Povitz-Common Law Property-Lametti-2014I. Introduction 5

Statement of Progressive Property (Alexander et al.) 7The Concept of Property: Relations through Objects of Social Wealth (Lametti) 7The Concept of the Anticommons (Lametti) 7Fundamental Legal Conceptions as Applied in Judicial Reasoning (Hohfeld) 7

II. Protections for Private Property and Expropriation 7 Reader pp. 140-174 10

Ziff, “ ’Taking Liberties’: Protections for Property in Canada” 10Pennsylvania Coal Co. v. Mahon (1922)-US 11Lucas v. South Carolina Coastal Council (1992) US 11Mariner Real Estate Ltd. v Nova Scotia (AG) (1999) 12Canadian Pacific Railway Company v City of Vancouver (2006) 13Metalclad Corp v United Mexican States (2000)-NAFTA arbitration Tribunal 14

Antrim Truck Centre Ltd. v. Ontario (2013) – SCC 14

III. Boundaries of Property 15 A. Classifications of Real and Personal Property in the Common Law 15B. Boundaries 16

i) Airspace and Subsurface Rights 16Reader pp. 175-201 (Airspace and Subsurface Rights) 16

Didow v Alberta Power Ltd (1988)-(above the surface) 17Edwards v Sims (1929) (US)-(below the surface) 17Ziff, “ Digging Below the Surface: The Story Beneath the Great Onyx Cave Cases” 18B.J. Barton, “ Canadian Law of Mining” 18

ii) Lateral Boundaries 19Reader pp. 201-224 (Lateral Boundaries) 20

Robertson v. Wallace (2000) – Alberta 20Blewman v. Wilkinson (1979) – New Zealand 21R v. Nikal (1996) – SCC 21

C. Distinction between Fixtures and Chattels 21Reader pp. 224-250 (Fixtures + Chattels) 22

La Salle Recreations Ltd. v Canadian Camdex Investments Ltd. (1969) – BC 22Diamond Neon (Manufacturing) Ltd. v Toronto-Dominion Realty Co. (1976) – BC 22Glencore International A.G. v Metro Trading International Inc. (2001) – UK 23McKeown v Cavalier Yachts Pty Ltd. (1988) - UK 23Gidney v Shank (1995) - MB 24

IV. Possession 24 A. Possession – Basics 24

Reader pp. 293-306 – Introduction and Basic Definitions 25Popov v. Hayashi (Califortnia Supreme Court) 25

Pierson v. Post (1805)-NYSC 26B. Adverse Possession 27

Reader pp. 306-328 – Acquisition of Title by Possession: Squatters 28Keefer v Arillotta (1976) – ON 28Teiss v. Ancaster (Town) (1997) – ONCA 29

Re St Clair Beach Estates v Macdonald (1974)-OntDivCourt 30C. Finders 31

Reader pp. 329-346 – The Relative Nature of Title: Finders 32Trachuk v. Olinek (1996) – AB Court of Queen’s Bench 32Charrier v. Bell (1986) – La.SC (Louisiana) 33

Parker v. British Airways Board (1982) – UK 34D. Gifts 35

Reader pp. 346-366 – Transfer of Title Through Delivery: Gifts 36J.B Baron, “Gifts, Bargains, and Form” 36Nolan v. Nolan & Anor (2003) – Supreme Court of Victoria (Australia) 36

Re Bayoff Estate (2000) – Sask 37

V. Common Law Estates 38 A. Tenure and the Feudal System 38B. Estates – Introduction 40C. Estate in Fee Simple 41

Reader pp. 367-373 – The Estate in Fee Simple 43R.C. Ellickson – “Property in Land” (Yale L.J., 1993) 43Thomas v. Murphy (1990) – NB Court of Queen’s Bench (Ziff, 369) 43

i) Fee Tail 44D. Life Estate 44

i) Creation 45Reader pp. 374-390 – The Life Estate: Introduction and Creation 45

Re Walker (1924) – ONCA 45Re Taylor (1982) – Sask 46Christensen v. Martini Estate (1999) –Alberta 46

ii) Powers and Obligations 47Reader pp. 390-400 – The Life Estate: Powers and Obligations 48

Ontario Law Reform Commission, Report on Basic Principles of Land Law – “WASTE” 48Powers v Powers Estate (1999) – Nfld 48

iii) Life Estates Arising by Operation of Law 49Reader pp. 400-402 – The Life Estate: Life Estates Arising by Operation of Law 49

W. Renke, “Homestead Legislation in Four Western Provinces” (1995) – Matrimonial Prop Law 49

VI. Equity (Equitable Interests) 50 Reader pp. 451-466 – Introduction & the Origins of Equity 52

P. Butt, Land Law 4th ed 52M. Conway: “Equity’s Darling?” 55

A. Resulting Trusts 56Reader pp. 466-478 – Resulting Trusts 56

Pecore v. Pecore (2007) – SCC 57

VII. Qualified Estates (Qualified Transfers and Future Interests) 58 Reader pp. 527-542 – Introduction and Basic Concepts 60

Stuartburn (Municipality) v. Kiansky (2001) – Manitoba 60McKeen Estate v. McKeen Estate (1993) – NB 60Caroline (Village) v. Roper (1987) – Alberta 61

A. Void Conditions + State Limitations on Private Power 62Reader pp. 542-573 – State Limitations on Private Power 64

Unger v. Gossen (1996) 64H.J Hayes Co v. Meade (1987) 64Re Leonard Foundation Trust 1990 Ontario CA (1990) 65B. Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust 66Trinity College School v Lyons 1995 CarswellOnt 403 (Gen.Div) 67

B. Remainder Rules 68Reader pp. 574-582 – Remainder Rules 71

Ontario Law Reform Commission, Report on Basic Principles of Land Law 72Re Crow (1984) – Ontario 73

C. The Rule against Perpetuities 73Reader pp. 582-608 – The Rule against Perpetuities 76

VIII. Co-Ownership (Shared Ownership) 79 A. Basic Concepts & Creation 79

Reader pp. 695-697 – Introduction & Basic Concepts 81Ontario Law Reform Commission – Report on Basic Principles of Land Law 81

Reader pp. 698-704 – Methods of Creation 82Ontario Law Reform Commission: Report on Basic Principles of Land Law 82Re Bancroft, Eastern Trust Co v. Calder (1936) – NSSC 83

B. Severance of Joint Tenancies 83Reader pp. 704-713 – Severance of Joint Tenancies 84

Re Sorensen & Sorensen (1977) 84

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C. Resolving Concurrent Ownership Disputes – Rights/Responsibilities of Co-Owners + Terminating Co-Ownership 86

Reader pp. 713-722 – Resolving Concurrent Ownership Disputes 86Ontario Law Reform Commission – Report on Basic Principles of Land Law 86J.W.Lem & B.G. Clark, “Annotation” 88

D. Shared Ownership of Personality 88Reader pp. 722-726 – Shared Ownership of Personality 88

Frosch v Dadd (1960) – ON 88E. Co-Ownership Through Family Property Law 89

Reader pp. 726-731 – Co-Ownership Through Family Property Law 89Braglin v Braglin (2002) – Alberta 90

F. The Nature of Condominiums and Co-Operatives 91Reader pp. 731-733 – The Nature of Condominiums and Co-Operatives 91

G. Alternative Conceptions of Shared Ownership 91Reader pp. 733-751 – Alternative Conceptions of Shared Ownership 91

Hofer v. Hofer – [1970] SCR 958 – Manitoba 92AJ Esau, “The Judicial Resolution of Church Property Disputes: Canadian and American Models” 92JS Youngblood Henderson, “Mikmaw Tenure in Atlantic Canada” 92GNU General Public License 93

IX. Servitudes over Property 93 Reader p. 753 – Introduction 94

A. Easements 94Reader pp. 754-757 – The Nature of Easements 95

Ontario Law Reform Commission, Report on Basic Principles of Land Law (Ont AG; 1996) 95i) Creation 96

Reader pp. 757-772 – Creation of Easements 98Nelson v 1153696 Alberta Ltd. [2011] - ABCA 99

ii) Scope, Location and Termination 100Reader pp. 773-783 – Scope, Location and Termination (of Easements) 101

Laurie v Winch [1953] – SCC 101Malden Farms v. Nicholson (1956) – ONCA 101

B. Other Servitudes and Servitude-Type Rights 102Reader pp. 783-788 – Other Servitudes and Servitude-Type Rights 102

British Columbia v Tener – [1985] SCC 102Bank of Momtreal v Dynex Petroleum Ltd (2002)-SCC 103

C. Access to Public and Private Property 103Reader pp. 789-797 – Access to Public and Private Property 104

Michelin & Cie v. CAW-Canada (1997) – Federal Court 104Sky City Auckland v. Wu (2002) – New Zealand 105

D. Covenants Running with Property 105Reader pp. 797-820 – Covenants Running with Property 108

Tulk v. Moxhay (1848) 108Ziff: “Restrictive Covenants: The Basic Ingredients” 109Berry v. Indian Park Assn (1999) – ONCA 110P. Filion, The Impact of Restrictive Covenants on Affordable Housing and Non-Single Family Use of Homes 111

i) Positive Covenants 112Reader pp. 821-841 – Positive Covenants 113

Amberwood Investments Ltd. v. Durham Condominium Corp No. 123 (2002) – ONCA 113ii) Invalidity and Termination 114

Reader pp. 841-843 – Invalidity and Termination 114B. Ziff, “Restrictive Covenants: The Basic Ingredients” 114

F. Servitudes for a Public Purpose 115Reader pp. 843-846 – Servitudes for a Public Purpose 115

X. Bailment 115 Reader pp. 662-694 – Bailment 118

Mercer v. Craven Grain Storage (1993) 118Letourneau v. Otto Mobiles Edmonton (1984) – Alberta 118M et al. v Sinclair c.o.b. Sinclair’s Riding Stables (1980) – Ont 120

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Punch v. Savoy’s Jewellers Ltd. (1986) – ONCA 120

XI. Registration & Registration 122 A. Priorities 123

Reader pp. 897-917 – Priorities at Common Law and in Equity 123S. Levmore, “Variety and Uniformity in the Treatment of the Good-Faith Purchaser” 123Northern Counties of England Fire Insurance v Whipp (1884) 124P.A. O’Connor, “Security of Property Rights and Land Title Registration Systems” 124Chippewas of Sarnia Band v Canada (AG) (2000; ONCA) 125J. Reynolds, “Aboriginal Title: The Chippewas of Sarnia” 126Rice v. Rice (1863) 126

B. Registration 126Reader pp. 918-973 – Registration 127

T.G. Youdan, The Length of a Title Search in Ontario 127Canadian Imperial Bank of Commerce v. Rockway Holding (1996)-Ontario 127D.C. Harris, The Advent of the Torrens System in Canada 128Harris, “Indefeasible Title in British Columbia: A Comment on the November 2005 Amendments to the Land Title Act”

128Lawrence v Wright (2007) 128Holt Renfrew & Co v. Henry Singer Ltd. [1982] 129Alberta (Ministry of Forestry, Lands and Wildlife) v McCulloch (1991) - ABQB 130Skeetchestn Indian Band and Secwepemc Aboriginal Nation v Registrat of Land Titles, Kamloops (2000) – BC 132Ziff, “Title Insurance: The Big Print Giveth, But does the Small Print Taketh Away?” 132

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I. IntroductionBasic Concepts of Private Property

Definition: 947 CCQ James Penner: “exclusion”

o Exclusion = ability that the owner has to exclude other peopleexclusive nature of propertyo Represents that the owner has the “final say” on the exclusive use of resources

Jim Harris: Ownership spectrum and Trespassory Rules Property is the relationship between and among individuals through objects of property Goal of a normative property system = try to regulate the kinds of rights/relationships that people can have and

the kinds of objects of property that people can haveo We also see property systems (CVL) trying to classify/group different types of property

Must consider what kinds of interests are possible in different kinds of objectsthe nature of the object of property regulates the kinds of relationships/rights that are possible

Unlike CVL, CML prop is not regulated in advance and therefore we see a high degree of ppl pulling “fast ones”

Justifying Private Property How we value certain things/people tells us a great deal about societyneed to keep thinking about these

choices in order to either keep the system status quo or to move the system to a better placeo The system needs to be justified because it creates inequalityex: in the concept of ownership, one

individual is given rights that are barred from others in society on that object Collective Arguments that have traditionally been used to justify private property:

o Consequentialist theory = property rights are used to achieve a larger goal/set of consequences Based on efficiency in 2 senses: (1) productive efficiency (more stuff) (2) efficient allocation “Tragedy of the Commons” – if you have a common resource and everybody around the

resource got to use it, at an individual level, everybody will make the rational decision to get as much of that resource as they canat the end of the day, the common resource will be destroyed = tragedy of overuse

Having private property rights internalizes the externalities/creates responsibilities Critiques of economic/efficiency argument

Economic development can be inhibited by too much private property—tragedy of the anticommons

o Consider a world for example where all impasses are owned privately—that would be unbelievably complicated

The economic justification lacks persuasiveness to the extent that there is no benchmark with which to determine if the efficiency that results is actually better than that produced by other forms of ownership

The economic theories about ownership also seem heavily reliant on the belief that most people are rational and greedy wealth maximizers at heart—if enough of us don’t fit that description then this starting premise breaks down

o Bentham’s idea that private property allows for security in societyo Communist collective theories that all property should be held collectively

Individual Arguments used to justify private property o Locke’s Natural Rights Theory = if you improve the land you have a right in the land you improve,

unless it belongs to someone else Based on the notion of rewarding meritorious activity

o Personhood arguments = based on our status as human beings (1) Hegelwe express ourselves through our property and it should belong to us (2) Aubry and Raupersonhood theory of patrimony

Problemapplies primarily to creative products, not really other things

Wesley N. Hohfeld (see article below)5

Hohfeld = legal realistwanted to simplify the world, wanted to clarify property and the whole of private lawo Went about this by trying to reduce private law thinking to a series of binary “two-part”

relationships, most fundamental was this idea of correlatives “Hohfeldian Claim Right” – idea of a claim right, which is constantly attributed to Hohfeld

o Notion that if the owner has his property taken away from them, he has the right make a claim for it Jural “Correlatives” and “Opposites”

o Correlative = notion of a (1) Right and a (2) Correlative Duty (most important) (3) Privilege (liberty) is correlative to a (4) No-Right (no-claim right)

Privilege/Liberty = one has a liberty to, for example, walk through a path (because the individual with the Right has granted them this Privilege)the correlative of this is that another individual does not have a claim right to stop that individual

o Opposite = (1) (4) Right vs. No-Right – either you have a right to a property or you don’t o Note the difference between a right vs. a duty vs. a privilege/libertyo Horizontal: as between two

Correlatives are between two peopleo Diagonal: what one person has

Opposites are what one person has and what another does not have 4 More Categories: (1) Power (2) Liability (3) Immunity (4) Disability

o Correlation between (1) Power (Ability) and (2) Liability People are liable to respect the power of another

o Correlation between (3) Immunity and (4) Disability (No-Power) Immunity means others have No-Power to affect that individual’s status

o Power (Ability) is Opposite from Disability (No-Power)o Immunity is Opposite from Liability

These various categories and the Correlatives + Opposites between them are meant to explain legal relationships

Ius in rem, ius in personam (real rights and personal rights)o Hohfeld: paucital versus multital rights

PaucitalAccording to Hohfeld, the binary relationship is an example of a paucital right (simple binary relationships – ius in personam / personal right)

o Stacking individual right explains property rights by saying they are put together or stacked – saying that the owner has a series of binary relationships with many other with respect to a piece of property and they are stacked up and the sum of all these relationships but together is a Ius in rem (property right)

Problem = not all relationships can simply be described as binary In many instances there is no actual relationship between the owner and the other

individualex: owner doesn’t want anyone going on his property, he doesn’t care who it is / the other individual knows not to go on that owner’s property, whether they actually know each other or notit is about the property itself, not the relationship between the 2 individuals

Lametti’s Solution = Penner said that the Correlative Right and Duty is too symmetrical and that in reality, property is asymmetrical (one to many)notion of having asymmetrical rights (owner has a right to not allow anyone to interfere with his property) and asymmetrical duties (non-owner has a duty not to interfere with anyone else’s property)

Instead of a relationship between the owner and the individuals, the relationships of both parties is now with the object itself

Lametti also suggests that this asymmetry allows us as owners to impose certain duties with respect to certain types of properties AND that owners themselves have certain duties imposed upon them with respect to some properties (ie: duty imposed on an owner not to destroy an incredibly rare and valuable resource)

o Turns owners into stewards Hohfeld puts the focus on the relationships between owner and other where as

Lametti/Penner would argue that focus is on the relationship that both parties have with the object itself.

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More Critiques of Hohfeldo Honoré’s List looked at Hofheld as too simplistic

“Incidents” of ownership based on a more empirical set up observations that create certain kinds of powers/rights usually associated with ownership

11 “sticks”/incidents Creates a “bundle of rights” ideacan have ownership even if you don’t have the whole

“bundle of sticks” Allows for a more flexible property institution

Statement of Progressive Property (Alexander et al.)

The Concept of Property: Relations through Objects of Social Wealth (Lametti)

The Concept of the Anticommons (Lametti)

Fundamental Legal Conceptions as Applied in Judicial Reasoning (Hohfeld)

II. Protections for Private Property and ExpropriationExpropriation

State must justify when it decides to take private property out of private handsindividuals have an expectation that private property will remain in their hands and they will hold control over that object and if the state wants to move in and change this, then it will have to bear some kind of burden

o Some jurisdictions will say that at the very least there must be a public purpose Much more academic writing on expropriation in the United States v. Canada In all cases we are balancing the state vs the individual

o Public purpose of the expropriation, public interest of a project, versus the individual having the final “say-so” over her property

How about…?o Re-Destination; Partial Re-Destination?o Re-purposing; partial re-purposing?o Expropriationinjurious affectation

What are the goals… Of expropriation? Of land (resource) regulation and re-direction?o Utility and fairness, efficiency and justice. Government must act prudently because of “insurance”

paid. Canada

No true constitutional protection (even in the 1981 Charter of Rights) o This is different from the United States

Quebec: Quebec Charter and CCQ 952 Bill of Rights (statute, pre-Charter) SO there is some protection, just not that a full constitutional protection like the US and Australia

Starting Point Provinces and federal governments have expropriation acts that go over what can be expropriated, the means

of expropriation etc.Compensation not required, BUT

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Burden is placed on state by cases, statutory interpretation and presumption in favor Need a statutory basis to expropriate Quebec: CCQ does explicitly place burden on the state

(1) Direct Expropriation/Per se = explicit physical expropriation or physical damage by the Crown (takes whole bundle)(2) Constructive/Indirect Expropriation/de facto = legal title is not actually taken, but some loss of use or depreciation in value (takes rights/sticks from the bundle)

(2)(a) If total loss of use, it amounts to expropriation (2)(b) If less than total, then “injurious affectation”

United States Physical invasion (Loretto – Supreme Court of the United States SCOTUS)

o Facts = cable was put down the front of a residential building, didn’t actually affect the value of the building that much but it was still a physical intrusion/invasion

o Ratio = If there is any physical invastion of property there will be compensation Kelothere was a development plan to try and re-invigorate a low-income town. Was going to be done

through a private developer. Kelo had a house in great shape in the middle of the city, she didn’t want to move, she loved her house. Went all the way to the SCOTUS but she lost, had to move

Pennsylvania Coal v. Mahon (1922 SCOTUS)o The mining company won the right to be compensated for the “expropriation” of the right/immunity

that was taken awaySO a removal of an important economic right from a property owner could be tantamount to expropriation

Lucas (1992 SCOTUS)

o This is known as indirect taking, creeping de facto, or constructive expropriation. In the US it is referred to as a regulatory taking.

Back to Canada Beneficial Interest to the Crown? Manitoba Fisheries (1979 SCC)company lost a fishing license and this was deemed to be a “taking” of a

beneficial interest by the Crown BC v. Tener (1985 SCC)loss of benefits from a license to a license-holder is indirect expropriation CPR v. Vancouver (2006 SCC)differentiated from other cases because the state doesn’t actually take a

beneficial interest + all reasonable uses weren’t completely removed from the property De Facto Expropriation Requires test from CPR :

o (1) The acquisition of a beneficial interest in the property or flowing from it, ORo (2) Removal of all reasonable uses of the property

“Of sufficient severity to remove virtually all of the rights associated with the property holder’s interests” (Marcea J. in Alberta v. Nisson 1999)

Mariner Real Estate Canadian analogue to Lucas but it seems like Canada defers more to zoning Not all reasonable uses were removed; hence no de facto/constructive expropriation

o (Also: not all avenues exhausted by Pdidn’t even apply for the other residential house)

Cromwell disagrees because the preclusion of development on land in question because of environmental sensitivity is not extinguishment of all rights

o Use not equal to valueloss of interests in land not the same thing as loss of value

o But loss of value is evidence of loss of interests Scope for Zoning?

o Quite a bit of scope – zoning up/down isn’t necessarily expropriation Should there be a difference between zoning and the more direct forms of

expropriation? Seems like we defer much more to zoningo Look at purpose of zoning here = environmental protection

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QuebecDoctrine of Disguised Expropriationo Does not focus on beneficial interest, rather on loss of profitable uses of the land (arguably wider than

the Canadian common law approach)

Constructive Expropriation when less than the whole property is taken“Injurious affectation”

Can affect the land directly; loss of value in whole or in part Can affect activities going on the land Has to be in the statute Cromwell in Mariner: “only instance” for compensating loss of value (remember diff from loss of land) “Loss of virtually all value” is not a “loss of an interest in land”

o Latter compensable, former not EXCEPT if “injurious affectation”Antrim Truck Centre

Three statutory requirements under Ontario The Expropriations Act for injurious affectation:o (1) “statutory authority” (2) “actionability” and (3) “construction and not the use”

See the case for the full requirements o Main issue here = requirement #2 of “actionability”

Where these requirements are present, the Act requires that the complainant be compensated for the amount by which the affected land’s market value was reduced because of the interference, and for personal and business damages (ss. 1(1) and 21 Ontario Expropriations Act)

2nd requiremento Imports a tort standard: Private Nuisancewould it have been tantamount to a deprivation of

enjoyment such that it would have been a nuisance?o Private nuisance requirements = (1) substantial and (2) unreasonable

(1) Substantial = interference that goes beyond the “normal give and take of life” – need to screen out weak claims before moving to more complex analysis of reasonableness

What is more than trivial?: “In St. Pierre, while the [Supreme] Court was careful to say that the categories of nuisance are not closed, it also noted that only interferences that “substantially alte[r] the nature of the claimant’s property itself” or interfere “to a significant extent with the actual use being made of the property” are sufficient to ground a claim in nuisance: ... One can ascertain from these authorities that a substantial injury to the complainant’s property interest is one that amounts to more than a slight annoyance or trifling interference.”

(2) Unreasonable Hard to assess “reasonableness” when moving from public to private – not necessarily

samefocus on balancingo “The main question here is how reasonableness should be assessed when the

activity causing the interference is carried out by a public authority for the greater public good. As in other private nuisance cases, the reasonableness of the interference must be assessed in light of all of the relevant circumstances. The focus of that balancing exercise, however, is on whether the interference is such that it would be unreasonable in all of the circumstances to require the claimant to suffer it without compensation.”

o In the traditional law of private nuisance, the courts assess, in broad terms, whether the interference is unreasonable by balancing the gravity of the harm against the utility of the defendant’s conduct in all of the circumstances

Factors to be considered are NOT a checklist Distinction between utility of the conduct (purpose) vs. nature of the conduct (how the

purpose is carried out)generally the focus in nuisance is on whether the interference suffered by the claimant is unreasonable, not on whether the nature of the defendant’s conduct is unreasonable

o SO could have reasonable conduct but still have nuisance

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o The burden on the claimant is to show that the interference is substantial and unreasonable, not to show that the defendant’s use of its own land is unreasonable.

o BUT the conduct will be considered “The question is whether the damage flowing from the interference should be

properly viewed as a cost of “running the system” and therefore borne by the public generally, or as the type of interference that should properly be accepted by an individual as part of the cost of living in organized society”

Also, is reasonableness necessary where there is a material or physical interference

Comparing US v. Canadian/UK approaches to Expropriation SO US Approach is to balance the individual vs. the collective interest with no preset set of questions or

methodologyvery open-ended approach Canadause of various kinds of categories, with many gaps

o High deference to regulation that doesn’t exist in USo Very much a creature of statute because there is no Constitutional provision in Canadao There is still balancing but it is much more technically restrictedo High difficulty in the injurious affectation standard of taking the reasonableness standard of

private law and trying to fit it into public law

NAFTAArticle 1110 is the takings clause Metalclad Corp v United Mexican States

Reader pp. 140-174(a) IntroductionZiff, “ ’Taking Liberties’: Protections for Property in Canada” Many Canadians feel that protection of private property should be protected constitutionally (author

doesn’t agree)The paper examines the relationship between private property and states powersThe Constitutional Dimension Notwithstanding clause of the Charter (section 1) allows gov to override all guarantees made within No express protection for private property under the Charter. Despite this, the charter still affects

property rights in a variety of ways:o It protects against unreasonable search and seizure…stops law enforcement from entering your

home and taking your stuff without reasono Freedom of expression has been used to undo regulations affecting commercial advertising

Charter also works to impose restrictions of the regulation of public property:o The exercise of the right to freedom of expression and assembly on public property can be

hindered by the state, provided it is done in accordance with charter. Example, restricting of political leafleting at an airport.

Constitution provides protections against state interference with Aboriginal rightsNon-Constitutional Protections Before the Charter there was the Canadian Bill of Rights. It remains in force even though a lot of it is

repeated in the Charter. Prime significance relates to property rights because unlike the Charter, the Bill recognizes a right to the “enjoyment of property, and the right not to be deprived thereof except by due process of law.” The Bill only applies to federal level but provinces have comparable legislation.

The limit on these non-entrenched protections is the fact that they may be overridden by express legislation

o Despite this, the common law has concluded the following “Unless the words of a statute so demand, a statute is not to be construed so as to take away the property of a subject without compensation”

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However, in Authorson v Canada (2000) a disabled veteran took action against government for failing to manage veteran fund. This resulted in no interest being gained and less money being paid to him. Government relied on legislation absolving the crown of responsibility in these situations. The SCC held that the government was not liable as a statute that provides for wholesale confiscation-with no exceptions and absolutely no procedure-is impossible to challenge as a denial of due process.

(b) Constitutional protections for property Unlike Canada, the US does have constitutional protection of private property (Fifth Amendment).

It provides for just compensation if property taken for public use. South Africa’s constitution (1997) balances the need for stability with the necessity of change. Existing

rights, including property rights, could continue to be recognized and protected constitutionally, but would simultaneously be restricted by the same constitution that demands and enables significant reforms…result of the country being so messed up in the past. Needs lots of change but doesn’t want to strip owners of rights.

(c) Constructive expropriation of regulatory takingZiff, “ ’Taking Liberties’: Protections for Property in Canada” The Expropriation Statutes There are statutory schemes across Canada to provide compensation for the expropriation of land. Understood that if the state guts incidents of ownership, it is the same as confiscation. So excessive

regulation can be seen as equivalent to confiscation. o “ If property is a bundle of rights, then state action that removes the ability to exercise

those rights leaves merely the twine of the bundle (bare title) but little less”o This is known as indirect taking, creeping de facto, or constructive expropriation. In the US

it is referred to as a regulatory taking.o How much state interference is too much is the tough question. Very few Canadian cases

provide answers (not constitutionally entrenched like the US who has a lot) American Perspective: Takes a case-by-case (Ad Hoc/ factual approach) from Kaiser Aetna v United

States: “The court has been unable to develop any ‘set formula’ for determining when ‘justice and fairness’ require that injuries caused by public action should be compensated by the government rather than remain disproportionately concentrated on a few persons.

o Ad hoc inquiries that include several factors: economic impact of regulation, its interference with reasonable investment backed expectations, the character of the government action

o In certain cases ad hoc inquiry is replaced for per se (categorical). These are the clearest cases. For example, a physical taking of a part of land is a per se taking.

Protections from taking found in US constitution are justified foremost on grounds of:o (1) Fairness: if government pursuing valid public purpose, cost should be shared by publico (2) Provides incentive for government to act prudently (the will have to pay compensation)o (3) Promise of compensation provides “insurance” to property owners and gives them recourse.

This works to promote investmentPennsylvania Coal Co. v. Mahon (1922)-US Facts: Defendants want to prevent Coal Company from mining under their property in a way that

would cause structural and surface damage to their house. Coal Company gained right to do this through deed granted by government. The deed allows company to take all coal under the surface and waive all claims for damages that may arise from mining. Defendants claim Kohler Act removes the rights of the Coal Company given to them by deed and want compensation if mining is to occur,

Reasoning-Holmes Majority: o The Kohler Act forbids mining of coal if it causes damages to structure used as human

habitation with certain exceptions. Statute will destroy previous rights of property and contract. o However, some values are enjoyed under an implied limitation and must yield to police power

(no compensation). These implied limitations must have limits. One fact for consideration in 11

determining limits is the extent of the diminution. o The greatest weight is given to the legislature but it always is open to interested parties to

contend that the legislature has gone beyond its constitutional power.o Opinion of court is that the Kohler act cannot be sustained as an exercise of police power

and so compensation should be paid to mining company. o The act makes it commercially impracticable to mine coal and has the same effect as restricting

the right to mine it. Reasoning-Brandeis Dissent:

o If a land use is itself noxious (harmful), dangerous, or a public nuisance, the legislature is free to regulate its use without compensation, even though the police power may cause great loss to the property owner

Lucas v. South Carolina Coastal Council (1992) US Facts: Lucas purchased residential costal lots in South Carolina in 1986 for development purposes. In

1988 government passed beachfront mgmt act, under which local council can designate land as being unavailable for development. Had the effect of barring Lucas from developing.

Reasoning-Scalia:o While property may be regulated to an extent, if regulation goes too far it will be recognized as a

taking.o Two categories of regulatory categories as compensable without case-specific inquiry into

public interest (1) Regulations that compel the property owner to suffer a physical “invasion” of

his property. With regard to permanent invasion, compensation will provided even if minimal regardless of the public interest it may achieve.

(2) Where regulation denies all economically beneficial or productive use of the land compensation must be provided

o When the owner of real property has been called upon to sacrifice all economically beneficial uses in the name of the common good (to leave his property economically idle), he has suffered a taking

o Compensation should only be resisted when the proscribed use of interests were not part of his title to begin with.

o In the case of personal property it is possible that new regulation might render property economically worthless without compensation

o In this case, the regulation prohibits all economically beneficial use of the land Mariner Real Estate Ltd. v Nova Scotia (AG) (1999)

Facts: NS enacted act to protect beaches. Prevented development on beaches unless was given authorization. Respondents owned land on beach and wanted to build but Minister denied their application (no authorization). Respondents claim their land has been de facto expropriated and want compensation. Trial judge found in favour of respondents and now province is appealing.

Reasoning (Cromwell J.A.)o (a) De facto Expropriation

Two questions to consider: (1) whether regulatory action was lawful and (2) whether the Expropriation Act entitles the owner to compensation for the resulting restrictions

De facto expropriation whether rights of ownership have been taken away In Canada, extensive and restrictive land use regulations is norm which often

times does not lead to compensation Test for De Facto expropriation: there must be a confiscation of all reasonable private

uses of the lands in question (R.J. Bauman). The question is whether the regulation is of “sufficient severity to remove virtually all of the rights associated with the property holder’s interest” (Marceau J.).

Must think about use in terms of Modern Canada*12

Application: the beach in question was, by its nature, not particularly well suited for residential living and was more recreational

o (b)The Effects of Regulation must look at actual application of the regulatory regime in the specific case and not

simply the regulatory regime’s potential interference with owner’s activities A court can’t determine whether a regulation has gone too far unless it knows

how far the regulation goes He thinks it is not the regulation created that constituted the appropriation but rather

the refusal of the minister which did (so not de facto expropriation)o (c) Is loss of economic value loss of land under the Expropriation Act?

According to Expropriation Act s.3(1)(i), land is any estate, term easement, right or interest in, to, over or affecting land

S.26 Expropriation Act sets out mains heads of compensation payable upon expropriation

(a) the market value of the land or a family home for a family home; (b) the reasonable costs, expenses and losses arising out of or incidental to the

owner's disturbance; (c) damages for injurious affection as hereinafter set forth; and (d) the value to the owner of any special economic advantage to him arising

out of or incidental to his actual occupation of the land, to the extent that no other provision is made therefor in due compensation.

S.30(1) states that compensation is payable to owner of land for loss or damage caused by injurious affection

S.3(1)(h) defines injurious affection as where statutory authority does not acquire part of the land of an owner

Compensation for injurious affection is the only instance where compensation is provided for the loss of value of land absent the taking of an interest in the land

Cromwell is concluding that there is a difference between loss of economic value and loss of interest in land within meaning of the Expropriation Act

o (d) loss of the “bundle of rights” cases recognize that regulation = confiscation. Restriction can be so stringent that they

deprive owner of interest in land even if paper title is undisturbed. Rights of ownership give land value and it is these rights that are subject of valuation De facto expropriation is rare in Canada and requires proof of virtual extinction of an

identifiable interest in land. The Respondents are claiming that the regulation and the refusal of permission by Minister prohibit virtually all activities normally associated with ownership

Cromwell disagrees because the preclusion of development on land in question because of environmental sensitivity is not extinguishment of all rights

Also, a lot of activities the respondents thought they were not allowed to do merely required a permit which they did not try and get (permit doesn’t mean refusal)

Conclusion: absence of evidence of refusal of permission to engage in reasonable use of land (Respondents lose)

o (e) acquisition of land Here, Province did NOT acquire legal title, so there is no acquisition Cromwell distinguishes from judgment in Tener, but also relies on Estey J.’s reasoning

in that case to conclude that an acquisition of an interest in land does not equal enhanced value, here he is rejecting the respondent’s argument

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Cromwell dismisses the respondent’s use of Lucas here because US Const Law is very different than in Canada.

Concludes that regulation that enhances the value of public property, if established, is not an acquisition of land within Expropriation Act

Canadian Pacific Railway Company v City of Vancouver (2006) Facts: in 1886 Crown gave CPR land to construct railway line. This land is at heart of appeal.

Railway was built but ended up failing and being shut down. CPR wanted to then use for residential or commercial purposes. CPR was willing to also sell land at whatever price determined by agreement/expropriation. City didn’t buy it and adopted By-law to designate the land as transportation and greenway heritage. This froze redevelopment and confined CPR to uneconomic uses of the land. CPR argues that (1) bylaw is ultra vires the City and should be struck down; (2) City must compensate CPR; and (3) by-law should be struck down because of procedural irregularities.

Reasoning (McLachlin CJ)o CompensationCPR argues: land was taken because their use is limited, it cannot use land

for any economically viable purpose, it cant run railway, and so they should be compensated McLachlin finds: bylaw does not prevent track maintenance or operation of railway.

CJ thinks the real argument should have been one of de facto taking of land thus needing compensation CPR didn’t frame argument in best way

For de facto taking, must be: (1) an acquisition of a beneficial interest in property or flowing from it, and (2) removal of all reasonable uses of the property

o (1): Failed. CPR didn’t show that City has acquired beneficial interest in land. City has gained nothing more than some assurance that land will be developed with its vision. This is not the benefit that is construed as “taking”.

o (2): Failed. By-law does not remove all reasonable uses of the property. This part of test must be assessed in relation to the land’s potential highest and best use and having regard to the nature of the land and range of reasonable uses to which it has been put. Here, bylaw does not prevent CPR from using its land to operate railway. By-law also doesn’t prevent CPR from leasing land.

(d) The North American Free Trade AgreementNAFTA, article 1110: Expropriation and Compensation NAFTA allows for expropriation of an investment for public purposes if compensation is paid and

expropriation is done in accordance with due process in a non-discriminatory basis. Compensation will be fair market value before expropriation

o Valuation criteria: going concern value, asset value, and others deemed appropriate for determining

Ziff, “ ’Taking Liberties’: Protections for Property in Canada” Under the Shadow of NAFTA 1994 free trade agreement between Canada, USA, and Mexico Concerned with Section 1110 which provides for mandatory compensation when investments are

expropriatedo A taking by Canada that affects Mexican/American investors triggers right of compensation

NAFTA uses the term investment which includes both real and personal property of all kinds including those acquired with expectation of being used/those actually being used. It includes covert/indirect taking that deprives owner in whole or in significant part the economic benefits of their property even if the state is not aware.

o Works like insurance to protect investors A breach gives rise to a private cause of action. NAFTA agreement enjoys a quasi-constitutional status

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but unlike the Charter, there is no section 1-override mechanism that allows for escape. Only escape is to withdraw from the agreement as a whole with 6 moths notice.

The general worry is that the imposition of the expropriation regime will stifle public policy, especially in relation to environmental protection. Although, NAFTA does make reference to environmental responsibility

Metalclad Corp v United Mexican States (2000)-NAFTA arbitration Tribunal The Mexican government was ordered to pay an American firm 17 million when a local government

refused to let the firm build a waste treatment plant on land they purchased (depriving the firm of the land’s value). The firm was given the OK by the federal government and began construction. They were later denied the building permit by the local government who zoned the land to be part of an ecological preserve. Claim was based on article 1110 of NAFTA. Tribunal held that zoning the land an ecological preserve was a form of indirect expropriation and so as per article 1110, compensation must be provided.

Antrim Truck Centre Ltd. v. Ontario (2013) – SCC Facts: The appellant owned and operated a truck stop located on Highway 17, the Antrim Truck Centre. In 2004 the province undertook construction of a new highway, Highway 417, which rerouted traffic from Highway 17 for public safety purposes. The province did not actually take/expropriate any land from the appellant but the rerouting of traffic basically put the appellant out of business – it was fully dependent on traffic on the highway. The appellant brought a claim for damages for injurious affection before the Ontario Municipal Board under the Expropriations Act and was awarded $58,000 for business loss and $335,000 for loss in market value of the land. This decision was upheld on appeal to the Divisional Court. The Court of Appeal set aside the Board’s decision, however, finding that its application of the law of private nuisance to the facts was unreasonable because it had failed to consider two factors in its reasonableness analysis and because it had failed to recognize the elevated importance of the utility of the respondent’s conduct where the interference was the product of an essential public service.

Issue: Is the interference with the appellant’s private use and enjoyment of land resulting from construction which serves an important public purpose unreasonable?

Holding: Yes, the interference with the appellant’s land inflicted significant and permanent loss. Appeal Allowed.

Legal Reasoning: (Cromwell) The Expropriations Act provides a right to compensation for injurious affection, which occurs when the

defendant’s activities interfere with the claimant’s occupation or enjoyment of land, if the claimant can meet three requirements: (i) the damage must result from action taken under statutory authority; (ii) the action would give rise to liability but for that statutory authority; and (iii) the damage must result from the construction and not the use of the works(i) and (iii) are easily satisfied, main issue is (ii)

o Main question = if the highway construction had not been done under statutory authority, could the appellant have successfully sued for damages under the law of private nuisance.

What are the Elements of Private Nuisance?Nuisance (2-part Test) = interference with the claimant’s occupation or enjoyment of land that is both (1) substantial (non-trivial, amounting to more than a slight annoyance) and (2) unreasonable (1) Substantial (First step, used to screen out weak claims prior to more complex 2nd step) = interference must be

material, non-trivial, more than a slight annoyance (2) Unreasonable = traditionally determined by balancing the gravity of the harm vs. the utility of the def’s conduct

o When assessing unreasonableness where the activity causing the interference is carried out by a public authority for the greater public good, courts and tribunals are not limited by any specific

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list of factors (the factors should not be treated as a checklist). The focus of the balancing exercise is on whether the interference is such that it

would be unreasonable in all of the circumstances to require the claimant to suffer it without compensation

o There is a difference between utility of the conduct (purpose) vs. the nature of the conduct (how purpose is carried out)focus in nuisance is on whether the interference suffered by the claimant is unreasonable, not on whether the nature of the defendant’s conduct is unreasonable

BUT if the def’s conduct is malicious/caress it will be an important factoro A very important public purpose will not immediately outweigh harm done to the

claimantunfair to give these factors equal weight because the public purpose would win every time

Cromwell goes through a line of Canadian cases that support this pointo Para 38: “the question is whether the damage flowing from the interference should be properly

viewed as a cost of “running the system” and therefore borne by the public generally, or as the type of interference that should properly be accepted by an individual as part of the cost of living in organized society”

o Para 40: “The reasonableness analysis should favour the public authority where the harm to property interests, considered in light of its severity, the nature of the neighbourhood, its duration, the sensitivity of the plaintiff and other relevant factors, is such that the harm cannot reasonably be viewed as more than the claimant’s fair share of the costs associated with providing a public benefit. This outcome is particularly appropriate where the public authority has made all reasonable efforts to reduce the impact of its works on neighbouring properties”

o Big difference between temporary interference vs permanent interference (such as the case here)

o Reasonableness is considered regardless of the type of damage BUT physical/material damage leads to a less detailed reasonableness analysis and vice versa regarding the loss of amenities

Ratio: (1) individuals can be reimbursed by the government for expropriation related losses even when no land is taken/expropriated (2) The reasonableness of the interference with private use and enjoyment of land when it results from construction which serves an important public purpose must be determined by balancing the competing interests, as it is in all other cases of private nuisance. The balance is appropriately struck by answering the question of whether, in all of the circumstances, the individual claimant has shouldered a greater share of the burden of construction than it would be reasonable to expect individuals to bear without compensation.

III. Boundaries of PropertyA. Classifications of Real and Personal Property in the Common Law Remember main idea of propertyrelationships amongst individuals through objects of property

This is because the common law, like the civil law, tries to understand and classify resources In the case of CML the classification is real vs. personal property

o NOT the same as CVL real and personal rights Real property = land and buildings classification of objects of property (immovables in the CVL)

o Real rights = rights that you have in real property (ownership rights)o Subject of an action in rem (real action – allows you to get it back)

Personal property = everything elsewhat CVL considers “movables”o BUT can have real rights in movablescan have ownership rights in these objects tooo Subject of a personal action

Damages in specie

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Note: mixed action – might get object back Note: there is still a classification of the kinds or real rights you can have, but much more complicated +

historically driven in the CML (also conceptually incomplete) Action in rem (Real action)

o Also true for movables/chattels o A property/real action allows you to get something backfor any type of property

Other Differences between real and personal propertyo Inheritance

Real property passes to heirs upon the owners deathviewed as valuable, so you don’t want it to not have an owner “corporeal heritance”

Personal property is passed to personal representative for distribution Now: all treated alike

Leasereal or personal?o Originally a personal claim could be launched by lessee – to some extent was that of tenurial holdingo Writ of ejectment (equity) allowed for re-possession

“Incorporeal” = right that you have in the property of someone elseo Same thing as servitudes in the CVL

Note: once again we see property being developed through both common law doctrines and equity

B. Boundaries

i) Airspace and Subsurface Rights

Above the surface Latin maxim “he who owns the soil, owns from the center of the earth to the heavens above”

o Mentioned in both Lacroix and Bernstein Bernstein (UK case)principle based on reasonableness concerning how one could possibly use their

airspaceo Balancing the rights of the owner with the rights of everyone elseo Restricted to the height necessary for the “ordinary use of the enjoyment of his land”

Anchor Brewhouse Caseconstruction cranes swinging over a person’s lando Person is granted an interim injunction for the cranes swinging over his land BUT not damages

Didow v. Alberta PowerZiffpermanent physical invasion into owner’s airspace is not allowedo Alberta legislation amended after this to allow for these invasions without payment

Conclusion you own a certain amount of the airspace and you are protected against certain types of invasions even if they are not permanent

Below the surface Edwards v. Simsdoes Lee have a share in the ownership of the cave because part of it is below his property

or does Edwards get full ownership because the entrance is on his property?o Majority says yes: “To whomsoever the soil belongs, he owns also the sky and to the depths”o Dissent says noEdwards was the one who “created” the cave and Lee is just getting a free rideo Ziffthis decision affects mining/drilling law quite heavily due to techniques they useo Coase “The problem of social cost”says that in this kind of scenario, if there are no impediments

to two people negotiating (both parties know what’s down there and what it’s worth) – allocation of ownership won’t matter because the social costs will be allocated properly – whoever it’s worth more to will pay the other party for it

The initial allocation of ownership will not matter because the party who it is worth more to will end up buying the other party out

o ZiffLogan (dissent) was motivated to find for Edwards because he had a “share” in the cave Note: for minerals (and oil), ownership automatically goes to the state in Canada

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Reader pp. 175-201 (Airspace and Subsurface Rights)1. INTRODUCTION Land has 3 dimensions: Area on the surface, right above surface, right below surface. This part of

the chapter looks as how these rights are determined and how they are recorded in documents of title. Efficiency is the dominant justificatory theory for private property. This chapter draws on an economic

analysis as a means of assessing the rules governing the spatial dimensions of ownership.

2. LAND: AIRSPACE AND SUBSURFACE RIGHTS(a) Introduction A transfer of land will recite the dimensions of the property to be sold. Rarely will the buildings on the

land be mentioned. It is also uncommon for a transfer document (like agreement for purchase and sale) to specify the rights to the space above the land (the airspace). As for the subsurface, a deed will usually only speak about mineral rights (if pertinent). Everything else is left unstated.

(b) Above the surfaceDidow v Alberta Power Ltd (1988)-(above the surface)Facts: AP constructed a power line on the municipal road allowance along the east side of the appellant’s land. The structure for the lines ended up protruding 6 feet onto the airspace above the appellant’s land. Appellant describe it as “unsightly” + might impact use of large machinery + restricts aerial spraying of farmland.Issue: Has the respondent trespassed the air space above the appellants land?History: Chamber judge concluded that protrusion did not interfere with appellant’s possession of air space or right of possession based on the fact that they did not claim any diminution in their right to full enjoyment of their property. Not making use of the air space and have no intention to do so.Reasoning (Haddad): Disagrees with trial judge and finds in favor of Didow. Divides the cited authorities: Cases involving permanent structural projections into the air space above another’s land

o Authority favors the view that a direct invasion by a permanent artificial projection constitutes a trespass.

o The right to use land includes the right to use and enjoy the airspace above the land. Cases involving a transient invasion into the air space above another’s land at a height not likely to

interfere with the land ownero Deals with airplanesa landowner cannot object to air traffic that does not interfere with the use

and enjoyment of his property. Respondent submits that a landowner cannot object to an intrusion into airspace over his land when he is

not actually occupying and using the land for the time being. Makes an analogous public policy argument to aircraft cases above. Also claims that this type of issue is occurring across thousands of miles of Alberta and so it should be tolerated. Judge rejects both arguments.

Respondents cites Lacroix v R: “the owner of land is not and cannot be the owner of the unlimited air space over his land, because air and space fall in the category of res omnium communis (common ownership)

Griffiths in Bernstein of Leigh v Skyview’s &Gen ltd: o Adjoining owners know where they stand; they have no right to erect structures

overhanging or passing over their neighbor’s land o The problem is to balance the rights of an owner to enjoy land against the rights of the general

public to take advantage of new uses of air space. This balance is struck by restricting the rights of an owner in the air space above his land to such height as is necessary for the ordinary use and enjoyment of his land and the structures on it, and declaring that above that height he has no greater rights in the air space than anyone else.

Ratio: After reviewing the case law (including a US case) Haddad confirms that the courts will not give literal effect to the latin maxim of res omnium communis and that the proper remedy for interference with

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a landowner’s air space with a permanent fixture is in trespass as opposed to nuisance. He adopts Griffith’s test from Bernstein and concludes that a landowner is entitled to freedom from permanent structures, which in any way impinge upon the actual or potential use and enjoyment of his land. The intrusion in this case interferes with appellant’s potential use and enjoyment. This amounts to trespass.

(c) below the surfaceEdwards v Sims (1929) (US)-(below the surface)Facts: Concerns the ownership of part of the Great Onyx cave. Edwards on whose land the entrance was located developed the cave as a tourist attraction. 1/3 of the cave was directly below the land of another, Lee. The cave below Lee’s land was inaccessible to him. Lee commenced an action against Edwards for trespass. A preliminary issue arose as to whether a survey of the cave could be ordered. Sims was the judge who decided that issue, and against whom Edwards brought the proceeding. Issue: Could judge Sims compel Edwards to allow entry onto his property so that a survey could be undertaken?Reasoning (Stanley): “To whomsoever the soil belongs, he owns also the sky and to the depths” there are however certain

limitations of enjoyment of possession such as its use to the detriment of interference with a neighbor and burdens which it must bear in common with property of a like kind.

Ratio: Compares caves to mines where court was able to compel mine owner to allow inspection for similar purpose. Limitation is that the person applying for the inspection must show (1) a bona fide claim and allege facts showing a necessity for the inspection AND (2) the party whose property is to be inspected must have had an opportunity to be heard in relation thereto.

o In this case both conditions were met.Dissent (Logan) Allowing the inspection deprives Edwards of rights which are valuable, and perhaps destroys the value of

his property. Lee has no interest as he cannot make use of the land even if he establishes what he plans on establishing through the inspection.

Unlike majority, different conception of what land owner actually owns: “I can subscribed no doctrine which makes the owner of the surface also the owner of the atmosphere filling illimitable space. Neither can I subscribe to the doctrine that he who owns the surface is also the owner of the vacant spaces in the bowels of the earth”.

Dissent Ratio: “The rule should be the he owns the surface is the owner of everything that may be taken from the earth and used for his profit or happiness. “

A cave should belong to whoever owns the entrance, and this ownership should extend to utmost reaches

o Worries that the majority’s reasoning would lead to an abusive of right for things like airplanes over land.

o Judge feels that Edwards made the cave valuable though discovery, exploration, developing, advertising, exhibition. Lee is a just a “leach” who is guessing that this cave might run under his land so he can profit.

Ziff, “ Digging Below the Surface: The Story Beneath the Great Onyx Cave Cases” Looks at the motivation behind Logan’s dissent opinion in Edwards v Sims He had a bias because he was an advocate of the National Park that would soon after span over where the

Onyx cave was located. When the park got created owners had to be paid for their land. If Lee were allowed to claim because the cave was on his land, others would also be allowed to claim against the Park Association (raising the cost)

Logan also worked shoulder to shoulder with Edward’s lead counsel, Rodes on the National park initiative.

-------------------------------------------------------------------------(d) An Economic Perspective

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Coase Theorem: As long as smooth bargaining processes are in place, any state allocation of entitlements will be adjusted by private parties to produce an economically efficient allotment

Posner on the subject: “If transactions are costless, the initial assignment of a property right will not affect the ultimate use of the property.”

Market forces will drive property into the hands of the party that values it the most.Richard Epstein’s 6 rules that might have been applied to the facts of Edwards to show ownership:

1. The owner of the surface (what the court held)2. The discoverer of the cave3. The owner of the entrance4. Co-ownership of the entire cave based on the surface title proportions5. The party mist willing to buy out the claim of the other party6. The state

Epstein thinks #3 is the most efficient based on belief that law should give title to one owner because otherwise one part could hold out to prevent unification of title. Ziff believes that Epstein’s reasoning can easily fail.

A case might have several surface openings What about if the opening was non-natural (as was the case with the Great Onyx cave) Has the threat of creating split titles

He instead suggests that a version of the cujus est solum Property holders have rights not only to the plot of land itself, but also to the air above and the ground below be used as it leaves no room for split titles. This version would extend rights to property deep below the surface

Blackstone has suggested that that title should extend 1000 feet downwardsGoes on to discuss the environmental implications with regards to carbon capture (putting Co2 back into the earth)(e) Mines and MineralsB.J. Barton, “ Canadian Law of Mining” Basic common law rule: Minerals, except gold and silver, are part of the land itself and prima facie to the owner of the land (soil). However, there are so many exceptions that the rule does not provide an accurate description of mineral ownership in Canada. Policy of reserving minerals to the crown on the occasion of a crown grant or patent of land has been a major force in keeping minerals in public ownership in most parts of Canada.Modern mineral law can be broken down into 3 main principles

1. The vernacular test: To decide whether a particular substance is a mineral it must be regarded as so in the vernacular of miners, commercial people, and landowners at the time when the severance took place.

2. The Purposes and Intentions test: In construing a reservation of mines and minerals, regard must be had not only to the words employed to describe the things reserved, but also the leading purpose or object that the deed or statute embodies.

3. The Exceptional Occurrences test: minerals does not only include the ordinary rock of the district, but rather exceptional or rare substances, that is, exceptional in use, character, value, or occurrence. (this test is on the decline)

Secondary Points from case law1. The question by what is meant by “mineral” is a question of fact. Must be understood from the

vernacular2. The same principles of constructions are to be applied equally to deeds, other instruments, Crown

grants, and a variety of different acts3. The onus of establishing that a substance is within a reservation of minerals is always on the person

alleging it to be within the reservation4. Just because the substance can create profit doesn’t mean it must be included in the term “mineral”5. The meaning of “mineral” is not restricted by the fact that the substance cannot be worked except by

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destroying the surface and that there is no right to work in that manner6. If no limitations are imposed in the severance, the word “minerals” are to be construed in the widest

sense.Basic object of the leading cases seems always to have been to ascertain the intention of the parties by giving ordinary meanings to the words that they have used.

ii) Lateral BoundariesLateral BoundariesLand Registry

For the most part, descriptions of the boundaries of a property are found in a land registryo In the common law, the layout of most areas is in a grid (along with heavy use of reference points)o In Ontario and other eastern provinces you register all the documentsnot just the title but also the

deeds etc. and then a lawyer will looks at these documents and issue a letter saying the owner has good title and that the land is “free and clear” of any defects

o Out West, they use a Torrens system, in which all deference is given to the registerthen there is an insurance scheme in which the government will compensate individuals who lose money or their property because the information in the registry is false

Most provinces are moving towards this system (Quebec was as well but they backed off) BUT need to have a checking system for the registry to make sure the information is good or if

not the government will be paying a lot of money Question s: how much value is the registry? Can there be mistakes in the registry? Can the situation on the

ground change so much that it actually trumps the registry?Land Surveys (in the Registry)Robertson v. Wallace

Possibility of “convention lines”notion of conceivably agreeing with your neighbor on a boundary and that boundary not necessarily being the exact boundary on the register

o We see an example of this in Robertson where the two families put up a fence – although at certain times, each party thought the fence was accurate/inaccurate

o Point = the original setting of the fence and the circumstances of it can easily be lost Onus on party claiming ownershipneed to have evidence of a convention – we have a fence line that has

been there for a long time BUT the fence was really only there to prevent cattle from going from one side to the other (fact heavy)

o Evidence of both parties going to the other side of the fence – shows that it wasn’t exclusively to divide two exclusive plots of land

Support Right to support in its natural stateBoth vertically and horizontally Not simply contiguous Altered states?

o Blewmanduty of support only exists if there is negligence during construction – no strict liability No ongoing duty of support after selling the property

Water Riparian: right to water, unlimited for ordinary uses

o Extraordinary? Can’t diminish quality or quantity Boundaries: Nikal

o Ownership split at mid-point of the stream IF non-navigable o Non-navigable rivers are “ownable” – in the private domaino Navigable rivers lead to a public interest because they can be used for navigation

SO riparian owners only own to the shoreline and the river itself is part of the public domaino River is NOT automatically rendered non-navigable if a part but not all of it is non-navigable

Gradual ChangeAccretion Alluvion (increase in the area of land due to sediment (alluvium) deposited by a river. This changes the size of

a piece of land (a process called accession) and thus its value over time) benefits the landownero Must be gradual and imperceptiblecan’t be sudden

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Wallaceavulsion (decrease of land – opposite of alluvion) not the same thingo Issue of land being moved from one owner’s property to the othercourt splits up the land (if there is

no physical attachment to one owner’s land) based on a new projection of the property lines

Reader pp. 201-224 (Lateral Boundaries)3. LATERAL BOUNDARIES

Boundaries are imaginary lines marking the perimeter of a property. Generally the location and boundaries of a plot of land and found on a cadastral map, which is basically a large map of an area like a town, showing how all the property in that area is divided.

o There are a bunch of different types of documents/systems/methods usedall can have errors Generally the issues come from when the legal description of land doesn’t properly describe the property to be

transferred etcfor example, it might say the property is x feet, but in reality it’s larger/smallero Issues also arise when there is ambiguity in the legal descriptionlook for intent instead

When neighbours are unable to determine a boundary, a boundary can be agreed upon under the conventional line doctrine (Robertson v. Wallace)

(a) land bounded by landRobertson v. Wallace (2000) – Alberta

Facts: the West bank of a river was surveyed in 1890 – that bank as described in the survey from 1890 was used as a natural boundary to divide land owned by 2 different parties on either side. There was also a fence on the land that was used as a conventional boundary to stop cows from going to the other side, but there was evidence of parties often crossing over to the other sides of the fence. In 1994 a new survey of the boundaries led to one of the owners being given a newly issued title with an extra 20 acres. There is now a dispute over the true boundary between the lands based on the river.

Conventional Boundary Issues A. Background of the law relating to conventional boundaries

o Grassett v. Carterwhere there is any doubt concerning the line between two properties and the parties meet and determine/agree on a line (fixing a “conventional boundary”), and then one of the parties builds up until that line, then the other party is estopped from denying that is the true dividing line between the two properties

o Necessary elements to prove a conventional boundary = (1) adjoining land owners (2) dispute or uncertainty about the location of the dividing line (3) they agree on a line (4) they recognize it as a common boundary

o Recognition can be oral or in writing or by conduct BUT evidence must be clear and definiteo Plaintiff bears onus of proof

B. The Evidenceo There had been a dispute about the line a few decades earlier and although there were no actual

discussions or agreements, both families recognized that a certain fence represented the division between their properties, and their conduct reinforced this

Conclusion = although conduct can establish a conventional boundary line, the judge felt that the evidence wasn’t strong enough to represent an actual agreement between the two parties in order to create a line

Blewman v. Wilkinson (1979) – New Zealand Facts: Defendant owns land and cuts a right of way to give access to rear sections immediately below lot 7.

Later, Defendant sells lot 7, but hadn’t given the bank support. Plaintiffs build a house on the lot, and the bank gradually erodes. Plaintiffs bring action—interference with natural right of support enjoyed by their land.

Basic Legal Background: if excavation on an adjacent property interferes with an owner’s land, that owner has a right of action against the original excavator – strict liability, no need to show negligence (Byrne v. Judd)… Problem here = does this principle apply if the person excavating owned all the land at the date of excavation but has since subdivided it?

Court refuses to extend Byrne v. Judd principle(1) unless fault can be shown, a purchaser can be fairly expected to take this risk given it is common in New Zealand (2) because the tort of negligence now extends to this field, the court prefers avoiding strict liability

(b) water boundaries

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R v. Nikal (1996) – SCC Facts: Appellant is aboriginal. He was charged with fishing without a license under the British Columbia

Fisher Regulations, which provides that indian people were permitted to a free fishing license. Appellant argues that (1) the Regulations infringe his aboriginal rights (2) the river he was fishing in was part of the reserve and therefore he was only bound by the band’s by-laws.

Reasoning (Cory)o The Application of the Ad Medium Filum Aquae Presumptionappellant argues that the river is non-

navigable and is therefore part of the Reserve because the Reserve borders it on both sides Court doesn’t let it apply because the river is navigable + other reasons

o When does the Ad Medium Filum Aquae Presumption Apply? As per La Forest in Water Law in Canada – The Atlantic Provinces: “the owner of land

through which a non-tidal stream flows owns the bed of the stream unless it has been expreesly or implicitly reserved; and if the stream forms the boundary between lands owned by different persons, each proprietor owns the bed of the river to the centre of the stream”

Navigable waters generally belong to the Crowno What is the Correct Test for Navigability, and is the River a Navigable River?

To assess navigability, the entire length of the river from its mouth to the point where navigability terminates must be considereda certain non-navigable section of the river does not render the river non-navigable automatically – it can still be navigable as long as certain interruptions to navigation could be readily circumvented through improvements

Although certain points of the river aren’t navigable, it is still considered navigableo The Fishery is Separate from Ownership of the Bedalthough ownership of the bed of a non-

navigable water does give right to ownership of the right of fishery (and if the owner owns both sides of the river bed then he holds exclusive fishing rights) the right of fishery is severable from the title and HERE, the Crown had no intent of granting an exclusive fishery to the indian band

Doctrine of accretion (discussed in notes after the case) deals with additions to riparian land owned by an individual due to recession of the water or movement of earth over time – see the notes for requirements etc.

C. Distinction between Fixtures and Chattels Personal Property

Chattels real = an interest in land that is less than a freehold (such as a lease) Chattels personal = an item of movable personal property

o Choses in possessiongoods: IP, bonds, shareso Choses in action

“Paper”: IOU, share certificate, cash cards Paper is evidence, though destroying paper is a conversion

La Salle Recreations Hotel carpetsdo these chattels become part of the hotel? Stack v Eaton (Meredith) (1) articles not attached to land by their own weight are not part of land, unless

intended to be. (2) Articles affixed to land are part of land unless intended to continue chattels. (3) circumstances necessary to be shown to alter the prima facie character of the articles are circumstances which show the degree of annexation and object of such annexation, which are patent to all to see (it looks like it was meant to be part of the real-estate) (4) the intention of the person affixing the article to the soil is material only so far as it can be presumed

o Note: even slight affixation gives rise to a presumption that the chattel is part of the buildingo Seems like we care about an objective intentionwas it meant to be part of the building?

Like CVL, we are looking at (1) degree of attachment and (2) reason for attachmento Use common sense

Chattels or Fixtures? Swimming pool tarp (Biss)chattel – clearly temporary, not part of the swimming pool Motorhome that was set up in a lot, along with a set of steps and other attachments meant for it to be there

permanently (Royal Bank v. Beyak)chattel – court said no attachment because not only could it be moved but that it would likely end up being moved at a certain point

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Houseboat (Chelsea Yacht)chattel – old vessel converted into a houseboat – no motor, has sewer and electricity connections etc. – absolutely no intention to move court doesn’t care still says it’s a boat

Reader pp. 224-250 (Fixtures + Chattels)4. FIXTURES

When chattel becomes a fixture it ceases to be personal property and the title to that item is subsumed into realty.

La Salle Recreations shows how Canadian courts determine when item has been transformed into a fixture

Diamond Neon shows some of consequences of designating a chattel as a fixtureLa Salle Recreations Ltd. v Canadian Camdex Investments Ltd. (1969) – BC

Facts: Dispute between secured creditors over the right to repossess wall-to-wall carpeting, which was purchased under conditional sales agreement. This agreement gave vendor title as security until fully paid. Building (hotel) which had carpets in it had a mortgage. Under Conditional Sales Act, security interest created under conditional sales agreement isn’t binding against mortgagee of land unless agreement is registered in registry office, which did not occur for the affixed carpet here. TF priority over the carpets turned on whether or not carpets had become fixtures. If so, mortgagee of land obtained priority over conditional vendor of the carpets.

Reasoning (McFarlane)o Prefer principles of Stack v Eaton (Meredith) (1) articles not attached to land other by

their own weight are not part of land, unless intended to be. (2) Articles affixed to land are part of land unless intended to continue chattels. (3) circumstances necessary to be shown to alter the prima facie character of the articles are circumstances which show the degree of annexation and object of such annexation, which are patent to all to see (4) the intention of the person affixing the article to the soil is material only so far as it can be presumed

o Refers to Haggert v Brampton (King) if object is attached to enhance value or improve usefulness and it is permanent, then it becomes part of realty. McFarlane looks at “permanent” and says this means that if it (the carpet) remains where it is so long as it serves its purpose, than it is permanent.

o The degree of attachment (annexation) carpet can be removed with little difficulty. o Object of annexation whether the goods were affixed to the building for the better use of

the goods as goods or for the better use of the building as a hotel Factors looked at: (1) unfinished flooring was unsuitable for the character of the Hotel;

(2) the carpet on the flooring would not fulfill the appearance or utility of the hotel; (3) annexation of carpets was reasonably required to complete the floors; (4) comparable hotels show carpeting is replaced at intervals of 3-5 years; (5) ready market exists for used carpeting after removal.

Because the object of the annexation was better and effectively used by the building as a hotel and not better used of the goods as goods, carpeting was annexed to the land and are fixtures.

Diamond Neon (Manufacturing) Ltd. v Toronto-Dominion Realty Co. (1976) – BC Facts: Discerning whether or not when D purchased land, that the pole embedded in soil, a sign

hanging from pole and a sign attached to shack on the land were fixtures. If they were not fixtures, their latest sale by D was conversion of chattels belonging to P, but if they were fixtures the P can make no claim on them and its action for conversion must fail.

Reasoning (Robertson)o Degree of annexation + object of annexation force conclusion that the things had become part

of the realty before the defendant bought the land (La Salle Recreation)o D acquired title to the signs and pole when it bought land and thus the D did not convert them

when it severed and sold them. So, the conversion claim of the P should fail 24

Dissent (Carrothers)o He thinks that the wording of a sign is capable of constituting circumstances to show that they

(articles affixed to land) were intended to constitute chattels and to show the degree of annexation and object of such annexation which are patent to all to see (La Salle Recreations).

o Uses analogy of 2 plates affixed to a building: one has an address on it and the other has the name of the lawyer/tenant of the building. It is safe to assume that when the building is sold, it includes the plate with address, but that the name plate is intended to remain a chattel belonging personally to the tenant.

Using this analogy a sign bearing the name and stating the biz of a former tenant should put purchaser of building on enquiry as to whether these signs are included in the purchase of the realty.

5. THE TRANSFORMATION OF CHATTEL OWNERSHIP Law of fixtures joining chattels to realty “Variously” belonging of A becomes combined with those of B “Accession” belonging of A was created by parts stolen or belonging to B “Alteration” when chattel is fundamentally transformed (crafting iron into a gate)

Glencore International A.G. v Metro Trading International Inc. (2001) – UK Facts: MTI buys, mixes and sells oil. Glencore, along with other companies, had K for storage of oil

in MTI’s facility. The oil was not stored separately, but mixed with oil of similar quality. MTI later went bankrupt and there was far less oil stored than expected by the customers, like Glencore.

Reasoning (Moore-Bick):o The owner of goods which are wrongfully taken and used to make a new commodity can

recover them from the wrongdoer, even in their altered form, if he can identify them in that new commodity and show that it is wholly or substantially composed of them. N.B. that they can also claim damages.

o Justice requires in a case like this that the proportions in which the contributors own the new blend should reflect both the quantity and value of the oil each has contributed.

McKeown v Cavalier Yachts Pty Ltd. (1988) - UK Facts: P (McKeown) owned hull, which was to be turned into finished yacht. Agreement entered into

with CY and other parties to complete the work. P gave a trade-in yacht and down payment in return for work. CY had a change in ownership and it was Spartech (new ownership) that completed the work on the yacht. Value of hull was 1k and the work (accretions) done had value of 24k. Spartech, not under K with P, says they didn’t get paid so they asserted ownership over yacht by saying that hull became an accession to work preformed. P says they fulfilled agreement with CY and are thus entitled to the yacht.

Reasoning (Young):o Who does the completed yacht belong to? Plaintiff.

If the minor chattel can be physically detached, an order may be made for its return. But if it cannot be conveniently detached then compensation may be imposed as a term of repossession or detention.

Application a yacht that is ready for use is a chattel that would be very affected if the accretions added by Spartech were removed from it. If you remove work, it would be destroyed. TF, Young says doctrine of accession applies.

In this case, it was slow, step-by-step work and improvements done, all building off of the hull. TF, the work done by both defendants form part of the hull and the whole of the current product is property of P.

o Remedy to P Can either have goods returned in specie or leave P to damages

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Court considers whether the chattel is sufficiently unique as to make damages inappropriate Young thinks this yacht is unique chattel. TF, he orders specific return of the yacht to P

o Compensation to D for improvements? Test for compensation: whether the work done conferred on the P an incontrovertible

benefit. If it did, the P must pay compensation to obtain specific recovery and the measure of the compensation is the amount of incontrovertible benefit. (Young did not make final decision on compensation $)

Gidney v Shank (1995) - MB Facts: In May 1983, the plaintiff, Gidney, purchased a canoe from Darryl Hedman. The canoe was in

poor condition at that time and he expended 100 hours to rebuild the canoe and $800. Unbeknownst to the plaintiff, the canoe had been stolen from Feuerstein, its owner before Hedman had it. In November 1983, the RCMP seized the canoe from Gidney and some random guy was convicted of theft. The canoe was eventually returned to Feuerstein and at that time was worth $1906.25. Gidney wants the canoe back or the estimated value of $1906 + compensation for loss of enjoyment, etc.

Reasoning (Huband): o Test for unjust enrichment requires: (1) an enrichment, (2) a corresponding deprivation, (3)

and absence of any juristic reason for the enrichment. (1) there was enrichment because was returned to F in improved condition (2) there was corresponding deprivation to G who lost benefit of labour and

expenditures (3) there WAS a juristic reason for the enrichment because there was no relationship

between G and F, and thus F had no knowledge that G was investing time and money in the canoe. F did not consent to the investment. Fails at this step.

F wins because he had no relationship or knowledge, nor did he consent to the betterment and improvement of his canoe. TF, no unjustment enrichment (failed step 3).

IV. PossessionA. Possession – Basics

Ownership v. Possession Elements

o (1) Physical Control Pierson, Popov

o (2) Intention Keron v. Cashman Avoiding the “free for all” solution

Jus Tertiio Possession in relation to ownership

Question is relative rights; who had better rights Better claim in a third party (jus tertii) is generally of no matter

Is sometimes relevanto Were the defendant has a superior claim, or is acting on behalf of someone

who does (jus tertii) In a standard disruption of possession case

o Or possibly if P is not relying on his own possession (Ziff, say he has sold the good prior to launching the action)

Now possible in English law, by statute, to avoid the second claim Applies to finders, bailees, adverse possessors

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Some Terms Detinue: possessory action

o Action to get back personal property (plus damages) from one who got it lawfully but retains without right

Trover: Action for recovery of damages against someone who found goods of another and converted to own usenow called Conversion: get damages, but also now equitable remedies

“ First Possession ” – Popov v. Hayashi Who deserves the ball – See Gray’s definition of a “catch” cited in the case Judge uses equitable division (as opposed from the cml balance of probabilities)

o Important factor: the intention to possess the same item from the beginning Judge find that Popov establishes a pre-possessory interest in the ball – so he had enough

control to establish an interest, but couldn’t complete possession BUT both had rights to the ball and intention to possess it so the ownership should be split

o Distinguish from Keron v. Cashmankids playing with sock full of money they found on the ground, there was no intention to possess the sock until they realized there was money in it

Pierson v. Post Majority – finds for Pierson

o Base position is that wild animals in nature are owned/possessed by nobody – if a person can capture that animal OR inflict the mortal wound, then that person has possession

Mere pursuit is not enough Dissent – finds for Post

o Tries to use a public policy approach saying that fox hunting should be encouraged and that to find for Pierson would discourage this activity

o Makes a customs arguments as wellif the “laws of baseball” should maybe have been used in Popov to decide the case, should the “laws of hunting” be used here?

Lametti: what is the difference between a pre-possessory right for Popov vs no right at all for Post?o Perhaps it depends on the nature of the object o Lametti – cites a case involving sealsthe more of a potential to lose the item before you gain

possession makes it much harder to set up a pre-possessory right before actual possession

Reader pp. 293-306 – Introduction and Basic Definitions1. INTRODUCTIONChapter will demonstrate the roles that possession plays in the ordering, proving, and perfecting property claims. 2. BASIC DEFINITIONSPopov v. Hayashi (Califortnia Supreme Court)Facts: Barry Bonds hits his record-breaking 73rd homerun. Ball lands in upper portion of the webbing of a softball glove worn by Popov. Gloved stopped trajectory of ball but it is not certain that the ball was secure. Popov is mobbed and ball comes loose (unsure exactly as to how). Hayashi, who committed no wrongful act, picks up ball and takes complete possession of it and says it’s his ball. Issue: Can Popov bring a claim of action based on conversion (which entails having possession to bring this claim) Therefore, did Popov achieve possession or the right to possession as he attempted to catch the ball and hold on to it? Holding: Yes. The ball must be sold and the proceeds split equally between the parties. Reasoning (McCarthy):

Conversion: The wrongful exercise of dominion over the personal property of another. Must be actual interference with plaintiff’s dominion. Wrongful withholding of property can constitute actual interference even if defendant lawfully acquired the property. If a person entitled to possession of personal property demands its return, the unjustified refusal to give the property back is conversion.

o Conversion must be intentionally done however wrongful purpose is not a component of

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conversion In this case conversion cannot exist unless the baseball rightfully belongs to Popov

Prior to possession, who was the owner? The ball was owned and possessed by MLB. As soon as the ball was hit, it became intentionally abandoned property. The first person who came in possession of the ball becomes its new owner (customary rule).

No single definition of possession - it varies depending on the context in which it is used. A stable economic environment requires rules that are understandable and consistent with the customs and practices of the industry they regulate. Because each industry has different practice, a single definition of possession cannot be applied to different industries without creating havoc.

However, there are central principles governing the law of possession:o Possession requires both (1) physical control AND (2) intent to control it or exclude

others from it (these should function as guidelines not direct determinants) Application to the facts:1) Intent: Popov clearly had an intent to posses the ball and had communicated that intent to the world. 2) Physical control: Did he do enough to reduce the ball to his exclusive dominion and control? Were

his acts sufficient to create a legally cognizable interest in the ball? Gray’s definition- judge likes this definition: “A ball is caught if the person has achieved

complete control of the ball at the point in time that the momentum of the ball and the momentum of the fan while attempting to catch the ball cease. A baseball, which is dislodged by incidental contact with an inanimate object or another person, before momentum has ceased, is not possessed. Incidental contact with another person is contact that is not intended by the other person. The first person to pick up a loose ball and secure it becomes its possessor.” (Here control once the ball is stopped is important)- as you could see, the circumstances do not fit with the definition (was not incidental contact- rather, the fans assaulted him).

Court accepts this definition because not only is it physically possible for a person to acquire unequivocal dominion and control of an abandoned ball, but the custom and practice of the stands creates a reasonable expectation that a person will achieve full control of a ball before claiming possession. Therefore, Popov did not achieve full possession.

However, Popov’s effort to establish possession was interrupted, not by incidental contact, but by unlawful acts. A decision that would ignore this fact would endorse the actions of the crowd and so the analysis must continue.

The question now becomes, can an action for conversion proceed where the plaintif has failed to establish possession or title?

o Popov is seeking a declaratory judgment that he has either possession or the right to possession

Ratio: Where an actor undertakes significant but incomplete steps to achieve possession of a piece of abandoned personal property and the effort is interrupted by the unlawful acts of others, the actor has a legally cognizable pre-possessory interest in the property. That pre-possessory interest constitutes a qualified right to possession which can support a cause of action for conversion.

o Because Popov has a right to possession he can advance his conversion claim.o This however does not protect the interests of Mr. Hayashi. The court must balance the

interests of all parties. Because Popov did not establish a full right to possession but only a qualified pre-possessory right, he is not protected from a subsequent legitimate claim. By the same token, Hayashi’s full possession is clouded by the pre-possessory interest of Mr. Popov.

Both men have a superior claim to the ball as against the world. Each man has a claim of equal dignity as to the other. So judge creates a middle ground through the concept of equtibale division

o It provides an equitable way to resolve competing claims which are equally strong.o Arnold v Producers Fruit Company (2000): Where more than one party has a valid claim

to single piece of property, the court will recognize an undivided interest in the property 28

in proportion to the strength of the claim. Court held that the ball must be sold and the proceeds split equally between the parties.

*Ball ended up being sold at auction for 450k

Pierson v. Post (1805)-NYSCFacts: Post went fox hunting on unowned land and was on the verge of capturing a fox when Pierson shot, killed and claimed it.Issue: Who owns the fox?Holding: PiersonLegal Reasoning:

Majority: It is agreed that wild beasts are not the property of anyone and are claimed by occupancy. Thus we ask what acts amount to occupancy. Ancient writers were unanimous pursuit alone gives no rights, and only actual possession of the carcass counts. To ensure certainty of rights, and avoid useless quarrels, this approach should be used. Pierson gets the fox.

Dissent: This dispute should never have been submitted to trial, but rather settled according to the custom and usage of huntsmen. Policy reasons suggest that fox hunts should be encouraged. Thus a broader definition of occupation is appropriate – Livingston chooses “reasonable chance of capture” as his standard for possession. Post had such a chance here. Fox to Post.

Ratio: (1) Occupancy occurs when a hunter has “so wounded, circumvented or ensnared” the animal that it has been deprived of its natural liberty; (2) Mere pursuit is not enough to found possession.*Note that the judges look at various authorities’ definition of hunting possession (with the exception of Blackstone, all are drawn from the Civilian tradition!). The general common law approach is to look at how a reasonable person in that field would interpret possession

B. Adverse Possession

Now, turning to landThe principle = Possession is good against the whole world, except the person who can show better title

Asher v. Whitlock (1865) – Case of women holding land!o Facts: O to his widow and then her daughter (& to heir Asher) if the widow remarries. Whitlock

married widow. Widow dies, then daughter dies – question is if Asher can eject Whitlock (who had possession of the land)

o Holding: Even though W had possession, it still wasn’t good enough to defeat Asher’s title BUT the reasoning allows for possession to give rise to ownership/rights

o Reasoning Cockburn: takes the standard view Mellor: same result but possession is prima facie evidence of seisin (legal possession –

meaning possession as the actual owner) Seisin gave you rights if dispossessed

Why protect possessors? Main argument = because possessor is usually the owner

o BUT if protection of title is the best argument – why do we need possession at allall titles are kept by registration systems

o Torrens System Western Canadanow Ontario as well Quiets titles + prevents adverse possession

Economic efficiency argument = possessor is usually producing some sort of economic benefit of the land or at the very least taking better care of it

Possession “keeps the peace” – protects proper balances

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Requirements for adverse possessionsomeone in possession of the land of someone else for a requisite period of timeleads to other questions

How do you possess, how do you show your possessing it, what do you mean by adverse? Need to look at the facts – very important for adverse possession cases

St Clair Beach Estates The Ms cleaned up the plot of land in question – cleared trees, put a piknik table, skating rink, dog house etc.

o They did all this without getting permissionused it as it was their own lando Note: Grants picked cherries on the land from time to timeonly reason they didn’t farm on that land

in question was because there were (1) hydro poles (2) cherry trees (3) bad soil for farmingo Grants claim allowing the Macdonalds to use their land was “neighborly acquiescence” o Note: Macdonalds tried to purchase numerous times – never accomplished it – then the Grant land is

sold, the survey is done and the new owner is asserting their rights on the land used by the McDs Use the Requirements from Pflug and Pflug v. Collins Macdonalds don’t winthe possession/use is NOT adverse

o Macdonalds had NO intention of excluding the Grantsno intention to possess / animus! Intention of the possessor is VERY important

Intention: how much “adversity”? Piper v. Stevension (1911)

o Fence around 8 lots instead of 6AP allowed Masiden Investments v. Ham (1984)

o 100 acre lot; Ham is a pilot; AP not allowed because not inconsistent speculative use Beaudoin v. Aubin

o Mistaken boundary; no intention; went with “time”

Intention of the ownerif it is something “active” on the part of the possessor, then the intention of the owner counts What happens if the person is actively possessing but starts on a mistake (one-side mistake on the part of the

possessor – not a mutual mistake) but then finds out halfway through that it’s the owner’s propertyo Do we count owner’s intention there or do we simply look at good/bad faith of the possessor?o CVL – used to be 30 years if bad faith possession and 10 if good (now it’s all 10)o Should good faith even be relevant in the CML (remember CML struggles with it)

See Pye

Keefer v. Arillotta House that belongs to K and store that belongs to Adriveway going down the line between the 2 properties

o K builds a garage in the back over the property line – also encroach on the line in other ways Note: they had a right-of-way over the driveway

o A barely uses their share of the driveway Note: a right-of-way does NOT automatically mature into possessory title Key idea : possession must be adverse in some way (and to some degree)

o See the requirements for adverse possessionPflug requirements BUT how does this change in cases where the possession is not adverse? Ie. Simple cases of mistake

o If you read Wilson – if that adversity standard is high enough, it is really hard to find adversity to begin with and it is impossible to find adversity in mistake cases

o Case that tries to bring it all together is Teiss v. Ancaster

Teiss v. Ancaster Question: does there need to be some sort of inconsistent use that is being made of the property by the

possessors? Is this a case of a mistake?o Laskintest of inconsistent use doesn’t apply to cases of mistake

Here, the notion of adversity is reflected in the idea that the claimant wants to claim over the whole land

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J.A. Pye v. Graham (UK) – adverse possession that isn’t the result of a mistake Graham was the owner of land adjoining the disputed land and he had signed a formal agreement in 1983

which permitted him to use the adjacent/disputed land for a period of 10 months – got the only key to the fence surrounding the land. At the expiry of the agreement, an agent of the title-holder asked him to vacate the land. Graham ignored the letter and continued to farm the land until 1999 – knows it isn’t his, but kept using it.

o Graham admitted he knew the land wasn’t his at trial and that he was willing to pay for continued use HOL held that Graham’s actions constituted possession – land was worth 10 million pounds! Was there bad faith? YES

o Graham was intentionally trespassing = bad faith (even though he didn’t do anything “bad”)o Note: inconsistent use didn’t matter here – irrelevant!

Held that intention of the owner is IRRELEVANT

Reader pp. 306-328 – Acquisition of Title by Possession: Squatters 3. ACQUISITION OF TITLE BY POSSESSION: SQUATTERS

Carrozzi v Guo (2002) – ON G had fence encroached on C land. C went to court after more than ten years to fight the matter, but past prescription point (10 years) so C’s title to the strip of land was extinguished (G won on adverse possession)

“First in time is first in right” person acquiring a legal interest in land is bound by all pre-existing legal interests affecting that land.

Keefer v Arillotta (1976) – ON Facts: Three things looked at in the facts:

o (1) nature and location of land in issue narrow strip of land runs on both K (residence and respondent) and A’s (business and appellant) land

o (2) chain of title K took their property subject to the right-of way of A over the “strip of land” at issue, and A obtained their right-of-way through the chain of title to their own property and by express grant in a quit claim deed from Douglas Cloy (prior owner).

o (3) conduct of owners K and their predecessors in titleProperty was always used as dwelling and strip is a

drive-way. At one point, a disabled car was left at rear of drive-way for 4 years. K maintained driveway. In 1952, K moved the garage located at rear of his property onto the strip to line it up with the driveway significant point because there was no objection by Mr. Cloy (then neighbour who shared land with K).

A and their predecessors in titleM. Cloy, then D. Cloy, and finally, A, have always used premise for business. Cloy would use the drive-way for business (trucks), often K moved their cars if the drive-way needed to be used. Cloy put gravel on driveway but did not maintain it like K, and when Cloys traveled during the winter months they would make no use of it

o Key point: K was on neighbours property pursuant to their grant of right of way, and even if they exceeded the rights they had by virtue of the right-of-way, this would not mean that their right-of-way matured into a possessory title.

Issue: whether K’s possession challenged the right of the legal owner (A) to make the use of the property he wished to make of it.

Holding: allow appeal and hold K entitled to a declaration that A’s title has been extinguished only with respect to that part of the land occupied by the K’s garage.

Reasoning (Wilson)o The use an owner wants to make of his property may be a limited use and an intermittent or

sporadic use. A possessory title cannot, however, be acquired against him by depriving him of uses of his property that he never intended or desired to make of it.

“The animus possidendi which a person claiming a possessory title must have is an intention to exclude the owner from such uses as the owner wants to make of

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his property” Application because the Cloys never parked their car on the strip of land shows

that they never intended to use the strip for parking, which explains why they gave the owner of the adjoining property (K) the right to use it. BUT, this does not mean that K acquired a possessory title over the strip.

o Test for acquisition of possessory title whether they precluded the owner from making the use of the property that he wanted to make of it (Re St. Clair Beach Estates)

Acts relied on as dispossessing the true owner must be inconsistent with the form of enjoyment of the property intended by the true owner.

Onus to establish title by possession is on claimant and harder for claimant to discharge onus when he is on property pursuant to a grant from owner

o To claim a possessory title must establish ( Pflug and Pflug v Collins ) *must satisfy all 3*

(1) Actual possession for the statutory period by themselves and those through whom they claim (satisfied)

(2) That such possession was with the intention of excluding from possession the owner or persons entitled to possession, and

Failed K never intended to oust the Cloyss from the limited use they wanted to make of the strip of land. Both parties shared driveway amicably.

(3) Discontinuance of possession for the statutory period by the owner and all others, if any, entitled to possession.

Failed Cloys did not discontinue their possession of any part of the strip of land other than the portion at rear occupied by respondent’s garage. Owners made such use as they wanted. K has not discharged the onus of providing discontinuance of possession of the strip (other than the portion occupied by their garage) by the owners for statutory period.

Ratio: The use an owner wants to make of his property may be a limited use and an intermittent or sporadic use. A possessory title cannot, however, be acquired against him by depriving him of uses of his property that he never intended or desired to make of it. (See 3-part test above)

Teiss v. Ancaster (Town) (1997) – ONCA Facts: The Teis’ and the Town both mistakenly believed for more than 10 years that Teis owned two strips of land that the Town actually owned. Teis is now claiming possessory title for these two strips of land, one of which they plough as part of their farmland, the other of which they turned into a laneway which the public began using occasionally as well. The trial judge held that Teis were owners by adverse possession of the two strips and that the public were entitled to use the laneway as well. Town appeals concerning adverse possession, Teis appeals for public use of lane.Issue: (1) does a person claiming possessory title have to show “inconsistent use” when both the claimant and the owner mistakenly owns the land? (2) Did the judge err in holding that Teis had “actual possession” for 10 years? (3) can Teis restrict the public from using the path?Holding: No. No. No.Ratio: (1) requirements for possessory title (2) the test of inconsistent use does not apply to a case of mutual mistake. Reasoning (Laskin):The Appeal – the Town’s appeal fails

Under ss. 4 and 15 of the Limitations Act, the owner of the land’s interest in the land is extinguished by a person who has been in adverse possession of that land for 10 years

Wells in Pflug and Pflug v. Collins – person claiming possessory title must establish (1) actual possession during the statutory period (2) intention of excluding from possession the owner (3) discontinuance of possession during the statutory period by the owner

(a) Actual Possession32

Requirementspossession must be open, notorious, peaceful, adverse, exclusive, actual and continuous o Open possession important because (1) shows claimant is using property as an owner (2) marks the

beginning of the statutory period o Adverse = claimant is in possession without permission of the owner

Laskin agrees with the trial judge that there was actual possession (b) Inconsistent Use

Inconsistent use = a claimant’s use of the land is inconsistent with the owner’s intended use of it Test of inconsistent use doesn’t apply in cases of mutual mistake “if the true owner mistakenly believes that

the claimant owns the disputed land, then the owner can have no intended use for the land and, correspondingly, the claimant’s use cannot be inconsistent with the owner’s intended use”

o Teis thought the land belonged to them not the Town, so there was mutual mistakeo Had there been knowing trespass, the result here would have likely been different

Note; in cases of mutual mistake, satisfying the second requirement for possessory in Pflug is difficult, so in cases such as these, the court will infer that the claimants intended to exclude all others, including the real owner, from the property

The Cross-Appeal – Teis’ cross-appeal fails Laskin finds that the judge was correct in declaring that the public had a right-of-way over the laneway

Adverse Possession of Municipal Park Land One of the strips in question is part of a Municipal Park – Laskin finds it necessary to discuss the discomfort in

upholding a possessory title to land that the Town would otherwise use to extend its public park for the benefit of the residents BUT the Town did not argue this and therefore Laskin can’t make that argument for them

Alberta, along with some US states prevent a limitation period from running against “municipal property devoted to public use”

o Shows that there is a basis in the CML that municipally owned land used for a public purpose, such as a park, cannot be acquired by adverse possession

Laskin likely would have found for the Town regarding this strip had the argument been madeQuestions and Comments Sectionsee for more information on adverse possession

See for limitation periods for chattels as well

Re St Clair Beach Estates v Macdonald (1974)-OntDivCourtFacts: M bought a residential home bordering on the Grant Farm in 1961. The part of the GF bordering M’s land is rough, overgrown with weeds, trees and rubble. M made use of the land “which an owner would make of his own backyard” including cutting down trees, erecting a dog house, building a large boat over the course of 2 years, etc. M never had the permission or consent of the owners of GF. The Grants picked cherries in the disputed area from time to time and farmed the accessible southern part of the disputed land. On two occasions M attempted to buy the land from G. Eventually G sold the farm to S. S applied for “first registration” under the Land Titles Act. The McDonalds objected on the basis of their adverse possession of the disputed parcel of land.

History: Trial judge held that G had “constructive possession” of the land and did not need to show “pedal possession” of every square foot of it.

Issue: Did M have the required quality of possession to adversely possess the parcel of land?

Holding: No

Legal Reasoning: Adverse possession requires three elements (taken from Plfug and Pflug v Collins[147]):

1. actual possession; 2. intent to exclude the owner and all other persons entitled to possession; 3. discontinuance of possession by the owner and all others.

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All of these factors must be true for the entire statutory period. Here M fails on the discontinuance of possession, since the Grants made use of the disputed parcel in a manner consistent with their ownership of it – there was no reason for them to go there more than occasionally, and they were found to visit in to pick cherries, among other reasons.

Ratio: (1) Enclosure constitutes use of land thereby enclosed without visits by the owner; (2) In case of unenclosed land, occasional use of land may be break adverse possession depending on the nature of the land; (3) Offers to buy land in dispute constitute an acknowledgement of another owner’s title and thus demonstrate a lack of intention to own.

C. Finders

“Finding” cases Possession and finding lost property

o Superior titleo Especially as between possessor and the owner or controller of a space

Jus tertii – remember this term from the introduction to the possession sectiono Ownership is based on who has the stronger possessory claim

Starting point o “Finder keepers”o Armory v. Delarmirie

Chimney sweeper’s boy finds a jewelgets to keep it! Principle is: as against anybody but the true owner, the finder has the superior claim

Parker v. British Airways (Current leading case in UK) Cases referenced:

o Armory - finder isn’t making a claim against the owner of the property on which the item was found Easier to make a claim for the object if you aren’t against the owner of the property where the

item was foundowner has more property rights o Elwes v. Briggs Gas (1886) – sunken ship in the clay – embedded in the land

Briggs is up against the owner of the land, who they were doing work for when they found it Owner of the land, Elwes, wins against Briggs that actually found the ship because it’s on his

lando Hibbert v. McKiernan (1948) – golf club is asserting ownership on the lost balls on its course (claim

against an individual who tried to take the lost balls)land owner wins here again Note: balls aren’t as embedded as the sunken ship in Briggs Gas Owners aren’t claiming they didn’t abandon the ballswhether or not the owner has in fact

lost/forgotten the balls can be an important factor Criminal element – trespass on the property to get the ballsdoes this matter = not really

Dishonesty doesn’t matter (Bird v. Fort Frances) Trespass doesn’t really matterKowall v. Ellis

o Notion of trespass in this case as well – but plaintiff had permission so not really trespass – but def. makes the argument that he shouldn’t have to worry about people taking things lying around on his land

o Court finds relationship of bailment on the part of the plaintiff and the objecto In re Cohen, etc. v. Katz – money hidden in a house and forgotteno Moffato South Staffordshire Water v. Sharman – Rings in the mud found by SSW on land that Sharman was

occupying but did not ownSharman wins Once again we come across this “embedded” factor

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o Hannah v. Peel – soldier finds a brooch in the house (sitting in a crevice in the wall), which is unknown to the owner (occupier of the house was the military – had commandeered the house)

The owner is making a claim against the finder (the soldier) – occupier doesn’t care The soldier winshow do we reconcile this?

Maybe the crevice wasn’t enough to be “embedded” o Bridges v. Hawksworth – money found in a public shop, shopkeeper did not know the money had

been dropped or try to exercise any “control” over themfinder winso Appleyard – money found in a safe, while demolishing the propertyo Grafstein – locked box…Intention to control the box when it is opened

Note : intention to abandon is a very important factorif someone hid money somewhere, they clearly did not intend to permanently abandon it

Note : seems like degree of embedding/attachment in the property is very important as wellSee Test (pp. 116-117) + Application (117-118)

Trachuk v. OlinekOnce again we see the use of bailment to allow the finder to keep the money

Duties of findershave an obligation to find the owner if there is the possibility it is lost and not abandoned If someone finds it they are a bailee and the rightful owner still has the right to claim it

CharierLouisiana Case (CVL law)

Reader pp. 329-346 – The Relative Nature of Title: Finders4. THE RELATIVE NATURE OF TITLE: FINDERSTrachuk v. Olinek (1996) – AB Court of Queen’s Bench Facts: Marathon Realty Co Ltd owned 160 acres of land with a surface lease of 4.44 acres to Amoco Canada Resources Ltd for the purposes of an oil well site. The rest of the land was leased to Trachuk (Plaintiff), a farmer. There were also easements, with rights of way, on the land to allow pipeline companies to access the well site. Olinek and 3 others (Def’s.) were contracted by a pipeline company (Signalta) for maintenance of its pipeline. During maintenance, Def’s. dug into the ground and found $75,960 buried approx 18 inches down. The 4 Def’s. claim (jointly) a right to possession of and title to the money on the basis of being “fortunate finders of lost property.” Trachuk makes the same claim on the basis of being an occupier of the land and thus in possession of the money both through de facto possession of the land and a right to possession.Issue: Who has the right to possession of the money, and if both parties do, which has the superior claim? (p. 333)Holding: The 4 Def’s have the superior right to possessory title.Legal Reasoning: Gallant J.Upon finding the money, the Def’s became a “quasi-bailee of the money” (p. 333).

Bailment is defined as the rightful possession of goods by one who is not the owner, by mutual consent.

“Quasi,” here, because no mutual consent. Evidence (purposeful burying) suggests the money was purposefully hidden, not abandoned. But “there is no evidence as to who the true owner of the money is” (333). Thus there is a presumption that the chattel is in the possession of the owner or occupier of the location where the chattel was found. Gallant J. undertakes a broad survey of the “philosophic rationale for possessory title”

Possession (Black’s Law Dictionary): “To occupy in person; to have in one’s actual and physical control; to have the exclusive detention and control of; to have and hold as property; to have a just right to; to be master of; to own or be entitled to” (335).

But there’s no “completely logical and exhaustive definition of ‘possession’” (336). Legal possession vs. de facto possession (citing Halsbury’s Laws of England): Legal possession is “a right in itself” and consists of (1) an intention of possessing and (2) control

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sufficient to exclude strangers from interfering. Legal possession can exist without de facto possession and vice versa.

Trachuk was not in de facto possession of the well site (4.44 acre lease). Though he erected a fence, it was to keep his livestock off the site, not to prevent others from accessing it. There is no evidence that he tried to exclude workmen such as the defendants from that land. That is, Trachuk shows both insufficient control and intention for possession. There is also a presumption that a lease provides exclusive possession to the tenant (Amoco, for the well site).“Trachuk is unable to show that he, at the time of finding of the money, had a scintilla of dominion to exercise over the portion of the lands where the money was uncovered” (338).Ratio: (1) “The finder of a lost chattel, while not acquiring any absolute property or ownership in the chattel, acquires a right to keep it against all but the true owner or those in a position to claim through the true owner, or who can assert a prior right to keep the chattel which right was subsisting at the time when the finder took the chattel into his care and control.”*Notes/Comments:- The facts are very detailed and case specific so the ratio should be understood in that context- Not clear why Marathon, as owner, or Amaco as holder of the surface lease, didn’t bring a claimCharrier v. Bell (1986) – La.SC (Louisiana)Facts: Plaintiff appealing trial court’s judgment denying both his claim as owner of Indian artifacts and request for compensation for excavation work in uncovering artifacts under the theory of unjust enrichment. Plaintiff claims he is an amateur archeologist. He conducted archeological research and obtained permission from Hoshman, who he believed was the owner of the land (Trudeau Plantation) he wanted to explore. After exploration the plaintiff notified Hoshman they he had located the Tunica village. Although the evidence is contradictory, the plaintiff contends that it was at that time that Mr. Hoshman first advised that he was the caretaker, not the owner, of the property. Plaintiff continued to excavate for the next 3 years until he had located and excavated 150 burial sites containing rare artifacts. Confronted with the inability to sell the artifacts because he could not prove ownership, plaintiff filed suit against 6 non-resident landowners of the property, requesting declaratory relief confirming that he was the owner of the artifacts. Alternatively, plaintiff requested that he be awarded compensation under the theory of unjust enrichment for his time and expenses. In 1978 the state of Louisiana intervened and purchased the land and the artifacts from the 6 landowners and agreed to take the case on themselves. By 1981 the Tunica and Biloxi Indians were recognized as a tribe by the state. The Tunica and Biloxi Indians then intervened in the suit seeking title to the artifacts and the land. The state subordinated its claim of title/trust status over the artifacts in favor of the Tunicas. Issue: (1) Is there adequate proof that the Tunica-Biloxi Indians are descendants of the inhabitants of the land and thus the owners of the artifacts? Holding: Yes. Objects buried with the dead are not considered abandoned and cannot be acquired by possession over the objections of the descendants. Legal Reasoning: Ponder J. The fact that members of other tribes are intermixed with the Tunicas does not diminish their relationship

to the historical tribe (as plaintiff submits). Evidence supports that some portion of the Tunica tribe resided on the land.

Plaintiff contends that artifacts were abandoned by the Tunicas and that by finding them he became the owner. Ponder J does not agree noting that to bury certain items along with the deceased does not result in abandonment.

o “While the relinquishment of immediate possession may have been proved, an objective viewing of the circumstances and the intent of the relinquishment does not result in a finding of abandonment. The relinquishment of possession normally serves some spiritual, moral, or religious purpose of the descendant/owner, but is not intended as a means of relinquishing ownership to a stranger.”

Res Derelictae: Things voluntarily abandoned by their owner with the intention to have them go the first

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person taking possession ex) things left on public ways. The intent to abandon res derelictae must include the intent to let the first person who comes along acquire them.

o Not the case with burial goods Burial goods are “treasure” under article 716 of the French civil code and thereby not subject to

occupancy upon discovery. Reason being it would promote commercial speculation and despoilment of burial grounds.

Ratio: (1) Res Derelictae: Things voluntarily abandoned by their owner with the intention to have them go the first person taking possession ex) things left on public ways. The intent to abandon res derelictae must include the intent to let the first person who comes along acquire them. (2) Objects buried with the dead are not considered abandoned and cannot be acquired by possession over the objections of the descendants.

Parker v. British Airways Board (1982) – UK Facts: Plaintiff was at an executive lounge in Heathrow airport owned by BAB and found a gold bracelet on the floor. He gave it to a BAB official (instead of police), along with his contact information if it was not claimed by the owner. Although owner never claimed it, BAB did not return it – they sold it and kept the proceeds (around £850). Plaintiff won at county court, judgment now being challenged by defendants.Issue: Between the finder of lost property and the occupier of the premises on which it is found, who has a better claim in this case? Holding: The finder. He acted honestly and had full finder’s rights – meaning that he can assert title against anyone but the true owner. The occupiers in this case cannot claim superior title based on the bracelet being within their premises, because they did not manifest a sufficient intention to exercise a high degree of control. Legal Reasoning (Donaldson L.J.):Neither are making claims as owner. So what are their respective claims? Plaintiff = CML rule that the act of finding a lost chattel gives the finder rights with respect to that

chattel. Defendant = Must claim they had rights in relation to bracelet immediately before plaintiff found it, and

that these rights are superior to the plaintiffs. At CML, occupier of land has such rights over all lost chattels on his land, whether or not they know if its existence.

Relevant precedents Armory = Rule is right as a general proposition “finders keepers”, but has been given some qualification.

There are some cases in which finder does not have strongest title:o Case of trespassing finder o Case of chattels attached to realty when they are found

Bridges = The unknown presence of notes on premises occupied by the shopkeeper could not, without more, give him any rights or impose any duty upon him in relation to them.

o Being manifestly lost on the floor, right of the finder to the notes is good against all in the world except for the true owner.

o He did not intend, by delivering the notes to the defendant, to waive the title. It was merely for the purpose of finding the true owner.

Any steps taken to find owner were taken by defendant as agent of plaintiff. The notes never were in the custody of the defendant nor within his protection before they

were found, as they would be if they had been placed there intentionally. South Staffordshire Water = Defendant tries to distinguish Bridges and apply this instead.

o Possession of land carries with it, in general, possession of everything attached to or under that land. It makes no difference that the possessor is not aware of the thing’s existence.

o Try to distinguish Bridges on the basis that it was in the “public part” of his shop.

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Kowal = Plaintiff found an abandoned pump on the defendant’s land – took the pump. When plaintiff took possession of the pump, he acquired a special relationship arising out of his relationship with the unknown owner – one of bailment. He thus has the right to sue anyone who interferes with his right of possession, except for the true owner or one with superior title.

Ultimately, the authorities side with the plaintiff and Bridges should be upheld . The distinction made by defendant about “public” part of store fails.Policy consideration = need CML rules that will facilitate rather than hinder the ascertainment of the true owner of lost chattel and a reunion between the two.

Defendant argues that this militates in favor of awarding owner of premises superior title, because it is more probable that owner will come back looking for it.

However, if this were the rule finders would have no incentive to stop and look. Furthermore, finder is under a duty to take reasonable steps to find the owner anyway, which will generally include notifying the owner.

Rights and Obligations of the Finder1. Finder of a chattel acquires no rights over it unless:

a. It has been abandoned or lost; andb. He takes it into his care and control

2. Finder of a chattel acquires very limited rights if he takes it into his care and control with dishonest intent or in the course of trespassing.

3. While finder does not acquire absolute ownership in chattel, he acquires a right to keep it against all but the true owner or those who can assert superior title or prior claim.

4. Unless otherwise agreed, servant or agent who finds chattel in the course of employment and takes it does so on behalf of his employer, who acquires the right.

5. Finder has an obligation to take all reasonable measures to find the true owner.Rights and Liabilities of an Occupier

1. Occupier of land or building has rights superior to those of a finder over chattels in or attached to it (if building, just attached), even if he is unaware of its presence.

2. Occupier of building has rights superior to those of a finder over chattels on and in, but not attached to, that building only if before the chattel is found, he has manifested an intention to exercise control over the building and the things which may be upon or in it.

3. Manifestation to exercise control can be express or implied from the circumstances (e.g. carrier’s liability). In any case, occupier is obliged to take all reasonable measures to locate the owner.

4. An “occupier” of a chattel (e.g. ship, car, aircraft) is to be treated as occupier of building.Application to the Instant Case

Plaintiff’s Rights and Obligations:o Plaintiff was not a trespasser and was acting with obvious honesty when he took the bracelet

into his care and control. He prima facie had full finder’s rights and obligations, and discharged obligations by giving bracelet to official.

o Finders rights were not displaced Defendant’s Rights and Liabilities:

o Defendants cannot assert any title to the bracelet based upon the rights of the occupier over chattels attached to the building – it was lying on the floor.

o Defendants cannot sustain title based on rights of occupier over chattels “in or upon” the building because they cannot demonstrate a manifest intention to exercise a high degree of control over the items within the lounge.

Gives counter-example of bracelet found in safety deposit box room in a bank – clearly intended to exercise high degree of control.

D. Gifts

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Gifts of personal property (two kinds) Inter vivos = living person giving a gift to another living person Mortis Causa = a gift “in contemplation of death”

Note: the CML has many rules on gifts because gifts are not treated as unilateral contractsvery strict! Very high skepticism on gifts in the CML

o Why? Baron articleCML has an issue with unilateral transfers

Nolan v. Nolan – 3 paintings, alleged inter vivos gift Essential elements of a gift= (1) intention to give (usually expressed through words – even better if written

down) (2) intention to accept (3) deliveryo Element 1 (donative intention) doesn’t need to be effected through “words of gift” just needs to be

proved through alternative means Here, the evidence wasn’t strong enough to prove donative intention

Note : equity will not perfect an imperfect gift

Bayoff = Mortis Causa Similar considerations as those seen in Nolan – BUT mortis causa gifts have some diff requirements You have 3 elements to determine if the gift is mortis causa

o (1) impending death from an existing peril, (2) delivery of the subject matter, (3) the gift is only to take effect upon death and will revert to the donor should he/she recover

o If the elements are not met, you move to the 3 elements of inter vivos

Note: in both inter vivos and mortis causa, there is a large amount of weight placed on the evidenceLametti: there are also policy considerations involved with gifts where we don’t want someone to be able to get around bankruptcy or insolvency issues by claiming they made a gift in very “dodgy” situations

With wills, it is a little easier because there is an actual document that provides more concrete evidence

Reader pp. 346-366 – Transfer of Title Through Delivery: Gifts5. TRANSFER OF TITLE THROUGH DELIVERY: GIFTSJ.B Baron, “Gifts, Bargains, and Form” Gifts require formalities such as delivery, signature or attestation The primarily legal goal of gifts is to effectuate donative intent; formalities are required to put that

intent beyond question. In contrast, contracts have the primary goal of protecting expectations and securing transactions.

In doctrinal discussion, gifts are treated as one-sided transfers, which merely redistribute existing wealth, and thus are not thought to warrant legal enforcement unless their formality renders administration of them simple. Bargains on the other hand are two-sided exchanges, which create wealth, and as a result are thought to warrant enforcement without formality. This is based upon the notion that there is a “fit” between the nature of a given transaction and the legal rules applicable to it. However there are reasons to questions this fit:

o The accepted donative formality of gifts assumes people are fundamentally unreliable and deceitful. The accepted justification of the consideration doctrine assumes that, in business, people are trusting and trust worthywe are suspected when we give, relied on when we trade.

o Gift is defined as a transfer without consideration and is designed to assume that any particular transaction can be placed on one and only one side of the gift/bargain line. However, anthropological, sociological and psychological studies of gifts suggest that gifts and bargains are like exchanges, differing only in that bargains involved the exchange of commodities, while gifts may involve the exchange of non-commodities such as a statusthe purely one-sided donative transfer is not part of the “reality” non-legal social scientists have studied.

If gifts are exchanges rather than one-sided transfers, should the law treat them differently than it currently does?

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o Noif a simple signature is adequate in one case than it should be adequate for the othero Gifts are socially important precisely because they are spontaneous, approximate and

unspecifiable. Is there a reason to treat conventional market bargains as more worthy of legal intervention than gifts?

o NoAs social scientists claim, there are equally as strong expectations in gift giving as there are in business promises and so these protections should be protected as well. The fact these expectations are non-economic should make no difference.

o The obligations of gift-exchange are satisfied through the non-legal pressures exerted by trust, gratitude and the like, legal intervention may be both unnecessary and inappropriate.

The business related non-legal pressures that cause most market participants to fulfill their bargains voluntarily are not thought to eliminate the need for judicial involvement in contracts; why should the social or psychological pressures that underlie gift exchange require a different approach for donative transfers?

“The persistence of formal requirements for donative transfers and the reluctance to enforce such transfers except on purely formal grounds carries a message: gifts are uncommon, untrustworthy, and unimportant. We are encouraged to think of donative transfers as being truly distinct.”

Nolan v. Nolan & Anor (2003) – Supreme Court of Victoria (Australia)Facts: Case concerns the ownership of three paintings by the well-known Australian artists Sidney Nolan (died in 1992). Jinx Nolan, the plaintiff, was Sidney’s daughter by adoption – she claimed that Sidney gave the paintings as a gift to Jinx’s mother Cynthia Nolan shortly before she died in 1976. Jinx was a major beneficiary of her mother’s estate and received many Nolan originals, but the three paintings were not part of the estate inventory. The paintings essentially remained in Sidney’s possession until his death (were never delivered)Issue: Were the paintings given as a gift to Cynthia and is Jinx therefore the owner as beneficiary of Cynthia’s estate?Holding: NoReasoning (Dodds-Streeton):Gifts of Chattels

3 methods of making a valid gift of a chose in possession, such as a painting, inter vivos: (1) deed (2) declaration of trust (3) deliveryoptions 1 and 2 do not apply here

Hurdles to the plaintiff’s claim:o (1) Equity will not complete an imperfect gifto (2) Possession

Possession is prima facie evidence of property, and for 27 years, the paintings have been in the hands of the defendants, not the plaintiff

The “witnesses of the facts” of the alleged transactions are deado (3) Plaintiff bears the onus of establishing the necessary elements of a gift of chattels effected by

delivery The essential elements of a valid gift of chattel inter vivos, in the absence of a deed of gift or a

declaration of trust are:o (1) An intention to make a gift, usually expressed by words of present gift;o (2) Intention on the part of the done to accept the gift (note: never important); ando (3) Delivery

Element 1 = Intention to Make a Gift (Element NOT met) Intention is usually accompanied by words of gift which show the intention and well as delineate the object

and extent of the intended benefactiono There is no evidence of “words of gift” for the alleged transaction claimed by the plaintiff

Corin v. Pattonalthough donative intention would normally be manifested by words, words are not necessary to manifest donative intention

o BUT the donee who seeks to rely on alternative means of establishing donative intention would bear the onus of proving the existence of present, unequivocal donative intention, attended by the requisite

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certainty as to object, extent, and whether the gift would take immediate effect Evidence used by plaintiff is statements within documents in which Sidney referred to the paintings as

“Cynthia’s” or part of “Cynthia’s collection” “The authorities establish that a promise to make a gift or an expression of gift by words of true

intention, however clear and unqualified, is not sufficient to establish a perfect gift. It follows that the donor’s expression of belief or conclusion that he or she has made a gift which has taken effect, so that property has passed to the intended donee, is equally insufficient.”

Note: also need to be cautious when the donor is deceased and intention is based solely on documentsElement 3 = Delivery (Element NOT met)

Delivery is the legal act essential to complete the gifttransfers both possession + ownership Delivery may be (1) actual (2) constructive

o Constructive delivery = occurs when the nature of the item renders manual delivery impossible or impractical OR when the donee is already in possessionnot the case here

Delivery in Common Establishments = question of how delivery of household chattels is to be validly effected between spouses or other cohabitants in a common establishment poses difficulties

o In both The National Trustees Executors and Agency Company Limited v. O’Hea + Re Cole v. Cole – the courts refused to relax the requirements of delivery for cohabitantsDodds-Streeton agrees

o Here, the paintings weren’t even located in the house for the majority of the period in question so delivery in common establishments wouldn’t even apply AND although Cynthia did exercise control over them at one point, there is no evidence that Sidney knew of or consented to her actions

Ratio: 3 essential elements of a valid gift of chattel inter vivos are: (1) donative intention (2) acceptance (3) deliveryRe Bayoff Estate (2000) – Sask

Facts: A. Simard, executor of P. Bayoff’s estate, applied for a ruling as to validity of certain gifts made to her by Bayoff before his death. Bayoff gave everything in his safety deposit box to Simard, but when Simard went to clear the box out, CIBC did not give her access because the bank’s forms were not signed. Bayoff died without signing these docs required to give Simard access. Simard tried again the day after he died and was granted access to the box and removed all items. He also left the residue of his estate to Simard and family members. Most of what was in the box was money, bonds, and combo to his safe. Position of all parties is that the real property disposed of is part of Will and are not gifts.

Issue: Were the goods left in the safety deposit box a valid gift donation mortis causa or inter vivos? Holding: Valid gift inter vivos. Reasoning (Krueger)

o Definition of gift gratuitous transfer of the ownership of property, which is effected by a transfer during lifetime of donor or through donor’s Will.

o Donatio Mortis Causa Gifts (Passes steps 1 & 2, but Fails step 3) Definition gift in contemplation of death. It has three essential elements (Rushka v

Tuba): (1) impending death from an existing peril

Satisfied Bayoff was aware that he was terminally ill with cancer, TF quialifies as impending death from an existing peril.

(2) delivery of the subject matter Satisfied After signing his Will, Bayoff attempted to give Simard the

contents of the box by giving her the key and instructing the lawyer to do the paperwork so that she would have access and remove the contents. Bayoff parted with control of the safety deposit box This can constitute delivery.

(3) the gift is only to take effect upon death and will revert to the donor should he/she recover

Donor of a donation mortic causa can revoke gift any time before death. Essence of this gift is that the property will revert to the donor if the imminent death does not occur.

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Failed Bayoff did not suggest that the gift was to take effect only if he died. He wished immediate ownership of safety deposit box.

o Inter Vivos Gifts Definition Gift that is intended to take effect during the lifetime of the donor. Three

elements (Ziff): (1) an intention to donate

Satisfied clearly intent to donate as expressed in presence of witnesses (2) acceptance of the gift

Satisfied Simard accepted gift when accepted key and went to bank (3) a sufficient act of delivery

Delivery of possession of an object by the donor to donee, with intention to give, is a valid and irrevocable means of making a gift (Vaines). Where it is not possible to physically deliver a gift due to size, symbolic delivery will suffice (Lock v Heath).

Simple delivery of a key is likely not regarded as symbolic delivery of a gift contained in a safety deposit box. The donor must give up control of the gift and do everything possible to vest title in the donee.

Here, all paperwork allowing access was inadequate and delivery had not yet been completed because Simard did not have access to the contents of the safety deposit box. Gift was unfulfilled. BUT, court allows it because the donee received control over the donor’s property once Simard (donee) became executor under the Will.

All steps satisfied, TF gift is inter vivos and was perfected once Simard became executor and was able to take possession of property (dealing with step 3 of test).

Ratio: Inter vivos gift is a gift that is intended to take effect during the lifetime of the donor. Donatio mortis causa gift is one given in contemplation of death. See tests and difference between both types in reasoning.

Comments: Delivery was not initially required for a Donatio mortis causa. Delivery element is still diluted

V. Common Law EstatesA. Tenure and the Feudal System

Tenure and Estates Ways of holdingTenure = how one holds

o Originally quite complex (see below), now quite simpleo In medieval England, tenure referred to the prevailing system of land ownership and land possession.

Under the tenure system, a landholder, called a tenant, held land at the will of a lord, who gave the tenant possession of the land in exchange for a good or service provided by the tenant. The various types of arrangements between the tenant and lord were called tenures. The most common tenures provided for military service, agricultural work, economic tribute, or religious duties in exchange for land

Way of defining rightsEstate = what one holds / the bundle of rights one has with respect to landTenure

Medieval, feudal origins See feudal system of land holding handout (page #3 of handout pack)

o Person who has the land is said to have “seized the land or seisined” which requires you to render certain services to the people above you (higher up on the triangle as per the chart)

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As you get towards the bottom of the pyramid, you are producing more for others than you are for yourself

Services, food, money – it all moves up the pyramid from the bottom Land – all moves downwards

Escheat: transfers the property of a person who dies without heirs to the crown or state. It serves to ensure that property is not left in "limbo" without recognized ownership. It originally applied to a number of situations where a legal interest in land was destroyed by operation of law, so that the ownership of the land reverted to the immediately superior feudal lord.

o Bona Vacantia: is a legal concept associated with property that has no owner. It exists in various jurisdictions, with consequently varying application, but with origins mostly in English law

o Note: this is still possible today! *Quebec and CML Canada are pretty much the same. Lametti thinks it would harder to expropriate in Quebec. From this original feudal system, we move to a more complicated picture (see page #5 of handout pack) Alienation SEE: the handout

o Subinfeudation (vertical) = the land gets divided downwardthrough this process you get more and more of a pyramid

Even though in theory, there should be no change in the total quantity of obligations moving upwards, it DOES get more complicated, and as you make it more complicated with more and more levels, you increase the possibility that obligations aren’t getting met and in turn there will be weak levels in this pyramid, which isn’t good for society

Retains its pyramid structure but with larger bottom. The total amount of obligations moving upward remains the same, it just gets complicated. This sucks for the person at the top as they have trouble controlling people at the bottom

o Substitution (lateral) = Creates a new lord-tenant relationship, person below gets no say. This can increase the instability and level of services being provided. For example, A is father X is son. Substitution occurs when A dies and gives land to X, his son. In general the duties moving upward got replaced by fees/taxes

Simplified also as to duties o Incidents became monetized over timeo Statue of Tenures 1660

All new tenure to free and common socage Some old tenures converted (knight-service and serjeantry) Property holding tenure in which the only thing you owe upward is taxed

o Went from pyramid with one top and different levels to King with direct lines to everyone through legislation. In theory all property is still owned by the king

o Point = series of obligations, many of which are personal and many of which are increasingly becoming monetary over time

Tenure “Take Away” Vertical Rights and Duties = CML prop doesn’t start with actual property rights, it starts with relational prop

rightsthe rights and duties you have regarding a piece of land change based on where you are on the hierarchy

Originally quite complex in Substance + Structure Now, quite simple:

o All hold “of the Crown”o Now “allodial” = ownership of real property that is independent of any superior landlord

Reception of this system outside of the UK Modes :

o Conquest (Quebec)o Discovery and Settlement (but wait…)o Reception statutes: Ontario 1792we take the law of the united kingdom to be our law as of a certain

date. Almost immediately courts change parts because physical conditions don’t coincide. Over time the systems move in different directions.

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Aboriginal “title” o Johnson v Macintosh: Having to rule on whether EU powers had legitimately taken over land of

aboriginals. Justice Marshall tries to justify what had happened. o AT and Aboriginal “Rights”

AT is not the same thing as aboriginal property normativity within a particular aboriginal system. That is known as an indigenous property system, there are 100’s across the country.

AT is the way we look (from cml perspective) at those normative systems given discovery and settlement. The CML dealt with this unevenly across Canada. Their rights not always extinguished but can be if done by statute/crown. When the constitution came in protected aboriginals post 1982.

o What is the Nature of each? AT is an intense relationship with land with a high degree of control. Lamer in delgamuuk

tries to define this. Before this it was called a suigeneris right that could not be alienated. o Lametti suggests we check out delgamuuko Lametti wants to know how AT can be justly recognized given the tenure system.

B. Estates – Introduction

Tenure and Estates Ways of holdingTenure = how one holds

o Originally quite complex (Medieval, feudal origins), now quite simple Way of defining rightsEstate = what one holds / the bundle of rights one has with respect to land

Real PropertyCorporeal Hereditaments (actins in rem) = capable of being possessed + passed on

Estate + land (fixtures)Incorporeal Hereditaments = things that can’t be possessed

These are rights in the property of someone else IF the rights are an action in rem (real action), then it CAN be passed on

o Includes (1) easements (right to use), (2) rent charges (right to revenue in property) (3) profits a prendre (right to exploit)

IF the right is an action in personam (personal action), then it CAN’T be passed ono Includes covenants, restrictive covenants and licenses

What is being protected here? Instead of just focusing on objects like CVL, CML focuses on actions in rem vs. in personam ActionsDetinue, trover, Conversion

Personal Property Chattels real Chattels personal

o Chose in possessiongoods: IP, bonds, shareso Chose in action “Paper”: IOU, share certificate, cash cards

Paper is evidence, though destroying paper is conversion

Concept of an Estate “[An] estate in land is a time in the land, or land for a time, and there are diversities of estates, which are no

more than diversities of time, for he who has a fee simple in land has a time in the land without end, or the land for a time without end, and he who has land in tail has a time in the land or the land for a time as long as he has issues of his body, and he who has an estate in land for life ahs no time in it longer than his own life, and so him who has an estate in land for the life of another, or for years” (Walsingham’s Case – 1573)

When looking at the estate, what we are considering is what you actually have if you are a rights holder within the systemThe package of rights you have in a system = an estate

Difference between a life estate and fee simpleLength that you hold these rights + kinds of rights you hold

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Capacity to Hold Who can hold this kind of estate “legal persons” Married women discriminated against historically; these restrictions were removed by statute Minors: could have an estate, subject to restricted powers to dispose (these restrictions still exist) Now

o Courts can dispose on behalf of minorso Substitute decisions makers for mentally incompetent individualso Aliens, as well, could not dispose; now they can

Corporations (moving from natural persons to legal persons) Skepticisms: from the feudal hierarchy

o Why – couldn’t perform most of the feudal obligations Who’ll pay the incidents? The “dead hand” of mortmain – mainly religious institutions Now – no worries

Estates SEE categories in land – “freehold” (see page #6 in handout pack)

o Look at the seisin pathTypes

“Freehold”: uncertain duration “Leasehold”: maximum, fixed duration

o An “estate in possession” at same time as the reversionary interest of the ownero Owner still has “seisin”

Interests in Land Abosolute (unqualified)

o (i) Estates of inheritancefee simple

C. Estate in Fee Simple

Fee Simple (absolute ownerhip) Larges Estate in Common Law Fee simple estate in free and common socage is most common fee simple Analogous to 947 ownership, allodial ownership “Fee” = inheritable “simple” = can descent to largest range of heirs No end point

Ellickson Utilitarian argument = having private holders is the best way to maintain the best set of uses over time Role for stewardship – responsibility towards society as a whole in the way we hold property Notion that if we are allowed to hold private property, it will be better for society as a whole over time

Transfer (Creation) 2 ways

o (1) Grant/Conveyance = transfer when you are aliveo (2) Devise = transfer when you are dead (will language)

Both will use the same kind of languageo “To A and his heirs”o “To A, her heirs, and assignees”o What does “to A” mean? means you are giving the property to A

Words of purchase/transfero What does “his heirs” or “her heirs, and assignees” mean?

Does not mean you are giving it to A and then his or her children, what it means is that you are defining the nature of what A is gettingwords of limitation!

These are Words of limitation goes to the duration of the rights given

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“And his heirs” or “and her heirs and assignees” = unlimited right = absolute ownership = fee simple

Importance of language o Needed to get it right, or you would not create the proper interest for a FS

Especially in inter vivos transfers Courts give more interpretive leeway in wills, under the rubric of intention of the testator –

Why? Inheritance meant “relief” – like an estate taxo Did not want to allow inter vivos transactions to avoid inheritance tax; so limit

it as far as possible (ie to one generation)o Keep someone seised, clearly

o Careful “to A in fee simple” or “to A forever” only conveys a life interest

Rule in Shelley’s Case (Wolfe v. Shelley (1581)) Rule in Shelley’s Case = An English common-law doctrine that provided that a conveyance that attempts

to give a person a life estate, with a remainder to that person's heirs, will instead give both the life estate and the remainder to the person, thus giving that person the land in fee simple absolute (full ownership without restriction)

“To A for life, remainder to A’s heirs” = fee simpleo “remainder” = a subsequent interest – usually in the case of the first estate being a life estate o These are words of limitationin this case there are no limitations, even though it seems as though it

is a life estate it IS NOT “to the heirs” are words of limitation, not purchase”

o Key = “heirs” means all the heirs, a general classdoesn’t specify specific heirs Anon (1742)Where the ancestors a freehold take: the words (his heirs) a limitation make” The rule = a rule of law and NOT a rule of constructionif you mess up, and that’s what you put in, it applies

regardless of the manifest intention of the testator (this rule lasted for a few hundred years) Why? Make inter vivos transactions more difficult

o “To A for life, remainder to A’s heirs” If A gets a life estate, B (A’s oldest son) gets it inter vivos, at the time of the devise, and will

not “inherit”, rather gets it as a giftavoids reliefBut Not so Fast here…Re Rynard

Construction of a willmore flexibility in wills – get an intention MR survived by H (PR) and two sons (B & K)

o Farm is devised to K for life (subject ot paying annuities) and remainder to “the heirs of my son” K Dispute

o Between K: invoking The Rule (above) Claims he got a fee simple Words of limitation + rule of law

o And his heirs / unborn heirs Argue he only got a life estate, not a fee simple – based on intention + words of purchase

Wilsonlooks at the intention of the testatoro Citing an old case called Grutten that read down The Rule from Shelley’s Case

Preliminary stage: does the rule apply? Is it what the T had in mind? If so, yes

o Effectively guts the Rule as a “rule of law”going to intention means it is a role of construction or interpretation

The Rule Was abolished in the UK in 1925 Not directly or indirectly abolished, as Wilson JA points out But post-Rynard… is likely dead in Canada (nevertheless, don’t be stupid – avoid the language!)

o Has been mostly eliminated through legislation (see Ontario) but might still creep up

Thomas v. Murphy Proper terminology was not used – “heirs” was not included

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o BUT The NB Property Act (1973) states: “In a conveyance, it is not necessary in the limitation of an estate in fee simple to use the words ‘heirs’, but it is sufficient if the words ‘in fee simple’ are used”

o BUT they also didn’t use the words “in fee simple”o SO they didn’t use “heirs” or “fee simple” – do we have a valid fee simple estate?

Despite the defect in language, the courts use the intention of the testator to allow the fee simpleo Court effectively “reads into” the will

SO we see the court + statutory reform trying to get past the requirement of having to use “magic words” in order to grant a valid fee simple estate

o Lametti = even if there is more interpretative flexibility, it’s always safer to use the “magic words”

Ziff Comments (pp. 371-373)1. Rule in Shelley’s Case2. Ontario reform3. Problems?

Statute of Wills 1540allows testator to name heirs – no longer bound by primogeniture (right of first born to inherit)

Reader pp. 367-373 – The Estate in Fee Simple1. INTRODUCTION (p 367)

Absolute ownership of land is, in theory, unavailable. As a result of the feudal system and the doctrine of tenures, people hold an estate in land (3 kinds): 1. Freehold estates (3 kinds)

i. Fee simple (closest to absolute ownership) ii. Fee tail (inheritable right of conceptually more limited duration) iii. Life estate

2. Leasehold estate (easement under a lease – ch. 8) 3. Copyhold (never existed in Canada; now obsolete in England)

This chapter will also introduce Aboriginal land rights, which are unique (sui generis).

2. THE ESTATE IN FEE SIMPLE (pp 367-371)R.C. Ellickson – “Property in Land” (Yale L.J., 1993)This excerpt discusses benefits of perpetual land ownership (fee simple)

Perpetual ownership greatly simplifies land-security transactions Perpetual ownership induces “a mortal landowner to conserve natural resources for future generations” (368).

“A rational and self-interested fee owner … adopts an infinite planning horizon.” Thus, the “fee simple in land cleverly harnesses human selfishness to the cause of altruism toward the unborn” (368).

When a fee owner considers improvements to her property, rights of perpetual ownership allow her to “capitalize” benefits and costs “from here to eternity” into the value of her rights. Thus, when she transfers her fee to another, the other will pay a value with a view also to its resale value. This causes everyone to have an interest in adopting “an infinite planning horizon.”

TMA: consistent with, but distinct from, the Tragedy of the Commons argument The view that “perpetual land ownership makes for better land stewardship” has developed independently in

different cultures “on every continent” (368-69)Thomas v. Murphy (1990) – NB Court of Queen’s Bench (Ziff, 369)Facts: Murphy was retained by the plaintiffs in the purchase of a property and gave “assurance to the plaintiffs that they had acquired marketable title” (369). The property in question had been granted to the Grantees by the residual beneficiaries under a will (i.e., a man died, left property to beneficiaries under a will, who then granted their interest in the land to a third party, the Grantees. The Grantees then sold the land to the plaintiffs and the question arises as to whether that sale was for a defective title because it lacked fee simple).The conveyance from the beneficiaries to the Grantees occurred via deed, in which the deed was stated to be “for the purpose of conveying all their [beneficiaries’] interest in the lands and premises.” The grant was

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made to the “Grantees, their successors and assigns” but left out “heirs.” For this reason the question arose as to whether the title was perpetual (i.e., a fee simple).Issue: Did the grantees receive a fee simple interest in the property that they could convey?Holding: Yes (plaintiffs’ action is dismissed).Legal Reasoning: Creaghan J.

“There can be no question about the intention of the grantors” (370). The grantors (i.e., beneficiaries) held the property in fee simple by virtue of the will. They then clearly indicated that “the deed was executed for the purpose of conveying all of their interest in the property” to the grantees.

Creaghan J.: “I had hoped that the strict imperative of using magic words in the grant of an estate in real property had gone out of our law” (370).

The NB Property Act (1973) states: “In a conveyance, it is not necessary in the limitation of an estate in fee simple to use the words ‘heirs’, but it is sufficient if the words ‘in fee simple’ are used” (370).

[From comments after case: In the phrase “To A and her heirs,” the words “and her heirs” are words of limitation, which delineate the extent of the right conferred on A.]

“The conveyance taken as a whole clearly explains the intention of the parties to the conveyance and that the requirement of words of limitation in the grant should be seen to have been supplied [set aside?] by the clear intention in the deed to pass the fee simple interest of the grantors” (371).

Ratio: (1) The clear intention of the parties trumps the strict requirements of “magic words” needed to convey interests in property.Questions and Comments (pp 371-373)1. The strict language requirement at the heart of Thomas v Murphy (i.e., “To A and her/his heirs”) is a rule of law, the absence of which makes it impossible to transfer fee simple even if there is clear intention to do so. This rule was moderated for wills and clear intention could override the rule of law. [TMA: not clear how this applies to the holding in Thomas v Murphy, which seems to derogate from the rule of law, which is therefore not “impossible” to do].Using the phrase “To A and her heirs” translates into the transfer of a fee simple. “To A” are words of purchase, describing intended recipient of the property. “And her heirs” are words of limitation, delineating the extent of the right conferred. The fee simple endures so long as A has a designated heir. In this way, a fee simple can last forever.2. “The term heirs is purely descriptive of the rights given to A and confers on the heirs no enforceable claim to the land (372).3. “The traditional hyper-technical approach to drafting has been significantly altered by legislative reform” (372).4. See this section for examples of different “devises of real property” (i.e., language used to transfer rights). 5. When the current holder of a fee simple estate dies without heirs, under the common law, the land “escheats” to the overlord. In Canada, this means “the property ascends to the Crown” (373)

i) Fee TailFee tail = A fee tail is an interest in real property that is ordinarily created with words such as "to A and the heirs of his body." It may be limited in various ways, such as to male or female heirs only, or to children produced by a particular spouse. This was a way of keeping land in the family and passed down from generation to generation.See Ziff 367 – Fee Tail = inheritable right of more limited duration (limited version of Fee Simple)

The bane of the Bennet’s “To A and heirs male of his body” “To A and heirs female of his body” Involves one side of the family only

Ziff 388-389 – Notes 2&3 Some fee tails set out in advance Others re-created through “settlement”

Has Fallen out of use Never part of the landscape in Canada; now abolished by statute (Ziff 389, n.4) Any attempt to create a fee tail now ends in a fee simple

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D. Life Estate Note: a life interest/estate is very similar to a usufruct in CVLget full use of a property for a period (can rent it out etc)“X to A for life, then to B”

A gets a life interest B gets a remainder interest; is the remainderperson Both have a property right, just different kinds of property rights Originally permitted by lord, provided relief was paid BOTH A and B have present interest, or estates

“X to A for life” No remainder specified Property will revert back to X (or X’s heirs”; retains the reversionary interest; reversioner)

o SO X still has a present interest in the property as a reversionerTerm?

Life of Apure sa vie Set by life of cestui qui vie (A in our example) Even if pur autre vie (Even if A alienates to C, C will only have use of the life estate until A dies, and then it is

given to B)o “X to C for A’s Life and then to B”

Note: B always ends up with a fee simple at the end of all this (once the property is transferred to B)

i) Creation

Question: how much power can the Life Estate holder be given before it becomes a Fee simple? Notion of trying to give something that falls right between these two concepts Power of encroachment – power to use up part of the propertythen the fee simple holder only receives

the remainder of what hasn’t been “encroached” uponRe Walker

Gives wife power of encroachment on property but then disposes the remainder upon her death Court rules that the attempt to “gift over” the remainder is repugnant (in conflict with) the original gift to her

and therefore the gift over fails and the wife receives a regular fee simple NOT a life estateRe Taylor

Similar situation as above – only difference is that here the remainder is divided between two daughters rather than a large group

Weight placed on intentionany intention to create a fee simple created by conferring the power to encroach is overridden here by the intention evidenced in the clear words of the testator

o SO the words of the testator seem to take precedence over anything else Court touches on Re Walkersays the testator seemed to have an intention of giving an absolute interest while

at the same time giving a limited interest – there was a conflict and the absolute wono Here, there is no such issue because the intention to give a limited interest is much more clear

Christensen v. Martini Lametti: more leeway to the testator’s intention if he/she is drafting it vs. if the lawyer is drafting it Here, the court tries to find a middle-ground between two conflicting provisions rather than let one win

outSee problems/hypotheticals on page 387

Reader pp. 374-390 – The Life Estate: Introduction and Creation3. THE LIFE ESTATE(a) introduction

Duration of a life estate is determined by reference to continued existence of a life or livesit involves an individual receiving some sort of property for the duration of his/her life – pur sa vie

o The estate is transferable, but its length remains connected to the life of the 1st – cestui que vie(b) creation

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Re Walker (1924) – ONCA Facts: John Walker, the testator, gave to his wife "all of my real and personal property", but added that "should any portion of my estate still remain in the hands of my said wife at the time of her decease undisposed of by her the remainder shall be divided as follows . . .". When the wife died, people stepped forward seeking some of the money from the original testator's will – alleging that at least a portion of the value of her estate represented the "undisposed" part of his property that remained when his wife died.Issue: Did the wife receive (1) A testamentary gift via fee simple or (2) A life estate via gift over?Holding: testamentary gift – the “gift over” is declared repugnant and void because the first gift prevailsReasoning (Middleton):

Giving and withholdingattempting to confer an absolute estate upon the done while in certain events resuming ownership later or controlling the destiny of the thing given is impossible

o Absolute ownership confers the rights of an owner – attempts to override this are voido BUT there are exceptions to what is otherwise impossible heretestators succeed in many cases

in creating a future right which would on the happening of certain events come into existence and terminate a pre-existing estate in fee simple – recognized in Show v. Ford

Note: there are limitations to this exception The Court attempts to give effect to the wishes of the testator as much as legally possible by ascertaining

which part of the testamentary intention predominates and by giving effect to it, rejecting the resto The court noted that these cases generally fall into three classes:

1. gift to the person first named prevails; and the gift over fails This is the class chosen by the judge for the present case

2. first named takes a life estate only; and the gift over prevails 3. first named takes a life estate, but life tenant is given a power of sale for the purpose of

maintaining the recipient Key words in the will: "undisposed of" and "in her lifetime" – refers to a disposal of some estate ONLY during

her lifetime. Court looked into the intention of the testator: He wanted her to have complete power to alienate the

property “ it appears to be plain that there is an attempt to deal with that which remains undisposed of by the widow, in a matter repugnant to the gift to her

Ratio: The intention of the testator is important when determining the purpose of the will clause.Re Taylor (1982) – SaskFacts: Similar to above “I give…all my real and personal estate…to my wife…to have and use during her lifetime….Any Estate of which she may be possessed at the time of her death is to be divided equally between my daughters….” Testator dies; she gets estate; she dies having only used a portion of his estate. Issue: Did the husband convey a fee simple or life estate to the wife?Holding: Life estate. Forces her to leave some sort of property for the daughters as they have fee simple after death. The language used evinces an intention on the part of the testator to give to his wife a life interest coupled with the a power to encroach on capital for her own proper maintenance.Reasoning (Scheibel):

The ability to encroach on the capital does not automatically turn a life estate into an absolute interesto Most important element is the intention to create a life interest – wording is importanto Differentiate from Re Rankin because there was not sufficient reference to the life of the donee to it,

and that was enough to demonstrate a lack of intentiono Here, “any significance a right to encroach on capital may have as evidencing an intention to given an

absolute interest is displaced by the clear words of the testator” Judge also rejects the argument that a gift over of what remains at the death of the donee should have the effect

of giving an absolute interest to the donethe gift over is no more than a logical result of the intentiono Fundamental rule to be applied by a court in construing a will is to give effect to the intention of the

testator when it is plaincannot construct in a way that would go against intention Judge also discusses + differentiates some cases that resulted in the conferring of absolute interests due to

logical inconsistencies that required the courts to choose between two alternative intentions Note: “the possibility that there may be nothing left on which the gift over can take effect does not

enlarge the interest of the done to an absolute interest”50

o Life interests with the power of disposition are also not automatically absolute interests Ratio: (1) most important element of a life estate is the clear intention in the words used to confer a life estate and not an absolute interest (2) power to encroach/dispose of capital does not lead to a life estate becoming a fee simple estateChristensen v. Martini Estate (1999) –AlbertaFacts: Appellant Martini is the widow of the testator (person who makes a will). The sister respondents Christensen and Nadon (Christensens) were longtime friends and neighbors of the testator, especially prior to his divorce from his former wife and his marriage to Martini. The testator and his first wife owned a duplex as tenants in common. For many years the Christensens and their parents lived in a suite in the duplex while the testator and the wife lived in another part of the house. It was at this time that a relationship developed. Because of this relationship the testator lent Christensen a large sum of money in 1988. In 1990 the testator and his wife divorced. The following year he married Martini and they resided in the duplex. The testator commenced a matrimonial property action against his former wife in 1991. A certificate of lis pendens was filed against the property by the testator a few days later. In 1991 the testator executed a will which stated that he give Martini the right to use the property and that when she no longer needed it that it be transferred to Christensen. The testator’s bank account was left to Christensen and the debt was to be forgiven. The trial judge felt that the uncertainty of the nature and extent of the interest given to Martini by the testator meant that it should become property of Christensen immediately. The section reads “I give my wife Sharie Raby (Martini) of 2203 Ave. Calgary for her use. When she no longer needs 2203 that she give said property to Christensen.”Issue: Who has title over the property?Holding: The testator gave Martini a life estate without a power of encroachment in the undivided half-interest he had at death. The undivided half interest received by the estate must be distributed as on an intestacy, with the result that martini receives title to it. *Life estate: is the ownership of land for the duration of a person's lifeLegal Reasoning: Hunt J. In interpreting a provision in a will, a court should give effect to the testator’s intentions as ascertained

from the expressed language of the instrument and the surrounding circumstances.o Leading Principle of Construction: “The testator’s intention is collected from a consideration of

the whole will taken in connection with any evidence properly admissible, and the meaning of the will and of every part of it is determined according to that intention. It is the duty of the Court to discover the meaning of the words used by the testator, and from them to ascertain his intention. Unless this is done, there is grave danger that the canons of construction will be applied without due regard to the testator’s intention.

Courts will also try to reconcile apparently conflicting provisions in a will, rather than ignore one of them or find one of them void for uncertainty.

Hunt J does not believe that the absence of the words “during her lifetime” necessarily means that the testator did not intend to grant his wife a life estate. He instead attributes the lack of words to the back that the testator did not have a legal educational and wrote the will himself.

The fact that the testator and Martini lived together in the property means that it is likely that the testator intended that she have the right to continue to occupy the paroperty after her death for the duration of her life.

Ratio: (1) In interpreting a provision in a will, a court should give effect to the testator’s intentions as

ascertained from the expressed language of the instrument and the surrounding circumstances.(2) Courts will also try to reconcile apparently conflicting provisions in a will rather than ignore one of

them or find one of them void for uncertainty.

ii) Powers and Obligations Problem with Life Estates = Incentive

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“settled estates” fell into disrepair-disputes over who should pay what Led to statutory reform And avoidance: use a trust Successive estates made possible by the life estate

o Shared interest, shared problemssimilar to incentive problems with usufructs in CVLPowers Case who has to pay for expenses?

Waste – Question = can the life estate holder destroy the property? (1) Ameliorating waste = improvements

o Life estate holder would be entitled to reimbursement (2) Permissive (from failure to preserve or repair)

o LT not automatically liable; only if expressly in devise/instrumento Generally, the life estate holder should be under no obligation to preserve/repair

(3) Voluntary (conduct diminishing value)o LT liable here, unless exempt (for major repairs, no overcutting of trees, no new mines etc.)

(4) Equitable (severe and malicious destruction)o LT always liable

In general, LT responsible for current expenses, interest on mortgage: remainder person on principal

Reader pp. 390-400 – The Life Estate: Powers and Obligations(c) Powers and ObligationsOntario Law Reform Commission, Report on Basic Principles of Land Law – “WASTE” Where different persons are entitled to successive interest in property, rules are required to balance the

interests of those in present possession against those of the future possessors. Outside of the law of trust, we must turn to the laws of waste for guidance.

“The holder of an estate fee simple, has an incident to his estate, the right to exercise acts of ownership of all kinds, including the commission of waste”

Even where an estate fee simple is qualified (where it is determinable or subject to a condition subsequent) it seems that the holder of the estate is generally not impeachable for waste. However it has been said the holder of an estate fee simple is subject to an executory gift “is in the same position as a life tenant without impeachment for waste and may not commit equitable waste, that is, wanton or malicious acts, such as destruction of houses or felling of trees left for ornament or shelter.” In addition, a will or settlement may expressly prohibit waste and such a provision can be enforced by injunction.

The essence of waste is that it is an act that causes injury, or does lasting damage, to the land. There are four types of waste: ameliorating, voluntary, permissive, and equitable

o Ameliorating Waste: Waste that results in benefit and not injury, so it improves the inheritance. Ex) conversion of run down dwelling into modern, turning pasture land into arable land. Unless the character of the property is completely changed, it is unlikely that a court will award damages/grant injunction for ameliorating waste

o Permissive Waste: Connotes failure to act. Ex) Allowing buildings to become dilapidated by failing to repair. A tenant for life, is not impeachable for such waste, unless a duty to repair is provided by the instrument of grant

o Voluntary Waste: Connotes the committing of positive, wrongful action. Ex) To tear down and remove a building, to open and work a mine but to chose not to work an already open mine, for a tenant to cut timber.

o Equitable waste: Malicious acts Remedies available for waste:

o If a life tenant commits waste he is liable in damages, which generally amount to the decrease in the value of the reversion, less an allowance for immediate payment.

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o In certain cases exemplary damages may be awarded. Alternatively/ in an addition an injunction may also be awarded to prevent repetition. The injunction is discretionary based on whether waste is minor and likelihood of repetition.

o If waste resulted in profit to life tenant, the money can be recovered by an accounting Whether waste has been committed is a question of fact and the onus is on the plaintiff to prove the

damages.Powers v Powers Estate (1999) – Nfld

Facts: Application for declaratory order respecting responsibility for certain expenses related to a property, in which applicant has life interest. Looking at costs based on responsibilities of executor v applicant, who was left an equitable life interest in will.

Reasoning (Cameron)o The applicant, who holds an equitable life interest, is entitled to:

Exercise usual incidents of a life tenant: occupy, lease, collect rent. Responsibilities: pay annual taxes, provide utilities to property

Executor must invest $ in savings accounts and pay interest to applicant (subject to fees)

o Cost of heating the premises in which applicant lives Default/general rule costs of heating property are borne by life tenant (applicant)

o Repairs General rule Repairs necessary for proper preservation of the building should be

paid out of capital (executor) whereas repairs of a recurrent nature should be paid from income (tenant) (Dwyer, Re (1930)).

Executor should and did pay the expense of replacement of the furnace and re-shingling of roof out of the capital of the estate court agrees with this.

Lawn care + interior painting is for life tenant to pay. BUT replacing or removing trees, replacing a deck/fence, or repairs should be paid for by capital.

o Insurance (specifically fire insurance) Court considers historical development of the law

CML default rule no obligation on a life tenant to insure, but must pay recurring expenses like land tax. If life interest is in leasehold estate, life tenant must pay insurance

Trustee Act s.18 no obligation to pay for fire insure on life tenant England no obligation on life tenant to insure Canada failure of trustee to insure for loss by fire would probably be seen as

negligence (Gamble, Re (1925)) US insurance premiums borne by tenant and paid by income

If trustee does prudent thing to insure, does it come out of capital of the state or income? If paid by income, life tenant loses $, if capital, estate is reduced more so than income.

2 clear approaches have developed in Canada (inconsistent)o (1) no obligation on life tenant to insure and premiums are paid out of

capitalo (2) premiums should be apportioned between life tenant and

reversioner Court’s conclusion s.18 Trustee Act provides trustee with power to do what he or

she would have done if directed by the testator to insure, which is to pay premiums from income. This is consistent with reasoning used in US cases because it is a modern day expense, like taxes or interest on mortgage

o Costs Paid out of the estate Ratio Recurring costs are borne by life tenant and come out of income, whereas necessary

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costs come out of capital of the estate. Insurance is difficult to assess, but usually will fall on life tenant (trustee).

Comments: a life tenant may grant a lease for up to 21 yrs, provided that the right to do so is not precluded by the original settlement. Such a lease will bind the remainder should the life tenant die before the lease expires

iii) Life Estates Arising by Operation of Law

Legal life estatescreated by operation of law1. Dower = interest of the surviving wife in 1/3 of the lands owned by the husband during the marriage2. Curtesy = interest of the surviving husband in all the lands owned by the wife during the marriage

a. Both Dower and Curtesy come from the feudal hierarchy as protecting the interests of the lord3. Homestead – see Ziff below

a. Particular to the settlement of North America moving westwardcould make an application to receive a land grant from the government

4. Remedial

Reader pp. 400-402 – The Life Estate: Life Estates Arising by Operation of Law(d) Life estates arising by operation of law

Life estate arising by operation of law irrespective of the intention of the landowner Arise in context of marriage important for regime of inheritance known as primogeniture

o Property devolved to heirs of landowners and heirs were premised on blood not marriage. TF, widows and widowers fell outside the primogeniture rules

o In response, a husband could, in certain circumstances, acquire a life estate in his deceased wife’s landholding known as “curtesy”. Widow’s corresponding right was called “dower”.

W. Renke, “Homestead Legislation in Four Western Provinces” (1995) – Matrimonial Prop Law(a) English Dower Inheritance

CML recognizes 2 types of interests:o (a) dower interest of a surviving wife a life interest in one-third of all lands owned at any

time during the marriage by her husband, ando (b) curtesy of a surviving husband life interest in all lands owned by wife during marriage

that had not been disposed of inter vivos or by will if there were children of marriageo land sold by a husband during his lifetime remained subject to his wife’s dower interest,

unless his wife barred her rights or, before marriage, the husband conveyed his land to certain uses to bar dower.

o Dower Act, 1833 abolished dower in land disposed of in the husband’s lifetime or by his will and left dower effective only on certain intestacies

Dower and curtesy have been replaced and now are only recognized by western provinces under statute

(b) Effects of Repeal of English Dower Reason for eliminating dower and curtesy rules inconsistency with principles of emerging land

titles systemso Those rules impaired freedom to transfer lands and provided for interests not disclosed on

certificates of title for lands After passing of Dominion Lands Act Husbands usually became sole registered owners of family

lands because lands were often granted to “heads of family” Prairie land boom husbands sold or mortgaged land without compensating wives

o These economically ruined women demanded legislative protection and succeded because the homestead legislation was created

Homestead legislation provides counterbalance to the free and efficient 54

alienation of lands promoted by modern title systems and promotes the security of the home.

(c) Evolution of Homestead Legislation Homestead legislation was drawn from US law 3 features

o (1) fetters ability of owner spouse to dispose of a homestead, without consent of non-owner spouse

o (2) provides non-owner spouse with a life estate in homestead upon death of owner spouse o (3) wholly or partially exempts homestead from execution by unsecured creditors

VI. Equity (Equitable Interests)The Big Picture

King: wants $$ and serviceswants to control mutations, in order to keep ppl seized and paying/servingo Lords: want to avoid incidents, service and $$

Over timeo Everything owed converts to $$$o More power to landowners, who attempt to circumvento But pushing back by the King/State to limit what an owner can do

Now = Throw epikeail/aequitas/equity/équité in the mixAnd you get equity Remember the Story (ACLO)writs in King’s Courtseventually gets formalized

o If you are out of luckask the King (through the Lord Chancery for relief)o Eventually, separate Chancery courts began to recognize certain kinds of property situations and

remedies that common law courts wouldn’t The “Use”

Remember the dead hand Mortmaino Statutes of Mortmain prevented corporations from holding propertyo Hence: X to A to the use of the Grey Friars

A gets seisin, but is expected to give over to the Franciscans for use Legal vs. Conscience

o A is title holder here interest of the friars can’t be enforced in a CML court, only in the realm of conscience (equity) “conveyance to uses”

Prohibited early on (1391) but persistedwhy?o (1) Avoiding incidents of feudal tenureRelief / wardship / dowry

How? Give it to a trusted friend (“feoffee” or “feoffee to uses”) Who promises to hold for the benefit of the grantor (cestui que use) And to whomever the grantor designated to take on his death Feoffee always seised; no incidents triggered

o (2) Allowed (prior to Statute of Wills 1540) testamentary dispositionso (3) overcame rigid common law conveyancing rules

Chudleigh’s Case (1595): “there were two inventors of uses: fear and fraud; fear, in times of troubles and civil wars, to save… inheritances from being forfeited; and fraud, to defeat due debts, lawful actions, wards, escheats, mortmains, etc.”

By the end of the 14th Century, many land held like thiso What about where feofee renegs?

Cestui has no recourse to common law Therefore: Kings-Chancellor-ChanceryEquity!

Equitable relief Good faith & conscience Protects cestui que use

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Injunctions: equity acts in personam Contempt orders

A great deal of work gets done by Equity Especially division between legal and equitable titlethe hallmark of the trust Example = X to A and his heirs to the use of B and her heirs

o A = feoffee to uses = fee simple = seisedo B = cestui que use & equitable

Statute of Uses (1535) Where one person is seised to the use, confidence or trust of another person (including a body politic or corporation), the legal interest of the person seised will be expropriated, and that interest will be given to that other person, but in all respects that second person will hold by the same entitlements as that person would have enjoyed under the use, confidence or trust as orignally granted.

o King Henry VII tries to close the loopholeo Note: still part of the law of Canadian jurisdictions o ImpactX to A and his heirs to the use of B and his heirs

Pre 1535: A is seised of FS; B gets equitable interest Post 1535: estate executed by the StatuteB, cestui que use, gets a FS

Another Example = X to A and his heirs to the use of B for life and then the remainder to the use of C and his heirs

o Post 1535A gets nothing / B gets a legal life estate + seisin / C = legal vested fee simple remainder Resulting use

o X to F and his heirs to the use of A for life pre-1535: F feoffee; A cestui for Life post-1535 F gets squat / A = legal life estate / X = legal reversionary interest in FS

Statute of Uses worked for a while BUT there are ways around:o Avoidance:

(1) Use a leasehold: X to A for 999 years to the use of B (for 999 years) = trust created for B (2) Use a corporation: X to A corporation to the use of B (or B corporation) = trust created for

B (corporations are not caught under the statute) (3) Use yourself: X to A and his heirs to the use of A and his heirs (4) Use real duties: X to A to the use of B = if A has real obligations to perform, Statute not

applied o Exhausting the first use

(1) Only applied the statute to only one (the first) “use”, and hence: X to A in fee simple to the use of B in fee simple to the use of C in fee simple

First time it was tried = Tyrell’s Case (1557) – found VOIDo Feudal incidents on the decline; abolished in 1660 (Tenures Abolition Act)o Crown has less of a need to worry about use on a useso post 1660 the use

on a use began to be recognized because the king didn’t care as much Later: Sambach v. Dalston (1634) “use upon a use” recognized

Languagebegins to change to language of the trust So: “X to A in fee simple to the use of B in fee simple to the use of C in fee simple”

o B is trustee, legal estate o C is beneficiary, equitable estate

X to A in fee simple to the use of B in fee simple to the trust for C X to A to the use of B in trust for C X to A to the use of A in trust for B X to A in fee simple to the use of B in fee simple in trust for C X to A to the use of B in trust for C X to A to the use of A in trust for B X to A and his heirs to the use of A and his heirs in trust for B and his heirs

o = “unto and to use of A and his heirs”Note: still applies in Canada (Lametti: wouldn’t be applied) + abolished in UK (1925)

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Effects Legal Executory interests Conveyancing Wills

The Trust is here to stayConway article: a mixed record as regards women, who in general were not well treated by the common law of property

Resulting Trust = “results back” to the settlor’s estate (When – Pecore, Madsen) Constructive Trust = equitable remedy resembling a trust imposed by a court to benefit a party that has been

wrongfully deprived of its rights due to either a person obtaining or holding legal right to property which they should not possess due to unjust enrichment or interference

Reader pp. 451-466 – Introduction & the Origins of Equity1. INTRODUCTIONTwo courts developed side by side:(1) Common law courtswho administer common law principles (interstitially altered by statute)(2) Courts whose province was to apply principles of equityfocus of this chapter Emerged as a cure for the perceived shortcomings of the law. The source of this new body of doctrine

was the crown, to which special petitions were presented in appropriate circumstances. The task of reviewing these circumstances was delegated to the office of the Lord Chancellor, and in time the court of chancery presided over by the chancellor.

The modern trust, as Butt’s dicusses below is a creation of the chancery in the exercise of its equitable jurisdiction. In this chapter we look at how equity has affected the property rights of women, as well as the place of equity in the context of aboriginal rights.

2. THE ORIGINS OF EQUITYP. Butt, Land Law 4th ed When feudal organization of society disappeared and the relationship of the lord and vassal ceased to

represent a fact of political and economic importance, the feudal based land law began to lose contact with the requirements of everyday life.

By the end of the 13th century the common law had become rigid, bound by a formalism that insisted that a remedy could be obtained through the medium of an existing form of writ; and in the case of land law, the number of writs was closed

Faced with this rigidity, the land owner turned to the “use”. The basis of this institution was the transfer of property to a trusted friend. Who was to hold it not for personal benefit but for the purpose of carrying out the transferor’s instructions.o The person to whom the land was conveyed for this purpose was the “feofee to uses” (Trustee)o The person whose benefit the land was conveyed (the beneficiary) was the “cestui que use” (in the

plural cestuis que usent) This person has a equitable interest Conveying land to uses had 3 chief advantages

1. Feudal burdens could be evaded. Land was conveyed to two or more joint feofees (“joint tenants”) in fee simple “to the use of” the grantor. The feofees thus became the legal owners of the fee simple, and they alone were subject to tenurial incidents. The most burdensome incidents took effect on inheritance of the land; but they did not apply on the death of one of a number of joint tenant(s) by right of survivorship and not by inheritance. And when the number of joint tenants dropped to one, the tenurial incidents on inheritance could be avoided by a conveyance from the surviving tenant to a new set of joint feofees to uses. Though the feofees were “seised”, they allowed the beneficiary into possession. In this way the beneficiary enjoyed the advantages of ownership without suffering its burdens. And since the beneficiary had possession but not seisin, no feudal incidents arose on the beneficiary’s death.

2. Uses could be disposed of by will. A landowner could convey land to feoffees to hold to the uses

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declared in the conveyor’s will. This bypassed the common law prohibition against devises of land. The feofees held the land to the conveyor’s use until the conveyor died, and thereafter to the uses conveyed by the conveyor’s will.

3. Uses provided a means of overcoming many of the rigid rules of common law conveyancingThe court of Chancery and the Use The success of the use depended on the extent to which the feofees could be trusted or coerced. The

common law refused to protect the cestui que use, for the accepted doctrines of the common law had no place for separate legal and beneficial ownership of land. The feofees to uses had seisin (having both possession and title of real property), the cestui que use did not, and no forms of action were available to protect a beneficial interest divorced from seisin chancellor started to get complaints about this and decided to intervene on behalf og the cestui que use.

He based his intervention on the premise that the consciences of the feofees bound them to observe the terms of the use-that it was unconscionable, even though not strictly illegal, for feofees to disregard the terms of the use. While the common law regarded the feofees as the owners of the land, the chancellor compelled them to exercise their legal rights consistently with the terms of the use.

Chancellor enforced the beneficial interest not merely against the feofees, but against all who came to the land in such a way that in conscience they could not disregard the interest. For example, the use bound a purchaser for the value from the feofee if, at the time of the purchase, the purchaser knew or ought to have known of the existence of the use, for to purchase with notice of feofee breaching a benefeciary’s interest, meant he was a party to the breach. He was not bound however, if the purchaser did not know and acted honestly. This allowed purchaser to disregard beneficiary’s claim.

o This has become known as the modern doctrine of notice: It ensures that a beneficial interest affecting the legal ownership of land binds all who come to the land, except those who are bona fide purchasers for value of a legal interest in the land without notice of the beneficial interest.

Once the interest of the cetui que use became enforceable against 3rd parties, had had acquired the characteristics of a proprietary interest.

The feofee to uses was the legal owner of the estate, but behind the legal ownership lay a beneficial ownership enjoyed by the cestui que useThe Statute of UsesPurpose In 15th-16th century it became common practice for large land owners in England to have legal title held

for their use (reducing feudal burdens). This reduced income for royal coffers. In order to avoid this Henry VIII enacted the statute of uses in 1535.

Purpose: To divest the legal estate from the feoffee to uses and vest it in the cestui que useo Section 1: Where any person is seised of any lands to the use, confidence or trust of any other

person, the latter person shall be deemed in lawful seisin, estate, and possession of the land for the estate as he or it had in the use, confidence or trust. Purpose was not abolish uses but was to preclude their employment as a revenue-defeating device. By converting the cestui que use’s equitable interest into a legal interest, the feudal incidents would be revived.

Operation Operation of statute can be illustrated by the following: Conveyance of land to feoffee to uses (F) to the

use of cestui que use (A). The conveyance would take the following form: o To F and his heirs to use of A and his heirs

The words “and his heirs”, words of limitation, ensured that a fee simple interest was conferred, not a lesser interest such as a life estate or estate tail. Before 1535 a conveyance in this form would have passed the legal fee simple to F and the equitable fee simple to A. After statute, the same conveyance would vest the legal fee simple to A. A was also deemed to be in possession of the land, even though he never entered it. F took nothing.

o To F and his heirs to the use of A for life, with the remainder to the use of B and her heirs.

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Before the statute this would have passed a fee simple to F, an equitable life estate to A, and an equitable remainder in fee simple to B. After 1535, F took nothing, A took a life estate, and B took a legal remainder in fee simple.

Resulting Uses (feoffee has no duties to perform) To F and his heirs to the use of A for Life

o Statute allows for reversion in fee simple to stay vested with conveyoro Before 1535: Whole legal estate to F, life estate to A. o After 1535: F took nothing, A took a life estate, conveyor took the legal fee simple in reversion

Active Uses (feoffee has duties to perform) Court held that statute did not execute active uses (uses where the feoffee had active duties to perform).

Based on premise that the statute effected a “parliamentary conveyance” of the land from the feoffee to the cestui que use in the same way the feofee could lawfully have done before the statute—and the feoffee with active duties to perform could not lawfully have conveyed the legal estate to the cestui que use, for that would breach the terms by which the feoffee held the land. Thus, if the land were conveyed:

o To F and his heirs to the use that F should collect the rents and profits and pay them to A and her heirs

The legal fee simple remained in the feoffee, A taking equitable fee simple (implied by right to the rents and profits)

Feofee must be seised Statute only applied where the feoffee to uses was seised. And so it did not apply where the feoffee to

uses held only a leasehold interest. Leaseholder has no seisino To F for 999 years to use of A and his heirs

Statute did not execute the use. The conveyance took effect in equity as it had done before 1535. But as long as the feofee was seised, the statute would apply even where the cestui que use was a lease holder, as in a conveyance

To F and his heirs to the use of A for 21 yearso Here F was seised, so the statute would vest the legal leasehold in A and

the reversion in fee simple to the conveyor.Not seised to own use Statute did not apply where the feoffee was seised to his or her own use. It applied only where a person

was seised to the use of another persono To F and his heirs to the use of F and his heirs

F holds legal fee by virtue of the common lawUse upon a use Tyrrel’s case decided that the statute did not execute a use upon a use. Before 1535:

o To F and his heirs to the use of A and her heirs to the use of B and her heirs F took legal fee simple, A took equitable fee simple, B took nothing. The second use was

repugnant to the first and was invalid. If there was no valid use in favor of B before 1535, then there was no use the statute could execute in B after that date. So in same conyance after 1535, F took nothing, A took the legal fee simple, B took nothing. The chancellor eventually changed the ruling on this though….

The Development of the Trust Tyrrel’s case (1557): Held a use upon a use was void. Result was that conveyance after 1535:

o To F and his heirs to the use of A and his heirs to the use of B and her heirs. A took whole legal fee simple by statute of uses, B took nothing. In 1600 the tenures

abolition act abolished the burdensome feudal incidents, the crown’s financial interest in prohibiting equitable ownership ceased, and the chancellor began to enforce the use upon a use. As a result, equitable interests in land could now be creating as freely as before 1535.

Before 1535 in order to vest the legal fee simple in A for the benefit of B:59

To A and his heirs to the use of B and his heirs After the statute of uses and once the use can be enforced same result could be achieved

To F and his heirs to the use of A and his heirs to the use of B and his heirs. In 1660 the terminology changed. The new relationship became the trust with the legal owner the

trustee. The old expressions use, feoffee to uses, and cestui que use were in practice reserved for those uses intended to be executed by the statute.

The terminology of the form of grant also changed: the phrase “in trust for” was employed to indicate the creation of an equitable interest, and the phrase “to the use of” was reserved for uses executed by the statute. Grant would now be expressed:

o To F and his heirs to the use of A and his heirs in trust for B and her heirs The Phrase “unto and to the use of” popularized was used as a shorthand for “to A and his heirs to the

use of A and his heirs”. As a result, trusts could now be created by the simple expedient of conveying land “unto and to the use of” the trustee “upon trust for” the beneficiary

Questions and Comments1. The statute of uses took the legal title that had been granted to the feoffee to uses and reunited with the equitable title that had been granted to the cestui que use. This is what is meant by executing the use. Statute did not execute the uses if feoffee was a corporation. 2. In England equitable courts and common law courts were merged. Superior courts could apply both principles. 3. “Where a rule of equity conflicts with a rule of the common law, the rule of equity prevails”-The Court of the Queen’s Bench Act s 33(4). This rule is qualified in various ways:

Equitable remedies have always been discretionary; In the context of property rights, equity may accord priority to a legal interestEquity will not impose an obligation on a person who is a bona fide purchaser.

M. Conway: “Equity’s Darling?” Equity protecting women stems from legal disabilities attaching to married women in English

jurisprudence A married woman could not own property in her own right, she could neither sue nor be sued, had no

rights over her own children, was not entitled to her own earrings. Single women did have legal capacity. more status of being married that caused severe legal disabilities

o Big reason married women had no prop rights male line of succession Most of the issues of common law hostility was towards daughters as heirs. “Operation of law would

transfer property to women, although only in default of a male heir. Where there was no power to alter common law rule, daughters could inherit.” patrilineal succession

Strict settlement was preferred method of arranging transmission of prop from one generation to next Primogeniture The right of the eldest son, to inherit the entire estate of one or both parents.

o not a legal requirement but was widely observed and settlements always leaned in favor of ito equity insured this was enforced which once again defeats cml right of daughters to inherito Ex of equity not mitigating harshness of common law, but depriving women of cml right to

inherito “when eldest son marries, limits the interest of the father to that of a life tenant and make

eldest son a life tenant after death of father, with estate descending to eldest son in tail”. This privileges sons over daughters

Settled Land Act 1882 gives powers of management to tenant for life, which ends power of father to rule from grave. This act prevented the creation of new strict settlements.

Women Inheritance: o Operation of law heiress at law were allowed to inherito Family settlements land and title passed to oldest son and the estate provided portions for

daughters and younger sons. 60

CML provision for Widows o CML dower provided that widow should have ½ of income of any real property of which her

husband had been seised during his life. Divorce/Separation (became more common in 18 th century) women lost all contact with kids

and were given small allowanceso Separation agreements: K-ual whereby husband would agree to pay allowance and in return

would be indemnified from responsibility of wife’s future debts. These agreements and clauses went against common law and equity law

o CML courts eventually began to refuse to enforce financial aspects of the agreements and claimed that marriage was indissoluble.

o Equity enforced the financial agreements but refused to enforce the separation Developments for women

o 19th century: modus operandi emerged where separation agreements would be enforced provided they were made via trustees

husbands didn’t need to worry about wives debts, wives had more financial controlo 1857 civil divorce introducedo 1932 men and women got equal access to divorce and women who did not divorce did not

have full rights to property at cml until Married Women’s Propert Act 1882 Married Women’s Propert Act 1870 allowed wives to keep own earings and prop

acquired after marriage CML v Equity

o CML women didn’t exist if married. No cml property rightso Equity married women exist through medium of a trust

Conclusion o Strict Settlement landowners safeguarding inheritance in the male line, keeping the estate

intact for future generations and providing financial provision for other family members. Net result was to prefer males

o Equity was used to defeat cml rights. Ex: rendering cml dower less effective and eventually having it replaced by jointure provisions.

o Equity removed status-based rights and replaced them with contractual rights. Marriage began to assume contractual status. Assumption is that bargaining parties are on equal terms and mutually agree, however, the marriage contract doesn’t fit that model.

o It was Parliament, not equity, which made the big change recognized separate existence of wives and granted them separate property rights. Wives had custody rights over their infant children, keep own wages and obtain civil divorces.

o TF Equity really only helped married women before legislation, particularly women from wealthy families who could use equity’s assistance via trusts. Moreover, single women and widows could use cml courts freely for legal matters. It was married women who were fucked!

A. Resulting Trusts

Pecore Rothstein draws a distinction between major (adult) and minor children of the transferring parent

o Abella (dissent) argues that because it is a gift made out of affection, the same rules should apply regardless of the age of the childRothstein says affection doesn’t matter

Reader pp. 466-478 – Resulting Trusts3. RESULTING TRUSTS

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Trusts express in nature = person who owned the property (settlor) transferred the property to trustees (settled the property on trustees). Trustees were expressly directed to hold the interest for the benefit of the settlor or other designated beneficiaries.

Resulting trusts = beneficial or equitable interest in the property results back to the settlor or that persons’ estate.

Equity recognizes resulting trusts in 2 circumstances: o 1) trust document has failed to dispose fully of all beneficial interests in the property,

equity presumes a resulting trust for the benefit of the settlor to fill in the gap Ex. “Property is given to A Trust in fee simple to hold in trust for B for life”. Here,

equity imposes a resulting trust, for the benefit of the settlor or settlor’s estate. Equity regards the settlor as having retained that which was not expressly conferred. The beneficial or equitable interest not disposed of in the words used to create the trust results back to the settlor or that person’s estate, consistent with equitable maxim “once a trustee, always a trustee.

Ex. “A gift to A Trust in trust for all of my grandchildren who reach 18 years old”. At point of creating trust, not all grandchildren qualify, and possible none will ever. Because there is no one whom the trustee can hold beneficial interest, a resulting trust arises for the benefit of the settlor, pending the time when a grandchild qualifies and claims interest. If no one ever qualifies as beneficiary of the trust, the beneficial interest remains with settlor.

o 2) gratuitous transfers equity prefers bargains, not gifts. When A purchases property and asks for title to be placed in name of B, equity

presumes A wanted to retain equitable interest by making B trustee, holding legal title for A’s benefit. Beneficial interest is resulting back to A, unless B shows A intended to gift the property. Equity starts with view that A intends to create trust, not gift!

Exceptions to presumption of resulting trusto Recognize in case of gratuitous transfers between family memberso Pecore v Pecore equity was willing to presume that the transferor intended to make a gift

of the property to the transferee. Transferee does not hold legal title on resulting trust, instead, holds both legal and equitable title for himself = presumption of advancement.

o It is ventured that the presumption of gift (advancement) is likely no longer operative as between spouses.

Old rule = only one partner can hold major assets in marriage. Courts have been struggling to find ways to change this so that person can’t walk away with everything. Some judges use the common intention resulting trust.

o Statute: Family Law Act (1990) s.14 Apply presumption of resulting trust regarding ownership of property between spouses as if they were not married, unless (a) they both hold property making them joint tenants or (b) money deposits are in both names in which case they are deemed joint tenants.

Pecore v. Pecore (2007) – SCC Facts: Edwin (E) was the father and a retired miner with savings. He transferred funds into bank accounts held jointly with his adult daughter (P). P had a spouse, M (who had disability). According to E's letters, he retained 100% ownership in the deposited funds and the deposits were not gifts (he did this to avoid tax liability). E controlled accounts. E died with a will. His will included specific bequests: most to P, some to M. The residue was to be divided equally between P and M. M and P divorced. M is claiming half of the amount in the accounts P shared jointly with E, P is arguing the accounts are hers entirely by the right of survivorship for property held in joint title.Issue: should the funds in the account go to P as the other account holder, or be distributed according to the will.Holding: E intended to gift the funds to Pthey go to P only

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Reasoning: (Rothstein) Regarding joint accountswhen only one of the account holders is depositing into the account and he

dies, it raises the issue of whether he intended to have the funds in the joint account go to the other account holder

o P clearly had legal ownership of these accounts through the right of survivorship BUT equity recognizes a difference between legal and beneficial ownership

o Beneficial owner = real owner of the property even though it’s in someone else’s nameo The question is whether E intended for beneficial ownership to be given to P only or split

Intention is the most important element when considering the treatment of joint accounts upon death of the transferor

The presumption of resulting trust (PoRT) is the general rule for gratuitous transfers. The onus is placed on the transferee to rebut the PoRT, on a balance of probabilities, to demonstrate that a gift was intended. This is consistent with the view that equity presumes bargains and not gifts.

o Note : a resulting trust arises when title to property is in one party’s name, but that party, because he/she gave no value for the property or is a fiduciary, has to return it to the original title owner

o However , the Court noted that a presumption of advancement (PoA) will apply instead of resulting trust when a complete set of two criteria are met:

(1) the transfer must be from a father/mother to a child, Parental affection for the child has no impact on the analysis

(2) the child must be a minorDependency alone is insufficient: allowing the application of the PoA to transfers to dependent adult children would lead to uncertainty, due to the wide variety of circumstances that make a person dependent.

The Court also noted that an independent child no longer requires the financial support of his or her parents, thus nullifying a primary policy justification for the PoA;

Important consideration is the common practice among ageing parents to create joint accounts with their children so that their children can manage their parents’ financial affairsdangerous to assume every transfer is a gift

Principal justification of PoA is parental obligation to support dependent children

If the PoA applies, then the onus is placed on the plaintiff, rather than the transferee, to rebut the presumption of a gift.

In this case the requirements for a PoA were not met, and the Court imposed a PoRT. The daughter was an adult, not a minor

The daughter successfully rebutted the PoRTshowed that the transferor intended to gift the accounts

o Demonstrated her dependence on financial support from her fathero Used previous statements and actions by the father indicating his intention to gift the balance

of the joint accounts through a right of survivorship. o The Court noted that, in addition to statements and actions taken by the settlor, certain

documents, while not conclusive, may play a role in rebutting a PoRT: e.g. banking documents, control and use of funds by the transferor before their death, power of attorney, etc.

Ratio: A presumption of resulting trust is the general rule for gratuitous transfers. A presumption of advancement will apply only to gratuitous transfers from parents to minor children. The presumptions are rebuttable Questions and Comments:

1. Madsen Estate v. Saylor (2007)released concurrently by SCC with Pecore, similar facts + outcome (ie. That the presumption of resulting trust should apply because the daughter was an adult)

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a. Justice Abella (dissent) disagreed with both decisions – arguing that the presumption of advancement should apply to all gratuitous transfers between parent and child, regardless of age

b. BUT here the SCC ruled that the evidence of intention to make a gift was insufficient to rebut the presumption of resulting trustdaughter claiming entitlement by way of gift was unable to prove that the father intended that she should have beneficial ownership of the accounts (weird decision)

c. Main distinction = in Pecore, the other siblings supported the daughter’s claim of beneficial ownership, in Madsen, the other siblings contested it

Talks about transfers into the name of another for illegal/fraudulent/questionable purposes

VII. Qualified Estates (Qualified Transfers and Future Interests)Fee simple absolute = terminates only where someone dies without heirsthere are ways to terminate prior to this!

How do you establish a qualified estateYou establish “a condition”o “For as long as Liz is the Queen” / “Provided it is used for education” etc.o Basically you are attaching strings to the devise

Question is = when will these be valid in terms of draftingo AND – what kinds of qualifications will be allowed (ie. How much will we let someone control

property after his/her death) Remember the big themes

o Move away from feudal to “allodial” ownershipo Move to more easily transferable propretyo Move to more $$, less service-based incidents o Add: the rise of Equity to try to mitigate the harshness of the CML rules

Policy = how long, and for what reasons, do we want to let someone who is dead, control property from the grave? Do we want to at all?

o Especially with cases that offend public policy – ie Leonard Foundation Trust

HERE, we are talking about future interests X to A for life, remainder to B in fee simple

o A gets a LEA’s estate is vested in interesto B’s estate is vested in future interesthas a present interest as remainderperson

B’s estate will vest in possession only at A’s death *Vested=absolute right to present or future interest.

Estates are present, if vested, even in futureo SO basically there is no difference (in terms of the vesting question) between having a present right in

a property in your possession vs. having a vested future interest, because in essence that is a present interest in something you will simply be receiving later

o Stuartburn v. Kiansky A “future” interest is a present interest if vestedpresent interest in a future reversion Remainder interest or reversionary is a present interest if vested and it isn’t conditional (it is

guaranteed to eventually happen)o BUT a contingent interest is NOT vested, until the condition happens

“To A for life, remainder to B when and not before B turns 25 years of age” Condition precedent – you aren’t guaranteed to live to reach 25 Condition has to be something that prevents vesting

See fee simple subject to a condition subsequent below

Different conditions have different effects Determinable fee simple vs. fee simple subject to a condition subsequent (aka “defeasible” on a cond sub)

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(1) Determinable o “X to A in fee simple until B marries”

Will automatically determine X retains a possibility of reverter

o Event happens: reversion to X is automatico Event doesn’t happen: A gets fee absolute o Lametti: much more automatic than a condition subsequent – will automatically determine

The determinable event sets the limit of the devise from the outseto Determining words = “so long as” / “during” / “while” / “until”o The determinable event sets the limit

(2) Fee simple subject to a condition subsequent “Defeasible” o Condition subsequent = Condition is added – addition of a condition

Purpose is to compel a conditiono “X to A in fee simple on condition that A does not marry Y”

(Remember “X to A in fee simple until B marries” or “X to A in fee simple so long as A does not marry Y)

X retains a right of entry But it isn’t automaticneeds to be exercised by X on the breach of the condition

o Conditional words = “on condition that” / “provided that” / “but if”o Condition subsequent and vesting?

Rubric: vests, and then divests on the event “To Sunnybrook, but should the land have ceased to be used as a hospital, the interest shall

revert back to the owner” SO Sunnybrook is deemed to have been vested with an intersest, but the second the

land is done being used as a hospital, the interest divests Important consequences

Reverter (DET) versus right of entry (DEF on Condition Subsequent) Rule against perpetuities only applies to condition subsequent (now amended by

statute in Ontario)o IF you do have a condition subsequent, you then ask yourself, is there a problem? Is the condition

invalid? Does the condition offend the rule against perpetuities? IF yes, then you can just strike out the condition (usually)

(3) Condition Precedent o Like a determinable devise

Determinable and Vestingdoes vesting help? McKeen Estate = “H to W for life, and then equally to my 2 sisters”

o (1) Here, the court uses intentionif the testator intended to vest it to his sisters’ estates, then it will be given to them, if not, it is given to the testator’s estate

o (2) Presumption against intestaciescourt will try to avoid an intestacy o (3) Construction in favour of vestingcourts are inclined to hold the gift vested rather than

contingent Brown v. Moodywhere there is a prior life estate which postpones another gift, there is an

interpretative provision that the gift is prima facie vested o Note, here we had a condition subsequent (NOT precedent) BUT they use the language of the

testator to avoid it and deem that the interest had already been vested at the death of the testator

Caroline v. Roper Discussion of difference between determinable and defeasible on Condition subsequent

o Lametti: had they worded it differently, it would have been determinable – much more simple Result – “document is void”Condition subsequent, hence condition falls because there is a perpetuities prob BUT most courts won’t follow the outcome of this caserecent UK case: can’t be used to simply avoid the

Rule Against Perpetuities

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Re Down (1968) – not in book Example of a “vesting construction” With respect to the handing down of a farm, father wants to encourage son H to stay on the farm, so he writes

that when the son H turns 30, “providing he stays on the farm” (up until that time), all his estate will be divided between H and S – if H doesn’t stay on the farm until hes 30, then he doesn’t get his half of the estate

o Precatory? Ie is this just a wish on the part of the father? Cour says no – there is a legal consequnces IF it is a condition precedent, is it operative until age 30? IF it is a condition subsequent

o He reaches 30, stays on farm (or shortly thereafter and comes to stay) OR does he reach 30 and must stay on the farmbasically it is unclear whether he has to stay on the farm until he turns 30 or if he has to come to the farm when he turns 30 and stays there

Court finds a condition subsequent (if they would have found precedent, the whole thing falls)o Voids the clause based on uncertainty and therefore the son just has to get to 30

Point = if there is ambiguity and you can play with it to get a condition subsequent, you do it and then the property vests and it usually ends up with someone getting a fee simple

Reader pp. 527-542 – Introduction and Basic Concepts*The main focus of the chapter is questions concerning the limits to proprietary freedomStuartburn (Municipality) v. Kiansky (2001) – Manitoba Facts: Kiansky is running for office, but under Local Authorities Election Act, s. 5, to hold office requires that he must be the owner of land, or the owner of a right, interest, or estate in the land. K had sold his home and moved from the relevant district, but continued to hold interest in other Stuartburn real estate, which was subject to the prior life estate of his grandmother. Issue: Does K’s interest in the land subject to his grandmother’s estate satisfy the ownership requirements of the election laws? (s.5 of LAEA)Holding: Yes, A life estate is sufficient to qualify as holding a vested interest in property and satisfies the requirements of the election laws Legal Reasoning: Wright J

“The idea of estates makes possible the fragmentation of ownership among different persons in succession” (reader p. 530). This means that both Kiansky and his grandmother can presently have an interest in the land.

Kiansky is the holder of an estate in remainder in real property expectant on the death of his grandmother. An estate in remainder: “is a present right which coexists with the life estate even though the enjoyment and possession of the property is postponed until the termination of the life interest” (reader p529).

David’s remainder is vested in interest, it is a present right to future enjoyment. He does not have possession and will only be ‘vested in possession’ once his grandmother dies, but he does have a presently existing right and is thus ‘vested in interest’

Ratio: A remainder interest is a present interest to future enjoyment to property. It is a presently existing right in the property and is thus part of the total ownership of property (reader 530).McKeen Estate v. McKeen Estate (1993) – NB Facts: Harry McKeen died in 1981 and directed his estate be held in trust for his wife for the entirety of her life and upon her death to divide what was left of the estate (all property that was not otherwise distributed) equally between his two sisters (if they both survived his wife). If only one survived the estate was to be given to her. Neither sister survived the wife. If the estate was vested in interest towards his sisters at the date of creation of his will, then the property would pass onto their estates and if not it would be considered intestate and distributed to all his relatives. Issue: was the estate vested in interest to Harry’s sisters at the date of his will? Holding: Yes, the estate was vested in interest towards his sisters and its remainder goes to their estatesLegal Reasoning: Landry, J

1. Intention = The determination of the testator’s subjective intention is paramount. When it is not 66

determinable from the words used in the will, the reasonable person test is used. Courts always presume that testators intended to dispose of all their property in their will.

2. Presumption against intestacy Intestacy : the condition of the estate of a person who dies owning property greater than the sum of

their enforceable debts and funeral expenses without having made a valid will or other binding declaration. Alternatively this may also apply where a will or declaration has been made, but only applies to part of the estate, the remaining estate forms the "Intestate Estate."

“Where the construction of the will is doubtful (where there is ambiguity or doubt), the court acts on the presumption that the testator did not intend to die intestate” (reader p. 534). In cases where the will shows an intention to dispose of the whole of his property (like McKeen did), courts find the interests created were vested so as to completely dispose of the whole of the estate.

3. Construction in favor of vesting The courts are inclined to call a gift that is prima facie contingent ‘vested.’ McKeen’s estate was

contingent (on his sisters succeeding his wife) and therefore vested. When was it vested? A gift that makes no reference to the time of vesting should always be held to

take effect at the testator’s death. Therefore, McKeen’s estate was vested to both his sisters (and/or their estates) in 1981.

4. The rule in Browne v. Moody This case (the leading case on the matter) establishes that a gift is prima facie vested if the

postponement is to allow for a prior life estate. The mere postponement of distribution to enable an interposed life-rent be enjoyed has never by itself been held to exclude vesting of the capital.

In this case, the reason for the postponement is simply that life interest was previously given to the widow, so that residue could not be paid until her death. Upon her death it can be paid to both sisters’ estates

Ratio: The process to determine whether a vested interest exists was created in this case: Where the construction of the will is doubtful, the court acts on the presumption that the testator did not intend to die intestate. They presume that testator intended to dispose of all property and therefore find the interests created were vested at the time of the testator’s death.Caroline (Village) v. Roper (1987) – Alberta Facts: In 1925, Thomas Roper allowed a community group to build a community hall on an acre of his land if it were to be used for community purposes only. Roper retained title and when he died in 1946, his widow inherited the title. In 1949, Mrs. Roper signed a deed transferring the land to the Caroline community trustees so they could build a basement. This was done on the condition that the land would revert back to the late Thomas Roper Estate if used for purposes other than a community centre. In 1961 Mrs Roper died and her son succeeded her estate. In 1982, the hall burnt down, it was not rebuilt, and the town had no intention of using it for a community centre any longer, now they want to sell the land for commercial purposes. The town is bringing an application to declare the trust in the document void because they claim that if the document is a trust, its wording offends against the rule against perpetuities Issue: Can the Roper estate retain the property once it was no longer being used for a community hall? (this is dependent on the applicability of the rule against perpetuities. If transfer was defeasible, the rule against perpetuities would render it fee simple absolute (ie no condition). But if interest was determinable, there is no perpetuities problem).Legal Reasoning:

If the deed granted a fee simple subject to a condition subsequent, the rule against perpetuities would void the condition subsequent and the grantee (the village of Caroline) would receive a fee simple absolute, meaning they could do what they wanted with the property

Precedent: Re Tilbury “if the terminating event is an integral an necessary part of the formula from which the size of the interest is to be ascertained, the result is the creation of a determinable interest, but if the event is external to the limitation, if it is a divided clause from the grant, the interest granted is an interest upon condition.”

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The essential distinction between the two is that the determining event in a determinable fee itself sets the limit for the estate first granted. While a condition subsequent, on the other hand, is an independent clause added to a complete fee simple absolute which operates so as to defeat it.

EXAMPLE: “So a devise to a school in fee simple ‘until it ceases to publish its accounts’ creates a determinable fee, whereas a devise to the school in fee simple ‘on condition that the accounts are published annually’ creates a fee simple defeasible by condition subsequent. (Clark v. Church of England Collegiate School of St Peter)

The key words in the deed use the future tense and seem to make the fee simple defeasible if a future event occurs: “This acre… shall revert IF used for other than a community centre.” The wording does not put a condition on the fee simple that it is only good so long as a certain use is made of it (that it is used for community purposes)

Holding: The deed is defeasible and void and unenforceable. Essentially, according to common law the Ropers should lose the property. However, the common intention of both the parties through the document was to preserve the Ropers’ rights to the property should it not be used as the site of the community hall. The judge ordered the deed to be rectified and the property conveyed back to the Ropers.

Ratio: “If” is a defeasible word. The deed is void because it violates rules against perpetuities. However this doesn’t comply with Roper’s intent, rectified to create determinable interest, Roper wins. Intention trumps all.

A. Void Conditions + State Limitations on Private Power

Void: “repugnant” Such as severe restrictions on alienation “Contrary to public policy” “Too uncertain”

Effects of void conditions Determinable

o Condition can’t be satisfied, and therefore the whole devise falls Might be saved by a “vesting construction” – we sort of see this in McKeen Estate

Condition subsequent o Normally, Rt of forfeiture/entry to grantoro Vesting construction often encourages finding of voidness; “conceptual uncertainty” used to prevent

forfeiture (meaning the court will basically void the condition”o Result: qualified estate becomes absolute

Another example = Essex County case 1925 deedgrant – to be used for school property only

o The said grantor reserves to himself and his heirs the preference to buy the said property at the current price should the same cease to be used for the purposes intended

Determinable or condition subsequent?o Kreaver JA: condition subsequenthence condition not met, within perpetuity period – now fee

simple absolute o Lametti: the clear fact that the grantors are just reserving a right to repurchase seems like a right of re-

entry and hence a condition subsequent

State limitations on Private Power We recognize other types of limitations on this private power Remember - what happens if the clause fails?

o IF condition is CS, then condition fails and the person who had the previous interest (before the condition occurred – not the original testator) gets a fee simple absolute

o IF DET, then whole grant fails and it goes back to the testator

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Remember, courts want to avoid an intestacy – would rather interpret the intention and try to give meaning to it, even if imperfect

Certainty want to know: (1) when the gift will end (2) who qualifies for ito If too uncertain, the gift will failo See Hayes v. Meade

Impossibility o See Unger v. Gossen

Public policy o See Leonard Trust

Unger v. Gossen The fact that potential beneficiaries get together to decide how it should be decided doesn’t legally have any

impact but it might indirectly influence the court in their decision The court will try to make the gift work when possible (They go through a lot of precedent on this)

o IF the condition is impossible – then it should be droppedo Look at the testator’s intentionshe added this condition subsequent because she was scared the

money would get confiscated in Russia, not necessarily wanting them to absolutely come to Canada

Main intention here = protection of the moneyas long as this intention can be respected the court will make it happen

Lametti – think about the condition itselfo The condition itself is held to be impossible because they didn’t have the money to be allowed into

Canada BUT even before it was probably impossible to defect from the Soviet Union

Hayes v. Meade James had to reside on the land + cultivate

o If he didn’t then he gets $1,000 from Harold and Harold gets the land IF

o IF this is a condition precedent, the whole thing falls because it didn’t vest at the outset and so it would go back into the residue of the testator’s estate

o IF this is a condition subsequent, it vests now We have already seen that vesting construction – courts want to vest property to whom the

property was apparently vested by the testator Note: we don’t want the property to just sit with the trustees – courts would rather see

someone with it Here, the court uses this vesting construction

o BUT what about the condition itself (“provided he stay on the farm and cultivate the land” This condition is void for uncertainty – the condition itself falls BUT it is already vested SO

James gets an absolute fee simple

Examples (Ziff 550) – Ontario Law Reform Commission Ontario law reformsuggestion (hasn’t been enacted) that difference between determinable and condition

subsequent should be done away withconstructions that would normally give rise to determinable should now be treated all as condition subsequent

Note: would still have the distinction between condition precedent and condition subsequent Shows that the CML is incrementally moving towards treating everything as condition subsequent –

slowly following the CVL and simplifying things o Problem is that nobody is pushing for a property law reform even though CML needs it

Public Policy – Leonard Trust Does this trust fall on policy reasons?

o At trial – the trial judge held that the trust was not invalid – said the offensive clauses did not affect the trust itself and that the trust itself did not contravene public policy

Said they weren’t central to the trust document

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Justice Tarnopolsky goes through an enumeration of the kinds of public documents that might help us come to the conclusion that the trust is against public policy

o Says the trust falls because it is against public policy – very heavy on public policyo Very external

What about Justice Robins?o Says the recitals can’t be read out like how the trial judge did – they were intended to give guidance

and direction to the general committeeo Also says there is grounds for intervention on the grounds of public policyo Also talks about the limits on property

In the end both use a doctrine that allows them to reform the whole trustallows the court to create a set of terms that are closest as possible to the original

Reader pp. 542-573 – State Limitations on Private Power(a) introductionUnger v. Gossen (1996)Facts: Woman dies in 1994 leaving a 150 k estate to her sister in life, and upon her death in equal shares to her three nephews Ernst, Heinrich and Erich Gossen, who were all citizens of the Soviet Union. The bequest to the nephews was subject to the stipulation that they become Canadian residents within 15 years of the testator’s death. If any nephew failed to become a resident of Canada within the required period his share would be paid to his children in equal shares provided they became Canadian residents. When the testator died the three nephews were old and living in Germany. They did not have the funds to invest in qualifying as an investor immigrant to Canada. All the beneficiaries (children of the nephews) agreed that the estate should be equally divided among the nephews anyhow. Issue: Should the estate be equally distributed among the nephews even though they did not fulfill the testator’s residency condition?Holding: Yes. Legal reasoning: Stromberg-Stein J

This case balances the intent of the testator in drafting the residency condition with the impossibility of the nephews to fulfill it

The testator’s concern was that the beneficiaries not live in the USSR as she did not want the money confiscated. When the nephews moved to Germany the testator suffered from dementia and lost the capacity to alter her will

The condition became impossible for the nephews to fulfill because of Canada’s Immigration Act and this was not known to the testator at the time of drafting.

Precedent: Re MacDonald “where a testator grants a bequest subject to a condition which is impossible, the dominant must be the gift, because to intentionally draft into a will a void condition is an absurdity. Unless it can be shown that the principal concern of the testator was the condition, and not the gift, the condition alone must fail.” (reader p544).

Ratio: A condition that is impossible to fulfill because it is impossible in law is void. Where the gift, not the condition, is the donor’s motivation and the performance of the condition is not the reason for the gift, an invalid condition precedent may not cause the gift to fail.Comments: Uncertainty = In Unger v. Gossman, the law regarding impossible condition precedents was extremely obscure, and stipulations cannot be enforced if they cannot be interpreted with certainty. When a condition precedent for obtaining property is involved, the language must be capable of some reasonable meaning even if the full scope of the condition cannot be mapped out in advance. The Court in Unger followed precedent and used the language of the will to understand that the testator’s principal concern was the gift and voided the immigration condition attached.(b) uncertaintyH.J Hayes Co v. Meade (1987)Facts: Thomas Hayes died in 1929. His will bequeathed to his son James the eastern half of the western half

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of his property on the condition that James reside on and cultivate this land. If James did not want this, the will stipulated for James to sell this part of the property to his brother Harold for one thousand dollars. James left the area to work in the United States and only returned in 1968 when he built a house on the disputed property. James died in 1983. Harold’s successors claim possession of the disputed landIssues: 1. Are the provisos for residency and cultivation in the disputed clause conditions precedent or conditions subsequent? 2. If they are condition subsequent, are they uncertain and should they be void for uncertainty?Holding: the provisos are conditions subsequent and are void for uncertaintyLegal Reasoning: Godin JConditions Precedent or Subsequent?

Conditions precedent are conditions that must be met before the property vests in the beneficiary. Conditions subsequent are conditions that allow for immediate vesting of the property subject to its

loss if the conditions are not subsequently met. If a condition subsequent is uncertain it is said to be void for uncertainty

Precedent Sifton v. Sifton “where it is doubtful whether a condition be precedent or subsequent the court prima facie treats it as being subsequent for there is a presumption in favor of early vesting.” (p. 547)

If the conditions in this case were construed as precedent, the property would not be vested in James at the time of his father’s death, nor could it vest in Harold (he never paid James). This would make the disputed property an intestacy.

Justice results by interpreting the provisos as subsequent as this is consistent with the law’s preference for a vesting construction and the presumption against intestacy.

Conditions Void for Uncertainty? Test for uncertainty established in Clavering v. Ellison: “the condition must be such that the court can

see from the beginning, precisely and distinctly, upon the happening of what event it was that the preceding vested estate was to determine” (p 549)

The uncertainty as to the period of time within which the residence requirement was to be met, as well as the uncertainty as to whether the beneficiary would forfeit his right if he left the property for any period of time, make it clear that the condition does not meet the test and are void for uncertainty

Ratio: 1. Where there is ambiguity as to whether a condition is precedent or subsequent, the Court will treat it

as subsequent because there is a presumption in favor of early vesting.2. Where it is impossible to determine whether a condition has been fulfilled because of its construction,

it will be void for uncertainty.(c) public policyRe Leonard Foundation Trust 1990 Ontario CA (1990)Facts: Leonard “settlor” creates an educational scholarship “the Leonard Scholarships”/ “The Trust.” The trust document recitals relate to race, religion and ancestry of the persons eligible to receive scholarships. The settlor believes that White British Christians are superior, and only they are to be recipients of this trust in the form of a scholarship. The management and administration of the trust is vested in the General Committee. Complaints from various human rights commissions have been brought forward due to the discriminatory nature and irrelevant criteria of the trust eligibility.Issue: are the terms of the scholarship trust established in 1923 by the late Leonard contrary to public policy?Holding: Yes, but the trust should be maintained, and the discriminatory recitals be read outLegal Reasoning: Robins JA-Majority

Recitals cannot be isolated from the balance of the trust document. The document must be read as a whole. The recitals were meant to be taken into the account in the making of awards, and I would not regard them as irrelevant. The operative provisions [awarding scholarship money] were intended to be administered in accordance with concepts articulated in the recitals.

While the foundation may have been privately created there is a clear public aspect to it’s purpose

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and administration. In awarding scholarships to study at publically supported institutions the foundation is effectively acting in the public sphere. To consider public policy issues of this kind by sterilizing the document and treating recitals as though they did not exist is to proceed on an artificial basis. The court cannot close its eyes to any of this trust documents provisions

Cites professor Walters in Law of trusts in Canada: courts intervening on matters of public policy is a big step, because there is a fear judges will impose their own values, and thus intervention should only be done in limited circumstances

Freedom of a property owner to dispose of property as he/ chooses is an important social interest. Here, the trust is couched in terms so at odds with today’s social values. A trust premised on notions of racism and religious superiority clearly contravenes public policy this is at odds with our pluralistic society in which equality rights are constitutionally guaranteed. The settlor’s freedom to dispose of his property must give way to current principles of public policy under which all races and religions are to be treated on equal footing

Under the cy-pres doctrine if a trust created for a charitable purpose and cannot be carried out as specified by the settlor, the court can revise the terms so as to carry out the settlor’s intentions as nearly as possible.

Majority Holding: The trust should not fail, apply the cy-pres doctrine and propound a scheme that will bring the trust into accord with public policy and permit the general charitable intent to advance education. I would strike out the recitals and remove all restrictions with respect to race color creed religion ethnic origin and sex.Tarnopolsky J.A.- Minority

In order to achieve charitable status, a trust must promote a public benefit among other things. Specifically the trust must be beneficial not harmful to the public and its benefit must be available to a sufficient cross section of the public.

Historically there has been no problem with defining the class of students eligible; so the argument that the trust was invalid because of uncertainty in defining the class of beneficiaries must fail.

On the issue of public policy, in Bhadauria v Seneca College, the Supreme Court recognized a new tort of discrimination. This affirmed that public policy is a doctrine to be invoked only in cases where harm to the public is substantially incontestable and does not depend on the idiosyncratic inferences of the judicial mind. Here, the promotion of racial harmony, tolerance and equality are clearly part of public policy of modern day

Public policy is gleaned from a variety of sources; there are anti-discrimination laws in every Canadian jurisdiction as well as in the world community ex. International convention on the elimination of all forms of racial discrimination.

Respondents argue that this will have adverse effects on qualified students who could not otherwise attend university without financial assistance. Therefore this case should not be taken as authority for the proposition that all restrictions amount to discrimination and are therefore contrary to public policy. Trusts should be evaluated on a case-by-case basis. Considerations of s 15(2) of the charter, whether charitable trusts are aimed at the amelioration of inequality need to be examined. Public trusts reserved to those in in financial need would be permissible

A finding that a charitable trust is void as against public policy will not have far reaching effects on the testamentary freedom of private family trusts. Historically charitable trusts have received special protection 1) treated favorable by tax statutes 2) they enjoy extensive exemptions from rule against perpetuities 3) they don’t fail for lack of certainty of objects 4) if settlor does not set out certain directions the court will supply them 5) courts may apply trust property cy-pres …. This preferential treatment is justified on the ground that charitable trusts are dedicated to the benefit of the community

Minority Holding: This is a charitable trust which is void on the ground of public policy to the extent it discriminates on grounds of race religion and sex.Ratio: Individuals right to dispose of property freely is not an absolute right. It is the public nature of charitable trusts which attract the requirement that they conform to the public policy against discrimination.

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Discriminatory recitals must be read out, courts may invoke the cy-pres doctrineComments: Refers to a case Fox v Estate whereby a mother was given broad discretionary power to allocate the property of her late husband. The mother “exhausted the residue” so her son had no benefit in the estate, and this was done because the son entered into a relationship with a woman of a different faith. Re Leonard Trust Foundation was used to support the finding that the mothers behavior contravened public policy. Is this at odds with the distinction between private and public underlying the decision in Re Leonard Trust?B. Ziff, Unforeseen Legacies: Reuben Wells Leonard and the Leonard Foundation Trust In general, property rights are extensive: people are entitled to do what they wish to their belongings.

Some common exceptions are: no selling cigarettes to minors or selling of prescription drugs, etc. Following Leonard there still remains a large ambit of offensive discriminatory conduct that is not

contrary to human right protections. Ex. people may decide that only whites can enter into their home Rationales for the powers and privileges that come with private property are consequentialist: economic

efficiency, material well-being, freedom, privacy, labor and productivity, etc. In Leonard, the CA relied on the public dimension of his “private foundation.” Justice Robbins

emphasized the quasi-public nature of the foundation; it was a charitable trust and therefore designed to benefit the public since awards were tenable at publically funded academic institutions.

Tarnopolsky distinguished between public trusts (charitable) and family trusts, stating public action should be assessed more rigorously than private dealings

In legal analysis the private public dichotomy can be further divided into three categories of conduct:1) state action2) private conduct in the public domain ( ex: conduct of a private enterprise) 3) private conduct treated as being outside public arena ( ex: family life)

State is subject to highest level of scrutiny because it is duty bound to treat each citizen with an even hand. Citizens are permitted to pursue their own self-interest. Leonard Trust is an ex of 2) because it involves both private and public elements

Private and public overlap. All private property dealings have a public dimension. Property rights can be seen as a state delegation of the decision making power (about property) into private hands (ex: in Christie v York, it was upheld that property could be used in a discriminatory way. There the state was acting complicity, since absent sate sanction and enforcement property laws vanish)

Instances where a testamentary gift was conditioned on the recipient upon adherence to a certain religious faith have typically not been treated as valid. This is confusing because such a gift is subject to legal enforcement and therefore public in the sense that courts enforce all valued testamentary gifts

Justice Tarnopolsky feels that family trusts should not be subject to the rigorous rules he proposed for discriminatory scholarships

Bottom line : it is unclear whether we should tolerate discriminatory action that affects family members to any greater extent than is tolerated by the community at large

One answer could be that if a gift is given to a son on the proviso he does not marry outside the Jewish religion, he is free to disclaim the gift. No harm is done by allowing such a gift to stand

One could argue that gift to a small subset of the outside world (family members) ought to be equally bound by public policy standards

In assessing publicness of such gifts, the difference is purely one of degree In summary, in Re Leonard Foundation Trust, we see a distinction drawn between public and private

action, and the dichotomy was instrumental in the reasoning of the judgments. I find this distinction unhelpful- what results from this approach is not a bright line rule at all but three overlapping categories that obscure rather than clarify what the law should be.

(d) restraints on alienationTrinity College School v Lyons 1995 CarswellOnt 403 (Gen.Div)Facts: The applicants (a residential school “TCS”) have land adjacent to the Bennett family (grandparents of the respondents.). In 1965 Thomas Bennett (optioner) entered into an agreement whereby TCS(optionee) was

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given the right of first refusal on the lot were Thomas Bennett and his wife Mildred lived, and an option to purchase the land upon the death of the survivor ‘post mortem option.’ Clause 4 of the 1965 agreement stated that if the optionee exercise their right to purchase it shall be at the price of 9,375 $. Thomas Bennett died in 1978, and Mildred Bennett in 1991. Following their death TCS served notice to exercise its option. The respondents, the three Bennett granddaughters stated the option was no longer exercisable as their parents had transferred the lot to them by gift by a deed registered in 1978. TCS brought an action for specific performance of the option or damages in the amount of the market value of the property 135,000$ minus 9,375$(the option price)Issue: Was the 1965 agreement void as improper restraint on alienation of an estate in fee simple?Holding: Yes, the application must be dismissedLegal Reasoning: Sheard J Precedent Stephen v Gulf Oil Canada: The right of alienation has been an inseparable incident of an

estate in fee simple. As a result, such restraints are usually void because they keep property out of commerce and tend to result in a concentration of wealth, and they prevent improvement of property since landowner will be reluctant to make improvements when he cannot sell the property.

An option to purchase is more objectionable as a restraint on alienation than right of pre-emption. A pre-emptive right exercisable at a fixed price makes no provision for the increase in value of the property, and may involve a very substantial sacrifice by the person who granted it. If the pre-emptioner must pay the offeror’s price, there is no material impediment to alienation. If it is a fixed price and substantially deprives the person who granted it of his right to alienation, then it will not be valid

The right of first refusal given by Thomas and Mildred Bennett was not void as a restraint on alienation notwithstanding that it specified a fixed price of no more than 9,735$

The right of option triggered by the death of the survivor of the Bennett’s was of a different nature and void as an unlawful restraint on alienation. The post mortem option in the 1965 agreement was an even greater restrain on alienation because it was exercisable at the choice of TCS, whether or not the executrix of the will Mildred Bennett wished to sell.

Ratio: Where an estate is bestowed, of which the power of alienation is an incident, one conveying such an estate to another shall not have the power to alter its character and to make it something wholly different than what has been made by law. Comments: In Re Macleay, a devise read “ I give unto my dear brother the whole of my property […] Pendell Court

Mansion, with the land belonging on it, on the condition that he never sells it out of the family” the judge stated alienation may be restricted in many ways; by prohibiting a particular class of alienation, by prohibiting it to a particular class of individuals, or by restricting it to a particular time.

In some instances the language of the gift makes it clear that entitlement would be forfeited completely if the condition was breached. Alternatively the transfer in violation of the restraint could be treated as void. This type of restraint disables the holder from exercising normal power of disposition. In Blackburn v McCallum, Taschereau CJ described the effect of an attempt to breach a prohibition on the transferring or encumbering of a devised parcel of land: “a void act cannot operate a forfeiture. The testator willed this land with prohibition to the devise to alienate it or encumber it. The consequence if he were to attempt to alienate or encumber: the complete nullity of any act done in contravention of the prohibition, but not forfeiture of nullity of the devise.”

Consider whether a purely contractual or promissory restraint is subject to these rules, and to what extent a grantor’s reasons for the restraints should affect the outcome of the case

B. Remainder Rules Idea: again we are looking at successive interests in the future and how the CML/Equity tries to control what or how you can give away

General idea = X wants to give A a life estate or a fee simple and then on to somebody elseFuture Interest

X to A for life, remainder to B in fee simple74

o A gets a Life Estate, a “particular estate” or “interesto B: future interest (but has a present interest as a remainder)

Important is that the right is vested (either as a future or a remainder interest)“Particular estate” = Any estate less than fee simple (ie. A life estate)Conditions?

Determinable and defeasible upon condition subsequento Generally vested LE holder in CDA; Def on CS by logic and bais (but what about X?)o DET by McKellar case

Condition precedent IF not vested it is contingent, and if it is contingent it is vulnerable

o Uncertainty, policy, time (perpetuities)However – the grantor is not completely free to encumber or direct estates for as long as she might wish or in terms of how it is to devolvecomplex rules prohibit a variety of future interests

Common law remainder rules Emphasis on CML because Equity will soften it Main idea here is seisinCML always wants somebody to be seised

o Going to be looking for gaps in seisinExample: “X to A when she turns 21” If she is only 15 at the time of the grant – X dies before this = “abeyance of seisin” Who fulfills this? Generally CML remainder rules present such gapsSO this gift would fail at the outset

The other main idea is that if somebody is appearing to get a fee simple, CML is going to be very hesitant to allow someone else to get some kind of an interest after that fee simple

How important are they?o Not surewe didn’t even know if they were officially received in Canada – has always been assumedo They are harsh – softened by Equityo Re Crow

Remainder X to A for life and then the remainder to B in fee simple when he turns 21 (B is 15 at time of grant)

o A: vested in possession / B: condition precedent, so contingent remainder (at 21 vests in interest – vested remainder / at death of a – vests in possession)

X to A for life and then to A’s widow for lifeo Identity of remianderperson is unknownvests in interest + possession at A’s death

Contingent remainder

A vested interest is:1. Limited to a person in existence

a. Ex: X to A for life and then the remainder in fee simple to A’s firstborn childi. Only vested if A has kids – we don’t know this will happen

2. Limited to a person who is ascertaineda. Identity of remainderperson known at time of grantb. Ex: X to A for life and then to A’s widow for lifec. Ex: X to A for life and then the remainder in fee simple to A’s surviving children

3. Not subject to a condition precedent a. Ex: X to A for life and then the remainder to B in fee simple upon graduating from McGill Law

Faculty / reaches 21 etc.

Future Interests1. Reversion 2. Vested remainder3. Possibility of Reverter4. Right of entry for condition broken5. Contingent remainders

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Reverter = Determinable condition – owner gets automatic right of reverter In Canada it is considered vested (whereas in UK probably contingent)

Note: CML is tougher on contingent remainder (possible gaps in seisin, uncertainty)

4 Common Law Remainder Rules (enforceable in CML – but not Equity)1. No Remainders After a Fee Simple

a. If Person 1 gets a fee simple, then it ends thereb. Ex: “To A and his heirs, remainder to B and his heirs” – 2 fee simples, the 2nd one fallsc. Ex: “To A in fee simple, remainder to B if A should die without children”

i. If A has a fee simple, he can do wtv he wants with it – the second part fallsd. Same thing for qualified fees

i. “X to A in fee simple so long as the CN Tower stands, and if and when it falls down, to B in fee simple”

1. First part is determinable FS, then we see some kind of remainder in fee simple2. Remainder to B is void

ii. “X to A in fee simple on condition that A use of the land solely for residential purposes and if he ceases to do so, to B in fee”

1. Looks like a condition subsequentdefeasible on condition subsequent2. The problem here is the attempt to give it to somebody who isn’t related to X

a. CML: a vested interest cannot be defeated in favour of anyone other than the grantor or G’s (X’s) heirs

i. Hence, possibility of reverter or right of entry for condition broken cannot be granted to a structure

e. Note: the two successive fee simples must be in the same documenti. X to A in fee simple, but should liquor be sold on premises then to B in fee simple

1. Void, but: X to A in fee simple, until liquor be sold on premises – then X later alienates reverter to B – this is OK

2. No Springing Freeholds (=no gap in seisin)a. Examples:

i. X to A’s first born child (A has none)ii. X to A upon A’s marriage (A is not married)

iii. X to A at the age of 21 (A is 15)b. Seisin must be transferred immediatelythe remainder must be supported by the prior particular

estate of freehold created by the same instrument. Freehold estate can’t “spring up”i. What this means is that the first transfer (such as an initial life estate) is the platform for the

second transfer – makes it possibleif there is a gap, then there is nothing to support the second transfer

ii. Ex: X to A for life and then the remainder to A’s first born child = contingent remainder supported by the life estate; no abeyance/gap in seisin

c. Is there a problem with leaseholds? NOPEi. Seisin remains with freeholder (landlord) – leasehold is certain in terms of duration

ii. “X to A for two years and then to B and her heirs upon attaining 21”1. B is 20? Nothing; not a freehold2. B is 21? B gest seisin, subject to 2 years to A3. NOTE: A is not seised on leasehold

d. Remember – all this was prior to registry systems seisin was the best evidence of title i. As we now move away from that towards registry systems – we can become more flexible in

terms of how we deal with these rules3. Timely Vestingcontingent remainder must vest within the time of the applicable period (usually

within the prior life estate)a. No gaps in seisin“X to A for life and the remainder to B in fee simple upon attaining 21”

i. B’s interest must vest in A’s lifetime – or else no effectii. Usually “wait and see”

b. If gap is obvious it is void

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i. “X to A for life, then one year after A’s death, to B in fee simple”c. Coterminous vesting?

i. `X to A and B for life, remainder in fee to the survivor = valid?Yes. Contingent remainder will vest in possession and interest in survivor at death of first

d. Rule in Festing v. Allen (1843)i. X to A for life, remainder to such of his children as attain the age of 21

1. W employ a class closing rule to save itwhen A dies, the class of persons who have made the condition will vest

2. Class of persons will vest at A’s death, ie termination of prior particular estate3. Saves the gift for those who have made itso the children who are 21 at the time of

death get it, the ones who aren’t yet don’t – but at least some of the class get it4. No Shifting Freeholdsvoid if it defeats the prior particular estate

a. This is a variant of the no fee simple after a fee simplehere it isn’t one fee simple after another, but it is an attempt to cut short the prior interest

b. Ex: X to A for life, but if A goes bankrupt, then to B immediatelyi. LE subject to condition subsequent

ii. BUT: no right of entry to a stranger (B) for a condition broken (Rule 1)iii. AND: operates to defeat the prior particular estateiv. RESULT: LE to A, X reversion

c. Can’t set up a prior condition that will effectively destroy the prior estated. Not applicable to determinable limitations

i. X to A for life or until Leafs win the Cup, and if the Leafs win the Cup, then the remainder to B in fee simple

1. Natural terminal of A’s LE (on A’s death other impossible)Summary

No springing:o Not supported by prior particular estate (rule 2)o Does not vest during prior particular estate (rule 3)

No shiftingo From holder of a determinable FS to a stranger on termination (rule 1)o If remainder purports to defeat prior particular estate (rule 4)

Equitable Estates Much more flexible regarding remainder rules NOTE:

o These rules won’t apply to “equitable interests” and “legal executory interests” With one exception (Purefoy v. Rogers)

o Equitable rules that evolved; not so concered with seisin… more concerned with “conscience”o There remainder rules may also NOT apply to devises of land

Impact on Equitable Executory Interests? X to A and his heirs to the use of B at 21 (B is 19)

o Pre-1535: B has an equitable executory (springing) interesto Post-1535: they become LEGAL EXECUTORY INTERESTS

B has a legal executory (sprining) interestSO:

X to A and his heirs to the use of B and his heirs, but if A marries C, then to the use of D and his heirso Pre-1535: A gets legal fee; B gets equitable fee; D gets equitable executor interst (a shifting interest)

contingent on marrying C – “gift over”o Post-1535: A gets squat; B gets legal fee; D gets legal executor interest (shifting) contingent on

marrying C “gift over” Point = equity softens the use of the remainder rules with respect to wills

Remainder Rules? More or less completely displaced by the possibility of legal executory interests Exception: contingent remainders (Wait & see)

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o Remember this is the area where the CML was already softeningo Re Crowo Rule in Purefoy v Rogers (1671) (CML rule that “strikes back” at Equity)

If a legal executor interest can comply with the common law remainder rules, it must And then the “wait and see” would apply but not equity

Required the contingent remainder to abide by the stricter rule X to A and his heirs to the use of B for life and then to B’s first child to attain 21 years of age (B has no

children) (NB: post 1535)o Ascertain 1st child; & reach 21o Legal executory interest would have to vest in B’s life time (juts as it would have had to under CML

remainder rule: vest during p.p.e.)In effect…

Treated like a contingent remainder, full stop RULE: because legal executor interest contingent remainder can comply, then it must, or FAIL

Another example: X to A and his heirs to the use of B at 21 (B is 15) Legal executor (springing) interst is created

o Would not have been able to comploy with CML remainder rule, hence Purefoy does not applyo Legal executory (springing) interest OK

Work aroundavoid the condition: X to A and his heirs to the use of B for life and then to the us of B’s first child to attain 21 years of age, either before or after B’s death

Might not comply with CML Rule Might be a gap – exec springing interest contemplated in the grant itself

o Woulf fail if it does not vest in B’s life W&s If it does not, interest fails at common law Deliberate ambiguity avoids application of the Rule

o And hence Rule in Purefoy does not applyStatute of Uses and Testamentary Dispositions

Prior to, use a “conveyance to uses” to make your will & designate hier Post, banned, therefore Statute of Wills (1540) CML courts: took freedom to mean that CML Remainder Rules did not apply to wills (1620)

SO (based on Rule in Purfoy) IF CML VOID, EQUITY WILL SAVE IF CML SAYS “WAIT AND SEE”, EQUITY DEFERS AND SAYS WAIT AND SEE

NOWpushing towards creating trusts

Reader pp. 574-582 – Remainder RulesThe Legal Remainder RulesIn Stuartburn v Kiansky: we saw that a holder of the fee simple can grant a life estate to A, and the remainder in fee simple to B. B’s remainder vests in interest at the effective date of the grant, and vests in the possession on the termination of the prior particular estate (A’s death). If B’s remainder interest is subject to a condition precedent, such as reaching the age of 21, the interest vests in interest only when the condition precedent is met. Remainders that are subject to a condition precedent are contingent remainders and are governed by arcane rules known common law remainder rules. Despite the name, these rules do not necessarily apply to remainder-like interests that are created by a conveyance to the uses.Ontario Law Reform Commission, Report on Basic Principles of Land LawThe Legal Remainder Rules Validity of contingent remainders in early common law is obscure. Eventually they were allowed subject

to certain restrictive rules. These rules are described below:Rule 1: There can be no remainder after a grant in fee simple

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Ex) If A granted a fee simple to B with remainder to C in fee simple the remainder to C would be void. o The rationale appears to be that the grant to B exhausts A’s interest in the property so

there is nothing left to give to C after B’s interest. Rule was applied even where the grant to B was a qualified (determinable) fee simple. Although A can grant a determinable fee simple and retain an interest known as a possibility of reverter or can grant a conditional fee simple and an interest known as a right of re-entry, A cannot limit a remainder in favor of C to take effect on the termination of B’s interest.

Rule 2: Remainder must be supported by a prior particular estate of freehold created by the same instrument. It cannot be allowed to spring up in the future after a hiatus. Ex) If A purports to convey an interest to B (who at the time is aged 19) if and when B turns 21, the

conveyance will be void at common law and B will obtain no interest. An interest could have been validly created if A had conveyed to X for life, remainder to B in fee simple if and when B attains 21. As long as B attains 21 during the lifetime of X the contingent remainder would vest in interest at that time and would in possession on the death of A. In this case, the remainder is supported by a prior particular estate of freehold: X’s life interest.

o Basic idea behind the rule is that there must, at the time of grant, be an immediate passage of seisin. This relates to the importance of seisin within the feudal system. The feudal system required that there always be someone with seisin because the person seised was required to pay feudal obligationsIt always needs to be seised by someone!

Rule 3: A remainder must await the regular ending of the prior particular estate. Ex) A can convey land to B for life provided he does not marry C. However, pursuant to rule 3, A cannot

give a 3rd party an interest that takes effect on the termination of a prior estate by reason of the operation of a condition subsequent. Assume for example, that A conveys land to B for life on condition that B does not marry C and if B does marry C his life estate to terminate and estate in fee simple in favor of D to take effect. The provision in favor of D would be void.

o The rule is based on common law principle that only the party from who a condition moves, the grantor or his heirs, can take advantage of a condition broken. This rule can be circumvented. For example, A conveyed land to B for life or until B should marry C, remainder to D in fee simple, the remainder to D would be valid. B would take a terminable life estate, so B’s interest may continue for his life or may determine sooner on the occasion of B’s marriage to C. The limitation in favor of D would constitute a valid limitation by way of remainder since the event of B’s marriage to C would not operate to determine B’s life estate prematurely. It would merely mark the duration of B’s estate so that, on the marriage, B’s life estate would end regularly.

Rule 4: Requires that a remainder vest during the continuance of the of the prior particular estate or at the moment that it determines Ex) The limitation may be so worded as to stipulate for a gap, in which case it is void, as in a grant

“to A for life, remainder to B when he reaches age 21 after A’s death.” On the other hand, if the gap may or may not occur at the time of the determination of the prior estate, the law permits the remainderman to wait and see until that time. If the remainder is then vested, it is allowed to take effect, if it is not, it is void. Hence, a grant “to A for life, remainder to B when he marries” (B being the bachelor), B’s remainder will be valid if he has married when A dies if he has not, it will fail.

o If remainder is initially valid under this rule, but will be invalidated if it does not vest during or at the moment of determination of the prior estate, the validity of the remainder will depend on the date or termination of the prior estate. This may terminate naturally, for example by the death of a prior life tenant, or it may occur artificially, for example, if the estate is destroyed by surrender or merger.

o Section 35 of the conveyancing and law property act has partially abolished artificial destruction of contingent remainder: “Every contingent remainder is capable of taking effect notwithstanding the determination by forfeiture, surrender, or merger of any preceding estate

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of freehold. o Abolotion is only partial because destruction of a prior estate may occur in other ways such as

disclaimer o This rule is closely related to the Rule 2, rests on the idea that there must be seisin.

The 2nd and 4th rule prevent the creation of interests that are too far into the future. However, because of the statute of uses, they were not an effective way of controlling perpetuities. This was more effectively carried out by the modern rule against perpetuities.

Questions and Comments The rules do not apply to interests that are:

o Purely equitableo Affected by the statute of useso Gifts of legal interests in wills (executory interests)

However there is an exception to the general rule that general executory interests are not subject to legal remainder rules. Exception found in Purefoy v Rogers, the applicability of which was at issue in Re Crow.

Another school of thought (comments after Re Crow) maintains that the legal remainder rules never apply in wills.

Re Crow (1984) – Ontario Facts: In his will C left a parcel of land “to my grandsons Robert and William the sons of my son Orville for and during the term of their natural lives and upon their death to their children.” Court found that the intention was that if R and W should die without children then the remainder should go to their nieces/nephews. W died in 1944 with no children or nieces/nephews – no one to inherit the remainder. R died in 1983, ad no children but by that point nieces and nephews had been born to claim his one-half interest. Issue: Do the nieces and nephews also get W’s unclaimed interest? In particular, was it subject to the rule of timely vesting and should therefore fail because there was nobody to whom the interest could have vested in when W died?Holding: The gift over of the remainder fails – the relevant date is W’s death.Ratio: Remainder rules require the existence of an individual to whom the interest can be vested in upon the end of the prior estateQuestions and Comments1. Re Robsonupon A’s death, the remainder was to be given to a’s children as attain the age of 21 – upon A’s death

some children had turned 21, some hadn’t yet. Question was whether those children who were not yet 21 lost the ability to claim interest once they turned 21held that the younger children did not lose their interest

a. Decision was based on the Land Transfer Act, which allowed for a transition phase that provided initial immunity from the legal remainder rulesthis would infer that remainder rules don’t apply in wills

C. The Rule against Perpetuities

Reminder from remainders: CML is touchy about successive/changing interests Particularly with gaps in seisin + limitations on FS Equity comes in and softens this touchiness Point: freeing devises from the dead hand of the testator

o Will to dispose of property vs the rights of those who come latero CML doesn’t want an individual to control property indefinitely from the grave

Question: what kind of limits can be attached to a gift/transfer and how far down the road can they apply?o Juxtapose this with the rights that the person receiving the gift haso How far down the road can a contingency happen, particularly if it may never happen?

Most property systems have some sort of rule against perpetuity – “iconic status” Same tension found in CML remainder rules

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o Owner can’t project “will” too far into the futureo But, as we have seen, with legal executory interests (Statute of Uses + Statute of Wills), CML

Remainder Rules fall short Ex: X to B for life and then to B’s grandchildren who marry before or after B’s death

o This could last 150 years plus – long way away Land such a scarce/valuable resource that we want to keep it efficient and productive

o Don’t want to keep it away from someone who may be able to put it to a better useScurry Rainbow

Trying to control too far down the road in too uncertain of a manner is seen to go against the public goodo Public policypreventing indirect alienation or tying up of property to the detriment of society

Common Law Version of the Rule against Perpetuities An interest is valid if it must vest, if it is going to vest at all, within the perpetuity period. That period is

calculated by taking the lives in being at the date the instrument takes effect plus 21 years (17 th century: Duke of Norfolk’s Case (1685))

o Why 21 yearswas a common date to gift for kids An interest must vestat the very least you must have a future interest vested now in order for it to be valid

you have to know what the interest is, and if it is a class you have to know not only what shares each in person in the class will get, but you have to know the class itself

Class giftso Exact size of the interest of the donee(s) must be knowno Hence all members of a class, and their respective shares, must be known

Applies to all Contingent interests – any interest where there is a conditiono Legal or equitableo If your interest is vested, it is OKo Otherwise, contingent interests and executory interests subject to the ruleo Note: interests without contingencies will not attract the RAP (like life estates)

Remember Determinable interests were traditionally seen as vested As opposed to defeasible on CS, which were not vested, and hence subject to the RAP

Now: Determineable interests are subject to the rulealtered by statute SO the focus of the rule is on contingent remainders - arise in the future and are a cloud over other interests “If at all” Rule is concerned with what may happen, not what does

o Originally, any possibility of vesting outside of perp period in an inter vivos grant or devise defeated the contingent interest ab initio

o This makes the rule very strictLametti: will see absurd variations of this rule of super unlikely shit Very hash: even if true on facts, the possibility of vesting outside defeated the condition from

the get go Counter VirtueCertainty, as time of grantinterest is created when…

o Devise = Deatho Inter vivos grant = time of deed’s executiono Does it mitigate the harshness?

“Within the Perpetuity Period” How do we determine = “Lives in being” + 21 years Life in being = Person expressly or impliedly mentioned in the gift (that life sets the time period)

o Life in beings must be: (1) Human being (2) Living at date of creation of interest (3) If groups of persons, not capable of increasing (must be fixed) (4) If groups of persons, ascertainable at date of creation of interest (know who they are)

o Express Life in Being Named in deviseex: “X to my children A, B, C and then to my grandchildren”

A, B and C are the lives in being Note: there is something else wrong with this but we will get to it after

Child en ventre de sa mère? OK81

Third party(ies)? YES “Last lineal descendent of Queen Victoria” “Queen of Spain” “Royal Lives clauses”

o Example: Express Life in BeingX devises to my grandchildren who marry during the life of A within 21 years of A’s death

Life in Being = A Deceased = X Does this vest “within the perpetuity period”? YES

o Example: Implied Life in BeingX devises to my grandchildren who attain 21 X’s children are the lives in being, impliedly The period of time is set by the life of the last child of X (C – once C dies, the 21 years starts

to click)is there a problem with this? NO – assuming that C had a child, that child, will have reached 21 by 21 years after C’s death – think about it, C can’t have kids after he is dead!

o Another example – inter vivosX to the use of my trustee in trust for my grandchildren who attain 21 Executory interest that springs up for grandchildren at age 21 Problem: X is still alive, can have more kids, and therefore grandkids who vest outside of the

perpetuity periodthus the gift falls True, even if X was a widow (could get remarried) Or an 80-year old widow (fertile octogenarian) OR precocious 5-year old

o Unborn WidowX devises to my son for life, then to his widow for life, and then to the remainder to their suriving children

Voidonly Life in Being is the son (not the widow) Children’s contingent interests void Widow’s initial interest? OK, will vest in time

o Another Example (inter vivos)1965: X to my first grandchild to turn 21 X has a 20 year old daughter Life in being? X and daughter Therefore X may have a child in 1966; therefore first grandchild may be outside perpetuity

periodo Same Example but this time as a Will1965: X to my first grandchild to turn 21

X has a 20 year old daughter; X dies Life in Being? Only daughter, therefore OK; will vest necessarily if at all within 21 years of

her death Class Closing Ruleattempt to save people who met the condition

o Andrews v. Partington (1791)if one can ascertain one person, then the class closes, and it is at least saved for those

ThusX to the use of my trustee in trust for my grandchildren who attain 21o If one grandchild has made it, then the grant executes, the class closes and any grandchild alive at the

time (as their own lives become lives in being) will necessarily vest

Scurry Rainbow “Top lease” = contingent lease in the oil and gas industry lease becomes effective only after the expiration or

termination of an existing lease on the tract of lando Public policy = we like these leases because they put pressure on the first leasing party to actually use

the land because if not someone else will come and take the oil LamettiBUT should we allow someone to control alienation of a scarce/valuable resource after their death?

o We can distinguish these types of contracts (which are commercially desirable) from a regular transfer under a willdoesn’t trigger the Rule against Perpetuities

Courtthe old Rule against Perpetuities does not reflect modern realities Are there any other issues with the conditionNO – no uncertainty, gaps in seisin etc.

Statutory Reformdifferent provinces have taken different approaches Manitoba : Rule against Perpetuities abolished

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Some other provinces : 80 years from the time of the original devise Ontario and AB : wait and see Ontario

o (1) Is there a perpetuities problem? IF no problem at CML, then OKo (2) Specific potential problem, see statute. Not void ab initio. REVERSES COMMON LAWo (3) Wait and see: ss. 3, 4(1)

So, for example: X devises to the first of A’s daughters to marry. (A has no children when X dies).o CMLVOIDA is Life in Being. A may have kids after X’s death and it may vest outside of the 21.o After the Ontario StatuteSaveds. 3, s. 4(1); possibly valid + “wait and see”

Hybrid Rule Northwest Territories Perpetuities Act o Creates presumptions and age limits in place of stuff like precocious five-year old etc.o Uses “wait and see”o Also creates rules for gifts given to a class of peoplewill try to save some ppl in the class

Reader pp. 582-608 – The Rule against Perpetuities McCrimmon, “Understanding the Rule Against Perpetuities: Adopting a Five-Step Approach to a Perpetuities Problem”The Origins and Policy of the Rules Against Perpetuities In feudal England courts took the position that land must remain freely alienable. As a result, courts were

involved in a battle to restrict the ability of a landholder to exercise, from the grave, control over real property. Courts formulated rules to invalidate interests which vested at too remote a time in the future. These rules became known as the rules against perpetuities.

Perpetual: Lasting or enduring forever or for an indefinitely long time. It has been used in 3 different senses

b. A limitation in the nature of an unbearable entailc. An inalienable interestd. An interest which vests in interest at too remote a time in the future (subject matter of the

Rule) Historically courts developed two rules to restrict the power of a landlord to control the future ownership

and enjoyment of land1. Old rule against perpetuities/Whitby v Mitchell2. Modern rule against perpetuities

The rule in Whitby v Mitchell voids any interest given to the issue of an unborn person, together with any subsequent limitations. It applies to both legal and equitable contingent remainders in real property but does not apply to personal property

The Modern rule Against Perpetuities Laid out in the Duke of Norfolk’s caseLord Nottingham held that the validity of a future interest is

governed by the time within the interest is to vest. If that time is too remote, the future interest is invalid. In determining whether the time is too remote, consideration was given to possible, rather than actual, events. In that case, Lord Nottingham held that a future interest which had to vest, if it vested at all, no later than the expiration of a life in being when the interest was created, was a valid interest.

By 1833 the rule was expanded and courts adopted the modern rule which may be stated as follows:o An interest is only good if it must vest, if it vests at all, not later than 21 years after the death of

some life in being who was alive or en ventre sa mere at the creation of the interest. If no such life in being was in existence at the creation of the interest, then the term of 21 years only is allowed.

Elements of the Rule (5 steps)-the general lawElement: The rule against perpetuities applies to contingent remainders and executory interests, not vested interests. Ex) T devises Blackacre to A for life, then to B for life, then to C for life, then to D in fee simple. (At T’s

death A is 3 years old, B is 2, C is 1, and D is 10)

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o The fact that a substantial period of time may elapse before B,C,D’s interest vests in possession is irrelevant, because at the date of the creation of the interest, the life estates in remainder to B,C, and the fee simple remainder to D are vested in interest.

Element: The date of the creation of the interest is dependent upon the nature of the instrument containing the gift. The perpetuity period begins to run as at the “creation of the interest”.

o If the gift is contained in a will, the perpetuity period will begin to run from the date the testator’s death

o If the gift is contained in an instrument inter vivos, the perpetuity period will begin to run from the date the instrument takes effect.

Ex) if gift contained in a deed, the perpetuity period will take effect from the date of execution and delivery of the deed. If the gift is revocable, the perpetuity period runs from the date the settlor releases the power of revocation.

Element: To constitute a life/lives in being, 4 conditions must be satisfied:1. The measuring life/lives must be human2. Such a person must be living at the date of the creation of the interest3. If a group of persons is used as the measuring lives, that group cannot be capable of increasing in number after the date of the creation of the interest.

Measuring lives can be implied in the instrument (life of parent in gift to grandchild see ex 2) Measuring lives can be designated expressly and don’t have to have any connection to gift (see ex 4)

4. If a group is used as the measuring lives, that group must be ascertainable (determinable) (it must be possible to determine that members of the group were alive at the date of the creation of the interest so that it can be determined when the last survivor of that group dies)To satisfy it is essential to first determine the date of the creation of the interest. A limitation contained a will may be valid, whereas the same limitation, in contained in a deed inter vivos, may offend the rule.

Ex 2) T devises Blackacre to all of my grandchildren in fee simple (At T’s death, T had two children, X and Y)

o The gift is contained in a will, the date of creation of the contingent fee simple remainder is at the date of T’s death.

o The measuring of lives for the purpose of the Rule may be expressly or impliedly designated in the instrument containing the gift. No express designation in the example, X and Y are impliedly designated. The grandchildren of T must be the issue of the children of T, namely X and Y, therefore X and Y are lives which are necessarily involved in the limitation and which satisfy all of the criteria necessary to constitute lives in being. (XandY are human, they are alive at the date of the creation of the interest, their number, given the death of T, is not capable of increasing and their number is ascertainable (determinable).

o The fee simple remainder does not offend the rule against perpetuities because the gift to the grandchildren must vest, if it vests at all, within death of the survivor X and Y plus 21 years. In this case there is no need to employ the 21 year component because X and Y can’t have kids after they die

o If the same gift were contained in a deed intervivos it would offend the rule and invalid under the general law

Ex 3) G gives Blackacre to trustees upon trust for all of G’s grandchildren. (At the date of the deed establishing the trust, G has two children, X and Y, who are both alive)

o This is a deed inter vivos so the date of creation is the date of the execution and delivery of the deed. G’s children are impliedly designated (same reason as ex 2) however, they cannot constitute lives in being. Subsequent to date of creation G who is still alive, and there condition 3 (If a group of persons is used as a the measuring lives, that group cannot be capable of increasing in number are the date of the creation of the interest) is not satisfied.

Ex 4) G grants Blackacre to trustees on trust for such of my lineal issue who shall be living at the 84

expiration of 20 years from the day of the death of the last survivor of all of the lineal descendants of the late sir Owen Dixon who shall be living at the date of the execution and delivery of this deed.

o Lineal descendants of the late sir Owen Dixon can be determined, the group is not capable of increasing in number subsequent to the date of the creation of the interes. This group would constitute expressly designated measuring lives

o To maximize the perpetuity period people would include the royal lives clause. This allows the vesting of some interests to be postponed until 21 years after the death of the last lineal descendant of a named sovereign living at the date of the creation of the interest.

Ex 5) T devises Blackare to trustees on trust for such of my lineal issue living at the expiration of 20 years from the day of the death of the last survivor of all of the lineal descendants of his late Majest King George who shall be living at my death.

o Meets the 4 conditions, does not offend the rule Ex 6) T devises blackacre to trustees to be held for A for life, then to B for life, then for all of my

lineal descendants living at the time of the last survivor of all persons who shall be living at the time of my death.

o The gift of a life estate in possession to A, and a life estate in remainder to B, are vested interests and fall outside the rule and are valid.

o The contingent remainder to the lineal descendants of T does not escape the rule. It would be impossible to determine which members of this group were alive at the date of the creation of the interest, Gift is void for uncertainty

Element: If, at the commencement of the perpetuity period, it is theoretically possible to construct circumstances in which vesting could occur outside of the period, the rule is infringed.

This is so even when the postulated circumstances are highly improbable and even if later events make them impossible.

The determination of theoretical possibility that interest won’t vest within the perpetuity period must be made at the commencement of that period, at the date of the creation of the interest. This is sometimes referred to as the initial certainty rule. To illustrate this point referene is often made to the fertile octogenerian and the precocious todller. Under the law there is a conclusive presumption of fertility. Males are deemed to be capable of begetting children, females are deemed to be capable of giving birth to the children. Regardless of age or physiological facts.

Ex 7) fertile octogenerian- T devises Blackacre to trustees on trust for his wife, A, for life, then for A’s children for their lives, then for such of A’s grandchildren who attain the age of 21 years. (At death of T A is 80 and has two children, X (60) and y (55). A also has 3 grandchildren, the eldest is 18)

o The Gift to A’s grandchildren infringes the rule and is invalid. A is presumed to be capable of having more children. A’s children belong to a group that can increase in #, so A’s children can’t be lives in being. A is only person who satisfies necessary conditions to constitute a life in being. For the contingent fee simple interest to the grandchildren to be valid, it must vest, if it vests at all, within 21 years of the death of A. There is a possibility that A may have a child Z, then die. Z may have a child who will not have attained 21 within 21 years after A’s death. Thus the rule is infringed.

Ex 8) Precocious Toddler T devises Blackacre to A for life, then for such of A’s grandchildren living at T’s death or born within 5 years thereafter who shall attain the age of 21 years. (At death of T, A is a widow aged 65, she has 2 children and one grandchild aged 8)

o The gift the grandchild infringes and is invalid. A is presumed to be capable of having more children. A’s children belong to a group that can increase in #, so A’s children can’t be lives in being. Given the wording A’s grandchildren cannot be lives in being for the same reason. A could have a child after T’s death, and that could have a child within 5 years of T’s death. A’s child would have to become a parent when aged less than 5 years a “precocious toddler”

Tackling a perpetuities problem in 4 steps85

Step 1: Is the limitation contained in the instrument one to which the Rule Against Perpetuities may apply? Applies to contingent remainders and executory interests NOT vested interests

Step 2: What is the date of the creation of the interest? Dependent upon the nature of the instrument containing the gift. Will: date of death of testator Inter vivos instrument: the date the instrument takes effect

Step 3: Who is/are the life/lives in being? Four conditions:

1. Measure life/lives must be human2. Measuring/lives must be living at the date of the creation of the interest3. If a group of persons is used as a the measuring lives, that group cannot be capable of increasing in

number are the date of the creation of the interest. 4. If a group is used as the measuring lives, that group must be ascertainable (determinable)

Step 4: Is it theoretically possible to construct circumstances in which vesting would occur outside of the perpetuity period?Ex 9 (application of 4 step process): By settlement inter vivos settlor S conveys Blackacre to trustees upon trust for such of my grandchildren as shall attain the age of 21 years. (S at date of settlement has 2 children, B aged 3, and C aged 1) Step 1: Given that the beneficiaries are not ascertained, the limitation is a contingent remainder to

which the rule applies. Step 2: The date of creation of an instrument inter vivos is the date the instrument takes effect, in this

case the date of settlement Step 3: Only person who satisfied 4 conditions of life in being is S. Her children can’t be lives in being

because she could have more children from day of settlement. S’s children could have children who are born after the death of S and therefore will not reach 21 within perpetuity period. Offends rule and is invalid

Statutory modification of the Rule Against Perpetuities-the final stepStep 5: Can the limitation which is invalid under the general law be saved through an application of the statutory modifications to the Rule?

In most cases legislation modifies but does not abrogate, the Rule.

Scurry-Rainbow Oil (Sask.) Ltd. v. Taylor (2001) – Sask CAFacts: T (who is now deceased) owned land, including rights to all the gas under the land. In 1949, granted a drilling lease to Imperial Oil – term was ten years and for as long as thereafter oil and gas are still being pumped. In 1950, granted a top lease to Scurry-Rainbow – life of lease was to take effect upon termination of drilling lease with Imperial Oil, if that occur within a 42-year period from the execution of the top lease. IO lease terminated in 1959.Issue: Should SR’s top lease be rendered void by the rule against perpetuities?Holding: NoReasoning: (Tallis) Rule against perpetuities = “no interest is good unless it must vest, if at all, not later than twenty-one

years after some life in being at the creation of the interest” (Professor JC Gray)o The exact period of 21 years is the full extent of the perpetuity period in all cases where no life is

indicated for the purpose, or where every life indicated has predeceased the testatoro The term “perpetuity” refers to limitations of contingent future interest which may or will not vest

beyond the period prescribed by the rule (21 years in this case)o This is basically an executory limitation of how a person can dispose of their land

Goes over the Statute of Uses, Statute of Wills + the history of the Rule Canadian Long Island Petroleums v. Irving Wire Products (1974)SCC held that a clause in

agreement between joint owners, which allowed each party to be a given a right of first refusal to acquire

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the other party’s participating interest, did not engage the Ruleo SCC held the agreement was personal and did not create an interest in lando Distinguished between old rule against perpetuities, and the modern rule

Old rule = forbids the creation of any form of unbarrable entail Modern rule = invalidates an interest that may vest at too remote a date in the future

Scurry-Rainbow Oil v Galloway Estate (1993)in order for the Rule to be invoked, it must offend public policy (such as preventing the development and utilization of land)

o Point = Rule is founded in the public policy of preventing the fettering of the marketability of property over long periods of time through indirect restraints

o Don’t want to exclude property from the stream of commercial development Here “top leases” are an acceptable business practicethey do not offend the policy behind the Rule, in

fact the provisions in this lease encourage commercial development and drilling activity on the lando It also does not clog alienationo Top lease were not contemplated when the Rule was initially formulatedneed to “re-formulate”

the Rule to properly reflect modern society and changing practicesRatio: (1) in order for the Rule against perpetuities to apply, the public policy that the Rule is founded in must be offended (2) the Rule can be adapted to reflect modern commercial realities.Questions and Comments1. The rule against perpetuities applies only to contingent interests2. Courts have ovided the Rule in cases involving oil and gas by characterizing the interest created as a

personal covenant rather than an interest in land, or by characterizing it as vested rather than contingent 3. This case represents a rare attempt at judicial reform of the CML Rule against perpetuitiesthere

have been attemtps to soften the application of the Rulea. Law Reform Commission of NS has called for abolishing the Ruleb. The Perpetuities Act reflects a first-generation of Canadian perpetuity reforms

Perpetuities Act (1988 – Northwest Territories) Art 3states that the Act outlines exceptions to when the Rule against perpetuities applies Art 4says a contingent interest that may vest beyond the period doesn’t automatically invalidate it Art 5every contingent interest that is capable of vesting within the perpetuity period is presumed valid Art 7perpetuity period is either 21 years or the relevant life Art 8(1)questions that turn on the ability of a person to have a child at some future timeArts 14-16states instances in which the Rule doesn’t apply or may be applicable in certain circumstances

VIII. Co-Ownership (Shared Ownership)A. Basic Concepts & Creation

Co-Ownership Not successive, as we have seen in the devises – it is at the same time

o X to A for life and then to her childrenco-ownership in the future (amongst the children) Two types of co-ownership in the CCQ

o (1) Undivided o (2) Divided = each owner owns a private sphere/part, and then everybody co-owns the public part

Conceptual distinctiono Co-ownership vs common property, commons (including intellectual commons – like ideas or

conceptual theories (can’t be owned by anyone)) etcvery different things Co-ownership deals with split ownership of private property Many different kinds of common propertyaboriginal property systems, true commons

(Oxford commons), intellectual commons (ideas, pure science) etc.

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4 traditional kinds of co-ownership in the CML1. Joint tenancy (JT)

a. See below2. Tenancy in common (TiC)

a. See below3. Tenancy by entireties

a. Based on traditional common law conception of husband and wife as one personb. Unseverable right of survivorshipc. Now repealed – fallen out of favour

4. Co-parcenya. Intestate succession: no male heir, many female heirsb. All females deemed to be one heir, each took an undivided sharec. Generally repealed

Interests 1&2 are the dominant ones – the other 2 have fallen into disuseNote: in this setting – a tenant is NOT a tenant

Joint tenancy vs. TiC Big difference is what happens on death

o Joint tenancy has a right of survivorship – does not go to the deceased’s heirs, goes to the other joint tenant

o TiC goes to the heirsright of successiono See Bancroft Estate

Now, presumption of TiC BUT, historically, there was a presumption of JT

o Easier to collect feudal dueso Easier on the registero Often family settings, marital relations

If simultaneous death of owners of the property, will be deemed TiC JT usually occurs in marriage and wills TiC usually occurs in business dealings (but partnerships are sometimes JT)

Joint Tenancy: Form and Impact 4 unitiesNeed all 4 for JT, for TiC only need possession

o (1) Possession Both JT and TiC have undivided right to the possession of the whole BUT: TiC has a fractional share in the whole. While JT has a unified interest in the whole

o (2) Interest JT: unified interest

o (3) Title JT: same title in same document

o (4) Time JT: created at the same time

Severance (how do you transform a joint tenancy into a TiC)?o See following section

Creation (see reading below)o Presumption of JT at CML (originally – now reversed by statute)o 3 exceptions

(1) 2 + advancing $$ on a mortgage (2) Partnership property (3) Purchase price is unequal

o Presumption is now TiC, at least for land (Conveyancing and Law of Property Act)Language and Context

“survivor” (JT) vs. “successor” (Tic)

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“Equal”, “equal parts” Tic But context is very important

JT: Varia Simultanteous death? Now deemed to have been TiC With a corporation? Now possible

Bancroft Estate Question – are Paul and Jean JT or TiC?

o IF they are TiC, Paul’s children each get a shareo IF they are JT, Paul’s children get nothing and Paul’s share goes to Jean

First question: between the 4 children of Samuel, does it look like JT or TiC?o TiC – shares are specified + it is clear that Samuel has in mind his grandchildren, because it says that

he wants for it go downward to the next generation (no survivorship – succession)o He already has Minnie’s share going to her kids

Second question: what about as between Paul and Jean?o Court finds a JT – court only finds the intention to create a TiC was for the first level, and that he

wasn’t thinking about the following generations in terms of equal shares, but instead just in terms of a “lump” being passed down – seems to imply survivorship

Question: would this change now that the presumption has switched from JT to TiC?o Lametti: this outcome wouldn’t change, just because the facts seem to support JT, BUT it is important

to remember that when there is enough ambiguity we will now find a TiC instead of a JT

Reader pp. 695-697 – Introduction & Basic Concepts 1. INTRODUCTION

Private ownership rights are shareable and divisibleprivate property doesn’t equate to individual ownership2. BASIC CONCEPTSOntario Law Reform Commission – Report on Basic Principles of Land Law Two main types of co-ownership = joint tenancy + tenancy in common

o Joint tenancy – fundamental concept is that 2 or more ppl together own the same interest Per mie et per tout = “each joint tenant holds the whole and holds nothing, that is, he holds the

whole jointly and nothing separately” 2 main features = (1) the four unities (2) right of survivorship

(1) Four unities that must be present for the creation and continuation of a joint tenancy are the unitities of possession (each tenant is entitled to possession of the whole), interest (each tenant must have the same interest), title (each tenant’s title must be from the same document) and time (each tenant’s title must vest at the same time – except for by will or by a conveyance employing a use)

(2) Right of survivorship is the right of the surviving joint tenants to take the interest of a pre-deceasing joint tenant (but the deceased’s share doesn’t actually pass to the survivors, they just remain joint tenants with one less tenant)

o Tenancy in common – likes a joint tenancy but has no right of survivorshipjoint tenancy becomes tenancy in common through the process of severance

2 main features = (1) only unity required is possession (2) no right of survivorship (when that tenant dies, his interest does not pass to the surviving tenants – forms part of his estate

Tenants in common have distinct interests – don’t have to be identical Two other forms of co-ownership that are no longer important/don’t really exist anymore:

o (1) tenancy by the entireties = arrangement that at one point applied to married persons Adds a fifth unity = unity of the person (married persons are regarded as one) Main feature = unseverability + indestructible right of survivorship Not fully abolished in Canada

o (2) Coparcenary = occurred when common law land descended on intestacy not to a single heir but to two or more persons – they would take the land as coparceners

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Done away with in Ontario – now if real property becomes vested in 2 or more ppl on intestacy, they take as tenants in common

Reader pp. 698-704 – Methods of Creation3. METHODS OF CREATION Ontario Law Reform Commission: Report on Basic Principles of Land LawCommon law presumption of joint tenancy (JT) (rather than a tenancy in common), so that a transfer of title to co-owners produces a JT if the four unities are satisfied and an intention to create tenancy in common was not established. -Equity can take a different view and presume tenancy in common (TIC) rather than JT in three cases: 1) Where two or more people advance money on mortgage, it is presumed in equity that their title as mortgagees is held as tenants in common2) Partnership property is presumed in equity to be held by partners as TiC. (A different position was taken in Harris v Wood), whereby Middleton J stated: “Partners carry on businesses jointly, and upon the death of one partner the whole partnership estate vests the survivor. The surviving partner asserts in his own name the rights of the firm. […]The fact that the transaction is a partnership transaction, and the property was conveyed to the partners, as partners, sufficiently demonstrates that the holding is as joint tenants not tenants in common”)-This suggests that in litigation involving the partnership, the surviving partner represents the firm and is able to convey title to partnership property. The view that partners were joint tenants at common law by survivorship does not imply that the survivor did not hold property or trust for himself and the estate of the deceased partner as tenants in common equity.3) Where the purchase for the property is provided unequally. Ex: If A and B purchased property and A paid 75% and B 25%, and title is put in name of B alone. Subject to a proof of contrary intention, B would hold property in trust for A and B as tenants in common with A having 75% share and B 25%.

If the title had been put in names of A and B, subject to s.13 of the Conveyancing and Law of Property Act, A and B would be joint tenants at common law, but they would hold title on trust for themselves as tenants in common.

If the title was put in A’s name alone and A and B contributed equally, A would, in the absence of proof of a contrary intention, hold title on a resulting trust for A and B. It’s not clear whether in equity A and B are joint tenants or tenants in common with equal shares.

In Delehunt v Carmody, A and B were equitable tenants in common with equal shares. A beneficial tenancy in common is presumed to be created when interests are created under a resulting trust, whether those interests are equal or unequal.LegislationSection13 Conveyancing and Law of Property Act[ CLPA]: where applicable, creates a presumption of tenancy in common. It reads: (1)Where by any letters patent, assurance or will, made and executed after the 1st day of July, 1834, land has been or is granted, conveyed or devised to two or more persons, other than executors or trustees, in fee simple or for any less estate, it shall be considered that such persons took or take as tenants in common and not as joint tenants, unless an intention sufficiently appears on the face of the letters patent, assurance or will, that they are to take as joint tenants.(2)This section applies notwithstanding that one of such persons is the spouse of another of them.-Section 14: Where two or more persons acquire land by length of possession, they shall be considered to hold it as tenants in common and not as joint tenants-Section 13: applies only to land. The common law presumption in favor of JT has therefore not been altered with respect to pure personalty. Where there is a gift to two or more persons consisting of both land and pure personalty- presumption of JT with respect to the personalty and a presumption of tenancy in common with respect to the land. This does not apply to partnership propertySection 24 of the Partnership Act: Where land or any heritable interest therein becomes partnership

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property, unless the contrary intention appears, it is to be treated as between the partners, including the representatives of a deceased partner, and also as between the heirs of a deceased partner and his or her executors or administrators as personal or movable and not real or heritable estateSection 14 of the Estates Administration Act states: Where real property becomes vested under this Act in two or more persons beneficially entitled under this Act, they take as tenants in common in proportion to their respective rights, unless in the case of a devise they take otherwise under the will of the deceased.Since land, which is partnership property, is treated as between the partners as if it is personal property, s.13 CLPA doesn’t apply, and the common law presumption of JT continues. This does not affect the equitable presumption in favor of TIC. With respect to land, s13 CLPA doesn’t apply in all circumstances when persons become co-owners, it only applies where land is “granted conveyed or devised” by “any letters patent, assurance or will”Exceptions- 1) Campbell v Sovereign Securities & Holding Co. held that written contract for purchase of land is not an “assurance” within the section and therefore it doesn’t apply. 2) Co-ownership may arise due to proprietary estoppel, constructive trust or resulting trust, in circumstances where co-ownership is not derived from any instrument at all.

Re Bancroft, Eastern Trust Co v. Calder (1936) – NSSC Facts: Samuel E Bancroft dies in 1971, leaving behind a living widow (Clara E Bancroft), two sons, one daughter, and a pre-deceased daughter (Minnie B Calder). Minnie had 2 children: Paul B Calder + Jean W Cooke. Paul died, leaving 4 living children. In Samuel’s will, his wife is bequeathed the house and furniture during her lifetime, and after her death they form part of the residuary estate. Residue of Samuel’s estate is to be converted into money and disposed of by the trustee as follows:a) Split into 2 equal shares, one to widow Clara during her lifetime. b) The other share to be invested, and the income divided during widow’s lifetime into 4 equal shares, to be distributed between Samuel’s 4 children (since Minnie has passed away her share goes to her 2 children, Paul and Jean.) -Up until Paul’s death, him and Jean have been sharing the ¼ of the income (so 1/8 each). Now that Paul is dead the question is does Paul’s 1/8th go to Paul’s kids or to Jean?Issues : Does Paul’s share of the will go to: a) Paul’s estate b) Paul’s living sister Jean or c) Paul’s children? Are Paul and Jean joint tenants or tenants in common?Holding: JT, Paul’s share of the will goes to JeanReasoning: Ross J

A bequest to a number of people without accompanying explanatory words creates a JT, whether the gift be by trust or not (confirmed in Jarman on Wills, 7th ed at p. 1764)

The same text at 1769 however states: anything which indicates an intention to divide property must be held to abrogate (nullify) the idea of a JT and create a TIC

Here, in the wording of the will “four equal shares” does not seem like the “qualifying words” required in the Jarman passage, it seems to be a plain case of a bequest to a plurality of persons unaccompanied by explanatory words

It is not inconceivable that the testator might have intended that the income during his wife’s lifetime should go to the children of Minnie or the survivor of them, while making an entirely different disposition of them after her death. To decide otherwise would be making a will and not interpreting it

Counsel seeking to uphold the JT says clause f) of the will did NOT show an intention to benefit the grandchildren of Minnie. It reads: any of my said trustees shall pay the remaining equal shares to the issue, if any, of my deceased daughter Minnie, then living, and if there shall be no issue of my deceased daughter Minnie, then living, my said trustees shall pay ½ of such shares to the United Baptist Convention[…], and the other half divided equally among my issue, then living, per stripes

It is unnecessary whether “issue” is restricted to children of Minnie or her lineal descendants. Read as a whole, there is nothing in the will that indicates an intention to divide income between children of

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Minnie which can abrogate (nullify) the idea of a JT and create a TIC.Ratio: when there is a bequest to a number of persons without explanatory words there is a presumption of JT. When reading the will as a whole, if there is nothing to suggest an intention to divide the property, then the presumption of JT remains.

B. Severance of Joint Tenancies

Severance of Joint Tenancy 3 ways to get out of JT (becoming TiC) Williams v. Hensman (1861) :

o (1) Unilateral act of parties = Curly, Larry, Moe. If Moe decides to severe the JT he can by a unilateral act which he conveys clearly to other parties that he will be holding the property in TiC. This means that when he dies his property will go to his kids. When Larry or Curly dies, Moe has renounced his right to their shares. Curly and Larry remains joint tenants. So if one dies the other will get his share

o (2) Mutual agreement = all parties clearly agreeo (3) Clear course of dealing = clear conduct

Robichaud v. Watson (1983) (case discussed in class) Facts: Niagra Falls, Couple meets in the hospital. Robichaud was recovering from gun

shot wounds. They buy a place together and get a mortgage. In theory they were both supposed to pay their part of the mortgage. Watson takes her kids to visit her mum in the UK and doesn’t come back. He got into financial trouble throughout and started assaulting her. Their relationship had fallen apart. She got a lawyer in Niagra to get her equity out of the house. The lawyer and Robichaud’s lawyer started negotiating and the house was sold, Robichaud got shot down

Issue: TiC would be half and half (between Watson and mum, estate holder). JT Watsom would have right of survivorshiplooking at the clear course of dealing, has JT been severed? She didn’t do anything to formally transfer her interests. YES JT SEVERED

Clear course of dealings led to severancebased on facts and intention. There was an agreement with respect to separation of share, of identifying them and finding a money equivalent of hers. Agreed price would have been better, but still, there was an element of mutuality. There was severance because "the negotiations carried on between the parties […] clearly indicated each regarded themselves as tenants in common that their interests had been severed and what was at issue in the negotiations was the value only of their respective interests.”

Clues include: emotional estrangement – abusive conduct – physical departure – hiring a lawyer – abortive unilateral action – other joint hiring lawyer (mutuality) – negotiations --- agreement (to sever/actual terms of severance)., but there must always be mutuality

Re Sorensen (1977) Leasedoes the granting of a lease by one joint tenant lead to severance? NO

o Also looks at conduct of the wife – doesn’t show conduct of someone who had severed JT Mortgagemortgage did not sever the JT eitherConceptually at CML the bank becomes the owner when

mortgage is given. The person gets a beneficial interest in the house. In the CVL the person gets ownership and bank gets an accessory real right. In Ontario, statute has made the CML similar to the CVL. The court in this case says the mortgage didn’t effect the right of survivorship, so no problem. Lametti thinks this true given the statute in Ontario. If the bank is the owner than you have changed the basis for the holding. He doesn’t think an old CML mortage when Bank is the owner can be disregarded

Execution of the trust deed transferring ownershipHere, the wife is directing the use and ownership of the property unilaterally down a generationthis severed the JT – destroyed the unities of time and title

Reader pp. 704-713 – Severance of Joint Tenancies4. SEVERANCE OF JOINT TENANCIES

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“Severance” is used in two different ways in the context of co-ownership:1. In the context of determining if a joint tenancy has been created, ‘words of severance’ denote a

tenancy in common2. Also refers to the transformation of an existing joint tenancy into a tenancy in common

Re Sorensen & Sorensen (1977)Facts: Mr. Mrs. S divorced in 1969; together they held three lots as joint tenants. They had a mentally disabled son Arthur. In a settlement agreement of 1971, Mrs. S was to retain possession of the family home for her life, and sell the vacant lot to keep the proceeds. Mr. & Mrs. S executed a lease of the property to Mrs. S for a nominal rent. Mr. S was to pay 100$ a month to Mrs. S for Arthur, and the payments were to be secured against Mr. S’s interest in the former family home. In 1974 Mrs. S diagnosed with cancer, decides to sell part of the property to provide a capital fund for Arthur. She executed a trust deed declaring that she held her interest in the three lots on trust for Arthur. Mrs. S also executed her last will, in which the three lots were her only significant assets. Her two daughters were the executors and trustees of the will and she gave them all of the property as trustees to pay the income to Arthur during his life and on his death divide the residue equally between them. Mrs. S brought a motion to partition the lots but died before it was heard. Mr. S filed caveats against the title to the lots, claiming he, as the surviving joint tenant, was the sole owner by the right of survivorship. The daughters argued that the joint tenancy (JT) had been severed prior to Mr. S’s death.Issues: Has there been a severance of the JT titles of the three lots in Calgary, which were registered to both Mr. & Mrs. Sorensen as joint tenants?Holding: Yes, the JT was severed.Legal Reasoning: McDermid JA

Precedent: Burgess v Rawnsley; Denning delineates 3 ways JT may be severed:1. By “An act of any one of the persons interested operating upon his own share. This may create a severance as to that share. Each one is at liberty to dispose of his own interest in such manner to sever it from the joint fund – losing... his own right of survivorship.”2. By Mutual agreement3. By any course of dealing “sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common... it will not suffice to rely on an intention.

Precedent: Re Denny; the onus to demonstrate there has been a severance lies on those who so contend

Severance is affected by destroying one of the unities . Unity of time could not be severed, and severance of the unity of possession meant partition, but severance of the unity either of title or interest would convert a JT into a tenancy in common (TIC).

Analyzing Mr. S’s Actions1. The Settlement

The settlement agreement did not constitute a severance of the titles to the lots; Mrs. S’s conduct (executing the trust deed & commencing an action for partition) go against drawing this inference and Mr. S never considered the JT severed2. The Granting of the Lease

A lease for a term of years by one joint tenant severs the tenancy. However, here the lease was only for the lifetime of Mrs. S. Upon her death the lease would terminate. The lease did not interfere with the chief characteristics of a JT.3. The Execution of the Trust Deed & Transfers

A declaration by one party uncommunicated to the other cannot separate a severance. The documents and transfers executed by Mrs. S do not convey an immediate interest, they merely defer the transfer of an interest until her death4. The Declaration of Trust for Arthur

The declaration of trust for Arthur severed the JT. The presumption of advancement applied and the result was that there was a valid gift of the beneficial interest in the properties to Arthur. Precedent:

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Stonehouse v AG BC “A gift, although only of the equitable title, severs the joint tenancy.” The gift severs the JT.5. The Execution of a Will

The execution of a will cannot sever a JT. Jus accresencdi praefertur ultimate voluntati” – the right of survivorship is preferred to the last will.

Ratio: The only act that severed the titles was the gift to Arthur by Mrs. S’s declaration of trust of the beneficial interest in the titles. This destroyed the unities of time and title. When Mrs. S died, legal title was held by both Mr. S and Arthur in TIC. Mr. S holds interest in trust in favour Arthur.Comments:

Some Canadian courts have held that the process of negotiation can constitute a course of dealing sufficient to sever the JT. However courts may be more willing to find this in the context of marriage breakdown than in other contexts. Each case must be decided on its own facts and the onus is on the party alleging severance to prove it.

Other Ways Severance can Occur By operation of law. Ex: bankruptcy; it severs all of the jointly held property and the title is

transferred by law to the trustee in bankruptcy. By the murder of one JT by the other. This produces a severance in equity. The victim’s share is held

on a constructive trust by the perpetrator for the benefit of the victim’s heirs.

C. Resolving Concurrent Ownership Disputes – Rights/Responsibilities of Co-Owners + Terminating Co-Ownership

Obligations of Co-Owners What if only one of them lives there? Do they remain JT or Tic? Benefits of Occupation (rent or income?) (Expenses?)

o No requirement in the CML to pay occupation rent unless there is ouster: where the person is prohibited from coming back (for example if the relationship has broken down)

o The problem is when there is more than one unityo Osachuk v. Osachuk (1971) two building unit owned by a couple. When they broke up he moved

back to one of the units they owned. He was responsible for renting out the other unit. Does the ex-wife have a claim for ouster on the first unit where he lives and a claim for rental income on the 2nd unit where he didn’t do a good job collecting?

Has the wife been ousted? CML says unless one co-tenant is ousted, they may not claim against the other. The court does not find that ouster has occurred. The CML is trying to maintain idea of unity of possession…that co-owners have a

shared right in the property. These cases (proving ouster) are always accounted for on the facts. In general both parties will

have to pay for expenses and maintain and both parties will get the revenues. Ratio: (1) In the absence of other circumstances, the mere voluntary failure in exercise of

occupation doesn’t give rise to right of rent. (2) Income from ownership (passive) has to be shared, as per the Statute of Anne. (3) As long as she can exercise her right to find a leasee, she's not entitled to a notional rent. (4) While the principal of the payment should be paid by both parties, the interests are considered current expenses, as such, they are only the occupier's responsibility. (5) The market value will be apportioned according to the value with add-ons, but building of the add-ons cannot be claimed as a co-ownership obligation.

Termination Always a have right to partition and sale. Most people would view this as just BUT can it be unjust?

o One party doesn’t have the means to purchase something else but must because of the right.

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o In the investment sense in you’re co-owner with a less than 50% share you can force majority to sell something they wouldn’t necessarily want to sell.

o The attitude of the CML says that despite oppression, the right to partition and sale is better of two evils

Reader pp. 713-722 – Resolving Concurrent Ownership Disputes5. RESOLVING CONCURRENT OWNERSHIP DISPUTES(a) rights and responsibilities of co-owners

Severance of joint tenancy converts joint tenancy into tenancy in common. So, co-owners are still co-owners, without right of survivorship.

Any co-owner has right to possession of whole of co-owned property, regardless of size of shareOntario Law Reform Commission – Report on Basic Principles of Land Law (i) Accounting for Benefits of Occupation

General rule co-owner does not have an obligation to account to other co-owners for the benefits derived from possession.

Exceptions: There are exceptional situations in which one co-owner may be required to account to other co-owners for the benefits of occupation, or “occupation rent”. These exceptions are described below:

o Ouster Liability to pay an occupation rent occurs when one co-owner has unlawfully “ousted” another. The person who ousted/kicked out the other must pay rent for staying in the property. This includes actual expulsion and violent or intolerable conduct which makes it intolerable for other to remain. Look for intolerable or unreasonable for the parties jointly to possess the property.

o Agreement Agreement b/w co-owners may make one liable to account. Two types: (1) co-owners may have agreed to one having sole possession in terms of rental or other payments; (2) one co-owner may have agreed to act as agent or bailiff of other co-owner with responsibility to account to latter for share in profits of land.

o The “Statute of Anne” a co-owner must account to his fellows for benefits which he receives as co-owner, from third parties, but not for benefits which he takes from the soil as a result of his own exertions.

Re-enacted in Ontario s.122(2) Courts of Justice Acts Ex. Co-Owner who was in sole occupation and farmed prop was not liable to account

for profits obtained (Henderson v Eason). o Waste S.31 Conveyancing and Law of Property Act “tenants in common and joint

tenants are liable to their co-tenants for waste, or, in the event of a partition, the part wasted may be assigned to the tenant committing the waste at the value thereof to be estimated as if no waste had been committed”.

NB- The law of waste is less stringent on co-owners then with tenant for life Ontario emphasizes destruction of property, and how if there is destruction courts

will fuck up the tenanto Equitable Accounting General equitable jurisdiction to make allowance b/w co-owners

only applies in partition and sale or analogous proceedings. Even in these cases, court’s power to order payment of occupation rent is limited to when party to be charged claims an allowance in respect of outgoings related to the property.

Mastron v Cotton (1926, ON) held that joint tenant was entitled to credit for making mortgage payments and paying taxes and for repairs if submitted to an allowance for use and occupation.

Court has flexibility in determining whether allowance of credit for payments by co-owner should open that co-owner up to liability for occupation rent. Below are relevant principle as giving court this flexibility”

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o Remember general rule one joint tenant, unless ousted by co-tenant, may not sue another for use and occupation

o Determining what is just and equitableis done on case-by-case. o “If one tenant has made improvements which have increased the selling

value of the prop, the other tenant cannot take the advantage of increased price without submitting to an allowance for the improvements…And, once again, when one tenant has paid more than his share of encumbrances, he is entitled to an allowance for such surplus.”

o When equitable allowances should not be made: “circumstances may indicate that the improvements were made or surplus payments made to be gifts”

o Measuring occupation rent No clear principle has emerged for measuring Irrsack v Irrsack amount ordered was ½ of rent that these premises would attract Dennis v McDonald pay “fair rent…eliminating scarcity element” Leake v Bruzzi occupation rent = interest element of mortgage payments made by

co-tenant in possession Baker v Baker same amount as mortgage payments made by co-tenant in

possession(ii) Claiming for Expenditures Related to Property

One co-owner can obtain reimbursement from other co-owners for to expenditures relating to the property

Often reimbursement obtained for mortgage payments, improvements, taxes, fire insurance premiums, upkeep, repairs and expenses form litigation w/ 3rd party

When expense relates to joint obligation = claim for reimbursement can be made at any time since the right of reimbursement is right of contribution

o Outside of right of contribution, right of reimbursement may be claimed only in proceedings for partition and sale or analogous proceedings.

o Ex. Denying relief Leigh v Dickeson: repairs or improvements are unnecessary or of no use to this inactive co-tenant

o Accounting should be done at the time of partition or sale because “the benefit conferred is now, in effect, a liquid asset in hands of co-tenant. Want to avoid unjust enrichment”.

Reimbursement for improvementso Australia Co-owner’s claim for an allowance arising from improvements creates

proprietary interest, in the nature of equity (not accepted in Canada). o Measure of compensation for improvements is amount of outlay to the extent that the value of

prop has been improved(b) terminating co-ownership

Co-owners can divide the whole into parcels that they will own individually. They can also sell the undivided prop to someone else and split proceeds, or one co-owner can sell share to another co-owner. Finally, co-owner may apply for an order for partition or for sale of the prop wth or without accounting b/w parties. This last option is what is discussed in this section.

J.W.Lem & B.G. Clark, “Annotation” Note: this comments on possibilities for an order for partition or sale under ON’s Partition Act Partition Act (“PA”) governs co-ownership arrangements that don’t have formal K PA provides that where co-owners of real estate cannot agree on how to govern it, at the demand of

any one or more co-owners, the co-ownership relationship will be ended by the court order and the co-owned property will be partitioned.

o Definition of “Partitioned” = divided up, w/ discrete portions of the fee granted exclusively 96

to each co-owner by the court in accordance with the co-owner’s proper co-ownership interests

o Where the property cant be partitioned (single buildings) the court can order the co-owned prop to be sold with net proceeds from sale distributed amongst the co-owners in their proportion.

o A partition and sale can be initiated by any aggrieved co-owner and mortgagee with an interest in co-owned land

Consequences of forced sale are not always equitableo Partition triggers additional costs (taxes, closing costs, penalties)o Greenbanktree Power Corp v Coinmtatic it is not relevant that majority of co-owner held

much larger % than minority. Although the forced sale caused additional costs to both co-owners, this was not a reason to take away minority co-owner’s right to force sale. Only way to fuck with minortity co-owner’s rights of partition is if you prove bad faith that is “malicious, oppressive or vexatious”.

o Risk: partition and sale remedy could be used offensively (sword) by a clever co-owner to extract “last man standing” premium simply for being last to sell

Although rare to find “malicious, oppressive or vexatious” conduct, it is possibleo Gartree (No. 2) minority co-owner’s application for partition and sale was denied because

of this bad faith conduct. Majority co-owners had offered to buuy out minority at 110% marke value for minority interest. Minority refused but then sought forced sale of entire portfolio under PA, arguing that she should not be forced into recognizing capital gains when other co-owners don’t need to (this is inaccurate!). Court refused minority application because of “scorched earth” philosophy of minority.

Carter, “The Partition Act” article about PA. Indicates many cases of this issue and mostly deals with fam members. Feels as though there is a need for borader range of remedies than just partition and sale.

o Lesson to be learned form PA cases: No realistic grounds for optimism in increased judicial activism in real property matters, it is unlikely that there will be much movement in the law of partition and sale in near future.

D. Shared Ownership of Personality

Reader pp. 722-726 – Shared Ownership of Personality6. SHARED OWNERSHIP OF PERSONALITY

Special importance in co-ownership of personality (including chattels) are rights pertaining to joint bank accounts (Pecore v Pecore; and Frosch v Dadd)

Trying to answer question: Do bank account holders hold as tenants in common or as joint tenants?

Frosch v Dadd (1960) – ONFacts: P and D were siblings of Henry Dadd (dead). Henry and brother had rental properties and deposited $ into joint account in their names. P claims that before joint account was opened, he and Henry agreed that the survivor of them should be entitled to the money at time of other’s death. The title to the real estate was in both their names as tenants in common, but D claims that diff arrangement was made. D said at trial level that this was arranged so that the survivor can continue to meet expenses (like tax). Two days before Henry’s death, he made informal will – which D knew about but was not present when will was executed. The day before Henry’s death, D withdrew entire balance from joint account and deposited it into his own account. After death, D, who was not left anything in will, wanted those who were to share residue of estate euqally with him. They said no. Legal Reasoning: (Schroeder J.A)

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D shouldn’t have taken the $. “This does not necessarily imply right of the appellant to take the money as his own. Otherwise there could be no joint bank account, to which any presumption of law could apply one way or the other, in view of the fact that such authority to withdraw is a necessary incident of the establishement of every joint bank account” (Re Mailman).

Looked at the form of joint deposit agreement in Niles v Lake and its language: “the death of one or more of the undersigned shall not affect the right of the survivors to withdraw all of the said money and interest”. In this case, the agreement was favorable to claim of D.

o Application: Here, the standard form agreement signed with bank is not consistent or corroborates the alleged oral agreement that D is claiming.

There is no acceptable evidence to substantiate D’s claim that money deposited into joint account was a gift to the two of them, where the law would be sufficient of itself to carry the property to the survivor. To give effect to this would be to hold that joint tenancy would be created by inadvertence.

The relationship b/w Henry and D was that of partnership. This has effect in equity that the share of Henry in the chose in action belonging to the partnership devolved on his legal personal representatives.

NB: “If a joint tenancy with the right to survivorship is to exist in either real or personal property, the four untiies of possession, interest, title and time must exist and continue to exist until the date of death, and the destruction of the untieies will terminate the tenancy and the right of survivorship (Power v Grace)”. TF, by taking the money and putting in personal account, D destroyed unities and lost whatever right of survivorship he might have had.

Ratio: In cases of joint tenant bank accounts, the court must consider the language in the standard form agreement, the relationship between the parties at issue, and in assessing the right to survivorship of real or personal property; the four unities of possession, interest, title and time (Power v Grace). Questions and Comment

Who owns items purchased from an account that is joint tenancy or tenancy in common?o Rathwell v Rathwell (1978) – SASK

Beneficial ownership of money and assets acquired from it depend on intention of parties.

Jones v Maynard when intention is that account is pool of resources (common purse), money will be joint.

Re Daly “In a case of joint tenancy, neither party is exlusive owner of the whole. Neither can appropriate the whole to himself”

E. Co-Ownership Through Family Property Law

Family Property What kinds of policy considerations do we want to be thinking about?

o Justice as between the partiesensuring equal division of equity and that the division ensures that one party is not prejudiced. So spouses being forced to sell house when they can’t afford another

Reader pp. 726-731 – Co-Ownership Through Family Property Law7. CO-OWNERSHIP THROUGH FAMILY PROPERTY LAW

Remember: role equity played in inadequately preserving property rights for married women prior to women’s property legislation (Conway, “Equity Darling?”)

1970s: statutory right to division of property acquired by the partners during marriage. Legislators have replaced separate prop regime with a system of “deferred sharing” spouses

maintain their rights as owners during marriage. So the obligation to share property with the non-title-holding spouse arises only on the occurrence of a specified event, like separation, divorce or death.

Two approaches to identify property that partners would share:98

o (1) Items used by the family (family assets), whenever acquired, were subject to the presumption of equal sharing, but business assets acquired during marriage were not shared.

o (2) Treat most assets accumulated during marriage as being property to be divided equally between the spouses, regardless of whether they were family or business assets. This approach was adopted by ON Family Law Act, c.F.3.

ON Family Law Act, c.F.3.o In general, Act treats property acquired by parties during marriage as subject to division

except prop received by gift to one spouse only (not a gift for family home). The exemption to these properties can be traced into later-acquired property (except home). Thus, new property retains initial exemption from sharing. NB = using domestic K, parties can use different family property regime

o Parties are entitled to walk away from marriage with equal share of accumulated property unless one of them can establish that an equal division would be unconscionable w/ regard to specified circumstanced in Act. Remember, unconscionably > unfairness. TF court can conclude that equal division is unfair, but still find it binding.

If spouses cant agree on how to divide property acquired during marriage, court can:o (1) order equalization payment so spouse w/ more net property pays othero (2) property of one spouse be charged with security interest in favour of othero (3) order spouse to transfer property to the other spouseo NB ON Act also allows for partition or sale of specific property

Along with deferred sharing, property regimes also provide that each spouse has the right to possession of the family home, regardless of who owns it. Also, non-title-holding spouses are protected from unilateral disposition of family home

o BUT, rules do not prevent spouse from conveying interest in family home from him to him, to sever the joint tenancy and destroy right of survivorship.

Interplay b/w Newfoundland + Labrador Family Law Act and ON Family Law Acto General law of prop must be invoked to determine who owns what, before the court can make

an order to divide prop to ensure equal sharingo Minor alterations to general law have been introduced under family property legislationo Law for unjust enrichment is not ousted altogether. o ON Act contemplates possibility that decedent spouse may have held prop under joint tenancy

with someone else. o When parties are co-owners, under general law certain financial readjustments are undertaken

when partition or sale is sought. Adjustments should be carried out when share of family property is being awarded.

Occupation rent can be charged when co-owner in possession makes claim for current expenses or for improvements to property

Courts have been willing to grant occupation rent even when spouse has voluntarily left family home and has not contributed to costs of maintain property.

Braglin v Braglin rules for determining entitlement to occupation rent were different in family law context but denied wife’s claim because she had not asked for occupation rent in her pleadings

Braglin v Braglin (2002) – Alberta Issue: Award occupation rent? Holding: Not appropriate to award occupation rent in this case. Legal Reasoning : (Veit J)

o Kazmierczak “Non-family joint tenants do not have mutual obligations of support for each other. In family law context, mutual obligations of support are present and will dominate and

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outweigh cml property rights associated with joint tenancy. Occupation rent should only be awarded in family law context with great context”.

Occupation rent is “discretionary remedy”o A court can award occupation rent for domestic dispute but this is a discretionary remedy

which depends on all circumstances of the case. Just because one joint tenant left the property voluntarily rather than by “ouster” does not deprive departing owner from a claim for occupation rent.

o A departing joint tenant who has not been asked to contribute to payments associated with property and who does not contribute to financial support of property is not prevented from bringing claim for occupation rent.

o Application Ms. Braglin did not make a claim for occupation rent when she issued divorced proceedings. Ms. B did not contribute to mortgage payments on home or repayment of home renovation loand. Mr. B is paying child support and matrimonial debts.

o Home should be sold and proceeds available quickly for distribution to parties as part of matrimonial property claim.

Ratio: court can award occupation rent for domestic dispute but this is a discretionary remedy, which depends on all circumstances of the case. Just because one joint tenant left the property voluntarily rather than by “ouster” does not deprive departing owner from a claim for occupation rent.

F. The Nature of Condominiums and Co-Operatives

Co-Ops and Condos Many provisions in the CCQ were taken from CML statute. Very similar regime. Same with Co-Ops

Reader pp. 731-733 – The Nature of Condominiums and Co-Operatives8. THE NATURE OF CONDOMINIUMS AND CO-OPERATIVES

Cooperative structure provide members with a shared right of use and governance over the subject matter of the association. In context of housing, two forms exist:

o (1) Equity coops = members contribute financially to enterprise to defray costs associated with premises (repairs, mortgage) and to augment the value of their investment. Commonly, the property is owned by the corporation and members hold shares. Right to live in a specific unit is contained in occupancy agreement.

o (2) Non-profit = providing low-cost accommodation coupled with the ability to participate in the governance of the community. Operate on principle of “one member, one vote”. The relationship b/w members and the coop is based on collective ownership. Members individually have a right of occupancy and security of tenure provided the comply with bylaws.

Internal rules of corporation govern members. Return on investment is designed to be minimal

Condominium combines individual ownership of specific units with shared ownership of common areas (roof, parking, elevator, ground).

o Nova Scotio Ltd v Ali condominium is system of ownership and administration of property with three main features. A portion of the prop is divided into individually owned units and the balance of the prop is owned in common by all individual owners. Condominium is vehicle for holding land which combines advantages of individual ownership and those of multi-developments. Unit owners have rights associated with sole ownership and have rights subordinated to will of majority.

Success of condo depends on equitable balance of the independence of individual owners and interdependence of them all in cooperative commynity.

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Condos are created by statute (Condominium Act).

G. Alternative Conceptions of Shared Ownership

Other Kinds of shared ownership Religious Indiginous normative systems Digital Commons

o GNU, CreativeCommons.o Lametti thinks the basis for digital commons is a private property system

Reader pp. 733-751 – Alternative Conceptions of Shared Ownership9. ALTERNATIVE CONCEPTIONS OF SHARED OWNERSHIP Three forms of shared ownership in this section:

1. Communal property held by groups whose religious convictions prevent them from owning property as individualsIn particular, Hutterite colonies

2. Aboriginal systems of shared ownershipThe present generation acting as stewards, not owners of land

3. Ownership of computer softwareTwo approaches to the Internet: “Commons” (shared) vs. “proprietary control” (private). An example of commons is presented.

1. Religious context of communal propertyHofer v. Hofer – [1970] SCR 958 – ManitobaFacts: Appellants and their families were expelled from the Interlake Colony of Hutterian Brethren. They contend that the expulsion was unauthorized according to the Colony’s Articles of Association, and as a result of the expulsion they’ve suffered abuses and indignities. They seek an order dissolving the Colony, and a distribution of its assets equally among the appellants and respondents. According to Hutterian tradition, “private ownership is not recognized and all real and personal property is held for the purposes of the colony and for the benefit of each and all members thereof” (735). Their claim was denied at trial and on appeal.Issue: Was the expulsion of the appellants from the Colony contrary to the Articles of Association?Holding: No (appellants have no claim for a share of communal property)Reasoning:Ritchie J.

Ritchie J. found that the Colony’s lands were held by the respondents in trust for the Colony as a whole, and that “individual members have no beneficial interest whatever” (736).

Even though the Colony was a “prosperous farming community, it cannot be said to have been a commercial enterprise in the sense that any of its members was entitled to participate in its profits. … I find it impossible to view the Interlake Colony as any form of partnership known to the law” (737).

All appellants and respondents freely signed the Articles of Association, without duress. “The decision to expel the appellants from the Colony was made by the Church [and made the

appellants] ineligible for continued membership in the colony” (738). Therefore the Articles of Association were properly complied with and the expulsion was valid.

Hall J. (concurring) Agrees with Ritchie J. but would add that public policy considerations may be relevant “in

circumstances involving minors or others under disability” (738). He also morally condemns the Colony for its treatment of the appellants, and agrees with Pigeon J.’s

criticism (in dissent) that a dissenter “cannot even claim ownership to the clothes he is wearing as he departs” (739).

Ratio: Religious-based communal property is a valid form of property holding that the courts will

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uphold (though considerations of public policy may be relevant).Questions and Comments

TMA comment: The appellants also argued that it was against public policy that the Church ministers had unlimited control over the personal life and property of members. This was found to be invalid (738), but wasn’t the focus of the case.

AJ Esau, “The Judicial Resolution of Church Property Disputes: Canadian and American Models” “Property entitlements are often linked to membership issues because the property of religious

associations is usually held in trust for the beneficial use of members of the particular association” (739), cites Hofer (above).

Courts can enforce a religious society to follow its internal rules, and make sure that this does not run contrary to basic principles of natural justice (notice, fair trial).

Religious communities often have internal schisms, and courts face the undesirable role of having to adjudicate claims among factions. In doing so, which rules should the courts apply? Worries about majority factions’ imposition of rules of minority factions abound.

This issue remains unsettled in Canada (the conflicts that forced the question in the Lakeside line of cases were dropped when the factions reconciled, and by a religious conviction of some factions against bringing lawsuits).

2. Aboriginal Context of Communal PropertyJS Youngblood Henderson, “Mikmaw Tenure in Atlantic Canada”

The Míkmaq have an obligation to protect the sacred order that characterizes their relationship with the land, and a right to share uses of the land “but only the future unborn children in the invisible sacred realm of the next seven generations [have] any ultimate ownership of the land” (741).

The Míkmaq value sharing resources and harmonizing the human spiritual realms over a notion of “management,” which implies human domination.

Stability and minimization of risk for the harvesting of resources is emphasized over growth and accumulation of wealth.

“Sharing of the harvest is … based on patterns, kinship, and correspondence. It is an honour, a duty and a privilege” (741).

“Míkmaq see no distinction between collective or individual interests” (741). “Certain families or peoples had ‘rights’ to use certain animals, plants, materials and access sites

(hunting and fish traps) because of their particular relationship” (742). “Greed was always considered a wrong, while private management of the resources, along with a

bundle of rights and duties, was the legal norm” (742). “Míkmaq ‘property rights’ were usually obtained through kinship rather than use or purchase. They

were endowments or legacies. Everyone has relative claims, through birth and marriage, to the use of a great variety of sites and resources, which can also be claimed by others on the same ground. Often the word for kinship and ownership are the same. It is inconceivable … that an individual could claim an exclusive use or entitlement to a particular site or that a family could lose their relationship to a site.” (742).

“In an indigenous tenure the role of the family or individual is more managerial rather than proprietary” (743)

“The system of kinship relations unites everyone in a web of complementary rights and responsibilities” (743).

“These legacies are ‘strong’ enough to create incentives to conserve, but ‘weak’ enough to create incentives to share” (743).

“The Míkmaq legacy becomes vested in a family or person after seven generations of sound management and generosity” (743).

3. Computer Software Context of Communal PropertyGNU General Public License TMA: This whole section is a reproduction of the terms and conditions of GNU’s license document. This is a tangible example of the “commons model” of internet ownership. The below bullets are from the Preamble. I

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haven’t summarized the rest of the terms and conditions because they are technical, and specific to GNU The license document was prepared by the Free Software Foundation

(https://www.gnu.org/copyleft/gpl.html). The License “is a free, copyleft license for software and other kinds of works” (744). It’s intended to guarantee user’s freedom to share and change all versions of a program “Free” = Freedom, not price

o Freedom to 1) distribute copies of free software (with a price if desired), 2) to receive source code, 3) to change the software, and 4) to know you can do this.

Users have responsibility to respect the freedom of others Developers must: 1) assert copyright on the software; and 2) offer users this License, giving them

legal permission to copy, distribute, modify it. “States should not allow patents to restrict development and use of software on general-purpose

computers” (745).Notable section: 12. No Surrender of Other’ Freedom

“If conditions are imposed on you (whether by court order, agreement or otherwise) that contradict the conditions of this License, they do not excuse you from the conditions of this License” (749).

Notes and QuestionsExtract of D Hunter, “Cyberspace as Place and the Tragedy of the Anticommons” (2003) 91 Calif. L Rev. 439.

Commercial exploitation of the Internet started in 1992, and has led to commercial operators “convincing judges to carve out remarkable new property rights online” (750).

This has eroded the public commons and threatens a digital anticommons. “If the current approach is not challenged, then little stands between us and an intractable digital

anticommons” (751).

IX. Servitudes over Property We’ve already seen to some extent people having rights in lands of another or rights to flow of water or percolating water that flow from one piece of land to another. Other non-possessory rightsRights that person or land owner can have in another person’s land. They are known as Incorporreal (can’t be possessed) hereditaments (it can be inherited)

Easements Covenants Profit a prendre: right to mine/fish/hunt in common law…in CVL this is called an innominate real right

Reader p. 753 – Introduction 1. INTRODUCTION

This chapter is another instance of the division of ownership rights: the possessory entitlements of an owner of a freehold or leasehold estate can be burdened with non-possessory rights. These interests are called “servitudes.”

In English and Canadian law, these interests are also mostly “incorporeal hereditaments” The “easement” is example of this kind of holding Other servitudes exist: Profit à prendre; Restrictive covenants; Rentcharges Some rights have servitude-like features.

o E.g., the Charter right of free expression and assembly on public land present some obligations on the state. These rights thus create some rights of access on public property.

A. Easements

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Easements 2 types:

o Positive: Right to do something on someone else’s land Right of way

o Negative: Obligation to not do something on your own land Don’t block a view

Ziff examples on p.755o 1. (a)positiveo (b)positiveo (c)negativeo (d)negativeo (e)postiveo (f)positiveo (g)positiveo (h)positiveo (i)positiveo (J)positiveo (K)positiveo (L)positive

4 Technical Requirements ( Ellenborough Park (1856) 1. There must be a dominant & servient tenement

a. Adjoining lands or close to each otherb. US: allows non-adjoining easements “in gross”anglo Canadian position is no easement in gross,

must be tied to dominant tenant that is reasonably closei. Rights of way of utility companies are rights in gross but they are originated in statute

c. Ackrod v. Smith (1850)i. Classic right of way case

1. Is it a license or easement?2. Grant to “owners and occupiers” and to “all persons having occasion”

ii. Why not1. Servident tenementneed to know who will have rights over; so look to DT2. But – use a registry system to “signal”

d. Kinds of easementsi. Use of a park as a garden

ii. Right to beach accessiii. Right to use lakeside property for recreational purposesiv. Ditch for water run-off

e. Ordinarily dominant tenement is a freehold or leaseholdi. Vannini – ownership of a waterworks system is “dominant tenement”

ii. Effectively another incorporeal heriditament2. An easement must accommodate the dominant tenement

a. Confers a real benefit on the DT and not merely some personal advantage upon dominant owner3. The owner of the DT and ST can’t be the same person4. Easement must be capable of serving subject matter of the grant

a. The rights can’t be too vaguei. Ex: the right to “wander”? – Sufficiently definite

b. Rights claimed amount to a claim of joint occupation? (too robust)c. Rights claimed of mere enjoyment and amusement – not utility and benefit (not robust enough)d. A capable grantor and granteecan’t require the servient owner to spend $e. Shelf Holdings (1989)

i. Issue: is the underground grant too absolute? If too robust, no longer an easement?ii. Facts: SH (grantor’s successor), owner of the surface, granted HO (grantee) the right to install

a pipeline underground (and to repair whatever). Or, gauges and valves sometimes extend

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above the surface: there's a right of way for that, and a right of access to service the pipelines. HO says it has the title of land. Whether the pipeline is an easement or a personal license makes a difference for tax, also easements don't have to be registered in order to be valid and enforced, unlike property rights (under the Registry).

iii. Holding: right of way in the form of an easementthe displacement is too minimal to truly exclude the owner – the test is one of degrees of exclusion

Gypsum Carrier case (1968) Railway companies claiming damages based on rights of way acquired by contract, Easement?

o No must have fairly express intention in order to find an easement.

Reader pp. 754-757 – The Nature of Easements 2. THE NATURE OF EASEMENTSOntario Law Reform Commission, Report on Basic Principles of Land Law (Ont AG; 1996)

Easement (defined by Anger and Honsberger): “An easement is a privilege without profit annexed to land to utilize the land of a different owner (which does not involve the removal of any part of the soil or the natural produce of the land) or to prevent the other owner from utilizing his land in a particular manner for the advantage of the dominant owner”

Per Re Ellenborough Park, easements have four characteristicso 1. There must be a dominant and a servient tenemento 2. An easement must “accommodate” the dominant tenement

“A right enjoyed by one over the land of another does not possess the status of an easement unless it accommodates and serves the dominant tenement, and is reasonably necessary for the better enjoyment of that tenement” (754) – Re Ellenborough Park

o 3. The dominant and servient tenements must “not be both owned & occupied by the same person”

o 4. A right over land cannot amount to an easement unless it is capable of forming the subject matter of a grant

The entitlement conferred must fall short of possession Flowing from these definitions: in Anglo-Canadian law: an easement cannot exist in gross

(independently of a benefitted piece of land) Two kinds of easement

o Positive easements: give the owner of land a right to do something on or to his neighbour’s land

E.g., rights of way, right to take water, right to have drainage pipes under lando Negative easements: give the owner of land a right to stop his neighbour doing something on

his [the neighbour’s] own land E.g., right to light; right to create what would otherwise be a nuisance. There are very few negative easements

Questions/Comments1. Pp. 755-56: Useful exercise in identifying positive and negative easements4. Pipelines challenge the requirement that easements cannot include rights of joint occupation that substantially deprive the servient owner of proprietorship or legal possession

o Shelf Holdings Ltd. v. Husky Oil Operations Ltd. (1989, ABCA): Found that a pipeline properly constituted an easement (and reversed trial court)

o “All conventional rights of way will … impair the use of land” (757).o “[T]he parties intended the grant to create nothing more than an easement”o “The [contract] reserves to the servient tenement a high degree of possession and control with only a

low level of interference from the dominant tenement. The rights granted to Husky do not detract 105

from the rights of the servient owner with the force required to raise the grant above the status of an easement” (757).

Ziff asks: Does this mean that pipelines are invariably acceptable forms of easement?

i) Creation

Numerus Clausus Reluctance at common to create new interests, indeed and create easements Looks like numerous clauses concern from the CVL. Also looks like the discussion we were having with wills. Reluctances forces parties to draft clearly and right. Otherwise the institution is not created.

o You might say that gypsum carrier case exhibits that reluctance How do we do this in property? Well we’ve already seen possession does that, registry does that in formal

terms, but also not making the system too complex helps. Knowing that there are only a certain number of categories helps by channeling not just peoples abilities to create legal relationship but also for non owners to know that only a certain number of categories exist means you can run your life accordingly.

Merrill and Smith argument for numerous clausus (closed set of categories) is that it reduces information costs to non-owners.

There aren’t high costs there as opposed to contract…if we allowed people to insert whatever kinds of rights they wanted…and since property has in impact in terms of everyone else, there’s that exclusive aspect of property, it would be disastrous in terms of everyone’s day to day existence, information costs would be too high, too many questions as to what to do with what resources.

Difference between a Grant and Reservation A grant is proactive; you’re giving someone a right.

o So a vendor sells a parcel giving P a right of way. o At the outset I own the whole thing….I’m going to keep this parcel and give D an express grant…

giving her something positive. o I’m serviant tenement and I’ve given up the right of way…vendor me is servient T and D buys

dominant tenement and gets grant. A reservation is the opposite. I own both at the outset, I sell but I reserve a right expressly that gives my land

right of way to the water. I’ve reserved….I’ve taken something out of what I’m selling….reserving right of way to the property that I’m keeping.

If not express, there are certain cases where easements are implied Necessity

o Sale of piece of landlocked/water surrounded land. Court will find an easemento Philosophy is productive use

Common intention Non-derogation.

Wheeldon v Burrows Vendor who holds land and uses a path, may create an implied easement on sale of a part of that land Quasi-easement

o What appears to be being enjoyed at time of grant

Claim For a grantee for an easement not expressly included in the grant, but which was there Not applicable to reservation for a grantor, won’t get power of pen. Contra preferentum

Estoppel Adams v Loughman

o Representation made to purchaser that an easement would be createdo Purchased in good faith; used the lane, and other estopped from preventing him from doing so

Underlying Assumption Either of law or fact

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Denning quote: Z761 Especially of money expended

Prescription Length of user might allow you to acquire certain kinds of rights Similar to adverse possession, though not identical

o UK: proof of usage to time immemorial Impossible except first nations

o So “lost modern grant”: 20 years Now in some statutes

4 previous requirements + the 3 belowo Nec vi-No violenceo Nec clam-No secrecyo Nec precario-No permission

Statuteso Also abolish the possibility of prescriptuon in some places

In total: Alberta no prescription, Torrent registry system In part: Ontario p.760can acquire prescription with respect to a view

Acquiescenceo Somewhere between permission and objection is acquiescence

Common Law Doctrine Prescription is possible The owner has to somehow object or impeded to show non-acquiescence (or give permission)

Similar debate to adverse possessiono Differences

Easement by prescription doest extinguish right of servient owner. It just carves a right over it Only recognizes the right of another. It doesn’t deduct whole ownership right. It perfects a presumed right (not maintaing an initial wrong) Statute allows you to create an easementusually for utilities

Requirements for easements (see earlier)Is there a difference between an easement and public access?

Does the easement turn into a public road or can it? o It does not, there is a difference between a public highway / public footpath / public right of way, and

an EASEMENT. Now you can create both at CML. You can create a public highway on your own land if that’s what you want

to do, or you can prevent your land where it is being used by the public and you can make it clear your intention is not to create a public way.

Consider that there are cases where there are owners of private property who want to make it clear that they are not creating anything public because they don’t want the construction of their building / lane way in the back to be seen as the creation of some kind of public highway dedicated towards the general public. It’s a sign that says this is still private. Intention is not there. So we don’t need to kick you off our sidewalk in front of building but there wont be rights created there.

In order to have the creation of a public highway you need to have the intention to do it, you need to have some publicization of that (some opening up…such that people know they can use the highway….and significant extended common use might be good enough) and some intention on the part of the public that they accept this. This is a pretty onerous standard.

Nelson: The key criterion for dedication for public use is intention. This decided the case. CofA found that the trial judge erred and that there was not sufficient intention for public intention. The majority finds no easement either. The easement of necessity needs to be there upon creation.

Reader pp. 757-772 – Creation of Easements 3. CREATION OF EASEMENTS Ziff lists 6 means of creating an easement (& 1 for creating public roads)

1. Grants

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a. The most effective way of creating an easement: express grant or express reservation from a grant

b. Express grant: “A, the owner or occupier of what will become the servient tenement, gives B, who owns or occupies what will become the dominant tenement, a non possessory right to make use of A’s land for the purpose identified in the easement” (757-58).

i. A grant for an easement can be included in a grant of a parcel of landc. Reservation: E.g., allowing A to retain the right to continue to use the land granted to B for

access to A’s land.d. Independently: an easement can be granted independently of a grant of other property

(Laurie v Winch, below).e. A grant should identify : the dominant tenement, servient tenement, nature/scope of the

easement, time period of easement, any rights/responsibilities of the parties2. By implication

a. Quasi-easements may become actual easements by implication in a granti. Quasi-easement: i.e., lanes established across a parcel of land that are not easements

because there are no separate dominant and servient tenements.b. Must meet 3 criteria of The Rule in Wheeldon v Burrows (1879) (to determine how a land was

used before it was divided into separate parcels under separate ownership):i. Quasi-easement must have been used by the owners/occupiers of the whole property

at the time of the grant for the benefit of the part to be granted;ii. Existence of the quasi-easement must have been “continuous” and “apparent” (i.e.,

observable, physical evidence);iii. Quasi-easement must be necessary to the reasonable enjoyment of the property

granted.c. Does not allow grantors to claim an easement through an implied reservation from the grant

(courts are reluctant to find that a grantor granted less than the grant states)d. If Wheeldon v Burrows criteria are not met, grantors (more difficult) and grantees may be able

to acquire a right to an easement by establishing that the easement was necessary to give effect to the common intentions of the parties.

3. Necessity (see Nelson v 1153696 Alberta Ltd., below)a. Like easement by implication, but stricter requirements for establishmentb. 1. First, easement must be necessary (not merely convenient/efficient) for the enjoyment of

the alleged dominant tenementi. Classic example: landlocked property without access to a public way

c. 2. Second, owner of alleged dominant tenement must be able to trace the title to the property back to a grant whereby an owner subdivided property, which had been a single parcel, but failed to include the easement of necessity in the grant.

4. Prescriptiona. Use of alleged servient tenement must be “as of right,” i.e., use without force, secrecy, or

permission since time immemoriali. This time requirement is set by legislation, generally 20 years.

b. Some places have abolished prescriptive easementsi. Alberta (completely)

ii. Ontario (for lands under land title registration and for particular easements)5. Proprietary Estoppel

a. Basis in Stiles v Tod Mountain Development Ltd., [1992 BCJ] quoting Lord Denning in Amalgamated Investment & Property Co. Ltd. v Texas Commerce International Bank Ltd., [1981].

b. Courts have used “proprietary estoppel to protect a person who acts to his or her detriment in expending money on land that s/he occupies but does not own, under an expectation created

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or encouraged by the landowner that the occupier will be able to remain there” (761).6. Statute

a. E.g., The Condominium Act, which creates easements for the benefit of individual units and the common property within condo complexes (see s 9).

7. Dedication (a public right in the nature of an easement, creating public roads)a. “A public right in the nature of an easement is created when a landowner dedicates land for

use as a public highway” (762).b. NB. This is not an easement, but a relinquishment of all proprietary rights in a road, which,

because it’s a road, has the appearance of an easement (See Nelson, p. 765 Ziff).c. Can be express or implied from conductd. At CML, a dedication will be found:

i. 1) Where there is an actual intention to dedicateii. 2) The intention has been “carried out by the way being thrown open to the public”

iii. 3) Use of the way as a highway is demonstrably accepted by the publiciv. NB. 1) and 3) can be inferred by long/uninterrupted public use; 2) and 3) are

sometimes considered a single, joint criteria (see Nelson)Nelson v 1153696 Alberta Ltd. [2011] - ABCAFacts: Ken Nelson purchased property in 1985 and created a commercial recreational facility (Shalom Park). It was bordered on 3 sides by the North Saskatchewan River, and on the 4th side by land owned by brothers Don and Dale Stelter. It was accessible by land only via the Stelter lands. Earlier, the Stelters also leased part of their land to Rabbit Hill Snow Resort, which, between 1968-1972, had built a road that also provided access to the land Nelson bought. Nelson used the road to access his property and made contributions to its maintenance. In 2005, Robert Proznik (owner of respondent 1153696 Alberta Ltd.) bought Dale Stelter’s land and sought to bar Nelson and his guests/staff/family from using the road. Nelson challenged this, claiming the road was both a public highway, and an easement at common law or equity. At trial, the road was found to be a public highway, but not an easement.Issues: 1) Was the road a public highway? 2) Was the road an easement?Holding: 1) No 2) NoDissent: 1) No 2) YesLegal Reasoning: Majority (McDonald JA):

Issue 1: Re: public highwayo Agrees with Paperny JA: No public highway via dedication because no intent.

Issue 2: Re: Easement: No easement based on necessityo “The critical evidence as to whether the Stelter Lands or the Don Stelter Lands was first

severed from the parcel was not before the trial court” (771). Paperny JA would have admitted this evidence on appeal. See below.

o “Under the Torrens system, an unregistered easement of necessity is somewhat analogous to a hidden landmine on a piece of property. It is essentially impossible to detect until it is too late” (771).

Dissent (Paperny JA): Issue 1: Re: public highway

o No dedication because no intento Two req’s for a public highway to be created at common law (764)

1. Actual intention of the owner to dedicate2. The way in question (i.e., the road in this case) must be “thrown open to the public”

and it must be accepted by the publico This case turns on first criterion: intention. Intention must be determined from the totality of

the evidence (longstanding public use, presence of a lease, testimony of past owner if available, etc.).

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o In case at hand, the previous owner, Dale Stelter, “testified that he never gave up his ownership of the Road and that he never intended the Road to be public” (765). Thus, he cannot be found to have relinquished all proprietary right, as is necessary for a dedication to establish a public highway.

o The fact that there was longstanding public use of the road is not in itself determinative. The trial judge erred in focusing her analysis on this point.

Issue 2: Re: Easemento There is a CML easement arising out of necessity, based on new evidenceo “Implied rights of way must be absolutely necessary for the use of the property” (767).

Indeed, “[t]he land granted (or retained) must be absolutely inaccessible or useless before a right of way of necessity will be implied” (768).

o “Where the circumstances are such that the part of a parcel granted or the part retained is land-locked and cannot be approached except over land originally belonging to the grantor, a way of necessity is created upon the severance of title” (768).

o “[T]he trial judge found that it is absolutely impossible to access the Nelson Lands by land without travelling over the [land] currently in the hands of the appellant” (768).

Water access (via N. Sask. River) does not counter necessity. One reason: during winter, there is no winter access over frozen river.

o “[N]ecessity must have existed at the time of the severance of title of the servient and dominant tenements” (769).

At trial, there was no evidence on this, and the claim was rejected. Here, Paperny JA is willing to consider new evidence (the Crown grant) to find by

implication an easement of necessity over the Stelter Lands in favour of the Nelson Lands (769).

Paperny JA would have admitted the evidence either pursuant to “judicial knowledge” or alternatively on the public interest in settling the matter (769).

o NB. Redacted from judgment by Ziff (but addressing majority argument): Paperny JA dismisses the Torrens system-based argument against easement of necessity by concluding that easements of necessity are exceptions to the principle of indefeasibility of title in the Land Titles Act.

Ratio: (1) Intention to dedicate must be demonstrated, and must take into consideration all relevant facts,

for a finding of a public highway.(2) Necessity must exist at time of severance of title for the creation of an easement. This is a

factual determination.*Notes/CommentsTMA: I believe the Minority’s reasoning is considered authoritative because the difference between the Maj. and the Min. is based on an evidentiary disagreement only (Maj. did not admit new evidence on appeal that the Min. would have).

ii) Scope, Location and Termination

Scope Once granted, serviant land can’t mess around…break down a fence An easement can extend over time…

What if things change over time? Laurie v Winch

o Easement on farmland extended to a subdivisiono Subdivisions happeningo Finding is that easement remains

Malden Farms110

o Duck hunters have easement over a road. o Scope of easement went too far

Reconciling the two caseso In Winch the expanded easement was not commercialized. In Malden the nature changed, land is being

used much more, different purpose. o The economic interest is always present.o The facts of the case are key because it comes down to the expectations of the people

Prohibition on colourable useo Rule in Harris v Flower: Can’t disguise benefit for a 3rd tenemento But some extension for original DT will likely be allowed, if usual

Ex) ParkingExtinction

By Granto Contract, sells it back

By unity of DT and ST: ownership and occupation By abandonment: need manifest intention

o Extinguishment by estoppel possible…if don’t use for long periods of time

Necessity What happens if the necessity that created it end?

o Remains unclear but Holmes v Goring says starting point yes they end when necessity ends.

Reader pp. 773-783 – Scope, Location and Termination (of Easements) 4. SCOPE, LOCATION AND TERMINATIONLaurie v Winch [1953] – SCC Facts: In 1910, a landowner, Sheppard, subdivided his land to create a number of (long, skinny, rectangular) lots, and retaining some land as a farm. The lots fronted onto Lakeshore Road in York County, ON, while another lot, Lot 33, (even longer and skinnier) ran behind all of these lots and acted as a laneway for the lakeshore lots (see p. 774 for a diagram). Lot 17 was retained by Sheppard and used as means of accessing Lakeshore Road, via Lot 33, from his remaining farm. In 1917, Sheppard sold his farm, including lot 17, to Smith, and in 1925, he conveyed to Smith a perpetual right of way over Lot 33. In 1944, Smith sold the farm and Lot 17 to Perry Winch (predecessor in title to the respondent Winch), as well as the perpetual right of way over lot No. 33. Appellant, Nettie Laurie (owner of lots 18, 19, and 33) brought an action against Winch and other owners to restrain them from traveling along Lot 33 and using it as a right of way to access Lot 17.Issues:

(1) Was the conveyance of 1925 a personal license only?(2) In the alternative, was the right of way granted to Smith limited to the purposes for which the lane

was used at the time, and thus did further subdivision create a change in circumstances that amounted to the extinguishment of the easement?

Holding:(1) No; (2) No.

Legal Reasoning: Majority (Kellock J.):

Issue 1: Was the 1925 conveyance of a personal license only (and thereby not transferable beyond Smith)? NO

o Appellant argued that there is no dominant tenement named in the conveyance, which indicates the easement in 1925 was an easement in gross. But because easements in gross do not exist in Anglo-Canadian law, it would need to be construed as a personal licence only.

o Kellock J. finds that the intention of the parties, based on the wording of the conveyance, was that the dominant tenement was the farm (not Lot 17), which is enough to establish that this was not an easement in gross.

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Issue 2: Was the purpose for which the lane was initially used so changed as to amount to an extinguishment of the easement? NO

o “[T]he grant is one of a right-of-way simpliciter with no express restriction as to use” (776).o “I cannot think that … it was within the contemplation of the parties to the conveyance of

1925 that the farm would always remain a farm” (777).o “[T]here is nothing in the circumstances to restrict the plain words of the grant to the use

being made of the farm lane at the time” (777).Ratio: (1) Circumstances are relevant to determinations regarding past conveyances. Circumstances can be used to determine intention of the parties and the nature of the rights conveyed.Malden Farms v. Nicholson (1956) – ONCA Facts: Malden Farms (Respondent) owned a parcel of land along the edge of a lake. It was primarily used for Duck hunting. In 1916 MF’s predecessors in title obtained an express right of way from Barron, who owned ajoining property. The grant gave the owners and “their heirs and assigns and their agents, servants and wokemen, a free uninterrupted right of way infress and egress for persons, animals and vehicles through along and over” a 20-foot strip. The owners were also granted the right to maintain gates at each end and the right to keep gates open or locked. This grant was transferred to Dayus and later to Nicholson. Nicholson operated a commercial recreation facility on the property. Malden Farms brought an action against Nicholson complaing that Nicholson was (1) making excessive use of the right of way, contrary to the terms of the easement granted to Nicholson’s predecessors in title (2) Had torn down gate which Malden Farms placed (3) Was using the right of way as site for picnic tables and in connection with operation of beach resort.Issue: Did Nicholson go beyond the scope of his easement and as a result, can an injunction be granted to stop the public from going onto their land?Holding: The appellant’s present use is much beyond the extent of his leal right and ought to be restrined. Appellant’s use of the right way constitutes unauthorized enlargement and alteration in the character, nature, and extent of the easement. Partial injunction granted.Reasoning: (Aylesworth)

The fee in the way is now burdened, not with a private right of way in favour of appellant but by all of the patrons of the their resort. This exceeds the scope that was provided for.

In ascertaining the rights of the parties court uses principles from Laurie v Winch [1953] SCC:o The grantee of a right is not entitled to increase the legitimate burden. But, on the other hnd,

the legal extent of his right may entitle him to increase the amount of inconveniences imposed upon the serviant tenant (ex: placing on the dominant tenement new building, increase the size of old building. The legal extent of the right must be ascertained from the intention of the parties at the time when the right was created.

Ratio: The grantee of a right is not entitled to increase the legitimate burden. The extent of the right must be ascertained from the intention of the parties.Questions and Comments 2. To Clarify Laurie v Winch and Malden Farms look to the rule in Harris v Flower (1904) C.A

An easement over a servient land for the benefit of the designated dominant tenement cannot be used in a colourable way to benefit some other property. It can be ancillary.

3. The line between colourable and ancillary is murky. Deemed ancillary if the extent of the use for the benefit of the non-dominant land is insubstantial or if it involves no exploitation of the easement in such a way that profit can be derived from use of the non-dominant land. 4. An easement may be released or extinguished, by express agreement between the holders of the dominant and servient tenements or by implied release (abandonment). The onus of proving intention to abandon and non-use rests with party seeking to determine that it has extinguished. In Costa v Janikas court rules that an easement that has been extinguished by abandonment cannot be revived by including it in a registered conyeance made subsequent to abandonment.5. An easement of necessity comes to an end when necessity ceases, so when another means of access is subsequently acquired-Holmes v Goring, although this can be modified if the grantor uses express language

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that it should pass- Morris v Edgingtion

B. Other Servitudes and Servitude-Type Rights

Profit a Prendre: Right to take something that is part of the natural produce Hunting, fishingMatahamajaw case Mining rights as well

Reader pp. 783-788 – Other Servitudes and Servitude-Type Rights 5. OTHER SERVITUDES AND SERVITUDE-TYPE RIGHTSBritish Columbia v Tener – [1985] SCC(Wilson) A “Profit a prendre” is defined as the right to enter on the land of another person and take some profit of the soil such as minerals, oil, trees, etc for the use of the owner of the right. It is an incorporeal hereditament, and unlike an easement it is not necessarily appurtenant to a dominant tenement but may be held as a right in gross, and as such may be assigned and dealt as a valuable interest according to the ordinary rules of property.

It is the right of severance which results in the holder of the profit a prendre acquiring title to the thing severed. The holder of the profit does not own the mineral in situ. They form part of the fee. What he owns are mineral claims and the right to exploit them through the process of severance.

profit a prendre may be held independently of the ownership of any land (in gross) In this way they differ from easements.

profit a prendre may be appurtenant (they may be a privilege which is attached to the ownership of land and increases its beneficial enjoyment) like easements

profit a prendre are extinguished by unity of seisin if the holder of the profit eithero Releases it in favour of the owner of the land in which the profit subsistso Becomes the owner of the land which the profit subsists

The extinguishment arises from the fact that if the ownership of the profit and the ownership of the land in which the profit subsists devolve on the same person, the profit can no longer exist as a separate interest in the land. The profit merges in the fee and is extinguished.

Bank of Momtreal v Dynex Petroleum Ltd (2002)-SCCFacts: *The right to extra minerals under a lease is known as a working interest. A royalty is an unencumbered share or fractional interest in the gross production of such working interest. An overriding royalty or a gross overriding royalty is a royalty granted normally by the owner of a working interest to a 3rd party in exchange for consideration (money, services). Rights and obligations of two types of royalties are identical. Only difference is to who royalty was granted.Appellant BMO was a secured creditor of Dynex. The trustee wanted to sell all the oil and gas properties of Dynex. Issue was whether the sale would be subject to overriding royalties arising out of the working interest held by Dynex. The respondents claimed their royalty rights comprised interests in land and claimed priority over the appellant because their interests, as protected by caveats preceded the appellant’s loans to Dynex and its predecessors. The appellant submitted that an interest in land could not arise from an incorporeal hereditament and therefore the respondents’ overriding royalties did not rank higher in priority. Issue: Can an overriding royalties interest be an interest in land?Holding: Yes. A royalty which is an interest in land may be created from an incorporeal hereditament such as a working interest of profit a prendre if that is the intention of the parties. Reasoning: (Major)

At common law, an interest in land could issue from a corporeal hereditament but not from an incorporeal hereditament

o corporeal hereditament: A material object in contrast to a right. It may include land, buildings, minerals etc

o incorporeal hereditament: (1) A right in land which includes such things as rent charges, 113

annuities, easements, profits a prendre etc (2) Property which is not tangible but can be inherited.

In Berkheiser v Berkheiser court held that an oil and gas lease, the interest from which an overriding royalty is created, can be a profit a prendre, an interest in land.

In Saskatchewan Minerals v Keyes SCC majority declined to decide whether an overriding royalty could be an interest in land. Laskin in dissent addressed the issue and said he did not find the distinction between corporeal and incorporeal hereditaments useful. He refers to Berkheiser where a royalty was held to be analogous to rent. Although theoretically the holder of lessor’s royalty holds an interest in reversion, whereas the holder of an overriding royalty does not, since in essence the two interests are identitical, there should be no distinction between the two in their treatment as interests in land. The effect of Laskin’s reasons was to render inapplicable, atleast in so far as overriding royalties, the common law rule against creating interests in land out of incorporeal interests

o Laskin concluded that an overriding royalty was an interest in land, analogous to a rent-charge. He did not find all overriding interests to be interests in land. He held that the intentions of the parties judged by the language creating the royalty would determine whether the parties intended to create an interest in land or to create contractual rights only

Friedmann Equity Developments INC v Final Note SCC outlines when changes to the rules of common law are necessary

1. To keep the common law in step with the evolution of society2. To clarify a legal principle3. To resolve an inconsistency

Changes should be incremental and consequences must be capable of assessmentRatio from Vandergrift: A royalty interest or an overriding royalty interest can be an interest in land if:

1. Language used in describing interest is sufficiently precise to show parties intended the royalty to be a grant of an interest in land, rather than a contractual right to a portion of the oil and gas substances recovered from land

2. The interest out of which the royalty is carved, is itself an interest in the land

C. Access to Public and Private Property

If you own a mall or a government owns an airport. The public is invited, how far do the rights extend. Commonwealth: People pamphleting at airport in Quebec. Asked to leave by airport managers. Courts decided

that airport had to tolerate a certain amount of freedom of expression. o Is it like an easement…a right of way

State v Shack (USA): Farm owner who had dorms on his land for migrant workers. Social workers were prevented from going on to land to provide services to workers. The court found that private property rights should not prevent social worker access.

o Is this another form of public easement? Sky City Auckland v. Wu: Can a casino prevent people from playing? Looking at the above cases does easement capture what is going on? Should they be characterize them as

public easements?o The problems with using the property discourse is that property rights are not the most

important rights in the world. Using property puts the burdens in the wrong place. Question should be why government should stop people from distributing. Why should social workers be prohibited.

o Comes down to a situation of overvaluing property rights. o Lametti says Michelin Illustrates what’s wrong with using property discourse.

Michelin Case: Union trying to organize at plant. Union used a picture without permission. It is a labour dispute. Michellin sues in copyright and trademark. Loose on the trademark and win on the copyright. The CAW infringed copyright by using the image.

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o Lametti: Nobody in their right mind thinks the picture is being to harm Michelin economically. Freedom of expression is of a higher plane than copyright.

o It gives property rights the ascending position where property rights are conflicting with other rights in society. In this case it is the right to organize.

Reader pp. 789-797 – Access to Public and Private Property6. ACCESS TO PUBLIC AND PRIVATE PROPERTY In recent years individuals have been given the right to use public and private property as venues for

public assembly or the exercise of free speech. Crown land is impressed with constraints on use that do no affect private owners. In Director of

Public Prosecutions v Jones the law lords were asked to determine whether the use of a highway as a site of protest was permissible under the common law. Lord Irving said the highway is a public space and may be enjoyed for any reasonable purpose-such as peaceful assembly-provided that the activity does not unreasonably impeded traffic or otherwise constutute a nuisance. Questions of fact to be determined on a case-by-case basis.

Lamer in Committee for the Commonwealth of Canada v Canada: “Freedom of expression cannot be exercised in a vacuum…it necessarily implies the use of physical space in order to meet its underlying objectives. No one could agree that the exercise of the freedom of expression can be limited solely to places owned by the person wishing to communicate: such an approach would certainly deny the very foundation of freedom of expression.”

In Canada, the most significant constraints on the right of exclusion and control of public property are the limitations that arise out of the Charter. It applies to state action and the state’s power of exclusion over its property.

Despite not being governed by the Chater the private property owner’s power to exclude is not absolute. For example, Human Rights provisions prohibit private discriminatory conduct in relation to the provision of goods, services, and rental accommodations. Under the common law, innkeepers and common carriers are obliged to accept all patrons unless there exist reasonable grounds to refuse service.

In the US a few states allow access to private property in carefully limited circumstances. In New Jersey another line of authority is developing. In Wientraub the court tried to strike a balance between proprietary rights and other values. “Property rights serve human values”. They are recognized to that end and are limited to it. Title to real property cannot include dominion over the destiny of persons the owner permits to come upon the premises. Their well being must remain the paramount concern of a system of law.” Case involved property owner taking a lawyer to court for trespass when he tried to meet with a migrant worker on the owner’s farm.

Michelin & Cie v. CAW-Canada (1997) – Federal CourtFacts: In the course of an attempt by the CAW to unionize labour at Michelin plants, posters were distributed containing the word “Michelin” and the logo, both without permission. M sued based on breach of trademark and copyright. CAW argues that the right to freedom of expression protected their actions.Issue: court finds that there was a copyright infringement, but that there was also “expression” based on the definition in s.2(b) – question is now whether the fact that the expression was on private property removes 2(b) protection.Holding: No violation of 2(b) rights – importance of private property rights outweights the expressionReasoning: (Teitelbaum) The Use of Private Property and Freedom of Expression

The use of private property may warrant removing the expression from the protection of 2(b)o Comes to this conclusion by analogizing from Commonwealth decision, where the SCC

suggested that choosing a public forum of expression could possibly limit the scope of 2(b) protection

CommonwealthMcL recognized that private property is not available as a forum for free expression while Lamer stated that only if the expression is compatible with the primary function of the property

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is the expression within the sphere of 2(b) protectiono Differences from Commonwealth(1) here, rather than just being used as a location for

expression, the private property is being used to convey the message (2) the property in Commonwealth was public property, while in the current case, the property (the copyright) is private property

Rejects argument that copyright is a piece of quasi-public property because it is registered by a state-formulated systemto diminish the private nature of this right would have wide-sweeping consequences

Although the threshold for prohibiting forms of expression is high, the threshold is not so high that use of another’s private property is a permissible form of expression

Expands on Lamer’s balancing of the parties’ interests in cases of a party asserting the right to use public propertyfor private property the balancing becomes stricterno 2(b) violation because Michelin’s loss of its right to control the use of its copyright amounts to a total loss of private property

Note : court held that even if a violation of 2(b) had been found, the relevant provisions in the Copyright Act would have been saved under s.1 as a reasonable limitation on 2(b) rights

Ratio: the threshold for 2(b) protection of the use of another’s private property is very high.Sky City Auckland v. Wu (2002) – New ZealandFacts: At trial, W was granted an injunction restraining SC from preventing him under a ban notice at their Casino. W claims that SC banned him for a 2 year period cuz he was a sick gambler and had raised issues concerning payouts from their machines. SC claims the ban was a result of W threatening one of their staff members. S. 67 of the Casino Control Act states that the landowner can exclude people from its casino without giving any reason. Trial judge held that the casino owners cannot exclude people unreasonably and that they owe a special duty to the public.Issue: is there an obligation on SC to show that it acted reasonably in banning W for the period stipulated?Holding: No – s.67 overrides the general cml doctrine which would otherwise require a good reason for the ban.Reasoning: (Blanchard and Anderson)

A business invested with the “monopoly of public privilege” must, in the absence of a good reason not to, make its facilities available to all, is an idea based in NZ law and economic good sense = the doctrine of prime necessity (Vector) (note: although originally applied to electricy/water, can be expanded to other industries)

NZ cml recognizes a casino as a business affected by the public interest in circumstances where the operator enjoys a monopolyin such a case, the operator can only excluded members of the public with good reason

o BUT this doctrine is negated by s.67 of the Casino Control Act, which excludes any cml principle, including the doctrine of prime necessity, which might otherwise require the casino operator to have a good reason before refusing entrance to W

Justice McGrathagrees with the conclusion concerning s.67 but states that the doctrine of prime necessity should not even be expanded to include casino operators

Ratio: there may be a cml principle which requires certain actors who are invested with the “monopoly of public privilege”, to, in the absence of a good reason not to, make its facilities available to all.

D. Covenants Running with Property

Covenants Covenants are contracts allowing you to place some negative restrictions on a piece of land Can “run” with the land…doesn’t just find parties but binds others down the road.

o Court in law or equity will enforce They are very common They are a kind of private planning/zoning

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Exampleso Mutual protection between two buildings. An exposed wall, each party has obligation to maintain the

wallo Safeway clause/ Steinberg servitude: You buy this land but engage not to sell grocerieso Nature or quality of construction eg only have your house painted in earth tones in Meadowvaleo Not in my back yard matters:

Not being allowed to sell property to certain types of people (since struck down for violating human rights)

Adult only type housing Enforceable in law and equity 3 principles

o Privity of Contract Between people: seller/buyer lessor/lesse Can sue on contract or assign the right to sue

o Privity of Estate Relationship between two pieces of property or institutions Can sue on matter that touch and concern the estate Idea that something objectively important that pertains to the estates

o Neither Covenant not enforceable Except

Equity: the negative burden runs In Law: a positive benefit of a positive restrictive covenant that touches or concerns

the land can runo Any benefit can be assigned in equity or statuteo A burden cannot

Benefits and Burdenso It is complicated..law and equity differo Sometimes hard to see the differenceo Sometimes when covenants are mutual ex)Buildings with shared stairway (benefits), each has shared

upkeep (burden)

Enforcement at Lawo Benefit of a covenant can pass in defined circumstanceso The burden cannot pass o Ex) Vender reserves a right on a purchased land (benefit), in favor of her land.

Requirements for benefit to runo 1. Covenantee of benefitting land must have a legal interest in the lando 2. Coventatee and assignee must have the interest in the lando 3. Touches and Concerns the covenant

“it must be shown that the covenant was entered into for the benefit of the land owned, not merely personal benefit”-Gray

Anybody who owns the land should appreciate the property and benefit from Benefit can be positive or negative

o The covenantor might have to do something proactive…ex) maintain river bankso Possible even where the benefit does not concern the Covenentors land (won’t be asked about this)

(Positive) Burden of the Covenanto Cannot passo Keppell v Bailey: Ironworks company (covenantors) entered into agreement to use stretch of railway

line. They then assigned their interest to Bailey. Bailey decides to no longer use the line. Keppell sues for them not using it. Keppell looses. You can’t assign the burden.

Rules Adopted in Canadao Registry systems: Assignees will no what they are getting into.

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o Potential benefits to land o Parkinson v Reid (1966): Burden of staircase (build, repair, maintain). When property sold, successor

not bound as it was held to be a burden not benefit Austerberry: Town, covenantor, seeks costs of repairing road. Austerberry seeks to ascertain his rights, and

seeks injunction. Nothing points to the Ps land in particular, rather appears to be a covenant to make a public highway. Burdens are not enforced

Getting around the common law ruleo Use a chain of personal covenants

Make everyone privy by contract Loses effectiveness overtime

o UK: Use a rentcharge (periodic payment) Fly in the ointment: Halsall v Brizell: If benefit is claimed under a deed, must fulfill the burdens

o The use of private roads under a deed encumbered by burden to maintaino Limited: only where benefit claimed and usedo Applied: Tito v WaddellRestore an island post WWI. Halsall is rejected in Australia (windows case)

in 1988.o In Canada: Amberwood (2002): Building development in Durham with multiple buildings. One

building gets built as well as the fitness center. Built building is suing other building for fees for fitness center.

Majority OCA: No, finds against applying Halsall burden does not transfer. Minority: Yes, if assignee has notice, benefit is accompanied by the burden.

Covenants in Equity Will allow burdens to run if there is notice Tulk v Moxhay (1848): Garden in Leiceser Square, builder knows they can’t buildBurden can run in equity if

noticeo Decided before Amberwood and Austerberry

Burden must be negativeo Haywood: no burdens to build and repair, but rather restricting uses

in substance, negative: do nothing and/to comply Regardless of phrasing: “to use for residential purposes only” is negative Similar to easement in gross; covenentee needs to have land

Benefiting land must beo Clearly identified (Galbraith v. Madawaska case)o Not too large

In order for Tulk Doctrine to work you need:1. Notice on part of assignee2. Negative/restrictive covenant in subtance3. Land benefited is retained by coventee4. Touches and concerns (relatively objective)5. Intention to bind successor6. Assignee of benefit in equity must show the covenant was “annexed” Or assigned in K or by building

schemesa. Expressly in deedb. Proper descriptions

Building Schemeso Common vendoro Mutual covenants on all purchasers for common benefit (must paint in all earth colors)o All know, all purchase, all expect equal application.

Covenants and Zoningo Filion pieceo Ellickson

Let covenants be used to organized peoples lives because they work efficiently. Believes municipal politics are broken, therefore we should move to the market.

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Problem : people who own the property make the decisions. Municipal laws get decided by the people, whether they own property or not.

Counter Problem : How efficient is the market? Would it allow for low income housing. Option : Allow private owners to make their covenants just restrict them. Or have a formal

process to review themo Berry v. Indian Park aka Horseshoe Valley

Developments around Horseshoe valley. Three parts to development. First 2 had appropriate architecture (rustic). 3rd development is a true subdivision, much more like a house than cottage. All 3 are paying a fee into the whole. At a certain point owners in 3rd group stop paying because the municipality is giving them the services the other two developments need (due to form of development).

Is this a building scheme? Common origin (same developer, same plan, same set of rules and regulations) Some of the restrictions (onerous): no deck, painting of house with approval, can’t

have a swimming pool. As between 1+2 and 3, the origins were not the same. There was no harmony. In

addition, trial judge found that a building scheme wasn’t present because restrictions were not registered for phase 3.

o Other Restrictions Drummmond Wren

These decisions run afoul of human rights violations. The court used emerging normativity to strike them down.

Noble and Wolf v Alley (no jews, blacks, people of colour…) Judge allowed racist covenants. Decisions has been widely criticized and wouldn’t

stand today. Lametti: This type of decision is out of the picture in Canada

o Common interest communities (single families, adult living, no kids, senior living) Use covenants to affect certain ends. How are these different from cases of Noble?

Don’t they create racial segregation and classism? Ex) Single family common interest community

Cuts out latinos because they tend to live with their extended family. Effects based discrimination…segregating impact

Ex) Green living community A socioeconomic segregation might be happening

Ex) Adult only/couples Religious discrimination

Zoning is part of a democratic process, as they need to be approved. How do we ensure that those kinds of processes don’t become segregated? Should our answer be to spend as much time as possible making sure the process is not discriminatory?

What do we think about positive covenants (burdens)?o Restrict the flow of commerceo Can preserve the environment, good for the buffaloo But purchase isn’t the only way the land is transferred. We don’t always have the opportunity to agree.

What if land is inherited, the person didn’t agree yet will still have burdens. By the same token, you don’t have to accept everything that comes your way.

Reader pp. 797-820 – Covenants Running with Property7. COVENANTS RUNNING WITH PROPERTYTulk v. Moxhay (1848)Facts: T, the owner of several plots of land surrounding a Square, sold a plot to another party, making a covenant to keep the Garden Square "uncovered with buildings" such that it could remain a pleasure ground.

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Over the following years the land was sold several times over to new parties, eventually to M. M, who was aware of the covenant at the time of purchase, wants to alter and build upon the Garden Square. T filed an injunction.Issue: should an injunction be granted?Holding: yesReasoning: (Cottenham)

Cottenham draws a distinction between the covenant and a contractnoted that if the agreement had been a contract instead of a covenant, it would have been enforceable.

o Therefore, the covenant should also be enforceable at equity (when an injunction is being sought) “If an equity is attached to the property by the owner, no one purchasing with notice of that equity can stand in

a different situation from the party from whom he purchased” (799)Ratio: A restrictive covenant between vendor and purchaser regarding the use of land will “run against the land” (will be enforced against all future purchasers with notice) under equity.Ziff: “Restrictive Covenants: The Basic Ingredients”Introduction

Describes law governing covenants as detailed, technical and irrational and notes that in Canada, compared to England, flexibility has occasionally prevailed over rigid adherence to technical doctrine

Important social issuecovenants allow private land rights to supplement public planning instrumentsleads to a possible collision of private and public interests concerning the way cities/neighborhoods should develop

Covenants can be used to control the type of homes built, keep an area residential, restrict commerce etc. Note: covenants take effect when the land is passed on to parties who are no longer part of initial

contract prior to that, any restrictions is simply part of the contract that the parties entered into and not running w/ land

Covenants generally engage other social values from the basic ones regular property law engages Most of law regarding covenants is based in equity – 2 reasons for this:

o (1) Under cml, the burden of a covenant will not run with the land, but in equity it willo (2) Often the case that the remedy is sought is an injunction, which is an equitable remedy

Burdens in Equity Tulk was the first case to affirm that a burden/covenant can run with land in equity – law has since developed 4 principal requirements for a valid covenant:

o (1) Covenant must be negative in substance – only restrictive covenants will be enforced Negative = the person can be in compliance with the covenant by simply doing nothing

o (2) Must have been intended that burden was to run with the servient land + land must be described

Equity will not impose a burden on a new owner if the original parties had no intention of ito (3) Covenant must be taken for the benefit of dominant lands (must also be well identified)

Based on prior two requirements – shows that there must be 2 properties involvedmust be a property that is benefiting (dominant prop) and a property that is burdened (servient prop)

AND both of these properties must be easily ascertainable (Galbraith v Madawaska Club) Reasoning = burdened owner entitled to know who may enforce the covenant Note: must actually benefit the dominant lands – can’t just intend to benefit

o (4) Equity must otherwise be prepared to enforce the covenant = must be notice to bind purchaser

Cannot be enforced in equity if no notice of the prior equitable rightBenefits in Equity

There are 3 means by which a benefit can be transmitted:o (1) Annexation

A covenant can be annexed so as to run automatically with the benefited land In order to run, the benefit must touch and concern that land and it must be shown that the

benefit was annexed so as to run with the land (use of word “annex” helps but not needed) Not necessary for the transferee of the benefited land to have notice of the benefit to obtain it

through annexationLand Titles Act confirms no requirement for covenant to be on the title

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English law allows for implied annexation but Canadian law does NOTsee requirement 3 above – land to be benefited must be sufficiently identified in document – means that if land is not identified sufficiently, even express annexation is impossible in Canadian law BUT can also mean that if implied annexation may be possible if land is sufficiently identified (weird)

o (2) Assignment The benefit for restrictive covenants can be expressly assignedsubject to contract law Effective of against original covenantor and in theory against a subsequent purchaser,

provided that the burden of the covenant has runo (3) Building schemes (or, in the context of leasehold covenants, Rental Schemes)

Common for restrictive covenants to be created en masse within the context of either a commercial complex or a residential development

Creates a reciprocal set of rights and obligations “local law” under which each property owner is subject to the burdens and is entitled to the benefits of the relevant covenants

Rather than a set of individual covenants, a building scheme allow for a more streamlined approach where each lot owner may enforce the covenants no matter when the individual lots were acquired

Five additional prerequisites needed to establish a building scheme: (1) Shown that the titles to the properties in issue are derived from a common vendor (2) The vendor must have laid out the relevant parcels subject to restrictions that could

only be consistent with a general scheme of development (3) The restrictions must be intended to be for the benefit of all the parcels within the

scheme – must be an element of mutuality (4) The affected parcels must have been purchased on the understanding that the

restrictions would ensure to the benefit of all of the other parcels (5) The area of the scheme must be properly defined

Note: the approach has relaxed in England but not Canada/Ontario Goes over some of the uncertainties in Canadian jurisprudence regarding building schemes Positive covenants are not enforceable under building schemes The rules regarding notice + identification of the dominant land still apply

The Running of Benefits and Burdens at Law Remember, principles of equity dominate cuz of (1) injunctions (2) ability to enforce against later parties BUT it is possible for the benefit of covenant to be transferred under the cml (k-tual assignment), and such a

transmission will allow the new holder of the benefit to enforce the covenant against the original covenantor o Even in the absence of a contractual assignment, the benefit may run if it has been annexed to the land

so as to run with it3 requirements to perfect an annexation at common law: (1) Covenant must touch and concern the dominant lands (2) Must be shown that it was intended that the benefit should run (3) The transferee must acquire the entire interest of the original holder of the benefit

Berry v. Indian Park Assn (1999) – ONCA Facts: Sugarbush is community with 3 phases of housing developments. Indian Park Association

(appellant) maintains recreation center and common areas in community and has by-laws requiring all residents to be members of Association. By-laws also have restrictive covenants, restricting how owners can use land. Association says the restrictions are enforceable because they are part of valid building scheme covering all lots. Respondents are homeowners in phase 3 whom object to being required to join Association and comply with land restrictions. They claim that the services provided by the Association, like snow and garbage removal and common parking lots only benefit the residents of P1 and P2, which is why many of P3 residents have stopped paying the fees. Also, it is important to note that P3 differs from P1 and P2 in significant ways: built much later and by different developer, homeowners of P3 use municipal garbage collection instead of, P1 and P2 were meant to be seasonal cottage community as opposed to modern permanent residence of P3. Most important differences is that P1 and P2 agreement does refer to building scheme whereas P3 does not, and the

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restrictive covenants are not registered to land of P3 but are registered to land of P1 and P2. JH: Declared by-laws unenforceable against phase 3 residents Issues: (1) Are the P3 lands part of a valid building scheme? (2) Are the by-laws restricting land use

and requiring mandatory membership enforceable? Holding: (1) No. (2) Unenforceable. Legal Reasoning: (Laskin J.A.)

o (1) The P3 lands are not part of a valid building scheme The Association conceded that it could not rely on the equity exception allowing

restrictive covenants to “run with the land” (Tulk v Moxhay), so they turned to a second equitable exception which is that “a restrictive covenant imposed for the purpose of land development may be enforceable despite the lack of privity of contract, if the land is included within a building scheme”

Building scheme exist when restrictive covenants are imposed during course of development with intent that once the scheme has crystallized on the sale of the first lot, the vendor will be bound by the scheme and the restrictions will be mutually enforceable by purchasers of various lots

Rational = because restrictions are imposed for general benefit of development, all owners have common interest in their enforcement.

Association claims that P3 is included within valid building scheme and so covenants are enforceable. (it is given that valid building scheme exists for P1 and P2)

Elliston v Reacher is leading case on requirements of building scheme and gives 4 requirements that must be met to enforce restrictive covenants as part of scheme:

(1) both P and D derive title under common vendor; (2) previously to selling land which P and D are respectively entitled, vendor

laid out his estate, or a defined portion thereof, for sale in the lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent with some general scheme of development;

(3) restrictions were intended by the common vendor to be and were for the benefit of all lots intended to be sold, whether or not they were also intended to be for the benefit of other land retained by vendor; and

(4) both the P and D, or predecessors in title, purchased lots from common vendor upon footing that restrictions were made to enure for benefit of other lots included in general scheme whether or not they were also to enure for the benefit of other lands retained by vendors

Requirements from Elliston co-exist with s.118(1),(3) and (5) Land Titles Act, which permit restrictive covenants to be registered and annexed to land.

Trial judge was correct in finding that there was no building scheme for P3 1) Failed to comply with s. 118 Land Titles Act because did not register

restrictions on land use as restrictive covenants. o the registration of notice of the agreement (including bylaws) did not

have effect of annexing the land use restrictions in the bylaws to P3 lots 2) Requirements from Elliston have not been met:

o First requirement not met because there is no common vendor. Association and owners of Sugarbush received title from three vendors

o Even if overlook first requirement, second requirement is not met because when Sugarbush was developed, P3 was not laid out or defined as part of the community, it was not contemplated at the time.

o Also, P3 agreemnent contained no express intention to establish building scheme. And, P3 development is not consistent with scheme of

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P1 and P2, mainly because it is permanent v recreational. o (2) Bylaws are beyond powers of association and unenforceable

Association exceeded its powers in passing bylaws that restricted the use to which P3 owners could put their property and that required all owners to become members of Association. TF, Association could not enforce its bylaws

Notes o Galbraith v Madawaska Cluv Ltd in Canada, in order for burden of covenant to run the

benefitted lands must be ascertainable from the covenant. P. Filion, The Impact of Restrictive Covenants on Affordable Housing and Non-Single Family Use of Homes

Moderate stand updating legislation to enhance the effectiveness and facilitate use of restrictive covenants

o Planning law is suitable to the setting of board development standards, while restrictive covenants can narrow these standards by focusing on detailed obligations beyond purview of zoning by-laws

o Covenants are perceived as effective instruments to protect and enhance neighborhood amenities

o Recommends a widening of restrictive covenants’ scope of application and preservation of public sector regulatory system

Radical stand see restrictive covenants as a potential free-market alternative to public sector regulations, in particular to zoning laws

o Adopts free-market stand to launch an attack on zoning which is perceived as an ill-guided form of gov intervention into prop rights – restrictive covs = an alternative to zoning

o A major complaint regarding zoning process is that it is susceptible to be seized by self-serving interests. This would skew the free-market process against cheaper forms of housing and be detrimental to social groups with little influence on zoning decision-making. Planners are also advantaged by zoning because they derive power from administering the process

o Another concern re zoning is its inability to provide a reliable protection of property values over long term. This is related to municipal gov’s control over zoning process

o Costs associated with planning process are another complaint. Including costs of comforming or challenging zoning laws.

o Fundamental problem with zoning is that it represents an excessive public sector involvement in land development process.

Solution involves abolition! Ellickson: proposes return to nuisance laws which would result in corrective

actions when interferences arise Siegan: (Houston, Texas example) land use specialization takes place

efficiently with or without zoning regulations and so we don’t need them. Believes that public sector control like zoning are not needed

Both authors think that restrictive covenants are the best alternative to zoning because they are more closely tailored to interests of residents and they remain unaffected by political system so are reliable

Both authors also believe that social equity problems from restrictive covenants are infrequent

o Shortcomings of restrictive covenants Lack of flexibility must go to court to change restrictive covenants Enforcement requires legal action by owner of the dominant land *they treat sectors they affect as if they were cut off from the remainder of the city of

society exclusion of broader society..creates “ghettos”o In current legal context, restrictive covs have capacity to frustrate planning objectives by

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isolating entire subdivisions from a requirement to support their share of affordable housing and other social facilities

Achieved through restrictions that stipulate single-family use of homes and set building standards that rule out affordable housing

Restrictive covs can shelter areas from effects of new planning approaches to encourage affordable housing

In Waterloo, restrictive covs do not threaten meeting of city-wide affordable housing and non-single-family use objectives because of availability of non-burdened sites. BUT covs can produce major equity problems because of the uneven distribution of such land uses they cause

o Currently, restrictive covenants permit the sheltering of residential sectors from land use policy objectives purporting to assure a sharing of affordable housing and non-single-family uses by different residential areas.

o On one hand, provincial commitment to affordable housing and inclusionary planning is intensified by policy to authorize apartment in a house located in all residential zoning and municipalities will maintain their own inclusionary objectives

o On other hand, seen increase in restrictive covs and this will continue. Only sectors likely unburdened by these would be multi-unit housing sectors. Efforts to protect neighborhoods from impact of policies promoting affordable housing and inclusionary zoning will lead to higher use of covs.

i) Positive Covenants

Reader pp. 821-841 – Positive Covenants8. POSITIVE COVENANTSAmberwood Investments Ltd. v. Durham Condominium Corp No. 123 (2002) – ONCA Facts: Amberwood and DCC 123 are the registered owners of two adjacent parcels of land, which were originally one joint parcel of land previously owned by WHDC. WHDC intended to build two condominiums on the land in two phases. When phase 1 was completed in 1992, DCC 123 was registered. This registration divided the land into two parcels. Phase 2 of the condos was not built because WHDC ran into financial difficulties. The two phased project was supposed to share certain facilities and expenses, and each phase would have easements over the land of the other for support and access. The Reciprocal Agreement set out these particulars; it applied to and was registered on the title of both parcels. The original lender for the project was RBC, which secured a mortgage over both parcels of land. However, when DCC 123 was registered in 1992, RBC’s mortgage on that parcel was discharged, and they only retained the mortgage on the adjoining parcel. In 1995 RBC assigned this mortgage to Paarl Construction, who later sold the parcel to The Shores of Whitby Land Corporation under a power of sale. Amberwood financed this purchase for Shares of Whitby and secured a first mortgage. In 1998, Shores of Whitby defaulted under Amberwood’s mortgage and quitclaimed its interest in the parcel of land to Amberwood. The recreational facility had been constructed on DCC 123’s land and was owned by both DCC and Amberwood. The Reciprocal Agreement provided for the sharing of the cost of maintaining the recreational facility. It required WHDC (whose parcel is now owned by Amberwood) to pay interim expenses until the second phase of condos was built. The general provision in the agreement set out the parties’ agreement to the easements established a basis for mutual use and enjoyment of the easements and bound them by every covenant in the agreement. It also stated an express intention for the agreement’s provisions to run with the land and be binding, to the benefit of the respective successors of the title. When Amberwood assumed ownership of the land, it paid the interim expenses for the first few months but then refused to continue paying. When the expenses remained unpaid, DCC 123 registered a caution and issued a notice of sale proceedings in accordance with the Reciprocal Agreement Issue: Is the covenant to pay the interim expenses, contained in a Reciprocal Easement and Cost Sharing Agreement between owners of adjoining parcels of land, enforceable against the successor in title

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(Amberwood) to the covenantor (DCC 123)?Holding: No. Appeal dismissed. Legal Reasoning: Charron J.A –

A positive covenant is one that requires a person to do something on his or her land The rule that positive covenants do not run with the land, as it established in Austerberry v.

Oldham Corp, has been a settled principle of English common law and it has been clearly adopted in Canada.

At common law, a person cannot be made liable upon a contract unless he was a party to it. Therefore, Amberwood cannot be bound to pay the interim expenses. The covenants were not enforceable because there was no privity of contract or estate between the lessee and the assignee. The need for certainty in the ascertainment of title served to maintain the traditional limits to the parties’ contractual freedom.

Charron notes that though the application of the rule can sometimes cause unfairness, the need to preserve certainty in commercial and property transactions requires that any meaningful reform be achieved by legislation and not by the courts. Amberwood is not bound by the positive covenant to pay the interim expenses

The court then considers if Amberwood is liable to pay under any other legal principles :1. The doctrine of benefit and burden This principle, as espoused in Halsall v. Brizell, holds that a person who claims the benefit of a

deed must also take it subject to its burdens. DCC 123 relies on this doctrine to avoid the application of the rule above (positive covenant rule). This doctrine is not very wide or settled in English law and has not been applied in Canadian law. Charron notes that the decision in Halsall v. Brizell is the subject of much debate and criticism and that the adoption of this doctrine as a recognized exception to the rule would have complex, far-reaching and uncertain ramifications. He believes the adoption of such a wide exception would be tantamount to abolishing the rule itself

2. The conditional grant of easement DCC 123 also relies on the possibility that the rule that positive covenants run with the land is subject

to the conditional grant exception in English law. This exception is that if a grant of benefit or easement is framed as conditional upon the continuing performance of a positive obligation, the positive obligation will be enforceable because the condition would serve to limit the scope of the grant itself. The question whether or not a provision in a conveyance is a conditional grant essentially turns on the construction of the relevant instrument, which in this case is the Reciprocal Agreement. Charron says that none of the grants of benefit or easement in the Reciprocal Agreement are framed this way. He sees no link between the easements conferred under the Reciprocal Agreement and the positive covenant to pay interim expenses so as to create a conditional grant within the meaning of this principle.

Further, the general clause of mutuality and reciprocity of easements contained in the agreement is far too general to create a conditional grant within the meaning of the principle. It cannot be relied upon by DCC 123 to convert all positive obligations into conditional grants of easement so as to defeat the rule.

The rule applies; despite the parties’ express intention to the contrary.Dissent: MacPherson JA –

MacPherson believes that both the doctrine of benefit and burden, and conditional grant exceptions should be adopted into the law of Ontario. He would apply the benefit and burden exception to the rule in this case because Amberwood had notice of the burdens, the benefits are ‘real and substantial,’ and since Amberwood elected to accept them, it must also accept the burden of paying its share of the interim costs.

MacPherson also found conditional grant exception applicable. He believes that it is clear in the Agreement that there is a direct and intentional reciprocity between the benefits of the easements and the burden of the interim costs. On this token, since Amberwood had notice of the

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burdens and elected to accept the benefits, they must also accept the linked burden of paying its share of the interim costs

MacPherson disagrees from the majority, holds that legal reform can be accomplished by the courts and not only the legislators; so long as the change is necessary to keep the common law in step with the evolution of society, the change itself is incremental, and its consequences are capable of assessment.

He believes that the adoption of both these exceptions to the rule would result in incremental change with consequences capable of assessment and that they should therefore be adopted and applied to this case.

Ratio: the rule that positive covenants do not run with the land and therefore do not bind freehold successors in title is a settled principle that has been adopted in Canada and it cannot be circumvented simply because it may be unfair in some cases. Exceptions to the rule would violate the principle of privity of contract. Neither the doctrine of benefit and burden, nor the conditional grant of easement can be used to evade it.Questions and Comments

Rentcharge = a way of avoiding the rule against positive obligationso Rentcharge = a periodic payment annexed to a freehold enforceable against the freeholder currently in

possessionso will bind subsequent purchasers of the land even though it imposes a positive obligation, and despite the absence of privity of contract or estate

ii) Invalidity and Termination

Reader pp. 841-843 – Invalidity and Termination9. INVALIDITY AND TERMINATIONB. Ziff, “Restrictive Covenants: The Basic Ingredients”

With regards to requirements for the running of covenants [a promise to engage or restrain from an act], validity may be affected if the covenant itself is uncertain or contrary to statute (ex: if it is discriminatory and violates the Human Rights Code).

Covenants are created to control commercial dealings, but doctrine on restraint of trade has a limited application to restrictive covenants. A party acquiring a property that is subject to a restriction on the use of land is not relinquishing a right that he/she previously had, such as a pre-existing right to carry on a business on that property. If a person has a present right to carry on business and later surrenders that right under a restrictive covenant, such a restriction would be unenforceable if it is unreasonable

Termination - In theory restrictive covenants last forever and not subject to the rule against perpetuities. Termination can occur if the covenant was intended to last for a specific time. The Ontario Land Titles Act states a covenant that has no fixed date is deemed to have expired 40 years after registration. If a time has been fixed, covenant may be removed no sooner than 10 years from start. Enforcement of a covenant can be sought in equity, but not if a plaintiff has been guilty of delay or acquiescence. A party will be estopped from enforcing a restriction owing to acquiescence if past breaches are so significant as to deprive covenant of their purpose

Statutes - s 61 of the Ontario Conveyancing and Law of Property Act: a condition or covenant that the land or a specified part of it is not to be built on or is to be or not to be used in a particular manner, or any other condition or covenant running with or capable of being legally annexed to land, any such condition or covenant may be modified or discharged

o Function of the provision is to enable a court to remove a condition or restriction unsuitable and of no value. This judicial power should be used where the benefits of doing such outweigh any resulting detriment. Monetary loss should not be treated as a sole criterion. These guidelines afford a narrow ambit of discretion, and court has no power to order compensation if a termination is granted.

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Land and Titles Act - a condition or covenant may be modified or discharged by a court on proof it will be beneficial to the persons principally interested in the enforcement of the condition or covenant

F. Servitudes for a Public Purpose

Reader pp. 843-846 – Servitudes for a Public Purpose10. SERVITUDES FOR A PUBLIC PURPOSE

An easement is a non -possessory interest in land. Covenants that run with the land can restrict landowners right to build what and where on their property. A person claiming the benefit of an easement must show the easement accommodates the land and not just the occupier. A covenant that runs with the land must similarly touch and concern the land that benefits the covenant. There needs to be a dominant tenement that benefits from the limits that the easement or covenant places on ordinary rights of the holder of fee simple in the servient tenement. If valid, it is enforceable against the successors in title to the servient tenement.

Public spirited landowner - Subject to proper drafting, a testator can impose on her successors in a title requirement to maintain the land as a suitable forest or a public park. But unless the testator retains a dominant tenement that would be benefited by these restrictions she cannot use easement of covenant to bind her successors to use the land as she wanted. Recently, Canadian legislatures have allowed the creation of conservation covenants that bind servient tenement even without a dominant tenement to be benefited. The rational is to protect ecologically important land and promote wildlife habitation and land stewardship. A conservation easement is an agreement between land owner and usually the crown or a non- profit organization which becomes the conventee (holder of easement.) The landowner gives up right to harvest timber or subdivides property. Sometimes these conservation easements run with the land (even though there is no dominant tenement to be benefited.)

Some jurisdictions have enacted legislation similar to the American Uniform Conservation Easement Act, and include provisions that provide for government to designate specific lands as protected areas; ex: Natural Areas Protection Act, Environmental Protection and Enhancement Act. These servitudes permit people to restrict future uses of land; they must be created and registered by statute. Conservation organizations that are eligible to serve as covenantees or holders of easement provide assistance to landowners.

A well drafted easement should include features like: a) name and address of holder of conservation easement and the grantor b) extent of the rights and privileges c) obligations d) legal description of parcel of land e) time period for easement is to exist f) purpose g) description of prohibited practices to which conservation easement relates h) restoration practices that may be undertaken i) terms and conditions of public access j) liability between holder and grantor for any personal injury or property damage k) responsibility for costs

Landowners who burden their land with conservation easements may receive a federal or provincial tax benefit if property value is reduced. Amount varies depending on the development potential of each land and the nature of the restrictions

X. BailmentBailment: Division between ownership and possession

Lend your car to a friend. Bailor and Bailee (person receiving property…in possession with authority) V a licensea contract. They can deal with personal property. Can enter into an agreement where by Lametti

agrees to lend me his book for 1$/day, everything set by the contract. NOT BAILMENT. Distinction becomes important because the obligations may be different, especially on the bailee side.

Issues will come up when something happens to the personal property.

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Usually consensual: term or “at will”o Ex) Parking (leaving your keys), giving someone your coat at the theatre.

Gratuitousimposed the status on someoneo Voluntary assumptiono Ex) The finder cases (quasi bailee)…British Airways Gold Watch in the lounge. Turn it over to airline,

they become the bailees (they are accpeting). “In possession with authority”

o Examples: Parking (leaving your keys), giving someone your coat at the theatre. Facts always crucial to bailment Duty:

1. To return in their original form2. Or altered form3. Or returned to 3rd party

How much change is allowed? Grain CaseMercer v Crazen: Farmers deposited wheat in companies called Craven. Storage and marketing,

each with separate arm. They say don’t sell unless you get a certain price. Their Grain is combined with grain of other farmers. Craven is teetering on brink of insolvency. It sells the grain for less than minimum price and goes into insolvency. Farmers want their grain back.

o Why do they want their Grain back/claim in bailment? Use a property right to get to the top of the creditor list. In an insolvency situation

everyone is trying to get to the top. Example of using property rights for other purpose

o The court doesn’t find any difficulty that there was bailment. Says to give them back their grain. All the grain is the same. It is like money. Court is punishing company for selling what they shouldn’t have. Court is acting as if the grain is separate even though it isn’t.

Camper Van CaseLetourneau v Otto Mobiles: Otto repairs camper vans. Letourneau brings in van. O says they assume no liability, contract is signed. Van still broken. L goes back, service manager says leave the Van in parking lot near servicers and put key in compartment in Van (no K), I’ll get it Monday. Van gets stolen. L sues Otto calling it a bailment.

o Is it a K of Bailment? What factors point to bailment? Normal Rule: Physical property must be put into control of bailee (ex: drop coat off at coat

check) Here, van was put into someone else’s property and there is no exchange of keys Otto says no bailment because we never had control of the Van

Role of the Employee: Employee needs to have authority (Lametti brought up, not in case) Another customer is told to do the same thing. So Otto gave instruction meaning it was a fairly

regular…requisite system.o Court finds bailment despite normal rule because there is a requisite system in place. o Holistic Circumstances: Requisite/ acceptance of control that must be established on the facts

Parking CasesHeffron (1974-parking case)o Respondent parked motor vehicle in lot. Got a ticket saying not responsible for damages. At the

request of parking company, was told to leave keys in the car. Signs everywhere repeating what it said on ticket. Car was stolen. Usually attendant would take keys into office across the street where they owned another lot. In this case that didn’t happen.

Is there bailment? Yes, the set of factors below are met and they point to control.

o Bailee is held to be responsible for the car.o What about stuff in the car? ordinary run of the mill stuff yes, if not, it

dependsMinichiello: parks car for 40 cents. Tells attendant he has a suitcase full of jewels. Car gets stolen. Held liable because the bailor gave notice to the bailee. Bailee could have said no. ALWAYS A QUESTION OF FACT

Ontario license/airport cases: If you (1) are just getting a space, (2) don’t leave keys, and (3) there is no supervision, it is a license and not a bailment. That requisite level of control isn’t there.

Exculpatory Clauses: They are allowed, but there is skepticism

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o Must be accepted by the bailoro Actual or constructive notice required: Placement of sign, size of printo Contra Preferentum ruleinterpreted against bailee (person drafting)

In Otto: Yes for the first agreement, but not for 2nd where there was no written agreement Fundamental Breach-Hunter Engineering 1989 SCC

o Can a clause exculpate from the very nature of the promise?o Rule of law or rule of construction?

If law, can’t ever be done If construction (pattern), then can be done where (1) equality of bargaining power exists;

(2) must be clear and unambiguous; and (3) actual constructive notice.o A rule of construction, hence exculpatory is possibleo Must be (1) clear, (2) can’t be unconscionable, and (3) must not go against public policy-Tercon

SCC 2010 Standard of Care-To what level do we have the bailee liable?

o Old View: Coggs v Bernard (1703): Relaxes the early (strict) standard of liability Facts: Bernard was transporting several casks of brandy; lost one Held liable on the basis of negligence, NOT strict liability First systematic attempt to classify bailments into 6 categories. Eventually turns into the below

categories. If you had to pay bailee (benefit of bailee) then they are at the highest level-strict

liability At other end, if whole thing was for benefit of bailor (friend takes person car while on

vacation). Bailor will be held to low standard If in the middle it approaches what we know as negligence.

o Post Modern view (today)Negligence across the board Seen in in Punch, Letourneau: Did bailee show that appropriate care was taken, or that his

negligence did not contribute to the loss. Burden of proof shifts in bailment-Presumption of negligence may arise on bailee, who is presumed to best

know what happened. Bailee’s defense: system in place; courts have found that provided you have the system, you won’t be liable. Ex) Coat check, if they have a system for tracking and they can’t explain why it got stolen, they have a chance to defend themselves.

o Opposite of tort Sub-bailment: Bailee can assign object to someone else. However, terms of the original agreement (written or

oral) have to allow it. Bailor can sue sub-bailee.o If B or (A) has right to terminate (at will), then can sue sub-bailee (C).o Punch v Savoy’s CoA(1986): Punch gives ring to Savoy, postal strike, Savoy gives ring to Walker.

Walker uses CN for shipping (doesn’t tell Savoy-but says they would have given him permission anyways). If ring lost, then P sues S in K, W & CN in tort. Savoy and Walker are liable in sub-bailment because they didn’t notify owner of unusual and system because they undervalued insurance. CN is liable because they can’t point to a set of procedures and processes to explain the loss.

Exculpatory clause, as between S&W? Only if expressly or implied consented to by P. In this case it wasn’t drafted clearly

enough to provide for theft of ring by employee (likely cause of the loss) If there is a clause it better be good.

License v Leasehold: A leasehold gives you a set of property rights that are good against owner undefinedproperty right. A license is a specific right to do something for a period of time with the property of another person.

Reader pp. 662-694 – Bailment 8. BAILMENT Can be thought of as a “lease of a chattel” as it involves a transfer of possession of goods from bailor to a

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bailee. Ex) If I park my car in a parking lot, I will likely be regarded as having bailed it to those controlling the

lot. Indicative if I hand over the keys. If I were to retain control over the car and not hand over the keys, a license would instead be granted.

Mercer v. Craven Grain Storage (1993)Facts: Plaintiffs (Mercer) are 3 farmers working in partnership. They became members in a Grain Marketing Scheme whereby through a company called Craven Grain Limited, they disposed of their grain. The defendants, Craven Grain Storage limited, is a separate entity from Craven Grain Limited, and acts as the storage facility. The plaintiffs deposited 2,200 tonnes of milling wheat. Upon deposit it was mixed with grain from other farmers and couldn’t be identified as separate. Plaintiffs told Muxlox, GM of both companies not to sell their wheat until selling price of 160 was achieved. Contrary to instructions grain was sold at a lower price and plaintiffs weren’t paid. Soon after Craven Grain Limited was insolvent. In contract it said that grain should remain property of grower but damage or loss of grain shall be born by the society and that any liability undertaken by the society should not exceed the amount recoverable by the society under their insurance policy. Issue: Did the defendants breach their contract in the nature of bailment?Holding: The plaintiffs were entitled to delivery of their share of grain when price was not met. Because the defendants were unable to deliver they are liable in conversion in disposing of the plaintiffs’ share of the mass, in breach of contract in the nature of bailment, under an implied term that the grain would be delivered to the plaintiffs or their order, and pursuant to contract because the defendants had lost the plaintiffs’ share of grainLegal Reasoning: Brown and Russell Essence of bailment is that the bailed property should be returned to the bailor or applied in accordance

with his instructions when the bailment terminates. The goods need not be in their precise original form when this event occurs in order for the transaction to qualify as bailment. What is necessary is that the goods themselves, whether in altered or original form, be returnable and not merely some other goods of equivalent character or value. There must be a clear physical heredity between what has been delivered to the bailee and what must be retuned.

o This rule has given rise to difficulty in milling/storage contracts where goods are intermingled. In South Australian Insurance Company v Randell a firm of millers were attempting to enforce a claim against their insurerers in respect of a quanity of wheat which had been destroyed by fire on their premises. Insurer’s said millers held the wheat as bailees for the farmers and the terms of the relevant policy did not cover goods that were subject to bailment because the millers had not insured them specifically as “goods held in trust or on commission”. The millers denied that they were bailees. They showed that their trade practice was to intermingle wheat and use the whole pool. The Privy Council said the above course of dealings failed to create bailment and instead gave rise to a contract of sale because the farmers could not demand the indentical consignment.

o This case differs because In Randell, Miller retained discretion as to how they were to deal with the wheat deposited

with them…Not the case hereQuestions and Comments1. Compare case with Lawlor v Nicol: “Whether the party supplying the grain is to receive a price in money or an equivalent quantity of grain, or has the option to do either, it is really a sale. The property passes to the warehouseman and is to pay in grain or money.”Letourneau v. Otto Mobiles Edmonton (1984) – Alberta Facts: Letourneau (P) owned trailer which they delivered to parking lot adjacent to Otto Mobiles Edmonton (D) in order for D to repair the trailer the next day. In the K b/w the parties, there was a waiver of liability executed by P which stated that “D is not responsible for loss or damage in case of fire, theft or any other cause beyond D control”. Also, when P delivered trailer after-hours, a manager showed P where to put trailer (Intuit lot adjacent to facility) and said the trailer would be picked up next morning which is

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customary practice of D. When P delivered trailer, another customer was at the lot and taking the spot, but P convinced the 3rd party to let P use it. P left, and the 3rd party were confronted by Intuit owner saying to move the trailer from property or it would be towed. Trailer was stolen and P seeks damages from D for loss of $27,500 but this case is concerned only with liability. Issues: (1) Did the relationship of bailor-bailee exist? (2) If so, did D fail to meet standard of care owed to P? (3) If so, was P’s loss caused by D’s failure to meet standard of care? (4) Did P’s negligence contribute to loss? (5) Did D breach K-ual obligation to P?Holding: (1) Yes. (2) Yes. (3) Yes. (4) No. (5) Doesn’t deal with it. Conclusion = D is liable for 27.5kLegal Reasoning (Johnstone J):

Definition of Bailment see definition from Cory J in Punch v. Savoy’s Jewellers Ltd.(1) The Existence of Bailment Relationship

Bailment here would be one of location operis faciendi contains 2 elements: “a K for services, coupled with a bailment of the article upon which those services are to be performed” (Coggs v Bernard (1703)). The workman performing the services is a “bailee for reward” for as long as chattel upon which work is done is in workman’s possession.

Essential element = possession of chattel by bailee . o Hefferman v Elizabeth Irving Service Center (1980) P parked truck at side of D service

station and truck was demolished. Everything done by P here was customary/standard practice when getting repairs done. Bailor-bailee relationship existed.

o Appleton et al v Ritchie Taxi (1942) P left car with parking lot attendant w/ keys inside as required. Car stolen. Bailor-bailee relationship existed where attendant was agent of lot because D had possession.

o Application P never physically delivered possession by direct delivery of keys to D, BUT they complied with instructions of manager re drop-off. This after-hours delivery was common practice for D shop, proven by other customers dropping trailer off at same time as P.

*Possession can be inferred when necessary. Here, P had a service K with D. Possession by D was necessarily incidental to the K since D needed to assume control to perform repairs. P acted in customary way.

P was given explicit instructions by manager which they followed for purpose of getting repair. Temporary possession passed to D wen P left trailer.

(2) Duty of Standard of Care Once Bailment established, burden shifts to D to prove on a balance of probabilities that it met

standard of care required. “taking such care of chattel as would prudent man of own possessions. Bailee is liable for loss of goods arising out of his servant’s theft, for when servant carrying out his duties. It matters not whether servant is careless, goods are stolen by stranger, or if Servant steals them.” (Punch).

Baillee for Reward v Gratuitous Bailee Doesn’t matter which it is. In either case, the obligation of bailee is to take same care of goods

received as a prudent owner, acting reasonable, might be expected to take of his own chattels. Waiver of Liability Clause

D should be entitled to rely on any limitation clause available to it and must be strictly construed (Murray v Bitango (1996))

o “Such provisions and conditions will be strictly construed and will be held not to exempt bailee from responsibility for losses due to his negligence unless words are clear and adequate for purpose or there is no other liability to which they can apply” (Brown v Toronto Auto Parks (1955))

o Application no written contract and no work order, BUT a verbal agreement where D through manager agreed to repair trailer. Waiver of liability clause in previous work order must be strictly construed and confined to that work and not later work.

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(3) Was the loss caused by D’s failure to Meet the Duty of Care P must establish that loss/damage to the bailed goods occurred while the goods were in possession of

bailee. Only then does the onus of proof shift to the bailee to negative negligence (Calgary Transport Services Limited v Pyramid Management).

Application D has failed to establish that the conduct of employees was consistent w/ standard of care that a prudent owner, acting reasonably, might be expected to take of his own chattels. Trailer was left on Intuit property consistent with agreement and consent of manager but as his discretion. D is responsible for not providing a safe location for storage of the trailer given that it invited the P to deliver possession of the trailer to it during biz hours.

o D breached duty of care to properly secure vehicle. It failed to take reasonable steps to do so resulted in loss.

(4) Contributory Negligence Contributory Neg failure for P to take reasonable care with result that P contributes to own loss. D

must prove that P was negligent and P’s negligence was cause of loss. Test is reasonable foreseeability of probable or possible risk (Heller v Martens)

o Rarely found in bailment cases Application P pad-locked hitch for trailer and hidden key at request of D. P were comfortable

leaving trailer there because it was based on instructions given to them by D. Manager at no time indicated to P they were parking in Intuit lot at own risk. TF, NO contributory negligence on paty of P.

Ratio: (1) Bailment here would be one of location operis faciendi contains 2 elements: “a K for services, coupled with a bailment of the article upon which those services are to be performed”(2) Once Bailment established, burden shifts to D to prove on a balance of probabilities that it met standard of care required. “taking such care of chattel as would prudent man of own possessions”.(3) Waver of liability provisions and conditions will be strictly construed and will be held not to exempt bailee from responsibility for losses due to his negligence unless words are clear and adequate for purpose or there is no other liability to which they can apply(4) Contributory Neg is failure for P to take reasonable care with result that P contributes to own loss. D must prove that P was negligent and P’s negligence was cause of loss. Test is reasonable foreseeability of probable or possible risk Comments

Coggs v Bernard where bailment is found to be for the sole benefit of the bailee, a higher duty of care is expected (even slight negligence is actionable. where the bailment is for the benefit of the bailor, liability attaches if gross negligence has occurred. For bailments of mutual benefit, ordinary negligence is the standard of care required of the bailee.

If it can be shown that goods have been damaged or lost during course of bailment, onus shifts to bailee to disprove negligence

A bailee’s liability is not restricted to negligent acts or omissions, also applies to strict liability. Contributory Negligence can be found in s.3 of Ontario’s Negligence Act Minichiello v Devonshire Hotel (1978) – BC Car parked at lot with jewelry in it, car stolen. Held

that bailee liable for loss of jewelry too cuz the P put the D on notice that there were valuables in car. Bailee is estopped from denying the title of the bailor unless and until a person w/ better right to the

bailed goods intervenes (Biddle v Bond (1865))A bailor assumes responsibility for state of goods bailed (M et al v Sinlair c.o.b. Sinclair’s Riding Stables 1980)M et al. v Sinclair c.o.b. Sinclair’s Riding Stables (1980) – Ont Facts: Millers rented horses from Sinclair. George Miller requested slow horses for himself and daughters but rented a more spirited horse for Michael Miller, his son. During ride Michael fell from his horse and injured his hip. Trial judge accepted evidence that the stirrup had fallen off while he had been riding and that

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this caused the fall. In a waiver the defendant denied liability on grounds that (1) as a condition of bailment, the plaintiffs executed a waiver of liability for bodily injury or property damage (2) that the maxim volenti non fit injuria (to a willing person, injury is not done) applied to the facts thus absolving the defendant. Issue: Was the bailor liable?Holding: YesLegal Reasoning: Lerner Case was founded in bailment for reward that carried an implied warranty of fitness and also in

negligence Hyman v Nye: basis for law for standard of care in Ontario. Plaintiff was injured when horse drawn

carriage that he rented fell apart. Although the action was based in negligence, the court held that the plaintiff could possibly recover on breach of warrantyA person who lets out carriages for hire is not responsible for all defects. Rather he is responsible for all defects which care and skill could guard against. The carriage should be reasonably fit and proper: As fit and proper as care and skill can make it to carry a reasonable number of people, conduncting themselves in a reasonable manner, and going at a reasonable pace, on reasonable grounds.

In this case, the strap holding the stirrup was defective or improperly secured. Care and skill could have avoided the injury.

Waiver fails (1) because Michael (10) and sister (8) were under age of accountability to sign. (2) Principle of contra proferentem means that ambiguous clauses must be interpreted against author. In this case clause wasn’t specific enough. Just said bodily injury or property damage. Didn’t discuss by whose fault…Sinclair or his employees or how.

On facts Miller or his son did not freely and voluntarily accepted risks so volenti non fit injuria does not apply.

Ratio: Standard for contract in the nature of bailment is that item be reasonably fit and proper for use.Punch v. Savoy’s Jewellers Ltd. (1986) – ONCA Facts: L took an antique ring worth $11k to S for repairs. S couldn’t do the repairs so sent ring to W by registered mail. Practice in jewellery trade is to send rings by registered mail, with a value of $100 shown for insurance purposes. When ring was fixed, there was a postal strike so W and S agreed to use CN’s service. W and S did not discuss the terms and the manner of carriage. On the CN form, the values of the items were listed in the $300-700 range (not $11k). CN’s policy was not to transport jewellery worth more than $300 – was set out in brochures. Furthermore, the CN shipping form which W’s employee signed limited CN’s liability to $50. Seemed like W’s employee didn’t look into CN’s policies and didn’t make them aware of the value of the ring. W also did not discuss the terms and conditions of the shipment with S. The ring was never delivered by CN to S. Was probably stolen by one of CN’s employees. CN never gave a reason for the loss and never looked into it.JH: Trial judge found that S was a bailee and W and CN were sub-bailees of the ring. Determine that W and CN were in breach of duty owed to L, but S was not. Issues: Were S, W and/or CN bailees or sub-bailees of the ring? If so, did they breach a duty to L?Holding: S and W are liable for breach of their duty as bailees – failed to (1) obtain instructions from owner as to the means of carriage in light of the postal strike (2) give proper valuation of the ring (3) failed to stipulate terms of insurance coverageCN is liable for unexplained loss of the ring. S and W are to be indemnified by CN for any loss which they must make good to the owner. W, however, can’t recover any costs from CN because it fixed the valuation of the ring at $100.Reasoning: (Cory JA)Duty of Bailees

Bailment = delivery or personal chattels on trust, usually on a contract, express or implied, that the trust shall be executed and the chattels be delivered in either their original form or an altered form as soon as the time for which they were bailed has elapsed

The legal relationship of bailor and bailee can exist independently of a contractcreated by the coluntary 133

taking into custody of goods which are the property of another (this is sub-bailment) S was a bailee for reward and W and CN were sub-bailees for rewardtransfer of ring = bailment Duty of care = the bailee for reward must exercise due care for the safety of the article entrusted to him by

taking such care of the good as would a prudent man of his own possessionso Bailee is liable for the loss of goods arising out of his servant’s thefto Morris v. CW Martinwhen goods are damaged or lost while in possession of a bailee, the bailee

must prove either that he took appropriate care of them or that this failure to do so did not contribute to the loss

Burden on bailee to show that the damage occurred without any neglect, default, or misconduct on the part of the bailee or any of his servants to whom he delegated the duty

Must show that the took due care to employ trustworthy servants + they exercised diligence How shoud bailment principles be applied to the facts of this case?

(1) Duty owed by W to the owner of the ringW was in breacho W was remiss in not discussing the manner of transport and possibility of obtaining insurance with So W was negligent in reporting a much lower value of the ring when it arranged for shipmento W did not take such care of a valuable ring as would a reasonable and prudent owner

(2) Duty owed by SS was in breacho S accepted a new method of carriage without inquiring as to the feasibility and cost of obtaining

insuranceprovision of insurance is an essential term of a contract of carriageo Prudent owner would have taken this step for goods of this type

(3) Duty owed by CNCN was in breacho The relationship of bailment combines elements of contracts and tortsregarding exempting

clauses, a sub-bailee is able to rely on the clause against the owner only if the owner expressly or impliedly consented to the bailee making a sub-bailment “containing those conditions, but not otherwise” – S did not consent to the terms and is therefore not bound by the clause

o Although there was no contractual relationship between L and CN, the Morris case expanded the scope of bailment to include someone in the position of L

o CN is liable to L since its contract of carriage specifically contemplates the existence of an owner to whom a duty of care is owed

(4) The effect of the limitation of liability clause in determining the claim of W for indemnity from CNo Where there is an unexplained loss of goods which may have been occasioned by theft by an

employee, the bailee should be liable for that loss unless the contract of bailment contained a clause clearly exempting the bailee from loss occasioned by the theft of an employee

o The present disappearance of the ring amounted to a fundamental breach of the contracto IF CN had shown that is exercised care, CN would have incurred no liability (system)

Ratio: when the goods are damaged or lost while in possession of a bailee or sub-bailee, he must show that he took appropriate care of them or that his failure to take appropriate care did not contribute to the loss/damage.Questions

S’s failure to notify L that the ring had been sent to Toronto may also be a breach of the bailment Parties are allowed to alter the normal rules governing obligations of care It is possible to contract out of liability even for a fundamental breach of contract

XI. Registration & RegistrationPre Class questionsHow important is a registration system? Is it necessary? If we did have a torrens systemsShould there be an insuramce scheme?

Registration has extreme practical and theoretical importance.

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If it ain’t registered, is it still a right?o Before the registry/abstract all that we had was possession. o We still have smells of possession. Today we have a registry system. Many people will look at this…

buyers, the bank, subsequent creditors, or the credit line agency, the government If you have a mortgage and want to get a line of credit using your house as collateral people

will check it to see the status. Difference between common law and equity

o Will have to be coordinated with the register. What do you register?

o Homes, mortgages, charge like credit lines, leans (work on the house) o Caveatsnot the charge itself but a notice or flag

How do you register?o Either the documents themselves. Watch out for small stuff like easements/restrictive covenants.

This is the case in the martimes and Quebec Potential Problems: Complexity, time, mistake

o Torrens has you register the titledon’t look behind the curtain. You can rely on it. Potential Problems: Starts to interfere with rights if things are registered, there can also be

mistakes. This can be dealt with by insurance (in principle). Land is something different and monetary compensation might not be enough. This system can create two innocent parties-Ziff Susan Laurence case. Mistake gets made (Holt Renfrew)

o How do you run a register? Racefirst to register Noticefirst right to get published…perfection process Race & Noticesituation now

Missing, Mistakes, etco Who ought to be bear the burden?

The person who committed the wrongful action Registrar…the state/insurance fund Someone acquiring the right Someone selling the right

o Who is the least cost risk avoider?/Who is in the position to police mistakes, who ought to be responsible?

State and registry, hence the insurance? But what about when there is fraud…state can’t prevent that from happening? Posner says owners are in the best place to know and is the least cost avoider

Sometimes a legal right is better protected than an equitable righto But again, notice, actual or constructive gives some measure of reliefo Lametti likes the outcome in Holt Renfrew but didn’t like how they delt with the lawyer. Once the

lawyer knew that there was a problem and vendors were basing belief he should have notified the appropriate party

Shows us that even Torrens systems are getting softened around the edges In General

o We are moving towards a Torrens systemo Cost, certainty and efficiencyo No great loss of fairnessnot speaking about how registry and “settled” expectations interact with

underlying rights of aboriginals Implications on property

o Theory and Property

A. Priorities

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Reader pp. 897-917 – Priorities at Common Law and in Equity1. INTRODUCTION

This chapter sees the return of two foundational principles:o Divisibility of property rights (rights over a parcel of land can be fractured and disseminated

to a huge class of “owners”);o Relative nature of title under Canadian law (e.g., can B show a right superior to C in a

conflict, even if both must yield to the superior rights of A?) As a result of these principles, doctrines are necessary to order competing claims

o General: “first in time is first in right.” But not always (e.g. adverse possession) Legal and equitable principles have been supplemented by statutory measures for the registration

of land claims.o Though procedural, registration can in fact affect priority ranking, and can thus alter

substantive rights (e.g., failure to register a right resulting in subordination of that right)2. PRIORITIES AT COMMON LAW AND IN EQUITYS. Levmore, “Variety and Uniformity in the Treatment of the Good-Faith Purchaser”

TMA: This is a theoretical piece of doctrine to illustrate the balancing of interests that is required to deal with “good-faith purchasers.” The author uses the example of a thief, an owner, and a buyer.

The law must decide who bears the cost of theft: original owner, or the (good-faith) buyer of the stolen prop

o Depending on a legal system’s approach, it could reasonably choose to burden either the owner or the buyer.

o “‘Property law’ … looks for a general rule (as between [the owner] and [the buyer]) and only infrequently allows particular circumstances to alter the rule.”

o “Different intuitions about [the owner’s] and [the buyer’s] relative abilities to take extra precautions lie at the heart of the variety [in allocating loss] that different legal systems display.”

o “Reasonable people can easily disagree over whether [the owner] or [the buyer] is the second-best target of the law-enforcement system [after the thief].”

TMA: The purpose of this extract is to justify the plurality of approaches, from a public policy perspective. It doesn’t contain much actual course content.

Comments The basic consideration in this area of property law: “Where a defective transaction has occurred,

and where the original owner and purchaser are without fault, the law must determine who should be entitled to what remedy.”

Before registration systems, such conflicts were resolved through the combined effect of legal and equitable principles. Four “conflict permutations” can arise:

(1) A legal interest followed by another legal interest (L v L)(2) A legal interest followed by an equitable interest (L v E)(3) An equitable interest followed by a legal interest (E v L)(4) An equitable interest followed by another equitable interest (E v E)

Keep in mind two Latin maxims:o Nemo dat quod non habet (one cannot give that which one does not have)o Caveat emptor (buyer beware)

Northern Counties of England Fire Insurance v Whipp (1884)Facts: In 1878, Crabtree, the manager of the plaintiff fire insurance company executed a legal mortgage of freehold property in favour of the company and gave them the title deeds. Crabtree then made another legal mortgage (of other freehold property) to the company, and gave them the title deeds. The deeds of the mortgaged properties were placed in a safe. A few months later, Crabtree removed the deeds from the safe (but left any evidence of the mortgages) and presented them to Mrs. Whipp as security for a mortgage in

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which she advanced him money. Whipp had no knowledge of the previous mortgages in favour of the company. Crabtree then went bankrupt and the company liquidator brought an action for foreclosure against Whipp. Whipp sought a declaration that the company’s securities were fraudulent and void as against her, or in the alternative, that her security be given preference and thus that the property in question be conveyed to her. At first instance, the latter claim succeeded. The company appealed to the present court.Issue: “What conduct in relation to the title deeds on the part of a mortgagee who has the legal estate [i.e., the company], is sufficient to postpone such mortgagee in favour of a subsequent equitable mortgagee [i.e., Whipp] who has obtained the title deeds without knowledge of the legal mortgage?”

Is the legal estate holder’s gross negligence (regarding the holding of its deeds) sufficient to postpone its legal mortgage in favour of Whipp’s equitable mortgage?

Holding: NoLegal Reasoning (Unknown Justice):

“Before the court can find a fraudulent intent in the legal mortgagee [company], it must be shown that [it] concurred in some project to enable the mortgagor [Crabtree] to defraud a subsequent mortgagee [Whipp].”

o The initial mortgage holder must help with, or at least know about, the fraud to the subsequent mortgage holder to forfeit its priority.

“The court will not postpone the prior legal estate [mortgage, in this case] to the subsequent equitable estate on the ground of any mere carelessness or want of prudence on the part of the legal owner.”

The court finds that there was great carelessness on the part of the company regarding how its directors dealt with their securities (i.e., how they failed to monitor their deeds in the safe). But this does not amount to fraud.

o The company’s carelessness was “likely to injure and not to benefit the … company” and therefore shouldn’t be evidence of fraudulent behaviour.

Because it did not commit fraud, the company is “entitled to priority and … the usual consequent relief.” (Its gross negligence is not enough to displace its priority).

Ratio: Only a legal estate holder’s fraud justifies the court in depriving it of the benefit of the legal estate in favour of an equitable estate holder. Gross negligence is not enough.QUESTIONS/COMMENTS

Whipp is from the UK in 1884. “The current view is that gross negligence by the prior holder can suffice” as conduct which will postpone that holder’s priority.

Other circumstances based on representations made, or appearances given, may estop a legal holder from asserting priority against a second claimant (but they aren’t listed).

P.A. O’Connor, “Security of Property Rights and Land Title Registration Systems” Thesis: “An equitable interest is not enforced against a bona fide purchaser of a legal estate who has

given valuable consideration and had no notice of the prior interest.” Constructive notice: If a purchaser fails to show due diligence in searching for prior interests in

property, they will be deemed to have constructive notice of prior interests that they should have discovered.

o Corollary: if a purchaser made the inquiries that a reasonably prudent purchaser would make in the circumstances, s/he was protected against any prior interest that s/he failed to find.

o A rule developed in equity to give purchasers an incentive to seek out information about prior interests

NB. There is a reasonableness standard b/c some equitable interests will be exceedingly difficult for purchasers to discover (e.g., oral transactions, with no paper trail).

Information costs “are split between the earlier owner and the purchaser, with the purchaser bearing the lion’s share. The earlier owner bears the risk of loss only if her equitable interest is one that would not be revealed by the usual inquiries.”

Chippewas of Sarnia Band v Canada (AG) (2000; ONCA)Facts: In 1839, Aboriginal leaders purported to sell lands to Mr. Cameron. Title to the lands passed in 1853

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and letters patent for the lands were issued to Cameron. Under common law rules governing Aboriginal title, land is inalienable except to the Crown, and the mode of transfer to the Crown is by surrender. No surrender occurred, but the letters patent were issued under the mistaken belief that it had. 150 years later, the Aboriginal Band disputed title to the patented lands. In the intervening period, the lands had been subdivided, sold and re-sold to a string of private owners, all of whom were thoroughly unaware of the irregularities in title. At first instance, the landowners succeeded in rejecting the Band’s land claim, yet it was also found that the land had never been lawfully surrendered to the Crown. The Court of Appeal confirmed that finding and further held that the claim was not barred by prescription.Issue: Are the Chippewas entitled to the remedies they seek (declaration that the patent is void and entitled to possession of the disputed lands)?Holding: No.Legal Reasoning (Per Curiam – i.e., no single judge listed):Re: implications of Crown mistakes and its granting of a patent:

“The administration of government is a human act and errors are inevitable. The rights of a party aggrieved by the error must be reconciled with the interests of third parties and the interests of orderly administration” (907).

“A Crown patent is accepted by all as the basis for rights to real property and no purchaser would consider it necessary to go behind the patent to determine whether or not it had been validly granted” (907).

Re: place of Aboriginal claims in Canadian courts: The Band relies on the principle of nemo dat quod non habet (one cannot give that which one does

not have) and argues that because there was no surrender to the Crown, the Crown could not grant the lands to Cameron.

The Band also argues (908-909):1. “Aboriginal title is strictly legal rather than equitable in nature”2. “Application of equitable doctrines to preclude the Chippewas’ claim to the lands would

constitute an unauthorized extinguishment of aboriginal title in favour of private interests, contrary to the fundamental rule that aboriginal title can only be surrendered to the Crown.”

However, the Court finds that because the Band seeks an equitable remedy (by relying on the Court’s discretionary powers), it is appropriate to apply principles of equity in its reasoning.

The Nemo Dat Principle (“one cannot give that which one does not have”) This principle does not automatically invalidate the claim of a third party. “Competing claims between subjects [have been] reconciled according to concepts akin to modern

registry systems and equitable doctrines of constructive notice. The nemo dat principle [does] not automatically invalidate Crown patents. … [T]he interests of innocent third parties must be considered” (912).

The innocent third party land-holders raise two equitable defences:1. Laches and Acquiescence2. Good Faith Purchaser for Value

Defence 1: Laches and Acquiescence “Laches and acquiescence” is an equitable doctrine arising from a delay by the other party in

asserting a right (in this case, the 150 years before the Band launched its claim). Test for its applicability (from La Forest J in M(K) v M(H), 1992): The defendant must show that the

plaintiff, by delaying the claim has either (913):1. “Acquiesced in the defendant’s conduct, or2. Caused the defendant to alter his position in reasonable reliance on the plaintiff’s

acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb.”

NB. Mere delay is insufficient to trigger the doctrine The motion judge found that by 1851 at the latest, the Chippewas “knew with certainty that the

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disputed lands had been taken from them without a surrender” (913). Further, they “actively acquiesced in the transfer by seeking and receiving payment of the

proceeds” (913). Therefore, the equitable defence of laches and acquiescence applies to the innocent third parties

(current landholders), in this case.Defence 2: Good Faith Purchaser for Value [i.e., with consideration]

Per the motion judge: this defence is “designed to protect the truly innocent purchaser who buys land without any notice of potential claim by a previous owner” (914).

There was “no evidence to suggest that any subsequent owner [after Cameron] knew or ought to have known that the Cameron lands were unsurrendered Indian lands” (914).

Therefore, the defence of good faith purchaser for value is applicable here. NB: “it may well be that where the denial of the aboriginal right is substantial or egregious, a rigid

application of the good faith purchaser for value defence would constitute an unwarranted denial of a fundamental right” but this is not the case here (915).

Conclusion: The established rules governing the availability of public and private law remedies require the court to take into consideration both equitable defences (916).

As a result, the Chippewas are not entitled to a declaration that the patent is void or to possession of the disputed lands.

Ratio: (1) Where equitable remedies are sought, the claim is subject to equitable defences (in this case: (a)

“laches and acquiescence,” and (b) “good faith purchaser for value”).(2) The Chippewas’ (a) delay in asserting their claim and the (b) reliance of innocent third parties

on the apparent validity of the Cameron patent are both important equitable considerations that protect the third party landowners in this case.

*Notes/Comments: Leave to appeal to the SCC was denied See Reynolds reading, below, for criticisms of this judgment TMA: much of this case relates to the question of applying legal and equitable rules in the context of

aboriginal title claims. However, within the context of the course, the take away is likely more related to the discussion of the equitable doctrines themselves, and their application in a context of debate as to whether the prior right is legal or equitable.

J. Reynolds, “Aboriginal Title: The Chippewas of Sarnia”Reynolds lists 5 comments on the court’s application of the “bona fide purchaser for value” (AKA good faith purchaser for value) doctrine:

1. The doctrine only applies if the interest being defeated is equitable rather than legala. Because the Chippewas’ interest was both legal and equitable, the use of this doctrine should have

been rejected2. The doctrine only applies if the interest being given priority is legal rather than equitable

a. The landholders’ claim is based on a Crown grant made in breach of the Royal Proclamation of 1763, so they do not have any interest, let alone a legal interest sufficient to make this doctrine relevant.

3. The doctrine is an exception to the basic rule of both equity and law that interest in land rank in order of creation

a. Aboriginal title pre-dates contact with Europeans, and without valid extinguishment or surrender this should be the default rule applied

4. The doctrine is not an exception to the nemo dat rulea. “The good faith of a purchaser cannot create title where none exists.”

5. The Court seems to confuse the equitable nature of the remedy being sough with the nature of the interest of the claimant

a. The doctrine is based on the classification of the relevant interests in land, not on the nature of the relief sought.

Rice v. Rice (1863)What is the rule of a court of Equity for determining the preference as between persons having

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adverse equitable interests? Ratio: In a contest between persons having only equitable interests, priority of time is the ground of

preference last resorted to. If one has on other grounds a better equity than the other, priority of time is immaterial. When looking for better grounds, court will apply same broad principles of right and justice and will look at:

1. The nature and condition of their respective equitable interests2. The circumstances and their manner of acquisition3. The whole conduct of each party

B. Registration

Reader pp. 918-973 – Registration 3. THE ADVENT OF REGISTRATIONIn early years of CML there were no land registration systems. Purchaser of fee simple was responsible for figuring out who had other interests in the property and if person selling actually held a real interest in that property. All discovery responsibilities lay with the purchaser.T.G. Youdan, The Length of a Title Search in Ontario Title to land is not absolute, it is based on possession and is relative to the rights of others. Ownership

occurs when someone has a better right to possession than others. In 18th century England, proof of title was facilitated by an abstract: A summary of documents and

events relative to the vendor’s title. Vendor required to show a chain of title back to a good root of title (proof of legal and equitable title) at least 60 years old. This was prepared by the vendor and verified by his solicitor. It was then given to the purchaser for examination by him, his solicitor and the conveyancing council.

o Applied in the absence of contrary contractual provisionso Title proof period did not affect claims of 3rd partieo Did not determine the quality of the title to which the purchaser was entitled; only concerned with

the length of the affirmative proof of the vendor’s titleComment From 18th century onwards various registration systems emerged to minimize purchaser’s risk in

land transactionsDeed registration systems Deed registration systems encourage the owners of property interests to register their rights.

o Despite being government run and publicly available, these systems do not provide guarantee that seller has a valid title. Purchasers are still required to conduct a chain of title search.

o The value of the system is that it encourages the registration of interests, and makes the process of searching title easier than it had been in the past

Three variations of deed registration systems 1. Race System: Priority is based on the order of registration2. Key effect of registration is to afford notice of a prior right3. Race-Notice System (most common): Priority is accorded to an otherwise valid subsequent interest if

two circumstances exist: The second interest must be acquired without notice of the first. The subsequent interest must be registered 1st.

Canadian courts have held that if a purchased has actual notice of an existing interest then the prior interest will retain priority, despite the fact that the prior interest lost the race to the register.

Canadian Imperial Bank of Commerce v. Rockway Holding (1996)-Ontario Facts: CIBC registered a charge on the property owned by Katmos. Charge was to secure a sum of 1.25 million loaned to Katmos by CIBC. A year and a half earlier, Katmos entered into a license agreement with Rockway granting them sole and exclusive license to remove all gravel from their property. Term was for life of the pit and for exclusive right og Rockway. That license agreement wasn’t registered until after

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Katmos has made agreement with CIBC (1.5 years after CIBC made registered their claim). Issues: Who’s charge has priority Holding: Rockway, CIBC had actual notice of some sort of agreement and failed to ask questions once they had this notice.Legal Reasoning (Salhany J): 71 of the Registry Act: Priority of registration prevails unless before the prior registration there has been

actual notice of the prior instrument by the person claiming under the prior registration. Is license an instrument? Yes, it is a profit a prendre (right to remove gravel, soil, and minerals from

someone else’s property) Did Applicant have actual notice?

o So long as a party knows that another has the right to use the property in question, that will be considered actual notice even if the party has not seen or has no knowledge of the instrument creating that right.

o No requirement that there be notice of precise terms of the agreemento Test: Whether the registered instrument holder is in receipt of such information as would cause a

reasonable person to make enquiries as to the terms of the legal implications of the prior instrument.

In this case CIBC has actual notice that Rockway had an agreement with Katmos to extract gravel. A CIBC clerk reviewed a document that showed this. This

Ratio: So long as a party knows that another has the right to use the property in question, that will be considered actual notice even if the party has not seen or has no knowledge of the instrument creating that right. It isn’t about who registered the right first if actual notice can be proved. Precise terms of agreement are not necessary to find actual notice.4. TITLE REGISTRATION(a) History of Title Registration in CanadaD.C. Harris, The Advent of the Torrens System in Canada Title registration systems share a number of featuresSystem designed to simplify and facilitate the

transfer of interests in lando Unlike CML or deeds registration systems where the holder of an interest in land is always

subject to the claim of the person wrongfully deprived of that interest, title registration guarantees that the person registered as the holder is the title holder. Exists in BC and Ontario, not QC

o Registration cures any defect in titleo Abolishes the CML doctrine of notice; the holder of a registered interest is unaffected by notice of

unregistered interestso Some systems include assurance funds

Title Registration aka Torrens system created by a non-lawyer in Australia because he felt lawyers had overcomplicated the process.

(b) The Curtain-indefeasible title Principle of indefeasibility marks the fundamental difference between title registration and CML

conveyancing or deeds registration systems. (unless there is fraud by owner in acquiring the interest) Two variants of title registration that differ on the timing of indefeasible title: immediate or deferredHarris, “Indefeasible Title in British Columbia: A Comment on the November 2005 Amendments to the Land Title Act”Common Law Conveyancing

“Nomo dat quod non habet” = no one can give what they don’t have This placed onus on purchaser to confirm vendor’s title. Purchaser needed to trace the chain of title to ensure

vendor had the interest they claimed. If there was any fraudulent activity (forged documents), then vendor and purchaser may lose title. If the purchase was made in good faith then purchaser acquires cause of action against the rogue.

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Indefeasible Title At CML, in a title registration system, the principle of indefeasibility secures registered owner’s interest- even

if there is a forged instrument in chain of title, but NOT if that person participated in the fraud. The registry determines conclusively who holds title and this provides simplicity and security. Title registration systems do not protect rogues- The rogue’s interest is always subject to the claim of the person who was wrongfully deprived of their land.

Immediate indefeasibility- allows person acquiring interest in land to hold indefeasible title even if they acquire on the basis of forged instrument (assuming good faith)

Deferred Indefeasibility- indefeasible title delayed until person acquiring interest does so from the person who is the registered owner and is therefore at least one step removed from the rogue and forged transfer instrument.

Ex. In a system of immediate defeasibility the fact that innocent party has dealt with a rogue in a contract of purchase and sale doesn’t matter- once the transfer instrument is registered purchaser holds indefeasible title.

In a deferred system- if a purchaser has been wrongfully deprived of an interest due to fraud, the purchaser’s title is subject to the original land holders claim to recover the title.

Indefeasible title protects the person registered on title at the expense of the person wrongfully deprived of their interest in land (the latter would receive compensation from an insurance fund). Title registration systems privilege sanctity of transaction over settled property interests in order to facilitate transfers.

Lawrence v Wright (2007)Facts: Susan Lawrence (SL) lives in her home in Toronto which was encumbered by a mortgage in favor of TD for 120 000$. An imposter posed as SL and tried to sell her home to Thomas Wright (TW) for 318 000 $, by forging a purchase and sales agreement. TW took out a mortgage from Maple Trust (MT) and they both had no knowledge of the fraud. The fraudulent transfer of the property in favor of TW was registered. Maple Trust advanced money pursuant to the mortgage, and TD (original mortgager) was discharged.Issues: (1) Is the charge against the property and in favor of Maple Trust, valid and enforceable against the true owner of the property? (2) In a contest between two innocent parties- the homeowner (SL) and the lender of the mortgage money (MT), who wins? (3) Is the Act predicated on the theory of immediate indefeasibility or deferred indefeasibility?Holding: (1) No. (2)The home owner. (3)Deferred Indefeasibility Legal Reasoning: E.E. Gillese J.A.

SL’s position (cml registry theory) - only the true owner can grant an interest in the land, all transactions arising from fraud are void- regardless of the fact that TW’s property transfer was registered. CML principle is that a person can’t pass better title than he or she had.

Maple Trust’s Position (immediate defeasibility)- Once an instrument is registered, it is effective even if produced by fraud-the fundamental purpose of the act is not to protect “true owners” but to protect parties who rely on title as effected by registration. Maple Trust was acting in good faith and without notice of fraud. MT’s charge was immediately defeasible on registration because it took from TW, the person that the register showed to be the registered owner. TW’s fraud is irrelevant to the validity of MT’s charge.

Ontario’s Position (deferred indefeasibility) - Registration of a void instrument does not cure its defect, thus neither the instrument, nor its registration gives good title. SL is the original owner; MT having dealt with the fraudster, and TW, is the intermediate owner. Good title can be obtained by a deferred owner from an intermediate owner, but there is no deferred owner (bona fide purchaser who takes from intermediate owner). MT, the intermediate owner, had an opportunity to investigate the transaction and avoid the fraud- therefore its charge is invalid in respect of SL.

Analysis: We reject the appellant’s [Maple Trust] view of immediately indefeasibility-The argument that

fraudulent documents are void regardless of registration is contrary to land titles system and provisions of the Act. If that were so, a person could never rely on the register since title would depend on validity of all past transactions, and chain of title would be broken by any fraudulent link.

Relying on deferred indefeasibility, Ontario argues MT’s charge is not valid against SL because it was obtained from a fraudster. TW did not hold valid title and couldn’t validly charge property. MT

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however accepted without fraud and registered its charge, thus a deferred owner could take from MT and obtain indefeasible title.

MT never took from the registered owner and therefore cannot rely on s78(4) vis a vis SL the true owner. [“ When registered, an instrument shall be deemed to be embodied in the register and effective according to its nature and intent to create, transfer charge or discharge as the case requires, the land or estate or interests therein mentioned in the register”]

Deferred indefeasibility is consistent with s 155 of the Act. It states: “With respect to registered dispositions for valuable consideration, any charge if unregistered would be fraudulent, is fraudulent and void despite being registered”

Deferred indefeasibility is preferable for policy reasons- The innocent homeowner has no defense to a mortgage’s action for possession. Real property is not fungible, it’s not okay to evict someone from their home and then provide the compensation. SL has no opportunity to discover her home was being fraudulently mortgaged and sold- MT had the opportunity to avoid the fraud. The law encourages lenders to be vigilant when making mortgages and the burden of fraud should be on them, not innocent homeowner.

Ratio: Under deferred indefeasibility the party acquiring interest in land from the party responsible for fraud (the intermediate owner) is vulnerable to a claim from the true owner because intermediate owner had the opportunity to avoid fraud. Any subsequent purchaser (the deferred owner) has no such opportunity. In accordance with s 78(4), the deferred owner acquires interest in property that is good against the world. The charge against the property in favor of Maple Trusts should be set aside(c) The mirror – title registration and prior unregistered interestsHolt Renfrew & Co v. Henry Singer Ltd. [1982]Remember: T&D=vendor (lawyer is Dickson), Henry Singer= purchaser ( lawyer Pekarsky), Holt Renfrew=tenantFacts: T&D were owners of a building in Edmonton in which they conducted a business. This business was sold to Holt Renfrew, and the property was leased to it. There was a 10-year lease between them, with an option to renew for 10 years. The tenant’s interest was protected by way of a caveat registered to the land titles office [note: A caveat is a notice that a person claims a particular unregistered interest in the property.] The person drawing the lease was not aware of Alberta Land Titles Act and did not file the lease or a caveat to protect it. The property was eventually sold to appellant Henry Singer Ltd (represented by Pekarsky), and these are the events leading up to the sale:

Pekarsky telephoned Dickson (lawyer for T&D) saying they have someone interested in buying the property and that the prospective buyer was aware that there was a long lease in favor of Holt Renfrew and that this wasn’t a deterrent for them. After examining the lease, the client decided they were not interested in buying real estate subject to the lease- but Pekarsky did not relay this information to Dickson***

An offer was eventually accepted by Dickson- and the only encumbrance shown on the certificate title was the Holt Renfrew caveat. After the purchase, Dickson filed a caveat with an intention of defeating the unregistered lease. Pekarsky filed one back in response.

Pekarsky knew of Holt Renfrew’s unregistered interest and that this could be defeated by concluding the transaction by registering his caveat. He did little to lead Dickson that it was understood that Singer would be assuming the Holt Renfrew Lease.

Issues: (1) Was the conduct of Pekarsky fraud within s203 of the Alberta Land Titles Act? (2) Did Dickson rely on this and was Dickson misled by this?Holding: (1) Yes, Pekarsky’s behavior constituted fraud. (2) Dickson was misled by this (Moir J.A Dissenting)Legal Reasoning: McDermid J.A. (Majority)

Knowledge of the existence of an unregistered interest, coupled with knowledge that the unregistered interest will be defeated by concluding the transaction, is not sufficient to constitute fraud.

We must look at whether the representation made by Pekarsky (lawyer for purchaser of property), that the lease was not a deterrent to the purchase of property, and his failure to correct it is a fraudulent misrepresentation. If so, did Dickson (representing vendors) rely on it? And Was Dickson

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misled by it? S.203 posits that except in cases of fraud, no person is bound by duty to inquire into the nature of the

title. Pekarsky was told there was a long lease on the property- and told Dickson “we do not believe the

tenant of the property to be a deterrent to our client’s interest.” Thus T&D (who Dickson represents), intended to convey to Singer (purchaser) about the property including the Holt Renfrew lease. It is clear Pekarsky knew T&D would not sell, except subject to the lease. Did Pekarsky have an obligation to correct this representation when he knew his client would not honor the lease?

We must look at ordinary contract law rules- if a statement has been made and at the time it was true, but later becomes untrue, the person who knows it becomes untrue must disclose. Failure of a party to understand he has a duty to correct the false misrepresentation doesn’t make it any less a fraud. Not correcting the misrepresentation constituted actual fraud even though Pekarsky thought he had an overriding duty to his client

We have representations that the vendors (T&D) acted upon belief that sale of land was subject to the lease. This is because Pekarsky never corrected his initial representations even though he had full knowledge his clients were no longer interested. Was Dickson misled by representation that the lease wasn’t a deterrent?

Pekarsky did advise that his client was no longer interest in shares of company but made no mention of the lease. This doesn’t alert Dickson to the fact that P’s clients position changed. There was fraud within meaning of 203, and Dickson relied on this misrepresentation. Pekarsky is not allowed to rely on s 203 to protect its title from the lease,

Moir J.A. (Dissenting) It is alleged that Pekarsky was guilty of fraud against Dickson and his client T&D. Failing to correct

a misrepresentation is only fraudulent if the misrepresentation is relied upon. Dickson received the offer, he saw the title, he saw Holt Renfrew filed a caveat to protect their leasehold interest. Dickson relied on the title and not the representations of Pekarsky

When Dickson found out that Holt had not protected their lease, he searched title and then phoned Pekarsky. Dickson told Pekarsky to go ahead and register. Nowhere did he say he was misled. For the representation to amount to fraud it must have been relied upon and induced the contract- there is no evidence this letter had that effect. Fraud must be specifically pleaded and proved and in this case there is a lack of proof.

Ratio: If a party caused a misrepresentation and failed to correct it, this constitutes fraud if the other party relied on it and was misled by it.Alberta (Ministry of Forestry, Lands and Wildlife) v McCulloch (1991) - ABQBFacts: In a written agreement, the department sold some land located along river to Svedber Lumber (S). It was one title, but included 2 parcels: residential parcel (west) and millsite parcel (east). Agreement contained many covenants, namely, utilize land only for millsite and accommodate existing residences. A caveat against title was filed by department to protect its interests in original agreement. S later went into receivership, and the receiver was Earnst & Whinney (EW). At this time, original certificate of title was cancelled, and 2 new ones were issued, one for each parcel, but abided by same caveats. Millsite parcel later sold by EW to McCulloch (M). M was aware of the department’s interest in land. There were two documents written here: one was a letter from EW to M stating that there needs to be approval by the Minister, and another was a letter from M to the department saying he agrees to the main covenant for the millsite and residences (these are uses of the land). Land was approved by court and new title was given to M with the original caveat. Later, department sold all or part of residential parcel to S and as part of transaction the department discharged the original caveat for the residential parcel only! BUT, a mistake was made by land titles office and this caveat was also discharged from M’s title, but M nor the department were initially aware. M later became aware from a phone call. M transferred his title to a numbered company that M owned – new title was issued for the company and original caveat was not endorsed on this title. Issue: Was the transfer of millsite parcel from M to numbered company fraudulent?

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Holding: Yes it was fraud as defined in Land Titles Act. Legal Reasoning (Sinclair J.):

Land Titles Act s.195 Except in case of fraud, a purchaser or transferee granted land has nothing to worry about with regards to title. Knowledge, by itself, does not constitute fraud; the knowledge must be used for an unjust or inequitable purpose.

Union Bank of Can v Boulter Waugh Ltd (Anglin J. – SCC) knowledge could not in of itself constitute fraud. Fraud must always have consisted in doing of something which that knowledge made it unjust or inequitable to do.

At this stage, must examine events which led to transfer of millsite by M to numbered co. o SHs of the company were: M (25%), his wife (25%), and his mother (50%). Mother died, M

got her % BUT tax returns show M and his wife are 50/50o M is director, president and is authorized signing officero M learned in spring of 1988 that the caveat was gone through discussions with Alberta

Opportunity Company and lawyer acting for Svedberg.M did title search and confirmed caveat was gone. He though the caveat would eventually be gone because department would be unable to realize the rights covered by caveat.

o M called the department to offer to sell millsite back to them and M asked the department why caveat was discharged. The person on phone from dept (R) was surprised and said there must have neem a mistake and that he would investigate the situation

o M made the transfer around one week after this phone call with dept. M did not advice dept of the transfer. M said transfer was done for tax reasons + to repay loan to his mom

o One month later, M then called back R from dept and offered sale again. R called back a month later and offered a very low offer which stems to original K tracing back to original sale of the land. R told M the dpet had also filed for a new caveat.

Was the transfer fraudulent as in Land Titles Act?o S.195 provides that knowledge of the unregistered interest (existing here), by itself, does not

constitute fraud. The knowledge must be used for an unjust or inequitable purpose. o Application The company’s year end was Nov 30, so it seems more than a coincidence that

the transfer was carried out within a few days after M learned the caveat was discharged. This transfer was also made for the purpose of defeating the dept’s interest and relieving M from its obligations to the dept. Thus = Fraud!

Ratio: S.195 of Land Titles Act provides that knowledge of an unregistered interest, by itself, does not constitute fraud. The knowledge must be used for an unjust or inequitable purpose.Comments:

Court of Appeal dismissed appeal of this case: Transferee here, in dealing at arm’s length with transferor (same person basically) had more than mere knowledge of what was going on. Agreed with trial judge.

United Trust v Dominion Stores actual notice of a prior unregistered interest would bind a subsequent purchaser.

(d) The net – assurance funds in title registration Repercussion of indefeasible title = bona fide purchaser of interest in prop may take that interest at

the expense of prior owner who was wrongfully deprived of their interest in land. Because of this, many registration systems include assurance fund that operates to compensate those who have lost their interest

BC Land Title Act s.296 indicates conditions that must be met to receive payout from BC’s assurance fund.

o It requires that a person who is wrongfully deprived of an interest in land because of fraud proceed in court against perpetrator of fraud and join Minister responsible for land registration system as a defendant. If perpetrautor is judgment proof (gone or has no $), assurance fund will cover loss.

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o To recover from the assurance fund, claimant must show that if this Act had not been passed, he would have been entitled to recover land from present owner (under CML conveyancing system).

TF CML principles become important “Final Report on Private Title Insurance (Sask. 2007) incidence of fraud and payouts under

assurance fund are rare(e) Title registration and Aboriginal titleSkeetchestn Indian Band and Secwepemc Aboriginal Nation v Registrat of Land Titles, Kamloops (2000) – BCFacts: Appeal from the refusal by Registrar of Land Titles, pursuant to s.168 of Land Title Act (Act) to register a certificate of pending litigation against certain lands in Kamloops, which many years ago the Crown granted in fee simple to predecessors in title of Kamlands Holdings (K), which holds these lands under a certificate of indefeasible tite. Appellants claim an aboriginal right to these lands, the right with “amorphous” (indeterminate) quality. Issues: Should appellants be granted aboriginal right to these lands?Holding: Appeal denied, not granted right. Trial judge + registrar correctLegal Reasoning (Southin J.A.):

There are likely many people of aboriginal descent in BC who hold land in fee simple but who cannot rest on their certificates of indefeasible title.

A cloud on title is still a cloud. Question for Registrar upon an application to register a lis pendens (certificate of pending litigation

against the land) was whether, if the plaintiff succeeded in his action, he would be entitled to a registrable interest in the lands. One cannot have a good safeholding and marketable title to an interest unknown to the law.

Nothing in legislative history to conclude that Legislature intended the claims put forther here by the appellants to be registrable, for in the minds of the Legislature there was no such “estate of interest in land” in BC.

Conclusion Appellants have no right to registration under s.215 of Land Titles Act, which governs lis pendens

Ratio: Courts have resolved issues surrounding aboriginal title by excluding Aboriginal title from title registration systems. Attempts to register notice of claims to Indian reserve land have been unsuccessful too.(f) Other features of title registrationVolunteers

In some Torrens jurisdictions, parties receiving gratuitous transfers (volunteers) are given less protection than purchasors for value. So a done can acquire no greater interest than that held by donor. This is stated in ON Land Titles Act s.90.

Physical Boundaries Canadian land titles statutes do not certify that the boundaries descrived in a certificate of title are

correctUnregisterable Interest

Some interests cannot be registered agreement for sale (in Alberta) or equitable interest in property held under a trust

Interests not registered are vulnerable to being defeated by a transfer from registered owner to 3rd party so some land titles systems allow for a document to be filed to serve as notice of such interests (“notice” or caveat”). BUT, this notice does not work to validate the interest.

o Caveat on priorities with a registered interest, timing of registration is determinativeOverriding Interests

Some interests will bind subsequent purchasers even though they have not been registered. These are lingering invisible coulds on title. They stand as exceptions to the mirror/photograph principle of land titles registration. These rights are called overriding interests.

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Alberta and Sask Land Titles Act allow public easements to exist as overriding interests List of overriding interests found in land titles legislation is not exhaustive. Legislation may provide

for others.5. TITLE INSURANCEZiff, “Title Insurance: The Big Print Giveth, But does the Small Print Taketh Away?”

Title insurance does 2 main things:o (1) Protects against defects in title leading to lossinsurance is not a guarantee of title, it is a source

of indemnity (payments only available when actual loss occurs)o (2) Challenges to a policy holder’s title can trigger a duty on the insurer to defend the title

Title insurance differs from other kinds of coverage in 3 main ways:o (1) Title insurance premium is structured as a one-time pmt for an indefinite termpolicies will often

terminate on the sale of the prop by the policy holder or some other designated point in timeo (2) The risks covered by title insurance are risks that exist at the date the policy comes into

forcemost other forms of coverage are directed at future riskso (3) Title insurance is focused on risk eliminationinsurer will seek to locate possible risks

American Antecedents Title insurance is indigenous to the United Statesinstigating event is said to the case of Watson v. Muirhead

(1868) in which there was an action against a coveyancer based on the negligent preparation of title – claim failed and it created the impression that the existing protections against defects in title was inadequate

o Other factors = anticipated land boom, shitty gov land records, opportunistic actions of lawyers Dominance of title insurance in US is inversely connected to the Torrens system, which isn’t common there It is now standard + mandatory commercial (and residential) practice to seek title insurance in the USit is a

multi billion-dollar sector of the economy There has been conflict with the rise of title insurance and the intrusion into the field of property conveyancing

The Emergence of Title Insurance in Canada Title insurance is much more recent in Canada – began with American investors in Ontario looking for the

same kind of protection they were used tovery strong in Ontario cuz of Toronto and business Legal communities are concerned that title insurance will erode their real estate practice response in both US

and Canada has been for the Bars to set up their own title insurance companies – but this creates ethical issueso Standards have been put in place to make sure lawyers provide their advice properly and that there are

no conflicts, particularly when advising clients on title insurance providers Response in Western Canada very different from Ontarioinstead of accepting title insurance as a viable

commercial practice the law societies of the 4 Western Provinces, all of which have entrenched Torrens sytems, banded together to determine a response to title insurance, an alternative/threat to Torrens

o Baiscally they improved/modified the Torrens sytem to avoid switching to title insurance But nonetheless, title insurance has been growing quickly in Canada, including Atlantic Canada Patricia Wilson suggests that title insurance isn’t as much as a threat to the legal profession as it is perceived

and that lawyers still play an important role in the title insurance businessBUT nonetheless there is little doubht that title insurance has reduced the involvement of lawyers in real estate transactions in the US and there is concern this will occur in Canada as well (if it hasn’t already)

Ziff suggests title insurance might not actually be that much of an improvement over the older coveyancing systems and that it really comes down to a question of cost-benefitAlthough it is possible that because the risks protected barely ever materialize, title insurance is a waste of money, the question is not which system provides better protection, but whether title insurance is more economical than the conveyancing alternatives

o This isn’t just between title insurance vs Torrens, but includes any registration regime

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