purchase land already owned
by the landowner – can burden yourself but you can’t burden someone else as a requirement of
acquiring a fee simple estate
o If you have to match market price it’s fine – equivalent to freedom of alienation
Cases cited in TCS:
 Re Rosher (Eng Ch 1884): preemptive option to purchase at fixed price (1/5 of market value at T’s
death) = void
 Re Cockerill (Eng Ch 1929): preemptive option to purchase at fixed price (1/2 of value at T’s death)
= void
 Stephens v. Gulf Oil (1975): right of first refusal at fixed price = void
o
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Bailment
Definition of bailment: Delivery of possession of goods from owner to another for a specified purpose. (Add
to the definition for a specified purpose because if it were permanent it would more closely resemble a
trust). It is a transfer of possession without a transfer of ownership.
 It is an important distinction and there are DoC implications if a transfer is a bailment or simply licence:
“to distinguish a bailment from a licence…the question turns on whether possession has been transferred”.
 There is no direct juridical nexus between a landlord and a sub-tenant, but this is not true in the law of
bailment (Punch v. Savoy).
Leases=transfer of possession of land to a tenant, ownership to landlord
Bailment=transfer of possession of a good or chattel to another, ownership is retained
Licence=grant of permission to enter land for a particular purpose; arises in relation to both leases and
bailments
Bailor: Owner of goods doing the lending
Bailee: Person taking possession.
 Usually a contract, but not necessary.
Does a bailment exist?
Letourneau v. Otto Mobiles Edmonton 2002 Alta. Q.B.
Facts trailer stolen in 1999. Ps had delivered trailer to parking lot adjacent to D’s business premises for
repairs the following day. D had previously been retained for repairs on same trailer; prior work order
contained waiver of liability clause, which included theft. Further work was required because repairs were
unsatisfactory.
D’s service manager directed P where to park the Trailer during non-business hours, as is customary
practice of D. P then followed those directions. D’s representative said P should padlock key in water
compartment. Trailer stolen and not recovered.
Issues:
1.
2.
3.
4.
5.
Did the relationship of bailor-bailee existed between Ps and D?
If so, did D fail to meet the SoC?
If so, was P’s loss caused by D?
Did P’s negligence contribute to the loss?
Did D breach contractual obligation to P?
Plaintiff’s position:
There was bailment given that possession, custody and control of Trailer passed to D based on clear
intention of the parties; D did not take reasonable care to safe keep trailer; no contributory negligence
because P strictly complied with D’s instructions.
Defendant’s position:
 Bailment not established; no possession—plaintiff’s retained a key. No evidence D would know when
trailer would be left—bailor cannot thrust bailment on bailee. Agreement did not commence until the
morning, thus the contract was frustrated by theft.
Reasoning:
 Cory J. in Punch v. Savoy Jewellers Ltd. (Ont. C.A.) defined bailment as:
“…the delivery of personal chattels on trust, usually on contract, express or implied, that the trust shall be
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executed and the chattels be delivered in either their original or an altered form as soon as a time for which
they were bailed has elapsed. It is to be noted that the legal relationship of bailor and bailee can exist
independently of a contract. It is created by the voluntary taking into custody of goods which are the
property of another”.
Existence of Bailment:
o Possession is one essential element of bailment. Ps never physically delivered possession by direct
delivery, though they complied with precise instructions/common practice. Appleton indicates
possession can be inferred when it is a necessary incident of some other function.
o Here, Ps had service contract with D—D’s possession was necessarily incidental to the service
contract. D had requisite knowledge – explicit instructions to P.
o Temporary possession of the trailer thus passed to D when P left the trailer and not, when D’s
employee should have picked it up the following morning.
Related Cases:
 Hefferman v. Elizabeth Irving Service Center (1980 Nfld SC) – P parked truck at the side of D’s
service station, it was subsequently demolished. Judge ruled it was “only too evident” that a bailorbailee relationship existed. It was typical practice for P to leave the truck, turn the keys over to an
employee, and telephone the service station a day or so later and indicate what repairs were required.
 Appleton et al v. Ritchie Taxi et al. (1942 ONCA) – Valet parking, car in valet’s care was stolen.
CA held the defendants became bailees when the attendant, as agents of the defendants, took charge
of the car at the front gate, since possession of the car was delivered to the defendants for safe
custody.
If Bailment, Duty of Care and Standard of Care
o Since bailment is established, burden shifts to D to prove on a balance of probabilities that it
discharged its SoC.
o  Bailee must exercise due care for safety of article by taking such care of goods as would a
prudent man of his own possession.
Bailee for reward v. Gratuitous Bailee
o Higher SoC historically placed on bailee for reward. But, makes little difference today. The
obligation of a bailee in either case is to take the same care of goods received as a prudent owner,
acting reasonable, might be expected to take care of his or her own chattels.
Waiver of Liability
o Bailment is consensual, and thus any limitation of liability for the loss of goods is a fundamental
aspect of that consent—contractual relationship.
o Limitation of liability clause will only exempt bailee from responsibility for losses due to his
negligence if the words used are clear and adequate for the purpose or there is no other
liability to which they can apply.
o Here, no written contract and no work order—simply a verbal agreement where D through service
manager agreed to repair the trailer.
o Waiver in previous work order must be strictly construed only to that work and not to July 5,
6, or 7 oral agreement.
Was P’s loss caused by D’s failure to meet DoC?
o P must establish that loss or damage to the bailed goods occurred while the goods were in the
possession of the bailee. Only then does the burden of proof shift to D to negative negligence.
o D has failed to establish that the conduct of employees was consistent with the standard of care that
a prudent owner, acting responsibly, might be expected to take of his or her own chattels.
o D is responsible for not providing a safe location for storage given that it invited P to deliver
possession during off business hours.
o Viewing bailment as tortious, same conclusion reached. D breached DoC to properly secure the
vehicle. Failed to take steps resulted in the loss. If bailment is tortious so that a claim is on
negligence alone, D is liable to P for its negligence.
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Contributory Negligence
o Rarely found in bailment cases. Ps followed direction by Service Manager. No contributory
negligence.
Conclusion Bailment existed; D did not discharge DoC/SoC; no contributory negligence.
$27500 damages awarded.
3 types of Bailment based on whom they benefited, **standard of negligence matters accordingly
(Coggs v. Bernard 1703):
 Sole benefit of the bailee  higher duty of care expected (slight negligence is actionable)
 Sole benefit of the bailor  liability for gross negligence
 Mutual benefit  liability for ordinary negligence
 Martin v. Town N’ Country Delicatessen 1963 Man CA - Car stolen from free valet for restaurant goers
 deemed “gratuitous bailment for the benefit of the bailor”. Presumably the same prices would be charged
for people who arrived by foot, bus, taxi, without any consideration for the furnishing of a parking lot for
motorists.
Notes: Parking lot is a fixed cost, provides incentive for patrons to arrive in most convenient way
(by car)  key part of the full offering of the restaurant, whether or not customers chose to drive for their
own personal reasons. Different customer segment was targeted by the parking offering. Also arguments
could be made that it added to the “prestigious appeal” of the restaurant, and thus there was some intangible
benefit to restaurant customers who didn’t drive  the lack of taking advantage of the valet service with no
price decrease was the CA’s key logic.
Compare:  Martin dissent (Schultz JA) & Murphy v. Hart holding (lost coat from free coat check) 1919
NSCA – while no price was paid directly or specifically to D for the care of the plaintiff’s overcoat, it was
part of the accommodation for which D received his recompense from his customers.
Note:
 in a civil action P must prove case on a balance of probabilities. ****This shifts in the case of bailment;
Once P has shown the goods have been damaged or lost during the course of bailment, D must
disprove negligence on a balance of probabilities.
 Bailee’s liability is not restricted to acts or omission—if chattels are dealt with in a manner outside
terms of bailment—strict liability as a result. Likewise if goods are misdelivered or deliberately
misappropriated, the bailee is liable even if care was shown.
 Contributory negligence in a bailment context is unresolved. Palmer suggests defence is not available
when the breach relates to an obligation for which liability is strict.
Minichiello v. Devonshire Hotel 1976 BC C.A.
Facts P parked in D’s lot. Left keys with attendant, notified attendant that “valuables were in the trunk”
(jewelry worth thousands) – car stolen.
Reasoning Bailment is clear—but what about the valuables?
o “The bailment would cover the contents of the automobile which one would reasonably expect to be
in the car and contents which one might not reasonably expect to be in the car but of which the
bailee has knowledge”.
o “…the statement that there were ‘valuables’ in the car was sufficient to constitute the appellant a
bailee for reward of the contents of the attaché case”.
o Basically, you need notice for items inside the bailed article—express or constructive.
Appleton Valet Parking is a bailment.
Is parking a bailment? Consider:
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o
o
Active supervision and control of car? (handing over keys, valet service, serially numbered ticket,
jockeying of cars) suggests bailment
Statement that says “charges are for use of parking space only” suggests license
Bailee’s and sub-bailees
Punch v. Savoy’s Jewellers Ltd. Ont. C.A. 1986.
Facts Punch, plaintiff, brought $11 000 ring to Savoy for repair. Savoy could not do it, so sent ring to
Walker Jewellery in Toronto. Transmitted by regular mail with $100 for insurance. Walker repaired it, but
there was a postal strike. CN carrier used to send ring; Savoy agreed, but terms/details not discussed. Ring
never delivered by CN to Savoy. No record of ring even being in CN’s possession other than invoice. No
explanation for loss of ring—conceded could have been theft. Punch did not object to ring having been sent
to Toronto for repair. CN form limited liability to $50.
Punch (bailor) Savoy (bailee) Walker(sub-bailee) CN (sub-sub-bailee).
Issues DoC owed by bailees and sub-bailees to the bailor; interpretation of clause limiting liability of subbailee carrier; whether there has been a fundamental break of the contract of carriage by the carrier.
1. Walker (sub-bailee) liable directly to Punch (bailor)?
YES Breach of duty as bailee
2. Is Savoy liable to Punch?
YES Direct relationship. Did not act like reasonable and prudent owner by failing to insure ring.
3. CN liable to Walker or Savoy?
Yes, and also liable to true owner for unexplained loss of ring.
Reasoning: Relationship of bailment: Walker and CN were sub-bailees.
o
o
o
Definition: “Bailment…the delivery of personal chattels on trust, usually on contract, express or
implied, that the trust shall be executed and the chattels be delivered in either their original or an
altered form as soon as a time for which they were bailed has elapsed. It is to be noted that the legal
relationship of bailor and bailee can exist independently of a contract. It is created by the voluntary
taking into custody of goods which are the property of another”.
Bailee for reward must exercise due care for the safety of the article entrusted to him by taking such
care of the goods as a prudent man of his own possessions.
If goods are damages or lost in possession of bailee, bailee must prove either appropriate care was
taken or that failure to do so did not contribute to the loss. Burden on bailee to show absence of
neglect, default or misconduct.
 Walker was in breach of duty to Punch and is liable for damages flowing from loss.
 Savoy – “I would characterize the provision of insurance as an essential term of this contract of carriage”.
Savoy breached DoC.
 CN—if bailment is consensual (contractual), limitation of liability is fundamental, and limitation of
liability may be relied on. If the action is tortious (negligence) CN would be liable to Savoy and Punch.
Relationship of bailment combines elements of tort and contract.
o “Sub-bailee is able to rely on exempting clause as against owner only if the owner expressly
or impliedly consented to the bailee making a sub-bailment ‘containing those conditions,
but not otherwise’”. Savoy did not consent, thus not bound. No contract between Punch and CN.
o CN liable to Punch for full value of the ring since its contract of carriage specifically
contemplates the existence of an owner to whom a duty of care is owed.
 Effect of liability clause in determining claim of Walker for indemnity from CN:
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o
o
Limitation of liability clause is primarily for excluding liability for negligence. If an employer
wishes to exclude liability for loss from theft by its own employees, good conscience requires it
be done explicitly and with clarity and precision.  the “or otherwise” wording is insufficient.
A bailee is liable for loss resulting from theft by employees…it follows that unless a clause exempts
bailee from liability, the bailee remains liable for such as loss. Applied here: “Where there is an
unexplained loss of goods which may have been occasioned by theft by an employee, the bailee
should be liable for that loss unless the contract of bailment contained a clause clearly
exempting the bailee from loss occasioned by the theft of an employee”. Disappearance of ring
without explanation is a breach of the contract.
Conclusion:
 Savoy and Walker both liable to Punch for breach of their duty as bailees.
 CN is also liable to owner for unexplained loss of ring.
 Savoy and Walker are to be indemnified by CN for any loss they must make good to the owner.
 Walker should not be able to recover costs against CN because they fixed the value at $100. P has
judgment for $11 000 against all Ds.
Leases & Licences
 Residential tenancies have undergone considerable statutory reconfiguration, largely in response to
power relationships typically found between landlord and tenant.
A tenancy is an interest in land conferring the right to possess it for a limited period.  creates a
leasehold estate in land
A license is a mere permission to be on the land, with or without additional permission to perform
specified acts there  no estate
Lease: Landlord/lessor and Tenant or lessee
License: Licensor and Licensee
Why does it matter?:
 Lease: Rights against 3rd parties (even purchaser/bank seizure), survives share of the land.
 License: personal, doesn’t usually bind third parties even with notice of the arrangement.
o But licensee may have enforceable right to stay if she relies detrimentally on reasonable
expectation created by landowner that she will be permitted to stay (another story, not
covered here…)
 Remedies for breach
o Wrongfully evicted tenant can recover possession; special statutory procedures and
remedies for breach
o Licensee can only recover damages; no special rules or procedures
Four kinds of leases recognized by the common law:
1. Fixed term lease (e.g. ten years)
2. Period lease (month to month)
3. Tenancy at will (which may be terminated at any time by either party)
4. Tenancy at sufferance (when a tenant overholds (overholding tenant) after the expiration of a
term—treatment of this as a true tenancy is somewhat fictional). A perpetual lease, by definition
without a certain term, can be created by statute—it is a creature unknown to the common law.
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Requirements:
 A lease must relate to a given property between ascertained persons (landlord(s) and tenant(s)).
 When lease is for fixed term, starting date and maximum duration must be ascertainable at the
commencement of the term (Black v. Blair Athol Farms Ltd).
o In NZ must have minimum finite term, whether fixed or periodic (Fatac).
 Payment of rent is not an essential ingredient (leasehold right may be given as a gift)
o Only indication of intention to be legally bound, doesn’t indicate either way lease/license.
 Lease must also contain a grant of the leasehold interest (a “demise”, not devise – gift in a will)
 Restrictions upon the use to which the occupier may put the land are not inconsistent with
exclusive possession
 No tenancy (only license) when there is
o a) no intention to enter into a legally binding relationship,
o b) where a tenancy is precluded by statute,
o c) where the occupier’s right to possession may be terminated for reasons extraneous to the
occupation of the land.
Lease-licence distinction elucidated in the following case:
Fatac Ltd (in Liquidation) v. Commissioner of Inland Revenue NZCA 2002.
Facts Puhinui owns Property in south NZ. Part of land was a quarry. In 1991 rights granted to Atlas the
right to operate the quarry for 12 years, renewable for 3 more, reserving a general right of access provided it
does not obstruct A’s permitted activities. In 1996, Puhinui agreed to sell whole property to Mt. Wellington.
Case involves which party liable for payment of GST, and turns on whether lands were tenanted property.
Reasoning Distinguishing feature of a tenancy and licence: A tenancy is an interest in land conferring the
right to possess it for a limited period. A licence is a mere permission to be on the land, with or without
additional permission to perform specified acts there. A tenancy creates an estate in the land; A licence does
not.
 History of Test for Lease:
o 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 1904)
o Mid-20th century  was intention of parties to create a personal privilege to enter the land
(license) vs. an interest in the land (separate from whether party was granted exclusive
possession). – Denning (Shell-Mex)
o Late 20th-century  HL rejects Denning’s approach: Street v. Mountford – “The
agreement was only “personal in its nature” and created “a personal privilege” if the
agreement did not confer the right to exclusive possession of the [property].”
 The right to exclusive possession has remained the core test for a tenancy in
England - AG Securities v. Vaughan H.L. 1990. (return to orthodoxy)
o Street: “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 lease. (parties’ intentions are irrelevant, except their intention as
to exclusive possession)
 Exclusive possession allows the occupier to use and enjoy the property to the exclusion of
strangers.
o Even the reversioner is excluded except to the extent that a right of inspection or repair
exists by contract or statute.
o The reverse is true for a licensee; lacking the right to exclusive possession, a licensee can
merely enter and use the land to the extent that permission has been given.
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
1. Rent would seem relevant to the presence or absence of an intention to be legally bound, but
not a precondition for a tenancy per se.
 2. Restrictions upon the use to which the occupier may put the land are not inconsistent with
exclusive possession and do not negate a tenancy. (BA Oil, service centre owner had exclusive
possession, despite restrictions on use).
o Shell Mex – 2 extra provisions – owner’s agents had right to enter premises without notice
and the occupier agreed not to impede the owner’s right of possession and control 
License, not lease
 3. In UK and NZ, Label is irrelevant, it’s the substance of agreement that matters (Fatac) but
Canadian courts have considered language as evidence of the parties’ intention to make a lease
(BA Oil) but substance is most important.
 4. Also no tenancy:
a) where the owner is prevented by statute from granting a tenancy,
b) where the landlord’s right of entry to provide services is inconsistent with exclusive
possession, or
c) where the right to exclusive possession can be terminated pursuant to some legal
relationship extraneous to that of landlord and tenant (e.g. employee’s right to exclude
others from employer’s premises (tenancy) can be terminated when employee is dismissed)
 Whether the occupier has the right to exclusive possession turns on the effect of the contract or
grant. The effect…is a matter of interpretation; a search for the intention of the parties. The quarry,
here, is intention as to exclusive possession.
o Fundamental question is whether the parties intended that the occupier would have the right
to exclusive possession.
 De facto exclusive possession can be an important guide to contractual intentions
 explains the significance attached to possession in fact.
 Where the occupier is found to have a mere licence, it will be because the initial appearance of a
right to exclusive possession is found to be critically undermined by the potential for
termination for reasons extraneous to the occupation of the exclusively occupied area.
 In NZ, then, exclusive possession is the lynchpin of a tenancy, as distinguished from a licence. Rent
is an important indicator, but its absence is not fatal. For exclusive possession to be meaningful,
there must be a minimum finite term, whether fixed or periodic. Here, the lack of a proviso for
rent does not preclude a tenancy.
Held: However, the court concludes here that the arrangement with Atlas was a licence and not a tenancy
(no clearly defined area for exclusive use).
Obligations of Landlords and Tenants
Terms of a lease are a matter of contractual intention, and freedom of contract is the guiding precept. One
term central to the tenant’s right is the right to quiet enjoyment.
Southwark LBC v. Tanner - House of Lords 2001
Facts Appellants are tenants of London Boroughs of Southwark and Camden. They complain that they
can hear all the sounds made by their neighbours because the flats have no sound insulation.
Neither tenancy agreement contains any warranty on the part of the landlord that the flat has sound
insulation or is in any other way fit to live in. Nor does the law imply any such warranty.
Covenant of Quiet Enjoyment – cannot be overridden by parties, always read into lease agreements by
Courts.
Reasoning In many cases the tenant does not have the bargaining power to exact an express warranty as
to the condition of the premises or the freedom of choice to reject property that may not meet his needs.
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Parliament vs. Judiciary (should judges go where Parliament has not)?
 Parliament has been very active intervening to protect certain tenants.
o No statutory remedy covers the appellant’s complaint, thus they are attempting to apply the
CL actions of the covenant for quiet enjoyment and an action of nuisance (rejected).
 If the case falls within CL, they should win.
 If it falls outside the CL, the CL should not be extended because Parliament has thus
far decided not to impose an obligation to install soundproofing in existing
dwellings (high $$ to landlords)
Covenant for Quiet Enjoyment: Covenant that the tenant’s lawful possession of the land will not be
substantially interfered with by acts of the lessor or those lawfully claiming under him.
 “quietly” does not mean undisturbed by noise…it means without interference – without
interruption of the possession. / Refers to the exercise and use of the right and having the full
benefit of it, rather than to deriving pleasure from it.
 There must be substantial interference with the tenant’s possession (his ability to use it in an
ordinary way, not a warranty that the land is fit to be used for some special purpose)
 In this case, Judge: I do not see why, in principle, regular excessive noise cannot constitute a
substantial interference with the ordinary enjoyment of the premises.
o Historically had to be physical interference.
 In the grant of a tenancy it is fundamental to the common understanding of the parties, objectively
determined, that the landlord gives no implied warranty as to the condition or fitness of the
premises.
o It would be inconsistent with this common understanding if the covenant for quiet
enjoyment were interpreted to create liability for disturbance or inconvenience or any other
damage attributable to the condition of the premises.
 The lease must be construed against the background facts, which would reasonably have been
known to the parties at the time it was granted. The complaint here is for an inherent structural
defect for which the landlord has assumed no responsibility.
o Prospective not retrospective  take the apartment in condition it was when tenancy started
and look forward. If disturbance is attributable to the prior state of the apartment at the time
the tenancy agreement took effect, then that disturbance won’t count as a violation of the
covenant for quiet enjoyment.
 Must have been contemplated at the time of the lease that the upstairs flat would be used for ordinary
residency in accordance with the way it was constructed; thus it could not have been intended that
such use would amount to a breach of the covenant for quiet enjoyment.
Held  it is sufficient that the tenants must reasonably have contemplated that there would be other
tenants in neighbouring flats. If they cannot complain of the presence of other tenants as such, then their
complaint is solely as to the lack of soundproofing. And that is an inherent structural defect for which the
landlord assumed no responsibility.
 (Claim in nuisance also dismissed, but analysis omitted).
**Parliament vs. Courts: pg 634: Parliament has dealt extensively with the problem of substandard housing
but so far has declined to impose an obligation to install (see above blue)
Pellatt v. Monarch Investments Ltd (1981 Ont.)
Facts: Tenants of a rental building were invited to terminate their leases prior to major renovations being
performed on the building. P decided to stay. The noise was intolerable, she commenced an action claiming
a breach of the covenant of quiet enjoyment.
 Landlord was reasonable – offered alternative accommodation, right to get out of lease without
penalty BUT the landlord still breached the covenant of quiet enjoyment
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
Judge ruled in her favour, cites jurisprudence stating that only a “physical interference with the
enjoyment of the demised premises will suffice” but chooses to follow’s Denning’s approach that it
covers “any conduct of the landlord or his agents which interferes with the tenant’s freedom of
action in exercising his rights as a tenant”
 “In this case I am satisfied that the construction…constituted an invasion of the tenant’s right to
“peace and comfort” – There was a breach of the covenant of quiet enjoyment.
*Consistent with Southwark? – Situation was radically different in two cases: who was making the noise
(landlord in Pellatt vs. tenants), Pellatt = highly unusual noise vs. usual in Southwark).
 Contemporary Ontario legislation deals with parties’ rights if landlord wishes to engage in major
renovations
-Covenant for Quiet Enjoyment does not protect against a claim by someone asserting a better right to
property than the landlord (a person claiming title paramount).  not claiming under the landlord.
-Other tenants do claim under the landlord. Their leaseholds are derived from the landlord.
 Some courts have interpreted this as meaning persistently noisy tenants can constitute a breach of the
covenant of quiet enjoyment when the landlord was in a position to take action but stood idly by
(Albamore Construction & Engineering Inc. v. Simone 1995 Ont. Gen. Div.)
HOWEVER: Curtis Investments v. Anderson Man. Co. Ct. 1981.
Where the breach of the covenant of quiet enjoyment was founded on the intolerable noise from an
upstairs apartment, which had not been remedied by the landlord, the court found no breach had occurred.
 Court of Appeal ruled “A lessor is not liable in damages to his lessee under a covenant for quiet
enjoyment for a nuisance caused by another of his lessees because he knows that the latter is causing
the nuisance and does not himself take any steps to prevent what is being done. There must be
active participation on the landlord’s part to make him responsible for the nuisance.” (Malzy v.
Eichholz 1916 Court of Appeal)
 Ontario Law Reform Commission recommended a change in the law to broaden the landlord’s
liability for breach of the covenant to cover acts done by his adjacent tenants, irrespective of his
active participation.  not the current law however.
Covenants
Rights of ownership are divisible: spatial dimensions, estates and future interests, shared ownership,
equity/legal, debtor-creditor
Servitude: interests in which an owner’s possessory rights are burdened by another’s non-possessory
rights. (involve rights other than possession – even where owner retains right of possession, still burdened)
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)
Profit à prendre: a right to enter land to remove minerals or other natural products from land.
Rights of access to public or private property (i.e. Charter) for expressive purposes can be thought of as
servitudes.
Covenant: a contractual promise to perform or refrain from certain acts in relation to land. (found in
land deed)
o Covenantor (promisor): bears the burden of the covenant
o Covenantee (promisee): enjoys the benefit of the covenant
Types of covenants:
 Positive: requires covenantor to DO something
 Restrictive (negative): requires covenantor to REFRAIN from doing something
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 Freehold: covenants given in connection with a grant of a freehold estate in land.
 Leasehold: covenants given in connection with a grant of leasehold estate (enforceable due to privity of
estate – not covered**).
Enforcing covenants:
o No problem when original parties still around—privity of contract, enforceable
o Original covenantor still liable for performance after they have sold their interest;
o To avoid being sued as original covenantor by covenantee: have purchaser adopt same
covenant in purchase agreement.
o Get a promise of indemnification – purchaser promises to indemnify you for any breach of
the covenant (you can go after purchaser if covenantee sues you)
o Enforcement of freehold covenant by or against successor in title is a big problem.
o General rule: freehold covenants are usually unenforceable in absence of privity of
contract.
Purchaser A covenants with B to maintain property as single-family dwelling, A sells (or given as
gift, through will, etc.) to C, B sells to D.
*A always remains liable for covenant. Covenant listed on title of both A’s and B’s land (benefit
and burden).
-If A were smart he would get a promise from C to keep it as a single-family dwelling.
-On what basis could D sue C? (neither has privity of contract)  when does covenant burden “run with
the land”
o More specifically: when does burden bind covenator’s successors in title so that they might be
sued (by original or successor covenantee); and when does the covenantee gain benefit of
covenant.
Tulk v. Moxhay (1848) E.R. Ch. (court of equity)
 “A covenant between vendor and purchaser, on the sale of land, that the purchaser and his assigns shall
use or abstain from using the land in a particular way, will be enforced in equity as against all subsequent
purchasers with notice, independently of the question whether it be one which runs with the land so as to
be binding upon subsequent purchaser at law”.
Facts Tulk owner in fee simple, sold land in Leicester Square to Elms with a restrictive covenant to
“…keep and maintain the said piece of ground and square garden…in an open state...”. This land was
subsequently conveyed to defendant (Moxhay) without a similar covenant but with notice of the covenant
of 1808. D manifested an intention to build on it, and P brought an action for an injunction to restrain the
defendant from “converting or using the piece of ground and square garden, and the iron railing round the
same, to or for any other purpose than as a square garden and Pleasure ground in an open state, and
uncovered with buildings”.
Issue covenant does not run with the land and the court cannot enforce it; but the issue is not whether the
covenant runs with the 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.
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o
Does burden of this covenant run with the land, so that the successor in title to the covenantor is
bound by it (and can be sued by the covenantee)
Reasoning if there was a mere agreement and no covenant, the court would enforce it against a party
purchasing with notice of it; “for if an equity is attached to the property by the owner, no one purchasing
with notice of that equity can stand in a different situation from the party from whom he purchased”.
o Purchaser cannot do anything with the land that the vendor wasn’t able to do (the limitations
would have been factored into the price the purchaser paid, thus to allow him to use/sell the land free
of the covenant would allow him to be unjustly enriched.
Ratio: the burden of a covenant may run with the land in equity. (see further propositions clarifying this
in Ziff, below).
 At law, the burden of covenant does not “run with the land” (Keppel, Austerberry (UK), Parkinson
(SCC))
 Concern about alienability of land, reduce value of burdened land (but may benefit
other land); land would become too encumbered by covenants passing with land.
 Also court was concerned with difficulty keeping track over time – not really issue
now due to registration systems.
o A person cannot be made liable on a contract unless s/he was party to the contract (Rhone,
pg 825)
o Applies both to negative and positive covenants
Held:  Tulk gets injunction to stop Moxhay from developing.
B. Ziff, “Restrictive Covenants: The Basic Ingredients”
In Re Drummond Wren, decided a covenant that prohibited sale to Jews and blacks was void because it was
contrary to public policy. Similarly SCC overturned ONCA and ruled that a covenant prohibiting transfers
of property in a cottage community to Jews, Blacks or persons of “coloured race or blood”
 “There can be a collision of private and public interests concerning the ways our cities should
develop, or about the complexion of the neighborhoods in which we might choose to live”.
Prominent private land use planning tool (e.g. Amberwood):
o Residential setting create planned communities/economic ghettos, control the types of homes that
are built or to preserve the area as purely residential (even where zoning allows for mixed uses).
o Can’t contradict zoning but can specify it.
o Commercial use  regulation of business competition within a development (e.g. shopping centre)
 Concept of covenants running with land arises out of, but is separate from, the notion of privity of
contract.
• Covenants are always enforceable between the original contracting parties due to privity of contract,
even after original covenantor has sold her interest.
Property law, as a general proposition, is supposed promote economic efficiency by allowing the transfer
to those who value the property most (measured by willingness to pay)
 But property law also seeks to promote freedom and personal development.
-Covenants can increase the value of benefited land, but it can diminish market value because its uses are
limited.
-Creation of a restrictive building scheme is a manifestation of the proprietary freedom of the original
owners vs. everyone who chooses to purchase lands within the scheme is agreeing to surrender some control
over their property  debatable whether this trade-off results in a net gain or loss of freedom.
As seen in Tulk, the burden of a covenant may run with the land in equity but not law
o Rationale: the rationale described on page 803 bottom, Keppell v. Bailey the problem is really free
alienability of land—danger was that if these covenants continue to bind successors to land down
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through the years, land will become increasingly encumbered, more difficult to ascertain interests, and
because of the risk of being bound by unknown promise, the market for land will be impaired. The
rationale is then alienation or alienability.
o But:
TEST FOR WHEN THE BURDEN OF FREEHOLD COVENANT RUNS W/LAND
1. The covenant must be restrictive (negative) in substance; only restrictive covenants will be
enforced.  Compliance is possible by the obliged party doing nothing.
o Consider efficiency, freedom and autonomy, transaction costs (probably not an issue with
advent of modern registration systems). See “Rationale” above.
o (If the only use to which the land can realistically be put involves doing what is restricted by the
covenant, it is arguable it is positive in substance (similar to de facto expropriation Can vs. US).
2. It must have been intended that the covenant/burden was to run with the servient land, and that the
land must be sufficiently described by the covenant.  Equity will not impose an obligation on a
new owner if the original parties had no intention to do so.  not getting into this
3. The covenant must be taken for the benefit of dominant lands, and those lands must be sufficiently
identified in the document (Covenant must be for the benefit of another “dominant” property).
Relates to the idea that the covenant must not have been intended as personal. (taking 2 and 3
together, means two properties must be involved – proximate but not necessarily contiguous).
a. Covenants in gross (no dominant land) are unenforceable absent privity (e.g. covenant in
favour of homeowner’s association or nature conservation group).
i. Statutory changes have been made so conservation covenants bind successors.
b. Covenant must touch and concern the dominant land (owned by covenantee) – must affect
mode of occupation or directly affect value of land.
i. Courts looking for good reason to enforce it (justification: it has some benefit
enjoyed by owner of some other land).
ii. Covenant touches and concerns the dominant lands when it affects the mode of
occupation of the land, or directly, and not merely from collateral circumstances,
affects the value of the land.
1. Valid covenants: restricting the property to residential uses, covenants that
endeavour to preserve land for amenities (e.g. parking), covenants aimed at
restricting competitive business activities.
2. Invalid covenants: covenants that prohibit alienation to members of a
particular race or religion do not touch and concern the land (also violates
public policy).
c. In Galbraith v. Madawaska SCC states the dominant land must be easily ascertainable from
the deed, extrinsic evidence alone will not suffice (differs from UK approach where the
property may be ascertainable even when it is not described in the initial covenant.
d. The holder of the burden must know who it is that might seek to enforce the promise.
e. If the ascertainability requirement is not met, the party acquiring the servient lands is not
bound by the covenant.
4. Equity must otherwise be prepared to enforce the covenant. Tulk reflected the importance of notice
binding the purchaser.
 Bona fide purchaser rule: the covenant is not enforceable against a bona fide purchaser of
the legal estate who had no notice or reasonable grounds to know of the prior equitable right.
a. Successor in title must take with notice;
b. (note this is now affected by Ontario Registry Act provisions re. notice & specific
registration requirements for restrictive covenants are set out in Ontario’s Land Titles Act).
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Positive Covenants:
Amberwood Investments Ltd. v. Durham Condominium Corp. Ont. C.A. 2002.
Facts Parties are owners of adjoining parcels of land. One half is a condo (DCC123) and the other half
was under mortgage to RBC who assigned it to Paarl Construction, which later sold land to The Shores of
Whitby, financed via mortgage to Amberwood. Shores of Whitby defaulted, quitclaimed its interest to
Amberwood. DCC 123 was informed. Reciprocal Agreement provided for sharing of costs for shared
facilities; it required WHDC to pay interim expenses. Section 13.1 of the Reciprocal Agreement—
Provisos run with the land.
Agreement was between WHDC and DCC 123.
WHDC stopped paying its share, and after quitclaim, Amberwood refused to pay. Costs supposed to be
shared are associated with the recreation center. 35% of the costs for water, heating, etc and the costs of a
security guard.
It is a positive covenant. Original covenantor is out of the picture; can it be enforced against covenantor’s
successor in title?
Issue whether a covenant to pay interim expenses contained in a reciprocal easement and cost-sharing
agreement between owners of adjoining parcels of land is enforceable by DCC 123 against the successor in
title, Amberwood.
Analysis Rule: burden of positive covenants do NOT run with the land – Parkinson v. Reid SCC 1966
(first enunciated in Austerberry v. Oldham 1885—at law, burden does not pass).
 While there may be inconvenience due to this rule, and even unfairness, the call for reform is for
the Legislatures.
 The rule that positive covenants do not run with the land applies despite the parties’ express
intention to the contrary. Hence the application judge erred in finding that because of 13.1(b), the
grant was conditional on payment.
Charron J.A.
Reasoning:
 It is a positive covenant here. Amberwood is not liable on that covenant.
 In Rhone v. Stephens H.L. 1994 examined this issue. Owner of house and adjoining cottage (shared
roof) sold cottage. Covenant for successors in title to maintain part of roof. P brings action,
claiming roof deficient (leaks). D found liable in nuisance and on covenant on the basis of benefit
and burden.
 Court of Appeal overturned both rulings. Reasons of H.L. in Rhone are suitable for this case.
o H.L. reiterated foundational principle. “At common law a person cannot be made liable
upon a contract unless he was a party to it”.
o At law, the benefit of a covenant may run with the land, but not the burden.
o Plaintiffs in Rhone argued equity compelled the owner. But H.L. said “equity supplements
but does not contradict the common law”.
o Equity can thus prevent or punish a breach of a negative covenant, but it cannot
compel an owner to comply with a positive covenant entered into by his predecessors
in title without flatly contradicting the common law rule.
 “Enforcement of a positive covenant lies in contract; a positive covenant compels
an owner to exercise his rights.
 Enforcement of a negative covenant lies in property; a negative covenant deprives
the owner of a right over property”—H.L.
 Here, “Equity will intervene only where there is a negative covenant, expressed or implied”.
 Positive covenants do not run with freehold land, either at law or in equity.
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
OLRC 1989 Report on Covenants Affecting Freehold Land:
o Page 827 bottom – OLRC justification for allowing positive covenants to run with the land
o “[t]here can be no principled rationale for a rule that would preclude neighbours from
agreeing, for example, to maintain a boundary fence, or, to keep certain drains clear, such
that the covenant would run with the land”.
o “the law should be reformed to permit the burden of affirmative obligations to run upon a
transfer of freehold land”.
 Returning to Rhone – court faced with similar suggestions, but did not agree: “to do so would
destroy the distinction between law and equity and to convert the rule of equity into a rule of
notice”. This would create a number of difficulties and engender considerable uncertainty.
 Applied to the current case, court says “the wisdom of these observations is unassailable…I
therefore conclude that any modification to the rule that positive covenants do not run with the
land should be made by the Legislature, and not by this court.
o Thus Amberwood is not bound by the positive covenant to pay the interim expenses solely
by virtue of having acquired the Phase 2 lands with notice of its terms.
 Statutory exceptions: Condominium Act 1998 S.O. permits the enforcement of such covenants for
condominiums governed by statute. No statutory exception applies here.
 Non-statutory methods to circumvent the rule: Simplest way is to use a chain of covenants so as to
maintain privity of contract.
Exceptions (both English; it was submitted they should be adopted in Ontario).
1. Benefit and burden exception in doctrine in Halsall v. Brizell, Tito v. Waddell (No 2)
Definition  Principle that “a person who claims the benefit of a deed must also take it subject to its
burdens”.
 In this case, purchasers of land were entitled under a deed to use roads, amenities, sewers –
covenanted to pay a proportion of maintenance. So they did get the benefit. 13.1 is clear
statement to be bound by the burdens in exchange for benefit “mutual and reciprocal use
and enjoyment…as an integral and material consideration”.
 But the doctrine HERE, cannot be simply defined by reference to this underlying principle.
Rhone (UK) rejected any notion of a pure principle of benefit and burden that would
bind successors to burdens that stood independently of the right. “The condition must be
relevant to the exercise of the right”.
 Here, case law does not support finding that the benefit and burden principle has been
clearly adopted in English courts as an exception to the general rule (“pure principle” of
benefit and burden was expressly rejected by the English Courts).
 Just because Amberwood received certain benefits upon obtaining title, that does not,
without more, under English common law, render it liable under positive covenants of the
same instrument.
 “the adoption of such a wide exception would be tantamount to abolishing the rule
itself”. In virtually every situation there will also be some benefits to the burdened party.
This pure principle is not good law.
 Thus, considering the proper scope of Halsall, Amberwood is not liable to pay the expenses
if the exception were adopted in Ontario law.
 In any event, it would be inadvisable to adopt the existing common law of England in this
area of law.  any reform to the rule in Austerberry is best left to the legislature.
2. Conditional grant exception
Definition “If the facts establish that the granting of a benefit or easement was conditional on
assuming the positive obligation, then the obligation is binding”
 Here, the application judge concluded this would apply on the basis of 13.1(b).
 This argument must fail, for the same reasons as the first.
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

As a matter of construction, “if a grant of benefit or easement is framed as conditional upon the
continuing performance of a positive obligation, the positive obligation may well be
enforceable, not because it would run with the land, but because the condition would serve to
limit the scope of the grant itself”.
o But, here, “none of the grants of benefit or easement contained in the Reciprocal
Agreement are framed in this way”.
It is undisputed in English and Canadian law that the rule that positive covenants do not run
with the land governs despite any express intention to the contrary contained in the
agreement.
o The attempt to create a contractual exception to the rule in Austerberry, while binding
on the original parties, cannot displace the rule that positive covenants do not bind
successors in title. ‘
o Look for something indicating the assumption of this obligation is integral part of the
conferral of the benefit.
 Thus applications judge correct in granting Amberwood’s application, appeal dismissed with costs.
Dissent: MacPherson J.A.  example of judicial activist vs. conservative majority
 Both exceptions to the rule in Austerberry should be adopted in Canada.
 Possible to have components of benefit/burden with clarity.
a. Must have notice of it. Cannot extend where party is unaware of positive obligation.
b. If it imposes burdens it must be accompanied by a benefit. Burden will not run in
isolation; could not ask for a clearer expression of intent here in 13.1. This section is not
specific enough, says majority – (all of the covenants).
c. There may be some qualitative threshold in the benefit-burden analysis. Broad principle of
justice.
d. No need for direct link between benefit and burden.
e. Assignee must be able to exercise choice about assuming benefits and burdens.
 Here, since Amberwood had notice of burdens, there are real and substantial benefits, and since they
elected to accept them, it must pay its share of the costs.
Conditional grant exception is also applicable. Would allow the appeal with costs.
 Proper case for court to fill gaps in the common law to mitigate hardships and wrongs.
 Majority thinks adopting doctrines would lead to radical effects, Dissent thinks “their adoption
would result in incremental change with consequences capable of assessment”
Real Estate—Priorities and Registration
 Property rights are divisible and title under Canadian law is a relative term. Simple approach in the
common law: “first in time is first in right”.
But, equity often, though not always, adheres to the importance of temporal priority in ranking claims.
o For land, statutory measures for registration of land have supplemented equitable principles.
Priorities at common law and in Equity
S. Levmore, “Variety and Uniformity in the Treatment of Good Faith purchasers” 1987.
 T steals O’s property and sells to B. Where T is judgment proof, legal rule must allocate loss between O
and B.
 What should be the criteria for deciding: Fairness? Economic efficiency? Ability to take precautions
against theft? Ability to absorb loss? Emotional attachment?
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Argument 1 – the more an owner cannot recover stolen property, the more s/he will guard
against theft. On a utility basis, the owner (O) could internalize costs of theft by a rule that does not
allow owner to burden B. Thus, a legal system might disallow O’s claim against B.
o Argument 2 – between two relatively innocent parties, B’s behaviour is most sensibly influenced
at the margin— could arouse suspicions of buyer. On this view, party B might be innocent, though
not entirely unable to help law enforcement. Thus, a legal system might allow O to retrieve property
from B.
 Favouring O or B may be based on their ability to absorb, diversify or insure against risk of loss.
Maybe best to focus on parties’ capability to self-insure or to spread risks and allocate the loss based on who
deals more regularly in the sort of property at issue.
 Conflict can be approached from behavioral perspective: “it will often be the case that O had the best
security system that money could buy or that B had every reason to think he was dealing with a most
reputable vendor”.
*There’s reasonable basis for a legal rule that puts loss on O, also reasonable grounds that the B
should bear risk of loss.
o
Common law and Equity developed their own rules (traditional CL rules – first in time, first in right)
 Supplemented by statutory systems for registering and ranking property interests, especially in land.
 Principles: (1) nemo dat quod non habet – one cannot give that which one does not have.
(2) caveat emptores (buyer beware).
PG 900
PRIOR LEGAL INTEREST
PRIOR EQUITABLE
INTEREST
SUBSEQUENT LEGAL
INTEREST
Prior interest wins (common
law rule of “first in time,
first in right”
Later interest wins, provided
it satisfies “bona fide
purchaser without notice”
test.
SUBSEQUENT EQUITABLE
INTEREST
Prior interest wins
If equities are equal (if the
holder of the prior interest
comes without clean hands,
the court will not enforce the
interest; equities broadly – the
broad picture of the case,
fairness and justice).
Prior interest wins if equities
are equal.
P.A. O’Connor, “Security of Property Rights and Land Title Registration Systems”
o An equitable interest is not enforced against a bona fide purchaser of legal estate who has given
valuable consideration and had no notice of the prior interest.
o Notice = conscientiously bound by it – inequitable to purchase
o To given purchasers an incentive to seek out information about prior interests court developed
constructive notice rules.
o Failing to make the inquiries that reasonably prudent person would make in the
circumstances = same as notice. If they are reasonable and don’t find a prior interest, they
will be protected from future claims.
o Onus lay on the purchasers to show they did not have notice of the interest.
o In addition to conscience consideration, also practical justification for setting a limit to purchasers’
search costs. Some equitable interests may be exceedingly difficult for purchasers to discover
(equitable rights from oral transactions, equitable rights before legal formalities have been
completed).
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o
Posner: original owner is “lower cost avoider” of mistake (buying property with mistaken belief that
it conflicts with no earlier interest). Assumes that the bona fide purchaser rule allocates the
information cost to the earlier owner.
o O’Connor disagrees: many interests in land give no immediate right to possession, nor an
entitlement to hold the chain of title deeds. Earlier owner is unlikely to be aware unless
notified by someone.
o More accurate to say that the costs are split between the earlier owner and the purchaser,
with the purchaser bearing the lion’s share.
o Earlier owner bears the risk of loss only if her equitable interest is one that would not be
revealed by the usual inquiries.
Chippewas of Sarnia Band v. Canada (A.G.) 2000 Ont. C.A.
FactsIn 1839 Aboriginal leaders purported to sell lands to Malcolm Cameron; approved by order in
council. Title passed in 1853. But, Aboriginal title is inalienable except to the Crown. Order in council
consistent with the idea of formal surrendering of lands, and letters patent issued under the mistaken belief
that a valid surrender occurred. 150 years later, Band disputed title to the patented lands (which had been
subdivided, sold and re-sold numerous times to private owners unaware of the irregularities).
Motions judge held lands were never lawfully surrendered to Crown; affirmed by Ont. CA.
Issue in light of the conclusion that no proper surrender occurred and it’s not limitation statute barred, the
issue is whether, on the facts, the Chippewas are entitled to remedies they seek, namely a declaration that the
Cameron patent is void and a declaration that they are entitled to possession of the disputed land.
Reasoning Right asserted is sui generis. Attention confined to claim for a remedy related to return on the
land/on the basis there is a right of action against the Crown for damages.
o The rights of a party aggrieved by the error must be reconciled with the interests of third parties and
the interests of orderly administration. Thus, a remedy may be refused where delay by aggrieved
party in asserting the claim would result in hardship or prejudice to the public interest or to
third parties who in good faith have acted upon impugned act or decision.
o Defective patent is subject to attack will continue to exist until a court sets it aside.
o Courts are hesitant to invalidate patents that have created third party reliance.
o Established legal principles require the court to take into account the interests of innocent
third parties before declaring a patent “void”.
o Chippewas rely on nemo dat quod no habet; the patent did not and could not convey a fee simply to
the lands unencumbered by aboriginal title.
 Chippewas assert: title is legal rather than equitable & application of equitable doctrines to
preclude claim would be unauthorized extinguishment of aboriginal title, contrary to rule
that aboriginal title can only be surrendered to the Crown.
Application:
o Chippewas’ position that equitable principles have no claim cannot be accepted…they assert a claim
for an equitable remedy: “Chippewas cannot escape the fact that, from a private law perspective,
they are claiming remedies that are discretionary in nature and subject to equitable defences”.
o Nor does the court accept the submission that a claim to aboriginal title is strictly legal in nature and
immune from equity, particularly where equitable remedies are sought.
 “We reject the contention that the sui generis right of aboriginal title should be rigidly classified as falling
exclusively into one of the historic streams of our legal history, completely immune from the other…we
conclude that it is appropriate to consider the effect of the Chippewas’ 150 year delay in asserting a remedy
and the consequent impact upon third parties of granting the Chippewas the remedies they seek”.
 Though formal surrender procedures were not followed, the purpose underlying the procedure, to protect
aboriginal interest, was fully met by the interposition of the Crown in the transaction.
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o
o
o
o
Nemo dat principle: does not automatically invalidate Crown patents; where the validity of the
patent is in dispute, the interests of innocent third parties must be weighed.
From the perspective of public law, the court’s discretion is engaged.
Doctrine of Laches and Acquiescence: rule—delay in asserting a right gives rise to the equitable
doctrine of laches and acquiescence.
 Defence: D can resist equitable (but not legal) claim if it can be demonstrated that P by
delaying prosecution of case, has;
 (a) either acquiesced in D’s conduct, or
 (b) caused D to alter position in reasonable reliance on P’s acceptance of status quo,
or otherwise permitted a situation to arise which would be unjust to disturb.
 Either would suffice.
 Applying Laches, “the Chippewas accepted the transfer of their lands and acquiesced in the
Cameron transaction. The landowners altered their position by investing and improving the
lands in reasonable reliance on the Chippewas’ acquiescence in the status quo. This is a
situation that would be unjust to disturb”.
Good faith purchaser for value: defence protects security of title to land acquired without notice of
a claim—court will not take an estate from a purchaser who has bought for valuable consideration
without notice.
o “there was no evidence to suggest that any subsequent owner knew or ought to have
known that the Cameron lands were unsurrendered Indian lands”.
o Chippewas assert their interest is purely legal and not caught by equitable defences—
argument NOT accepted. A claim for equitable remedy is subject to equitable defences.
o Chippewas accepted terms of transaction at the time—no reason why good faith
purchaser for value defence should not be applied to preclude Chippewas from asserting
their claim against landowners.
Conclusion and remedies Chippewas’ delay combined with reliance of landowners is fatal to the claims
asserted by the Chippewas.
** rule from Chippewas -- Where contest is between prior equitable interest and subsequent legal one,
equity will accord priority to latter, provided that the legal estate is acquired by a bona fide purchaser
for value without notice of the equitable interest.
Posner  suggests this rule creates incentive for earlier owner to avoid mistakes because he or she can do so
more cheaply than purchase. But, absent land registration system, it is difficult to alert third parties to one’s
rights.
James Reynolds, “Aboriginal Title: The Chippewas of Sarnia”
o Criticism of this case:
 doctrine of bona fide purchaser only applies if interest being defeated is equitable rather than legal.
o Court found that aboriginal title does not fall exclusively in either category (L/E), thus no
justification for applying the doctrine.
 only applies if the interest being given priority is legal rather than equitable.
o Claim based on a Crown grant made in breach of the Royal Proclamation of 1763, difficult to
see how they could establish any interest, let alone a legal interest in the lands.
 doctrine is an exception to the basic rule of both equity and law that interest in land rank in order of
creation.
o By definition Aboriginal rights existed before European contact – valid against subsequent
interests except where right extinguished or surrendered (not in this case) or justifiably infringed
under s.35(1).
 doctrine is not an exception to nemo dat.
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o The good faith purchaser cannot create a title where none exists.
 Court seems to confuse equitable nature of remedy being sought with the nature of the interest of the
claimant.
o The doctrine is based on the classification of the relevant interests in land, not the nature of the
relief sought.  also were seeking orders of possession against some of the landowners (common
law remedy, but not appealed to CA)
Other criticisms:
o Court doesn’t address that the hostility of the courts to any notion of Aboriginal Title (still no
successful claims of AT) and the criminalization of land claims for 50-year period, First Nations
were not in a position to assert claims like this until the 1980s.
Advent of Registration:
 Title registration systems introduced in common law jurisdictions in the 19th century.
o Encouraged owners to register rights; but, provided no guarantee that seller had a valid title.
o Most common in Canada: Hybrid Race-Notice system—priority accorded to otherwise valid
subsequent interest if two circumstances exist—second interest must be acquired without notice of
first, and subsequent interest must register first.
o Courts have transformed pure race systems (e.g. Nova Scotia) into race-notice systems to prevent
abuse from purchasers with notice of an unregistered prior interest:
o Ross v. Hunter SCC: it is well settled that nothing short of actual notice, is sufficient to
disentitle a party to insist in equity on a legal priority acquired under the [NS registration
statute].
Title Registration
 Under a pure-form land titles system, title is not merely recognized, but issued by the state. Three features
of title systems:
1. Indefeasibility – state certifies title of existing owner.
2. Mirror – register is supposed to serve as a mirror of all interest elating to a given plot of land.
Failure to register might lead unregistered interest to not be binding on subsequently acquired
interests.
3. Insurance (net) principle – system provides for monetary compensation for owners deprived of title
by reason of the operation of the curtain principle—i.e. where errors in administration or wrongful
conduct leads to the loss of or encumbrance on and owner’s interest.
The curtain – indefeasible title: lies at the core of a title registration system and marks the fundamental
difference between title registration and common law conveyancing or deeds registration system—unless the
registered owner is a party to fraud in acquiring the interest, the registered owner is the owner of that
interest.
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