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 Crowno Communal ownershipo 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 Crowno 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 possibleo 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 sovereigntyo (2) If present occupation is relied on as proof of occupation pre-sovereignty there

must be a continuity between present and pre-sovereignty occupationo (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 justificationo (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 evidenceo (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 semi-nomadic 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 inalienabilityo 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 Act1) 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 willii) 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 populariv) 1540: Statute of Wills allowed all lands held under socage, and 2/3 of lands held

under knight service to be passed by willv) 1660: Abolition of Tenures Act converted knight service to socage, so completing

alienability in willsvi) 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 con-fuses this.

o The middle part of s.23(2)(i): “the right of a person to show fraud, including for-gery, in which the registered owner, or the person from or through whom the re-gistered 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 pur-chase 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 in-strument that is void but you are named in the instrument, and in good faith and for valu-able 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 perso-nam, 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 perso-nam 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 InterestsSection 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 transferredo 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 intestacyo (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 EstateA. Repungnancy – A fee simple or a life estate?

Repugnancy: if give absolutely cannot control it’s destiny – intention in wills, formal in deedsRe 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 estateo (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. CreationBy 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 estateBy 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/reversionero (2) Applies to other relationships where one party has possession but another has

a simultaneous interestCategory 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 IssuesHistoricalDoctrine 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 regimeo 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 botho 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 trust4) 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 non-married 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 Testamentary Matrimonial breakdown

General (can apply anywhere)

Land (SP) Act Land (SP) Act Land (SP) Act Resulting trustEstate Administration Act

Wills Variation Act

Family Relations Act

Constructive trust

9. Co-Ownership – Concurrent EstatesTypes of Co-OwnershipCo-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 co-ownership 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 CoparenaryTwo 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 co-owner 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.18o Because of survivorship, a JT cannot be severed testamentary (i.e. by will) but

rather must be inter-vivoso 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)

Joint tenancy (JT)Each owns the wholeEqual divisionsSurvivorship

Tenancy in Common (TIC)Ownership: each owns a shareShares may be unequal

Individual ownership (severalty)

Co-ownershipRequires 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

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, oro 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 fam-ily, 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

Joint tenancy (JT)Each owns the wholeEqual divisionsSurvivorship

- 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 as-signed 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 partitiono 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 ProfitsSpelman 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 co-tenant 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 constructiveo (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 co-owner can’t call on the other co-owner to bail out his business enterprise. Con-versely if it is successful, the other co-owners can’t claim a share form that suc-cessful 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 co-

owner 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 co-

owners (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 severStonehouse 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: unclearo 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 TenantSeverance 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 requestedo 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 discretionRayner 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 discre-

tion 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 parti-tion 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. non-vested)

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 ves-ted 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)

ConditionsCondition 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 ori-

ginal 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 21Re 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!

- 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- 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 non-existent)

- 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 InterestsCommon 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

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) Remaindero 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 simpleo 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 permittedo 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 Revertero 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 simpleo 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

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 of-fends the rule because there is no preceding estate of freehold to support the con-tingent 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 cap-able 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) 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 prema-turely 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 determin-

able 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- 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 acceptableo 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 alien-ation to family members of a specific generation, then he is restricting alienation to a di-minishing 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 dimin-ishing 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 exist-ence at the creation of the interest. An interest is only valid if remote vesting is im-possible:

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, 1978o 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 giveno Determine whether each interest is vested in interest (or possession) or

contingent and say whyo 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 <= 55o s.14(2) evidence may be given to show that a living person incapable of having

childreno 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 purposeo 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 lando 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 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 viewo 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”), shadeo 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 generallyRe 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.

- 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 Acto 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

- 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

- 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 lando 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:

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 themB.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.

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 li-cense 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 homeo 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 ex-daughter-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 ito 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 contracto 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 hereo 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 baileeo 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 ando 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 shop-walker, 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 sys-tem. 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 SaleCrawford 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 at-

tendant 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 it-self. 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 pos-

session. The ticket addresses this even though the attendant requested the keys. Sign pos-ted 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 hourso 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 BailorMacTague 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 BaileeCoggs 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 keep-ing it, anything inconsistent with re-delivery of item)

o 2) Negligence – the standard of care is the particular circumstances or the particu-lar context

- Ask 3 questions:- 1) Is bailment for the benefit of the bailor – bailor receives pretty much all of the bene-

fit 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 sub-bailee 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 givei) 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