Contents

Historical Context..3 Real and Personal property....6 Fee Simple..9 Fee Tail..10 Life Estate.11 Equity and equitable estates..17 Qualified Estates...19 State limitations on private power22 Remainders, Reversions and the common law remainder rules...............................27 Rule against perpetuities...29 Physical Boundaries (Air Space)..31 Surface & Subsurface...31 Riparian water...33 Support of land in its natural state ...34 Joint Tenancy....35 Tenancy in Common....36 Severance.39 Resolving concurrent ownership disputes...41 Other concurrent forms of ownership..42 Modern Trusts..44 Aboriginal Land Rights...47 Transferring an estate in land..49 Adverse Possession.51 Licences..52
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Profits a prendre..52 Easements53 Covenants57

Property Law
A. English Common Law Estates in Land 1. Historical Context Canadian property law grew mainly from a cutting of English Law which was based on English feudal system. In order to understand the basic structure of this system, it is typical to refer back to the period immediately following the Norman Conquest of what is now England. Here one finds two main principles of feudal land law, which continue to serve as foundations of Canadian real property law, the doctrines of: 1. Tenures, and 2. Estates Feudal Structures: Tenures and Estates y William, the Duke of Normandy over 1000 years ago invaded England; he granted land to his principal followers who then made grants of rights in the land to their followers and so on. Resulting in a pyramid of relationships the Crown being the King who was regarded more as a top lord within the pyramid system of land holding, government and economic organization rather than as king: CROWN

Tenants in capite (mesne lords) tenants in demesne (mesne lords) tenants in demesne (mesne lords)

Copyhold tenures tenants in demesne (mesne lords) (unfree tenure)

The recipients did not obtain absolute ownership of the land. The function of the tenurial arrangement was to create an economic and social network: land devolved from the crown in return for allegiance, revenues and other benefits. The first grants were from the Crown to the tenants in chief. Tenure created a bond of reciprocal obligations between tenant and lord more akin to a contractual right than of property. In time the tenant was able to pass the lands to someone else. That might be done by either Substitution- the alienation of the tenants full interest in the lands to a purchaser or donee, who would then assume the very position occupied by the original tenant; or by Subinfeudation-which was to place the granting tenant in the role of lord of the grantee. The new tenant (the tenant in demesne) held the land of the immediate overlord. A tenant in chief of the Crown thereby assumed the additional role of being a lord(termed a mesne lord). y The Normans in England had four needs which resulted in this theoretical pyramid: 1. Security could require military services with the tenant summoning the men of their tenants and so on to create troops for war. 2. Splendor ceremonial tenures; persons had to provide personal services to the lord; recognizing publicly the power of the landlord. 3. Salvation land might be granted\ to the church or an ecclesiastical corporation in return for a priest, abbot, or bishop saying prayers for the lord. 4. Sustenance need for profit, income and wealth; this was realized in granting land to persons in return for some of the product from the land they were given. y The services to be performed fell into several principle categories: 1. Religious Tenures main ones being frankalmoign and divine service. 2. Tenure by Knight Service obligation was to provide a number of army men for a certain period each year. 3. Serjeanty Tenures  Grand: consisted of holding land in return for the provision of services that were essentially personal; ceremonial.  Petty: involved military services and sometimes could be just supply of armour or military materials. 4. Tenure in Free and Common Socage (Socage Tenure) the services were agricultural but the obligation was always specific. This is the only form that came to Canada. y There are three features between a landlord and tenant which were necessary to meet the four Ss (do not apply to free and common socage tenure) 1. Duty of Loyalty on the party of the tenant to the lord who had granted him this land; coupled with less strong sense that the lord had some responsibility for the welfare of his tenant 2. Provision of Services by the tenant to the lord on a continuing basis for the benefit that was conferred on him by the grant of land 3. Further obligations regarded as relatively minor were incident to this relationship a. Confirmed with Homage: where lord granted possession of land to chosen tenant and the tenant swore loyalty to the lord and it was seen to confirm this reciprocal and personal bond between lord and tenant and was also a duty of protection of the tenant 4

b. Aids: came in time to be standardized and eventually were confined by Magna Carta in 1215 to three types of special payments due from tenant to lord in free and common socage tenure and knights tenure: where lord imprisoned, tenant would have to contribute to ransom; where lords eldest daughter married, tenant had to contribute to dowry; when lords eldest son became a knight c. Reliefs: Tenant dies and leaves land to son, the lord would decide if he wanted to grant land and did not have to, he could demand payment from the son to exercise this power (i.e. primier seisin, meant that lord would grant land but the king would take all the profits for one year) d. Ward ships/Marriages: if the son of the deceased tenant to whom the lord was willing to grant land was an infant, it was seen as the lords obligation to take the infant into his care (Ward ship). Lord also had to consent to any female heirs on marriage. The lord could choose the husband and she could refuse and marry someone else only if future husband was willing to pay. e. Escheat: used to describe a reversion of the land to the lord could occur on two grounds: y Proper Delictum Tenentis: when tenant is convicted of a felony (seriously breached any special feudal bond or tie between himself, the tenant, and the lord). This now encompasses the commission of a serious criminal offence. The land would revert to the lord in the event of a felony by the tenant, but the king had a right to step in and take possession of a year and a day before the lord could resume it again: o High treason was treated differently, then his rights in the land would go to the Crown not by way of escheat but by way of Crown prerogative to claim forfeited land o Literally means a defect of the blood. This became important when inheritance right was guaranteed y Proper Defectum Sanguinis: became important when the tenant had no son or anyone to inherit. In this case the lord could have possession of the land because the land escheats to him. TENURES

LAY

SPIRITUAL

Base tenure

frankalmoign

divine services

Pure Villenage

villein socage Free tenure

Chivalrous

non-chivalrous

Knight service

grand serjeanty 5

petty serjeanty

free socage

The process of disintegration of this feudal system began from within. The Magna Carta dealt with resistance to subinfeudation by lords, provision from 1217 that a freeholder should give or sell no more of his land than necessary to support obligations owed to his lord. Two statutory reforms altered the shape of feudalism dramatically: The first of these developments was the enactment of Statute Quia Emptores Terrarum in 1290. 1.Recognizes that a feudal tenant can at his own will alienate and does not depend on consent of lord or anyone else. 2.Such an alienation must thereafter be by substitution and not by subinfeudation. - was basically implemented to eliminate subinfeudation. - principle effect of this statute was to freeze the feudal system, this in time came to mean the system was bound to, and did decay. Over time feudal lords ceased to insist upon their rights and records disappeared or were forgotten. - Is still in effect and operates here every time there is a conveyance of land. The Statute of Tenures, 1660 the second of these developments significantly reduced the available tenurial forms. Military Tenure was abolished and turned into Tenure by Free and Common Socage. Three kinds of landholdings survived: 1. Free Tenure by Common Socage 2. Tenure by Francalmoign 3. Copyhold Tenure (holding of tenants who held it under law of particular lord and had variable obligations). The reception of English Law The incorporation of English property laws principles into Canada was accomplished through the general laws of reception. There are several modes of reception and the applicable system mainly depends on how a British colony was acquired: a. In the case of conquest or cession from another imperial power, the colonies retained their preexisting law until it is altered, e.g., Quebec. b. In settled colonies, the English law applies. In some jurisdictions, including Ontario, the territories and the western provinces, a reception date is now fixed by statute. Only rules that are somehow applicable on the selected dates are received. The laws incorporated by reception are in addition to those imperial laws which are directly applicable to the colonies by their own force. The position today is that Canadian landholding in the common law jurisdictions is not allodial (absolute) but tenurial, all land in private hands being held of the Crown in the form of an estate. Within the common law jurisdictions the tenure under which land is held is free and common socage. The fee simple estate is the interest enjoyed in most privately held lands. 2.Real and Personal Property Real Property mainly rights in relation to land.

Personal Property- things other than lan d.

Real Property Interests in Land Initially dealt with by the King's Court (From the French "ral" meaning "regal" or "royal") Includes: anything growing on land (ex. crops) structures on the land (ex. houses) fixtures (started off as chattels, but became part of the land)

Personal Property Includes: 1. "Choses in possession" = tangible Chattels Money 2. "Choses in action" = intangible For example: Debt (ex. bank accounts) Patents Shares/Stock 3. "Chattel real" Leases/leasehold interests in land

In the case of property disputes, the system recognized two main actions: real and personal. The real action gave to the successful plaintiff an order for the return of property ( the res), while in the case of personalty (or chattles), the plaintiff was entitled to compensation through an award of damages. The early common law did recognize a mixed action, arising from the wrongful detention of goods (an action in detinue), through which the court could order a return of the goods or their value. The right to recover the thing itself is no longer limited to real property. The law allows the holders of property rights to goods which are difficult or impossible to replace to recover those goods from others wrongly in possession of them. The lease of land fits somewhere between the two main types of property. The leasehold developed initially as a contractual right and was used a s a form of loan-security. In the 15th century, another form of action called ejectment, was developed to allow tenants to recover possession of leased land. However, since ejectment was not a real action, leases of land were not reclassified as real property, but described as a chattel real. Rights in rem and rights in personam A right against the world at large is referred to as a right in rem. A right against an individual is described as being in personam. Real property can be divided into two further groups: Corporeal hereditaments: Those interests capable of being held in possession: essentially freehold estates. Incorporeal hereditaments: Interests which are non-possessory in nature. The main types are easements, rent charges, profits `a prendre and restrictive covenants. Chattels personal can be:

Choses in possession (tangibles): A tangible thing which is in someones possession. Choses in action (intangibles): All personal rights of property which can only be claimed or enforced by action, and not by taking physical possession. A chose in action, by definition, cannot be reduced into possession. It is a n abstract entity, enforceable solely by court action. A CLASSIFICATION OF PROPERTY INTERESTS Real Property Personal Property Unique Interests

Corporeal

Incorporeal

Chattels Personal

Chattels Real

Aboriginal Title

Others

Choses in Action

Choses in Possession

Leases

Under the functional analysis employed by Andrew Bell (author of, The Modern Law of Personal Property in England and Ireland), property interests can be described in one of four ways: i. Beneficial rights (ownership) ii. Security rights (Mortgage) iii. Managerial rights (Trustee) iv. Remedial rights (as a relief) Legal/Equitable Property rights: This distinction is of overwhelming importance and emerges as a product of the historical development of two parallel court structure, one administering the common law, the other (the Court of Chancery) applying what came to be called rules of equity. Two main differences are the manner of their creation and their durability. First, most equitable property rights can be created with less formality than the comparable legal property rights. Secondly, they tend to be less durable than legal property rights and are more easily extinguished by competing property rights to the same thing. Property Creating events: Four main categories: i. Wrongs (return of bribe money) ii. Consent (sale of goods, bequest in a will, grant of a mortgage) iii. Unjust enrichment (right to recover land or goods transferred by mistake) iv. Others (creation or destruction of property rights brought about by physical changes to things. 3.Freehold Estates An estate confers a segment of ownership as measured by time. An estate is a time in land, or 8

land for a time, Walsinghams case. Rights to property in land are four dimensional: Length; breadth; vertical dimension (height); and time

y y

Freehold estates are distinguished from leaseholds on the quality that a freehold estate is an estate of which the duration is uncertain. These estates are classified in terms of potential duration: a. Estates of Inheritance o Two principle estates of inheritance are fee simple and fee tail

Fee Simple: The fee simple is the closest approximation to absolute ownership found in the Anglo-Canadian system of landholding. The word fee means that the interest is one of inheritance; and simple signifies that the property can descend to the largest range of heirs contemplated by law. In modern terms, an estate in fee simple will continue after the death of the current holder, provided that it is passed to someone else by will, or through intestacy (i.e., to those entitled under statute to receive property not disposed of under a will). If there are no takers under these routes, the estate ends; an escheat occurs. y y Creating words: To X and his Heirs At common law this was the only language that could create a fee simple. The words, and his heirs are words of limitation which designate the estate as being inheritable; they are not words of purchase, there is no right to that land,

To X Words of purchase (who takes)

and his heirs Words of limitation (what you take duration)

Such words are no longer required; in modern legislation in some jurisdictions (e.g. Albertas Law of Property Act, 2000), the general rule has come to be that where there is a gift of land to X it is presumed the grantor intended to give the fee simple or largest estate the grantor has to give, unless the will shows a contrary and more limited intention. The modern rule of construction, under which a grant of a fee simple is presumed, is premised on the assumption that the meaning contained in the statute actually accords with the intention of the landowners.

The Rule in Shelleys Case (1581) This was an exception to the required use of the magic words in the conveyance of the fee simple estate. To Shelley for life, and then to Shelleys heirs (words of purchase) (words of limitation) (remainder disposition) It is a rule of law under which a gift to A for life, remainder to As heirs works to place the fee simple in A, not the life estate that appears to have been given. y Attempts to give life estate to Shelley, with remainder in fee simple to his heirs y Effect is to vest fee simple in Shelley, if: y In one document (deed or will) y either mediately (i.e. later) or immediately y you give a freehold estate (i.e. piece of fee simple) and the (entire) remainder y to the same person (i.e. gift over to ones heirs must be indefinite line of succession) y the rule operates to vest a fee simple y Estate must be of same type both legal or both equitable otherwise rule does not apply y Separation between estates (e.g. intervening life estate) is irrelevant y Rule of law, not rule of construction y Abolished in MB, still operative in ON, many other provinces y For the rule to be invoked, the use of heirs in the second half of the limitation must have been intended to refer to the whole line of inheritable issue over the generations, and not just heirs who are alive at the death of A. Fee Tail: Fee tail is one in which, from the outset, future inheritance is restricted. An estate in fee tail devolves only to lineal descendants and lasts as long as there are direct lineal descendants of the holder. The acceptable line includes children or their issue, but excludes collaterals (uncles, nieces, etc.). y it can only be inherited by descendants and the line of descent is specified or y the gender of the inheritor may be specified. In theory this could last as long as a fee simple but the restriction of class or description of persons makes it more likely for a moment to come when no one can inherit y Creating words: To X and the heirs of his body y Problems; i. Land cannot be sold; could only sell a life estate ii. Hard to get a mortgage, lenders would be unlikely to loan money iii. Tenants in tail along with the court developed strategies to bar the tail iv. One form of action, called a common recovery, was available to a fee tail owner in possession and resulted in the enlargement of the entail into a fee simple. 10

v.

vi. vii. -

When the fee tail holder was not in possession, and if that party could not obtain the consent of the person who was, the action taken was called a fine, and the estate created through barring was known as a base fee. That interest was transferrable; but it would last only so long as the original line of fee tail descent continued. Parliament by statue made a deed for disentailing an estate This barred the entail Manitoba may allow a fee tail. This is only of historic interest; In Canada, legislation permitting the granting of disentailing deeds was received or later introduced. Following abolition, an attempt to grant a fee tail is generally taken to have produced a fee simple.

The Life Estate: pur sa vie Conventional Life Estates pur autre vie transfer of life estate pur sa vie Life Estates by Operation of Law Dower Curtesy Homestead Remedial Duration: A life estate may be created: y to last for the life of the recipient(s) known as a life estate pur sa vie or y some other person - pur autre vie. y Cestui que vie, the person designated as the measuring life need not have any connection with the parties or the property and serves merely as a reference point, marking the duration of the estate. Creation: No special terminology is needed for the creation of the life estate at common law. In fact a failed attempt to confer a fee simple estate can produce a life estate instead. Because of that, questions of interpretation can arise as to whether a life interest has been given away or some lesser right has been conferred, such as a mere permission or license to use the land. An issue of construction can also arise as to whether the donee was meant to receive a life estate or the fee simple. There are three common readings of such gifts. Under one, the first gift is seen as being absolute and the subsequent stipulation is discarded as being repugnant. A second possibility is to cut down the absolute gift to a life estate, with the remainder going to the donee(s) of the second gift. A third option, lying notionally somewhere between the first two, is to treat the first gift as a life estate to which a power of 11 as originally created

encroachment has been appended. That power might allow the life tenant to overreach the life interest and to mortgage, lease, or even sell the property. Re Walker (1924) 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. On an inquiry as to the dominant intention, the Court concluded that the wife had been given an absolute gift, rendering the remainder after her death of no effect. Middleton J.A. said that when a testator gives property to one, intending him to have all the rights incident to ownership, and adds to this a gift over of that which remains in specie at his death or at the death of that person, he is endeavoring to do that which is impossible. His intention is plain but cannot be given effect to. The court has then to endeavor to give such effect tot the wishes of the testator as is legally possible, by ascertaining which part of the testamentary intention predominates and by giving effect to it, rejecting the subordinate intention as being repugnant to the dominant intention. So the case fall into two classes: the first, in which the gift to the person first named prevails and the gift over fails as repugnant; the second, in which the first named takes a life-estate only, and so the gift over prevails. An apparent exception to this rule are the cases in which all that is given to the first taker is a life-estate, but the life-tenant is given a power of sale which may be exercised at any time during the currency of his estate. It appears to be plain (in the case at hand) that there is here an attempt to deal with that which remains undisposed of by the widow, in a manner repugnant to the gift to her. I think the gift to her must prevail and the attempted gift over must be declared to be repugnant and void. Re Taylor (1982) The following portion of the will was under discussion: I give, devise and bequeath all my real and personal estate of which I may die possessed to my wife.., to have and use during her life time. Any estates, to which she may be possessed at the time of her death is to be divided equally between my daughters namely The issue was whether the testatrix takes an absolute interest under the will or only a life interest. According to Scheibel J, the meaning to be given to these clauses is clear. The language used evinces an intention on the part of the testator to give to his wife a life interest coupled with a power to encroach on capital for her own proper maintenance. The limit on the power to encroach, not set out explicitly in the will, was imported by the Court, presumably to respond to the claim that here the life estate + the power to encroach = a fee simple (in all but form). However, the power did not seem to cover the right to dispose of the property by will; therefore, even without the imposed constraint, the left side of the equation would not equal the right. The possibility that there may be nothing left on which the gift over can take effect does not enlarge the interest of the donee to an absolute interest. Where the testator uses plain language to indicate an intention to give a life interest only, that interest is not enlarged to an absolute interest because the testator has declared that the donee is to have a right in her discretion to encroach on capital for her proper maintenance. There is nothing in such a provision which can have the effect of displacing the clear intention of the testator. Re Scott (1926)

12

The testator gave all of his property to his wife with directions to convert any real estate into money and to pay a small bequest to the wifes sister. This was followed by a gift over to the wifes sister of whatever property remains in her [wifes] hands at the time of her death. It was held that the wife took an absolute interest and that the gift over was void for repugnancy. Townshend v. MacInnis (1973) The testator gave all of his property to his sister to be used and disposed of as she wishes during her lifetime followed by a gift over any that is left at her death to X. The PEI Supreme Court on appeal held that the sister took an absolute interest. The Court took the view that the words to be used and disposed of as she wishes during her lifetime gave to the sister the whole estate so that nothing remained on which the gift over could take effect. Accordingly, the gift over was held to be repugnant. There is a suggestion in the words of the J that, where a life interest is coupled with a power of disposition inter vivos, the done takes an absolute interest. Christensen v. Martini Estate (1999) The Appellant is the widow of the testator. The respondents were longtime friends and neighbors of the testator. The testator and his wife owned a duplex as tenants in common. For many years, the respondents lived in a suite in the duplex with their parents, while the testator and his wife lived in part of the duplex. The clause 4(c) of the will said: I give to my wife (his part of the duplex) for her use. When she no longer needs it that she give said property to S and SC of the city of Calgary. The preferable interpretation of this clause is that the testator gave Martini a life estate without a power of encroachment in the un-divided half interest he owned at death. It is trite law that in interpreting provisions in a will, a court should endeavor to give effect to the testators intentions as ascertained from the expressed language of the instrument and the surrounding circumstances. It is apparent that the testator intended to benefit both the appellant and the respondents. This interpretation is supported by the language of clause 4(c) itself, the entire will, and the surrounding circumstances. The most likely interpretation is that the testator intended Martini (appellant) to have a life estate without a power of encroachment, with a gift over to the respondents. It is apparent that he intended that the respondents ultimately receive the property, because of his reference to the said property. If the gift is interpreted as a life estate to Martini with a power of encroachment, the said property could be significantly diminished by the time it comes into the hands of the respondents. That does not appear too be what the testator intended, given his choice of language. If it is up to her to decide when she no longer needs the property, it is extremely possible that she would not make that determination during her lifetime in any event. Rights, powers and obligations of the life-tenant: The general rule is that a life tenant is liable for all current expenses, including property taxes (in an amount up to the annual value of the land) and interest due on mortgage debt (Re Morrison Estate [1922]). y Enjoyment & Possession - Can have legal (possession & title & benefit) or equitable life estate (benefit; no title or possession). -Legal estate owner has title + benefits, Equitable estate trustee has title, beneficiary gets benefits, may get possession at discretion of trustee. 13

y Alienation - Can only sell what you have (a life estate). - Can sell, rent, lease a life estate, but ends on death of life tenant. - Leasing - 1856 Settled Estates Act Can lease for a term of less than 21 years (binding on remainder) - Re Moffatt Settled Estates When l.e. ends, remainder man gets proceeds (still good law) y Emblements (harvest of crops, timber, etc.) Part of the land, crops (inherited w/ land). Life tenant can remove, but expectation they will be replaced. Expenses - Duty of life tenant is to maintain the estate for the remainder man - Life tenant is responsible for current expenses (tied to use) to maintain premises - Max the life tenant has to pay is the INCOME-GENERATING CAPACITY of the estate Repairs Max INCOME GENERATING CAPACITY of the estate Must keep estate air & water tight (Lee Dickson case) Fixtures (Will accrue to remainder person)

Taxes- Life tenant must pay taxes (if estate goes to tax sale, life tenant can be sued!) -Mayo v. Leitovski (Man KB) lapsed into tax sale; son bought l.e. back for mother - If a life tenant allowed property to be sold at a tax sale, that person cannot directly or indirectly gain title to the estate - Life tenant is in a quasi-fiduciary relationship with the remainder man. - Equity unjust enrichment equitable interest in remainder man (cant change legal title) -Duty of life tenant is to pass estate in same condition as received, including taxes paid up to the amount owing when the life tenancy was received. -Duty to pay taxes is limited to value of taxes the property can support. -Must only pass on an incumbered property if it was incumbered when acquired, but still have an obligation to prevent tax sale. y Insurance - Life tenant has no legal duty to insure Remainderman can insure if he wants - Equitable life tenant has a legal duty to insure by statute, Trustee Act, s. 37 Mortgage Payments (Mortgage=taxes, interest, capital) - Life tenant ONLY responsible to pay taxes and interest b/c are current expenses - No duty to pay capital at common law, but if do remainder man unjustly enriched - Re Earl of Warwick Estate (Eng. CA) Can get $ back from remainder man for capital - Re Chupryk Life tenant cannot mortgage so as to bind remainder man w/o permission - Perpetuities & Accumulations Act, s.4(1) makes legal l.e. and equitable l.e.

Earl of Warwicks Case y Rule: If a life tenant pays off an encumbrance, he can make a current claim against the remainder person 14

Waste y Any act or omission of duty by a tenant of land which does a lasting injury to the freehold, tends to the permanent loss of the owner of the fee, or to destroy or lessen the value of the inheritance, or to destroy the identity of the property, or impair the evidence of title Four types: y Voluntary do an act (commission) that injures/damages estate for remainder person. y Ameliorating improvement, but changes fundamental nature of estate to be actionable, it must be substantial and it must significantly transform the property. It reflects values related to the personhood justification of private property. y Permissive act of omission that injures/damages estate for remainder person law only acts if damage is significant. y Equitable severe and malicious destruction. Life tenant is responsible for voluntary and permissive waste to the extent that they are detrimental to the interest of the remainder person. Estate for life without impeachment for waste does not permit equitable waste unless the instrument creating the estate expressly confers such a right Law of Property Act s.12

y y

Remedies The remedies available for waste are: Damages- which generally amount to the reduction in the value of the reversion, less any allowance for immediate payment. In certain cases, exemplary damages may be awarded. Injunction- alternately, or in addition, an injunction may be granted to prevent threatened or apprehended waste or the repetition of waste. Recovery of Money- If the waste has resulted in a profit to the life tenant, for example, by the sale of timber or minerals, 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 damage. Delgamuukw v. British Columbia The concept of waste was called into service. It was held that land under aboriginal title cannot be used in a manner that is irreconcilable with the nature of the attachment to that land underscoring the claim. Taking the term equitable waste to mean wanton or extravagant acts of destruction, Lamer CJ said that this description of the limits imposed by the doctrine of equitable waste captures the kind of limit I have in mind here. Powers v. Powers Estate (1999) This was an application for a declaratory order respecting responsibility for certain expenses related to property in which the applicant had an equitable life interest. The cost of heating the premises in which the applicant lives- there is no obligation on the executor to pay the heating costs out of the capital of the estate. The payment out of the interest to be paid to the applicant by the executor is only an indirect method of the life tenant paying the heating costs. Repairs- These expenses are directed to the preservation of the house and therefore should be paid out of capital. As to lawn care, regular care is for the life tenant. Unless one requires replacement of a retaining wall to protect the property. Repair should be paid out of the income. 15

Insurance- The following points are generally accepted: 1. At common law there is generally no obligation on a life tenant to insure, although the life tenant must pay certain other recurring expenses such as the taxes imposed on the land. However, if the life interest is a leasehold estate, then the life tenant assumes the duty to pay the rent and the insurance if that is required by the lease. 2. The Trustee Act 1990 does not impose an obligation to insure on the life tenant. 3. In England, at least historically, there was no obligation on the trustee to insure. However, if the executors were directed to insure the trust property against loss or damage by fire then the income payable to a party under the will would be net income after payment of certain expenses, including insurance. 4. The Trustee Act does not impose a duty on the trustee to insure. Rather, it grants the trustee the power to insure in the manner and to the extent specified in the Act. 5. However, in Canada, the failure of a trustee to insure for loss by fire would probably be seen as negligence in the performance of ones duties as a trustee. Settled Estates Legislation The life estate was a constituent element of the strict family settlement, which was at one time a prevalent estate planning device used by Englands landed class. Under a settlement, the life tenants ability to exploit the land was circumscribed by the law of waste. Absent a power to encroach on the remainder, the life tenants power to sell, mortgage or lease was also limited: it extended only to the life interest itself. The strict settlement, standing in the way of free commercial trade in land, demonstrates that personhood values seem to have affected the ways in which members of Englands propertied elite treated their holdings. In the nineteenth century, a series of legislative reforms were introduced that were aimed at allowing property tied up in family settlements to be set free. The 1882 legislation accorded the holder of a life estate wide powers to lease, mortgage and sell. Some Canadian provinces enacted settled estates legislation along the lines of the first wave of English reforms which conferred limited unilateral rights of disposal on life tenants. The statutes also provided for mortgages or sales with court approval. In 1996, the Ontario Law Reform Commission proposed that for successive interest in land a trust (to hold or retain the land) would be presumed to exist when one is not expressly established. As a general matter, the basic law of trusts would apply. Valuation This can be difficult for two reasons: First, there is very little Canadian case law on point. Second, the duration of the right introduces considerable uncertainty into the equation. The income-capital relationship can provide some guidance. One approach, where the property is sold as a whole, is to invest the proceeds of sale in a prudent and appropriate way, paying the annual income to the life tenant. The corpus would pass to the remainderer when the life tenant dies. Or, one could give the proceeds of the sale to the remainderer but require periodic payments to be made to the life tenant based on expected income from investing the corpus, or based on the estimated fair market rental value of the property. An alternative approach is to try to fashion a one-time allocation and be accomplished by giving the remainderer a lump sum which, if invested properly, would grow to the size of the original proceeds of sale by the time the life tenant is expected to pass away. The rest of the original proceeds would go immediately to the life tenant in a lump sum. The case of Aho v. Kelly illustrates that method. There are obvious difficulties with that approach. 16

A different strategy focuses on the income stream (of the life estate) rather than attempting to replenish the capital over time. For example, one might allocate the full proceeds of the sale to the remaiderer, and order that a sum be paid to the life tenant that equates with an annual income. 4.Equity and Equitable Estates The origins of equity This body of jurisprudence first emerged from the Crowns residual prerogative over the administration of justice, a power capable of being used as a corrective measure for defects or omissions in the common law. Some petitions were delegated to the Chancellor whose office served as the royal secretariat. In time, the Chancery emerged as the principal authority charged with the responsibility of assessing the merits of these special pleas. The early Chancery did not resemble a court. In the latter part of the fourteenth century the Chancellor increasingly undertook to hear petitions and issue decrees. By the fifteenth century the Chancery was being regarded as a court of conscience that could cure the harshness of the common law. This brand of justice dispensed by the Chancery came to be referred to as equity. Equity has always been conceived as a means of perfecting the common law. It was designed to improve and supplement, but not supplant, the law. It was resolved that when a conflict between common law and equity arose, it was equity that would prevail. In the 1870s the administration of justice underwent large-scale restructuring in England. The primary development was the fusion of the courts of law and equity with the result that a single court could now apply both sets of rules. By and large, the incorporation of the principles of equity into the common law jurisdictions of Canada was straightforward with a few exceptions. The emergence of the Use and the Trust The emergence of the trust stands as the chief contribution of equity to the law of property. The modern trust arose out of the use, a concept with feudal origins. The use was a device under which the legal title was granted to one person to hold for the benefit of another. the feoffor to uses- the person who transferred the land, the feoffee to uses -the person to whom the land was conveyed, the cestui que use-the person for whose benefit the land was to be held. Conveying land to uses had three chief advantages: First, feudal burdens could be evaded. Land was conveyed to two or more joint feoffees in fee simple to the use of the grantor. Though the feoffees were seised they allowed the beneficiaries into possession. In this way the beneficiaries enjoyed the advantages of ownership without suffering its burdens. And since the beneficiary had possession but not seisin, no feudal incidents arose on the death of the beneficiary. The second advantage was that uses could be disposed by will. A land owner could convey land to feoffees to hold to the uses declared in the converters will. This bypassed the common law prohibition against devises of land. The feoffees held the land to the conveyors use until the conveyor died, and thereafter to the uses declared by the conveyors will. Thirdly, uses provided a means of overcoming many of the rigid rules of common law conveyancing. By the fifteenth century a majority of the land in private hands in England was held to uses. The Statute of Uses, 1535 was passed to divest the legal estate from the feoffee to uses and vest it in the cestui que use. The purpose was not to abolish uses, but to preclude their employment as a revenue defeating device. By converting the cestui que uses equitable interest into a legal interest, the feudal

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incidents would be revived. The statute applied not only to uses in existence, but also to all future limitations. The Statute, despite its rather overbearing tone, does not affect all transfers under uses. Therefore, by constructing transfers in a way not pinpointed by the Statute, a purely equitable interest can be produced. A convention has developed of describing these post-Statute uses as trusts. The modern terms for : the feoffer is settlor, the feoffee is trustee and the cestui que trust is the beneficiary. Chief aspects of the Statutes operation: y y Resulting uses: the statute executed resulting uses as well as uses expressly created. Active uses: the courts held that the statute did not execute active uses, that is, uses where the feoffee had active duties to perform because such a feoffee 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. Feoffee must be seised: for the statute to apply, so it did not apply where the feoffee to uses held only a leasehold interest, for a leaseholder had no seisin. Not seised to own use: the 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 person. Use upon a use: Tyrrels case decided that the statute did not execute a use upon a use.

y y y

There are two primary methods of overcoming the impact of the Statute of Uses: i. Avoidance: One method of creating a trust after the Statute is to construct a limitation that does not fit within the four corners of legislation. The Statute does not apply when the trustee holds a leasehold estate, since a leaseholder cannot be seised to the use of another. Seisin is the possession enjoyed by a freeholder. Therefore, a gift to B for 99 years to hold for the use of C is not executed. Instead, a trust is created for the benefit of C. Second, the Statute applies when a person holds to the use of a corporation but not vice versa: it does not apply when a corporation holds property to the use of someone else. Accordingly, a grant in which BLtd. holds to the use of C also creates a trust. Again, such a transfer does not fit within the formula created by the Statute. The Statute does not apply to personalty. Exhaustion: The Statute has limited potency. Consider a transfer to A (in fee simple) to the use of B (in fee simple) to the use of C (in fee simple). A is seised to the use of B, and this falls within the purview of the Statute. As a result, As interest is executed and conferred, by operation of law, on B. It is at this stage that the Statute has run its course; it is exhausted, for lack of a better term, for the full fee simple has been shifted from the feoffee and bestowed on the cestui que use. Although B is seised to the use of C, the Statute will not execute this use. What is the effect of the second use? In Tyrrels Case (1557) it was said to be void. However, in time the attitude of the courts changed. This use upon a use now results in the creation of an enforceable title held by C. Sambach v. Dalston (1634) is a leading authority which paved the way for the use-upon-a-use device. The Statute of Uses was abolished in England in 1925. Nevertheless, this relic may be the law in Canada, however, some aspects of the Statute may be affected by modern legislation rules. Incidental effects of the Statute of Uses: 18

ii.

First, it revolutionized conveyancing practices. Using a method called bargain and sale, A would agree to transfer the property to B at a stated price (eventually even a nominal sum was taken to suffice). The bargain and sale raised a use in equity, imposed on A in favor of B. the Statute could then operate, taking the legal title from A and placing it in B. Second, the Statute was thought to have removed the power of the landowners to make testamentary transfers. Third, the Statute in welding the legal and equitable titles together, created a hybrid form of property, known as a legal executory interest. 5.Qualified Estates a. Reversions and Remainders A conveyance by G, a fee simple owner to A for life, the interest granted to A is a mere particle of the fee simple. The grantor retains a reversion- the property returns or reverts to G on the expiration of As life interest. In a transfer by G that reads to A for life, then to B in fee simple, the interest conveyed to B is a remainder; instead of reverting to the grantor on the death of A, the property moves to B, to be enjoyed in possession when the particular life estate given to A has ended. Remainders and reversions are present rights to future enjoyment. b. Defeasible and Determinable Interests An interest is defeasible if it can be brought to a premature end on the occurrence of a specified event. The deceaseds estate retains a right of re-entry, which may be exercised if the stated event comes to pass. For example, a devise to the School Board in fee simple, on the condition that if the property shall no longer be needed for school purposes, my estate may re-enter. Here the School Board receives a defeasible interest, or more precisely in this instance, a fee simple subject to a condition subsequent. A determinable interest closely resembles its defeasible counterpart. In a devise to to the School Board until the land is no longer required for school purposes, a determinable fee simple is produced. The board receives a present possessory right. Should the determining event occur, the fee will end and the property will pass to the grantor (or that persons estate). The interest that is retained is called a possibility of reverter. It is created only when the grantor retains the future interest. Uses words of time such as so long as, until, and during, to attach the condition to the grant. Ex. To A in fee simple so long as used as a park. The words so long as used as park are incorporated as part of the definition of the interest as it is given. If the condition was something against public policy (i.e. To A in fee simple so long as used as a brothel) in this case the court would declare the whole clause void. The legal characterization of a right of re-entry was pivotal in St. Marys Indian Band v. Cranbrook (1995). There a native band surrendered reserve land to the Crown for use as airport. The document of surrender contained the condition that should at any time the said lands cease to be used for public purposes they will revert to St. Marys Indian Band free of charge. In 1992 the band tried to impose a property tax on the current occupiers of the lands. Ina dispute over the validity of the levy, the BC court of Appeal decided that the band had no interest in the lands and therefore, retained no powers of taxation in relation to that property. The Court concluded that the surrender was subject to a condition subsequent and that the band held the right of re-entry. But here is the crux of the matter: it was also decided that the right of re-entry was not an interest in land.

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c. Vested Interests, contingent interests and conditions precedent Property interests are either vested or contingent. An interest is vested when no condition or limitation (including the ascertainment of the identity of the recipient) stands in the way of enjoyment. The natural termination of the prior particular estate is not treated as such a condition. So, in a devise to A for life, remainder to B, the interests of both donees are vested. The life estate is vested in possession. Bs remainder is vested in interest (but not in possession). There is nothing more to be done and no further requirement to be satisfied before a person can take an interest; the person who is to take the interest is known, the person has capacity in law to take the interest, and there are no contingencies to be satisfied before the person can take the interest. An interest is contingent if vesting is delayed pending the occurrence of some condition precedent, the happening of which is not inevitable. a gift to A for life, remainder to B but only if and when B marries imposes a condition precedent on Bs remainder. Ascertaining whether a gift is vested or contingent is a matter of construction. The courts have followed a rule of construction favoring vesting or early vesting, particularly where the property is land. There is also a preference in favor of vesting gifts at the earliest time possible. For example, when its unclear whether a gift creates (i) a condition precedent; (ii) a condition subsequent; or (iii) a determinable limitation, the latter two options are preferred because these readings lead to an immediate vesting of the interest. The condition or limitation is then treated as a basis for termination. At best, only a rebuttable presumption in favor of early vesting arises, which can be overcome by language that shows that a contingent interest was intended. The rule in Phipps v. Ackers (1842) illustrates the preference for early vesting in action. As initially cast, the rule provided that in devise or grant to A, if or when A attains a given age, with a gift over in the event that he or she were to die before reaching that age, the age threshold is to be regarded as a condition subsequent and not precedent. As a result, A would take immediate vested estate, subject to being divested if he or she died before reaching the specified age. d. Precatory words Terms are said to be purely precatory if they fall short of establishing conditions, limitations or any kind of binding obligation whatsoever. For example, to request that the beneficiary maintain accounts for the gifted property, coupled with a stated understanding that the property shall pass on that persons death to others, has been treated as precatory; that language denoted neither a condition nor a gift over. Precatory words are to be distinguished from a precatory trust which, means, simply a trust, albeit one crouched in polite language. The difference between words that are precatory (and of no effect) and those that establish a precatory trust (binding in equity) is a question of construction. e. In terrorem conditions Some testamentary conditions attached to the bequests of personalty (or a blended gift of realty and personalty) may be treated as in terrorem, that is, not intended to lead to the loss of an interest. That interpretation has been applied when the conditions impose a partial restraint on marriage, or where they seek to prevent a beneficiary form disputing a will. f. Transferability Interests that are vested in possession are fully alienable, as are reversions and vested remainders. In the case of contingent remainders, until the condition precedent is met no interest exists, and so there should 20

be no transferable entity. However, currently it seems to be accepted that these interests can pass by will. The ability to convey a contingent interest by means of an inter vivos transfer was expressly provided for in the English Property Act, 1845. Stuartburn (Municipilaty) v. Kiansky (2001) An application was brought to determine whether David Kiansky, the Reeve of Stuartburn, was entitled to hold that office. Under Manitoba election law, in order to hold elected office, a person must, among other requirements, be an owner of land. Kiansky had sold his home and moved from the relevant district but he continued to hold an interest in other Stuartburn real estate. His entitlement to that land was subject to a prior life estate in favour of his grandmother. Issue: whether Kianskys remainderman interest is sufficient to classify him as an owner of land. The exact phraseology in S. 5(1) of the Local Authorities Election Act, 1987 is is, in his own right.an owner of land. The person in this context must be the present owner of a freehold estate in land. In this case, this means that Kianskys remainder interest must be capable of identification as a freehold estate owned by him at the same time as his grandmother was exercising her rights in respect of the life estate. The nature of Kianskys remainder interest is of a right to a free hold interest in fee simple. Most importantly, the remainder interest is a present right. It co-exists with the life estate even though enjoyment and possession of the real property is postponed until termination of the life interest. This arises from the common law requirement that there could be no abeyance of seisin. Thus, as in the present circumstances, a grant of a life estate to one person with the remainder in fee simple to another, was and remains a grant to each effective as of the time of the grant. Kianskys remainder interest allows him to be classified as a present owner of a freehold estate in the Municipality. This meets the requirements of S. 5 (1) of the LAE Act. McKeen Estate v. McKeen Estate (1993) The testator, died in 1981. His will directed that his entire estate be held in trust for his wife for her life, and on her death, the residue to be divided .equally between my sisters..if they are both alive at the time of the death of the survivor of me and my said wife. If only one of my said sisters is alive at the time of the death of the survivor of me and my said wife,the residue of my estate to the surviving sister, the same to her absolutely... The two sisters died in 1989; the testators wife died in 1992. Neither sister survived the testator and his wife. Did the testator intend to make the gifts to his sisters contingent on their surviving his wife? Presumption against intestacy: where the construction of the will is doubtful, the courts act on the presumption that the testator did not intend to die either wholly or even partially intestate, provided that on a fair and reasonable construction there is no ground for a contrary conclusion. Construction in favor of vesting: the courts are inclined to hold a gift vested rather than contingent wherever the words used and the will as a whole admit of a construction that will result in early vesting. Accordingly, a gift whether a devise or a legacy, that makes no reference to the time of vesting should always be held to take effect at the testators death, unless a contrary intention appears from the will. The rule in Brown v. Moody (1936): a gift is prima facie vested if the postponement is to allow for a prior life estate.

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The clause in question cannot be split and must be read as a whole, with the result that the actual and subjective intention of the testator is as follows: I want the residue of my estate divided between my sisters or the survivor of them. The reason for the postponement of the distribution is simply that a life interest was previously given to the widow, so that the residue could not be paid until her death and is not a reason personal to the legatees. A construction which gives a vested interest is favored by the courts where there is ambiguity or doubt as in this case. Therefore, the court was of the view that the sisters or their estates had not been divested of their interests, and that their estates are equally vested and entitled. Caroline (Village) v. Roper (1987) This case concerned the construction of a deed that transferred the fee simple in certain property that had been donated for the site of a community hall. At issue was whether the grantee could retain the property once it was no longer being used for a community hall; this depended on the applicability of the common law rule against perpetuities. The key words in the document are this acreshall revert if used for other than a community centre. Those words use the future tense and the future action depends on something occurring which may not occur or may occur in the indefinite future, thus offending against the rule against perpetuities. The words seem to make the fee simple that was given that day defeasible if a future event occurs. They do not put a condition on the fee simple that is good only so long as a certain use is made of it. For these reasons, the document in its present form is void and unenforceable. The document was ordered to be rectified to show that the transferees received title to the property as trustees for as long as the property was used as a community centre and to be conveyed back to Ropers at the end of that use. State Limitation on Private Power Ownership rights are always subject to a qualification that a private act will not be treated as valid if it offends a countervailing state policy. Two discrete categories of public policy may be identified: First, those policies related directly to the use of property like the promotion of alienability; the need for certainty in property dealings. The second category of public policy contains a large spectrum of social policy considerations, including matters that may only incidentally have a property dimension. Here proprietary freedom must be measured against any number of other values that the law might wish to promote. a)The effect of invalidity The effect of invalidity depends on the form the grant takes. An invalid condition subsequent is severed from the grant, destroying the grantors right to re-entry and thereby rendering the gift absolute. An invalid determinable limitation results in the entire grant failing: both the determinable interest and the grantors possibility or right of reverter are destroyed. Likewise an invalid condition precedent to receiving a grant of real property will be voided, and the possible grant with it. The rule concerning conditions precedent of personalty may well follow that established for land. Unger v. Gossen adopted a different approach. Unger v. Gossen (1996) M left her estate to her sister for her life, and on her sisters death, in equal shares to her three nephews, who were, at the date of the will, citizens of the Soviet Union. The sister predeceased the testator. The bequest to the nephews was subject to a stipulation that the nephews become residents in Canada within fifteen years of the testators death. 22

When the testator died, the three nephews lived in Germany. A Canadian immigration lawyer deposed that, in his opinion, none of the nephews would be eligible to immigrates to Canada under the selection criteria set out in the Immigration Act Regulations. All potential beneficiaries agreed that the estate should be divided into three equal portions and immediately distributed to the three nephews of the testator. Stromberg-Stein J said that at issue is whether the Court can or should direct a distribution of the estate as desired by all the potential beneficiaries. This involves consideration of the effect of a residency condition in para6(e) in the Will. It is necessary to consider the intent of the testator in drafting the condition and the fact that it is impossible to fulfill the condition at this time. It is clear from the evidence that the overriding concern of M at the time her Will was drafted was that she did not want any of her funds to go any beneficiary residing in a communist state, particularly the U.S.S.R. believing that the state would confiscate all or most of the funds hence the residency requirement in her Will. The condition has become impossible to fulfill due to the operation of Canadian Law. This impossibility was not known to the testator as it arose after the making of the Will. The condition of residency is a condition precedent. However, the gift, not the condition, was the Testators motivation and the performance of the condition was not the very reason for the gift. Clearly her intent was to benefit her nephews. The condition was drafted to ensure that the nephews were the beneficiaries and not the Soviet government. Having regard to the testators wishes, and because the condition in the Will is impossible to fulfill by operation of law, the condition fails and the estate should be distributed at this time in accordance with the terms of the Will and the wishes of all potential beneficiaries. b)Public Policy Conditions that contravene public policy will not be enforced. It has been warned that public policy should be invoked only when the harm is substantially incontestable and that the application of the doctrine should not depend upon the idiosyncratic inferences of a few judicial minds. Accordingly, the courts are reluctant to develop new heads of public policy, although the existing categories are not closed or inflexible. Some conditions are rendered invalid because they affect state interests in a very direct way, such as by encouraging a recipient to violate the criminal law. Sources of Public Policy In order to locate the sources of public policy, the courts have tended to look beyond potential analogies in the case law, to such other sources as human rights legislation, international laws and conventions, and even political speeches. The Canadian Charter of Rights and Freedoms can also serve as a barometer of public policy. In a strict sense, the Charter does not apply to private transactions, yet it can influence the evolutionary development of public policy; in that indirect way the charter can affect the law governing private dealings. A case in point: the Leonard Foundation Trust litigation (1990) This case demonstrates how public policy pits rights of private ownership against other social values. The case involved a trust established by Colonel Reuben Wells Leonard to provide student bursaries. The principal question in this appeal was whether the terms of the scholarship trust established in 1927 was now contrary to public policy. Robins J.A. said that the freedom of a property owner to dispose of his or her property as he or she chooses is an important social interest that has long been recognized in our society and is firmly rooted in our law. That interest, must however, be limited in the case of this trust by public-policy considerations. 23

In my opinion, the trust is couched in terms so at odds with todays social values as to make its continued operation in its present form inimical to the public interest. The concept that any one race or any one religion is intrinsically better than any other is patently at variance with the democratic principles governing our pluralistic society, in which equality rights are constitutionally guaranteed and in which the multicultural heritage of the Canadians is to be preserved and enhanced. While the trust was practicable when it was created, changing times have rendered the ideas promoted by it contrary to public policy, and hence it has become impracticable to carry it on in the manner originally planned by the settlor. In these circumstances, the trust should not fail. It is appropriate and only reasonable that the Court should apply the cy-pres doctrine and invoke its inherent jurisdiction to propound a scheme that will bring the trust into accord with public policy. I would strike out the recitals and remove all the restrictions with respect to race, colour, creed or religion, ethnic origin and sex as they relate to those entitled to the benefits of the trust. Tarnopolsky J.A., in a separate judgment suggested that discriminatory scholarships could be saved if directed towards acceptable policy ends. Under such a standard, scholarships to promote the education of women or Aboriginals would likely be acceptable. In general, a specific evaluation of the context, purpose, and effect of the restrictions would have to be undertaken in each case. Tarnopolsky J.A. expressly excluded family trusts from the ambit of his ruling. In Re Ramsden Estate, a scholarship at the University of PEI tenable only by Protestants was upheld. Leonard was distinguished on the ground that it was based on blatant religious supremacy and racism that was absent from the Ramsden bequest. c)Uncertainty Conditions attached to property transfers that are too imprecise may be found to be void. Uncertainty may arise in a number of ways. The problems addressed here involve the standard of clarity to be applied in giving meaning to conditions of acquisition (i.e.; conditions precedent) or retention (conditions subsequent and determinable limitations). This is a problem of conceptual uncertainty. Language is inherently flexible and its ultimate meaning is bound up with its setting. The importance of context is recognized in some rules of interpretation, especially those that apply to wills. The Court should strive to put itself in the position of the testator at the time the will was being drafted. When it comes to the assessment of whether the language of a disposition is sufficiently clear to pass the test of conceptual certainty, the judicial approach is quite different. The courts attempt to apply objective tests. Not all conditions will be invalid on the ground of uncertainty; only a practical level of clarity is demanded. The task is to assess the language used on a so-called common sense basis. The tests for uncertainty are aimed, theoretically, at enabling the recipients of property to understand the scope of any conditions affecting their entitlements. For conditions subsequent (and probably determinable limitations), the donee must be able to see distinctly and precisely from the outset those actions that will lead to a loss of the interest. In the leading Canadian case of Sifton v. Sifton (1938), a condition requiring the donee to continue to reside in Canada was held to fall below that minimum standard, because there were no adequate guidelines as to what sorts of temporary absences or sojourns would contravene the condition.

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A lower threshold of certainty is demanded for a condition precedent. All that need be shown is that the condition is capable of being given some plausible meaning. The donee may enjoy the gift so long as it can be shown that he or she falls within a reasonable meaning of the term used. Owing to the difference between these two tests, conditions subsequent are more vulnerable to invalidity than conditions precedent. As a result, a requirement that X remain within the Jewish faith may fail as a condition of retention, though it might be valid as a condition of acquisition. In H.J. Hayes Co. v. Meade (1987), the court had to determine whether the testator had intended to create conditions precedent to his son James obtaining the disputed property, or a condition subsequent for retaining the property. 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 favour of early vesting(Sifton v. Sifton). If the provisos are construed as conditions precedent the property could not vest in James at the time of his fathers death. Nor could it vest in Harold. The condition affecting Harold was never met. He never paid $1000 to James. By treating the provisos as conditions precedent, the bequest of the disputed property fails completely. In such an event the disputed land would fall into the residue of the testators estate. There is no residuary clause in the will. The result is an intestacy with respect to the disputed property. Justice is more likely to result by interpreting the provisos as conditions subsequent. Such an interpretation is consistent with the laws preference for a vesting construction. It is consistent with the presumption against intestacy. It is also the only interpretation which gives effect to the testators clearly expressed intention to confer a benefit on each of his sons. The question is that whether the provisos are void for uncertainty. Where a vested estate is to be defeated by a condition on a contingency that is to happen afterwards, that 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 (Clavering v. Ellison, 1859). The uncertainty as to the period of time within which the residence requirement must 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, either through illness or for a holiday, make it clear that the condition does not meet the test put forward in Clavering and Ellison. The proviso for residency and cultivation contained in the will of Thomas Hayes are conditions subsequent and void for uncertainty. James took an absolute title to the disputed property at the time of his fathers death.

d)Restraints on Alienation The rationale of the rules: The law promotes alienability and therefore conditional transfers that impose unacceptable restraints on the transfer of property are invalid. A devise that reads to A on the condition that the property never be sold, leased or mortgaged will be invalid. To describe these rules in terms of the doctrine of repugnancy: restraints are invalid if they are inconsistent with an inherent attribute of ownership, i.e., the right to transfer property freely. The factors that support the promotion of free alienability reflect the twinned beliefs that allowing property to circulate as a commodity of exchange furthers economic efficiency and that the market provides the best mechanism, on the whole, for allocating resources. The economics-based reasoning in support of the law regulating restraints on alienation takes many forms.

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The promotion of free alienability is not pursued relentlessly in the law. Restrictions on the right of transfer will occasionally accord with public policy. For example, the controls that exist over transfers of minors property; restrictions imposed on transfer of matrimonial home without spousal consent; in laws preventing sale of prescription drugs by patients; and the controls on the amount of land that can be held by residents, non-residents, corporations, and so forth. The testing of restraints: Three types of restraints are possible: Forfeiture, Promissory, and Disabling. A forfeiture restraint is one for which a right of re-entry or possibility of reverter may be invoked in the event of a breach. A promissory restraint is one that is purely contractual. A disabling restraint simply removes a power of disposal. Unlike a forfeiture restraint, an attempted transfer that is in violation of a disabling restraint does not divest the holder of the property. It merely deprives the owner of some aspect of the power of transfer normally found in the bundle of proprietary rights. The purported transfer is treated as a nullity. When the validity of a restraint is at issue, the extent of the restriction must be assessed. In general, powers of disposal may be abridged in three ways: 1. By restricting the mode of alienation; 2. by prohibiting alienation to some class of recipients; 3. or by precluding dealings for a specified time. It is not necessary for the restraint to be tied directly to a transfer at all, if a stipulation could have a chilling effect on alienation. Accordingly, in Fuji Builders Ltd. V. Tresoor (1984), a detailed restrictive covenant that contained a clause providing that any construction on the affected land had to be carried out by a designated builder was declared to be void because it created a substantial restraint on alienation. The stipulation could adversely affect the marketability of the land. The principles concerning restraints on alienation have been held to apply to conditions that attach directly to an interest in property, as in the case where the restriction is disabling or one of forfeiture. Conversely, it is by no means clear that the rules apply when the restraint is purely contractual, because the contract would not run with the land. In C.M.H.C. v. Hongkong Bank of Canada (1993), the SC addressed the applicability of the rules governing restraints and their applicability to contracts. To the extent that the public policy against restraints applies to purely contractual restrictions, the law does not render these provisions unenforceable for all purposes. Such terms are simply ineffective to prevent the owner of land from conveying a good title to a purchaser but other in personam remedies remain available. The three elements of mode, class and time seem to be of paramount importance in recent Canadian cases. In ascertaining whether the combined effect of the mode, class and time restrictions is unacceptable, the test is whether the condition takes away the whole power of alienation substantially. Assessing this is a matter of substance, not form. Therefore, its immaterial whether the restraint is direct or indirect. In Re Rosher (1884), a son received a devise of black acre subject to the proviso that he (or his heirs) could not sell the land without first offering it to his mother for 3,000. At the time the devise took effect, the property was worth about 15,000. It was held that the proviso was an invalid restraint on alienation. 26

In Trinity College School v. Llyons (1995), at issue was a term of an agreement signed in 1965 giving TCS (the optionee) the right of first refusal on the lot where T and M lived, and an option to purchase the lot on the death of the survivor, which Justice Sheard referred to as the post mortem option. A fundamental question underlies the whole arrangement embodied in the 1965 agreement. That is, whether the option , for a fixed price, was unenforceable or void as an improper restraint on alienation of an estate in fee simple. The objections in principle to restraints on alienation are twofold. They keep property out of commerce and have a tendency to result in concentration of wealth. They also tend to prevent improvement of the property, since a landowner will be reluctant to make improvements if he cannot sell the property(Stephens v. Gulf Oil Canada Ltd., 1975). A pre-emptive provision is a restraint on alienation. It asserts, nevertheless, that such a provision is valid if the optionee is required to meet any offer received by the optionor as a condition of exercising his option. It, however, the optionee need pay only a fixed price, the restatement treats the provision as one governed by the general rules as to restraints on alienation of estates in fee simple.(Fratcher on Perpetuities and Other Restraints, 1954) The right of first refusal given by T and M was not void as restraint on alienation, notwithstanding that it specified a fixed price. However, the right of option triggered by the death of the survivor of the Bennetts was of an essentially different nature, and is void as an unlawful restraint on alienation. The post mortem provision in the 1965 will should be declared void, since it was an even greater restraint on alienation, because it was exercisable at the choice of TCS, whether or not the executrix of the will of M wished to sell.

6. Future Interests and Equitable Estates The Legal Remainder Rules: Under the first rule, a remainder after a fee is void. For example, in a gift to A in fee simple, remainder to B in fee simple, the remainder to B is a nullity. Once the grantor has parted with the full fee simple by conferring it on A, there remains no additional interest that can be given to B. Any attempt to mount a fee after (or upon) a fee is invalid and the second interest will be ignored. The main gift will stand and the rights arising on the happening of the prescribed event are retained by the grantor. The second rule provides that an estate of freehold is void if it is designed to take effect in the future, unless it is supported by a prior particular estate. This means that a deed given to A on Day#1, which is stated to take effect on Day#2, is void. There is a gap in seisin here, which the common law has resolutely refused to tolerate or remedy. Importantly, the rule is not violated when the future interest is preceded by the granting of a prior particular estate, as in the case of a grant to A for life, remainder to B and her heirs. The gift to B is supported by the prior particular estate in A; hence there is no gap in seisin. Once A dies, seisin passes automatically to B. The third rule declares that a remainder is void if it is to take effect by cutting short a prior particular estate. A grant to A for life, provided he does not remarry, but if he does, then to B. This wording gives a valid life estate to A, which is subject to a condition subsequent. However, the right given to B could cut short As life estate and would, therefore, be invalid under Rule#3. According to this rule, only the grantor (or his estate) can enjoy the benefit of this right of re-entry. Under this rule, A cannot give a third party an interest that takes effect on the termination of a prior estate by reason of the operation of a condition subsequent. The rule is based on the common law principle that 27

only the party from whom a condition moves- the grantor or his heirs- can take advantage of a condition broken. The fourth rule that a legal contingent remainder is void unless it vests at or before the termination of the prior particular estate. Concerned with the timely vesting of contingent remainders. Thus, a gift to A for life, remainder to B if B remarries after As death is void ab initio because the stated marriage requirement will produce an inevitable abeyance of seisin. B has been given a contingent interest that cannot vest until the condition precedent has occurred. An interest that remains contingent is too inchoate to allow its holder to enjoy seisin. In contrast, a transfer to A for life, remainder to B if she marries before As death is unquestionably a valid remainder, because there is no possibility of a gap in seisin. This rule can reduce the number of recipients claiming under a class gift. A limitation to A for life, with a remainder to all of Bs children who reach 21 creates a class gift in favour of the children. The recipients are determined by whether they fit within the defined class: the children of B who manage to reach 21. The interests of those children who comply with rule#4 will be valid, and the children reaching 21 afterwards will be shut out. Equitable interests and legal executory interests: One of the advantages of creating equitable interests in land is that they are not subject to the legal remainder rules. A gift of an equitable interest to A for life, remainder to B if B marries after As death would produce the following entitlements: A would receive an equitable life estate; B gets an equitable contingent remainder. In the inevitable interval of time after As death but before Bs marriage it would be presumed that the equitable title would return to the settlor. That interest is the resulting trust. On Bs marriage the settlor would be divested and the right to possession would move forward to B, as a springing trust. If no marriage ever takes place, title will remain with the settlor. Similarly, any gap occasioned by a gift in futuro would be remedied by the imposition of a resulting trust in favour of the settlor. Similarly, a gift of an equitable interest to A and her heirs, but should she remarry then to B and her heirs, which may result in the cutting short of As interest in favor of B, gives B a shifting equitable interest. When the Statute of Uses is applied, a gift to A to the use of B places the legal and equitable titles in the hands of B; A retains nothing. The Statute provides that the cestui que use ( to whom the Statute transferred the legal title of the feoffee) is supposed to hold the same estate that he or she formerly had in the use. The resultant right is called a legal executory interest. This is a hybrid interest, with a legal facet, but it is supposed to otherwise resemble an equitable right. Legal executory interests are not subject to the legal remainder rules with one exception. The exception relates to the wait-and-see permutation under the fourth rule. When a transfer is made to A for life, remainder to B if B remarries, one must wait and see if the rule of timely vesting (rule#4) is violated. If B does not marry before A dies, the remainder is invalid. In Purefoy v. Rogers it was decide that the legal remainder rules would apply to legal executory interests in this wait-and-see situation. In the words of the Court, where a contingency is limited to depend on an estate of freehold which is capable of supporting a remainder, it shall never be construed to be an executory devise, but as a contingent remainder only. The impact of rule #4 is felt only if an executory interest is capable of complying with the legal remainder rules. If a remainder can comply with those rules it must comply. 28

Testamentary gifts: Whether the legal remainder rules apply to devises is not clear. It was never settled in England whether the Statute of Uses affected interests created under the Statute of Wills, 1540. The Statute of Uses does refer to interests created by will. Additionally, it has been decided that legal interests in devises should be treated as legal executory interests, even if the uses are not recited in the will itself. This attitude arose out of a generous reading of the first wills legislation, which allowed interests to be transferred at the free will and pleasure of the donor. This can, on its own, negate the application of the Statute of Uses. An executory devise (i) to A, but if B marries, then to B is treated as creating a valid shifting devise and is the functional equivalent of a grant (ii) to X in fee simple, to the use of A, but if B marries, then to the use of B. Again in a will, legal interests may shift or spring, just like legal executory interests. Therefore, apart from the possible effect of the rule in purefoy, the legal remainder rules have no application to devises. Re Crow (1984) Charles Crow devised a parcel of land to his grandsons Robert and William during the term of their natural lives and upon their death to their children. Based on other provisions in the will, the court found that the testator intended R and W to hold their life estates as tenants in common with no right to survivorship; and should they die without having children, the remainder should go to their nieces and nephews. When William died in 1944, he had no children nor any nieces and nephews. Robert died in 1983, he too had no children but nieces and nephews had been born since Ws death. The property interest in issue was Ws share. Was it subject to the rule of timely vesting and, therefore failed, because there was no one in whom the interest could have vested in interest before Ws death. Under the second branch of rule#4, known as the wait and see rule, one would wait and see whether at the date of Williams death, there were, in fact, children of his siblings. But no such children had been born at the date of the termination of Ws life estate. In the absence of any statutory provision abrogating the common law rule and unless the gift over is not a legal remainder but is an executor devise, the gift over must fail. A contingent interest in a grant to uses or a will, when scrutinized as at the moment of its creation, might either i. Defy the legal rule from the outset, and be certain to infringe them if it took effect at all, as did shifting or springing interests; or ii. Comply with them from the outset, and be certain to vest within the limits and in the way required at common law; or iii. Be capable of complying with them, but not certain to do so unless events turned out favorably. In this case, events have turned out adversely to the interest because at the time of Ws death none of siblings had any children and, therefore, the gift over to them was invalidated. Note: Re Robson (1916) reached the opposite conclusion on the application of the rule in Purefoy v. Rogers et al. The Rule Against Perpetuities The basic common law rule is as follows: 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. 1. an interest 29

2.

3.

4.

5.

It applies to almost all contingent interests in property, real or personal, legal or equitable. In Canada, the rule does not apply to the possibility of reverter, which is regarded as a vested interest. Once the interest is treated as being vested, the rule against perpetuities becomes irrelevant. must vest The doctrine is solely concerned with contingent property rights. They must vest, either in possession or interest, within the perpetuity period. In addition to referring to interests that are not subject to a condition precedent, it also includes a requirement that the exact size of the interest of the done(s) be known. The vantage point from which to determine whether a possibility of remote vesting exists is the time the disposition becomes operative. For an inter vivos transfer, the completion of the transaction is the crucial moment; for a will, it is the death of the decedent that starts the clock. if at all Not necessary that it be certain that the interest will vest but it must be certain that if it should vest it must happen within the time period allowed by law. The rule poses the following question: when will we know, one way or the other, whether this contingent interest will vest? If we know that this question will be resolved within the period, either way, that will satisfy the rule. within the perpetuity period The time period is measured under the common law rule by the span of the life of a person or lives of certain persons, plus a further period of 21 years. The life or lives in being were usually persons closely associated with the gift. A large class of lives in being can be chosen to serve as measuring lives for the computation of the perpetuity period. For instance, a royal lives clause, one that postponed vesting until 20 years after the death of the last lineal descendent of Queen Victoria, was upheld in the 1929 case of Re Villar. If there was any chance that the vesting, if it occurred, would be outside the time period, then the future gift was void and was void from the beginning (ab initio). Reform measures There is no longer a rule of perpetuities in Manitoba. In Alberta, the key revision has been the implementation of the wait and see rule. Another mode of reform, suggested for Saskatchewan in the early 1960s, is to confer a general judicial power of modification for dispositions that run afoul of the rule.

First Step: figuring-out what the perpetuity time limit is - a life or lives in being, plus 21 years plus any relevant gestation period. - tricky issue: what is meant by life or lives in being? - measured by those mentioned in the will or necessarily implicit in it - must measure the lives in being from a finite class of people; not one that is still expanding Second Step: is it possible that the contingency could be resolved after the perpetuity period has ended? If yes, then the contingency is void. - is it possible that the contingency could be resolved after the last of this class dies plus 21 years, 9 months? If so, it is void for perpetuity. - an attempt to control the extravagant use of contingencies (not vested in interest) - will not wait & see - not worried that it might happen, but indeed that it just might resolve itself, but beyond the perpetuity limitation period. Elements of the Rule- page 545 of the property law reader

30

B. Physical Dimensions of Land Ownership and Incidental Rights 1. Physical Boundaries The traditional starting point is the maxim meaning whoever owns the soil, holds title all the way up to the heavens and down to the depths of the earth. Given this, one might surmise that the owner of land acquires a great deal of space, from top to bottom, in a standard conveyance, even if the lateral dimensions of the parcel are quite modest. However, that is not so. The courts have resisted applying the maxim literally. a. Air Space: y y Ownership of a tract of land also confers rights in the airspace above the surface. Furthermore, rights to airspace may be severed from the surface and allocated separately. That is the position under common law. The owner of a condo unit, as with the tenant in an apartment building, possesses a slice of the stratosphere. Contrary to the maxim, the property rights to a column of air do not reach forever upwards. Instead they are limited in a way that strikes a balance between the realistic needs of landowner and those of the public, for whom the air is common property. The owner of the surface holds an entitlement to the airspace up to a certain height above the ground- that which can be used or occupied. There is no fixed upper limit, however, some measure of certainty emerges from the rule applied in cases such as Anchor Brewhouse v. Berkeley House (1987). The Court held that the intrusion of a structure located on the defendants land necessarily constituted a trespass to the plaintiffs airspace. This ruling has the virtue of certainty, since it would seem to apply to any building or land-based object that intruded into neighboring land. An action based on trespass to land can be maintained to protect a direct interference with possession and actual damage need not be shown. The prevailing approach is to treat airspace rights as possessory and therefore, amenable to protection through an action in trespass. In Didow v. Alberta Power Ltd. (1988), the single issue in the appeal was whether the respondent has trespassed the airspace above the appellants land. A resolution of the issue before the court turns on the extent of the rights acquired by the appellants to the column of air above and within the boundaries of the land. The problem is to balance the rights of an owner to enjoy the use of his land against the rights of the general public to take advantage of all that science now offers in the use of airspace. This balance is in my judgment best struck in our present society by restricting the right of an owner in the airspace 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 airspace than any other member of the public(Monnin J.A. in Air Can v. R., 1978). I view this test as saying a landowner is entitled to freedom from permanent structures which in any way impinge upon the actual and potential use and enjoyment of his land. The cross-arms constitute a low level intrusion which interferes with the appellants potential, if not actual, use and enjoyment. This amounts to trespass. b. Surface and subsurface:

y y

y y y

31

y y y y

y y

Subsurface ownership should be limited to that which can be reached by the surface owner, or that which can be reasonably used by that person. There is a distinction worth drawing between the extent of rights enjoyed above and below the ground. Above the ground there is a notional competition between air travel and construction on the land. The competing interests below the surface are not perfectly analogous to these. Moreover, the means of access to the subsurface are essentially the same for the owner of the surface and some other private landowner. Accordingly, there is no difference in the technologies used by these competing private claimants as there is in connection with airspace, where landowners and the public pursue their respective interests literally from two different directions. Unusual geological formations aside, the potential uses for all owners of the subsurface are identical. In Edwards v. Sims, the Great Onyx Cave case (1929), A, the owner of the subsurface, was held to be entitled to seek to prevent a neighbor, B, from using parts of the cave (those parts that could be proven by a land survey to lie below As land) as a tourist attraction. Even though the caves were inaccessible from As property, there were openings on Bs land. A prevailed. The dissent saw the majority ruling as creating incalculable injury to B without benefitting the surface owner. Adopting the view that any ruling that brings great and irreparable harm to a party is erroneous, he maintained that the owner of the opening should own the caves and that this title should extend even to the utmost reaches if he [or she] has explored and connected these reaches with the entrance. Bs entitlements arose by virtue of discovery, exploration, development, advertising, exhibition and conquest.

c. An economic perspective: y If one wishes to design a property system that can facilitate efficient allocations, that system should seek to promote exclusivity, universality and transferability. So, (i) the surface owner has clear and legally protectable control inside the boundary line (exclusivity is respected); (ii) by extending rights to the depths of the earth the greatest possible area of land is made ownable (universality); and (iii) the clearness of the rule reduces the transaction costs that might be produced by the need to determine who has title to what lands. That kind of certainty facilitates exchange (transferability). Private property is supposed to be consonant with economically efficient resource allocation. The pursuit of efficiency can thus be used as a measure of the efficacy of property rules. The most influential economist in this field is Ronald Coase. His Coase theorem is designed to show that efficient resource use can occur regardless of how the law initially determines ownership rights. It is, in essence, a liberal perspective: 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. The term efficiency is used here to mean the result of an allocation- whether non-consensual or through an agreed exchange- from A to B, the result of which is to benefit B to a greater extent than a detriment suffered by A. The type of cost-benefit approach is commonly referred to as a Kaldor-Hicks measure of efficiency. At its simplest, the Coase theorem maintains that, in the absence of transaction costs, an efficient allocation of resources will result, irrespective of legal rules; that is, irrespective of which party is assigned the property right in a situation of conflicting uses.

y y

d. Mines and Minerals:

32

y y y y y y

Ownership of the surface may or may not include rights to the mines and minerals found below. At common law, a grant of Blackacre by the Crown into private hands carries with it an estate in all mines and minerals, except gold and silver. When land is conveyed by the Crown reserving all mines and minerals, it is customary to speak of the grantee as the surface owner. Ownership of the surface means not the mere plane of surface but all the land except the mines. In Alberta, a Crown grant is taken to reserve mines and minerals impliedly. Generally, once ownership of a mineral estate has been granted, a sale between private individuals will pass mines and minerals automatically unless those interests are expressly reserved. Title to a mineral reserve can be severed from the surface ownership. The sale of the right to work the mines and minerals gives rise to an implied right at common law to enter onto the surface lands as a means of access as well as a right to use reasonable means to recover the minerals granted. In Alberta, legislation now provides that as a general rule a right of entry must be expressly granted and the consideration paid for that right must be explicitly and separately set out in the transfer document; otherwise an access order must be obtained from an administrative tribunal. That body can order that compensation be paid to the surface owner to account for the impact of the right of entry on the utility of the lands.

2. Incidental Rights a. Riparian Water: Land bounded by water: y y The common law distinguishes among water formations depending on whether these are navigable and/or tidal. At common law, a presumption arises that the boundary of land that is adjacent to a non-tidal river extends to the middle of that river (ad medium filum aquae) unless the documents of title state otherwise. This presumption in favour of ownership is not easy to overcome. In such cases, the owner of the bed is the owner of the fishery above it. When the body of water is tidal, ownership extends only to the ordinary or mean high water mark. Below that line, that is, seaward, the Crown holds title. The strip between the high and low marks, the foreshore, also belongs to the crown. Tidal rivers are treated as navigable and hence, reserved for general access. In some provinces, the beds of the rivers that are navigable are vested in the Crown, even if they are not tidal. Hence, everything turns on navigability, the basic test of which is whether the watercourse can be used as a public highway. Some interruptions in navigability will not normally mean that the river is non-navigable. One looks to see whether the river is navigable as a whole. Placing title in the Crown for these watercourses assists the state in constructing wharves, docks and other structures designed to facilitate public thoroughfare. In R v. Nikal (1996), a case involving Aboriginal fishing rights in British Colombia, the Supreme Court of Canada adopted navigability as the test to determine whether or not the title to the bed passed. The reasoning of the court relies heavily on the rules for reception of English law, which vary across the country.

y y

y y y y y y

33

In Alberta, the title to the beds and shores of all permanent and naturally occurring bodies of water is vested in the Crown unless expressly conveyed away. Riparian Rights:

y y y y y

y y

At common law, ownership of lands abutting water carries with it usufructary entitlements known as riparian rights. These include a right of access to the water and the right to take emergency measures to prevent flooding. A riparian owner may appropriate an unlimited amount of water for ordinary uses. Water may also be drawn for extraordinary purposes, such as manufacturing or crop irrigation. When the use is extraordinary, the right is limited in order to conserve water for the riparian tenements that are downstream. Specifically, the law provides that the flow of the river cannot be diminished as to its quality or quantity. In many places, legislation now controls water resources in a more precise and sophisticated way. Unlike the common law, there is usually a cap placed on the amount of water that may be taken. Accretion:

y y

y y y y

When land is bounded by water, it is inevitable that changes to the shoreline, great or small will occur. The land mass may be reduced by erosion or flooding (diluvion). Conversely, accretions to the land or the recession of the water may augment the size of the parcel (alluvion). When that occurs the law of accretion governs the effect of these changes on title. In Nastajus v. North Alberta (Land Registration District) 1987, Miller A.C.J. outlined the general principles: Accretion may occur either by the gradual deposit of soil or sand or by the permanent recession of the water. The process of transformation must be gradual and imperceptible in action. An avulsion or other rapid change will not augment the riparian lands. It is the process of accretion that must be imperceptible and not the result. Accretion may even occur through non-natural forces, such as by the building of a dam upstream, provided of course that it is not the landowner who has brought about that result. The doctrine applies whether or not the transfer document describes the boundary by reference to the waters edge, by a metes and bounds description or in relation to some other land-based reference points, as long as the land so described is in fact contiguous with the water. The precise mode of description can be critical. Finally, although accretion is a natural or inherent right associated with riparian tenements, its operation may be excluded in the granting document, either expressly or by necessary implication.

b. Support of land in its natural state: The owner of Black acre may be in a position to control the use of neighboring land through a property law device called a restrictive covenant. Attached to Black acre may be a right of access (an easement) over a neighboring property. The tort of nuisance can be used to limit conduct that unreasonably interferes with activity on nearby lands. In sum, rights exist inside and outside the boundary line. y The owner of Black acre enjoys a right of support for land in its natural state and at its normal level, a right that must be respected by the owners of neighboring properties. 34

That right exists because the removal of soil on one property reduces the lateral pressures imposed against adjoining lands. A reduction in this lateral thrust can cause soil subsidence which, in turn, can result in considerable structural damages to buildings and other mayhem. y A purchaser of land is entitled to the level of support that existed at the time the land was acquired. y Excavation on white acre that leads to subsidence in black acre is actionable and liability is strict. y Not just contiguous properties. y Applies both vertically and horizontally. y A claim for loss of support is predicated on the occurrence of actual damage, not merely increasing the risk of future subsidence. y The natural right of support does not extend, directly, to any buildings on the land. y When subsidence arises from the loss of vertical support, the necessary causal connection is normally presumed to be present. y If the case for the loss of support to the land is made out, consequential damages for injuries to buildings may be recovered. y Blewman v. Wilkinson (1979 )- the present appeal raises the question whether the principle applies if the person excavating owned all the land at the date of the excavation but has since subdivided it. Can the owner for the time being of one of the lots in the subdivision sue the original excavator if the lot now subsides in consequence of the excavation? Cooke J: In my opinion a subdividing owner prima facie owes to subsequent owners of the lots a duty of reasonable care in respect of planning and construction of his subdivision. In general the owners of the lots will have such remedies as the modern flexible law of negligence gives. I am not satisfied that it would be just to give them any greater protection against the original subdivider or his agents. At any rate where it is manifest that sections in a subdivision have been created by excavation, the subdividing owner is not under a strict non-contractual duty to a subsequent owner of a section on which subsidence occurs because of the excavation, but that the principles of the law of negligence will apply. y The right of support may be waived by agreement. What language is sufficient to find that the right to support has been released? In Fuller v. Garneau (1921), Anglin J. quoted Lord Macnaghten (Butterknowle v. BAI Co-op Society, 1906): To exclude the presumption (of the right to natural support) it is not enough that the mining rights have been reserved or granted in the largest terms imaginable, or that powers and privileges usually found in mining grants are conferred without stint, or that compensation is provided in measure adequate or more than adequate to cover any damage likely to be occasioned by the exercise of those powers and privileges. But where it is established that the mines cannot be worked or the minerals extracted without entailing such consequences, an express order to work the mines and get the minerals necessarily implies the right to cause subsidence and destruction of the surface.

C. Co-Ownership of Land The common law recognized four types of co-ownership: (i) Joint tenancy (JT); (ii) Tenancy in common (TC); (iii) Tenancy by entireties; and (iv) Co-parcenary. The first two retain contemporary significance; the latter two are functionally extinct in Canada. 1. Co-Parcenary 35

This occurred where at common law or by custom land descended on intestacy not, as was usually the case, to a single heir but to two or more persons. If a man who had a fee simple estate died and had no son but only daughters, if there were two or more daughters they inherited the land together and took title by co-parcenary. In Ontario, coparcenary is expressly abrogated by s.14 of the Estates Administration Act which has the effect that if real property becomes becomes vested in two or more persons on intestacy, they take as tenants in common. 2. Tenancy by the Entireties At common law a transfer of land to a husband and wife, without more, created a specialized joint tenancy, known as tenancy by entireties. A fifth unity was present, the marital unity. Husband and wife were regarded as one person. When one died, the other took the whole property. Husband and wife were treated as one but the one was the husband who could appropriate the entire income from the property to himself. These are a historical relic and do not exist in Canada. Several provinces have expressly abolished it and in others it has probably been destroyed as a by-product of the elimination of the doctrine of marital unity. 3. Joint Tenancies The legal fiction underlying is that there is only one tenant and that there are no distinct shares held by anyone. When land is transferred to two persons as joint tenants, the two are regarded as taking the property on such a basis that with respect to the world they are to be regarded as one single owner; each tenant owns nothing and yet owns everything because of two principle features: i. y y Survivorship or jus accrescendi On the death of one tenant his interest in the land passes automatically by survivorship to the remaining joint tenant(s). It is possible for joint tenants to end the joint tenancy and in effect create individual interest in the land (called severance) but this must occur during the lifetime of the particular tenant (severance cannot be worked by a will). If nothing done to disturb joint tenancy the last survivor gets all. There is an advantage, for example, in trustees holding legal estate as joint tenants b/c it meant when one of them died it was not necessary to appoint a new trustee or vest the title in the remaining trustees.

y y

ii. Unities y Unity of Possession each joint tenant is in principle as much entitled to possession of any part of the land as any other joint tenant, same piece of property. y Unity of Interest in the eyes of the law, each tenant has an exactly similar entitlement or interest in terms of its scope, character and potential length; means you cannot have a joint tenancy btwn persons who are different in character of interest. y Unity of Title had to have acquired their interest by the same act or instrument of transaction. y Unity of Time the interest of each joint tenant had to vest at the same time. 4. Tenancies in Common Tenants in Common- 2 or more people who have an equal undivided 1/2 interest in the property 36

y y y y y y y

each tenant may dispose of his/her interest by will or deed (no right of survivorship) words of distribution- to be divided share equally- signifies tenancy in common Ex: To Lisa and Leon and Tara and the survivor of them [Joint Tenancy] Decide to have Saul and Leah join Join as Tenants in Common with other 3 because they do not have unity of time Between them, they have all 4 unities of Joint Tenancy, but it must be specified [E.g.: ... Join for now and forever"] To bring them in as Joint Tenants, will have to sever joint tenancy of everyone and rebuilt it as a joint tenancy between all 5 people.

a. The co-tenants are regarded as holding by distinct though undivided shares y Not as having distinct title to land but as having distinct share. y No survivorship in common tenancy; when one dies he can leave his share to someone by will b. Of the four unities essential to a joint tenancy, only unity of possession is absolutely required for valid tenancy in common. Others may exist but are not essential. y In particular unity of interest need not exist. Means the interests of the tenants in common need not be equal. Modes of Creation: Obvious way is to do it explicitly in the constructive instrument Problem arises when property conveyed to two or more persons without specific indication as to the nature of the concurrent interests they are to take, i.e. to A and B in fee simple; is this joint tenancy or tenancy in common? Assuming that the unity of possession is present, a tenancy in common can be created in a variety of ways: (i) By express creation; (ii) Pursuant to a statutory presumption; (iii) As a result of a failed attempt to create a joint tenancy; (iv) By operation of law.

y y

Common Law y Courts turn to rules of interpretation or presumptions y Common law favoured joint tenancy; original reason was that from point of view of a feudal lord it was convenient if doctrine of survivorship caused land to vest in one person. Conveyancers later had a preference for joint tenancy b/c joint tenancy has effect of simplifying title. y Modern advantage simplified proof of title therefore simplified conveyancing y Words of limitation involving two or more persons would be construed as a joint tenancy. - Words of severance could be used to make a tenancy in common. - The absence of unities would also create a tenancy in common. Equity y Equity comes close to contradicting common law here; it favours equality and as such prefers a tenancy in common as a joint tenancy due to survivorship does not produce an equal result. y It came to be in a number of situations that they would find a tenancy in common rather than joint tenancy: 1. Purchase in unequal shares o Original purchase money put up in unequal amounts; position taken by equity was that when persons buy something each intends to get what he has paid for and the appropriate result is to grant each buyer a proportion of the share equal to what they paid (i.e. if B pays of price, he should get of share) 37

2. Advance on Mortgage o Borrower takes loan from A and B and in return conveys or grants the fee simple on mortgage; if mortgage simply said A and B equity would presume a tenancy in common o Each borrower lends his own money with intention of getting back his own money o Is only a presumption and will not operate if it is clear they did intend to take mortgage as joint tenants o Even if A and B put up money in equal amounts equity would still presume tenancy in common 3. Partnership Asset Acquisitions o A and B are business partners and vendor conveys to them without indicating if joint tenancy or tenancy in common; common law would say this is a joint tenancy but equity says it is a tenancy in common o How did equity do this without directly contradicting the common law? Said that A and B as joint tenants hold that property on trust for themselves as tenants in common o If B dies, A because of survivorship will become sole owner but will hold on trust for himself as to a particular share and on trust for Bs estate as to the other part of the shares y Court of law began to take less favourable view of joint tenancies. If you enforced joint tenancies you may go against the intention of the parties; law became more alert to discover in actual words of a grant or will some kind of manifestation of intention to create a tenancy in common rather than a joint tenancy. o For example if will left to A and B to share and share alike courts interpreted this as meaning each person was to have a distinct, equal share and doctrine of survivorship would not apply o Or if will said property to be divided amongst A and B or left to A and B to be divided among them o The interpretation of such gifts are called words of severance (words that suggest donees are to receive separate interests) In modern law where transferor has not indicated what type of co-ownership, this is dealt with by statute. The Law of Real Property Act, the Wills and Tenancies Act, etc. Basically whenever property is transferred to two or more persons they will take as tenants in common and not as joint tenants unless a contrary intention appears on face of instrument. In Re Bancroft, Eastern Trust Co. v. Calder (1936), the question was whether the children of one Minnie B. Calder took as joint tenants or tenants in common. In the words of Ross J., a bequest to a number of persons without any accompanying explanatory words creates a joint tenancy. On the other hand courts have leaned strongly against joint tenancies and.anything which in the slightest degree indicates an intention to divide property must be held to abrogate the idea of a joint tenancy and to create a tenancy in common. I cannot adopt the reasoning that because the testator showed clearly that he intended benefitting the grandchildren of Minnie B. Calder under cl.(c), that is, after the death of his wife, that you can therefore read into cl.(b) an intention to benefit them under that clause as well, and thus make a tenancy in common where otherwise, on the face of the will, there would be a joint tenancy. I find nothing in the will which in the slightest degree indicates an intention to divide the income between the children of Minnie B. and which can be held to abrogate the idea of a joint tenancy and to create a tenancy in common. 38

y It is possible for parties to hold property as joint tenants in law but as tenants in common in equity. For example, a transfer of land unto and to the use of A and B in trust for A and B would make the parties joint tenants in law, but TC in equity. Severance of Joint Tenancies y y y When can co-owners change the joint tenancy into another form of co-ownership? A and B are joint tenants, both or just one of them can change the co-tenancy into a tenancy in common; this is called severance. This must be done inter vivos; cannot work severance by a will.

Rule: A joint tenancy can be severed in three ways: y A tenant can sever his own share each is at liberty to dispose of his own interest in such manner as to sever it from the joint fund losing, of course, at the same time, his own right of survivorship y All parties may sever by mutual agreement y Severance can be by any course of dealing sufficient to intimate that the interests of all were mutually treated as constituting a tenancy in common (mutual course of dealing) 1. By Own (Unilateral) Act Alienation y One co-owner can act unilaterally to achieve a severance. Land held in joint tenancy by A and B and A transfers his interest to another person. y A takes purchase money in exchange for ones interest in the land; result is complete alienation of As potential interest. y Question as to whether granting a mortgage by A works a severance; at common law it seemed to but at modern law a land mortgage does not convey title to the mortgagee, it gives the mortgagee a charge on mortgagors title and as a result there is no severance. y One of the unilateral ways by which joint tenancy may be severed is by alienation inter vivos to a third party but could a person sever his own interest by conveying title to that interest to himself? This will result in a severance, because the new title resulting from this process is obtained at a different time and under a different document than that of the other joint owners. Severance Operating on Own Share Sorensen v. Sorensen, [1977] Facts: Joint tenants, wife tries everything to sever, dies, husband claims all Issue: What, if any, acts by the wife severed the joint tenancy? Rules: y Any act that interferes with survivorship severs a joint tenancy, and any act that does not interfere does not sever y A valid gift (including establishment of a trust) severs joint tenancy y Lease for life does not sever lease for term that is binding after death severs y Will does not sever survivorship takes effect prior to will y Mortgage does not sever no longer transfers title y Execution of separation agreement did not sever y Onus to prove severance rests with party asserting there has been a severance y Declaration by one party, not communicated to other, with no other act, does not sever y Action for partition does not sever until the action is complete (i.e. judgment) 39

McDermid J.A. I am of the view that the weight of authority is that the declaration by one party of an intention to sever alone without any other act and without acceptance by the other joint tenants does not sever the tenancy. 2. By mutual agreement y a JT can be severed by a mutual agreement to do so by all JTs. (Re Somers) y does not have to be freestanding agreement y can form a clause of a separation agreement between spouses. y agreement must be mutual y all parties must unanimously agree. y McClean notes mutual wills from all JTs that direct shares to someone outside JT will operate to frustrate survivorship, and b/c this conduct is mutual and inconsistent with JT, it will sever (see Re Somers). I think this can be seen as falling under Rule 2 or 3. y 3. By mutual course of dealing y any course of dealing that simply cannot be compatible with existence of JT will affect a severance. (Flanagan, Re Walters) y no express agreement reqd but JT no longer act like JT y they behave in a way that suggests they mutually regard selves as TIC. y can arise quietly without anyone knowing y Parties need not be aware of severance. (Flanagan, Jackson v. Jackson) y conduct must be mutual y all JTs must act this way. y negotiations toward an agreement that, if reached, would be considered an act of disposition, need not be concluded to affect a severance. (McClean) y Re Walters: H and W negotiate to sell one JTs share of home to other severed. y Burgess: PENNYCUICK says oral agreement to sell one JTs share to another, though never executed, was sufficient to affect severance. y key is that parties mutually acted in a way that was inconsistent with JT. y no severance in Re Wilks b/c intent to sever was not mutual. As a result, JT needed to complete unilateral act of disposition - d/n do so, thus no severance. 4. Severance by other means y A severance will also occur on bankruptcy, by judicial sale and probably by seising the property via lawful execution procedures. y In Ontario, if a spouse dies owning property as a joint tenant in a matrimonial home together with a third party (i.e., not with the other spouse), the joint tenancy will be deemed to have been severed immediately before the death of the owning-spouse (thereby allowing that spouses share to be available for division as marital property). y Finally, while the murder of one joint tenant by another may in one sense be called unilateral action, it is best regarded as resulting in division of title in equity by operation of law, based on the principle that one should not be permitted to profit from an illegal act. 5. Agreeing not to sever At common law there is an inherent right to sever a joint tenancy unilaterally, even behind the back of other owners. Joint tenants may wish to contract out of that default rule and agree not to sever. y Such agreements, whether express or implied, are permissible in law, despite the fact that such arrangements restrain alienation. y If A and B agree not to sever, but A later sells to C, at least two results are possible: 40

i. Under one, the transfer is valid, and therefore, the joint tenancy is over. B and C will hold as tenants in common, as there is no unity of time or title inter se. B is entitled to damages. ii. Alternatively, the transfer to C may be treated as void in whole or in part. A constructive trust is imposed on A and B as a result of the agreement. C is then bound by this equitable obligation under the normal rules governing the transmission of legal and equitable rights. Co-Owners Relative Rights: Rights and responsibilities of co-owners Severance of joint tenancy merely converts it into a tenancy in common. How are the issues resolved when the co-owners have not resolved them by agreement: i. Accounting for the benefits of Occupation The unity of possession is an essential characteristic of both joint tenancy and tenancy in common: each co-owner has the same right to possession of the whole of the property. It is therefore a general rule that a co-owner does not have an obligation to account to the other coowners for the benefits derived from possession. There are exceptions to this rule where a co-owner may be required to account to other coowners for the benefits of occupation often referred to as occupation-rent: a.Ouster When one co-owner has unlawfully ousted another. It includes actual expulsion as well as other circumstances which made the conditions intolerable for the other co-owner. b.Agreement There are two main types of such agreement: y First, the co-owners may have agreed to one having sole possession on the terms of making rental or other payments. y Second, one co-owner may have agreed to act as agent or, as bailiff of the other coowner with responsibility to account to the latter for her or his share of the profits of the land. c.The Statute of Anne Statute provides for accounting in certain circumstances. The relevant English provision, often referred to as the Statute of Anne, has been re-enacted in Ontario as section 122(2) of the Courts of Justice Act, which provides that a JT or a TIC can bring an action for an accounting against a co-tenant for receiving more than the co-tenants just share. d.Waste The law of waste applies to the co-owners. S.31 of the Conveyancing and Law of Property Act provides that TIC and JT are liable to their co-tenants for waste and in the event of a partition, the part wasted may be assigned to the tenant committing the waste. However, the law of waste curtails the enjoyment of land by a co-owner less stringently than it does that of a tenant for life. e.Equitable Accounting There is a general equitable jurisdiction to make allowances between co-owners. However, it appears that this jurisdiction only applies in partition and sale or analogous proceedings. In Mastron v. Cotton(1926) it was held that a joint tenant was entitled to take credit for making mortgage payments and paying taxes, and for repairs if she submitted to an allowance for use and occupation. The Court has flexibility in determining whether allowance of credit for payments by a co-owner should open that co-owner up to liability for occupation rent. What is just and equitable depends on the circumstances of each case. ii. Claiming for expenditures relating to property

41

In certain circumstances one co-owner can obtain reimbursement from other co-owners with respect to expenditures relating to the property, e.g., mortgage payments, improvements, taxes, fire insurance premiums, upkeep and repairs, expenses from litigation with a third party, etc. (a) Termination Termination can occur through the release of one co-owners interest to the other, or by a transfer by all. Alternatively, a co-owner may invoke the judicial power to order a physical division of the land (partition), or sale. The common law provides no remedies of partition and sale to JT or TC. The power to order a partition was conferred by statute in the mid-16th century. The courts had to grant a partition however inconvenient or undesirable partition may be. The power of sale, added in the 19th century, allowed a court to order a sale in lieu of partition. But the court did not have the power to refuse an order altogether. In those common law provinces that do not rely on the received English law, it is assumed that the courts have a discretion, to some degree, to refuse to grant an order. Even though it is recognized that a co-owner has a prima facie right to partition or sale, some courts have assumed that they may refuse an order in the interests of fairness and justice. In theory, these same criteria apply to commercial relationships. However, courts do seem less inclined to forestall one co-owner from bringing these property relationships - i.e., those motivated solely by profit potential to an end. Parties may wish to contract out of the right to seek partition and sale. Modern Canadian cases state that a contractual bar will normally serve to convince a court that it should exercise its discretion not to grant partition or sale. Greenbanktree Power Corp. v. Coinamatic Canada Inc. (2002) The applicant company held small percentage interests in five properties, as a TC with several other owners. In 2001, the respondent, Metcap, paid $107 million for the interests of all the co-owners except GBT, which rejected the offer as being too low. After the sale closed, GBT applied under Ontarios Partition Act for an order for sale of the properties and division of the proceeds. Metcap argued that the order would cause it undue hardship. Issues: 1. When should a court deny a TC its prima facie right under the Partition Act to compel the sale of commercial property owned jointly with an unwilling co-tenant? 2. Can the applicant, in such an application, be required by the Court to sell only its own interest?

(b) Financial Issues In settling the financial issues that emerge on the termination of co-ownership, the court has discretion to make all allowances that are just and fair under the circumstances. A number of basic principles guide the courts, such as, whether one co-owner has excluded the other; whether a co-owner was a tenant, bailiff, etc.; whether he has committed waste, received more than his just share from the property, etc. All else being equal, each party is liable for capital expenditures and current expenses in accordance with his or her ownership share. Other concurrent forms of ownership: The nature of condominiums

42

A condominium exists when two or more property owners band together under an arrangement in which there are individually owned units, coupled with the shared ownership of other lands, all of which is subject to the scheme of management. The condominium projects that now exist in Canada are governed by statutory codes but condo-like arrangements could be crafted through the use of common law principles. Two main problems tend to emerge in the creation of a common law condominium: one has to do with the nature of airspace rights; the other with the establishment of a workable net of reciprocal duties. These matters can be dealt with by contract, but to be fully effective against all owners, present and future, the contractual solution is limited. New owners will not be bound by past agreement; ideally each newcomer would have to enter into a contract that would be enforceable by all. The conventional law of co-ownership lacks a suitable mechanism of ownership for resolving disputes among owners. In the absence of an agreement the only solutions available to resolve conflicts are the drastic measures of partition and sale. Finally agreements aside, one co-owner may sell his or her share in the common areas separately from an individual unit, or seek an order for a partition or sale of the whole common property. Styles of condominium regulation Modern condo statutes attempt to overcome the limitations of the common law. In general, the Canadian legislation provides for the creation, registration, regulation and termination of condos. In essence, the statutory condo is analogous to a municipality. The legislation creates a micro-sovereignty that can enact and enforce a type of local law, provided, of course, that the rules are promulgated in conformity with both the general law and the enabling condo statute. A person buying into a condo project is then subject to the rules and becomes a part of the community of governance. Participation in the condo projects necessarily involve a surrender of proprietary independence. Co-operatives Co-operative commercial endeavors began cropping up in Canada in the 19th century. A co-op is typically designed to create a community comprised of shared amenities and individual entitlements. In addition, members co-operate in the administration and governance of the project. In the context of housing, two main forms exist: Under one, so-called equity co-ops, members contribute financially to the enterprise in order (i) to defray costs associated with the premises, and (ii) to augment the value of their investment. Commonly, the property is owned by the corporation and the members hold shares in that entity. Some co-op housing projects adopt a not-for-profit model. Such arrangements serve as a means of providing low-cost accommodation coupled with the ability to participate in the governance of the community. Other renditions of communal property Communal systems are found all over the world. In Canada, some groups have established shared arrangements within the strictures of the common law. y In Hutterite colonies, for instance, all property is vested in the congregation. y Common law aboriginal title is regarded as communal. y The Internet has given rise to sharing arrangements that have the look and feel of common property. There is a great mass of information to which access is available for free.

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D. Introduction to Modern Trusts y Today many rights and responsibilities are set out in the Trustee Act or similar legislation. All of them come down to principle that a person who takes a property on trust owes a duty of loyalty to the purposes of the trust and to the beneficiary of the trust. This means that a trustee must never be in a conflict of interest between his interest and the interest of the beneficiary; must never use his trust position to his own advantage where it is his duty to act for the beneficiary; this is the fiduciary principle o Equity gave the fiduciary principle effect through the use of remedies; if a trustee misbehaved or failed to perform equity would name a new trustee and if the trustee misappropriated the property of the beneficiary it would be restored

Are Equitable Rights Proprietary? y Equity focuses on the conscience, creating personal rights (rights in personam) enforceable against an individual; in theory these rights are not proprietary. However, the effect of recognizing the rights of enforcement of the cestui que trust is normally described as creating an equitable interest in property that has been impressed with a trust. The result of this is that equitable rights are regarded as proprietary. What Was Meant by Property? 1. Assignability bundle of rights must be capable of transfer either by inter vivos transactions or succession or will 2. In the case of a purely personal right there is only one defendant at a time. When you own something you have certain rights and claims in that thing which the common law protects against anyone who without justification damages or interferes with your rights in that thing. How does a beneficiary enforce a trust against a third party? 1.Volunteer o If the third party is a volunteer he will take subject to the trust o A volunteer is someone who has not given consideration for his grant; in equity the consideration had to be more than nominal consideration o It doesnt matter if the volunteer knew when he acquired the land that it was subject to a trust. 2.Third party purchaser for value o When third party is purchaser for value and has given consideration for the land at common law the trustee is the owner and has the rights to the land and can sell to the third party. In law the third party becomes the new legal owner. o Equity said that a beneficiary could enforce the terms of trust against a purchaser for value in three situations: i. Fraud clear and deliberate. If the deal between the trustee and the third party was a collusive deal to deprive the beneficiary of the trust. ii. Actual Notice third party transferee knew as a matter of fact that the land was subject to a trust and that the transfer to the third party by the transferor was being done in a breach of trust.  Note that not all transfers of land by trustee are prohibited. If done for the benefit of the beneficiary in the course of the administration of the trust it is allowed. iii. Constructive Notice where third party transferee did not have actual notice of the fact that land was subject to the trust, equity extended its remedies to the case where the third party transferee ought to have known those facts 44

o o

A purchaser would be held to have this knowledge: a. Where a purchaser failed to make usual inquiries common in a conveyance of that type as to the title of the vendor b. Suspicious Circumstances something known to the purchaser that should have made him suspicious that there might be an outstanding equitable claim on the property. Ignorance is not protection. As such, it is clear that a beneficiary cannot enforce the trust against a bona fide purchaser for value without notice. This person is beyond equities reach because such a purchaser is morally pure and equity deals with unconscionable transactions. Even in such a case the beneficiary would still have personal remedies against the trustee. We come very close in equity to recognizing the interest of the beneficiary as something that is protected against most of the world; therefore this trust is treated as a proprietary right.

Other Kinds of Trusts 1. Purpose Trust y Those which served a charitable purpose were recognized at law y Charity was defined as a concept by analogy to types of purposes recognized as charitable in a list during reign of Queen Elizabeth I and included relief of poverty, education, and other trusts serving a public benefit. y General test is that it must serve a significant public benefit and must serve the public 2. Operate by Act of Law a.Resulting Trust Can arise in several ways: If, in a grant of property on trust, some element of the beneficial interest is not transferred, it will result back to the settlor (if settler has died then to settlors estate). Can also arise if a deed of trust is somehow ineffective, such that it fails totally or partially; for example, when the trust is found to contravene public policy, or if it was created through the perpetration of fraud or duress. In such cases also, usually the equitable title results back to the settlor. It could occur when a property is gratuitously conferred by A to B, a resulting trust may be found in favour of A. When A buys property and places title to it in the name of B, a resulting trust is presumed to arise in favour of A. The presumption of resulting trust can be rebutted by showing that a gift was truly intended. One example is where in 1900 a settler might have transferred some property to a trustee to hold in benefit of tired and weary buggy makers. Eventually no such trust could be carried out so the courts would conclude that although the settler created the trust for the benefit of the poor buggy makers but also had general charitable intent, court will direct a scheme so that the trust is to be used for charitable purpose as near as possible to the buggy makers. For example, a charity to help ill and retired workers of any kind. If no such purpose could be found it would revert to the settlers estate. The presumption of resulting trust is the general rule. However, in some circumstances the position is reversed, and a presumption of advancement or gift obtains. It depends on the nature of the relationship of the parties to the transaction. For example, a gift is presumed in favour of a minor child. 45

y y

y y

Pecore v. Pecore (2007) presumption in case of an adult dependent child (property reader, p. 448) The common intention resulting trust is a variant on the idea that a trust arises in favour of the party advancing the purchase price. That form of resulting trust has been found in cases in which it is shown that the party on title intended some other person to share beneficial ownership. What normally triggers the trust is an agreement, often only implicit, sometimes quite fictional, that the non-titled spouse should acquire some proprietary right owing to that persons contributions to the acquisition, preservation or enhancement of the property.

b.Constructive Trust (i) Conventional forms y Imposed by a court in order to achieve an equitable purpose y Is situationally based, it arises in a number of specific instances y For example when a trustee wrongfully obtains profits from his or her position, he or she will hold those monies under a constructive trust for their beneficiary. Example of this is case of Keach v. Sanford where the one of the assets held by the trust was a leasehold. The lease was expiring but was subject to renewal. The trustee took the renewal for himself at an advantageous price. y In the leading Canadian case of Soulos v. Korkontzilas (1997),[real estate agent, PL reader, p. 468] McLachlin J. outlined four criteria that would determine whether the good conscience constructive trust was appropriate: (1) The defendant must have been under an equitable obligation. (2) The assets in the hands of the defendant must be shown to have resulted from deemed or actual agency activities of the defendant in breach of his equitable obligation to the plaintiff. (3) The P must show a legitimate reason for seeking a proprietary remedy. (4) There must be no factors which would render imposition of a constructive trust unjust in all the circumstances of the case. (ii) Remedial y For responding to unjust enrichment, equity can intervene to prevent this in circumstances such as those where there was value added to the property by the non-owning spouse if advantage could be taken from that by the working spouse. One of the methods was to impose a trust; said husband held property for himself and his wife; converted sole ownership of husband into divided ownership of husband and wife. y If conduct of someone who owns or acquires property is unconscionable, a trust may also be imposed. y The constructive trust can be used as a remedy, but should be used with care because imposing a trust creates a proprietary right in someone which allows them to jump the cue against all creditors who have claims against the defendant. y Murdoch v. Murdoch (1975), infamous decision of SC, claim by a wife to an interest in husbands ranch properties, no resulting trust, minority-Laskin J. prepared to hold a constructive trust should be imposed, paved the way for family law reform.(p. 235, ziff) y In Rathwell v. Rathwell(1978), a three-member minority of the SC endorsed the existence in Canada of a general doctrine of unjust enrichment, applicable where the facts display: (i) an enrichment; (ii) a corresponding deprivation; and (iii) the absence of a juristic reason for the enrichment. y A finding of unjust enrichment does not invariably lead to the imposition of a constructive trust. Another option open to a court is to award monetary compensation.

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In Peter v. Beblow (1993), the Supreme Court held that for a constructive trust to be ordered, whether in family law cases or otherwise, a court should find that (i) a monetary compensation is inadequate; (ii) that a link exists between the services rendered and the property in dispute. (p. 458, PL Reader) Bulun Bulun v. R. & T. Textiles Pty. Ltd. (1998), (Australian case aboriginal art, fiduciary obligation, PL Reader, p. 476)

E. Introduction to Aboriginal Land Rights In Canada, European settlement and the reception of English law overlays the pre-existing property rights of Aboriginal communities. Aboriginal entitlements are placed apart from other rights to acknowledge that unique status. (a)Aboriginal title at common law (i) The rules of recognition of Aboriginal title In Delgamuukw v. British Columbia, the SC of Canada clarified the basic rules for the recognition of aboriginal title in Canadian law. The critical concern boils down to a single variable: first occupancy. To succeed in a title claim it must be shown that the land was occupied at the time of the assertion of British sovereignty. If present occupation is relied upon as proof that occupation existed, then continuity between present and pre-sovereignty occupation must be shown. Proof of an unbroken chain is not mandated. The occupation relied upon must have been exclusive. That requirement was justified on two grounds: a. The proof of title (i.e., exclusive occupation) should be consistent with the property interest acquired. b. The requirement of exclusivity prevents the chance of conflicting and adverse claims being recognized in favour of different aboriginal communities. In analyzing the elements of native title one searches for a suitable analogy among the forms of possession to help characterize the degree of occupation needed here. Should it be that of an adverse possessor, the registered owner or some other type of claimant? The choice of approach can be critical. However, the rights being considered are sui generis. Accordingly, analogies are useful only as a starting point for analysis and should not dictate conclusions. The meaning of occupation or possession that is applied must respond to the specific context in which the issue arises. Here the focal concern is the fair recognition of ancient land rights. That , in turn, is affected by personhood or grouphood values: the connection between ancestral lands and aboriginal conceptions of self and spirituality should be front and center. The SC has said that the rules for proof of occupancy must be grounded both in common law and aboriginal concepts. Both are equally relevant. However, the common law concepts of exclusive occupation must be applied to Aboriginal land claims with caution. Once it is accepted that some form of actual possession is enjoyed a significant physical presence need not be shown for the group to retain rights over those lands. As to the requisite quality of possession, courts should adopt a standard that recognizes and accommodates differences in geography, cultural norms, needs, technologies and so on. So hunting grounds can be in occupation as much as settled villages or cultivated fields. In the Hamlet of Baker Lake case (1980), when Inuit claims were addressed, it was found that the required degree of occupation existed, to the extent the barrens lent themselves to human occupation, the Inuit occupied them. The occupation must be exclusive. The presence of other nations can reinforce a claim to exclusivity when it is shown that these groups were permitted to enter on the lands. Treaties may also support the 47

idea. The crux of the matter is whether the claimant could have excluded others had it chosen to do so. Shared arrangements among first nations may still satisfy the requirement of exclusivity; shared exclusivity is possible. (ii) the nature and sources of aboriginal title Aboriginal land rights cannot be placed into any conventional pigeonhole. Several features have been identified by the SC as marking out the unique features of Aboriginal title: (a) it is inalienable except to the crown. It cannot be sold, mortgaged, leased, or surrendered to any other party. (b) title is held communally by the members of an aboriginal nation. (c) It pre-dates the assertion of colonial sovereignty. By contrast, generic common law estates in land arise from grants made after sovereignty had been established. The recognition rules are designed not just to acknowledge but also to preserve a continuing connection with the land. Accordingly, uses that threaten to destroy that relationship fall outside of the content of a proven aboriginal title. (iii) the recognition of other aboriginal rights There are other kinds of legal rights amenable to legal recognition. The rang of possible entitlements can be placed along a spectrum in accordance with their degree of connection to the land. So, for example, some claims based on customs, practices and traditions may not entail occupancy rights over land, or indeed the use of land in any way. Such rights are not dependent on proof of aboriginal title, and exclusive occupation does not have to be shown. However, it must be demonstrated that the practice, custom or tradition for which recognition is sought was a central and significant part of the Aboriginal groups distinctive culture at the time of first European contact. (iv) extinguishment and infringement y At common law, an extinguishment can result from a valid, yet unilateral, sovereign act if it can be proven that Parliaments intention to produce that outcome is clear and plain. The requisite intent need not be express, and therefore aboriginal rights may also be extinguished implicitly(R v. Sappier, R v. Gray, 2006) y There are severe constitutional constraints on the ability of the provinces to expunge Aboriginal rights. Some grants, such as leases, might only suspend, but not terminate Aboriginal title. y A second method of extinguishment is by means of surrender to the Crown. y The controversial decision of the Ontario Court of Appeal in Chippewas of Sarnia v. Canada (Attorney General) 2000, can be read as recognizing a third method of terminating Aboriginal rights at common law. In that case it was held that the lands although imperfectly surrendered in 1839, but by the time the dispute over these lands erupted in the 1990s, had passed through the hands of countless bona fide purchasers. In view of those subsequent dealings, as well as acquiescence in 1839 and 1853 by the Chippewas, and their delay in launching a suit, the current owners had priority. The Band had recourse against the Crown for breach of its fiduciary duties. y The means by which the state can affect Aboriginal rights are constrained in two key ways: First, in dealings between the government and aboriginals, the honor of the Crown is at stake. The Crown must act in good faith in all dealings and negotiations. The scope of these duties is affected by the attendant circumstances. It must consult and accommodate when action might affect Aboriginal rights. The honor of the Crown also means that the state owes 48

y y

y y (b) Reserves

fiduciary obligations to Aboriginal peoples whenever it has assumed discretionary control over specific Aboriginal interests. The second set of constraints on state action can be found within Canadian constitutional doctrine. Section 35 of the Constitution Act, 1982 provides that existing Aboriginal and treaty rights of the Aboriginal peoples of Canada are hereby recognized and affirmed. S.35 rights can be abridged through state action, however, a two-pronged test must be satisfied to justify a derogation: First, state action must be in furtherance of a compelling and substantial objective. Aboriginal rights must be balanced against the needs of other communities, for example, environmental conservation. One must also ask whether the Crowns actions are consonant with its obligations to Aboriginal peoples. The duties of consultation and accommodation are germane. In R v. Van der Peet (1996), it was held that subsequent to s.35(1) Aboriginal rights cannot be extinguished and can only be regulated or infringed consistent with the justificatory test laid by this court in Sparrow In 2005, the SC confirmed that prior to constitutionalization of aboriginal rights in 1982, aboriginal title could only be extinguished by clear legislative act. Now that is not possible(R v. Bernard, 2005) Finally, the Constitution Act, 1867 also imposes limitations on state action. Legislative competence over Indians, and lands reserved for the Indians is conferred on the Federal Branch. Provincial laws extinguishing aboriginal rights are ultra vires and therefore void. R v. Bernard, R v. Marshall (2005), logs from crown land, aboriginal title at common law. (p. 411, PL Reader) Haida Nation v. BC (2004), duty of consultation and accommodation. (page 418, PL Reader)

Unique property rules exist on the reserves under federal control. Entitlements on land on a reserve may be granted to individual band members by the governing band council, with the approval of the responsible federal minister. That right is somewhat similar to a fee simple. These ownership rights are conditional on the holder remaining resident on the reserve. (c)Mtis title An individual holding Mtis title has the exclusive right to (i) Use and occupy the land, (ii) Make improvements on the land, (iii) Transfer the title, (iv) Grant lesser interests as set out in the Land Policy, and (v) Determine who receives the title on the holders death. However, the land may not be given as security for a debt, and may not be held as a joint tenancy, or a tenancy in common. F. Acquiring Real Property 1. Transferring an estate in land The first statutory system of transactional registration in England emerged as a by-product of the Statute of Uses(1535). The statute could be used to transfer legal title from the person seised of land to the person entitled to the beneficial interest. The English Reforms of 1925 established a system of title registration which has now been replaced by the Land Registration Act, 2002. 49

In Canada, registration was introduced in various parts of the country beginning in the mid-eighteenth century. Two models have been tried in Canada: deeds registration and title registration. a. Deeds Registration y An attempt is made to create a record and repository of all documents pertaining to a given parcel. These become a matter of public record; accordingly, due registration can serve as notice to the world. y Deeds registration system may be classified as: (i) race (to register), (ii) notice, (iii) race-notice. y Under a race system, it is generally the order of registration that determines the priorities. y A notice system, is concerned with ascertaining whether a subsequent transaction was undertaken with notice of a prior one; that is central to the determination of how interests will be ranked. The real question is whether there existed sufficient notice at the time of the subsequent transaction. Whether that notice may be actual, constructive, or imputed, depends on whatever a given system allows. A person without notice takes free of prior interest. y A race-notice statute accords priority to a party who acquires subsequent interest without notice of a previous one, and who registers before that prior interest is placed on title. It is the most common of the three forms. y It has frequently been held that notice of an unregistered interest at the time of a second transaction is enough to preserve the priority of the prior interest. The reasoning is that the point of the statute is to protect innocent purchasers. That goal is fully satisfied if the second party is aware of the prior right. y In general, under deeds systems the registration of a deed is treated as equivalent to actual notice. It might be better to speak of notice by registration as being adequate to protect an interest endorsed on the register. y Registration is a ministerial act only: the validity of any document on the books remains open to challenge. As a result, a historical search to show a good chain of title is still necessary. Under current Ontario law a 40-year search is contemplated. C.I.B.C. Mortgage Corp. v. Quassa (1996) b. Title Registration the modern system of title registration in Canada can be traced to the pioneering work of Robert Torrens and the implementation of the first Torrens title registration system in South Australia. The Cardinal Elements of Torrens Title: y The main goals of Torrens title are to create a system that facilitates transfers, allows for simplicity, and reduces the cost of conveyancing. y Rather than require costly searches each and every time, a title Regis. System takes a calculated risk that most of the time the top title on the register is valid. Security of title is sacrificed, but conversely security of transfer is enhanced. y Under this system, the register is said to be the mirror of all rights in relation to that land. The failure to register a property interest alters the priorities that would otherwise govern that entitlement. A person registering without proper notice of a prior interest can claim priority over it. y A Torrens system also attempts to certify titles. y An integral element is the insurance (or net) principle. The owner who is deprived of the property is expected to make a claim against the fund (purchasers contribute to a fund that is used to compensate owners in those instances when the deal would not have been valid under the common law rules) for errors resulting from fraud, mistake or maladministration.

50

The potential harms of this system are: the system tolerates the presence of various unregistered overriding interests; obtaining registration to a piece of land does not mean that there will be no past defects in earlier dealings; a subsequent error might lead to defeasance; the insurance fund will not always provide compensation.

2. Adverse Possession Possession is created by: 1. physical control. 2. intention to control. 3. knowledge of goods inherent value 4. intention to possess y Possession or the right to possession, not ownership or title per se, determines the ability of an owner (or other aggrieved person) to sue in tort in response to a wrongful interference with chattels. At its core are two components: animus possidendi -an intention to possess and factum (physical control, sometimes also referred to as corpus). The degree of possession demanded will depend on the function that the concept of possession is designed to serve. Possession is sometimes distinguished from custody. An employee holding goods belonging to the employer is generally regarded as having custody only, with legal possession remaining in the employer. The common law provides that title to wild animals vests by taking possession. Where animals rest on private land, the proprietor obtains title until they are able to fly or run away. Title is lost if the animal escapes. This rule of qualified title exists to induce the owner to tame and retain the animal. An apparent exception to the idea of qualified title is made for those wild animals that have animus revertendi the intention to return, which is assumed to exist when the animal shows a habit of returning. In Popov v. Hayashi (2002), a dispute arose over the ownership of a baseball hit for a recordbreaking home run. Although Hayashi was the first to establish manucaption conclusively, Popov nevertheless had what was called a pre-possessory right, which was held to warrant legal recognition. To obtain such an entitlement, the Court reasoned, one must undertake significant but incomplete steps to achieve possession of the property, and those steps must have been disrupted by the unlawful acts of one or more intermeddlers. Abandonment is, in essence, the reverse of possession-taking: there must be an intention (animus reliquendi) to renounce title; that is, an indifference to the fate of a chattel. Merely giving up the search in despair of an item lost or misplaced is not abandonment. Sufficient acts of divestment are also required. There is no concept of abandonment of real property. The abandonment of some incorporeal real rights, such as easements, is possible.

y y y

Acquisition of title by possession: Squatters y y y y Possession may serve as a source of title to realty through the law of adverse possession, sometimes referred to colloquially as squatters rights. The right of the true owner to sue may be statute-barred against a person who has been in adverse possession of that land for a specified period. It can found an action in trespass against a subsequent possessor, and it can be transferred. A person asserting a squatters right must have an intention to possess. 51

y y y

To succeed, the acts of possession must be open and notorious. Adverse, exclusive, peaceful (not by force), actual (generally), and continuous. If any one of these elements is missing, at any stage during the statutory period, no rights against the paper owner can be successfully asserted. In Keefer v. Arillotta (1976), the claimant failed to demonstrate that land over which he has been granted an easement has been taken through adverse possession. It must be shown that there was an intention to exclude the owner from such uses as the owner wants to make of his property. The owners intention was also taken as germane to the determination of the factum of adverse possession: the acts relied on as dispossessing the true owner must be inconsistent with the form of enjoyment of the property intended by the true owner. It has been held that the test does not apply if there is a mutual mistake as to the correct location of the boundary line. In the case of chattels, the right to sue for recovery may be barred through the passage of time. Even though the right to sue has been barred, the true owner retains the ability to recover the goods.

G. Servitudes 1. Licenses: y y y y A license is a permission to do that which would otherwise constitute a trespass. Such a privilege may be expressly conferred, for instance, through a contract to enter a theatre to see a show. Or it may be implied, such as, when a shop is open for business to the public at large. Several forms: y A bare license, one unsupported by contract, is fully revocable. When a license expressly or impliedly precludes or limits revocation, the licensor may be prevented, by injunction if necessary, from revoking contrary to the agreement. For example, Davidson v. Toronto Blue Jays Baseball Ltd. (1999) [p. 316 ziff] y A license may blossom into an interest in land, in equity, under the principles of estoppel and unjust enrichment. y Stiles v. Tod Mountain Development Ltd. (1992) [p. 316 ziff] y A constructive trust may also be apt in certain situations to preserve a license against a third party. This remedy is appropriate only if it would be unconscionable to allow the purchaser to take the land sans license. In that regard, the critical question is whether the purchaser has undertaken a new obligation to give effect to the license. y A license in connection with the land while entitling the licensee to use the land for the purposes authorized by the license does not create an estate in the land. This position is adopted in Canada. y A license coupled with an interest can also bind third parties in some circumstances. The key is that the binding nature of the license on third parties is dependent on the status of the interest to which it is coupled. If that interest cannot bind third parties, neither will the license. y Errington v. Errington (1952) [has been rejected in more recent case law]. y Toronto (City) v. Jarvis (1895)[p. 624, PL Reader]

2. Profit a Prendre: y The incorporeal hereditament known as profit a prendre is somewhat akin to a positive easement. y Entitles the holder to enter onto the land of another to take some part of the produce, such as timber, crops, turf, soil, grass or animals also oil and natural gas. 52

y y y y y

y y y y

Can be held with others (in common) or exclusively (in severalty). Right to win or extract title to the objects covered is acquired by capture, not before. May exist in gross or may be tied (appurtenant) to a dominant tenement if in gross, extent is unlimited. Aboriginal rights, some of which are analogous to profits a prendre, can also be recognized under the common law or by way of treaty. Some public usufructary rights resemble incorporeal hereditaments. Private roads can become public roads or highways under the doctrine of dedication. In general, there must be an intention to dedicate on the part of the owner, the property must be made available for public use, and the dedication must be accepted by the public. Government regulation of the use of public property is subject to review under the Canadian Charter of Rights and Freedoms. State measures to abridge the exercise of charter freedoms at locations open to uses by the citizenry as sites for protected speech and assembly, are invalid unless they are justifiable. The historical or actual functions of such places are an important factor in determining where the rights will be protected. And whether or not the values underlying free speech such as enhancement of democratic discourse, truth-finding, and self-fulfillment, would be furthered. British Colombia v. Turner (1985) [PL Reader, p. 778] Bank of Montreal v. Dynex Petro. Ltd. (2002) [PL Reader, p. 779]

3. Easements: General y Incorporeal hereditament y Derives from copyhold tenures of English manors to resolve conflicting claims to common land y Definition: (Per Gale) The law recognizes a situation in which there is a natural right incident to the ownership of a piece of land (the servient tenement) that is curtailed and, as a result, a corresponding artificial right is added to the rights incidental to the dominant tenement. y Positive or negative Positive permits the holder to engage in an activity on the servient tenement Negative restricts the activities on the servient land y Categories are not closed. y Essentially a right to use or to restrict use of the land of another person Four doctrinal elements of an easement are: 1. That there must be 2 parcels of land, a dominant tenement (which enjoys the benefit of the easement) and a servient tenement (the land over which the right is exercised). Easements cannot exist independent or separate from ownership of land (can only exist appurtenant of the land). 2. Servient tenement has to accommodate the dominant tenement; it cannot be a personal advantage that is not connected to the land itself. Land must also be in the vicinity but not contiguous. This principle can sometimes create problems i.e. pipeline running from Brandon to Winnipeg. Crosses over many parts of land. Such matters are usually accommodated by virtue of special statutory provisions in the Land Titles Act; called Quasi-Easement and Statutory Easement as it validates a right in land where it would otherwise fail as an easement. An easement that is too broad may not be valid for not serving the purpose of the dominant tenement. 53

3. 4. y y y y

The dominant and servient tenements cannot be owned by the same person. The right claimed must be capable of being the subject-matter of a grant. Capable grantor and grantee. Rights must be precise and certain, not too vague. (Apart from fencing easements) cannot require the servient owner to spend money. Cannot confer a right to possession or control of the servient lands to an extent that is inconsistent with the possessory rights of the servient owner easement cannot grant exclusive or unrestricted use of land (cannot oust owner) a grant doing this passes ownership.

Re Ellenborough Park, [1956] Ch. 131 (Engl. C.A.). y Facts: Park owners sell building lots with guarantee to enjoy park, now disagree y Issue: Do the homeowners have an enforceable right (easement) to the use and enjoyment of Ellenborough Park? y Rule: Four characteristics of an easement: y There must be a dominant and a servient tenement y An easement must accommodate the dominant tenement y Dominant and servient owners must be different persons y A right over land is not an easement unless it could form the subject-matter of a grant Creation: Acquire Easements Statute Grant

Express

Implied

Presumed

Common Law y Means to create an easement:

Lost Modern Grant

Prescriptive Easement Act 1832

1. Express grant i.e. contract, gift variable duration, as an interest in land, an easement must comply with any formal requirements that are mandated for a valid transfer of real property. 2. Implied grant y Necessity e.g. landlocked property, common areas in apartment building based on implied intentions of parties, not by operation of law. y Sub-group- intended easements, Wong v. Beaumont (1965),intended easement of proper ventilation of basement, without which the premises could not have been used as a restaurant. y Rule in Wheeldon v. Burrows(1879) quasi-easement may become real easement on sale of servient tenement. 3. Prescription y Three types: y Common Law pre-1189 y Lost Modern Grant presumed but cannot find proof 54

Prescription Act 1832 The relevant provisions of this statute were made applicable to Upper Canada in 1847 and are now contained in sections 30 to 32, 34, 39 and 40 of The Limitations Act. 20 year and 40 year period. y Based on legal fiction - omnia praesumuntur rite esse acta everything is presumed to have been done correctly y nec vi, nec clam, nec precario without force, without secrecy, without permission y Requires 20 years of use (19 + 1 day) y Not rebutted by showing no grant was made y Can be rebutted if no one during the 20 years had capacity to grant y Requires one full year to interrupt y Continuous means use when circumstances require it y After 40 years, easement is absolute and indefeasible 4. Statute Special rights may be conferred by statute, and this includes easements in favour of, or against, public or private entities. 5. Reservation, refers to an interest retained by the grantor on a transfer of land to some other person. 6. Estoppel, easements can be created through the operation of the doctrine of proprietary estoppel. Adams v. Loughman (1876), lane going to be set aside for the use of the land being offered for sale, purchaser agreed to buy the property on that faith. Grantor estopped from preventing the grantee from using the lane as right of way. y MAIN TEST for an easement is that it should be capable of lying in grant. Various consequences arise out of this: 1. There has to be a capable grantor; infants and lunatics cannot grant 2. There also has to be a capable grantee 3. The right must be sufficiently definite y y Courts require that rights acquired over someones land be reasonable; you cannot claim a right to a view or a right to privacy Generally courts do not hold easements over the servient tenement which require money or expenditure; if someone has an easement over your property you are not obligated to maintain the road or pathway Most of law of easements is concerned with the method by which the easement is created o Usually arise where there are two adjacent properties and easement is acquired by owner of one. Or one person owns large piece of land, divides it and sells part to B but acquires from B a right of way across Bs land so he can get to the land he has retained o Can arise by express reservation (best way to create an easement) so as above when owner divides land and sells part but retains right of way or a grant where A wishes to be able to cross Bs land and negotiates with him to get the easement, usually in form of a deed. o Implied grants are much more complicated; law in general sets itself against them. General Rule is that grants of land are construed against the grantor; if he wishes to keep the right over land he must do so expressly except: a. Easement of Necessity sell part of my land so cant get to my land without having a way across the part sold but I dont expressly reserve this right of way for myself. Court is reluctant to find this but will do so if appears necessary; will select least intrusive right of way 55

b. Intended Easement arises where it can be presumed or inferred that it was the shared intention of the grantor and grantee of the land that there be such a right. Ex. Two buildings on same parcel of land so constructed as to be dependent on each other for support, land divided and one land and building sold to B; court would find although not express that there was a shared or common intention of parties that houses would continue to support each other with respect to actual grants of easements, the common and proper way to create one is by express grant. The law here will more willingly find implied easements; of necessity, common intention, and incidental or ancillary easements c. Ancillary Easement if I am owner of land and grant my neighbor some special right in my land (a profit or similar to a profit) the right to take water from a well on my land, although nothing said in deed or instrument in which I conferred that right upon him, the court will imply that I must have intended to grant him a right as well to come onto my land in order to take the water from the well d. Principle of Wheeldon v. Burrows says there are sometimes quasieasements. If I owned land and I used the land in ways that could constitute easements if there were separate titles to the land, when I sell the land or part of the land to a purchaser, the purchaser may acquire or be deemed to have been granted the use of the retained land that I had made before. y Ex. House on land before I sell it; electricity comes in by wires over another part of the land and sewer and water go in and out across another part of the land, when I sell the land with the house but the pipes and electricity cross the land I retain does the buyer of house acquire a right to items crossing my land? The principle says yes if the following three requirements are met: i. At time of transfer of land the uses of the retained land must have been continuous and apparent ii. They must be necessary to the land that has been granted iii. At time of grant by orig. owner, quasi-easements must have been in continuous and apparent use (must be able to be seen or known of by a reasonable person) by grantor.

General Requirements of Easement by Prescription y Easements can also be granted by prescription; at common law certain rights could be acquired in perpetuity and attached to the land as benefits of a dominant tenement by virtue of fact that particular use of the land had been enjoyed lawfully for a long period of time. Prescription implies long user in fact giving rise to permanent rights in law. 1. The actual user must appear to court to have been exercised as if of right; cannot have been nec clam, nec vi or nec precario (not secretive user, must have been a peaceable use of the land (not by violence or force) and cannot be of right if clearly being done on basis of limited and revocable permission).

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2. Use must have been by a fee simple owner against a fee simple owner and fee simple owner against whom right is claimed must have known about user and been in a position to resist if he had chosen to do so. 3. Use that is relied on must have been in a broad and common sense way continuous. If some years A walks across Bs land and others doesnt, court would say that the user is not continuous. How did one acquire an easement by prescription? 1. Common Law question is how long must a person have made this use of the alleged servient tenement before it can be said a permanent continuing easement has been created? o Answer at common law is that he must have done it since the memory of man runneth not to the contrary (specific date is 1189 which is at common law time immemorial) o Obviously problems with proving continuous since 1189 so courts adopted presumption that if it could be shown the land was used for 20 years along guidelines above it had been used that way since 1189. 2. Presumed Lost Modern Grant fiction in the form of a presumption. Courts said if there had been this use of land within living memory or for at least 20 years it could be presumed that the right had lawfully and fully been created by an actual express grant of easement but that the grant had been lost. Court would require evidence that user could have been capable of being granted the easement. 3. Prescription Act, 1832 passed in England to deal with easements by prescription; is a mess that involves many problems mostly because it did not abolish earlier law but accepted it and laid new layer of law on top of it or provided alternatives to pleading on two earlier grounds. o Time period measured backwards from when litigation started; time period has to be uninterrupted but interruption means hostile interruption (landowner putting up blockage and preventing use); interruption must have continued for about a year. o User has to have been as if it were of right; nec vie, nec clam, nec precario o So, to stop your neighbor from crossing your land on same path everyday so that he cannot gain a perpetual right, you can physically impede or stop him or put a barrier up on a regular basis (once or twice a year block the path). Or can authorize the use and make it clear to B that you are allowing him to cross your land; it is with your license and permission that B is crossing your land. Depew v. Wilkes(2002), prescriptive and equitable easements [p. 757, PL reader] Scope, location and termination -from book [ziff] y Laurie v. Winch (1953) y Malden Farms Ltd. V. Nicholson (1956) y Costa v. Janikas (2001) [PL Reader-pages 767,772, and 775] 4. Covenants: y y Covenants over land can be used to create rights enforceable by one landowner against another, even in the absence of both privity of contract and estate between the parties. Covenants resemble public land use controls, and can be used to create a planned community aided by a purpose built legal structure. 57

y y y

Covenants over land can cater to a variety of interests. They can be used to regulate commercial practices among tenants in a shopping center. Another common function is the regulation of the nature or quality of construction in residential developments. At one time, freehold covenants were deployed in an attempt to restrict ownership or occupation of land to certain classess or races. In time the legality of these devices came into question. In Re Drummond Wren (1945), it was held, in part, that the covenant was void for uncertainty, and that it constituted a restraint on alienation, and also that the impugned clause was void as being contrary to public policy. Opposite in Re Noble & Wolf (1978), much criticism followed. Outline of the analysis: A covenant may be regarded as a valid contractual undertaking made by a covenantor (who assumes the burden of the promise) in favour of a covenantee (who obtains the benefit). The land burdened by a covenant is the servient tenement; the land to be benefitted will be the dominant tenement. An individual seeking a legal remedy (damages) must hold an entitlement to the benefit of the covenant at law and an action can only be brought against a person subject to the burden in the eyes of the law. Likewise, equitable relief is available against someone whom equity sees as bound by the burden, and a remedy will issue in favour of a holder of the benefit in equity.

y y y

Difference Between a Covenant and an Easement y An Easement gives the owner of the dominant tenement a right of use, not occupation, over the land of his neighbor, the owner for the time being of the servient tenement. This right attaches to the dominant land as a benefit and to the servient land as a burden. o Creature of common law and is a legal estate or interest. o A right relating to the land of another. A Covenant by use of the servient tenement is restricted for the benefit of the neighboring dominant tenement. It limits a servient tenement in what they can do with their land. o Creatures of equity; claims to them are subject to all equitable defenses. o Historically meant a promise given (executed under seal), in a modern context means any promise for a use of land. o Burden of covenant is the duty or limitation imposed by the covenant and therefore the liability for its breach.

Running of a Covenant as a Benefit or Burden y i.e. A gives a promise to B that A will not do something on his land. A sells the land to C, the covenant between A and B would not normally be enforceable against C under contract law but the benefit of the covenant may run with the land itself and B may enforce the covenant against C. o If B should alienate his ownership to D, Bs successory title can be enforced against C.

Covenantor = person who gives the promise Covenantee = person who takes the promise EQUITY

58

y y y y y

Only intervened or took a part when legal remedies were inadequate in which case its own specific remedies might be available. Did not directly contradict the law but might say in some circumstances it would be unconscionable for a person to use his rights in some way. There are a number of defenses to equitable actions (party comes too late, comes with unclean hands, and so on). Promises between the parties can be either positive or negative; it may be the case that only negative covenants can be enforced. Law of covenants also applies between lessor and lessee; lease agreement will contain a number of promises. The lessor can always sue the lessee in respect of such contractual promises so long as the lease exists even if they have assigned their interests in the meantime. An exception arises in s. 4 of Landlord and Tenant Act that when original lessor parts with his interest he loses the right to personally enforce the covenant against the lessee.

Process 1) Is there privity of contract between the parties in dispute? o If parties in dispute re covenant are respectively the original promisor and promisee, privity of contract exists no problem of enforceability of covenant. o Ex. A makes promise to B that he will not erect a high rise building, A then sells to X who builds a high rise building. Whatever action B may have against X, A is liable if he promised that there would never be a high rise put up on the land. In this arrangement he should take the same covenant from his purchaser or an indemnity provision so that A if exposed to liability can have X repay him. 2) If not, is there privity of estate between the parties in dispute? o Peculiar to leasehold situations; if covenant under debate originated in any other context this question is not applicable o Deals with situations where original lessor or lessee has assigned the whole of his interest to the present plaintiff, defendant or both. Assignees who stand in the shoes of original parties to lease are said to be in privity of estate with their opposite number for the time being  Note that sub-lessees, not being full assignees of unexpired residue of term, are not in privity of estate with lessor o When there is privity of estate between parties in dispute:  All covenants both positive and negative are mutually enforceable as long as they touch and concern the land  There are no exceptions to this rule; means that covenants must effect the way in which the land is used and enjoyed or value of the land and are not personal covenants between parties  This proposition derives in part from statute and part from old case law (Spencers Case, 1583 on tenants side and on landlords side back to statute of Henry VIII, 1540). Our legislature re-enacted both of these in our Manitoba Landlord and Tenants Act 3) If No to 1 and 2 then: a. Is the plaintiffs only problem that of showing the benefit has run to him? (if so stop and apply common law rules) OR

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b. Is he compelled instead, or as well, to show that the burden has run to his opponent? (if so then have recourse to equity rules) c. Applies to covenantee having sold his land and wanting to enforce the covenant. Rules of Common Law Showing Benefit of Covenant has Run to Him y y Doesnt matter if covenant is positive or negative Doesnt matter if it had something to do with the covenantor

a) Covenant must touch and concern the land (the dominant land) o Must be land to benefit therefore covenant must be for benefit of that land; means it must concern the way in which the land is occupied and used or must in some fairly direct way affect the value of the land b) Must be an evident intention that the benefit of the covenant has so run o Preferably expressed, but court is willing to infer it c) Original covenantee must have had a legal estate in the land when taking covenant; assignee now seeks its enforcement must be seized of same legal estate o Basic position is that the burden does not run at common law; common law recognized the benefits of the covenant could run; left covenantee with an action only against the original covenantor o Two indirect ways in which covenant may be enforceable: i. Covenantor may always remain personally liable which means it was prudent he took a provision against his purchaser as to how the land may or may not be used and so on. Plaintiff may then be able to go through chain of purchasers to the person who currently owns the land; problem that chain may have been broken somewhere along the way ii. The principle in Halsall v. Brizell sometimes called the pure benefit or burden principle d. Recourse to Equity y Permitted burdens of covenants to run with land to an extent y Rule originated in famous 1848 case of Tulk v. Moxhay; covenant had been written not to build on Lester Square. Covenantor sold land to purchaser who had knowledge of terms of covenant. Lord Cottenham said they would allow the covenantee to obtain an injunction against the new owner of the land preventing him from putting up buildings in the square. Equitys Burden Running Requirements: 1. There must be two pieces of land, one to be benefited (dominant) one to be burdened (servient). o Normally means parcels must be adjacent; must be proximate enough that what is not done on one has a benefit on the other. 2. Covenant must touch and concern the land of the covenantee. o Appears now from Canadian authority, esp. Galbraith that the benefited land must be identifiable from document in which covenant or promise was given; reason is so person who buys servient land will know to whom he owes his duty if he is bound by the covenant. 60

3. Covenant must be NEGATIVE in character. 4. Must have been common intention of original contracting parties that the burden has the capacity to run. 5. Plaintiff must have standing to sue either as original covenantee or as having had benefit run to him 6. It is only in equity that this possibility exists and therefore all ordinary equitable defenses can be plead to the action 7. If answer to 1 and 2 was no and response to question 3 was (b) and equitys burden running requirements have been met, is the plaintiff: c. The original covenantee? OR d. A successor-in-title of the original covenantee? if (a) then no problem If (b) must satisfy equitys benefit running rules

Equitys Benefit Running Requirements: 1. Covenant must touch and concern the dominant land 2. Benefit of covenant must have attached itself to the dominant land; there are three ways to do this: i. Express assignment or benefit OR ii. Annexation by appropriate language (must be clear you intended the benefit to flow not only to the promisee but to his successors and must actually refer to the land) sufficiently indicating both land to be benefited and intent that covenant shall benefit successors-in-title.  In Canada you must be able to identify the ascertainable land from the language of the covenant  Can also occur by implied annexation. Cases in England have been coming toward this point that whether the promise attaches to the dominant land is a matter of intention at time of covenant and intention can be inferred from entire language of document considered in its surrounding facts; not the law in Canada iii. Building Schemes (Schemes of Development)  Deals with situation where large tract of land is owned by one person who wants to subdivide it into several lots to create a residential community; want everyone in community to promise to limit use of their land in certain ways  Developed within scheme of Elliston v. Reacher, 1908  If seller takes same promise from everyone he sells to, the others to whom he sells the lands will be able to enforce those promises. Must show: 1. They both derived their title under a common vendor 2. Prior to selling of lots the vendor laid out the overall area for sale in lots which would be subject to same restrictions 3. Had to be intended by vendor that restrictions were to be of benefit for all of the lots 4. Both plaintiff and defendant or their predecessors in title purchased their lots from common vendor on basis that the restrictions would be in place and were for benefit of all lots 5. The building scheme had to be reasonably well defined or described

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3. If your client is still without relief, he is likely seeking to enforce a positive covenant against a successor-in-title of an original covenantor try: Privity of estate cases apart, can Burden of Positive covenants ever run? y y Yes under Halsell v. Brizell if a person claimed to take a benefit under a deed he had to take it subject to any corresponding or reciprocal burden imposed by that deed. Doctrine: The obligation to fulfill the stipulation of a deed where, for example, contribution to expenses is a corollary of taking benefits, may become binding on successors in title, because it is a principle of law that he who takes the benefit of a deed is bound by a condition contained in the deed.

Ex. Tito v. Wadell - land of island tribe taken over by guano mining company who took mining rights over the land; tribe would be entitled when mining was completed to have mining company restore land surface; no resurfacing was done - There was no privity of contract between the islanders and the tripartite commission - Sir Robert McGarry saw an implication of benefit and burden principle; Commissioners had taken the benefit of the contract and should therefore be regarded as having taken that benefit subject to the condition that they would replant the island Getting Rid of Covenants y Overt time the dead hand of those who made the original covenant may govern the successors in title in completely different circumstances to which the covenant is no longer relevant; always appropriate for a court of equity to refuse to recognize such a covenant In Canada the municipal board is given authority to vary or cancel building restrictions Applications for discharge and variation are not that frequent but can be made. Board must consider whose interests must be taken into consideration (who has standing to be heard on such an action) o Different views as to whether the court should take the effect on outside parties in the community into account

y y

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