Chapter II – The General Principles of Land Law
Property (Mickelson)
Dec 2008
Bernstein (Lord of Leigh) v. Skyviews [1977] 2 All E.R. 902 (QB) ................................ 4
La Salle Recreations Ltd. v. Canadian Camdex Investments Ltd. (1969) 4 D.L.R. (3d)
H.A. Maclean article: "Historic Development of Water Legislation in BC" .................... 5
Schillinger v. H. Williamson Blacktop & Landscaping Ltd. (No. 2) [1977] 4 B.C.L.R.
Steadman v. Erickson Gold Mining Corp. [1989] 35 B.C.L.R. (2d) 130 (CA) ................ 6
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Re McKellar [1972] 3 O.R. 16 (HC), aff'd, [1973] 3 O.R. 178n (CA) ........................... 24
Canada Trust Co. v. Ontario (HR Commission) [1990] 69 D.L.R. (4th) 321 (Ont. CA) 28
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Chapter I – The Legal Concept of Land
Real property/realty (land) vs. personal property/personalty (anything else)
Fixtures (part of land) vs. chattels (personal property)
A. Cujus est solum ejus est usque ad coelum et ad inferos
"To whomsoever the soil belongs, that person owns also to the sky and to the depths"
1. Ad Coelum
(a) Common Law
No clear determination on whether airspace can be owned
CL cases: airspace goes up endlessly ( Kelsen v. Imperial Tobacco) , airspace divided into public and private zones that will vary according to nature of property and its use
( Bernstein v. Skyviews ), airspace cannot be owned ( Manitoba v. Air Canada )
Trespass vs. nuisance definition
Kelsen v. Imperial Tobacco Co. [1957] 2 All E.R. 343 (QB)
F P's landlord allowed D to display advertisements on top of building that protrudes by
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Is a low-hanging, protruding sign a trespass? What relief is appropriate?
Is a trespass, not a nuisance; mandatory injunction granted
Maxim holds true. Test for damages in lieu of injunction:
1. Injury to P's legal rights is small
2. Injury can be estimated in money
3. Injury can be compensated by small monetary payment
4. Would be oppressive to D to grant injunction
Bernstein (Lord of Leigh) v. Skyviews [1977] 2 All E.R. 902 (QB)
F D took aerial photograph of P's house and offered it to P for sale. P alleged trespass into his airspace and invasion of privacy
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Is movement of plane through airspace considered trespass?
Not trespass
Maxim limited. Rights to airspace extend to height for "ordinary use and enjoyment"; above that, it is public space
Manitoba v. Air Canada [1980] 2 S.C.R. 303
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Manitoba wanted Air Canada to pay taxes on aircraft that landed in or flew over province
Can airspace be owned?
No
R Airspace cannot be owned, but limitations can be put on who can occupy it
(b) Legislation
Land Title Act R.S.B.C. 1996, c. 250
s. 139 states that airspace constitutes land and lies in grant (can be transferred in written document)
Not contradictory to CL cases; for sake of creating "air space parcels" for apartments
(see Strata Property Act S.B.C. 1998, c. 43)
Not determinative on whether airspace can be owned and if so, to what height
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2. Ad Inferos
Subsurface rights subject to certain prerogative rights in the Crown, terms and reservations in original Crown grant, and extensive statutory restrictions
B. Fixtures
"Quicquid plantatur solo, solo cedit" – "whatever is affixed to the soil belongs to the soil"
Re Davis [1954] O.W.N. 187 (Eng HC)
F Calculating widow's claim to husband's real property. Home included bowling alleys, question of whether these were to be included in calculation of dower interests
Are the bowling alleys chattels or fixtures? I
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Chattels, not to be part of realty
Test from Haggert v. The Town of Brampton et al – object is overriding consideration
If object is to improve freehold, even if only slightly affixed, part of realty
If object is for better enjoyment of chattel, then not part of realty
La Salle Recreations Ltd. v. Canadian Camdex Investments Ltd. (1969) 4 D.L.R. (3d) 549
(BCCA)
F Hotel installed rental carpet, defaulted and was foreclosed. Carpet company sought
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Was carpeting fixture or chattel?
Became fixtures
Test from Stack v. Eaton :
1. If not attached to land, not considered part of land unless intended to be
2. If even slightly affixed, part of land unless intended to be chattel
3. Consider prima facie character – object and degree of annexation which is patent for all to see (objective test)
4. Intention of person material only so far as can be presumed from degree and object of annexation
C. Water
1. Riparian Rights
Water Act
Water Protection Act
(a) The Development of BC Law
H.A. Maclean article: "Historic Development of Water Legislation in BC"
Riparian rights
Rights relating to the use of water; taken from English CL
Incidental right for every owner of real property bordering a stream to have water flow to him in natural state, quantity, level and quality
Rights remain whether exercised or not
Entitled to make certain uses of water; not exclusive right, but subject to similar rights of other riparian owners o No material injury to fellow riparian owners
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o Not for uses unconnected to riparian property o If supply exhausted through ordinary use, cannot complain o Domestic purposes only o Restrictions on irrigation – "amount adjudged reasonable" and returned with "no diminution other than that caused by evaporation and absorption" o Cannot grant use to another
In BC, statutory scheme has eroded CL riparian rights o Right to use and flow vested in Crown o Domestic use of unrecorded water (= not regulated under licenses) permitted
(b) The Conjunction of CL and Statutes
No consensus on relation between CL rights and statute
Riparian rights exist even without license: Johnson v. Anderson
Only a license grants riparian rights: Schillinger v. H Williamson Blacktop
Riparian rights exist except where explicitly denied: Steadman v. Erickson Gold Mining
Johnson v. Anderson [1937] 1 D.L.R. 762 (BCSC)
F D diverted stream from P's property. P had no water license, D had license that did not authorize diversion. P sought damages, demolition of works, injunction. Under new legislation (1925 changes to Water Act ), no one has basic right to flow. Old version grants general right for all to use unrecorded water for lawful public or private access
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What happens when there are two unlicensed water users?
P can continue to use the water, can protect this right against another unlicensed user
Act pre-empts riparian rights, but does not remove them
Schillinger v. H. Williamson Blacktop & Landscaping Ltd. (No. 2) [1977] 4 B.C.L.R. 394
(S.C.), aff'd (1979), 8 B.C.L.R. 163 (C.A.)
F P diverted water for fish hatchery. D's company altered course of water flow. Resultant silt caused P's fish to die.
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Did P have right to divert water? Can P claim damages from D?
No right to divert, cannot claim damages
No CL riparian rights exist except those which are granted by license
Steadman v. Erickson Gold Mining Corp. [1989] 35 B.C.L.R. (2d) 130 (CA)
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P had ground water piped to his house. D built road, caused contamination.
Can P claim damages from D, despite not having a license?
Yes, P's water use has domestic character
Riparian rights exist except where explicitly stated that they do not
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Chapter II – The General Principles of Land Law
A. Real and Personal Property
CL divides property into land or real property ("realty") and personal property
("personalty")
Historical separation between differing nature of these two types led to different transactions and disputes
B. Reasons for Studying the Law of Real Property
Property is a fundamental concept within law
Property law has not changed significantly over history
Property law is one of the only areas that falls completely within CL
1. Dispositions – property can be "disposed of" through
Inter vivos – transaction between living persons o by sale o by gift
On death o by will o according to the rules of intestate succession
2. Use of Land
Restrictions and limitations on land use fall into three rough categories
(a) Common Law
From law of torts: nuisance, trespass, negligence
(b) Private Arrangements
From law of contracts: protecting interests of residential neighbourhood, for instance (e.g. restrictive covenants)
(c) Legislation
Federal and provincial statutory restraints in connection with air space, environment, particular uses (e.g. agriculture)
Municipal regulations exist e.g. zoning
C. Some Basic Principles of Land Law
1. Tenure
Historical background
William the Conqueror took land unto himself, parceled it out among followers, who then parcelled it out amongst tenants, sub-tenants, etc.
This process was called sub-infeudation
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King never parted with absolute ownership – this remains theoretical basis in land law today that Crown is an absolute owner and that an individual cannot own land; instead, he can only have an interest in land
NB: What implications does this have for the aboriginal title claims? Particularly in BC, aboriginal right over territory has never been ceded
Tenure
Two types of tenure: freehold and copyhold. Will only focus on former
Freehold tenure divided into four types: knight-service (soldiers), socage (agriculture), seargentry (divided into grand seargentry, equivalent of knight service and petty seargentry, equivalent to socage) and frankalmoin (religious)
These tenures eventually united into single tenure, socage
Statute of Quiz Emptores 1290 prevented further sub-infeduation and required interests be transferred
Tenures Abolition Act 1660 abolished all incidents connected with socage except: o Forfeiture – right for Clown to claim land of person guilty of high treason o Escheat – right of lord to claim land of tenant who died without anyone to succeed his interest (= modern intestacy) or who committed a felony
"Although the doctrine of tenure embodies the rules for allocating land rights and corresponding obligations, it does not describe their duration. That is the function of the doctrine of estates."
2. Corporeal and Incorporeal Interests in Land and the Doctrine of Estates
Corporeal interests entitle a person to possession of land
Incorporeal interests entitle a person to some rights in respect to a piece of land (e.g. right of way)
(a) Corporeal Interests
Landowners do not own land, but merely a time in the land, or more technically, "an estate in the land"
Five different types of estates: o Fee simple – potentially without end o Fee tail – as long as there are descendants o Life estate – interest for one's lifetime o Estate pur autre vie – interest for life of another o Estate for a fixed period of time
(i) Fee Simple
Grant for as long as person has heirs of any type
Ability to dispose of this interest inter vivos given in 1290 Statute of Quia Emptores
Ability to dispose of this interest by will given in 1540 Statue of Wills
Result: equivalent of absolute ownership and an estate potentially without end, requiring only that proper steps be taken (i.e. preparation of will)
(ii) Fee Tail
Restrictions on who can inherit (e.g. think of Jane Austen novels: "to A and his male heirs" father's property cannot pass to daughters, goes to a distant cousin)
Abolished throughout North America (BC in 1921)
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(iii) Life Estate
Interest in land for lifetime of holder of estate, ends with death of holder
Traditionally used in marriages so that surviving spouse has life estate that is divided upon his/her death
Not so common nowadays, estate usually passed onto spouse automatically
(iv) Estate Pur Autre Vie
Variation of life estate; based not on lifetime of holder of estate but on someone else's lifetime
(v) Leasehold Estates
For a fixed period of time
Originally regarded not as an interest in land but as a contract
Attempt to protect interests of lessees (e.g. Kelsen – airspace part of land/lease)
(b) Incorporeal Interests
Include: easemenets, convenants, profits à prendre, mortgages
3. Legal and Equitable Interests
(a) Origin of Equitable Interests
Disappointed litigants might appeal directly to King to seek justice
Petitions dealt with by the Chancellor
Court of Chancery (aka Court of Equity) grew out of this
(b) Development of the Use
Holder of legal title held interest not for his own benefit, but for benefit of another
Process known as "feoffment"
Modern version: trust
Example: A transfers fee simple in Blackacre to B "to the use of C" o A is feoffor o B is feofee to uses o C is cestui que use ("he to whose use" the land is held)
Allowed someone to dispose of property after death before that right was legally recognized
Could be used to provide women with an independent means of support
(c) The Statute of Uses
Statute of Uses 1535 "executed" (eliminated) the use
Converted equitable title of cestui que use into legal title, thereby removing feoffee o In above example, the fee simple would go from A to C and B would be removed
Statute did not apply where a person was seised to his own use o i.e. if land was transferred "to B in fee simple to the use of B in fee simple", B had both legal and beneficial ownership
If there were two uses, Statute did not execute second
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o i.e. A in fee simple to X to the use of B to the use of C – legal title would move to
B
(d) Emergence of Modern Trust
A transfers fee simple in Blackacre "unto and to the use of B in trust for C" o A is settlor o B is trustee o C is beneficiary ( cestui que trust )
In trust, legal title always remains with trustee
Trustee may transfer legal title to third party as long as benefits go to beneficiary
What about equity?
Example: A is holding Blackacre in trust for B, but A sells it to C who doesn't know it's a trust o CL maxim nemo dat quod non habet ("no one may give that which one does not have") C would not get anything o Equity protects innocent parties – "bona fide purchasers for value without notice".
Fee simple would go to C, but B can bring a claim against A
Ct will consider the equitable doctrine of notice: o Express or actual notice – what the transferee really knows o Implied notice – what the transferee’s agent knows o Constructive notice – what a transferee ought to have known if s/he had made the type of inquiries that a reasonable person ought to have made
Types of trusts
Express trust – A transfers property to B with instructions that property be used for C’s benefit
Resulting trust – A transfers property to B with no payment; B presumed to hold property in trust for A
Constructive trust – Court imposes trust to redress injustice
A resulting trust is presumed any time there is a transfer without valuable consideration
Equity assumes that nobody wants to give away their property without benefit to them
4. Freedom of Alienation
Facilitating the transfer of property
Freedom of disposition – power of current holder of property to dispose of property
Limitations on restraints on alienation – limit power of owner to impose restraints on the freedom of alienation of a transferee
Mechanisms of transfer – simple and straightforward transfer process
(a) Freedom of Disposition
(b) Restraints on Alienation
Restraints fall along a continuum; the more far-reaching, the more difficult to hold up in Ct
(ii), (iii), and (iv) are limited by the Ct or by legislation
(i) Direct Restraints
Clauses that prohibit disposition are void
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Exception: restraints on the assignment of a leasehold interest are valid
Example: Residential Tenancy Act prevents subletting without landlord's consent
(ii) Fee Tails
(iii) Future Interests
(iv) Strict Settlements
(c) Mechanics of Transfer
(i) Establishing Good Root of Title
Search of all documents relating to the property, going back 60 years (statute of limitations)
Had to be repeated with each subsequent transfer
(ii) Methods of Transfer
Livery of seisin – public, physical delivery of property
Statute of Uses moved legal title regardless of whether there had been livery of seisin
(iii) Modern System
Registration of documents
Introduced in BC in 1861
All documents relevant to a parcel of land are on file
Title registration
BC has quasi-Torrens system
Torrens system protects purchaser o "Mirror principle": register of title reflects accurately and completely all estates/interests that may affect the land o "Curtain principle": registry is only source of information for a prospective purchaser; all estates/interests that do not appear on title are irrelevant
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Chapter IV – Acquisition of Interests in Land
A. Crown Grant
Right to take up to 1/20 of property (unused land) for public works
All subsurface rights: oil, gas, minerals
Right of someone with a valid water license to come onto land and exercise rights under that license
Right to take certain materials (e.g. gravel, stone, timber) for use in public works
B. Inter vivos Transfer
1. The Contract
General rule: s. 59 of the Law and Equity Act
(3) A contract respecting land or a disposition of land is not enforceable unless:
(a) there is, in writing signed by the party to be charged or by that party's agent, both an indication that it has been made and a reasonable indication of the subject matter
Requirements known as the "three Ps" – property, price, parties
There must be a valid contract [implicit]
There must be writing that indicates the contract has been made and gives a reasonable indication of the subject matter [s. 59(7): writing can be sufficient even though a term is left out or wrongly stated]
Contract must be signed by the party being sued or that party's agent
Predecessor of s. 59 was s. 1(1) of the Statute of Frauds
Contract must be valid
Writing can take any form and must be signed; it need not have come into existence to satisfy the statute and it may come into existence after the contract has been entered into
Two documents, if they expressly or impliedly refer to each other, may be combined to satisfy the requirements of the section
Ct have tried to devise ways around the Statute of Frauds ; incorporated into:
s. 59(3)(b): extension of doctrine of part performance
s. 59(3)(c): reliance
s. 59(5): power of Ct to order restitution or compensation
2. The Transfer – Form
(a) Writing and Sealing
Property Law Act
s. 15(1): Land may be transferred in freehold only by an instrument expressed to transfer the land, but it is not necessary to use the word grant or any other term of art
s. 16: Instrument need not be executed under seal
(b) Registration – Prescribed Forms
General requirement in Property Law Act is that a transferor deliver to a transferee a registrable transfer
To determine what is registrable, look at Land Title Act
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Land Title Act (LTA)
s. 39: instrument sufficient to pass or create an estate or interest in land is registrable unless the use of a prescribed form is required
s. 185(1): a transfer of a freehold estate must be in the prescribed form and on a single page
(c) Standard Forms
Form A is required to transfer a freehold estate o Includes: ID of applicant, ID of property, market value, consideration, transferor, freehold estate transfer (e.g. fee simple, w/ or w/o conditions), transferees, execution
Relatively simple form, but qualified by other documents that preserve legal underpinnings
LTA s. 186 says Form A is deemed to be made under Land Transfer Form Act includes all the language in Column 1 and has the effect of the language in Column 2
3. The Transfer – When Is It Operative?
Normally dealt with under contract law; becomes significant for gifts
Under CL: deed takes effect immediately after "signed, sealed, and delivered" (intention given)
Under Torrens system: physical act
According to Part 3 of LTA
Unregistered instrument does not pass estate
s. 20 (1) Except as against the person making it, an instrument purporting to transfer, charge, deal with or affect land or an estate or interest in land does not operate to pass an estate or interest, either at law or in equity, in the land unless the instrument is registered in compliance with this Act
Means that an instrument dealing with land does not operate to pass an interest, either at law or in equity, unless registered in compliance with the Act
"Except as against the person making it" – only that as between transferor and transferee, registration is not necessary for interest to pass
Example: A (registered owner) B (doesn't register) … A then C (does register) o Under CL: B is protected by doctrine of nemo dat o Under Torrens: C's interest prevails o B is vulnerable to a third party. May have claim against A, but no claim against C
So when does interest pass?
Ross v. Ross
F Grandmother went to lawyer's office to prepare a deed conveying property to grandson;
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Should the non-delivered deed be considered valid?
Yes
Physical delivery and recording not required; execution ("signed, sealed and delivered") is delivery, as long as all requirements for being valid are met
Transfer of property complete and immediately operative, though grandson not aware
Ct will attempt to fulfil intention of grantor (based on circumstances, behaviour)
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Zwicker v. Dorey
F Father conveyed lands to stepson (D) with clause it was not to be registered until father's death. Father then conveyed additional land to D. Then, conveyed promised lands to self and wife as joint tenants. Father died, another wife (P) claimed husband said he would give her everything
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Who is land conveyed to?
Title passes to P
A document operative upon death is not a deed but a testamentary document
Ct look at intention at time of transfer
MacLeod v. Montgomery
F Grandmother (A) executed transfer to granddaughter (R) as gift, with life estate reserved.
Transfer document given to R and duplicate title promised, but never actually turned
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Does the execution of the transfer constitute a complete or incomplete gift?
Incomplete gift
To complete a gift effectively, the donor is obliged to do what can be done
Equity cannot force a volunteer to complete that which is incomplete
4. Transfer to Volunteers
Presumption of resulting trust: A B o A has transferred legal title but retained equitable title. B holds in trust for A
Presumption of advancement: Husband Wife or Father Child o A has transferred title absolutely
In recent years, presumption of advancement has been applied to transfers from parents to children
Pecore v. Pecore 2007 SCC 17
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Father created joint account with adult daughter to avoid capital gain taxes of regular transfer. Daughter understood it as gift; father told bank not a gift. Father's will did not mention accounts. Daughter's ex-husband brought action during matrimonial property proceedings of divorce. Trial judge found father intended gift; CA dismissed appeal.
Should a presumption of resulting trust or of advancement be applied here?
Presumption of advancement; account was gift. Appeal dismissed
Presumption of advancement should be limited to situations with minor children
Rothstein J: affection not significant; resulting trust protects elderly parents from making gifts each time child's name is added
Abella J: parental affection is about relationship, does not end when child becomes adult
Property Law Act
s. 19(3): A voluntary transfer need not be expressed to be for the use or benefit of the transferee to prevent a resulting trust
No need to use specific language to state gift; can use supporting documents
Does not change presumption of resulting trust, just eliminates need for specific language
(a) Pre Statue of Uses
(b) Statute of Uses
(c) The Trust
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C. Wills or Intestacy
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Acquisition of interests in land by will
Wills Act ss. 3 & 4 set out basic requirements for validity of will with regard to form
Very strict requirements in BC o Writing: will must be in writing to be valid o Signature: signed by testator or by another in his presence and by his direction o Witnesses: at least 2 must be present at same time when testator makes or acknowledges signature o Signature of witnesses: at least 2 must sign in presence of testator
Acquisition of interests in land by intestacy
Estate Administration Act part 10 – "Distribution of Intestate Estate"
s. 83: if intestate dies leaving a spouse but no issue, estate goes to spouse
s. 84: if intestate dies leaving issue, subject to the rights of the spouse, if any, the estate must be distributed per stirpes (= based on lines of descent) among the issue
s. 85: if intestate dies leaving a spouse and issue o (3) if net value of the estate is not greater than $65,000, estate goes to spouse o (4) if net value of estate is greater than $65,000, spouse is entitled to $65,000 o (5) after payment of $65,000, the residue of the estate goes as follows:
a spouse and one child, 1/2 goes to spouse
a spouse and children, 1/3 goes to spouse
Acquisition of interests in land by will or by intestacy
Title to property does not vest in those named in the will or entitled to take on intestacy
Instead, title vests in the personal representatives: the executor(s) named in the will or the administrator appointed by the Ct in the case of intestacy (or where the will fails to name an executor)
Personal representative has responsibility to gather in all assets of the deceased and pay debts and taxes before transferring the property to those entitled to it
Acquisition of interests in land under the Wills Variation Act
s. 2: despite any law or statute to the contrary, if a testator dies leaving a will that does not, in the Ct's opinion, make adequate provision for the proper maintenance and support of the testator's spouse or children, the Ct may, in its discretion, in an action by or on behalf of the spouse or children, order that the provision that it thinks adequate, just and equitable in the circumstances be made out of the testator's estate for the spouse or children
Grants significant amount of judicial discretion
Tataryn v. Tataryn Estate [1994] 2 S.C.R. 807
F Husband left wife a life estate and made her a beneficiary of trust with second son as
I trustee. After wife's death, estate would pass to second son. Wife and first son brought action under Wills Variation Act . Trial judge granted wife life estate, $10,000 gift to each son immediately, division of estate after wife's death: 1/3 first son, 2/3 second son. CA dismissed appeal.
How should "adequate, just, and equitable" be interpreted and applied to adult independent children?
Trial judge's order reinstated.
Should not use needs-based test; rather, consider legal and moral obligations
D. Proprietary Estoppel
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A. Creation
1. Common Law
Chapter IX – The Fee Simple
Words of purchase: describe individual(s) who take an interest
Words of limitation: describe interest that person is taking – "limits" of interest
At CL, default position is that transfer created life estate
To rebut that presumption, one had to use the formulation: "To B and his/her heirs"
Example: "To A for life, remainder to the heirs of A" o Appear to be two separate gifts: a life estate to A, remainder to A's heirs o The Rule in Shelley's Case states you have to read "remainder to the heirs of A" as words of limitation, not words as purchase i.e. read it as "To A and his/her heirs"
Rationale for this: importance of freedom of alienation (cannot determine who heirs are until A's death; constrains how property can be dealt with during A's lifetime) and allows
Crown to take a cut (if A had life estate, heirs could take interest after death w/o paying taxes)
Rule of law, not of construction, so not discretionary
Rarely arises in practice, limited application in Canada
Remainder must be limited to A's indefinite line of succession, rather than a particular group of heirs
2. Statute
Property Law Act
s. 19(1): reversed CL, made it unnecessary to use "and his heirs" wording in order to transfer an estate in fee simple
s. 19(2) makes subsection (1) redundant: if you do not use words of limitation in an inter vivos transfer, there is a presumption you transfer the fee simple or greatest estate you have to give
Land Title Act , s. 186(4) to (8) says same thing
Wills Act , s. 24 has similar provision applicable to wills
Tottrup v. Ottewell Estate [1970] S.C.R. 318
F Twin brothers drafted identical wills leaving small amount to church and remainder to
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Deceased's daughter claims that as an heir, she is entitled to more than 1/8.
Since words of limitation are no longer necessary, is their inclusion significant?
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No, meaning of will is clear. Daughter entitled to no more than 1/8.
Words of limitation are not necessary but their inclusion does not alter character or effect.
3. Problems of Interpretation – Repugnancy
Series of cases in which Ct are attempting to determine what testator/trix intended when he/she used certain language
Two possible outcomes: o Gift to first person named prevails; gift over fails as repugnant o Gift over prevails; person first named takes life estate only
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Re Walker [1925] 56 O.L.R. 517 (CA)
F Husband gives estate to wife, states if any remains upon her death (gift over), will be
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Should gift prevail (gift over fail) or gift over prevail (person takes only life estate)?
Gift to wife prevails; gift over is repugnant and void
Ct endeavour to give effect to wishes of testator by ascertaining predominant testamentary intention and giving effect to it, rejecting subordinate intention as repugnant to dominant intention
Re Shamas [1967] 63 D.L.R. (2d) 300 (CA)
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Husband gives estate to wife until youngest child reaches age 21. If wife remarries, she will take share like children; if not, she will keep estate and will be divided among children upon her death.
Should gift prevail (gift over fail) or gift over prevail (person takes only life estate)?
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Gift over prevails; wife given life estate
Cielin v. Tressider [1987] 14 B.C.L.R. (2d) 267 (CA)
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Deceased bequeathed property and assets to partner, but stated that on sale or disposal of real estate, proceeds be divided equally between her son and his children
Should gift prevail (gift over fail) or gift over prevail (person takes only life estate)?
Gift prevails; gift over is repugnant and void
B. Words Formerly Creating A Fee Tail
1. The Common Law
(a) Technical Words of Limitation
(b) Informal Words of Limitation
(c) The Rule in Wild's Case
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Chapter X – The Life Estate
A. Creation
1. By Act of the Parties
Because life estate was the original form of grant, unless words of limitation were used, a transfer "to B" gave B a life estate
This presumption has been reversed by statute, so that the creation of a life estate requires express language: "to B for life"
2. By Statute
(a) Introduction
CL doctrines to protect the interests of one spouse when other died have been abolished and been replaced by limited statutory protections
(b) Estate Administration Act
s. 96: when one spouse dies intestate, the other is automatically entitled to a life estate in the matrimonial home
Privileges spouse over children
(c) Land (Spouse Protection) Act
Applies when one spouse is the registered owner of land on which a residence used by the spouses is located
Spouse not on title may file an entry against the property at the Land Title Office
s. 4: on death of spouse who is the owner, a life estate in favour of non-owning spouse automatically arises
Applies beyond intestacy and works even if there is a will
B. Rights of a Life Tenant
1. Occupation, Use and Profits
Life tenant is entitled to possess and use the property, and/or annual income arising from the property (e.g. rental income, interest arising from investment of personal property)
In contrast, an equitable life tenant can benefit from property but not necessarily occupy it
2. Transfer Inter vivos
Holder of life estate can assign his/her full interest to a third party, but only to the extent of that interest (e.g. A can assign her interest to C, but only for her lifetime. Then C would have estate pur autre vie )
A can assign less than full interest (e.g. granting lease to C) o Problem is that lease can only be for what A has to give (e.g. A grants 10 year lease, dies before 10 years, tenant is out of luck)
Trust and Settlement Variation Act allows for modifications in certain circumstances
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3. Devolution on Death
Rights of life tenant over property end when person's life ends. No power to dispose of property by will
An estate pur autre vie can pass by will or on intestacy
C. Obligations Of A Life Tenant To Those Entitled In Reversion or Remainder
1. Waste
Set of rules and principles to address what powers the life tenant has over the property
(a) Permissive Waste
Definition: damage that results from a failure to maintain the property
Basic rule: Life tenant is not responsible for upkeep unless expressly made so by document creating his/her interest
(b) Voluntary Waste
Definition: damage that results from the activities of thelife tenant
Basic rule: life tenant is not entitled to commit voluntary waste. If he/she does, may be required to pay damages to those entitled in reversion or remainder
Voluntary waste is i) anything that causes permanent damage to the land or ii) anything that changes nature of land in any way, whether for better or worse
Exceptions
Doctrine or "ameliorating waste" (or "improving waste) recognizes that in certain circumstances, change can be non-damaging and might even improve the value of the property o In these circumstances, those entitled in remainder or revision would not be able to get damages and would be unlikely to get an injunction o This protects changes like renovations
NB: "reversion" remains with grantor; "remainder" given to third party
(c) Equitable Waste
Law and Equity Act , s. 11: statutory form of doctrine of equitable waste in BC
Problems in relation to waste can be dealt with advance by person creating life estate by making life tenant "unimpeachable for waste" – removing restrictions imposed by doctrine of voluntary waste
In theory, this would leave life tenant with a lot of leeway, but Ct have imposed some limitations
Basic principle is that equity will not allow individuals to make unfair use of their legal rights
Classic case: Vane v. Lord Barnard (1716): father gave life estate in castle to himself and remainder to son; had falling out with son and proceeded to strip the castle. Court of
Chancery granted injunction to prevent further damage to castle and ordered repairs
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2. Liability for Taxes, Insurance, etc.
Insurance: life tenant under no obligation to insure for the benefit for those entitled in remainder/revision – who should probably insure separately
Taxes: In Mayo v. Leitovski , Ct held that life tenant is obligated to pay the annual taxes at least up to the annual value of property
D. Statutory Powers
Law relating to life estate provides default set of rules and principles to balance interests of life tenants and those entitled in remainder
Now frequently set up as a trust; trustee is supposed to balance these rights
Trust and Settlement Variation Act also provides for some flexibility
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Chapter XII – Future Interests
A. Nature of Future Interests
Future interest: possession will or may be obtained at a future time
B. Vested and Contingent Interests
Whether interest is vested or contingent will depend on words used in document creating it and may require construction by the Ct
If ambiguity, Ct prefer constructions which leads to a conclusion that an interest is vested
1. Vested Interests
Vested "in interest": estate given to A without any precondition to A taking the estate
Vested "in possession": A immediately entitled to possession of property
If unqualified and immediate transfer to A: A is vested in interest and possession
If transfer made to B for life, remainder to A in fee simple: A is vested in interest but not vested in possession. B invested in both interest and possession
Types of vested interests
vested absolutely o to A in fee simple o Sabrina can go to a sleepover, Karin hopes she will behave
vested absolutely but possession postponed o to X for life, remainder to A in fee simple o Sabrina can go to the sleepover, but not until she turns 10
vested, but subject to divesting (i.e. subject to condition subsequent) o to A in fee simple, but if A goes to a Canadian law school that grants a J.D., then back to me o Sabrina can go, but if their mother calls and says she is misbehaving, Sabrina will must come home
Q. isn't this repugnant? A. no, condition is attached from beginning
Q. Why is it you cannot say "to my wife unless she remarries" and yet can say this? A. Ct put limitations on what conditions are recognized
vested but determinable (i.e. subject to determinable limitation) o to A in fee simple until A goes to a Canadian law school that grants a J.D., then back to me o Sabrina can go until she starts misbehaving, then she must come home
Distinction between this and previous: "if" vs. "when"
Not a matter of belief in whether person will do something; limitation in this one is built in
contingent (i.e. subject to condition precedent) o to A in fee simple if A goes to a Canadian law school that grants an LL.B. o Sabrina can go if she can she she's learned to act responsibly
2. Contingent Interests
Contingent (i.e. non-vested in interest): dependent on occurrence of some event (i.e. contingency) which may or not occur
Subject to a "condition precedent" which must be satisfied before it can become a vested interest
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An interest is contingent until: o property is identified o identity of the grantee or devisee is established o right to the interest (as distinct from the right to possession) does not depend on the occurrence of some event (i.e. no condition precedent)
Browne v. Moody [1936] 2 All E.R. 1695 (PC)
F Testatrix left sum of money to son for life, to be divided amongst descendants on his death. SCC said contingent interest, appeal to Privy Council
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Are descendents' interest vested, and if so, is it liable to be divested?
Interests vested, subject to divesting if descendents predeceased testatrix's son
Ct prefers early vesting, subject to divesting over contingent interests
Re Squire [1962] 34 D.L.R. (2d) 481 (HC)
F Grandmother had trustees hold properties in trust until two grandsons reached age 30, but trustees could grant 700/yr for school expenses if necessary
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Re Carlson [1975] 55 D.L.R. (3d) 616 (BCSC)
F Father's will left estate for younger son's use until age 21, then 45% to him, 45% to daughter, 10% to other son
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Do grandsons have vested interest (can take out at age 21) or contingent interest (must wait to age 30)?
Vested interest
Interest is vested unless condition precedent to vesting is expressed with reasonable clearness
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Are gifts to other two children vested at the death of father or are the gifts contingent
(when younger son reaches age 21)?
Gifts are contingent b/c amount cannot be known
R Ct look at principal intention of testator
Two other notable cases
Phipps v. Ackers: To A if she reaches age 21, but if she does not reach that age, to B o Seems to be a contingent interest, but treated as a vested interest subject to being divested if A does not reach age 21 o Ct viewed gift to A as primary goal
Festing v. Allen – Ct rejected this approach in analogous situation
C. Types of Future Interests
Future interests can be divided into two broad categories, legal and equitable interests
Legal interests can be further subdivided into common law and legal executory interests
1. Common Law Future Interests
Assume these can only arise in inter vivos transfers w/o the interposition of trustees
(a) Reversions
Definition: the interest that remains with someone who has made a partial disposition of the property
Example: A to B for life o B has vested life estate; A has reversion in fee simple
Reversion is always vested
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(b) Rights of Entry and Possibilities of Reverter
(i) Rights of Entry
Definition: interest that arises when a transferor conveys an apparent absolute interest but adds a condition subsequent which will divest the interest of the transferee in favour of the transferor and his/her heirs
Example: A to B in fee simple, but if B marries C, then Blackacre is to be returned to A and her heirs o B has vested interest (fee simple) subject to condition subsequent o A has right of entry but not diversion b/c no guarantee that B will marry C
Right of entry is a contingent interest (i.e. A may or may not get Blackacre back)
(ii) Possibilities of Reverter
Definition: interest that arises when a transferor conveys a determinable fee simple by limiting the duration of the estate (using "words of limitation")
Example: A B in fee simple until B marries C o B has determinable fee simple o A has possibility of reverter
Possibility of reverter is a contingent interest
(iii) Consequences of the Distinction
Similarities
Both subject to application of Rule Against Perpetuities – Ct limit interests in future by saying interest must vest within certain length of time
Both can be registered
Both subject to same 6 year limitation period
Differences
Ct more willing to accept limitations through determinable interests than through conditions subsequent (b/c if condition in determinable interest is invalid, the gift as a whole fails; if a condition subsequent is invalid, the gift takes effect w/o the condition)
At CL, both rights of entry and possibilities of reverter could only arise in favour of the grantor and his/her heirs o By statute [s. 8(2) of PLA ], rights of entry can now be made exercisable by any person o No reference to possibility of reverter – this is still imited to grantor
May be a difference with regard to ability to assign the interests o s 8(1) PLA and s. 2 Wills Act provide that contingent, executory or other future interests can be disposed of. o Then go on to mention rights of entry specifically, which raises the question of whether possibilities of reverter are not included. o Note that in the Westsea Construction case (1995 B.C.S.C.) Boyle J. in obiter stated that possibilities of reverter are transferable.
Difference in the way in which the interest of the transferee terminates o With determinable interest, interest terminates automatically in the event of the determining event occurring o With condition subsequent, estate does not terminate until a claim is actually made, i.e. when right of entry actually exercised. o More significant in theory than in practice, given that same limitation period applies to both.
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Re McKellar [1972] 3 O.R. 16 (HC), aff'd, [1973] 3 O.R. 178n (CA)
(c) Remainders
(i) Defined and Illustrated
Definition: future interest meeting two qualifications o Possession is postponed until some prior freehold estate expires o Remainder does not operate so as to prematurely terminate that prior estate
Example: A to B for life, then to C in fee simple o B has life estate o C has remainder in fee simple
At CL, this was the only type of future interest that could be created in favour of a third party
Remainders can be vested or contingent
(ii) Creation – Restrictive Rules
At CL, creation of remainders was subject to 4 extremely stringent rules
As a result of statutory modification in BC, these have been reduced to 2 ½
First two rules based on CL doctrine of seisin: prohibited "springing" interests
Last two rules based on proposition that only the grantor could take advantage of a right of entry or reverter: prohibited "shifting" interests
The rules
Rule 1 – Remainder must be supported by prior estate of freehold, created by the same document. Still applies
To A for life, remainder to B in fee simple o Valid b/c A's prior estate supports the remainder interest of B in fee simple.
To my first grandchild to obtain an LL.B. o CL response was that there was no prior supporting estate, automatically void.
Rule 2 - In order for a remainder to be valid at the outset, it must be at least possible that the holder of the remainder will be in a position to take possession at the termination of the prior estate. Still applies.
No problem if remainder is initially vested in interest. o To A for life, remainder to B in fee simple o Valid; clearly B will be in a position to take possession on A’s death.
In the case of a contingent interest, there has to be a possibility that the condition precedent will be satisfied prior to termination of the prior estate. o To A for life, remainder to my first grandchild to obtain an LL.B o Valid; it is possible that a grandchild will have obtained a LL.B. degree prior to
A’s death
There cannot be a gap. o To A for life; 2 years after A’s death, to B in fee simple o Void; there will inevitably be a gap between A’s life estate and B’s fee simple
Rule 3 – Attempt to create a remainder is void at the outset if the remainder operates to prematurely terminate prior estate. No longer applies .
Precludes giving a right of entry to a third party (recall that at common law, right of entry could operate only in favour of grantor) o To A for life, but if she goes to law school, to B. Void.
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Under s. 8(2) of the PLA, can now make right of entry in favour of third parties, thus rule 3 no longer applies
Rule 4 – Remainder after a fee simple is void. Half no longer applies .
Based on the idea that once you’ve given a fee simple away, it’s gone and you can’t create an interest in favour of third parties. o To A in fee simple, but if she goes to law school, to B o To A in fee simple until she goes to law school, then to B o Both void at common la
Again, s. 8(2) provides that a right of entry can operate in favour of a third party. Half of
Rule Four therefore no longer applies o To A in fee simple, but if she goes to law school, to B o Valid because of s. 8(2)
Half of Rule Four still applies: after a determinable fee simple cannot create a possibility of reverter in favour of a third party
(iii) Destructibility of Contingent Remainders
If a remainder is vested in interest, nth can affect it
If a remainder is contingent, it can be destroyed if the prior supporting state comes to an end and the contingency is not yet satisfied
Natural Termination
Example: To A for life, remainder to B if B obtains a LL.B. A is 30; B is 15.
Valid at the outset; certainly possible that B will obtain LL.B. before prior estate comes to an end
If A dies and B hasn’t obtained the degree, the remainder is destroyed and title goes back to grantor
Premature or Artificial Termination
Possible to manipulate things so as to deprive the remainder of its prior supporting estate
Avoiding destruction
No way of preventing the artificial destruction of a contingent remainder in BC
English legislation has dealt with the issue of natural termination of a prior supporting estate, but there is nothing in BC to deal with this issue
2. Legal Executory Interests
3. Equitable Future Interests
(a) The Governing Rules
Use of a trustee eliminated problems with regard to "springing" interests, since legal title remained with the trustee
With "shifting" interests, Courts of Equity gave grantors almost complete flexibility, allowing them to circumvent CL restrictions
(b) Creation of Equitable Interests
Can be created through a trust arrangement ( inter vivos or in a wall)
In the absence of a specific trust arrangement, Re Robson provides a strong argument that any future interests in a will should be treated as equitable
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Re Robson [1916] 1 Ch. 116 (Ch.D)
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Testator devised land to daughter Helen for life, remainder to children of Helen who obtain age of 21. At Helen's death, of her 4 children, 2 were over 21 and 2 were under
Whether children who had reached age 21 took to the exclusion of those who had not
No, not entitled to land to exclusion of infants
R Title goes to personal representatives of deceased who act as trustees for beneficiaries or those entitled to take on intestacy
NB: Similar provisions of the Estate Administration Act: ss. 77, 78, 79.
Re Crow [1984] 12 D.L.R. (4 th ) 415 (Ont. HC) potentially problematic: treated interests in a will in terms of the law relating to legal executory interests rather than equitable interests. Re Robson was not cited, and one might try to argue that the case was decided per incuriam
D. Attributes of Future Interests
1. Protection of the Land
2. Alienability of Future Interests
E. Registration of Future Interests
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Chapter XIII – Conditional and Determinable Interests
Types of qualifications that can be imposed
Condition subsequent, which operates as a divesting provision
Condition that sets the limits to the interests/causes the interest to determine (i.e. determinable interest)
Condition precedent, which must be satisfied before the interest can vest
Consequences of invalidity
Condition subsequent: gift is absolute
Condition attached to determinable interest invalid: gift fails
Condition precedent invalid: gift fails
Influence on approach taken by courts to interpretation
Conditions subsequent: courts far more willing to subject conditions to strict scrutiny, because it will not destroy the gift
Determinable interests: courts more flexible —presumably it is preferable to subject the transferee to questionable conditions than to leave him or her without any interest at all
Also, courts sometimes willing to read determinable interests as absolute interests subject to a condition subsequent in order to save gifts that would otherwise be invalid
Conditions precedent: court s have been quite lenient; valid “unless the terms of the condition or qualification are such that it is impossible to give them any meaning at all, or such that they involve repugnancies or inconsistencies in the possible tests which they postulate.” [In Re Allen , 1953 decision of the English C.A.]
A. Crown Grants
B. Uncertainty
Most cases involve qualifications of three types —the three Rs: race, religion, residence
Often said to fail b/c of uncertainty
Noble v. Alley [1951] S.C.R. 64
F Developer attempted to purchased land for private summer resort; each transfer included restrictive covenant prohibiting transfer to any person of color. Purchaser sought court order declaring clause invalid. Ont. HC held clause not uncertain, did not constitute an invalid restraint on alienation, not void as being contrary to public policy. Judgement
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Can the clause be upheld
Fails b/c uncertainty of whether a proposed purchaser is/not within ban
Test for conditions from Clavering v. Ellison [1859] (Engl HL): a condition "must be such that the Ct can see from the beginning, precisely and distinctly upon the happening of what event it was that the preceding vested estate was to determine"
C. Restraints on Alienation
Restraints on alienation
First approach: as a matter of principle, restraints on alienation ought to be invalid and Ct ought not to extend restrictions that have already been accepted
Second approach: as a matter of pragmatism – Ct should be asking "does this represent a substantial restriction on alienation"
Mickelson says Ct tend to favour #2 to avoid the moral judgments in #1
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Restraints on marriage
Ct have to balance the wishes of the transferor against the interests of the transferee, as well as public interest in maintaining family relationships, preserving personal autonomy, etc.
Absolute restraints are invalid; partial restraints may be acceptable
Ct have been willing to inquire into motives of transferor
E. Human Rights Legislation
Public policy: direct application
Human rights legislation may apply directly
BC Human Rights Code provides that one cannot discriminate (on a number of enumerated grounds) in situations involving the acquisition of property interests o s. 9: acquisition generally; not clear whether applies to gifts o s. 10: rental situation
Land Title Act s. 222: prohibits discriminatory covenants (e.g. would deal with Noble v.
Alley )
Note that many covenants are still reflected on title; void, but aren't struck out until property changes hands
Public policy: general arguments
When facts do not fall within provision of human rights legislation, to what extent can we
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Canada Trust Co. v. Ontario (HR Commission) [1990] 69 D.L.R. (4th) 321 (Ont. CA)
Trust established to provide "Leonard Scholarships" for white race
Can a trust premised on notions of racism and discrimination be upheld?
No
Charitable trusts contrary to public policy cannot be upheld
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