5. Issues in Aboriginal title
History of aboriginal land title claims in B.C.
- Three ways of viewing aboriginal title:
- (1) At whim of sovereign: They didn’t have land to give up, only a moral right to occupy
land at whim of sovereign – thus treaties a sham since Indians had no legal interest to
give up
- (2) Only personal rights to hunt, fish, etc. and such rights only surrenderable to the
Crown. No legal right to own the land, only use it
- (3) Communal ownership like fee simple, surrenderable only to the Crown, supported by
Royal Proclamation and Delgamuukw.
Delgamuukw v. British Columbia (1997) (S.C.C.)
- Facts: Gitksan and Wet’suwet’en claim land in BC. Trial judge did not give independent
weight to natives’ oral history of their attachment to the land and concluded plaintiffs had
not proved their historical occupation, hence dismissing claim.
- Issue: what is the nature and scope of constitutional protection afforded by Section 35(1)
to Common Law Aboriginal Title?
- Objective of s.35 is reconciliation of prior occupancy by aboriginals with British Crown
sovereignty
- Aboriginal title exists on top Crown title as a burden / encumbrance (and this is why it
couldn’t have existed until 1846, time of sovereignty, rather than at first contact)
- Content of aboriginal title:
o Sui generis: exists in and of itself, not derived from some other doctrine /
principle, and a mix of aboriginal and common law
o Inalienability: can only sell/surrender to federal Crown
o Communal ownership
o Sources: prior occupation, and pre-existing systems of Aboriginal Law
- Proposition 1: It is a right in land including exclusive use and occupation,
o 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
culture of the aboriginal band. Thus present day needs can be met.
- Proposition 2: It contains inherent limits
o May not be alienated – except to the Crown
o Use of the land must be consistent with Aboriginal title
o Title comes from previous occupancy and use of land, which forms part of
distinctive culture, which should be protected for future aboriginal people.
o Thus no equitable waste (legal waste is when current holder e.g. life tenant goes
beyond just taking income and destroys future interest e.g. for remainderman, and
equitable waste is similar waste but destroys interest for someone else)
o This is not to be interpreted as preventing surrender
- S.35 protected rights fall along a spectrum
o One extreme free-standing right: practices, customs, traditions integral to
distinctive culture, but not sufficient to support title claim, right only and no title.
o In middle site-specific right: such activities that by necessity take place on land,
perhaps at specific site, but still not sufficient to support title claim e.g. nomadic
people who have seasonal grounds, but not exclusive occupation.
o At other extreme title: aboriginal title and the right to the land itself. When land
was of central significance to their distinctive culture, activity sufficient to
constitute exclusive occupation. This is a burden on the Crown’s title.
- Proof of aboriginal title:
o The time for title = Crown sovereignty over the land. Need to prove occupation.
o Evidence: Oral histories must be considered
- Need to Establish:
o Proof of Exclusive occupation at the time Crown asserted sovereignty:
 Can use both common law which recognizes actual physical occupation,
and aboriginal law; proof can use physical dwellings, cultivation,
enclosure of fields, regular use for hunting/fishing/exploiting resources,
regard to be had to groups size, manner of life, material resources,
technological abilities, and character of the land claimed.
o Must be continuous if a substantial maintenance of connection to land, even if
nature of occupation has changed and making allowances for periods of
disruptions (by European settlers for example)
- Overall test: land must have been of central significance to the groups culture. This
means more than incidental – must have been either substantial connection or sufficiently
important.
- Aboriginal rights may be infringed by both federal and provincial governments, so long
as they satisfy test of justification:
o Legislative objective must be compelling and substantial,
o Must be consistent with fiduciary obligation of Crown to aboriginal peoples to put
their interests first
o Fiduciary duty requires at least consultation, if not full consent / involvement in
management by aboriginals on land they have title to depending on importance of
right, and fair compensation will usually be required.
o Infringement must infringe as little as possible
o Allowable infringements to title may include development of agriculture, forestry,
mining, general economic development, protection of environment or endangered
species (unclear if this only applies to title, may also apply to rights with no
internal limits)
- Only the federal government had the power (prior-1982) to extinguish aboriginal title, but
they must have done so with a “clear and plain” intent.
My Notes
- Test for proof of Aboriginal Title
o (1) Land must have been occupied prior to sovereignty
o (2) If present occupation is relied on as proof of occupation pre-sovereignty there
must be a continuity between present and pre-sovereignty occupation
o (3) At sovereignty that occupation must have been exclusive. Must rely on both
the perspective of the common law and the aboriginal perspective placing equal
weight on each.
- Infringements on Section 35 need to pass a test of justification
o (1) Infringement of aboriginal title must be in furtherance of a legislative
objective that is compelling and substantive.
o (2) Whether the infringement is consistent with the special fiduciary relationship
between the Crown and Aboriginal People
 Aboriginal title encompasses the right to exclusive use and occupation
 It encompasses the right to choose what uses land can be put
 Lands held pursuant to aboriginal title have an inescapable economic
component.
- The Crown must consult before breach of fiduciary duty. Must be in good faith and may
require full consent of the aboriginal nation. The economic aspect of aboriginal title
suggests compensation relevant to the question of justification of breach of fiduciary
duty.
R v Marshall; R. v. Bernard
- Facts: Person is part of nomadic group, accused of cutting trees without the permission of
the Crown on Crown land. He claims Aboriginal title but since nomadic, not located at a
specific spot, not building dwelling houses, etc. They may visit the site at different times
during the year.
- Decision: Need evidence of exclusive occupation otherwise it would blur the difference
between a title right and a right. Delgamuk can apply to nomadic but it is hard
o Must reflect something more than a transient presence to the particular site.
o Need to establish that they were the only ones that could go there and that they
excluded anyone else from going there.
- 3 concepts
o (1) Exclusion: right to control land and exclude others from using it is basic
notion of common law title.
o (2) Nomadic or Semi-Nomadic can get title based on evidence
o (3) Continuity: Must establish they are right holders.
- In sum, exclusive possession in the sense of intention and capacity to control is required
to establish aboriginal title. Usually by showing regular occupancy
- In this case it is difficult to prove on the spectrum because there has been activity on a
site specific place but they don’t have exclusive occupation.
- Dissent: Test posed by the majority may prove to be incompatible with nomadic or seminomadic lifestyles. Aboriginal concepts of territoriality need to be incorporated into
common law approaches.
Aboriginal cultural artefacts/chattels, held in museums, seeking return
- Museum may be unsure who is rightful claimant
- Possible conflict of laws if held outside Canada,
- Preservation may be an issue – if returned, will the artefact be preserved
- How should such artefacts be viewed
o Should ownership of chattels come under title, with inalienability
o Are they Fixtures
o Or should artefacts be seen as cultural/heritage rights
o Or perhaps even view as human rights.
- Law of intellectual property relevant here
6. Issues of Indefeasibility
Alienability – source in 1290 Quia Emptores, completed in 1660 Abolition of Tenures Act
1) The alienability (from transferor to transferee) was completed in 1660, for both inter vivos
transfers and by will:
a) Inter vivos (while living):
i) 1660 Abolition of Tenures Act: abolished this fine for tenants-in-chief, so after that
they were given the rights to sell their interest without a fine. Alienability inter vivos
was fully established.
b) Testamentary:
i) Originally personalty, not realty, could be disposed of by will
ii) The “use” got around this: A would transfer land inter vivos to B for the use of A
during A’s lifetime, with remainder to go to someone specified in A’s will (equitable
interests could be disposed of by will)
iii) 1535: Statute of Uses got rid of this technique, but was not popular
iv) 1540: Statute of Wills allowed all lands held under socage, and 2/3 of lands held
under knight service to be passed by will
v) 1660: Abolition of Tenures Act converted knight service to socage, so completing
alienability in wills
vi) B.C. Estate Administration Act now specifies who gets what if die intestate (i.e.
without will), and if no one possible, escheats to Crown
Mechanics of transfer: from historical livery of seisin to modern documentation
- Seisin = Legal possession of property, livery = delivery
- Historically there was a requirement of a public display to transfer land.
- Written evidence of such livery (delivery) was made compulsory by the 1677 Statute of
Frauds.
- The requirement to actually be on the land to make the transfer, and the public nature of
it, led some people to develop alternative means of transfer (like creating uses). Over
time “livery of seisin” was almost completely replaced by such methods.
- In England, the Real Property Act of 1845 recognized and simplified these alternative
methods, allowing for corporeal interests to be transferred by grant (i.e. by deed, a
document under seal) as well as by livery of seisin. The documentation had to be
delivered, replacing the ceremonial delivery of the land in livery, and hence the phrase
“signed, sealed, and delivered”.
- Deeds, not livery, came to Canada. Today, contracts transferring land have to be in
writing, but do not have to be sealed. The Land Title Act contains the forms for transfer
(and even computerized records/transfers today).
Conveyancing: Common law, Deeds registration, Torrens Title registration
- The registration system prevents people from having to search for the root of the
title to learn about mistakes and if they are obtaining a good title.
- Historically, common law conveyancing:
- If there was an error in the past, it will be corrected (by the nemo dat principle, cannot
give what you haven’t got)
o E.g. A sells to B who gives in will to C who sells to D who sells to E – but
suppose recently discovered that C was witness to B’s will, so cannot benefit from
it, then C did not have proper title to land, and so therefore neither D nor E have
good title (it will belong to some other benefactor from residuary clause of B’s
will).
-
-
-
-
Searching for good root of title was therefore necessary on every conveyance. So had to
go back through time and make sure each conveyance is good otherwise latest person will
lose out if discovered. Theoretically the search should go all the way back to original
grant from the Crown, but a limitation period of 60 years was usually recognized.
To address difficulties finding all these documents, Deed registration required all
documents to be stored at registry. So you still needed same searching of title however,
since defects would be corrected as at common law, documents not registered could
safely be ignored. Still operates in Maritimes and earlier-settled parts of Ontario.
Title registration systems avoids the need for search – register establishes all interests in
land, and issues certificates of title.Developed in England in mid C18th and has now
brought most of land in England under it, and Ontario largely on this system.
Torrens system in 4 western provinces, New Zealand, Australia.
Section 23(2) of B.C. Land Title Act (previously the Land Registry Act)
General Principle of Indefeasibility: curtain drawn over previous errors, mirrors situation
- An Indefeasible title is incapable of being defeated or altered
- Indefeasibility of title in fee simple is cornerstone of Torrens land title system
- Once land registered and certificate of title issued a “curtain is drawn” on previous
errors, and current title certificate “mirrors” the current state of affairs.
- Thus an indefeasible title is conclusive evidence at law and in equity, against the Crown
and all other persons, of title to an estate in fee simple. However, there are some
exceptions (which vary from jurisdiction)
Creelman v. Hudson Bay Insurance (1920) (J.C.P.C.)
If land is registered, defect in title is corrected and third party obtains good title
- Facts: Hudson Bay was holding land and there was a possible defect in title. Under the
old system, if such land was sold to another party and the defect then discovered, the
purchaser would lose out since the land would be returned to the proper owner.
- Decision: Hudson Bay had registered title for the land under the B.C. Land Title Act,
which effectively corrects any defect, and so the third party could not get title back even
if there was a defect in the root of title.
o Prior to a third party being involved, prior holders could have said that the register
has to be changed, but once a third party buyer becomes involved, they rely on the
mirror of the register and have the ability to have the good title conveyed
Section 23(2)(i) of B.C. Land Title Act
Exceptions to indefeasibility are fraud/forgery without knowledge
- Indefeasible title is subject to: “the right of a person to show fraud, including forgery, in
which the registered owner, or the person from or through whom the registered owner
derived his right or title otherwise than bona fide for value, has participated in any
degree”.
- Fraud = something said/done/omitted with design of perpetuating what that person must
know to be false. Based on intention, but constructive fraud = reckless, could have found
out the truth but turned a blind eye. Forgery = act fraudulently by making false
documents.
-
If the newly registered holder was involved in the fraud/forgery, they do not get
indefeasible title, S.23(2)(i).
If the currently registered owner had no knowledge of the fraud/forgery, they were a bona
fide purchaser for value. Opinion is divided
o Deferred indefeasibility (Gibbs v. Messer): Since the first error is not in the
register, the first innocent party only gets a root of a valid title. This root could
grow into a indefeasible title, if another party then relied on it, since then the error
would be in the register
o Immediate indefeasibility (Frazer v. Walker) says yes, the first innocent party
gets it, the fact that the forged mortgage instrument was registered means
that indefeasibility immediately applies. Otherwise the whole purpose of
registration would fail (since would need to search behind the registry)
Gibbs v. Messer (1891) (J.C.P.C.)
- Facts: Creswell given power of attorney by the Messer, owner of land. Creswell made up
a person F and transferred Messer’s land to F by forging Messer’s signature, and then
registered the transfer. Creswell then fraudulently arranged a loan from mortgagee M to F
secured by mortgage of the land, and M registered the mortgage (M was an innocent
party with no knowledge of the fraud/forgeries). Creswell absconded with the money.
- Issue: There are two innocent parties here: Messer and M. Who should bear the loss of
the loan?
- Rule: Deferred indefeasibility = errors outside the register do not give indefeasible title.
However, the resulting errors in the register do not prejudice subsequent bona fide and
for value purchaser and so the subsequent purchaser (mortgagee) does get indefeasible
rights
- Decision: F, the currently registered title holder, doesn’t exist, so Messer’s name restored
to the register
- Rule: In the first transaction Messer to F there was no error in the registry, but rather the
error was outside the registry (i.e. S’s fraud). Thus F did not gain indefeasible title.
o However, a subsequent registered, bona fide and for value transaction F to M
would give M indefeasible rights, since now there is an error in the registry (i.e. F
is wrongly named as the title holder), and M should not have to go behind the
registry to check for errors within it (i.e. basing this decision on the purpose of the
land title legislation)
- But, here the second transaction had another error outside the registry – the mortgage
F to M was not conducted between F and M (since F doesn’t exist) but rather between the
forger S and M, and M relied upon the honesty of S. It was M’s duty to confirm that S
really did represent the registered principal F, and that the deed drawn up by S really
was executed by F. M participated in the fraud because was careless, and so M does not
have indefeasible rights even though they registered the mortgage. Thus the mortgage is
invalid and of no effect. If X bought from M, would get indefeasible title
Frazer v. Walker (1967) (J.C.P.C.)
- Facts: This case involved forgery. H and W (husband and wife) jointly owned a farm. W
signed herself and forged H’s signature to borrow money from mortgagee M, secured by
mortgage on the farm, and this mortgage was registered. W made no payments to M, so
M then sold the farm to purchaser P, and this transfer was registered. H had no
knowledge of these transactions, and M and P acted in good faith with no knowledge of
the forgery
- Issue: H claims his interest in the land is unaffected and that the mortgage is a nullity.
- Decision:
- The court could have simply applied the Gibbs rule that the first transfer created a good
root (but not good title) in M, and the second transfer (M to P) then gave good title to P
since the error was now in the registry.
o But they didn’t and instead distinguished by saying Gibbs looked at the purpose
of the legislation rather than the specific provisions, and it involved a fictitious
person
- Even though the legislation requires proper signatures on an instrument to be acceptable
for registration, the fact that the forged mortgage instrument was registered means
that indefeasibility immediately applies. Otherwise the whole purpose of registration
would fail (since would need to search behind the registry)
a) Rule: A person’s name, once entered into the registry, even though it came from a void
instrument, gains indefeasible interest immediately, and so only those claims listed as
exceptions in the legislation are then allowed (such as showing fraud/forgery on the part
of the newly listed person, but M in this case was not involved themselves in the
fraud/forgery)
Canada:
- Saskatchewan, Hermanson v. Martin took the Frazer immediate indefeasibility
approach. In B.C. the wording of .23(2)(i) = Frazer immediate indefeasibility although
some cases applied deferred indefeasibility, don’t mention Frazer
- There is a contradictory section in the B.C. Land Title Act s.297(2): “A person taking
under a void instrument is not a purchaser and acquires no interest in the land by
registration of the instrument”. This suggests Gibbs deferred indefeasibility. However,
Canadian Commercial Bank v. Island Realty (1986) (B.C.) has limited the application of
this section to the insurance part of the Act. This section provided that a person taking
under a void instrument is not a purchaser and acquires no interest in the land by
registration of the instrument.
- In 2005 there was legislation amendments designed to deal with this difficulty. Literal
reading is immediate indefeasibility but then there is the ground about nullity which
confuses this.
o The middle part of s.23(2)(i): “the right of a person to show fraud, including
forgery, in which the registered owner, or the person from or through whom the
registered owner derived his right or title otherwise than bona fide for value, has
participated in any degree”. This means that if someone participated in fraud to
obtain land, and then gave that land to you by gift/will/etc. (i.e. you did not
purchase it for value) then you have no better claim to title than the person who
gave it to you
- Section 25.1: Solved the problem for a bonafide purchaser. If you obtain though an
instrument that is void but you are named in the instrument, and in good faith and for
valuable consideration purport to acquire the estate, have acquired that estate on
registration of the instrument (25.2 (2)).
-
2 things to know from these two cases (a) Torrens systems all have a backup of a fund, so
if someone losses their property through the operation of the system, then can claim
against that fund. It is created to protect only the original party. (b) This principle in no
way denies the right of a plaintiff to bring against a registered proprietor a claim in
personam, founded in law or in equity, for such a relief as a court acting in personam may
grant. Courts have reserved this as a safety net, nothing we have said denies an in
personam title. This relates directly to section 29
Pacific Savings v. Can-Corp (1982) (B.C.C.A.)
Indefeasibility is to protect bona fide purchasers for value, not just registered owners
- Facts: After a final order of foreclosure (order absolute), a certificate of indefeasible title
was issued to the mortgagees. The mortgagors filed a motion to re-open the final order,
obtained a certificate which was registered which aid the legal issues were unresolved. A
new purchaser then tried to register their title later the same day. The mortgagees claim
that as registered owners the mortgagor cannot now challenge their title.
- Decision: The Land Title Act does not give conclusive indefeasible title on the registered
owner – courts may order that some other person is properly entitled to the title. The
mortgagee, as a party to the original dispute, had not obtained indefeasibility until their
dispute was resolved. But such orders could not prejudice the rights of bona fide
purchasers for value. If the new purchaser had registered before the lis pendens, the
curtain would have been drawn and they would have obtained indefeasible title.
- Sections 23 and 25 are for the protection of bona fide purchasers for value and not for the
registered owners.
Notice of Unregistered Interests
Section 29
- B.C. Land Title Act s.29(2) except in the case of fraud, someone contracting, proposing to
take or taking from a registered owner either land or a charge on land is not affected by
notice of an unregistered interest other than (c) an interest with registration pending, (d) a
lease of up to 3 years with actual occupation
- Attempt to get rid of the equity doctrine of notice, getting rid of this is required for the
mirror principle in land title registration i.e. all interests must be registered otherwise they
have no effect.
- However, the courts have decided that in some cases notice constitutes fraud, and so falls
within the exception to s.29 i.e. almost a judicial repeal of s.29. Generally, someone
doing something in the normal course of business will not constitute fraud, but if
someone tries to bring themselves within s.29 i.e. tries to use the statute to aid in a fraud,
then s.29 will not protect them
Central Station v. Shangri-La (1979) (B.C.S.C.)
S.29 protection if unaware of unregistered interest at time of transaction completion
- Facts: A registered owner O of land, subject to a registered mortgage from mortgagee M,
leased the land to the plaintiff tenant T (but this lease was not registered). O defaulted on
their mortgage payments to M, foreclosure, and order nisi (i.e. an order that takes effect
after a period of time to allow payment, and if not then order absolute). M agreed to sell
the land to the defendant purchaser P if O didn’t pay up by a certain redemption date.
-
-
After this agreement was completed, but before the redemption date, P became aware of
the lease held by T. O did not pay up, and P became the registered owner. T then sought
to enforce it’s lease
Decision: S.29, protects a purchaser from unregistered interests if they did not know of
that interest at the time of completion of the transaction = time at which became
contractually bound to buy the land (even if they then became aware of the interest prior
to registration). So actual notice after completion (but before registration) is not fraud
since continuing to registration is just normal course of business,
So here T’s action to enforce lease failed because P had protection under S.29 protection.
Me-N-Ed’s Pizza v. Franterra (1975) (B.C.C.A.)
S.29 protects against unregistered interests, but not if acknowledges and acted upon
- Facts: plaintiff (tenant T) had a 20 year lease from the first defendant (owner O), but did
not register it. O then sold the land to P, and this sale was registered. P had notice of the
lease when land purchased, adjusted the purchase price according to pre-paid rent by T,
had T now pay rent to P, and later assigned the rent payments from P to a third party.
- Decision: if the lease had been registered, P would have been bound to honour it since it
would have been an endorsed charge on the land.
- However, the lease was not registered and so P could have ignored T’s lease since
although T was in possession it was for over 3 years (see s.29(2) says that a lease longer
than three years must be registered to make it binding).
- However, P acknowledged, acted upon and benefited from the lease, as if the lease had
been registered as a charge on the land, and so there was an assignment of the lease in
equity. Therefore P estopped from denying lease, and the unregistered lease is protected,
and T is entitled to have a registerable lease delivered to him by P i.e. P clearly has
indefeasible title, but by in personum order P required to recognize lease
Nicholson v. Riach (1997) (B.C.S.C.)
Actual knowledge of previous fraud or unregistered interest, or constructive knowledge (i.e.
suspicion but no further enquiries, failure to take the steps to find out the truth that a reasonable
person would have taken) plus dishonesty, constitutes fraud and removes s.29 protection
- Facts: 20 years previously the mother M bought property, and due to pressure and undue
influence by her son she agreed that S should have 50% interest in the property. M and S
were registered as co-owners. She provided all the funds for purchase and subsequent
taxes and maintenance.
o 20 years later, damages awarded against S for an assault on P, and since not paid,
the court ordered S’s interest in the property to be sold to satisfy payment of the
damages. P purchased the 50% interest, and it was transferred into her name, she
seeks partition and sale of the property. She claims registration of her 50%
interest gives her indefeasible title to that interest regardless of any previous flaws
in giving the son S the 50%. Court ordered the sale.
- Issue: Did the petitioner participate in a fraud to obtain the 50% interest i.e. did she have
knowledge of the alleged fraud by which the son originally obtained his 50%
- Rule: Even though the son’s original obtaining of the 50% may have been by fraud, this
will not affect a subsequent registered purchaser (the petitioner) unless that purchaser
participated in the fraud to some extent.
-
o To show such participation in fraud, it must be shown that the subsequent
purchaser had either actual knowledge that the vendor did not have title, or at
least an arousal of suspicion must have been raised followed by an abstaining
from making enquiries for fear of learning the truth i.e. there must have been
an element of dishonesty combined with such constructive knowledge.
o A simple lack of making enquiries which could have uncovered the fraud is not
enough to show participation in fraud on the part of the purchaser.
Decision: Although the petitioner in this case did have some knowledge of the
respondent’s claim of trust on the 50% interest, there was no dishonesty or obligation to
make further enquiries. Further supporting this finding for the petitioner was the fact that
20 years had passed during which the mother did not challenge the son’s 50% interest.
7. The Fee Simple
“Words of Limitation” and “Words of Purchase”
- “To A”: words of purchase, who words i.e. who gets the estate
- “and his/her heirs”: words of limitation, what words i.e. what is it that A receives
- Inter vivos transfer: historically strict – had to use “and his/her heirs”, and if no words of
limitation, or the wrong words (even “in fee simple” was not adequate) would instead
create a life estate
- By Will transfer: historically more flexible, and if a clear intention to pass fee simple,
even though the magic words not used, would pass fee simple
- Inter vivos trust: the courts of equity were also more flexible and without words of
limitation would still pass fee simple if clear intent
- The strict rules of inter vivos transfer would often create life estates where fee simples
were intended, so in the early C19th statutes passed provided new rules of construction to
rectify this.
Section 19, Property Law Act
- Today, the B.C. Property Law Act applies to inter vivos transfers – s.19 Words of
Transfer
- S.19(1) “in fee simple” without “and his heirs” is adequate, and
- S.19(2) if no words of limitation, then fee simple or the greatest estate possible would
be transferred, unless of course the transfer expressly provides otherwise (e.g. if only had
a life estate, then could only pass an estate autre vie)
Section 24, Wills Act
- The B.C. Wills Act applies to will transfers
- S.24 Devise without words of limitation: If no words of limitation and without contrary
intention in the will, fee simple or greatest estate possible would be transferred
o Re Airey (1921) (Ont. H.C.): If no words of limitation and no contrary intent, fee
simple (or greatest estate possible) passes:
Re Ottewell (1969) (S.C.C.)
Surrounding facts to will only relevant if ambiguous, and distinguish words of limitation from
words of purchase:
- Facts: Frank (A), in his will gave his brother Fred (B) his property and had nothing was
said in case B died before A. B had similar will giving everything to A. B died first, and
so all his estate went to A (B’s only daughter got nothing). A did not change his will and
-
-
-
then died. B’s daughter claimed she should get A’s property, but A’s other next of kin
claimed it should be shared amongst all of them (of which Fred’s daughter is only one).
Decision: Only if there is ambiguity in the will should the surrounding
facts/circumstances when the will was executed be considered.
o Here Frank’s will is not ambiguous, so such facts are irrelevant here. Court
decided the words quoted above are words of limitation and not words of
substitution (i.e. not words of purchase (who) as daughter was claiming). Hence
Frank’s property was only devised to Fred (and not to Fred’s heirs) and since Fred
was dead, Frank effectively died intestate. Hence property should be divided
amongst all of next of kin.
Dissent: Since don’t have to use words of limitation, the quoted words above don’t have
to be given the usual technical meaning (i.e. “and his heirs” technically has meant words
of limitation, but they don’t have to here). There are 2 assumptions when interpreting
wills:
o (1) Presume against intestacy
o (2) Presume every word has a meaning
Dissent therefore concludes quoted words are words of substitution (i.e. of purchase) and
therefore daughter should get all of Frank’s estate
Comments:
Have to be careful using words that are not required in the particular context
Today, the daughter might consider suing the lawyers who drafted the joint cross wills.
8. The Life Estate
A. Repungnancy – A fee simple or a life estate?
Repugnancy: if give absolutely cannot control it’s destiny – intention in wills, formal in
deeds
Re Walker (1925) (Ont. App. Div.)
Leading case sets out the basic principles (there are exceptions): repugnancy – either 1st gift
dominant (fee simple) or 2nd gift dominant (life estate) or take middle ground of life estate plus
encroachment:
- Facts: Deceased husband’s will gave his property to his wife but added that if anything is
left when she dies it should be divided as follows. Upon the death of the wife, some
claimed certain property according to her will and others claimed that same property
according to the husbands will. Trial court said widow only gets life estate.
- Decision: Basic idea of repugnancy = it is impossible legally to give something
absolutely (i.e. fee simple) but to then control it’s destiny e.g. by specifying some gift
over. The counter argument will be that only a partial interest was to be given (e.g. life
estate), with remainder going to someone else.
o If such an attempt at control is made, the court must distinguish between 3
possibilities by determining the dominant intention of the testator and then
rejecting the subordinate intention as repugnant:
o (1) The gift is dominant and the gift over repugnant (fails and is void)
o (2) The gift-over is dominant, so the first named gift only gets a life estate
o (3) Middle ground is that only a life estate is given, but it may be encroached
upon (e.g. sold) during the lifetime of the life-tenant, with whatever remains as a
gift over
- In this case option 1 found appropriate, so widow gets fee simple.
Re Richer (1919) (Ont App. Div.)
Interpreting intention / expectation of testator so as to give life estate, even though will said “free
use” and “unspent … if any”
- Facts: Deceased’s will gave his widow the “free use” of all his property, with the balance
“that will remain unspent … if any” on her death going to their children. The lower court
found that the widow should get fee simple.
- Decision: Although the words “free use” could imply fee simple, there is in intent /
expectation in the will that a balance will remain on her death to go to the children.
o The words “if any” not given much attention.
o Rather the word “unspent” certainly allows the widow to spend monies and to use
up goods and chattels, but court said the word is inapplicable to land i.e. land
cannot be “spent”. Thus life estate to land given to widow with remainder to the
children.
- Comment: “unspent” may not be as inappropriate to land as court suggested here –
consider cutting timber, mining, etc.
Re Shamas (1967) (Ont. C.A.) :
Re Walker found too formal (broader intention allowed here): testator’s intention should be
determined from whole will and (if ambiguous) circumstances when will was made
- Facts: Deceased’s homemade will gave all his property to his wife, to belong to her until
all the children reached 21. If she remarries, she will get a share like the children. If not,
she will keep the whole and each child will get an equal share on her death. After his
death, widow thought everything belonged to her and she didn’t keep accounts, sold the
store but kept the property. But upon reaching 21 the children challenged this. Trial court
said life estate to wife with right to encroach (but only up till last child reaches 21).
- Rule: The intention of the testator as indicated by the whole will (and not just a particular
provision) and from relevant surrounding circumstances at the time the will was made
should be determined
- Decision: Found Re Walker too formal. Instead, should just interpret the document as a
whole to give effect to the intention of the testator.
o From the will, widow given life estate subject to it being divested on her
remarriage, and to encroach on the capital till youngest child reached 21.
o From relevant circumstances when the will was made, the testators property was
not enough to support the wife and children before and after all reached 21, and so
suggests an intention that the wife should be able to encroach on the capital as she
thought fit. Hence she can also encroach on it after all children reach 21.
Re Tremblay and Township of Tay (1984) (Ont. C.A.)
Important for the interpretation of the document.
- Interpreting a deed is a relatively formal process, and the granting clause takes priority
over habendum clauses, even if intention to follow habendum clauses is clear.
- This is different to interpreting wills, where court should look at the whole will and
perhaps even surrounding circumstances
- Facts: to avoid statutory registration / planning requirements, an attempt was made to
transfer lots of a subdivision to 5 people in a checkerboard fashion. However, the
conveyance was inept. An inter vivos deed has many types of clauses – the granting
-
-
clause here granted the entire area equally to all 5 people, whereas the separate habendum
clauses listed out which specific lots should belong to whom (and it was not equal).
Lower court: gave 1/5 interest of every lot to each of the 5, since the habendum clauses
were incompatible with the granting clause (and because the attempted conveyance was
fraudulently and insultingly attempting to avoid the legislation)
Decision: Agreed with the lower court. Although the objective of checker-boarding is
clear, the intention must first be determined from the wording. Since the wording is
clear and unambiguous, no other rule of construction or reading the document as a
whole can save it from a finding that the habendum clauses are repugnant to the
granting clause (and so the granting clauses win out).
B. Creation
By Act of the Parties
Creation by express words “for life”, by statute, pur autre vie (life of another) and
devolution on death
- Creation by act of the parties:
- Recall life estate “To A for life” and pur autre vie “To A for life of B”.
- Express words needed since otherwise by B.C. Property Law Act s.19(2) and B.C. Wills
Act s.24 will transfer the greatest interest possible (e.g. fee simple)
- Recall can create difficulties if grant to B for life and then to C, since restricts what B can
do with the property, and more common to now use an equitable life estate
By Statute
- Recall life estates were also created at common law by dower (to widow) and curtesy (to
widower). Both finally abolished in 1925 recognizing the fact that husbands and wives
were not totally separate as to property rights (only if one spouse died either totally or
partially without will did the other acquire any automatic rights – see B.C. Estate
Administration Act).
- However, this separate property regime has been changed by legislation as follows:
B.C. Land (Spouse Protection) Act
- Allows a one spouse (e.g. wife) to register/file an entry in the Land Title Office against a
“homestead”
- Once registered, owning spouse (e.g. husband) cannot dispose of the homestead inter
vivos without other spouse’s (e.g. wife’s) consent in writing,
- Once owning spouse dies, other ones gets a life estate despite any testamentary
disposition but subject to any debts/foreclosures.
- Further, no contracting out of this is permitted i.e. spouses cannot agree between
themselves that this Act will not apply, but the Act is rendered inapplicable if the spouses
are separated.
The B.C. Estate Administration Act:
- If a spouse dies intestate (without a will), the estate goes to the surviving spouse (s.83)
subject to entitlement to the children (s.85).
- S.96 automatically gives to a surviving spouse, in an intestacy, all of the “household
furnishings” and a life estate in the matrimonial home. Note surviving spouse can rent out
the property to get income, and can abandon it with intention to give up this life estate.
-
o Although legal title goes to those entitled to it by law (such as the children by
s.85) they must hold it in trust for surviving spouse
The Definition of Spouse Amendment Act 2000 came into force July 2000 and amends
“spouse” to include common law spouse (cohabited for at least 2 years, in marriage like
relationship, including same sex)
C. Rights of Relationship between holders of life estates and remainders and reversions.
Waste
Legal Waste
-
-
-
-
Legal waste: permissive (passive), voluntary (active), includes ameliorating
With life estates there is a danger that the life tenant will exploit the property in a way
that despoils/reduces the value for people with a future interest, remainderman or
reversioner. To balance between these rights, the law of waste controls the level of
exploitation during the currency of the life estate.
The holder of a life interest has right to exclusive possession, profit/income, and can
generally use/occupy land as if fee simple. But reversioner / remainderman has right to
receive land in substantially (but note not completely) the same form as when granted to
the life holder.
There are 4 distinct categories of waste, 3 legal and 1 equitable:
(1) Permissive waste (passive) – damage resulting from a failure to preserve or repair
property. Life tenant generally not liable unless grant put obligation on life tenant.
(2) Voluntary waste (active) – positive action that changes/diminishes value of land (e.g.
over-cutting of timber, destruction of buildings, opening new mines, etc.). Generally
liable unless grant of life estate contains exemption expressly permitting life tenant to
commit voluntary waste – said to be “unimpeachable for waste”.
(3) Ameliorating waste (active) – positive acts that enhance/increase value of land.
Generally not liable but can be actionable due to negative side effects such as increased
property taxes or a significant transformation of the property.
Hiltz v. Langille (1959) (N.S.S.C.)
- Definition of injury to successive interests flexible – must take into account the local
circumstances / nature of the land (e.g. timber estate)
- Facts: Mother transfers life estate to herself with remainder to daughter, then allows son
to cut down trees. Daughter claims that the sons wrongfully cut down the trees and her
reversion or reminder had been injured and she suffered damage/loss
- Rule: Discussed waste in general and timber cutting in particular
- Old medieval English law of waste said that can only take timber for reasonable estovers
i.e. as necessary for enjoyment / repair of premises, for fuel, and for making/repairing of
agricultural implements and fences
- Such restrictions inapplicable to natural lands in Nova Scotia, where cutting timber can
be the main value of the land (i.e. timber estates) and if not allowed could render a life
estate worse than worthless (due to taxes). Proper level of damages is by how much less
the premises would sell in the consequences of the wrongful acts of the appellant. But not
entitled to damages until she obtains the property.
-
However, life tenant must not act in a way that constitutes a permanent injury or material
prejudice to the inheritance so that it’s value is diminished.
Equitable Waste
-
No unconscionable waste (even if unimpeachable) and to other relationships
There are 2 categories of equitable waste.
o (1) Between a life tenant and remainderman/reversioner
o (2) Applies to other relationships where one party has possession but another has
a simultaneous interest
Category 1
- Even if the instrument creating the life estate permits voluntary waste a court of Equity
might still, on petition from reversioner or remainderman, restrain life tenant from
unconscionable/flagrant waste (i.e. extreme waste beyond normal activities)
Vane v. Lord Barnard (1716) (English)
- Facts: On the marriage of his son, father gave himself life estate in castle (without
impeachment for waste) and remainder to his son in tail male. After the father had taken
some displeasure with his son, he started to demolish the castle and sell off the materials.
- Decision: court of equity granted injunction against further pulling down of castle, and
ordered repair.
- This equitable rule is in statutory form: B.C. Law and Equity Act – S.11
o Equitable waste – an instrument granting an estate for life without impeachment
of waste does not give a right to commit equitable waste unless there is an express
intention to the contrary
Category 2
- The second category of equitable waste (i.e. disallowance to destroy/depreciate the
subject matter) applies to other relationships where one party has possession but another
has a simultaneous interest, such as tenants in common, joint tenants,
mortgagor/mortgagee, tenants in fee simple subject to an executory devise over, partners,
purchaser by contract awaiting to perfect title in registry
- Note no legal right to commit voluntary waste here, so equity stops not just flagrant
waste.
City of New Westminster v. Kennedy (1918) (B.C. Co. Ct.) also applied to a tax sale:
- Facts: For failure to pay taxes, the collector of taxes sold the defendants house to the
City. The defendants had one year, during which they retained possession, to redeem (i.e.
to pay their taxes). During that year the defendants stripped the house of everything
removable (e.g. doors, windows, etc.)
- Decision: Clearly equitable waste, and no real difference here compared to life estates.
Ordered repair of house by defendant. There was a permanent reduction of value.
- Principle Applied: one in possession will be restrained from using his legal power
unfairly to destroy or depreciate the subject-matter
Liability for taxes and remainder interests
Mayo v. Leitovski (1928) (Man. K.B.)
Obligation/cannot benefit by not paying taxes, can’t sell against remainderman’s wishes
- Injury to title: life tenant cannot benefit (by obtaining fee simple) from her own failure to
live up to obligation to pay taxes:
-
-
-
-
Facts: D had a life estate of land, and after her death, fee simple was to pass to the P. But
the D (old and without means) failed to pay taxes and as a result the municipality sold the
land. However, the Ds daughter purchased the land at the tax sale, paid the taxes, and
then assigned the tax sale certificate back to the D. The D then applied for title to the land
in fee simple, which if granted would effectively exclude the reversioner (P) i.e. life
tenant would benefit as a result of her own default in paying taxes
Decision: The life tenant is a trustee of the corpus of the estate for the
reversioner/remainderman and must take reasonable precautions to preserve the state for
transmission. In particular, the life tenant is under an obligation to try to prevent
forfeiture of the reversion/remainder and hence is under an obligation to pay the taxes.
There are 2 equitable maxims:
(1) Equity looks on that as done which ought to have been done
(2) Equity imputes an intention to fulfill an obligation
So, in this case, where the mother should have paid the taxes and preserved for the
plaintiff, following the maxims equity imposed a trust on mother to hold the land in trust
for the plaintiff, and so the mother will see no advantage in obtaining fee simple title.
Comment: the plaintiff could have stepped in at the tax sale and bought the property
Morris v. Howe (1982) (Ont. H.C.)
Cannot order partition/sale under Partition Act over objection of consecutive interest
- Facts: applicant (widow) is the sole life tenant of certain lands, to be followed by a fee
simple held by the remainderman (sister). The life tenant wishes to sell the land against
the remainderman’s wishes because after maintenance and taxes, the land provides her no
income. Thus the life tenant seeks an order directing such a sale under the Ontario
Partition Act.
- Decision: Order for sale denied. Although it is possible for a partition to be ordered under
the Partition Act in the case of co-ownership, it is not possible in the case of consecutive
interests as here.
o Thus a sale cannot be ordered against the wishes of either a life tenant in favour of
a remainderman, nor vice-versa as here, since it would defeat the other’s interest.
o Found that the remainderman’s opposition here was reasonable (wanted farm to
remain in the family) but left open the question whether unreasonable opposition
might allow an order of sale.
- Comment: virtual prison sentence for widow. Perhaps the widow here should have asked
the court to vary the will under Manitoba’s version of the B.C. Wills Variation Act.
- B.C. Trust and Settlement Variation Act: allows a court to vary or revoke a trust or
settlement when there are parties involved who cannot speak for themselves (e.g. infant,
unborn, mentally disordered, etc).
o S.4 says this includes a legal life interest in land (life holder is deemed to hold the
land in trust for themselves and for successive holders of the land and Act can
apply when beneficiaries are deemed to be incapable of consenting to the
arrangement). This might have been useful in Morris, but only if the court deemed
the life holder or remainderman to be incapable of speaking for themselves –
seems unlikely in this case.
D. Family/Spousal Issues
Historical
Doctrine of Marital Unity
- Under this the husband assumed duty to support his wife, which continued into
widowhood.
- If land was not disposed of by the wife on her death, the widower would receive it under
“curtesy”
- A wife could prevent this by creating trusts, but this was expensive and only available to
the rich
Dower
- Designed to provide shelters for widows, it conferred on the widow the life interest in the
freehold lands of her deceased husband
- Through a form of conveyance known as “deed to uses” a husband could effectively
enjoy the incidents of fee simple ownership and yet insulate the property from his wife’s
dower claims.
- Typically the one-third share was non-variable and enjoyment of dower consummate was
not abridged by the widow’s remarriage
Curtesy
- A widower’s interest in the lands of his deceased wife known as an estate.
- Says was designed to finesse or postpone the claims of feudal lords to certain incidents of
tenure that might otherwise arise on the devolution of land from a woman to an infant
heir
- Or seen as a means of promoting family cohesion by serving as a means of mediating the
claims of widower and offspring.
Modern Statues and Case Law
-
-
-
Family Relations Act (community property regime on breakdown) & Wills
Variation Act
B.C. Land (Spouse Protection) Act – spouse can file “homestead”, other spouse can’t
dispose of inter vivos without consent, spouse gets life estate on other’s death (whether
testamentary or intestacy)
B.C. Estate Administration Act s.96 – on intestacy automatically gives household
furnishings and life estate in matrimonial home
By Definition of Spouse Amendment Act 2000 spouse includes common law and same
sex
Formalized marriage = registered. Common law marriage = legal capacity to marry and
agreement to marry, so although not formally married recognized as valid marriage.
Common law relationship = more general notion of marriage like situation
The Ontario Family Law Act concerns property on marriage breakdown and death in that
province, in response to the separate property regime e.g. to ensure spouses share the
value of assets accumulated during the marriage
o In M v. H (1999) (S.C.C.) the definition of spouse which was limited to
heterosexual for spousal support on marriage breakdown in the Ontario Family
Law Act was struck down as unconstitutional. Ontario amended these
maintenance sections, but it remains to be seen what effect this will have on
spouse definitions in relation to property. Statute only applies to property acquired
after marriage but surviving spouse can choose to take what was given in the will
or can choose to take what would be given on marriage breakdown.
-
-
B.C. statutory community property regime
o By B.C. Family Relations Act, on marriage breakdown each spouse entitled to
one-half interest (court can vary the 50-50 proportion for fairness, taking into
account length of relationship, extent to which property acquired by one spouse
by gift/inheritance/etc) in each family asset.
o Only automatically applies to formally married couples, but same-sex and
common-law couples can opt in. In B.C. includes property acquired before
marriage if becomes a family asset. There is some discretion under this act –
length of marriage of about 2 years normal to trigger the property parts.
The B.C. Wills Variation Act gives broad discretion to the court if it thinks a deceased
spouse’s will does not adequately provide for “the proper maintenance and support” of
the surviving spouse and children, so the court can limit testamentary autonomy and to
vary the will as it “thinks adequate, just and equitable in the circumstances”. The history
and interpretation of this wording was discussed in Tataryn v. Tataryn estate (1994)
Walsh v. Bona
- Attempt to have SCC declare that the Family Relations Act, by limiting its application to
formal marriage was a violation of the equality provision in Charter
- Facts: the couple was together for 10 years, had 2 children and then split
- Trial judge: said they exercise freedom of choice, they could have formally married
- Court of appeal: it infringes the equality right. Suggests that relationships that are not
formal are less worthy by excluding un-formally married persons – there is no pressing
objective to do so
- SCC reversed and agreed with trial judge that this is not a discrimination, many people
choose to avoid the institution of marriage and the consequence that institution
brings
Tataryn v. Tataryn estate (1994) (S.C.C.) :
- Strict needs/maintenance test: the first approach to interpretation started in the 1920’s
where courts interpreted the Act as only requiring provision for basic needs /
maintenance to avoid surviving spouse and children becoming a public charge upon the
country (i.e. avoid welfare)
- Broader marital/parental “moral duty” test: the courts extended their interpretation
beyond mere necessities to a more generous test i.e. preservation of standard of living. By
taking into account moral considerations, this approach gave an equitable share even in
the absence of need.
- The S.C.C. unanimously preferred this second approach. It considered both
o legal rights / obligations (e.g. to continue the legal duty to support spouse and
children after death and avoid unjust enrichment by ignoring contributions during
lengthy relationship, an independent child’s contributions, ability of survivors to
support themselves, etc as in Family Relations Act i.e. family law principles apply
in the context of wills variation) and
o moral obligations (e.g. more subjective to make provision for dependent spouse
and children as the size of the estate permits and should consider charitable
donations, etc.).
Common law: resulting trust, constructive trust (equitable remedy avoids unjust
enrichment)
1) Resulting trusts work on the theory of the intention by the parties e.g. give donation to cover
someone’s medical bill, but then government steps in and pays it, then the donation money
will be held under a resulting trust to be returned to donors
2) Constructive trusts imposed by equity to deal with unjust enrichment e.g.: in response to
unconscionable conduct (such as a trustee wrongfully obtaining profits, or person profiting
from a crime) e.g. imposed on vendor of house prior to closing of transaction
3) History:
a) Recall doctrine of marital unity at common law (wife’s property held by husband, single
legal entity, husband had duty to support and liable for wife’s torts and credit, connected
to dower and curtesy).
b) Development of equity which allowed wife to hold separate property on the use, which
was usually made inalienable so husband couldn’t pressure her to transfer
c) England 1882: the Married Women’s Property Acts created a regime of separate property
so wife could hold property as if femme sole (i.e. just like unmarried women)
d) However, although these Acts were of symbolic importance, women still lacked the
practical means of acquiring money or realty. On breakdown of marriage, this separate
property regime led to courts denying the right to split up property to give share to the
women. This was demonstrated in the infamous case Murdoch v. Murdoch (1975)
(S.C.C.):
i) Facts: Wife’s money from previous work and from money obtained from her mother,
and very significant labour by her went into ranch owned by husband. On marriage
breakdown, she claimed an interest in the ranch
ii) Decision: Her action failed. The court found no intention to create a resulting trust,
and seemed to accept the view that wife’s labours no more than those expected of
ordinary ranch wife.
iii) Dissent: Laskin J. laid foundation for new concept of constructive trust
4) The were statutory responses as described above: the Land (Spouse Protection) Act and the
Family Relations Act. However, before the Family Relations Act the constructive trusts
became firmly entrenched in Canada to prevent unjust enrichment by rewarding those
involved in household labour, and enlarged over the years to include both common law and
same sex relationships. This stuff is not so important now with the Family Relations Act
(except for people who do not fall within it):
a) This “remedial” equitable remedy of constructive trusts was recognized in the dissent in
Rathwell v. Rathwell (1978) (S.C.C.) and then by majority in Pettkus v. Becker (1980)
(S.C.C.) ) where constructive trusts can be applied if the facts show that there has been an
enrichment, a corresponding deprivation, and the absence of a juristic reason for the
enrichment e.g. no obligation to perform the duties
b) Application of the constructive trust expanded to include the facts in Sorochan v.
Sorochan (1986) (S.C.C.) to include a long term relationship but not married and farm
property had been owned by man prior to the common law relationship
c) Application of constructive trusts was further extended in Peter v. Beblow (1993)
(S.C.C.) for conventional domestic services (12 year cohabitation, woman undertook
domestic work and man, the property owner, maintained the property). The court rejected
the idea that domestic services cannot found a claim saying that it devalues such
women’s contributions and adds to the feminization of poverty. They said an equitable
remedy is appropriate even though matrimonial property legislation excludes nonmarried couples. The entire equity in the home was awarded to the woman.
5) In summary then, the Acts and common law that apply to relationship breakdown and death:
Inter-vivos
Intestacy
Land (SP) Act Land (SP) Act
Estate
Administration Act
Testamentary
Land (SP) Act
Wills Variation
Act
Matrimonial
breakdown
Family Relations
Act
General (can
apply anywhere)
Resulting trust
Constructive trust
9. Co-Ownership – Concurrent Estates
Types of Co-Ownership
Co-ownership (unity of poss), TIC (shares), JT (each owns whole + 3 unities + survivorship)
- Applies to realty and personalty where two or more people own the same interest (future
or present interests). Can be created by grant inter vivos or testamentary.
- E.g. “to A & B for lives remainder to C & D in fee simple” (so A and B get present coownership interest, and C and D get future co-ownership)
- E.g. “to X in trust for A & B” (co-beneficiaries)
- Co-ownership = Unity of Possession = every co-owner has the right to possess the
whole. Unity of possession is a present interest which can be dissolved by mutual
agreement or by partition (be careful to distinguish this from severance which only
applies to joint tenancies and does not destroy co-ownership). When co-ownership
destroyed, get severalty i.e. individual ownership. Not successive interests
Tenancy by Entireties and Coparenary
Two old types of co-ownership were:
- Tenancy by Entireties: When land was transferred to a husband and wife in
circumstances where, if they had not been married, they would have taken as joint
tenants, then took as “tenants by the entireties”.
o The legal marital unity of the husband and wife meant their title was regarded as
single and indivisible, with the survivor taking their property absolutely (i.e.
survivorship indestructible with no right to partition). This has been abolished by
s.12 of the B.C. Property Law Act.
- Coparcenary: On intestacy the real property went to the heir of the deceased, usually the
eldest son by primogeniture. In the absence of a son the property descended to all the
daughters, and if there were more than one the daughters would take the estate jointly as
coparceners. Each daughter had the right to possession. This has also been abolished now
by the Estate Administration Act
Today we have 2 types of co-ownership (be careful to distinguish ownership and possession in
the following):
Tenancy in Common
- Unity of possession (as with all co-ownership): each has their own share and can be
unequal. Passes on to their next of kin. Preferred by equity. Each entitled to possess the
whole of the property
- Each only owns a share of the whole (i.e. divided ownership interests), and the shares
need not be equal (e.g. 60%-40%)
-
Each can dispose of their share inter vivos (this is when you give something to another
when you are still alive) without the consent of the other owners
- Each can dispose of their share by will or on intestacy (same as with any other property
owned by the deceased) i.e. there is no survivorship, so upon death passes to estate
Joint Tenancy (JT)
- Unity of possession (as with all co-ownership) i.e. each entitled to possess the whole of
the property
- Each owns the whole but it must be equal unless there is severance
- Right of survivorship (jus accrescendi) which means that a JT upon the death of the other
simply drops out of ownership leaving it to the other with greater interest.
o So long as there has been no antecedent inter-vivos severance (which would have
converted JT to TIC)
o If criminally responsible for the death of the other (e.g. murder) then can’t benefit
– interest held in trust by the JT for heir of deceased person.
o When the penultimate JT dies, the final co-owner becomes the absolute fee simple
owner. If last two die together, the B.C. Survivorship Act s.2 says the oldest one
is deemed to have died first, so property will pass to the estate of the younger.
o Survivorship is a precondition/integral to JT, so if no survivorship no JT
 If says “to A & B for their joint lives” this means only so long as they are
both alive and so survivorship is impossible therefore no JT
 But “to A and B for the life of A” is ok since if B dies first survivorship
can operate in one direction (i.e. to A) therefore there is a joint tenancy in
this case.
- Although a JT can sell inter vivos (destroys unity of title and so severe the JT converting
it to a TIC) as a result of survivorship cannot dispose of by will because as soon as coowner dies, he has nothing to dispose of and any attempt will have no force and effect
- Three additional unities (if one destroyed then the JT is severed and have a TIC)
o Unity of Title – the co-owners must derive their titles from the same instrument
(transfer or will)
 E.g. if there are three joint tenants A, B, C created under one instrument,
then C sells/transfers their interest to D (i.e. under a different instrument).
There will then be a joint tenancy between the original A and B, and
together they form a tenancy in common with D. (where A+B hold 2/3
and D holds 1/3)
o Unity of Interest – The interests of the joint tenants in the property must be the
same in each of the following ways:
(a) Quantum – each co-owner’s portion must be equal
(b) Duration – each co-owner must hold for the same duration
(c) Nature/Kind – each co-owner must hold the same kind of estate e.g. can’t
have one holding a leasehold and the other a freehold.
(i) Consider “to A & B for lives as JT, then remainder to B in fee simple”.
Authorities suggest that if this is set up originally then it is ok, but if B
later acquires the remainder then not ok and works a severance.
o Unity of Time – applies only to the Common Law (not Equity). Interests of the
co-owners must vest at the same time.

-
-
E.g. “To A for life, remainder in fee simple to heirs of B & C upon their
turning 21”. If B & C turn 21 on the same day then this is OK, but
otherwise there is no JT. The existence of unity of time does not apply in a
transfer to uses or in a gift by will (a joint tenancy will exist as long as the
other unities exist)
Severance (converts JT into a TIC): to be a joint tenancy, there had to be the possibility
of severance at the time of creation
o A JT can be severed by agreement of the JT’s, though a course of dealings where
conduct of parties acting as if TIC, etc.
o A JT can be severed by breaking one of the 3 additional unities. It can happen
unilaterally and in secret without giving the other co-owners notice (although note
this is not allowed in Saskatchewan by statute).
 E.g. Stonehouse where one of co-owner’s (wife) transferred her interest to
another (daughter) hence breaking unity of title. She was concerned that
daughter would not be treated fairly after her death, and so wanted to
ensure they were looked after, so transferred her interest secretly without
telling her husband. On wife’s death husband thinks that he is getting
survivorship, but is surprised to learn he is TIC with the daughter – of
course still co-ownership, so husband still had right to possess the whole
 E.g. can transfer to oneself B.C. Property Law Act s.18
o Because of survivorship, a JT cannot be severed testamentary (i.e. by will) but
rather must be inter-vivos
o Recall that if unity of possession is destroyed then do not have severance but
rather have partition i.e. lose co-ownership altogether and get severalty (i.e.
individual ownership)
By B.C. Company Act s.32 a corporation can be a joint tenant. By s.32(2) where a
corporation is joint tenant of property, on its dissolution the property devolves on the
other joint tenant (so that other at least has some chance of survivorship)
Individual ownership
(severalty)
Co-ownership
Requires Unity of Possession (i.e. each co-owner
has the right to possess the whole)
Partition = becomes individual ownership (unity of
possession lost)
Today TIC and JT, historically also tenancy by
entireties and coparcenary
Tenancy in Common (TIC)
Ownership: each owns a share
Shares may be unequal
Joint tenancy (JT)
Each owns the whole
Equal divisions
Survivorship
3 additional unities (title, interest, time)
Severance converts to TIC
Creation of Joint Tenancies and Tenancies in Common
Old CL preferred JT, but now lack of unity/words of severance/statute  TIC
- (1) Common Law: In interpreting an instrument, historically a JT was presumed at
Common Law if the 3 unities in addition to the unity of possession were present
- (2) Equity: disliked the notion of survivorship in JT’s because of the element of chance
involved so preferred TIC’s. Would use two methods:
o Interpretative role – more willing to find an indication of intent for a TIC in a
document (Clarke)
o Substantive equitable remedy role:
 Even though co-owners may be treated as JT’s in law, equity would
operate in a substantive way and require co-owner’s to act in personum as
if TIC’s without disturbing the underlying legal JT e.g. if contributed
unequally to the purchase price, if partnership, if mortgagees (Robb)
o May also treat as TIC’s even though only one name on deed to avoid ousting if
both substantially contributed (Bull)
- With the end of the system of tenures in 1660, common law took on the equities
approach. Thus would interpret a document as creating a TIC if:
o One of the 3 additional unities was absent, or
o If all the unities were present, would still create a TIC:
 With express terms, for example: “To A and B in fee simple as TIC”
 Or by using words of severance that imply in any way a division of the
property into shares which is antithetical to the imagery of JT, for
example:
 “To A and B in fee simple in equal shares” (Re Bancroft)
 “To A and B in fee simple” and then in later provision “with equal
responsibility for payment of debts” (Clarke)
 Other words of severance include between, amongst, each.
 Or if could find intention to benefit the extended family of one of co
- (3) Section 11 of Property Law Act: Now TIC’s are to be presumed by statute for land
transfers unless contrary intention, although leases and personalty still go by rules of
common law and equity (Robb)
- Succession is to be interpreted as a tenancy in common word. Whereas survivorship
would mean a joint tenancy. Should make it clear that you are intending survivorship and
this should trump any interpretation in favour of tenancy in common.
Re Bancroft Eastern Trust Co. v. Calder, (1936) (N.S.S.C.)
- Facts: Testator left a life estate in realty to his wife, with the residue of his estate to be
converted into money and invested in two equal shares. The income of one share was to
be paid to his wife while the other share’s income was to be divided into four equal
shares, one share to each of his three surviving children and the fourth to be paid to the
two surviving children of his deceased fourth child
o This distribution is called a “per Stirpes” – it is according to the stalks of the
family, here all four kids get ¼ each and then the two grandchildren get 1/8 each
o If it was “per capita”, it would be 1/5 each
-
-
Action: between surviving grandchild (who claims JT, so survivorship) and heirs of
deceased grandchild (who claim TIC)
Decision: The interest was a JT between the two grandchildren, so the money shall be
paid to surviving grandchild. In absence of words of severance, the Common Law
presumption is that a JT is created. Anything, which in the slightest degree indicates an
intention to divide the property (e.g. “equal shares”) will create a TIC. In this case, court
had to interpret the will in two separate time periods:
o During life of widow: in this period no words of severance or shares, and since
the wife is not yet dead this is what applies
o After widow’s death: “upon the death of my wife” there were words of severance
(“in equal shares”) and so the bequest to the children would create a TIC, but the
bequest to the grandchildren had no such words. Widow is not dead and so the
courts can’t use intention in one clause to mean intention in the other.
Comment: Another issue was the meaning of the word “issue”. If it meant “children”
then a JT would result, but if it meant “lineal descendants” (i.e. includes children
grandchildren, great-grandchildren, etc.) then there would have been a TIC. “Issue” is
now statutorily defined as “lineal descendants” in Estate Administration Act, even though
in common speak it means children. Therefore you must be very careful using “issue”.
Winchester v. McCullough (2002 NBQB)
- Was it going to be a JT or a TIC
- Facts: The will said “To the son and two daughters to be theirs jointly in equal shares”, the
son died without kids so it went to the two daughters. Dorothy had also died and Hazel
assigned her interest to someone else.
o Now Dorothy’s kids are saying it was a tenancy in common and so they should get
her share. But the person it was assigned to is saying it was a JT so he gets
everything due to survivorship.
- Issue: What is the ordinary meaning of jointly – concurrent or in common
- Decision: If situation is ambiguous then one needs to err on the side of a TIC
- New Brunswick statute states that it unless declared to be a JT then TIC
o Under BC statute its unless a contrary intention appears in the instrument
- There is ambiguity because we have a reference to equal shares and the word jointly
is used
B.C. Property Law Act s.11(2)
- Applies after April 20, 1891, With the exception of transfers to trustees and personal
representatives (i.e. does not apply to property held by trustees)
- The presumption is that following a sale of land to two or more persons, it is a TIC unless
a contrary intention appears (e.g. a reference to survivorship will be taken as intention to
JT).
- S.11(3): Where the interests of the tenants are not stated they are presumed to be equal.
- Applies to land and not to leases or personalty where CL and equity rules apply
Robb v. Robb (1993) (BCSC):
- Strict interpretation of S.11
-
-
-
Facts: Because the husband’s children from a previous marriage intended to challenge the
will, P sought a declaration that the shares and the leasehold interest were held by her and
her husband as joint tenants, and thus passes to her as surviving joint tenant.
Decision: Application allowed.
o At common law, when real or personal property is granted to two or more persons
with no words of severance, the persons are JT’s.
o The exceptions to that rule recognised by equity are: where purchase is in unequal
shares, where property is a mortgage and co-owners are mortgagees, and business
partners.
o Although the P put up the purchase money in this case, it could not be concluded
that the parties contributed in unequal shares in light of the fact that the husband
subsequently conveyed other property to P in consideration. The situation was
unaffected by s.11(1) of the Property Law Act – that provision cannot be
interpreted as applying to an assignment of lease.
Comment: As mentioned, mortgage relationships were also seen as incompatible with
survivorship (i.e. with JT’s). When 2 or more people lend money on the security of a
mortgage of land and as a part of this mortgage the borrower transferred the land to the
lenders, the lenders held legally as JT’s, but if one of the mortgagees died equity would
compel the surviving JT to hold the legal title on trust for the deceased’s estate so that the
estate would not lose its security for the repayment of the loan
B.C. Property Law Act s.18
- Rules for transfer and ownership to oneself (IMPORTANT TO MEMORIZE)
- At common law it was not possible to transfer an interest to oneself. E.g. if A was a fee
simple owner, s/he could not transfer to themselves and B making them co-owners of the
property – now can by s.18(4)
- S.18(1): A person may transfer land to himself in the same manner as to another person,
and a JT may transfer his interest in land to himself
- S.18(2): A trustee or personal representative may transfer land to himself in his personal
capacity
- S.18(3): A transfer by a JT to himself of his interest in land, whether in fee simple or by a
charge, has and shall be deemed always to have had the same effect of severing the joint
tenancy as a transfer to a stranger
- S.18(4): A registered owner may make a transfer directly to himself jointly with another
(e.g. A transfers to A and B as JT’s or TIC’s) and registered owners may make a direct
transfer to one or more of their number either alone or jointly with another
B.C. Land Titles Act:
- S.173 Several persons interested in registration: The registrar may effect registration of
the fee simple at the insistence of one or more co-owners of a JT or TIC
- S.177 Registration of Joint tenants: Where, on the registration of the title to land under an
instrument or document, two or more persons are JT’s, the registrar shall enter in the
register following the names, addresses and occupation of those persons, the words “joint
tenants”.
Role of Equity
-
B.C. Partnership Act s.25 recognizing that Equity regarded survivorship as incompatible
with partnership, partnership land is viewed as a tenancy in common
Where land or any other heritable interest has become partnership property, it shall, unless
a contrary intention appears, be treated between partners as personal property and not as a
real or heritable estate.
Bull v. Bull, (1955) C.A.
- Example of where Equity uses the concept of tenancy in common in a remedial way
- Facts: son (P) and his mother (D) jointly purchased a home for themselves with P paying
greater portion of the price. P put as sole owner on deed. After a family dispute P asked D
to leave.
- Decision: The court applied a tenancy in common as an equitable remedy so the that son
had no right to turn mother out. Where 2 people are in possession of a property to which
they have both substantially contributed, and there is a clear intention that both should
have possession, even though only one name appears on the deed they are equitable
tenants in common. Neither one can oust the other as they are entitled to concurrent
possession, use, and enjoyment of the land. When land sold, each will be reimbursed
according to their contribution.
o Son would have to resort to partition
o If $ has been contributed in different amounts to a property, while in law it may
well be a JT, because of the unequal contributions, equity will interpret as a TIC
- Comment: Note the interpretation approach of Equity. Further, Equity will impose in
personam obligations in certain specific circumstances to ensure that a just result follows
Relations Between the Co-Owners
Relations between co-owners: can ask to account if unfairly sharing profits, but not for
labour
- Recall that the principle of equitable waste can apply between JT’s and TIC’s
- The old Common law rule of no obligation to give a statement of accounts was changed
by Statute of Anne 1705. e.g. pure rents should be divided equally between JT’s or
according to shares of TIC’s (or equally if an equitable TIC was imposed)
Share of Profits
Spelman v. Spelman, (1944) (B.C.C.A.)
- Facts: P & D owned two properties as JT’s and lived together for many years running a
rooming house. P left for 6 years and upon return demanded account of rents and profits
so that she could sue for occupational rents (husband was running a bed and breakfast).
- Decision: Order for accounts failed.
- When one co-tenant has been an exclusive occupier but there has been no agreement or
ouster (e.g. one co-tenant changing the locks or a “constructive ouster” where one cotenant makes living conditions so bad it is next to impossible for the other tenant to stay)
the co-tenant who has exclusively occupied is not liable to pay occupation rent to the
others because s/he has a perfect right to be there by unity of possession (especially when
the other person just walks away)
-
When one tenant is receiving a return for his own labour and capital he is not receiving
more than his just share, and his co-tenant has no right to it. I.e. other owners are not
entitled to products of your labour
- In the absence of a contract (i.e. between tenants to share profits) or ouster, there is no
obligation to account for profits.
- Comment: Probably can differentiate between pure rent (e.g. obtained from a rental suite
jointly owned) and payment for services (as in this case where one co-tenant provides the
labour but both own).
- Case tells us there are three subcategories to look at
- (1) Pure Rent: apportion according to the share, if parties have contributed in unequal
shares, equity will say that the share should be recognized and the shares will be divided
depending on the contribution.
- (2) Sole Occupation: this is where the person who has sole occupation, does not have to
pay a rent and this is not taking more than they are entitled to. This is because due to unity
of possession, you are only entitled to take a certain amount?
o (a) This is unless there is an “ouster”, actual or constructive
o (b) “Agreement”: no obligation to make rent payment and are not taking more
then you are entitled to.
- (3) Products of one’s industry: Vancouver Rooming House
o One of the co-owners is doing something in the sense of investing capital or labour
into some enterprise that is being carried on, if the enterprise is a failure that coowner can’t call on the other co-owner to bail out his business enterprise.
Conversely if it is successful, the other co-owners can’t claim a share form that
successful enterprise. By keeping all of the profits you are not receiving more than
your just share or proportion.
Estate Administration Act s.71
- The accounting provided for in the Statute of Anne 1705 is now this Act where a coowner can bring an action to account against another JT or TIC to determine if they have
been receiving more than their just share or proportion of the profits.
Share of Expenses
Expenses: common obligation & at request & option adopted v. no option/equity on
partition
- At common law, owners could not compel other co-owners to pay cost of repairs or
recover voluntary expenses
- The B.C. Property Law Act (noted in Bernard v. Bernard to only be procedural and not
add any new substantive law) on common obligation expenses:
- S.13: When a co-owner has to pay more than his proportionate share of mortgage, money,
rent, interest, taxes, insurance, repairs because of default of another registered owner, he
can apply for relief under s.14.
- S.14: Under application of s.13 the court may order a lien or sale on the defaulting
owner’s interest. The applicant may purchase the defaulting owners interest in the case of
a sale.
- The duty to share expenses arises from a shared liability under the terms of the
mortgage for which parties are together obligated
Leigh v. Dickeson (1884) (C.A.)
- Facts: P is claiming occupation rents from D. P held in trust a 3/4 interest in a TIC for X.
X leased her interest to D for 21 years. D then purchased the other 1/4 interest and thus
became a TIC with P. The lease expired and D continued to live in the dwelling. There
was some correspondence between the parties about continuing the lease, but P wanted
the rents in advance, which D refused, so nothing more came of it at that point. P sues for
rents and D counterclaims for repairs and improvements that he made since the lease’s
expiration.
- Issue: is one TIC liable to another for the costs of repairs, and can one TIC charge another
for rent?
- Decision: Judgement for P on both claim and counter-claim.
- Have division of certain expenses for which there is a common obligation on all coowners (e.g. payment of mortgage or taxes). All co-owners must pay, so there can be
immediately recovery of such an expense –s.13 and s.14 of Property Law Act
- Expenses with no common obligation:
o If made by one co-owner at request of the other co-owner: can be recovered
immediately based on notions of implied agency, promise, or from business
practices
o If not made at request of other co-owner i.e. a voluntary expenditure:
 (a) If an option was given to the other co-owner to adopt (usually where
an expenditure benefits all co-owners):
 if adopted by other co-owner then can be recovered immediately,
but
 if rejected by other co-owner then no contribution can be recovered
 (b) If no option was given then at common law there is no recovery of a
contribution (i.e. a TIC cannot charge another for cost of voluntary
repairs/improvements if they didn’t give the other the option as to whether
to do ahead with them so long as the property is enjoyed in common).
 However, by equity on partition, if expenses increased the value of the
property then at Equity a contribution can be recovered since would be
unjust for the other party to benefit from the increase in price without
having contributed to those expenses. This was the situation in this case: D
gave P no option as to whether she wanted the repairs/improvements
performed, and therefore there is no remedy for D at this time (although
there could be on partition).
Bernard v. Bernard, (1987) B.C.S.C.
- Facts: The husband (D) and wife (P) are settling a JT and want to know who owes what
to whom with regard to occupation rents, percentage of partition, etc. The wife has been
living in the property and paying the mortgage and taxes (and wants an order for
partition/sale) whereas the husband has been living away for 6 years. She says he left
voluntarily whereas he claims it was constructive ouster. Action brought pursuant to s.13
and s.14 of the Property Law Act.
- Decision: Order for sale granted and no need for wife to pay occupation rent.
- The divorce turned ownership from a JT to a TIC in equal shares.
-
-
-
-
Sections 13 & 14 of the Property Law Act are merely procedural, and they do not create
any new obligations beyond the common law.
The duty to share expenses arises from the shared liability of the co-owners at common
law, and an absent co-owner has no right to claim compensation from the sole occupying
owner (except where ousted or expressly taken to act as his bailiff)
The Statute of Anne 1705 provided that absent owners have the right to a share of rents
and profits (now in s.71 Estate Administration Act). However, this section only applies to
rents actually received from third parties, and imposes no duty or right for charging
rents by either owner on the property
Except in an ouster or express bailiff, there is no right to charge an exclusively occupying
co-owner with occupation rent (each co-owner is entitled to occupation of the whole –
recall Spelman). However, if on a partition action (again except in ouster and bailiff
cases) an occupying owner claims an allowance for their expenses then under equity on
partition they will be liable for occupation rent (i.e. a fee for their exclusive occupation is
levied against the claimed expenses). This rule should apply in an application for sale
under s. 14
Comment: this latter liability for occupation rent on partition if claim expenses seems fair
if the expenses were not a common obligation (i.e. the person occupying didn’t need to
make those expenses) but it seems less fair if the expenses were a common obligation
(since the absent party is obligated to pay them, so why should an occupation rent relieve
that absent party). Nevertheless, that was the decision.
D. Severance of Joint Tenancies
Severance overview: destroy unity, mutual agreement (express or implied), other
unilateral?
- Severance converts a JT to a TIC (distinguish this from partition which destroys unity of
possession and so destroys co-ownership altogether, leading to individual ownership).
- Survivorship (which applies to JT but not TIC) will therefore only apply if there has been
no antecedent severance. The issue in many of these cases is whether the property goes to
the deceased’s heirs (TIC) or whether it stays with the other co-owners (JT).
- 3 possible ways (or 4 if classify differently):
- (1) Destruction of one of the 3 additional unities (by unilateral action of one JT). The
focus is on the consequences and so intent is not directly relevant.
o Most commonly it is the unity of title that is destroyed
o Can also sever without destruction of a unity by creation of a trust at Equity where
trustee is yourself (so no movement in legal title)
o There is no severance by adding a charge/encumbrance however, such as an
agreement for sale and purchase or a mortgage
o There is no severance by a unilateral declaration by one party of an intention to
sever, nor by execution of divorce settlement (if parties act as if still JT), nor by a
will (unless cross-wills or mutual wills with intention to treat as TIC)
o If one JT leases out their interest it is uncertain if severs since authorities divided –
likely that no severance if survivorship is not lost
- (2) Mutual agreement between joint tenants to sever, either expressed, or implied by a
course of conduct/dealings where all co-owners act as if TIC (some classify express and
-
implied separately so leading to 4 categories of severance). The focus here is on the
parties intent
o There will be a severance if all the parties acted as though their interests were a
mutual TIC i.e. an implied mutual agreement (Flannigan). Note must be mutual –
a mere intention declared by one JT is not sufficient for severance (Munroe).
o A sufficient agreement is if the joint tenants agree to divide the property in specie,
or to sell and divide the proceeds of the sale, or if one joint tenant decides to sell
his/her interest to another.
o Recall can’t sever by a will, since wills have no effect until you die, and this is too
late to sever since survivorship has already occurred at the moment of death.
However, a “joint” or “mutual” will can sever the JT since it provides for a
distribution of property upon death, which is inconsistent with the rights of
survivorship in a JT, and so shows a mutual intention to sever (Sorenson)
o Simply receiving and dividing rents is not enough to sever, nor an agreement by
all of the joint tenants to sell to a third party in itself enough to sever
(3) Unilateral action of one JT that falls short of breaking one of the three additional
unities.
o The focus here is on whether this action is sufficient to sever.
o Likely applicable in the UK, but there are two B.C.C.A. and one Alberta C.A.
decisions that say a unilateral action of one JT that falls short of breaking one of
the three additional unities does not sever, so, subject to a ruling by the S.C.C.
preferring the UK approach, this method of severance does not apply in Canada.
o Unilateral declaration to sever without any other act or acceptance by others is not
sufficient (Re: Sorenson and Sorenson)
Destruction of one of the unities
Destroy unity: transfer/trust yes, mortgage/lease/divorce?, agree to sell/will/uni declaration
no
- The first way a severance can occur and so a JT is converted to a TIC with no
survivorship is by destruction of one of the 3 additional unities
- Recall by B.C. Property Law Act s.18(3) a JT may transfer his interest in land to himself
severs a JT since unity of title destroyed, and this can be done secretly.
- Similarly, a secret transfer to a third party will sever
Stonehouse v. A.G. of B.C., (1963) S.C.C.
- Facts: the plaintiff husband and his wife were registered owners in JT of land. Without
telling her husband, the wife conveyed her interest in the property to her daughter, inter
vivos. She did not want survivorship to apply.
o The wife died 3 years later, and the husband thought that he had gained complete
title through survivorship. However, the daughter registered her deed the day after
the wife’s death (so three years after it was executed) and registrar accepted this,
at which time the husband became aware of it. The plaintiff husband claims the
registrar should not have registered the 3-year old deed since the wife grantor was
dead.
- Decision. Although the estate does not actually pass to the transferee (i.e. daughter) until
the transfer deed is registered, severance of the JT occurs on execution/delivery of the
unregistered deed (i.e. 3 years ago) since unity of title was destroyed at that time by the
different instrument.
o Thus once the mother executed the document she was bound by it, registered or
not, causing the severance and so changing the interest of the remaining JT (the
husband) to one of TIC, and so his right to survivorship was lost.
o Note that by B.C. Land Registry Act the person who signs/seals/delivers a transfer
cannot then rely on it not being registered as a shield to claim the transfer is
invalid, although 3rd parties can (this is different to Australia where it is not valid
at all till registered).
- Comments:
- Note the key focus here is on the effect (i.e. was on of the unities destroyed).
- Secret transfer without registration performed inter vivos is severance in B.C.,
although not registering runs the risk that a third party might register and get the
indefeasibility (cannot do severance secretly by will since survivorship kicks in
immediately on death). So in B.C. a JT should realize may or may not get survivorship
- It is a policy question as to whether this should be allowed. Could insist that there is no
severance unless the transfer is registered. In Saskatchewan a severance must be
registered and requires the written consent of the other joint tenants, where it is
claimed that this avoids unfair surprise and ensures that all dealings are open (although of
course in other jurisdictions such as B.C. when a JT is granted it is done with the
knowledge that it can be unilaterally severed by destroying one of the unities)
Mortgages
- At common law there is a conveyance (i.e. alienation) of legal title from mortgagor (i.e.
owner/borrower) to mortgagee (i.e. bank/lender) subject to an equity of redemption.
- Equity would protect the redemption (transfer of title back to the mortgagor) so
mortgagee couldn’t treat the property as their own since it’s just security, and could only
take/sell the property after foreclosure.
- Thus a mortgage severed a JT since unity of title broken, and when title was
eventually conveyed back the JT was not revived.
- In Torrens jurisdictions, however, the situation is generally different
Lyons v. Lyons, (1967) (S.C. Vict. Australia)
- Facts: The Lyons were owners in JT of land. Husband granted a mortgage of all his estate
and interest in the land. After he died, the mortgage was registered.
- Issue: Did the mortgage sever the joint tenancy under Victoria Law
- Decision: should follow 3 steps to determine if there has been a severance:
- (1) Must analyse the “juristic” nature of the event i.e. what is the legal perspective – was it
a transfer or simply a charge.
o In this case: under the Torrens System mortgages do not convey title to the
mortgagee, but rather the mortgage acts as a charge (i.e. an encumbrance) on the
title to secure the promise (covenant) to pay, and so legal title remains with the
mortgagor. Unity is not destroyed
o Therefore, since only a charge on the JT’s (i.e. the mortgagors) interest, the
mortgage dies with the mortgagor and so the mortgagee loses out
o But suppose that the wife had died first, in which case the husband’s interest
would have increased to full title, and the mortgage would remain but now with
security of the whole property
-
-
(2) Apply the rule that a JT is severed on loss of any of the 3 additional unities, but not
severed if they aren’t affected. In this case, under Torrens system a mortgage is only a
charge and so does not destroy any of the unities, therefore no severance
(3) Note are not concerned with intention of parties, but only the result/consequences of
the transaction are relevant (i.e. is a unity destroyed).
North Vancouver v. Carlisle, (1922) B.C.C.A.
- The situation is not so clear in B.C. The B.C. Land Registry Act refers to a mortgage as a
“charge”, but unlike other Torrens jurisdictions, we do not have legislation that allows for
this charge to be converted on foreclosure and the property sold. So, at least when
considering foreclosure, must continue to think of mortgages in B.C. as having transferred
title according to the old common law:
- Facts: Not concerned with joint tenancies, but rather involved foreclosure proceedings on
a mortgage.
- Issue: does the B.C. Land Registry Act, s. 2(1) state that the legal estate no longer passes
to the mortgagee under a mortgage (as it would under common law)
- Decision: unclear
o One judge said by mortgage the legal title passes to the mortgagee subject to an
equity of redemption in the mortgagor i.e. the common law approach of
conveyance on mortgage remains, unaffected by the B.C. Land Registry Act (i.e.
the Torrens system).
o Another judge said a mortgage is just a charge. This means that the unity of
title has not been destroyed the lender gets a burden or encumbrance
Comment:
- One judge seems to overrule Lyons here in B.C., suggesting that the common law
position of severance on mortgage applies unchanged by the B.C. Land Registry Act,
and further it could be argued that to recover a security in B.C. one must rely on
foreclosure so should not only consider a transfer to have taken place when actually
foreclosing.
- But could be read narrowly (other judge) to refer only to cases involving foreclosure
and otherwise the B.C. Land Registry Act, which refers to a mortgage as a “charge”
against property, should prevail and so a mortgage does not work a severance,
following Lyons. The unreported case Bank of Montreal is a weak authority for this
approach, and this approach is most likely.
o Similarly with the issue of whether the mortgage dies with the mortgagor – Lyons
says that it does, or can argue the common law conveyance approach that the
mortgage severed the JT
o So, in discussing these issue must describe the common law position, the two
cases, and the Land Registry Act treatment of a mortgage as a “charge”.
Trusts (i.e. moving from common law to Equity)
Public Trustee v. Mee, (1972) B.C.C.A.
- Facts: Defendant ex-wife and her ex-husband were joint tenants. After the divorce, but
before ex-husband’s death, he declared a trust for his infant son, with himself as the
trustee (therefore legal title did not move). The trust was never registered and the son
could not take title until he reached 21. On ex-husband’s death, ex-wife claims title
through the right of survivorship.
- Issue: Certainly transferring legal title to another as trustee would break unity of
title and hence work as a severance. But what about when make yourself the trustee
(so no change in legal title and so unity of title not broken).
- Decision: A valid declaration of a trust, even if not registered, and even if to self as trustee
for benefit of another (so unity of title not broken), is inconsistent with the maintenance of
a JT and so effectively severs the JT to the same extent that a direct transfer to a person
would sever. However, if the trust is not completely constituted Equity will not enforce
an imperfect gift.
- Comment: This is similar to Stonehouse (where there was a binding transfer in law) –
here there was a binding transfer of benefit by trust in Equity. The key feature is that the
husband had bound himself by the trust instrument to carry out its terms i.e. there was
certainty as to the property transferred, the trust was irrevocable, and it was properly
executed to make it binding. Therefore equity held that the benefit of the property was no
longer the ex-husband’s.
Foort v. Chapman, (1973) B.C.S.C.
- Facts: Mother conveyed her fee simple interest to herself and her sister (defendant) as
joint tenants, expressly agreeing that the survivor would get all. Without informing the
sister, the mother entered into an agreement for sale and purchase with her son (plaintiff)
and registered this agreement (an agreement for sale and purchase is where the seller is
paid off over a period of years, during which it is registered as a charge, and when paid in
full the purchaser can execute it i.e. ask for conveyance of the property which a court
would enforce i.e. seller is like a lender and the buyer is protected by the charge).
o The son never paid anything, and although the mother released the son from all
obligations to make payments under the agreement she died before conveying the
property to him. Thus the agreement remained only a charge against the title to
the property. After the mother’s death, the son tried to have 1/2 interest registered
in his name as executor, but registrar refused.
- Issue: did the agreement for sale and purchase sever the joint tenancy
- Decision: An agreement for sale and purchase is not an actual conveyance but rather
only a change/encumbrance on the mother’s title and so does not affect the unity of
title, and so does not sever the JT until it is executed. Therefore by the time the son
wanted to register his agreement the property had already gone by right of survivorship to
the sister.
- Comment: Since mother had forgiven son’s debt, might think Equity would come to his
aid and say, even though no conveyance that the son had effectively gained equitable
ownership. But Equity tends to only come to the aid of those bona fide and for value
i.e. not volunteer’s (i.e. gifts as here). Thus if the son had given consideration then he
might have got the half interest.
- However, if had found a severance, because of the contract between the sister’s promising
survivorship to each other, the court said it would have applied Bull v. Bull (where an
equitable TIC was applied to stop a son turning his mother out)
- In finding no severance (which is correct) court incorrectly cited Flannigan v.
Wotherspoon as authority for this (in Flannigan the JT’s mutually agreed to enter into a
transaction with a third party, unlike here where only one of the JT’s agreed to the sale)
There are 4 ways a gift can be made from a donor to a donee:
- (1) By transfer, conveyance or delivery of the property to the donee
- (2) By transferring, conveying or delivering the property to a 3rd party as trustee for the
donee
- (3) By the donor declaring themselves a trustee of the property for the donee
- (4) By will
Re: Sorenson and Sorenson, (1977) (Alta. App. Div.)
- All but the second were tried in this case
- Facts: The divorced Sorensens were joint tenants of three properties. The wife found out
that she was dying, and wanted to sever in order to provide an estate for her disabled son.
She tried to work a severance through a number of means:
- (1) The execution of their divorce agreement
- (2) A devise of everything she owned to her son in her will
- (3) She commenced an action for partition, but she died the morning of the partition
hearing
- (4) A declaration of a trust deed for her son
- Decision: The onus of proof that there was a severance is on the one who asserts it. This
case nicely summarized ways to sever by unilateral action, and only the declaration of a
trust severed here:
- (1) The execution of the divorce settlement didn’t amount to partition in this case
because the wife later acted as if it hadn’t by filing for partition
- (2) The execution of a will does not sever since survivorship will have already
occurred (unless cross-wills i.e. JT’s mutually leave the property to each other indicating
a common intention to treat as a TIC)
- (3) A unilateral declaration by one party of an intention to sever that falls short of
destroying one of the 3 additional unities, without any other act, and without acceptance
by the other joint tenants, does not sever.
o So the commencement of an act of partition is evidence of intention alone and
does not sever (the party who commenced the action still has the choice of
abandoning the action).
- (4) The declaration of a trust by a joint tenant severs a joint tenancy (as in Public
Trustee v. Mee)
- There was also a lease involved in thise case. The husband had granted a lease of his
interest to the wife for life. This didn’t create a severance because it was only for life and
since wife died first survivorship returned to husband
o Thus the question of whether one JT granting a lease can sever was dodged in
this case and remains unresolved. Although a lease gives a right of possession
by a different instrument, it doesn’t transfer legal title (which is what unity of title
is all about). Some authorities say a lease only a charge/encumbrance on an estate,
others say it does sever.
o Suggestion that no severance so long as survivorship not lost i.e. in this case if
the life holder predeceases the joint tenant then the right of survivorship is revived
upon his death so no severance, but if the joint tenant predeceases the life holder
then severance occurs and it becomes a TIC
- The mortgage does not sever. Signed, sealed but not delivered transfer did not sever.
Agreement between the parties
Severance by mutual agreement – express or implied by course of dealings/actions as if TIC
- The second method of severance is by mutual agreement, either express or implied (i.e.
by inference made from the actions of all the co-owners). Emphasis here therefore is on
mutual intentions, and so must focus on the facts of the case.
Flannigan v. Witherspoon, (1953) B.C.S.C.
- Facts: two brothers (defendant D and B) were joint tenants of several lots. They entered
into an agreement for sale and purchase to a 3rd Party (i.e. a charge as in Foort v.
Chapman), and the proceeds was be equally divided and deposited in each brother’s bank
account.
o Brother B died and left all his real and personal property to his daughter (plaintiff).
On his deathbed, B told her that the proceeds from the land would be hers, and
brother D heard this and made no opposition. Brother D also later talked to the
daughter as if the brothers were TIC’s. The daughter claims therefore that there
was an implied severance by mutual agreement and so she should inherit the
proceeds that were going to B, whereas brother D claims still a JT so by
survivorship all the proceeds should now go to him.
- Decision: Judgement for the daughter. A course of dealings, which indicates a mutual
agreement to sever, will do so. It is sufficient for the parties to act as though the interest
was a tenancy in common i.e. that they had separate shares. To determine this must look at
the facts of the particular case. Here:
- Although the sale did not in itself effect a severance since it only changed the form of JT
interest from land to money. Dividing the proceeds equally was not a severance on it’s
own (equal) but having it deposited in two separate bank provided good evidence for
a severance i.e. treating the proceeds as going to each other’s estate separately.
- Brother’s words suggested daughter would inherit and so TIC:
o Brother B said “so neither of us has anything to worry about”, which implied B
had no need to worry about his daughter (i.e. that she would inherit), which
implied the brothers were thinking in terms of shares (i.e. TIC)
o Brother D’s statement to the daughter that on her father’s death she would be 1/2
owner was clear evidence of the mutual agreement to sever
- The silence of D when he heard about the will, while not proof, was perhaps indicative of
the intention to treat as a TIC, although given the circumstances was fairly weak
evidence for a severance
Unilateral Intention of a Single Joint Tenant
Severance by unilateral act that falls short of breaking a unity – likely in UK, unlikely in B.C.
- The final method for severance (in the UK but apparently not here) is by unilateral
actions that fall short of breaking a unity e.g. a statement of intent or notice given by
one of the JT’s to the others. The Canadian case law show this is not available in Canada.
English law is different
- England has it’s Law of Property Act 1925 (which has not been adopted outside the UK)
which says that all co-ownership is JT at law, and the issue of JT v. TIC is settled at
equity. Thus since 1925 there has been no legal severance, but rather only equitable
severance for both realty and personalty joint tenancies.
- The statute allows realty or personalty JT’s to sever in equity by merely giving notice to
the other parties
Statute also appears to suggest that previously to it’s enactment (1925), at common law
could have severed JT personalty by simply giving notice (the statute says it is now
allowing this for land as well). Although there was no English common law authority
actually showing could sever personalty in this way, it did raise the possibility that at
common law there was a difference in rules of severance between realty and personalty
joint tenancies over unilateral actions. This has not been accepted in Canada – see Walker
v. Dubord, which said that a unilateral intention by one party (not amounting to
destruction of a unity) could not sever personalty nor realty
Walker v. Dubord (1992) (B.C.C.A.)
- Facts: husband (plaintiff) and deceased wife were JT’s. Shortly before wife died, she
transferred the JT land to herself, and attempted to sever her JT in personalty by a
unilateral declaration (investment certificates and bonds).
- Issue: concerned both realty and personalty, so addressed the question of whether there
is a separate rule over severance by a unilateral action (that doesn’t destroy a unity)
for personalty as opposed to realty, as suggested by the English
- Decision: held for the husband:
- Clearly there was a severance of the land (the wife had transferred the land to herself –
recall s.18 of the B.C. Property Law Act)
- The JT in personalty (the bonds and investment certificates) had not been severed simply
by her unilateral declaration since it did not destroy one of the unities i.e. her
statements in the letter which effectively said to treat the personalty as TIC (she could
have transferred this personalty to herself, which would have severed, but she did not)
- In B.C. a unilateral (e.g. written) declaration of intent to sever, even if notice was
given to other JT’s, does not sever unless carried through all the way.
- The rules for realty and personalty JT’s do not differ at common law in Canada
(despite the suggestion in the English Law of Property Act 1925)
- Recall from above Re: Sorenson and Sorenson, (1977) (Alta. App. Div.) which said,
after reviewing the authorities, a unilateral action (short of destruction of a unity) such
as an application for partition in equity cannot sever
-
E. Partition and Sale
General History
- Partition = where one co-owner wants to sever but other(s) do not, so must go to court to
break co-ownership. Not just talking severance by breaking one of the 3 additional JT
unities to convert to TIC but rather talking about destruction of the unity of possession
so destroys co-ownership completely, and applies to both JT and TIC. Ex-co-owners
then become owners in severalty (i.e. individual ownership)
- At common law, there was no way to partition other than through mutual agreement, but
statutes in 1500’s created a writ of partition
- The English Real Property Limitation Act, 1833. Abolished the Common Law writ to
order a partition. However, the courts of equity assumed the independent power to decree
a partition and this power was exercised even after the Common Law writ was abolished,
and it remains today
- The English Partition Act, 1868 empowered the court to order a partition and sale
- British Columbia adopted this Act in 1880: the B.C. Partition of Property Act
-
Therefore, may bring action under the statute (for land only, not personalty) or the
courts of equity (applies to personalty)
B.C. Partition of Property Act
- S.2 describes who can be subject to an order of partition, court has discretionary power to
order partition for land.
o All JT’s, TIC’s, mortgagees, creditors or other parties having liens on any
property may be compelled (note discretionary) to suffer a sale or (physical)
partition of the land. A partition may be had whether the estate is legal or equitable
(note must go to equity for action in personalty which has developed the sale idea
– can’t cut a horse in half!)
- S.3: Proceedings for a partition can include a sale and distribution of the proceeds
- S.4: Is the most important section since it describes who can seek an order of partition i.e.
only those with a right to possession. Any person who, if this act had not been passed,
might have maintained an action for partition may maintain such action against any
one or more of the parties interested without serving the other or others (if any) of those
parties.
- SS.6-8: Deal with sale rather than physical partition (note that equity has not yet replicated
these ideas for personalty):
o S.6: if applicant owns 1/2 or more of property and requests sale (rather than
division of the property), then the court “must” order sale (unless good reason not
to)
o S.7: but if less 1/2 then the court “may” order sale if sale is requested
o S.8: if the court thinks fit parties can be bought out by other tenants
Who May Apply
Only those with right of possession may seek partition (e.g. not creditors, remainderman,
etc)
Morrow v. Eakin and Eakin, (1953) B.C.S.C.
- Facts: creditor (P) received judgement against one of the co-owners (D) in JT. The
creditor wanted to bring an action for partition and sale of the defendant’s portion so that
the judgement debt could be satisfied out of the proceeds (the creditor was concerned
since the lien is a charge against the defendant’s interest, and so it will disappear if the
defendant dies (Re Young is authority for this proposition).
- Decision: Action dismissed. Only those who have a right (i.e. a vested interest) to
possess can make an action for partition. The right to maintain an action for partition is
limited to JT’s and TIC’s. Judgement creditors (who only have a charge /
encumbrance) are not entitled to maintain a partition action (they must proceed
through the Execution Act) and neither could a remainderman, reversioner.
- Comment: recall Morris v. Howe where life tenant could not order partition over
objection of consecutive interest (remainderman), although life tenant does have
possession so potential uncertainty here
Nature of the Jurisdiction
Court discretion: may focus on equitable “clean hands” maxim or on statutory discretion
Rayner v. Rayner, (1956) B.C.S.C.
-
-
-
Facts: husband (P) was JT of a cottage with his wife (D). The cottage was purchased with
the profits from a shop owned by the wife, but in which the husband worked. From the
date of their separation, the husband had possession of the cottage and collected rents for
7 years. The wife then occupied the cottage claiming it as her home. The husband
(seeming to want to cause her as much hardship as possible) then sought partition and sale
of the cottage, but the wife felt that she was also entitled to 7 years.
Decision: Action for partition denied. The wife is entitled to sole occupation for same
number of years as husband enjoyed.
o But when he seeks to make the right absolute, he must do so by invoking Equity.
A court may exercise its equitable discretion (concerning fairness) in the awarding
or refusing partitions and sales, and the considerations taken into account are
different for a married couple than for business partners say.
o In this case a Maxim of Equity applied: “he who comes to equity must have
clean hands” so for equity, there must be no unworthy malice, spite, or
vindictive behaviour. Court saw the husband’s conduct in this case as poor.
Comment: but we are dealing with property rights, and so perhaps motive should not be
relevant, as demonstrated in the percolating water case Bradford v. Pickles
Bradwell v. Scott 2000 BCCA
- Position of equitable discretions is retracted from because the courts have statutory
discretion and they will exercise that discretion unless justice requires otherwise
- But court doesn’t say that equity can never be taken into account – it may influence but is
not a pre-requisite for jurisdiction
- So equity is not irrelevant but statutory basis for discretion is distinct in and of itself as a
statutory discretion of which equitable principles might be contemplated
- Court went on to look at S.6 – deals with a sale in instances where a party with more than
half requests a sale and S.2 which gives partition to sell or partition
- Sections don’t really indicate that they know each other exists
- Reconcile by saying main discretion is under s.2 – to order a partition or sale or not
- And then s.6 unless court sees good reason to contrary (test for that is no different
than test under s.2)
- In an appropriate case, court doesn’t want to order sale, but does want to order partition so
if you have a large expanse of land around a lake (like in this case) 1 option could be a
physical division
- If a person who owns half or more says “I want to sell” you can’t order a physical
partition unless there is good reason to the contrary
- The test that was used was “good reason to the contrary”, the prima facie owner has the
right to partition but there may be good reason to the contrary
o Like serious hardship may be a factor for the overall good reason to the contrary.
o Like the house is specially equipped for a party with a disability. So they may put
the party on notice to look for another place that is equipped.
- Section 2, says “may” so this is the test used to determine if they should partition
-
Note that courts may give higher consideration for spouses (especially with children) and
so are more likely to deny the other partner partition, whereas if the case concerns siblings
(even if one has children) the discretion may be applied differently (since siblings not
considered responsible for each other’s children) B.C. Family Relations Act (applies to
marriage breakdown)
- S.55(2): In an order for partition and sale where payment is to one or both spouses, the
court has the discretion to refuse the order, or to change the division from 1/2 each
B.C. Law Reform Commission
- (not law, not adopted) – controversial recommendations
- JT’s ought to allow unequal shares (and benefit of survivorship should be allowed despite
those unequal shares)
- Secret unregistered unilateral severance is in conflict with the registration system, so
should not be allowed – either registration or at least notice to other co-owners should be
required to make severance effective
- The Morrow decision results in a creditor possibly losing out, since cannot seek partition
and the charge will die with the co-owner (e.g. mortgage dies with mortgagor). Therefore
law should be changed so that a creditor can seek partition, and a charge should continue
to have effect after the co-owner’s death, becoming an encumbrance on the surviving JT’s
10. Future Interests
Nature of Future Interests
Conditions precedent (contingent) v. conditions subsequent (vested) v. absolute vesting
- Gift over: any transfer of property to take effect after the termination of an intermediate
estate such as a life estate
- Present interest: is an estate in possession. It is “vested in interest” meaning have the
interest now, and additionally is also “vested in possession” meaning can take immediate
possession (if “vested in possession” than will also be “vested in interest” automatically)
- Future interest: an estate in expectancy and is a present right for future possession which
will or may be obtained (it cannot be vested in possession)
o “Will” means the future interest is vested in interest (i.e. certained – it must
happen)
 To A for life remainder to B: then B has an unqualified right to take
possession as soon as the preceding estate ends and that preceding estate
must end at some time (and if B happens to die before A then the
remainder passes to B’s heirs because B has the interest already, that’s
what vested in interest means)
o “May” means the future interest is only contingent (i.e. uncertained, i.e. nonvested)
 It is dependent on the occurrence of some event (a contingency i.e.
condition precedent) other than the guaranteed passing of a prior particular
estate which may or may not occur, and so the interest may or may not
become vested (recall a grantor with fee simple who gives a life estate is
not giving the entire estate, but rather only a “particle” of that estate, and
hence the term “particular estate”)
 To A for life remainder to B in fee simple if married at the time of A’s
death: B has a contingent remainder
 To A for life and then to C in fee simple if C marries D: C starts out with a
contingent remainder, and if C than marries D (while A is still alive) then
C’s former contingent interest becomes vested in interest, and then on A’s
death it becomes vested in possession.

To A for life and then to B in fee simple if and only if B attains the age of
19 years: B starts out with a contingent i.e. non-vested interest, which
become vested in interest if reaches 19 during A’s lifetime, and if so, then
becomes vested in possession on A’s death
- Vested Interest: If all you are waiting for is the passing of prior estates, then you are
vested in interest because that is not a contingency
- Contingent Interest: A contingency is when, in addition to the passing of the prior estates,
there is some other factor/criteria that is specified
- An interest is contingent until:
o The identity of the grantee/devisee is established, ascertained and the
grantee/devisee is in existence (i.e. an unborn child - the identity is known, but the
gift doesn’t vest until the child is born)
o The exact share of each member is ascertained: in the case of a class gift (i.e. a
gift to a group of people defined by reference to status as a class e.g. children,
grandchildren, children who have reached 21, grandchildren who are married, etc.)
then the interest is contingent until the class becomes closed (i.e. no more can join
the group e.g. there can be no more children)
o The rule against perpetuities is relevant here since it only applies to contingent
future interests (it basically says that contingent interests must vest, if they are
going to vest at all, within a certain time period called the perpetuity period)
Conditions
Condition Subsequent
- Provided that, but if, on condition that
- The grantor has a right of re-entry
- It is a vested interest, you have it and are using it. But if you do something that you’re not
allowed to do, then you lose it
- Ex. Have a water bottle and using it and enjoying it, but if you fail property then the
original person gets it back. Someone has to actually do something.
- In these cases you will have a sub clause. Since it is a separate clause, you can strike out
the clause and so you are left with the grant and so the person gets to keep it.
- From A to B but if X occurs then back to A: which means there is a possibility of
divestment (called a defeasible grant). Note that a condition subsequent cannot stop
vesting in the first place.
Condition Precedent
- Here you don’t have anything yet
- Ex. If you get an A, then you can have the bottle. You have an interest in the bottle but
don’t have it yet
- In this case you never had the object, it is contingent on you doing something. Therefore
it never goes back to anyone
- It is like an incentive
Determinable Interest
- While, during, as long as, until
- Possibility of reverter but the gift will naturally end.
- Ex. You get the water bottle until you fail property. Natural falling off, someone doesn’t
have to actually do anything
- Here the clause itself will stipulate the ending.
-
-
Here since it is all tied together, you cannot just strike out the clause and so whole gift is
void and therefore it goes back to the person, reverter
Where there is an ambiguity in a document between a vested interest and a non-vested
interest, the courts have a preference for early vesting to avoid the problems of
contingencies (such as the rule against perpetuities and the difficulty selling contingent
interests) and choose whichever construction which will lead towards the vesting of an
interest.
Brown v. Moody, (1936) P.C.
- Illustration of condition subsequent (which can only occur after vesting and if it does it
divests, but can’t prevent vesting in the first place like a condition precedent)
- Facts: Deceased left fund of $100,000 the income of which was to be paid to son during
his lifetime. On the death of her son, 1/2 of the income was to be given to grand-daughter,
and 1/6 to be given to each of her three daughters – let’s call the 4 of them the 4 D’s. In
the event that any D should predecease the testatrix or the son, leaving issue, the children
of that D would take over the interest. No one died before the testatrix, but one of the
daughters died without children before the son died.
- Issue: if one of the D’s died without issue and before the son died (as here), did that D
actually have anything to pass on in their will (i.e. did they have anything vested in
interest). Or did the interest (on the sons death) pass back into the testatrix’s estate. The
lower courts decided the latter, but the J.C.P.C. disagreed.
- Decision: had to determine the scheme that the testatrix intended.
- Principle: If no condition precedent, there is immediate vesting in the remainderman on
testator’s death. So a preceding life interest never stops the vesting of an interest in the
remainderman. Further, the mere postponement of the distribution of the capital, through
the waiting for the life estate to terminate, will not by itself exclude immediate vesting of
an interest.
o So if no CP then doesn’t matter if the person has died, the gift will not stop vesting
- Application: On the death of the testatrix, each D’s interest was immediately vested
since no condition precedent here, such as requiring a D to out-survive the son, because
the division of the capital must come eventually (i.e. when the son dies).
o Also, the purpose of the instrument is so that the son can enjoy the income during
his life, and there is no reason to deny vesting to the ultimate takers to achieve
this. So just like “to son for life then remainder to D’s” so each D has a remainder
that was immediately vested in interest on the testatrix’s death.
- Normally if a D has a remainder vested in interest and D dies (before it becomes vested in
possession) the remainder will simply go to D’s estate. However, there is a condition
subsequent here since the will says if any D predeceases the son “with issue” then that
D’s interest should go to their issue i.e. that D’s interest divests and so does not go
according to that D’s will/estate.
o Note this condition subsequent does not apply if a D dies without issue before the
son – in such a case it will pass as normal to D’s estate
o So could re-word the will something like this: “to son for life, then remainder to
D’s, but if any D should die with children and before son dies, then that D’s
interest divests from that D and goes to their children”
Re Squire, (1962) Ont. H.C.
-
Illustration of absolute vesting (i.e. neither condition precedent nor condition subsequent).
Background: rule in Saunders - if there is an absolutely vested gift payable at a future
time along with all accumulated interest, then beneficiary, under the law of trusts, can
demand the whole thing at age 21
o I.e. if you give someone something absolutely, can only deny access to them if
they are under the age of majority, which was 21. Note: the trust must be
absolutely vested in the beneficiary
- Facts: Testator left certain properties to trustees to hold for his grandsons until they reach
30 years, and then convey it to them absolutely. Income was to be accumulated and added
to the inheritance, unless they wished to pursue higher education, in which case they could
encroach on the capital up to a certain amount. There were two further residuary bequests;
the first offended the perpetuity rule while the second didn’t.
- Issue: is there a condition precedent or condition subsequent or neither?
- Decision:
- If a testator gives absolute gift giving both capital and accumulated interest, but attempts
to accumulate interest for a number of years, then he is deemed to have meant an
immediate gift.
o If the gift is contingent (i.e. condition precedent) or defeasible (i.e. condition
subsequent) or if any other person may have an interest in the trust, then this
principle does not apply.
- There was an absolutely vested gift to the grandsons (i.e. neither condition precedent nor
condition subsequent) since the words in the will when read in context (recall wills are
interpreted as a whole whereas grants inter vivos may look only at the granting clause)
indicated an early vesting (which the courts tend to support):
o “When and so soon as” or “upon attaining” are not conditions precedent, whereas
“if you should attain” is a condition precedent.
o The property was separate from the estate (if it had been a condition precedent
more likely property would have been kept with the estate)
o The income was to accumulate for one beneficiary (Teddy)
o Most importantly there was no gift over specified i.e. didn’t say “to Teddy, but if
he dies before 30 then to B” (contrast this with Phipps v. Ackers).
- Therefore the interest is vested absolutely and the rule in Saunders applies so the
grandsons were entitled to receive the property at age 21
Re Carlson, (1975) B.C.S.C.
- Illustration of a condition precedent (i.e. condition which must be met before vesting can
occur)
- Facts: Testator devised the residue of his estate to be held in trust and invested, and that
the income and capital be used for maintenance, education & advancement of youngest
son Chris (C) until he reached 21. The then residue was to be divided between C (45%),
the daughter (D – 45%) and other son (S to pay his debts – 10%) i.e. the estate which is
already vested is to be divested in favour of the 3 of them
- Issue: Is there immediate vesting for D & S on the death of the testator or is there a
condition precedent (i.e. not vested till C reaches 21)?
- Decision:
The court said it must “sit in the armchair of the testator” in order to interpret the
circumstances in which the will was made by the testator to discover his intent in creating
the will.
- The court found his intention was to keep the whole (both income and capital) for Chris’
use until he reached 21, and that if there was nothing left when Chris reached 21 to give to
his siblings that would be ok (this was based on the fact that the executor was directed to
use not only the income but also the capital of the estate residue for Chris’ benefit until the
age of 21). It was therefore inconsistent to have D’s and S’s shares vesting immediately
at the death of the testator
- Distinguishes Re Squire where only one person is involved
- When the whole of a gift, income and capital may be used for the benefit of one person
until a stated age, and “then the residue” is to be divided between him and another, the
residue is not vested in the other until the first person reaches the stated age. This is
because when the first person has the power to encroach, the interest in the residue
cannot vest as the exact amounts (or even if anything will be left) cannot be
determined
- Thus Chris had an immediate and vested interest in the gift subject to a trust for D and
S for their portions of the residue. D and S had contingent interests subject to C reaching
21.
- The court will only interpret in favour of a vested interest over a contingent one where
language is ambiguous
- Note that the estranged wife was left $1.00 and said she can maintain herself, to prevent
scrutiny under the Wills Variation Act, but such clauses are double edged swords since if
they are too obviously spiteful they may encourage the court to change the will
- Comment: Cannot say that certain words always create a condition precedent and other
always create a condition subsequent, since must look at the provisions of a will in
context (for example, the context here was that the testator wanted to provide for Chris).
However, without further context words like “upon”, “when”, “if”, “as”, “as soon as”,
“provided” all are more likely to imply conditions precedent, whereas “but if” is more
likely to imply condition subsequent.
Phipps v. Ackers, (1842) H.L.
- Another way to avoid a condition precedent and gain a vested interest (with a condition
subsequent) was shown
- Facts: Testator devised land to his trustees to convey to his godson upon his reaching 21,
but if godson doesn’t reach that age and he doesn’t leave issue, then will shall divest and
become part of the estate residue which goes to P, the testator’s wife. At the time of the
testator’s death, godson George was 12. George did attain 21, but the P claimed the
income from the estate that accrued from the time of the testator’s death to when the son
reached 21
- Issue: Who is to get the income that accrued over the 9 years?
o P arguing that George’s interest is contingent i.e. that he must reach 21 is a
condition precedent and so he would not get a vested interest till reaching that age
(suggesting the income should go elsewhere until that time).
o But can argue the same for P i.e. that there is a condition precedent on her interest,
namely that her interest doesn’t vest unless George does not make it to 21 (and so
she shouldn’t get the income either). But someone must get it!
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Decision:
Principle: “if there is a gift over upon death under the stated age, the gift over shows that
the first devisee is to take whatever interest the person (i.e. the second devisee) claiming
under the devise-over is not entitled to i.e. the immediate interest.” i.e., by looking at
what the 2nd person doesn’t get you determine what the 1st person does get.
So when a gift is to a devisee upon attaining a certain age, with a gift over to some other
ascertained person(s) if the devisee dies before reaching that stated age, the very
existence of the gift over shows that the first devisee is to take an immediate interest
(albeit subject to divesting if don’t reach that age)
Application: the second devisee here (P) did not get an immediate vested interest (on the
death of the testator) since don’t get anything if George makes it to 21 (or he dies before
21 but has issue), so therefore the immediate vested interest must go to George, and so
the condition of reaching 21 (without issue) is a condition subsequent for George. These
words of contingency apply as a condition precedent to the gift over, not the gift.
The court gives a typical rule of interpretation: “sometimes you can give the literal
meaning to words, but where the context conflicts with those meanings, it overrules them”
Comment:
When you see a clause that says what happens if grantee dies before attaining contingency
and mentions issue, then Phipps v. Ackers is likely to apply
Note difference with Re Squire, since the will here said what would happen if George did
not reach 21 without issue
This rule applies to equitable interests as well. Therefore, the 2nd party gets nothing, unless
the 1st party fails to fulfil the stipulations of the gift
Re Barton Estate, (1941) S.C.C.
- The Phipps v. Ackers rule applies to personalty as well as realty:
- Facts: Testator left sum of money to his grandson when he “shall attain 25”, but allowed
the income to be used for his maintenance and education prior to his attaining 25. If the
grandson did not attain 25, and left no wife or children (among whom the money could be
divided equally), then it should fall back into the residue of the testator’s estate.
- Issue: is the grandson entitled to the income generated during the intervening years until
he reaches 25? The answer will be yes if the grandson’s interest is vested, but no if it is
contingent (i.e. condition precedent)
- Decision:
- Approved the rule in Phipps v. Ackers: “if there is a gift over upon death under the stated
age, the gift over shows that the first devisee is to take whatever interest the person
claiming under the devise over is not entitled to i.e. the immediate interest.”
- Thus the grandson took a vested interest subject to it being divested should he not reach
25. Therefore the grandson is entitled to the intermediate income upon reaching the stated
age
- Comment: Recall it is best to use “child” instead of “issue” which means “lineal
descendants”. Also, when see “without issue” or “without children” this is likely to be a
condition subsequent.
Festing v. Allen, (1843) Exch
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However, just one year later we were given a limit to the application of the Phipps v.
Ackers rule. Condition precedent rather than condition subsequent found on age
attainment requirement in contingent remainder
Facts: Testator left land to his granddaughter for life, and upon her death, to her children
who shall attain 21, and if no such issue the land was to go into other trusts specified in
the will. On the granddaughter’s death she left three infant children all under 21 (these
children were born out of wedlock and the courts used to treat such children as nonexistent)
Issue: do the children obtain anything here?
Decision:
Rule of destruction of contingent remainders: if a remainder was still contingent at the
time when the prior particular estate ends, this would result in an unacceptable gap in
seisin (see Rule 2 below on remainders). Therefore, on passing of the prior particular
estate, all unmet contingencies are destroyed.
Thus the infant children did not get vested interests subject to divesting if they didn’t
reach the specified age (as was given in Phipps v. Ackers) because they had not reached
21 upon the death of their mother.
Comment:
If upon her death she had a single child of 21 (and others under 21), that one child would
have taken absolutely to the exclusion of all other children.
The court could have used Phipps v. Ackers to allow the children to get everything not
given in the gift over, but this would have overturned the long-standing common law rule
of destruction of contingent remainders
Can get around the rule of destruction in Equity, but here the trust was not properly set up.
See Re Robson (which, if the decision is correct, says everything in a will is equitable).
The rule of destruction was abolished in England in 1877 by Contingent Remainders Act,
but no such legislation here in B.C. so Festing v. Allen can still apply (e.g. see Re Crow)
Also in Phipps v. Ackers the beneficiaries were ascertained on the death of the testator,
but they weren’t in this case. The rule in Phipps v. Ackers is severely limited by context.
Facts must be almost identical to Phipps v. Ackers or Re: Barton estate before the rule
applies.
Types of Future Interests
Common Law future interests: reversions, remainders, rights of entry, possibility of
reverter
- There are three types of future interests
- (1) Common law future interests applies to legal interests
- (2) Legal Executory Interests applies to legal interests created by the Statute of Uses
executing the use (not the double use)
- (3) Equitable future interests applies to the equitable interest created by the double use
(i.e. a trust).
- There are 4 types of Common Law Future interest:
- (1) Reversions
o Always vested in interest (i.e. it concerns something that must return, not may)
and is that part that remains with a grantor who has not exhausted the whole of the
interest by the transfer
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-
o E.g. A, holder of fee simple grants to B a life estate, so possession leaves the
grantor but future interest of return of that possession remains with grantor
o A can later dispose of the reversion (by sale, gift or will) and the interest of the
recipient is still called a reversion because, although disposed of by A, it still
retains the status it had when it first came into existence
(2) Remainder
o Grantor A gives smaller estate than the complete interest to B, and so gives
what is left over (the remainder) to C. Thus a future interest where possession is
postponed until after the expiration of some prior particular estate
o Only way at common law to give a future interest to a third party (although
grantor can assign their other common law future interests to a third party)
o E.g. A grants a life estate to B with remainder to C in fee simple
o Can be vested in interest or contingent
 E.g. A transfers property to B for life and then to C in fee simple. Here C
gets a vested remainder (vested in interest, but not vested in possession
until B’s life ends)
 E.g. A transfers property to B for life and then to C in fee simple if C
marries D. Here C gets a contingent remainder since a condition precedent
has been added to it.
(3) Right of entry (a.k.a. right of re-entry)
o Defeasible grant with a condition subsequent that can occur after vesting and if
so grantor has right to re-enter (i.e. upon condition occurring, grantor can bring an
action to recover possession, but up until exercising this right the transferee
continues to enjoy the property, and there is a limitation period of 6 years within
which the grantor must bring the action - Property Law Act s.8(3) and Limitation
Act)
o A complete gift is given, but the condition subsequent operates so as to
artificially/prematurely terminate an estate by giving grantor right (i.e. option)
to re-enter and determine the estate (i.e. to divest grantee)
o This is an exception to repugnancy that is permitted
o Note that a condition subsequent can also be used in a legal executory interest
(which is not common law and can grant to a third party – see below)
o e.g. from A to B in fee simple but if B marries C then property to return back to A
(other common words are “provided that”, “on condition that”, “if it happens that”
although remember words in a will must be read in context)
o The contingency (i.e. the condition subsequent) can’t prevent vesting, but rather
it divests an already vested interest if and when the contingency occurs (contrast
this with a condition precedent which prevents vesting in the first place).
o Thus an estate with a condition subsequent is vested, but the right of entry itself
(i.e. the return of the property to the grantor) is contingent, since the condition
subsequent in the gift is a condition precedent for the right of entry.
o Think of the condition subsequent as a rabbit (the condition) sitting on the log (the
gift), and if the condition subsequent is invalid, the rabbit is simply flicked off
leaving the log (i.e. leaving a valid absolute gift) behind. Contrast this with an
invalid condition precedent, which becomes an impossible to satisfy contingency,
and so the gift can never be vested.
o Be careful of the words contingent and contingency: contingent means there is a
condition precedent, and both a condition precedent and a condition subsequent is
called contingency
o Property Law Act s.8(3): a right of entry affecting land, exercisable on breach of
condition may be made exercisable by any person and the persons claiming
under him. This has not been interpreted by the courts, but could be interpreted to
allow a 3rd party to a right of entry. At common law however, only with a
remainder can a grant of a future interest be made to a third party
- (4) Possibility of Reverter
o Arises when a grantor creates a determinable gift in fee simple or life estate i.e.
which is to last until the occurrence of some future determining event specifying a
slot in time written into the words of limitation, and the event may or may not
happen
o E.g. from A to B in fee simple until B marries C (other common words include
“while”, “whilst”, “during”, “so long as”, “as long as” although remember words
in a will must be read in context). A maintains a possibility of reverter, and if B
dies without marrying then the fee simple goes to B’s estate as an absolute fee
simple (since the determining event can never now occur that B is dead)
o The grant is subject to divestment i.e. legal ownership will automatically revert
back to grantor on determining event occurring, if it occurs at all
o It is not giving completely and taking back, as in right of entry, rather it is giving
something less. Thus, the courts have decided that the possibility of reverter itself
is vested since courts have considered the determining event to be a “natural”
termination as opposed to a condition subsequent which cuts short an otherwise
completely given estate.
o Think of this as a rabbit (determining event) in a log (the gift) – it is an integral
part of it that cannot be simply flicked off. So if the determining event is invalid it
makes the entire gift invalid (dead rabbit in log makes the whole thing stink!)
Re Tilbury West Public School Board and Hastie, (1966) (Ont. H.C.)
Illustration of possibility of reverted/determining event/determinable estate:
- Facts: By deed in 1890 land conveyed in trust school board for so long as it is used for
school purposes, after which time it would be returned to the owner. The land was used
for school purposes until 1961, after which it was used for storage of school things. In
1964 the Dept. of Highways expropriated the land.
- Issue: Was the grant a determinable fee simple subject to determining event and a
possibility of reverter or was it a fee simple subject to a condition subsequent and a right
of entry. School wanted the latter since if it was a condition subsequent it would be invalid
(due to uncertainty) and so the condition would be “flicked off” leaving the gift of land
with the school absolutely.
- Decision:
- The distinction between a possibility of reverter/determining event and a right of
entry/condition subsequent is that a determining event itself states the limit for the
estate first granted in the granting clause (as opposed to giving a complete grant and
then defeating it by cutting it short with a condition subsequent which is an independent
clause) and reverter is automatic/natural (whereas with a condition subsequent the grant
continues until the right of entry is exercised)
The words “so long as it shall be used for” create a determinable fee simple with a right of
reverter, because the limit is within the granting clause and this interpretation is
supported by the habendum.
- Payable in part to both parties because after 1961 the land was only partly used for school
purposes.
- Found that the rule against perpetuities did not apply to the possibility of reverter (since it
is considered to occur naturally and so is not contingent – something of a fiction)
- Comment: rule of construction: in interpretation and deciding between a right of entry and
possibility of reverted, if there is any inconsistency in the deed the earlier direction
governs e.g. if the words providing for a return of the lands are considered inconsistent
the granting clause, then the granting clause should control (not an issue here since they
are consistent)
Re McKellar, (1972) Ont. H.C.
Illustration of right of entry/condition subsequent/defeasible:
- Facts: In 1892 land was granted to the C.N.R. “only so long as they continued to use the
land for railway purposes”. C.N.R. proposed to abandon the railway line
- Issue: Was the interest a determinable fee simple or a defeasible fee simple with condition
subsequent (in the latter case the condition would be invalid under the rule against
perpetuities)?
- Decision:
- With a determinable estate:
o The determining event is part of words of limitation and marks natural
boundary of the estate rather than operating to defeat it.
o It does not grant complete fee simple to grantee, but a limited estate.
o It is an essential characteristic of all determinable estates that they may possibly
endure forever.
o Can be created either “until a specified contingency shall happen”, or “as long as
an existing state shall endure”.
o No specific words are needed as long as words are clear that they mean that the
duration of the estate depends upon the future event
- On the other hand, a fee simple subject to a condition subsequent:
o The condition is an independent clause added to a fee simple absolute and
operates to defeat it prematurely, operating to defeat title already granted before
that title reached it’s natural boundary
o Right of entry must be exercised by grantor or estate to destroy the fee simple
o Normally created by use of words including “but if”, “until”, etc.
- In this case the grant was forever, followed by a condition which included the words
“become entitled to enter” which seem to contemplate a right of entry. The condition is an
independent clause - it does not set a limit on the estate first granted (as it was granted for
forever) but rather operates so as to defeat it. Thus C.N.R. held a fee simple interest
subject to a condition subsequent. But since the condition is invalid the land would not
revert.
- Comments: Words are strong general indicators to decide if determinable v. condition
subsequent, but must still interpret them in the context of the document
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Legal Executory Interests
Rules restricting remainders, avoided by legal executory interests & equitable future
interests
- Recall that remainders are the only way at common law of creating a future interest
in a 3rd party. They are in arbitrary order. Note prior to 1535 (Statute of uses) could get
around these common law rules in Equity, and after 1535 by legal executory interests
- The first two rules concern gaps and springing interests
o gap means a gap in seisin and
o a springing interest is one that attempts to just spring up to fill a gap – these first
two rules say that such gaps and springing interests are not allowed):
- Rule 1: A remainder must be supported by a prior estate of freehold created by the same
instrument as the remainder. Void unless supported by prior freehold (springing)
o To B and his heirs if B reaches 21. You can’t give it to someone who is incapable
of holding it. If you are giving to someone who is 19 and they can’t have it until
they are 21 the entire gift is invalid because there is a two year gap. The grant
offends the rule because there is no preceding estate of freehold to support the
contingent interest which A wished to confer on B. i.e. A trying to create a
“springing interest” here that will just pop up after a gap in seisin when B turns 21.
o To B for life and then to C and his heirs if C reaches 21, is valid. B has life estate
vested in possession and C has a remainder vested in interest. So B’s estate is the
prior estate of freehold which supports the remainder interest in C, so there is no
gap in seisin, and therefore the remainder is valid. A would also get a reversion
upon a failed condition precedent, so if on B’s death C hasn’t reached 21, returns
to A (i.e. common law prepared to wait and see if the contingency will be met, and
if not then the contingent remainder is destroyed – note the common law is not
prepared to wait and see for perpetuity purposes however). Thus valid
o E.g. A (owner in fee simple) transfers Blackacre “to B for 2 years and then to C &
his heirs if C reaches 21”. C gets nothing because, although there is a preceding
interest in B, it is only a leasehold interest (it is a precise amount of time) and not
a freehold estate. So no prior estate of freehold, and invalid
- Rule 2: A remainder must be limited so as to be capable of vesting if at all at the moment
of termination of the prior particular estate. Timely vesting (Springing)
o A to B for life, and one year after Bs death to C in f/s. There is one year where no
one has this property. Therefore you have a one year gap. Grant to B’s son is void
ab initio (from the outset) since there would inevitably be a gap in seisin.
o A to B for life and then to C in f/s at 21. C must be able to take immediately on Bs
death, if B dies and C is only 19, there is a gap in seisin and therefore destruction.
It is not void from the beginning, but potentially valid.
 This is where you would wait and see, until B dies to see if it is valid, if
the child is 21 then it is not a problem but if they don’t reach 21 upon
death then its invalid
 Have met rule one because you have a freehold estate, but it would be
void from the beginning because you have created a gap so it is not
capable of meeting rule two that C must be able to take immediately upon
Bs death, so you have violated rule 2.
 Accordingly, the remainder is treated as prima facie good since it may be
valid (i.e. the common law will wait and see what happens on B’s death)
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but the contingent remainder will be destroyed if condition precedent
has not been met on B’s death (i.e. no son has reached 21 at that time) –
thus A holds a contingent reversion, with condition precedent = no son has
reached 21 on B’s death. Recall this is the rule of destruction of contingent
remainders mentioned in Festing v. Allen.
The next two common law rules disallow shifting interests (shifting refers to title moving
from one person to another):
Rule 3: A remainder is void from the beginning if it takes effect in possession by
prematurely defeating the prior estate of freehold. Void if prematurely defeats prior
freehold, no wait and see (SHIFTING)
o This rule is based on the common law principle that a condition subsequent could
only benefit the transferor (or his estate) through a right of entry and could not
benefit a 3rd party
o Most likely this one will be on the exam.
o Someone has to act, difference between condition subsequent versus a
determinable interest which is okay under the common law remainder rules.
o “A to B for life BUT IF B marries C, then to D”, we are benefiting a third party,
not a right of entry or re-entry, it is about sending the land to a third party. In CL
this was a shift by defeat or premature termination, so it was void.
o If it was not a premature defeat, this rule would not apply, change it to “A to B for
life, until B marries C and then to D. This would not violate the rule.
 At common law this rule could be circumvented by making the prior estate
a determinable life estate with a determining event and hence a
“natural” ending (rather than a condition subsequent and a premature
ending). So change “but if” to “until”. This is a valid interest as the
remainder awaits the natural termination of the prior supporting interest
(which is a determinable life estate i.e. simply giving less to begin with in
the first gift)
Rule 4: A remainder after a fee simple is void (SHIFTING)
o As the fee simple is the greatest interest a transferor can have, the rule that he
could not pass a remainder after the entire fee simple had been disposed of
seems obvious.
o This also applies to a transfer of a fee simple with a condition subsequent, and to a
determinable fee simple. Note however, that a determinable life interest with
remainder is good under both rule 3 and 4 because it is not prematurely ended, and
it is a life estate rather than a fee simple
o A to B in fee Simple, until B marries C then to D. Have used until so that you
don’t violate rule 3, but rule 4 you have a fee simple after a fee simple, and even
though you are taking about a natural end, it is still void under this rule.
o To B and his heir, remainder to C and his heirs. You have already given
everything to B so nothing left to give to C, therefore invalid.
Note the Property Law Act s.8(2) might allow a right of entry to be exercisable by any
person, and so there has been a legislative allowing of shifting interests, going against
these last 2 common law rules (still to be tested in court)
Legal Executory Interests – Rule of Purefoy and Rogers
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These 4 common law remainder rules (including) only apply to legal title future interests.
Prior to the Statute of Uses 1535, could therefore get around the rules by using the single
“use” i.e. a feoffor giving legal title to a feoffee and equitable title to a cestui que use, and
this equitable title could be passed as remainder without having to worry about the 4
remainder rules.
But the Statute of Uses “executed” such equitable interests into legal interests by passing
the legal title from the feoffee to the cestui que use, and the cestui que use now had what
is called a legal executory interest (note there is only a single “use” here, not a double
“use” which would create a modern day trust).
However, four common law remainder rules still do not apply to a legal executory interest
since the Statute of Uses said that the interest the cestui que use now had would
correspond to the equitable interests they held before (to which the 4 common law
remainder rules). Thus springing and shifting can be valid at law as legal executory
interests
o E.g. “A transfers Blackacre to B and his heirs when B reaches 21” is invalid due
to gap/springing in legal title, whereas “A transfers Blackacre to X and his heirs
to the use of B and his heirs when B reaches 21” is valid because the “use” is
executed (so X actually gets nothing) and a legal executory interest is given to B
called a “springing use” because the interest springs up of its own accord without
any prior supporting estate of freehold
o E.g. “A transfers Blackacre to B for life and one year after B’s death to B and his
heirs” is invalid due to gap/springing in legal title, whereas “A transfers
Blackacre to X and his heirs to the use of B for life and one year after B’s death to
C and his heirs” is valid
o E.g. “A transfers Blackacre to B for life but if B marries C then to D and his heirs”
is invalid at common law, but “A transfers Blackacre to X and his heirs to the use
of B for life but if B marries C then to the use of D and his heirs” is ok since C
takes a legal executory interest called a “shifting use” because, on the specified
event happening (marriage) title shifts from B to D
The interests which originate behind uses are called executory interests. If they arise in an
inter vivos conveyance they are referred to as executory limitations, and if from a will as
executory devises. For testamentary transfers the court would imply the words “to the
use of” to save the gift by making it an executory devise, but the words “to the use of”
must be used for inter vivos transfers (still true today) to create an executory limitation.
Indestructability:
Recall from Festing v. Allen that a gift such as “to B for life, remainder to children of B
on reaching 21”, although this might break rule 2 the common law was willing to wait and
see what would be the situation on B’s death, and if at that time all of B’s children were
under 21 the contingent remainder would be destroyed
Pells v. Brown (1621) decided that this rule of destruction of contingent remainders
does not apply to legal executory interests (so such an interest could have saved the gift
in).
However, destruction is not avoided in every case: Purefoy v. Rogers (1671) revised
Pells v. Brown:
o If an interest, even though arising in a grant to uses or in a will, complied
with the four common law remainder rules, it had to be treated as a
remainder and run the risk of destruction and this is presumably still the law in
B.C. (see application in Re Crow in Ontario).
o So if “waiting and seeing” under rule 2 with an interest that was otherwise valid
by the 4 rules, if it turned out the condition precedent on the contingent remainder
was not satisfied, could not then save the remainder by calling it a legal executory
interest. To get around this problem, use a trust (see below)
o E.g. A transfers Blackacre “to B & his heirs to the use of C & his heirs on C
reaching 21.” This is obviously not a valid remainder and therefore must be an
executory interest to which the common law remainder rules and the rule of
destruction do not apply.
Equitable future interests
- Recall in Equity the double use got around the Statute of Uses, with words such as “unto
and to the use of trustees in trust for beneficiaries” (where “unto” means giving the legal
title to A, and there is then a double use/trust which are synonyms, the first of which is
executed by the statute). Remember not to flirt with the statute by only saying use/trust
once (although common practice to simply say “in trust for” – courts will look for the 3
certainties to decide if there is a trust)
- Recall also the resulting trust (works on theory of intent of creation of a trust by the
grantor) and constructive trusts (remedy imposed by law to avoid unjust enrichment)
- Can avoid all of the difficulties of common law except the rule against perpetuities:
o Equitable future interests are not subject to the 4 common law remainder rules
and they are not subject to the rule of destruction of contingent remainders
(Purefoy v. Rogers) – the only thing that binds equitable interests is the rule
against perpetuities. E.g. Can have gaps in equity, since it is only the benefit that
will have a gap and not the legal title (which always remains with the trustee), and
the benefit during that gap will simply go to the trustee
- So not surprisingly trusts are used extensively today (note that in Festing v. Allen it was
not clear that a trust existed).
- Everything that can be done at common law can be done in equity (i.e. any type of future
interest which could be created at common law or under the Statute of Uses can be created
as an equitable future interest)
o E.g. “unto and to the use of X in trust for: A for life, remainder to B and his heirs”
creates in B a vested equitable remainder (corresponds to the common law
vested remainder)
o E.g. “unto and to the use of X in trust for: A for life, remainder to B and his heirs
on B reaching 21” creates in B a contingent equitable remainder (corresponds to
the common law contingent remainder)
o E.g. “unto and to the use of X in trust for: A for life, but if B marries C then to B
and his heirs” creates in B an equitable executory interest (corresponds to the
common law legal executory interest that can arise under the Statute of Uses)
- Rules of destruction do not apply to an equitable contingent remainder that has been
turned into a legal contingent remainder through the Statute of Uses. (Re Robson)
- Re Robson, (1916) (Ch. Div.)
o Facts: (similar to Festing v. Allen): Testator devised property to his daughter for
life and the remainder in fee simple to such of her children as shall attain 21 and if
-
-
more than one in equal shares as tenants in common. The daughter died leaving
four children, two of whom were over 21 and two who were not.
o Issue: Are 2 younger children excluded from their share because they weren’t 21
before their mother died?
o Decision: All four children get shares.
o Court considered testators intention was that all children who at any time will
attain 21 shall take a share (even though their interests may still be contingent at
the time of the life tenant’s death).
o In order to get around the destruction demonstrated in Festing v. Allen, court
interpreted the English equivalent of s.77 and s.78 of the B.C. Estate
Administration Act which says that “the personal representative of a deceased
person must hold the real estate as trustee for the persons by law beneficially
entitled to it”.
o From this the court essentially said everything in a will is equitable i.e. the
freehold estate is vested in the executors, not the life tenant, and the executors held
the land as trustees for those who were entitled to equitable estates on the death of
the testator.
o Comment: after 1925 in England statutory reform saying same thing as this case
(and similar legislation in Manitoba) but not in B.C. There is considerable doubt
as to the validity of this case – if it doesn’t apply, then the only way to have an
equitable interest is if there is a trust (and in trust law today you do not need
special words but must speak in terms that are certain). So in considering a fact
pattern today must say “If Robson is correct then anything in a will is
equitable and so avoids remainder rules, Purefoy and destruction, but
otherwise apply the rules…”
Re Crow (1984) (Ont. H.C.)
o Facts: in a will, property given to A and B for life, remainder to their children,
and if no children then to their nieces and nephews. On A’s death there were no
children able to claim the remainder, but potential recipients were subsequently
born.
o Issue: does the rule in Purefoy v. Rogers apply to invoke rule 2 and make the
remainder void (i.e. destruction of contingent remainder)?
o Decision: Court applied Purefoy, hence destruction of remainder i.e. did not apply
Re Robson to make the gifts equitable, either because Re Robson was not cited to
the court or because the court considered Re Robson to be wrong.
So in summary, if something springs or shifts:
(1) Check first to see if it is an equitable future interest i.e. a trust (i.e. a double use) – if
so, no problem
(2) Is it in a will? If so, say “If Re Robson is correct, then anything in a will is equitable
and so avoids remainder rules, Purefoy and destruction, but otherwise …”
(3) Check to see if it is a single “use” creating a legal executory interest (or if it is
testamentary in which case courts will imply a single “use” to save the gift) – if so, no
problem unless it meets the 4 common law remainder rules in which case will be treated
as a remainder and so still runs the risk of destruction after a wait and see period (Purefoy
v. Rogers)
D. Types and Validity of Conditions and Qualifications
Attributes of future interests: protection from equitable waste, alienability, registration
- Protection of the Land:
- The owners of future interests are obviously interested in protecting the value of their
interest.
- The right of the owner of an equitable future interest is against the trustee, who, if he is
not protecting the land, is probably breaching the trust. Owners of a future interest which
is a contingent remainder may be in a weaker position than the owner of a vested
remainder.
- Using the doctrine of equitable waste the courts can keep a balance between the current
possessor and the holder of the future interest. E.g. City of New Westminster v.
Kennedy (1918) (B.C. Co. Ct.): the purchaser in a tax sale acquires an equitable interest
which may ripen into full title if the assessed person does not redeem before the expiration
of the redemption period, and the assessed person (who remains in possession during that
time) cannot commit equitable waste (court ordered repair of the house in this case after
that person had stripped the house of everything removable)
- Alienability of Future Interests:
- At Common Law some types of future interests could be disposed of inter vivos and
others could not
- B.C. Property Law Act s.8(1): a contingent, executory or future interest in land, and a
right of entry on land, immediate or future, vested or contingent may be disposed of
- B.C. Wills Act s.2: a person may devise or dispose of all property to which he is entitled
in law or in equity, of estates pour autre vie, contingent, executory, or other future
interests in property, and rights of entry
- Registration of Future Interests
- B.C. Land Title Act s. 172: future interests are registered as a “charge” against the
property
- B.C. Land Title Act s.176: title of trustee registered but details of trust are not
- B.C. Property Law Act s.10: a possibility of reverter or a right of entry for a broken
condition may be registered under the Land Title Act in the same manner as a charge
Restraints on Alientation
Validity of conditions/events, restraints on alienation
- Recall the effects of an invalid condition/event:
- Condition subsequent (defeasible / right of entry): invalid condition subsequent
“flicked” off since not part of words of limitation leaving absolute gift (Re McKellar)
- Determining event (determinable / possibility of reverter): invalid determining event
makes the entire gift void because event is part of the words of limitation (Re Tilbury).
As a result courts will sometimes take a results-oriented approach and try to interpret as a
condition subsequent so the gift can remain
- Condition precedent (contingent interest): invalid condition precedent makes it
impossible to satisfy, so generally invalidates the gift
- A gift can also be void if:
- It is illegal (e.g., murder)
- It contains restraints on marriage that go against public policy
- It is a restraint of alienation (e.g. Re Leach "until")
Restraints on alienation and repugnancy: Generally by repugnancy an owner can’t give
something away and then control what the person who received the property does with
it (for both real and personal property). With respect to land, the Statute of Quia Emptores
1290 tried to control restraints on alienation
Blackburn and Cox v. McCallum, (1903) S.C.C.
- Facts: Testator devised to his sons land with the condition that the land could not be
disposed of, or encumbranced, until 25 years after his death. One son mortgaged the land
and the Ps were assignees of the mortgagees. The son defaulted and P took the land and
sold it to D. D objected that the restriction on alienation in the will rendered the
mortgage void so that P had no title to pass.
- Decision: The mortgage was good since the son took the land in fee simple.
o General restriction on alienation is bad (a restriction on alienation is valid if it
applies to, or excludes, only a particular class of persons). If already a total
restraint then limiting it by time will not make it acceptable. However, if only
a partial restraint then limiting it by time can make it more acceptable.
-
Re Brown, (1954) Ch. Div.
- Facts: Testator left property to four sons with the restriction that they could only alienate
to their brothers, otherwise their interest would be held in trust for the grandchildren who
shall attain 21 (i.e. condition subsequent attempted to control alienation).
- Issue: is this restriction on alienation repugnant, or is there an exception to repugnancy
that allows it?
- Decision: The restriction clause is void and can be ignored.
- Recognized that the old exception to repugnancy to allow restraints on alienation had
become the rule. Exceptions have been recognized and they have grown:
o Can restrict from alienating to an individual: E.g. “to B, but if B sells to C then
right of entry back to grantor” was acceptable
o Can restrict from alienating to a particular class of persons: E.g. “can’t sell to
D,E,F,G” was acceptable.
o But what about “can’t sell it except to H” where H = brothers in this case
- To determine if a particular restrain on alienation is valid, must ask whether the
condition takes away the whole power of alienation substantially – it is a question of
substance, not of mere form
- If restricted to alienating to a class, and the class is diminishing (as opposed stationary
or expanding e.g. “lineal descendants”, “family”, “brothers and heirs”) then the restraint
is generally invalid since repugnant i.e. over time will amount to a general prohibition
on alienation. So if the testator attempts to keep the land in the family by restricting
alienation to family members of a specific generation, then he is restricting alienation to a
diminishing class e.g. if restricted to 2 brothers (as here) then they will eventually die so
class is diminishing.
- Must ask (1) does the restraint on alienation take away the whole power on alienation
substantially and (2) if the disposition is made to a class, is the class found to be a
diminishing class, or is it an expanding class
o If it is an expanding then the class will be found to be fine.
o If it is diminishing, then it will be found to be repugnant
Re Porter, (1907) Ont. Div. Ct.
- Facts: The testator provided that the son was not to mortgage or sell the lands provided
to him.
- Decision: This provision was held to be valid because it did not prohibit alienation by
will, lease, or other manner. A clause prohibiting a particular type of alienation is
therefore perhaps ok.
Re Leach, (1912) Ch. Div.
- Facts: Testator drew his own will and put his freeholds in trust. He devised land to his
nephew (P) “until” that nephew assigned or charged it, or became bankrupt (i.e. a pretty
significant restriction). There was also the restriction that he leave it to the male heirs of
his body. If there were no male heirs it was to go to his male nephews. This was a limited
gift, not a restraint on alienation.
- Decision: Restriction was valid, because the equitable estate was determinable (used
“until”) and so would “naturally end” rather than being a restraint on alienation i.e. had
not given a complete gift but then made it defeasible with a condition subsequent i.e.
not giving then threatening to take away, but rather giving less in the first place. If there
was a condition subsequent (“but”) then the restraint on alienation may have been
repugnant.
- Comment: by building the restraint into the clause by using it to define the slot in time
(and so determinable rather than defeasible) the problems of repugnancy are avoided.
Void for Uncertainty
- History: Uncertainty used to arise in racial and religious circumstances e.g. “to A but if
marries a Catholic then …” Courts historically used uncertainty to get rid of
racial/religious conditions like these (by asking what is a Catholic – someone who is a
regular church goer, or someone who says they are, etc) but really a policy decision
- E.g. Re Tuck (1949) (English)
o Facts: Condition subsequent, donee had the interest “but if she married outside
the Jewish faith” then divests, and if any question as to whether the person she
marries is Jewish, the question should be referred to the chief Rabbi to decide
o Decision: Lord Denning found this to be valid – by referring uncertainty to the
chief Rabbi that uncertainty is removed (even though this imposes the chief
Rabbi’s views on the private arrangement and could be argued it ousts the court’s
jurisdiction)
- With a condition subsequent, it will take place after vesting and may continue to have
importance for entire duration of the estate, so courts have said it is important that the
donee be able to understand clearly, from the outset, what actions/conditions will
lead to loss of the interest i.e. for condition subsequent need good clarity of meaning
and if not then uncertain so void
- For a condition precedent, however, it need only be applied once at the beginning of
the interest (e.g. does this person qualify or not) and can then forget it. E.g. “to B if tall”
and if someone 6 feet claims it, although far from certain what tall means can say yes, 6
feet qualifies, and that is the end of the matter (as a condition subsequent this would
likely be void for uncertainty) i.e. don’t have to be able to explain meaning of a condition
precedent as clearly
Re Messinger Estate, (1969) B.C.S.C.
- Facts: Testator left his wife a life interest in a Vancouver home “while she resides in the
home”. On her death or should she leave the home in her lifetime, it was to be distributed
between the two daughters. At the time of the testator’s death to the present the widow
never resided in Vancouver and doesn’t want to in the future
- Issue: is the “resides” condition void for uncertainty (i.e. could mean physically, or just
paying the taxes, or might mean a two week holiday away would terminate the interest)?
- Decision: The condition is void for uncertainty
o Policy reason = shouldn’t be able to force person to reside in a home when the
person is not even a resident of that city.
o Note the importance whether this was a determining event or condition precedent
(invalid event/condition means entire gift invalid) or a condition subsequent
(invalid condition means it is “flicked” off and gift remains as absolute). So as not
to invalidate the gift, courts try to find condition subsequent rather than condition
precedent (i.e. presumption of early vesting if there is doubt) or determining
event. The will clearly states that a “life interest” is given and the condition was a
condition subsequent, so condition “flicked” off.
The Rule Against Perpetuities
CL rule against perpetuities: contingent interest must vest, if at all, within perpetuity
period
- This rule applies across the board, to contingent interests whether legal or equitable, to
legal executory interests (rights of entry), to equitable executory interests (springing and
shifting interests), to personalty and realty, to wills, deeds, and contracts. Thus although
legal executory interests and equitable interests can avoid some or all of the
common law remainder rules, they will not avoid the rule against perpetuities. So
applies to any gift with a condition precedent i.e. contingent. Not concerned with things
that are vested – only things which are not vested (i.e. contingent)
- Only allows you to control 3 generations, including your own (but only 21 years into the
lives of that 3rd generation). To prevent people from ruling from the grave too far into the
future, and to restrict the wealthy trying to keep power in their families forever by
restricting the power of future generations from alienating the land.
- Strikes a balance between desires of the present generation and the similar desires of the
succeeding generations. Conversely, the policy of the law was to prevent land from being
tied up and withdrawn from commerce, so there is an economic efficiency purpose as
well.
- The Old Rule (now gone) was from Whitby v. Mitchell: If an interest in realty is given
to an unborn person, any remainder to his issue is void, together with all subsequent
limitations
- The modern rule (from the Duke of Norfolk case): RULE: No interest is good unless it
must vest if at all, no later than 21 years after the expiry of a life in being in
existence at the creation of the interest. An interest is only valid if remote vesting is
impossible:
o Remote vesting means that an interest may vest after the perpetuity period.
o The perpetuity period is calculated by taking the lives in being at the date the
instrument takes effect (e.g. for a deed on the date it becomes effective, and for a
will on the death of the testator), plus 21 years.
-
Alternatively can describe the rule this way: an interest must vest, if it will vest at all,
within the perpetuity period. So the rule is not concerned at all with whether or not an
interest will vest or whether it will not vest, but rather with when it may vest, if at all.
So the mere possibility that it will vest after the perpetuity period makes it void by the
common law rule.
- Irrevocable v. revocable deed: the time a deed takes effect is usually the date it is
executed and delivered, but if it is revocable (special clause needed) then it starts when
the power of revocation is lost (usually the death of the settlor)
Lives in being:
- Must be human lives and not that of animals or corporations.
- Lives in being may be expressed (by designated, rare) or impliedly involved in the gift,
and they need not be beneficiaries.
- In one sense could say this means anyone alive could be used, but this is useless – need
an effective life in being i.e. must have some bearing on the gift
- If no life in being is possible either expressly or implied, the perpetuities period is 21
years only
- If the lives in being are a class of persons, only requirement is that they are alive at the
date of the creation of the interest i.e. it must be a closed class. So can’t say “all my
children” if I’m still alive and so could still have more children. Note the common law
deems both males and females capable of producing children up until their death (the
Perpetuities Act has changed this).
- Any number of measuring lives may be chosen, provided it is reasonably possible to
ascertain when the last one dies. If too many lives are chosen the disposition may fail for
uncertainty (e.g., the last of Queen Elizabeth’s descendants).
- If at the creation of the interest there is an effective life in being en ventre sa mere, then
that unborn person can be used as a life in being (effectively adding 9 months to the start
of the period). Similarly, if a devisee/grantee/beneficiary is en ventre sa mere at the end
of the perpetuity period, then that is also ok (so 9 months can be added to the end of the
period as well). Note this only works with an actual unborn child in existence – can’t just
add 9 or 18 months to the time period explicitly. See definition of “in being” in s.1 of the
Perpetuities Act.
For an interest to vest (i.e. to not be contingent anymore):
- The rule is not concerned with vesting in possession but rather with vesting in interest
(see definition of “vesting” in s.1 of the Perpetuities Act)
- The person or persons entitled to the interest must be ascertained
- Any conditions precedent which are attached to the interest must have been satisfied
- In the case of a class gift (a gift of an aggregate sum to a group of persons uncertain in
number at the time of the gift, who will be ascertained at a future time) the exact share to
be taken by each member of the class must be certain (in other words, the class must
be closed by the end of the perpetuity period, and any possibility that it will not be makes
the whole gift invalid).
o The “all or nothing” common law rule said that if a class was open making remote
vesting possible, the gift was invalid for everyone, even those in class who alone
would vest within time – e.g. “grandchildren of A”, if some grandchildren were
alive on A’s death they could have been potential beneficiaries, but the class of
grandchildren is open on A’s death so none of the grandchildren get anything.
-
-
o However, Andrews v. Partington created a common law class closing rule to get
around this: if can interpret the testator’s intention was to close a class after a
while, a court can do this to make the gift valid. E.g. “devise to A’s
grandchildren” could be taken to mean only those grandchildren alive on A’s
death, therefore making the class closed on A’s death, so it can vest on A’s death
and so is valid
o A gift of a fixed sum to each member of a class is not a class gift because the
shares do not vary according to the number of beneficiaries (i.e. to “equally divide
between my three children” is not a class gift because each child gets 1/3, and the
class is certain).
Under common law, there is no wait and see period (the Perpetuity Act changes this).
Absolute certainty of vesting must be present at the time when the perpetuity period starts
to run.
When an interest is invalid for infringing the perpetuity rule it is struck out of the
instrument that contains it. Under the general law (but not under the Perpetuity Act) all
interests which are ulterior to and dependant upon the invalid interest must also fail.
However, an interest is not invalid merely because it is followed by an interest that is
invalid
o E.g. if age to be attained is less than or equal to 21, it is usually okay; if more, red
light
o E.g. if the beneficiary is the life in being then it’s likely to be valid
Statute law: the Perpetuities Act – common law rule still applies, but adds a safety net
- The modern version of the common law rule against perpetuities is preserved in B.C. by
s.6(1) of the Perpetuity Act, which took effect Dec 1, 1978
- If a gift passes the common law rule then finished, it is valid. But if the gift fails the
common law rule, then the Act will likely validate it i.e. the Act is a safety net,
sometimes called the “moron’s charter”, designed to cover people’s mistakes/ignorance
of the common law
- Note that a few things do still slip through e.g. when there is a contingency based on
marriage (although s.9 wait and see might help)
- Some suggest that the common law rule is out of date (created for the 17th century) and
that, had the rule not existed, the Act never would have been created in its present form.
In some jurisdictions the common law rule against perpetuities has been abolished
altogether (such as in Manitoba in the 1980’s). In B.C. a middle ground was chosen (e.g.
see s.7 of the Act)
Procedure:
- Start at S.2:
o The Act applies to instruments taking effect after December 31, 1978
o A will, takes effect on death of testator and not on creation of the will, and if inter
vivos takes effect on execution and delivery of instrument, or at a date specified in
the instrument, or if there is a revocation clause then effective date is when can’t
revoke anymore e.g. after death.
o Note if instrument took effect prior to Dec 31, 1978, might have to consider the
old common law rule from Whitby v. Mitchell. So, determine if the Act applies
– did instrument take effect after December 31, 1978
- Now go to S.6:
-
-
-
-
(a) 6(2) abolished the old rule from Whitby v. Mitchell
(b) S.6(1) says, except as provided by this act, the modern common law rule against
perpetuities continues to have effect. So, apply the (modern version of the) common law
rule against perpetuities:
o Divide the gift into its parts i.e. the various interests being given
o Determine whether each interest is vested in interest (or possession) or
contingent and say why
o For each contingent interest:
 When does the perpetuity period start (i.e. on testator’s death, or on
execution and delivery of deed, or on a date specified in instrument)
 Who are the lives in being (recall must be alive/ascertainable when
instrument takes effect and cannot be an open class)
 When does the period end (21 years after the last life in being)
 What contingencies/limitations does the gift depend upon. Look at
each contingency independently:
 Can the contingency possibly happen after the perpetuity period
has ended – if yes, then entire gift is invalid by the all or nothing
rule (so return to Act to look at the safety net)
If the gift is invalid at common law:
S.7: 80 year period – ok if the interest must vest (either by express terms of the
disposition creating it or by necessary implication of the disposition) within 80 years of
it’s creation
Go to S.3 for the order of application of the other remedial provisions of the Act:
(1) S.14: capacity to have children – if a question turns on whether or not someone can
have children:
o s.14(1) presume can only have children if: 14 <= male, 12 <= female <= 55
o s.14(2) evidence may be given to show that a living person incapable of having
children
o s.14(5) the possibility that someone may have a child by adoption or legitimation
must not be considered
(2) S. 9: wait and see – (under common law, couldn’t do this, had to determine if valid at
fixed time when came into effect) – every contingent interest is not invalid until actual
events show the interest is incapable of vesting within perpetuity period
o S.10 specifies who should be used as the lives in being if s.9 applies:
 S.10(1)(a) must use the following people as lives in being, and they must
have been alive or conceived but unborn at the start of the perpetuity
period
 E.g. s.10(2)(b)(i) since can now wait and see by s.9, can use individual
members of a class i.e. not restricted to only classes closed at the start of
the perpetuity period
 Also note s.10(2)(c), (d), (e)(iii)
(a) Note there is also an interpretation problem: suppose waiting and seeing what
will happen by s.9, and during that time a female goes over 55 years old, is it
then possible to go back and apply s.14 to close the class of her children?
Currently this is unknown (perhaps not since s.3 specifies order, and as
example 19 below shows, this might allow lives in being to change, going
against s.10)
- (3) S.11: age reduction – if disposition creates an interest contingent upon attainment of
an age over 21, and that is what makes the gift violate the common law rule, but
would not have been void if age had been 21, then that age specification should be
reduced to the nearest age to avoid the violation i.e. reduce by the minimum amount
necessary
- (4) S.12: Class splitting for dispositions:
o S.12(1) for s.11, if members or potential members of a class prevents s.11 from
saving the gift those persons should be excluded and then s.11 applied (so s.12(1)
is no use if there are no ages over 21, but s.12(2) might still be useful)
o S.12(2) general, if there are still too many members in class making it void, then
those should be excluded as well (note error in legislation: last part “and s.11 has
effect accordingly” should read “and the gift takes effect accordingly”)
- (5) S.13: general cy pres – discretion of the court to vary a disposition as it sees fit, to
make a gift valid when it is invalid solely on the ground that it violates the rule against
perpetuities if it can be done within the testator’s intention (which must be ascertainable)
– does not save gifts that are invalid for other reasons (e.g. uncertainty)
Incorporeal Interests
Introduction: distinguish contracts (don’t bind future owner) from incorporeal
hereditaments
- Incorporeal interests: An intangible right/obligation in relation to land but not the land
itself and does not give a right to possession of that land. However, still recognized and
protected by law as proprietary.
- Incorporeal Hereditaments: Things that perhaps start out as contracts between two land
owners, but that become attached to the land (a bit like a fixture) and so run with the land,
thus binding a future owner to what was agreed upon between the previous owner and
someone else. Different from K which only binds two parties and not third parties.
- The main types of incorporeal interest:
o Easements: e.g. a right of way. Can bind third parties (i.e. subsequent owners)
o Profits a prendre: i.e. a right to enter land and take something from it, e.g.
minerals, timber, crops. Can bind third parties (i.e. subsequent owners)
- Covenants: e.g. a right to prevent a neighbour from operating a pig farm. After Tulk v.
Moxhay may bind third parties (i.e. subsequent owners) if they had notice
- Licenses: i.e. a right to do something on someone’s land that would otherwise constitute
trespass. Generally cannot bind a third party (i.e. subsequent owner) but change may be
occurring similar to that in Tulk v. Moxhay for covenants
Easements
- Easements are registered as a charge on the land, and are generally enforceable against
3rd parties i.e. considered proprietary at law, running with the land
- Two types:
- Positive easements: gives the owner of the land benefited (dominant tenement) the right
to enter the land burdened (servient tenement) for some purpose
o Must have a dominant tenement (land with a benefit) and a servient tenement
(land with a burden)
o E.g. a right of way to pass over another’s land
o I.e. a right to use the land of another in a particular way, but that is short of
possession and that does not include the taking anything away (would be profit a
prendre)
- Negative easements: Do not confer a right to enter onto the servient tenement (Burdened
land), but restrict the owner of the servient tenement in his/her use of it in a way which
benefits the dominant tenement. Someone is prevented from doing something on their
land (ST), which benefits another’s land (DT)
o E.g. the servient tenement owner agrees to refrain from building structures that
would interrupt the light or air from reaching the dominant tenement
- Negative easements are similar to restrictive covenants, but there are differences:
o Negative easements are more restricted in what subject matter they can cover,
whereas restrictive covenants can cover a broader range of things (including new
things) since has other safeguards (Phipps v. Pears)
o Negative easements limited to matters that can be the subject matter of a grant,
whereas restrictive covenants can be made simply by agreement
o Negative easements can be legal and equitable, whereas restrictive covenants can
only by equitable
o Negative easements bind third parties even without notice, whereas restrictive
covenants cannot bind without such notice
o Negative easements are subject to prescription, but not with restrictive
covenants which must be by agreement and requires notice (prescription = after
some period of peaceable, uninterrupted, non-secret use an easement can be
created, such as right of support for buildings or light, although note prescription
doesn’t apply in land title jurisdictions)
o Easements are created by a grant, whereas covenants are made by an agreement
under seal
- Distinguish easements from natural rights (i.e. riparian, support, accretion perhaps)
which come as part of the land itself, and therefore corporal hereditaments
- Distinguish easements from public rights such as public rights of way (i.e. paths that
everyone can use) across private land. Easements are between a dominant and servient
tenement – they can’t be used by anyone
Phipps v. Pears, (1965) (C.A.)
- The difference between positive and negative easements, and the restrictions on subject
matter for negative easements was laid out in
- Facts: New house built very close to old house, but without touching. The new wall
wasn’t completely weatherproof, so when the municipality ordered D to pull old house
down, the wall of the new building was left exposed to the weather, & frost caused it to
crack. P, owner of new building, sued D for damages, claiming he’d acquired an
easement by prescription to protection from the weather i.e. P claims a negative
easement, right to stop neighbour from doing something on his land, namely pulling
down the old house
- Decision: Judgement for D – there was no easement.
- For policy reasons there is no easement by which a dominant tenement can be protected
from the weather. If such easement were to be permitted, it would unduly restrict a
neighbour from the use of his land. The only way for an owner to protect himself from
the weather is to get a restrictive covenant from his neighbour, which would be binding in
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contract and would be enforceable against third parties (subsequent owners) provided
there was notice.
While courts have been willing to apply positive easements to new technology and
expand the allowable categories, they have been very cautious when it comes to negative
easements, and it is unlikely that they will expand the categories since they hamper titles
and development, limit neighbours in their use of land, can bind 3rd parties automatically,
can appear by prescription (although prescription has gone in B.C.), etc
Cannot get a negative easement for (can be covered by restrictive covenants, which have
safeguards, namely that notice must be given to third party and prescription does not
apply):
o Obstruction of view
o Receive wind in an undefined channel (however, can get a negative easement for
air flow in a defined channel, such as a ventilation shaft to a cellar)
o Sun (not in a “shaft”), shade
o Protection from weather (as in this case)
Re Ellenborough Park
- Facts: homes were built around Ellenborough Park. The original conveyances for each
home lot were in fee simple together with certain easements for the “full enjoyment in
common with other persons with similar easements of the Park subject to fair and
proportionate costs of maintaining the Park”.
- The vendors in return held covenants to maintain the park and not to build upon it.
During world war II, the property was taken away for war purposes, and compensation
was paid out. The question concerned who should get this compensation – if there were
valid easements, then the surrounding home owners would have a proprietary interest in
the park, and so should get part of the compensation.
- Issue: Do the owners of the lots have any enforceable rights over the Park?
- Decision: The lot owners had enforceable easements which were annexed to the land.
There are a number of legal requirements for an easement:
o There must be both a dominant and a servient tenement, distinguishing an
easement from a public right, where there is no dominant tenement. In this case
the surrounding houses were the dominant tenements.
o An easement must objectively benefit (i.e. accommodate) the dominant tenement
i.e. the right granted must inherently benefit the dominant tenement land itself, so
the nature of the right and the nature of the dominant tenement will be relevant
i.e. it will be a question of facts
 (1) I.e. the granted right must be connected with the normal enjoyment of
the dominant tenement, and not just a perk to the particular present
occupier i.e. like with fixtures, it must benefit the land as land.
 (2) Increasing the value of the land is a mere factor that may help show
this, but is not determinative
 (3) It is a question of fact: in this case the nature of the dominant tenement
was residential property and the nature of the right was as an ornamental
garden or pleasure ground. This is something that would objectively
benefit the dominant tenement, much as a garden does for a house

(4) This benefit must also be sufficiently proximate, although not
necessarily adjoining. In this case ok since the houses were close, even if
they didn’t all front onto the park
o At common law, the dominant and servient owners must be different persons
(although s.18(5) & 18(7) of the Property Law Act has abolished this requirement
– see below)
o Must be proper subject matter to form an easement grant:
 Must be sufficiently defined and sufficiently certain - it can’t be too wide
or too vague (in this case the right was to “wander in the garden”, as
opposed to a distinct path/right of way, but since this was limited to a few
houses in a close and defined area shaped in a crescent around the park it
wasn’t considered too vague i.e. it wasn’t just uncontrolled wandering for
anyone)
 It must be consistent with the servient tenement owner’s right of
possession. I.e. something that gives a right of occupation cannot be an
easement (e.g. right to dump on the property or to put in a car park or to
cut down trees would be no good) although can get easements to lay pipes
or overhead cables, and could argue this would affect possession (i.e.
space now taken up that can’t be used)
 Previous cases had suggested an easement must possess a quality of utility
or benefit and not mere recreation, but this case overruled this and allowed
an easement for mere recreation, although the court did say if this element
is still required this case is still an easement since parents walking children
in prams is not mere recreation. That this requirement for utility/benefit is
not required was upheld in Dukart v. Surrey
o The parties who made the arrangement must have had the ability to act as the
giver and receiver of the grant
o There must have been an intention for it to run with the land and bind future
parties i.e more than a private contractual arrangement, giving a personal
privilege for one of the original parties. In this case yes, said “for successive
title”.
Dukart v. Surrey, (1978) (S.C.C.) – see generally
Re Ellenborough Park was followed in Canada in
- Facts: D acquired some land through a tax sale, and proposed to erect a John Crapper on
the land. The land lay just before the foreshore at the water of the bay. The building
would interfere with P’s view and her access to the foreshore. P’s title was rooted in the
original 1912 plan which recited that the foreshore reserves were to be held by the
grantor for giving access to the shore for the purchasers of other lots. All of the
conveyances sold in trust in 1917 were subject to the restrictive covenants of the original
plan.
- Issue: Did P have valid easement over the reserves, and if so should it be restricted?
- Decision: success for P, easement granted.
- As long as the four requirements of an easement are met (from Re Ellenborough Park)
then a right to move upon another’s land can be considered an easement and therefore
runs with the land.
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Giving access to water is sufficient as a utility or benefit. So are leisure and recreational
purposes.
Giving access rights to other people as well and the grantee (i.e. a private right that
overlaps with a public right) can still be ok as an easement (as in this case), although a
completely public right might not be allowed
Statutory Easements
- Today easements (in order to bind future owners) must be registered as a charge on
servient land and noted on the dominant land (but just because registrar accepted them
as easements doesn’t mean they are easements, that’s up to the court). Although recall
s.29 of the Land Titles Act concerning unregistered interests
- B.C. Land Title Act
o S.218(1) – A person may create an easement without a dominant tenement, to be
known as a statutory right of way, for any purpose necessary for the operation and
maintenance of the grantees undertaking. The grantees may be the Crown, a
Crown corporation, municipality, public utility, pulp/timber corporation, etc.
o S.218(2) the rule requiring an easement to have both a dominant and servient
tenement is abrogated as far as subsection (1) requires
- B.C. Property Law Act (overturns common law requirement that owners of the
dominant and servient tenements be different persons):
o S.18(5) – the owner in fee simple (or owner of a registered lease or sublease),
may grant to himself an easement or a restrictive covenant over land that he owns
for the benefit of other land that he owns (registered). This grant must be
consistent with the interests held by him as grantor and grantee at the time of the
grant.
o S.18(7) – common ownership of the dominant and servient tenements does not
extinguish an easement; in other words they no longer have to be two separate
owners of different lands.
Profits a Prendre – no assigned readings
Profits a Prendre: to take part of land, has implied right of entry, can be in “gross”
- A profit a prendre is an incorporeal hereditament i.e. it is proprietary, and it is binding on
3rd parties. A profit a prede could exist in gross, didn’t always need a dominant tenement
to enter upon the land to take the produce
- It confers a right to sever and take from a servient tenement part of the natural land, such
as minerals, crops, ferae naturae (subject to the Wildlife Act), fish, etc. (but must be part
of the land – can’t take tricycle). The thing taken must be susceptible to ownership,
therefore it doesn’t include water (a right to water cattle, for example, would be an
easement, not a profit)
- It carries with it:
o The right to remove and take from the land the designated products or profit
o An implied right of entry (by license)
o A right to use as much of the surface as is necessary/convenient for the exercise
of the profit
- Unlike an easement
o A profit can be granted in “gross” i.e. there need be no dominant tenement.
o A profit does give a right to possession since it gives the right to sever and take,
although in reality the thing taken has changed to personalty, therefore, strictly
speaking, not a right to possession.
Not in syllabus or lecture
Leases: exclusive occupation (not for licensee), privity of estate “touch and concern” land
- A lease gives exclusive right of occupation, but is not a freehold. A lease has terms and
duration which must be certain (e.g. monthly tenancy)
- Privity of estate: e.g. when a tenant T1 assigns down (through assignment or substitution,
not subleasing) to T2, T2 and landlord have no privity of contract but landlord can still
enforce terms of lease on T2 through privity of estate. Similarly if landlord assigns their
interest to another (new landlord)
- Privity of estate relates only to those terms in the lease which touch and concern the
leased property – any terms of original lease that are purely personal between parties do
not bind new parties
- Boundary between lease and license is blurry e.g. a lodger in a boarding house is a
licensee, but a tenant is a lessee – the difference is a licensee does not have an exclusive
right to occupy
Covenants
Contract-like, if privity of contract or estate (touch/concern) binds 3rd parties
- Incorporeal hereditaments are proprietary i.e. they run with the land.
- Covenants are not really incorporeal hereditaments – more akin to contracts (although
they pre-date contract law by several 100 years). Covenants historically required to be
under seal, but no need anymore except for corporations. A restrictive covenant is a
promise/agreement that the covenantor will not do something in respect of the servient
land. Similar to negative easements
- If there is privity of contract it is binding i.e. if the parties who originally made the
covenant are involved, the covenant is enforced as a contract.
- If no privity of contract but there is privity of estate covenant is enforceable between
new parties as long as the contractual terms “touch and concern” the land
o e.g. if tenant T1 covenants to come and clean the landlord’s apartment, if T1
assigns their lease to T2, then it is not enforceable against T2 since does not
“touch and concern” the land
- If neither privity of contract nor privity of estate, there are differences between the
common law and Equity (see cases below)
- At equity:
- Includes benefits running with the land
- After Tulk v. Moxhay, burden can also run with the land i.e. a restrictive covenant
- Thus needs both a dominant and servient tenement
- Notice required for successive owners to be bound (Tulk v. Moxhay) and also registration
(s.29)
- Need an intent by original parties that it should run with the land
Covenants & Common Law
Smith & Snipes Hall Farm v. River Douglas Catchment Board (1949) (C.A.)
Only the benefit can shift
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Facts: Mrs Smith and 10 others were owners of land in fee simple that was subject to
flooding. They (the original covenantees who owned the dominant tenement) entered into
contract with original covenantor D, under seal, that D would take steps to prevent
flooding, and in return the owners would contribute to the costs of the work (so note no
servient tenement here, only a dominant tenement). Mrs. Smith transferred her interest to
Bruce Smith and Snipes leased the land from him. The transferor (Mrs. Smith) purported
to assign the benefit of the agreement to Mr. Smith. The land flooded. Trial court found
D negligent in its work and in breach
Issue: Can P sue with respect to this breach?
Decision: The covenant was binding and D was in breach. Common law rules:
Only the benefit of a covenant can run with the dominant tenement - so subsequent 3rd
party owners of that dominant tenement can enforce it, but a burden cannot
So needs a dominant tenement and the covenant must “touch and concern” the dominant
tenement/land (as opposed to being purely personal)
It must have been the intention of the original parties that their arrangement would run
with the land
No need for a servient tenement since there is no burden which runs with the land
(burdens affect a servient tenement). Thus the covenant does not have to be connected in
any way with the covenantor’s land. So courts can hold that the benefit of a covenant
runs with the land of the covenantee, while the burden of the same covenant does not run
with the land of the covenantor.
Dominant land has to be benefited (accommodated)
No notice is required for benefit to run with the land
Must expressly identify dominant land, by extrinsic evidence if not in deed
The covenantee (holder of dominant tenement) at the time of making the contract had to
have legal interest in the land benefiting, and the assignee of the covenantee who seeks to
enforce the covenant has to have the same legal estate as the original owner E.g. if
original covenantee held in fee simple, but subsequent holder had leasehold, could not
enforce benefit (no longer the law – can hold different interests)
Austerberry v. Oldham Corporation, (1885) (Ch. Div.)
- Facts: A group of landowners agreed to build a road, and transferred the necessary lands
over to a trustee, who undertook to build and maintain the road and agreement was to
bind successors. P, a successor in title to one of the original owners, refused to pay
maintenance charges with respect to the road, which were imposed by D, successor in
title of the trustee. Although P refusing to pay towards road, sues D for repairs wanted to
road
- Decision: P was not required to pay the charges because:
- At common law, for a covenant to run with the land, it must “touch and concern” the land
and it must benefit P’s land
o Lindley, J: covenant to keep in repair as “public” highway, nothing in covenant
points to P’s land in particular, no clear benefit in deed that benefits P’s land, so
not sufficiently linked with the land.
o Fry, J: deed intended to benefit and run with P’s land and did benefit the land as
land
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At common law the burden of a covenant does not run with freehold land so as to bind
the successors in title – only the benefit can pass. In this case obligation to pay is a
burden so cannot pass to successors i.e. P
Comment: the court did not use equity to solve the problem (i.e. Tulk v. Moxhay)
because it was a positive covenant (and not a landlord and tenant case, therefore no
privity of estate.)
Halsall v. Brisell, (1957) (Ch. Div.)
Cannot take the benefit of the deed if you do not take on the burden
- Facts: Similar facts as in Austerberry. The original owner of a house entered into a trust
deed in 1851 whereby he agreed to pay towards the costs of P for the maintenance and
upkeep of roads and sewers. The owner sold to D with notice, who then rented it out. P
attempted to increase charges for multiple family dwelling in 1950.
- Decision: D need only pay on the terms of the 1851 agreement.
- Obligation to pay is considered a burden, and burdens are not generally enforced against
subsequent owners.
- But, if you have such an unenforceable covenant, yet you still want to take the benefits
(of the road and sewers in this case), you have to take the burdens/obligations as
well (pay in this case)
- So although D not required to pay at all (since a positive covenant doesn’t run with the
land), cannot rely on necessity or prescription to give him a right to take the benefits of
the covenant unless willing to pay the burden as well.
- Taking a benefit in the past does not mean you have to pay the burden in the future, if
you no longer want the benefit
Parkinson v. Reid, (1966) (S.C.C.)
If you no longer need the benefit, your use of the benefit in the past doesn’t imply you are
bound by the burden anymore
- Facts: In 1926 owners of adjacent lots entered into an agreement under seal, whereby a
staircase being built on one lot could also be used to get to the second floor of the other
lot. The grant gave the covenantees, their heirs and assigns, free, uninterrupted use and
right of way on the staircase. The covenantors agreed to repair and in the case of
destruction, replace the staircase. In a separate agreement, the covenantor was given the
right to use the adjoining wall as a party wall. In 1961 a fire destroyed the building and
staircase, and P sues for reconstruction.
- Decision: Covenant unenforceable.
- Affirmative covenants requiring the expenditures of money or the doing of some act such
as the repair and reconstruction of a stairway (i.e. a burden) do not run with the land in
law or in equity, and so is not enforceable against a successor in title of the servient
tenement where there is no privity of estate.
- Added to the rule in Halsall that if you no longer need the benefit, your use of the
benefit in the past doesn’t imply you are bound by the burden anymore (i.e. just
because used the wall in the past, if no longer want to then no longer have to pay). So
only bound by burden as long as you take the benefit.
Covenants & Equity
Will bind burden if negative, benefits dominant tenement, and notice
- In Equity we see recognition of agreements between private parties becoming entirely
proprietary and so running with the land and binding subsequent owners, and so have the
same result with restrictive covenants as with negative easements. The elephant
(breakthrough) case was Tulk v. Moxhay, and then subsequently came LCC v. Allen (the
tiger) which provided a rational basis
Tulk v. Moxhay, (1848) (Ch. Div)
A burden, will be enforced in equity against all subsequent purchasers with notice of
covenant
- Facts: In 1808, P sold his garden plot in fee simple, and the conveyance contained a
covenant (for the heirs, executors and assigns) that the purchaser would, at his own cost,
maintain the garden as a “pleasure ground” and not build upon it (a burden). In return, the
tenants of the square could purchase a key for the privilege of admission to the garden.
The purchasers successors bought the land with notice of the covenant, but they (D)
wanted to build on the garden.
- Decision: Appeal dismissed, injunction remains in force.
- A covenant between a vendor and a purchaser on the sale of land, that the purchaser and
his assigns shall not use the land in a particular way i.e. a burden, will be enforced in
equity against all subsequent purchasers with notice of covenant, independently of
the question of whether or not the covenant runs with the land at law, because it would be
unconscionable to allow the third party subsequent purchaser D to refuse to acknowledge
the covenant of which they had notice (and court said the price reflected the fact that D
couldn’t do anything with the land i.e. if D were now allowed to develop it would be
unjustly enriched)
- Court seemed disinterested in whether there was dominant or servient tenements, and in
whether it was a positive or negative covenant. Court was only concerned with notice,
and with such notice, the subsequent (3rd party) buyer is treated equal to the vendor
(enormously broad doctrine)
- Comment: Breakthrough case allowing a burden/enforcement to move to subsequent
3rd parties by Equity, but didn’t discuss doctrine of running with land nor did it set out
analysis or principles (court in LCC v. Allen below tries to clear up this area of law). No
mention of whether this is a negative or positive covenant.
London County Council (LCC) v. Allen, (1914) (C.A.)
- Facts: Allen, a builder, applied to the P for permission to lay out two streets. The
permission was granted subject to the covenant that Allen would not build on certain
other properties that he owned, so that the property could eventually be used to continue
the streets. D, successor in title to Allen, built on the property and P wanted the buildings
removed. D had notice of the covenants, but P had no land in the vicinity.
- Decision: For D, the covenant was not enforced.
- Noted that by Haywood (1881) (C.A.) refused to extend Tulk v. Moxhay to anything
that was positive – Equity only attaches to the owner of the land
o There is no dominant tenement in this case
o There is an equitable proprietary interest in which the burden from a covenant
runs with the land and so binds successive 3rd party title holders if:

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The enforcers of the covenant have a dominant tenement that the burden
was made to benefit/accommodate (i.e. touches and concerns the dominant
tenement) – so a dominant tenement is now required i.e. similar now to a
negative easement, although negative easements are still more restricted
due to prescription (recall Phipps v. Pears)
There must be a common intention that the burden shall run with both
lands
The covenant is negative in substance i.e. restricting only the mode of
using the land (so if it involves the expenditure of money it is positive and
so will not bind), and
The successive title holders of the servient land had notice (which
overcomes effect of legal estate)
Comment:
Thus the only one who escapes the burden is a successive legal estate holder, bona fida
purchaser for value without notice
If the purchaser took only an equitable estate, he took it subject to the burden whether or
not he had notice
The benefit should be for the use and occupation of the land, not for financial interests.
(Canada Safeway v. Thompson)
Creation of Covenants: need to register them, but being registered doesn’t prove them
B.C. Land Title Act
- S.219(10): Just because a covenant is registered under s.219 does not necessarily mean
that it is enforceable i.e. the regular tests still need to be done
- S.221(2): Just because a restrictive covenant is registered doesn’t mean it is a restrictive
covenant or that it is enforceable
- S.29(1): Notice:
o Where there is no fraud, no purchaser shall be effected by express, implied, or
constructive notice of an unregistered interest or charge (includes covenants) on
land except:
 (1) An interest, the registration of which is pending
 (2) A lease, or an agreement for lease for a period not exceeding 3 years
where there is actual occupation;
o Notwithstanding the rule in law or in equity to the contrary. (In other words, only
registered covenants are binding, and the equitable doctrine is overruled).
Licences
Licence: permission for licensee to do otherwise illegal thing on licensor’s land, differs lease
- A permission given by one person (licensor – burdened) to another (licensee – benefited)
allowing the latter to do something in relation to land that would otherwise be unlawful.
- So a license is purely a personal right against the licensor, and it does not pass any
interest nor does it alter or transfer property in anyway. The permission may be given
gratuitously or for value.
- Most commonly is license is granted to allow trespass to land.
- Bare License: revocable at will, contains nothing more than permission
- License coupled with an interest in land: this category provides a linkage, if the interest in
land is still valid, then the license that is coupled with it cannot be revoked.
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o If you are given a profit a predre, to take the produce of land. Given a license to
enter to take the produce of land. If the profit a predre remains valid, then the
license to enter cannot be revoked while the interest in land remains valid
License couple with a contract: this area has been under recent development, covered in
the Honslow case, and in the Errington and Errington case, in relation to a successor the
licensor
Compared with leases:
o E.g. lease an apartment, but only a licensee if a bodger/border in someone’s home
o Leases give a leasehold estate in land, whereas licences just give a personal right
to be on the land (both can give a possessory right)
o A lease, being a non-freehold estate, requires a certainty of term (either through
express stipulation or a certaining mechanism e.g. month-to-month where lease is
started and ended each month), whereas a licence need not have a certainty of
duration (generally can be revoked at any time)
o A leaseholder can bring an action for trespass (even against landlord in most
situations since leaseholder has exclusive possession i.e. they are the occupier),
whereas a licensee cannot because they don’t have exclusive possession (e.g. a
lodger, who is considered a licensee, would have to ask the licensor/owner to
exclude an intruder)
o Today, in some jurisdictions, a lease must be in writing, whereas a licence does
not
o To determine whether a leasehold or a license has been created, the intention of
the parties is important: ask if they intended to give an estate in land (i.e. a lease)
or just allow someone to be there (e.g. consider someone in possession for their
employment, such as a lighthouse keeper, then employer is the occupier and
employee is licensee)
Hounslow London Borough Council v. Twickenham Garden Dev. (1971) (English Ch. Div)
Licenses: Bare, coupled with land interest (e.g. profit), and new irrevocable contractual
- Accepted in Canada
- Facts: D contractor was employed by P to carry out extensive construction work on a 27
acre site. A condition of the contract empowered P, on certain preconditions being
satisfied, to terminate the contract. P tried to terminate the contract under this condition,
but D insisted upon continuing the work. P sought damages for trespass and an injunction
to stop further trespass.
- Decision: Judgement for D. No injunction granted.
- Bare licence: traditional common law view
o E.g. simple consent to be on land so defence against trespass, revocable at any
time but must give reasonable time to depart land (e.g. to walk off if license
allowed walking across land, or to remove a building if license allowed
construction of a building on land).
o Since revocable, licenses do not bind a successor (i.e. subsequent purchaser of the
land).
o If arising from a contract, if license is revoked can sue for breach of contract:
 E.g. Wood v. Leadbitter: ticket holder turned out of racecourse even
though had ticket to be there. Licence could be revoked at any time and
-
-
ejection from land can be enforced by force. However, P can sue for
contract breach (i.e. damages = the ticket price). This case now largely, if
not wholly, ceased to be binding.
 E.g. Thompson v. Park: one schoolmaster gave another a licence to teach
in the same building (during World War II buildings scarce). Following a
dispute, the 2nd schoolmaster is kept out, but he forcibly re-enters.
Injunction is granted to keep 2nd schoolmaster out despite breach of
contract by 1st schoolmaster.
o Common law could only award damages (did not have the equitable powers of
injunction and specific performance), so no point in trying to call a license
irrevocable since only remedy still would be damages. After the Judicature Acts
1873/75 when common law and equity courts were each given the power to make
orders from the other, this limitation no longer applied
Licence coupled with an interest in land: e.g. a profit-a-prendre (i.e. a right to take
from the land) has a licence to enter that land coupled to it. Irrevocable for the term of the
interest (e.g. profit). Since a profit a prendre binds a 3rd party (successor), by implication
they are bound by the license as well. To make licenses irrevocable, the notion of
“interest in land” was expanded to get around the common law revocability:
o Hurst v. Picture Theatres said that a movie goer had a right to see a performance,
which amounted to an interest in the land.
o Vaughan v. Hamson similarly made right to attend creditors meetings an interest
in land. Very odd to call this an interest in land
o Hounslow critical of this approach of including a miscellaneous collection of
rights i.e. seems absurd calling things an “interest” just so as to be able to come
up with an irrevocable license: “there ought to be no need to torture the word
‘interest’, rather we should recognize a third [middle ground] category of
license”.
Licence coupled with a contract: A “contractual license”, the middle ground created
here in Hounslow:
o WinterGarden: license to use a theatre for plays – case turned on contractual issue
of whether the licensor could revoke the contract. English H.L. said yes, could be
revoked. But in dicta said that if the license had been granted pursuant to a
contract, need to first interpret the contract and ask if it gives the power to be
revoked (if so, then so too can the license). But if contract irrevocable and tied up
with it is a license, then the license is irrevocable as well.
o Equity used to develop this idea here in Hounslow: if the contract is irrevocable, a
license set up by provisions in the contract is also irrevocable, and can be
enforced with equitable remedies (injunctions, specific performance):
 If the licensor is threatening to revoke, equity would grant an injunction
stopping them from revoking,
 If the revocation has been declared by licensor but not yet carried out, the
carrying out can be enjoined by injunction,
 If revocation already carried out, did not say whether could get an order of
specific-performance to get the license back (generally Equity more
comfortable ordering injunctions to stop revocation than ordering positive
action as would be required here),

-
If licensor asks the court to help remove a licensee, if contract is
irrevocable Equity won’t help i.e. Equity won’t aid in the breach of a
contract. Note this conflicts with Thompson v. Park above, but that case
was distinguished since it involved forcible and riotous re-entry, and
Equity can be used to stop such violence
Note that none of this applies to third parties (i.e. successors to licensor) – it just applies
to the original licensor and licensee
Errington v. Errington & Woods (1952) (C.A.)
3rd party successor bound by license unless bona fide purchaser for value without notice
- Facts: Father in law puts down money for a house. Title in his name. Let’s son and
daughter-in-law live there saying that it will be theirs when they finish paying off the
mortgage. He dies, leaving everything including the house to his wife. Son leaves
daughter-in-law, goes back to live with mother. Mother claims house is hers, wants exdaughter-in-law out.
- Issue: Given that a license can be irrevocable against licensor (father) if the contract that
creates it is irrevocable, is a subsequent 3rd party successor (mother) to the licensor then
generally bound to honour it in favour of the licensee (daughter-in-law). There are
certainly other, less general ways to make a license binding on 3rd parties:
o By acquiescence (i.e. estoppel) e.g. licensor allows licensee to spend money
raising expectation of irrevocability, and 3rd party acquiescent to this, then Equity
may impose license on that 3rd party
o If 3rd party takes benefit and knew of the burden, may be bound by it
o By a constructive trust to prevent unjust enrichment at licensee’s expense
- Decision:
- Exclusive possession is prima facie a tenancy, but if the occupier was granted a personal
privilege then they are a licensee. If the license arises out of a unilateral contract where
acceptance is through the performance of some act (payment of mortgage here), the
license cannot be revoked once performance of that act has begun (it only ceases to bind
if the act is left incomplete and unperformed).
- Thus the couple here were licensees having a permissive occupation short of tenancy, but
with a contractual or at least an equitable right to remain so long as continued paying
instalments, and would ultimately get title (so here is an example of how can have
exclusive possession with a license)
- “Contractual licences have a force of their own and cannot be revoked in breach of
contract (i.e. if revoking the license leads to a breach). Neither the licensor nor anyone
who claims through them (i.e. successor) can disregard the contract & license except a
bona fide purchaser for value without notice.”
o Thus the mother, a successor to the estate of her husband, is bound by the
agreement he entered into, because she had received it by will and had notice so
was not a “bona fide purchaser for value without notice”.
- Comment:
- Hounslow used Denning’s reasoning from this case to create the new category of
contractual licenses. But Hounslow taken as the stronger precedent since judge in
Hounslow was more conservative
-
-
There is no dominant tenement here (license is just a personal agreement) but this case
makes it possible to bind successors. Thus has effectively made a license a proprietary
interest in land, much as Tulk v. Moxhay did with covenants.
No subsequent cases have followed this case (used similar notion of constructive trusts)
but perhaps becoming more acceptable
Personal Property
Finders
- Rights and obligation to true owner, who exerted most control
- Finders applies only to a chattel that has been lost. This is only one of a number of ways
of giving up possession:
o May sell in contract
o May give away via a gift (requires the intent to give and the actual
giving/delivery)
o Lost: possession and custody of an item are gone through involuntary accident or
negligence and they can’t be retrieved – finders applicable here
o Cache / hidden / mislaid: owner deliberately put property in a cache and then
forgotten where the cache is. The “treasure trove” principle applies here: if
gold/silver then goes to king, otherwise goes to landowner
o Abandoned: where true owner has intent to get rid of possession and has in fact
got rid of possession (surrenders, relinquishes, disposes or gives up a chattel
without reference to passing it on to someone else). If a person finds an
abandoned item they become the true owner.
- A person who finds a lost item does not have to take possession, and is not liable to the
true owner if they do not. A finder who takes possession gets right as a finder: item might
become theirs, but limited since the true owner and prior bailee have better rights. But
also obligations as a bailee for the true owner or some prior bailee, thus finders are a nice
example of bailment.
- To determine if taken possession, just picking something up and putting it back probably
will not count, but if take it away or use it then yes, probably will be held as taking
possession.
- If you find something and you know/can find out who the true owner is, the item should
go back to that true owner.
- Consider an item (lost by the true owner) left on some landowner’s land.
- If the item was in / under / attached to the land, then the landowner has the superior claim
- If the item was only on the land, can look at the problem from one of two perspectives
(and sometimes come to different conclusions as a result):
o Obligation approach: if landowner didn’t know it was there, has no
obligation/liability to the true owner, but if they knew it was there, they become a
bailee and owe a duty to take reasonable steps to locate the true owner.
 Knowledge important when considering obligations.
 In deciding who should get the item (the finder or the landowner,
assuming can’t find the true owner), this obligations approach will suggest
whoever owes an obligation to the true owner should get the item. So the
landowner only gets an item that was on their land if they knew it was
there e.g. Kowal
o Rights approach: in deciding who has the best right to the item (the finder or
landowner, assuming can’t find the true owner) whoever had exerted / intended to
exert the most control over the item should get it.
 So the landowner presumed to have property right to the item (albeit a
weaker presumption when the item is on as opposed to in / under /
attached to their land) regardless of whether they knew it was there (i.e.
knowledge not so important when considering from a rights approach) e.g.
Grafstein
Grafstein v. Holme & Freeman (1958) (Ont. C.A.)
- Facts: Employee found locked box in basement of store. It was covered in stuff, so might
think fixture if covered by relatively solid things, and might think cache or abandoned.
Employee took it to store owner and asks him what to do with it (i.e. employee not
exerting control / dominion / custody over it). Store owner is somewhat ambiguous
concerning possession, saying “It’s not mine, you might as well just leave it on a shelf”
(i.e. leave it here in the store).
o Two years later another employee looks at it, and the 2 employees open it, find a
ton of bank notes ($38,000), put a new lock on it (splitting the cost of the lock
between them, suggesting their intention to share as finders) and go to the owner
and say “You’re rich”. But they all shake hands and employees suggest they
should split the cash 3 ways, give the key to the new lock to the store owner, and
store owner says he will talk to a lawyer. He comes back with a lawyer and says
“It’s all mine”. Give cash to public trustee, put advertisements in newspapers, but
no one comes forward to claim it.
- Store owner claims it all belongs to him as land owner because:
o It was a cache (rejected by court)
o It was lost but I’m prior bailee
o It’s mine because of employee / employer relationship and found during course of
employment (rejected by court)
o It’s mine because employee’s were trespassing (rejected by court)
- Decision: the store owner gets it all.
- Wasn’t a cache nor abandoned, rather it was lost and therefore in the realm of finders (if
cache, store/land owner would have got it all, if abandoned employees might have rights).
- To be a finder must have taken possession (i.e. must exert de facto control = power to use
and exclude others) when no one else had a previous claim or interest. So C.A. decided
the question was who had exercised the most control over the box and it’s contents (i.e. it
will be a very fact based discussion):
o If item is in / under / attached to someone’s private land, the landowner will be
presumed to have control (and so will have a stronger claim to it), as opposed to if
item is simply on their land in which case landowner still has presumption in their
favour, but will be weaker. Note makes no difference whether the landowner is
aware of the item’s existence.
o But someone can be a finder even though they find something on someone else’s
private land (i.e. doesn’t have to be found on public land)
o Also look at parties intent to control
-
-
In this case, the box was found two years earlier but the land owner had exercised some
control over it by having it left there, and the first employee appears to have deferred to
this. So store owner had possession of the box from that time.
o If landowner had known of the contents at this time, would have had obligation to
true owner to secure such a sum of money, and simply putting the box on the
shelf would not have been sufficient (so if, for example, the money had then gone
missing, landowner would be liable as bailee to the true owner – similarly if gave
it away to someone claiming to be the true owner, but didn’t take care to make
sure it was theirs by asking questions such as do you have a key, or how much
money is there).
o However, landowner didn’t know of the sum of money at this time
o Thus knowledge is important when determining the obligation to the true owner.
o Note had no obligation to open the box to see what was in there.
Concerning the contents of the box, the 2 employees claim they revealed it’s contents to
the store owner, but not as part of their employment (this is what led to the claim of
trespass). Held that store owner had prior custodial control over the contents.
Cranbrook v Brown
- Given couch to Brown and he moved into an apartment and a stash of money fell out of
the couch. The estate of the guy whose couch it was doesn’t claim. The guy who owns
the couch says it’s his, the manager of the building says its mine I picked it up, the prior
owner of the couch says it’s his.
- Here the true owner was known, therefore it went to the past owner.
- On an obligation approach, cannot be held liable because you didn’t know it was there.
But if you take a rights approach then lack of knowledge may be reduced. The partner of
the deceased existed and he was the true owner and so he go it
Kowal v. Ellis (1977) (Man. C.A.)
- Facts: A $450 dollar pump was found by P on (i.e. not under) D’s land. It was lying
unattached on the ground.
- Issue: who gets the pump? The finder or the landowner? Was landowner a prior owner
(e.g. if pump had been abandoned or cached on their land) or a prior bailee (if
accidentally lost)
- Decision:
- A finder becomes a bailee if they take the item into their possession. No rights or
obligations arise from the finding itself unless he takes possession of it, after which the
finder is responsible to take reasonable steps to locate the true owner.
- If an object is in, attached to or under the land it belongs to the land owner, but if it is just
on the land it is not a fixture (as is the case here)
- The court asked: did the landowner have any obligations towards the true owner of the
pump before the finder found it? I.e. was the land owner a prior bailee?
o The key criteria is whether the landowner knew it was there (in Grafstein court
held that it did not matter if the landowner knew it was there when considering if
he had a right to ownership. But here considering the issue from an obligations
approach, so knowledge is important).
-
o Finding the landowner did not know it was there, and because it was just on the
land, court decided the landowner couldn’t have been a bailee and thus the pump
belonged to the finder.
Other cases have just asked whether the land owner had exercised any control over the
item (using the rights approach)
The issue of trespass did not arise here since the finder had permission. Court stated that
it does not know how to rationalize a trespasser who is a finder.
Parker v. British Airways Board (1982) (English)
- Facts: Man found gold bracelet in Executive lounge at the airport (a relatively exclusive
place with a system to restrict who can be there, but there was no lost property system in
place). Finder left it with B.A. with instructions that if no one claims it he wants it, and he
left his name and address (i.e. honest, but still exercising degree of control). B.A. sold it.
Finder sued, got the selling price of the bracelet plus interest in damages. B.A. appeals.
- Decision: appeal dismissed.
- Court took a rights perspective. Asked if the fact that the bracelet was in the executive
lounge at the airport meant it was under sufficient control by B.A.
- They laid out the rights and obligations of the finder and the occupier of the building in
detail:
o Rights/obligations of finder:
 Finder only gets rights if item is lost/abandoned and they take it into their
care/control.
 Finder acquires very limited rights if they had dishonest intent (e.g.
perhaps they are more a converter than a finder) or were trespassing (don’t
want to reward trespassing, but not answered if trespasser can never get
right)
 Finder acquires right to keep it against all but the true owner (and
representatives of the true owner) and anyone who can assert a prior right
that existed before the finder “found”.
 If employee finds in course of employment, employer is finder
 Finder has an obligation to reasonably try to find the true owner.
o Rights/obligations of an occupier:
 If the object is in / attached to the land or a building, strong presumption in
favour of the occupier over the finder, regardless of whether they knew it
was there.
 If the object is only on / in (but not attached) to a building, only a weak
presumption in favour of the occupier over finder, and must ask if before
the item was found, did the occupier manifest an intention to control the
building and the items found within it.
 If an occupier has expressed such an intent, then is under an obligation to
reasonably ensure that lost chattels are found and returned to the true
owner.
- Discussed policy:
o What is the best approach so that the true owner will be found – probably the
landowner should get the item since a true owner would most likely ask them if
they had found it
o What is the best approach so that a finder does not become a “concealed keeper”
(i.e. just pick it up and walk away with it) – need to give a finder a chance of
ownership if they hand it in
- In this case, since B.A. had no public policy for lost and found items, and the control they
exercised over the lounge had less to do with found items and more to do with classes of
passengers and keeping out bombs, the judge decided that B.A. did not manifest a
sufficient intent to control items found in the building, and the bracelet thus goes to the
finder.
Bailment
Bailment: taking of possession/control, returning same object, obligation to take care
- Bailment is the temporary, voluntary taking into custody of chattels which are the
property of another. Bailment is a common law proprietary relationship that comes about
by the bailee taking possession of the bailor’s property. The bailee gets property rights
exercisable against everyone other than the owner or prior bailee.
- Bailment is different from sale or gift because no title to the object is given, just a
temporary possession.
- It is also different from a license because a bailee takes possession and so is liable to take
reasonable care of the bailor’s property, but a licensor does not take possession and so is
not liable e.g. if friend leaves a bag with you, if you move the bag and leave it under an
open window where rain comes in and damages it, you are liable if it was a bailment.
- A contract is not necessary: bailment is older than contract, and also has nothing to do
with equitable trusts. E.g. a finder is a bailee for the true owner (there is no contract
involved). Bailments often are, however, associated with a contract e.g. hiring a car. In
such cases the contract can modify the terms of the relationship.
Morris v. C.W. Martin (1965) (English).
- Definition of bailment, ask in this order:
- (1) Has there been a bailment? I.e. was the item taken with the intent to take possession?
- (2) The bailee has obligations in tort. Obligation in negligence to take reasonable care of
the goods (and for conversion if transfer to someone else, and for detinue if fail to return).
Duty of care on a bailee:
o Bailments for the benefit of the bailor alone: bailee takes custody of the goods (to
carry or do something to them), receives no payment, and can’t use them (would
otherwise represent a benefit): Gratuitous mandate – bailee liable only for gross
negligence (i.e. low standard of care on bailee)
o Bailments for the benefit of the bailee alone: gratuitous loan where bailor lends
chattels to the bailee for their use: there is a high standard of care on the bailee, so
will be liable for the least neglect (the item can only be used for the purpose for
which it was lent)
o Bailments for the benefit of both: e.g. pawn where goods are given as security for
a loan or other debt, hire where goods are left with the bailee for their use with
payment made to bailor, ordinary standard of care on the bailee
- (3) Burden of proof is on bailee to show appropriate level of care was taken.
- (4) If there is a contract then exemption clauses limiting liability will apply
Lesson v. Jones (1920) (N.B.C.A.)
-
Facts: P made arrangements with D to pay him $5 a month to store his car in D’s garage.
D assured P that his car would be safe. The car was damaged.
Issue: Was there a bailment here (and hence liability for the damage) or was D simply
providing space for P’s car?
Decision: Judgement for D since no bailment here rather it was a license to use space in
the garage.
To determine if bailment, focus is on possession / custody / taking control. Bailment is
the delivery of something of a personal nature by one party to another, to be held
according to the purpose or object of the delivery, and to be returned or delivered when
that purpose is accomplished. There was no such taking of possession in this case since P
maintained:
o Possession of the car key and
o Had access to the garage at any time to retrieve the car without D’s cooperation.
Newman v Bourne & Hollingsworth
- Facts: Customer in store has a broach in her coat and puts her coat on the glass case.
Leaves her coat there while she tries on other coats. Tells assistant to bring her coat, puts
it on, leaves store and later realizes no broach. Broach is found and handed in to
shopwalker, manager put it away, but then couldn’t find it. Store manager admitted that
the system of lost property hadn’t been fully complied with and brooch should have been
taken to lost property department – element of negligence (not complying with system as
to standard) and therefore liability flows.
- Talks about varying degrees of care, the classic case is the old 1704 case of Coggs and
Bernard
o The modern position is that the standard of care is a standard that is appropriate in
the circumstances. Is the benefit for the bailor then the bailee has a low standard
of care, gross negligence (conversion).
o If it is the benefit of the bailee then it is a high standard
- Comment: generally storekeepers are not liable if employee takes something into custody
without knowledge of owners, but here shop-walker was a senior person – rules and
system. Employer/employee situation – when we looked at finders – employee who finds
in course of employment gives a right to employer. Here it is the converse – employer
has the obligation when an employee finds in the course of employment under
circumstances of a set of rules or system being in place
Bailment versus Sale
Crawford v. Kingston
- Facts: Possession of cows taken, and there was a contractual obligation to return the
same number of cows (although didn’t have to be the exact same cows)
- Decision: bailment is concerned with taking possession of an object and then returning
that very same object. So in this case not bailment, since contract would allow sale and
replace.
- Comment: With bailment there is no transfer of title. Further, in some cases legislation
might specify a certain type of deal is a bailment even though it would not satisfy the
normal requirements (such as intent to return actual items as in this case).
Bailment versus License
- If there is a bailment of chattels (e.g. bailee takes delivery of possession of bailor’s
parked car) then gives bailee rights (e.g. to move the car around at their convenience) and
also imposes obligations (to take care, hence giving rights to bailor).
- Onus of proof is on bailee to show took appropriate level of care (with parking, mutual
benefit, so ordinary standard of care) and if not, liability unless there is a contract limiting
it.
- If however, only a license to park car, then not same duty of care on car park operator
(other than usual tort negligence e.g. not to drive fork lift truck into it). So often a matter
of deciding whether there is a licence or a bailment.
Appleton v Ritchie Taxi
- Facts: P drives into parking lot, and leaves the keys in the car. He gets a ticket and the
attendant drove the car from the entrance to the lot. The key is left there. The car is lost
and then found with damage. Did the attendant take possession – have control?
- Court goes through a series of steps:
- (1) Is there a bailement?
- (2) If yes, then the onus of proof is on the bailee to explain what has happened. They
have taken possession and when the bailor gets back and its damage or vanished, the
bailee has to demonstrate that there was no negligence
- (3) Was the bailee negligent?
- (4) Is there a K that limits
- Possession and control was taken of the car, and therefore there was a bailment. They had
the key to the car, and the attendant got in. The key is an element of control in and of
itself. Here there was no contract because the type of ticket was not the type of situation
where one would contemplate that the ticket contained conditions.
- Onus of proof – rests on the bailee to show there was no negligence or conversion as the
bailee is in the best position to explain negligence or lack of it
Palmer v Toronto Medical Arts Building
- Facts: The attendant came and asked driver if he wanted him to park the car. Normally
the owner parked the car but the situation in this day was one where the attendant said I
will park the car. The key was to be left in the car.
- Decision: Here there was no bailment because the attendant was not taking possession of
the car, he didn’t have the keys and was not in control. Just a voluntary curtesy
Bata v City Parking Ltd
- Facts: This case involves a sign and a ticket which said parking space only. The attendant
did have the keys. It did not address the question of liability.
- Decision: So in this case, the court said this is not a situation of the car park taking
possession. The ticket addresses this even though the attendant requested the keys. Sign
posted that said “fee is for use of space only” – court found that this was not an exclusion
clause, but rather reflected the ‘true nature of the relationship’ – license not bailment
Heffron v. Imperial Parking (1974) (Ont. C.A.)
-
-
-
-
Facts: owner parked the car themselves before leaving the keys with the attendant. There
was an exclusion clause on the ticket stating not responsible for car and contents. The car
went missing (no one knew what had happened).
Decision:
Decided the land owner was a bailee, since land owner had set up a system to take
possession / control / custody of the items on their land, a finding based on the following
factors:
o Car could be moved around at land owner’s convenience.
o Keys give means of control, and were left in possession of land owner at their
request (as opposed to, say, leaving keys with attendant just because attendant
doing you a favour and parking your car for you)
o Ticket with serial number indicates a system of retrieval i.e. have to show it to get
your car back (as opposed to ticket simply being a receipt for payment)
o Provision of an attendant by the parking company to, apparently, look after the
cars (as opposed to attendant simply being there to take payment – might look at
whether attendant can see the cars from their booth, if they supervise things, etc)
o Had a system in place to return keys after hours
o Had hours posted
The onus rests with the bailee once the bailor proves non-delivery to show that he took
reasonable care. This then raised the issue of the exclusion clause.
Concerning the exclusion clauses in the contract, referred to Bata v. City Parking (1974)
(Ont.C.A.) where there were signs in the area stating that “fee is for use of space only” –
the court in that case said was not an exclusion clause, but rather reflected the “true
nature of the relationship” i.e. license as opposed to bailment.
In this Heffron case, the exclusion clause was not about the relationship, but was an
attempt to limit liability. In this case, failure to redeliver the car (and with no explanation
as to what happened) was a fundamentally breach, which meant the exclusion clause did
not apply. Further, possessions in the car were covered if they are the type of things that
might be reasonably expected to be in the car e.g. tools, clothing, radio, etc. (interesting
to think about how types of items expected might vary from place to place e.g. in
vacation area v. downtown business district).
Martin v. Town and Country Delicatessen
- Facts: Have a restaurant and a free parking lot. The lot became full so attendant asked the
P for car keys so car could be parked in a space when available, P did. Car later is stolen
- Decision: No bailment, If it were, it would be gratuitous bailment – low standard of care
(gross negligence/fraud) – wouldn’t be liable for P’s car
- Dissent: found there was a mutual benefit on the basis that the bailee derived the benefit
indirectly.
- Duties of the bailor: Has a duty to warn, to anything that would render that object unfit
for the object for which it will be used.
Duties of the Bailor
MacTague v. Inland Lines
- Also a duty on bailor
-
If you are delivering something and it has a defect in it – then you have to warn the bailee
of the defect in that item
If you deliver something defective, you are liable for a failure to warn of defect
Particularly so if defect renders the item unfit for the purpose for which it is delivered –
like a fundamental breach of the contract
If there is a defect that has caused personal injury – warning has to be made and if it is
not, then bailor is liable
Duties of the Bailee
Coggs v Bernard
- Care means appropriate standard of care in the circumstances
- There are 2 overriding duties of the bailee in relation to liability to the bailor
o 1) Conversion – where you act intentionally to do some act that is inconsistent
with true owner’s interest (transfer it to someone else, take it with intent of
keeping it, anything inconsistent with re-delivery of item)
o 2) Negligence – the standard of care is the particular circumstances or the
particular context
- Ask 3 questions:
- 1) Is bailment for the benefit of the bailor – bailor receives pretty much all of the
benefit such as deposit – to keep for bailor in a gratuitous context or to do something with
it for the bailor gratuitously – need serious breach of standard of care – gross breach
- 2) Mutual benefit – transaction in which there is something in it for both parties (both
bailor and bailee) – level of test of standard is ordinary negligence
o E.g. Bailment for reward, hire, even to pawn something
- 3) For the benefit of the bailee – e.g. where you lend something to the bailee gratuitously
for the bailee’s use and enjoyment – strict liability there (held to a high standard)
MacDonald v. Whittaker Textiles
- Facts: have a system where workers can bring to work their tools, carry them in box, box
placed in supervised caged area and is locked at night
- What is the type of bailment - is it all for benefit of bailor, or is it for benefit of the bailee,
or for benefit of both
- Likely to be for the benefit of both – court finds to be of mutual benefit. Employee
saved burden of carrying box of tools, but tools are used for the purpose of employment
- Was there a bailment?
- Decision: Yes there was a bailment in this case
- Reward doesn’t have to be in terms of a fee/money, could be money’s worth
- Standard – onus of proof – in practical terms, you have to be in a situation where the
evidence tends to be equal – what is submitted by one party to a dispute equals what is
submitted by the other party
- Then go against person who has an obligation / onus of proof
- When the evidence is exactly equal, then the onus rules
- Here, onus of proof lies on bailee when object is lost, injured or destroyed – must
show care or diligence as if it were bailee’s own property
-
-
If the bailee succeeds in doing this, he is not bound to show precisely how or when the
loss or damage occurred – but cannot refuse to explain the steps that were taken or not
taken to safeguard the item itself
Certain employment rules in place – take role of K in terms of governing placement of
these items
Employees are requested to avoid bringing valuable items to work- clearly doesn’t mean
avoid bringing tools
Townsend Air Services v Hansen
- Facts: P owned aircraft and the D pilot, crashed it. D escaped from injury but aircraft was
destroyed
- Action brought for cost of the air craft
- Decision: Bailee is presumed or expected to be the person in the position who knows the
most about it, or at least should know more about it than the bailor – obligation on that
person. Pilot clearly negligent – hadn’t checked the weather – ice rain
- Insurance – primary obligation on bailor – but you are responsible during term that you
have item – can’t rely on bailor’s insurance (bailor’s insurance company will sue you)
- D did not discharge the burden on him to show that he was not negligent
Sub-Bailment
Sub-bailment: if sub-bailee knows bailee not owner, then liable to owner, limits not
applicable
- Sub-bailment is like sub-leasing, or sub-infeudation, sub-contractors, etc.
Morris v. C.W. Martin (1965) (English)
- Facts: Gave fur to bailee to clean. Bailee, with owner’s knowledge, contracts with and
sends it to sub-bailee (on bailee’s own initiative) to do the actual cleaning. Sub-bailee’s
employee, when told to clean it, steals it. Owner wants to sue sub-bailee, but the subbailee has an exclusion clause in their contract with the bailee, and the owner was not
aware of the terms of that contract. Note there was no question of agency here (i.e. bailee
was not contracting with sub-bailee acting as agent for owner – if this had been the case,
then there would be privity of contract between the owner and the sub-bailee)
- Issue: can the owner directly sue the sub-bailee, or does the claim have to go down
through the chain (i.e. owner dues bailee, bailee sue sub-bailee). Also at issue was
whether the exclusion clauses of sub-bailee would apply to the owner, but not answered
here.
- Decision: Diplock / Salmon
- Sub-bailee voluntarily took possession of owner’s property, knowing it did not belong to
the bailee (although didn’t know who the owner was). Since sub-bailee was aware of
distant owner, it set up a bailment between owner and sub-bailee, and so sub-bailee is
liable to owner. This is independent of contract (there was no contract between owner and
sub-bailee). Somewhat similar reasoning as with notice, and outcome would have been
different if sub-bailee had no knowledge someone else owner the object.
- The scope of the exemption clause was not applicable in this case so it wasn’t considered
if it would have applied between the owner and sub-bailee
- Employer was found vicariously liable for the conversion by their employee since
employer had given the coat to that employee for cleaning
After reading Denning’s decision (which came to same result but by different approach)
said: “The beauty of the common law is that it is a maze and not a motorway”
- Denning: owner can sue sub-bailee if she had right to take immediate possession.
o Otherwise, can only sue sub-bailee directly for permanent injury or loss.
o Compares it to a lease, where lessee (but not owner) can sue for trespass, but
owner can still sue for permanent injury or loss (i.e. damage to reversion). So must
ask: does sub-bailee have a right to exclude true owner from possession.
Punch v. Savoy (1986)
- Facts: owner gave jewellery to Savoy to clean. Savoy, insured it for $100 and sent it by
registered mail to Walker in Toronto. Walker cleaned it, but there was a mail strike so
they used Rapidex Courier (4th party) to send it back (different from Martin – the owner
did not know that the ring would be sent). It never got back.
- Issue: Assuming that sub-bailee has liability to true owner since knows it belongs to
someone other than bailee, can sub-bailee rely on their contract with bailee to limit their
liability to the owner.
o From point of view of undertakings, would answer yes (sub-bailee only undertook
to do something according to their contract with bailee), but from point of view of
owner, seems unfair they should be bound by something they were not aware of.
- Decision: Savoy and Walker were liable for negligence for not insuring it enough
(standard of care for a bailee is that of a prudent owner). CN tried to rely on exemption
clause, but in a bailment situation, a limitation of liability can only be relied upon if the
original owner expressly or impliedly assents to it.
-
Gifts
Gifts: capacity to give & receive, inter vivos requires intent and delivery (cohabiting tricky)
1) For a gift to be valid, must have both:
a) Legal capacity to give
i) If you don't have legal title you can’t give it (i.e. nemo dat – can’t give what you
haven’t got).
ii) Must also have the “mental” capacity (i.e. mentally defective persons, children,
intoxicated persons, and corporations who don’t follow their own regulations)
b) Legal capacity to receive
i) In certain relationships the law will not allow gifts due to concerned about abuses of
confidence, undue influence, inequality of bargaining positions (e.g. solicitor/client:
the client wants to leave money to his lawyer in his will, it will be invalid unless the
client goes to another lawyer for independent legal advice, similarly with
doctor/patient, and with parent/child to some extent).
ii) In the past there were also certain public policy concerns making some gifts invalid
(e.g. “a gift to all my future illegitimate children” used to be disallowed due to
concern of promoting immorality)
2) Gifts can be made on one of 3 ways:
a) Inter vivos – requires 2 steps for gift to be valid:
i) Must be an intent to give
(1) Evidence must show that the donor intended to divest themselves of possession of
the property, and not simply give possession as a bailment for example.
(2) The words used have to be very clear/unambiguous, and sufficient to change the
ownership (not just create a bailment or a license). If there is any doubt it is
assumed that the smallest transfer was given (e.g. “the dog is your responsibility
now” said in the heat of frustration is not good enough to create a gift)
ii) Must be delivery or deed
(1) Actual delivery of the object to the donee is required, unless gift is made by deed
(and the deed is signed, sealed, and delivered). So not enough to just say by words
or in writing that you are making a gift. Delivery is not merely evidence of a gift
having been made, it is an essential element of the gift itself.
(2) Constructive/symbolic delivery: when you can’t actually physically hand over an
object you can hand over something which will transfer control of the chattel e.g.
hand over keys to a car.
iii) Until both intent and delivery have occurred (they may occur at the same time, or
either may come before the other) a person is free to change their mind, and intention
alone to give a gift cannot be enforced. After that, however, gift cannot be revoked.
iv) With people living in the same place there is often difficulty showing delivery, since
both the donor and donee might continue to use the chattel (so unclear if donor really
giving gift or just letting donee use it). This might apply to housemates, siblings,
spouses, etc. Often ends up in court when one of the parties (e.g. donor in Re Cole)
goes bankrupt, and trustee in bankruptcy is looking for all their assets to pay their
creditors. E.g. Re Cole (1963) (C.A.)
(1) Facts: Husband goes bankrupt. Both wife and husband claim husband gave all the
furnishings as a gift to the wife. He show her the house, she touched some of the
furnishing, and he then said “all of this is yours” (i.e. claiming symbolic delivery).
At trial it was accepted that both the husband and wife believed the gift to have
been made. However, the trustee in bankruptcy disputes the wife’s claim, pointing
out, for example, that the goods were still insured under the husband’s name
(2) Issue: had there been an effective delivery to make this gift valid?
(3) Decision: No, judgement for the creditors
(a) In order to transfer property by gift, there must be either a deed or instrument
of gift or there must be actual delivery of the thing to the donee (i.e., a change
in possession, like livery in seisin).
(b) Merely bringing someone near to chattels and letting them handle them is not
sufficient to constitute delivery (it would have be sufficient if the donor had
then left, leaving the chattels with the donee, but that did not occur here since
both donor and donee lived in the same house, and so there was no clear
change of control)
(c) In a spousal situation and in cases where both persons are in a common
establishment, a deed or contract of sale (say for $1) is necessary – mere
words alone are not enough because there is no clear change in possession,
and possession will stay where title was originally
(4) Comment:
(a) Had the couple transferred the insurance of the chattels to the wife’s name,
wife might have succeeded since that would be good evidence of transfer
(b) This might be decided differently today
b) Donationes Mortis Causa
i) A gift made by a person who, apprehending their own death, delivers to another the
possession of any personal goods to keep as their own in case of the donor’s death. If
the donor dies the donee receives the gift absolutely, but if the donor lives the donee
has to give it back. Until the person dies it is a bailment, and if they die the gift is
completed.
ii) Used to be applied strictly e.g. in Thompson v. Meecham, (1958) (Ont. C.A.) the
death had to occur from peril contemplated, that peril cannot be just an ordinary risk
of living, and it needs to be an extreme / pressing danger which will not allow the
time to make a will (in this case man feared flying, gave his car to his girlfriend, went
to airport and died of heart attack – wife successfully sued for the car). Such a strict
approach has not been applied widely however.
c) By will