Property Law summary

CML 1108 D Property Professor Paul Daly Fall 2010

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Summary

A. Bundle of rights

Property as a bundle of rights: Property refers to particular rights of persons or entities

with respect to scarce tangible or intangible resources. According to Honore, there are

eleven aspects of property rights (reducible to six):

a. Possession (see A.2); management; and control

Fee simple / life estate (see C).

Exclusion: The power of control to exclude is commonly identified as the chief element of property law from the perspective of single-variable

essentialism.

b. Income and capital c. Transfer inter vivos (see A.2.c.(I)) and donatio causa mortis (see A.2.c.(II)) d. Protection under law e. Liability to seizure / execution f. Prohibition on harmful use


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1. Boundaries

a. (Vertical boundaries) Airspace: Cases involving alleged trespass into airspace can

be divided into two groups:

Literal interpretation of the maxim is impractical. A balance had to be struck between the owners right of use and the public interest in using modern technology. Test: land owner has rights to the height necessary for the ordinary use and enjoyment of his land and the structures on it; above that, no greater rights than the rest of the community in the airspace.

The two concepts that become apparent are firstly, that the courts will not give literal effect to the Latin maxim and secondly, the proper remedy for interference

with a landowners airspace with a permanent fixture is in trespass as opposed to nuisance [which requires proof of harm].

(I) Permanent structural intrusion: Cases involving permanent structural projections into the air space above anothers land: The weight of authority favours the view that direct invasion by a permanent artificial projection constitutes a trespass. However, according to Lacroix v. R [1954], by putting up buildings or other constructions the owner does not take possession of the air but unites or incorporates something to the

surface of the land.

Airspace test: In Bernstein v. Skyviews [1978], the court developed an airspace test that Haddad interpreted as saying that a landowner is entitled to freedom from permanent structures which in any way impinge upon the actual or potential

use and enjoyment of his land.

(II) Transient invasion: Cases involving a transient invasion into the airspace above anothers land at a height not likely to interfere with the land owner.


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b. (Vertical boundaries) Subsurface: The Latin maxim is more absolute in

subsurface boundaries. In Edwards v. Sims, the Court held that the owner of the surface

was entitled to prevent a neighbour from using parts of a cave beneath his land despite

not having access to the cave himself based on the following principles:

Whatever is in a direct line between the surface of the land and the centre of the earth belongs to the owner of the surface

Certain limitations imposed by statutory and common law rules prevent interference,

Caves are just like mines so survey can be ordered where there are reasonable grounds to suspect trespass.


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c. Chattels vs. fixtures: Quicuid plantatur solo, solo cedit.

Chattel: An article of personal property, as distinguished from real property.

Fixture: An article in the nature of personal property which has been so annexed to the

realty that it is regarded as part of the real property.

In La Salle Recreations Ltd. V. Canadian Camdex Investments Ltd., the court combined

tests developed in Stack v. Eaton (1902) 4 O.L.R. 335 and Haggert v. Brampton (Town)

(1897) 28 S.C.R. 174 to create the La Salle fixtures test:

Contracts are not controlling: Whether or not a chattel becomes a fixture, which is based on the degree/purpose test, cannot be conclusively controlled by contract or outside agreement.1 In Diamond eon (Manufacturing) Ltd. v. Toronto-Dominion Realty Co., the court held that a contract that provides that a

chattel shall not by attachment or otherwise be deemed a fixture will not resolve the issue of chattel / fixture characterization because the purpose of annexation

must be objectively patent for all to see.

(I) Several objects have been confirmed to be chattels or fixtures: Confirmed chattels

include a statute on a plinth, a sundial on a pedestal, and a houseboat. Confirmed fixtures

include a fireplace, panelling, machines attached by nails, statutes / figures / vases / stone

garden seats where vital to the architecture of the property. In La Salle Recreations Ltd. v.

Canadian Camdex Investments Ltd., the court held that hotel wall-to-wall carpeting

constituted a fixture.

(II) Degree of annexation (Stack annexation test):

(i) If the article is resting on its own weight, it will be presumed to be a chattel. This

presumption can be rebutted if it is shown that the article was intended to be a fixture.

(ii) If the article is affixed - even slightly - to the land, it will be presumed to be a

fixture. This presumption can be rebutted if it is shown that the article was intended to be

a chattel.

Carpets: In La Salle Recreations Ltd. v. Canadian Camdex Investments Ltd., the court held that the degree of annexation of wall-to-wall carpets is slight.

Outdoor signs: In Diamond eon (Manufacturing) Ltd. v. Toronto-Dominion Realty Co., the court held that outdoor signs were clearly affixed to the property.

(III) Purpose of annexation (Haggerty intention test):

Permanent / occasional: In La Salle Recreations Ltd. V. Canadian Camdex Investments Ltd., the court held that the permanence of a chattel/fixture should be

determined by its ability to serve its purpose. For example, the need to replace

hotel carpets every five years does not undermine its permanence.

1 Bruce Ziff, Principles of Property Law 4

th ed. (Toronto: Thomson Carswell, 2006), 103


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(i) If a reasonable person would think that the purpose of the attachment is to

enhance the land, then it is a fixture.

Carpets: In La Salle Recreations Ltd. v. Canadian Camdex Investments Ltd., the court held that the object of the annexation of hotel carpeting was the better and more effectual use of the building as a hotel because unfinished flooring is unsuitable for a hotel and annexation was reasonably required for the completion of the floors as such.

Outdoor signs: In Diamond eon (Manufacturing) Ltd. v. Toronto-Dominion Realty Co., the court held that the object of the annexation of outdoor signs was for the

enhancement of the land.

(ii) If a reasonable person would think that the purpose of the attachment is for the

better use of the chattel, then it is a chattel.


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d. Removal of tenant fixtures:

(I) Determining fixation: La Salle fixtures test (c).

(II) Removal of tenant fixtures test: In Frank Georges Island Investments Ltd. v.

Ocean Farmers Ltd. 563 A.P.R. 201, the court established the basic principles governing

the removal of tenant fixtures:

(i) Several considerations about the nature of the fixture make it removable:

Trade: Trade fixtures are defined as Things which tenant has fixed to the freehold for the purposes of trade or manufacture.

Ornamentation

Domestic convenience

(ii) Several contextual considerations of the fixture may forfeit the right of

removability:

Removal would cause material injury or irreparable damage to the property

Contractual provisions that preclude removal

Untimely attempt to remove: In Carabin v. Offman (1998), 222 A.P.R. 407, the court confirmed that a tenants only right was to make use of those improvements during the term of the lease and remove them before the end of that

term if he wished to have any further benefit from them.


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e. (Intellectual Property) Copyright: In Theberge v. Galeria d'Art du Petit

Champlain inc., the Court affirmed that the Copyright Act "is usually presented as a

balance between promoting the public interest in the encouragement and dissemination of

works of the arts and intellect and obtaining a just reward for the creator."

(I) Criteria for copyright (LDMA, performances, sound recordings, signals)

(i) Originality: Originates from an author and is not copied from another work;

Product of an authors exercise of skill and judgement; Efforts must be more than trivial.

(ii) Fixation: Copyright exists as soon as the work is fixated in some reasonably

permanent form; Low threshold to add certainty.

(iii) Connection to Canada: Work created in Canada; Work created by a Canadian;

Work created by a citizen or ordinary resident of a country that is a signatory to a variety

of international treaties (e.g. Berne, Rome, WTO).

(II) Copyright infringement tests

(i) Infringement of economic rights:

Note: In Theberge v. Galeria d'Art du Petit Champlain inc., the Court held that Theberge attempted to assert "a moral right in the guise of an economic right."

Has there been copying / a reproduction with a public element? o Reproduction: In Theberge v. Galeria d'Art du Petit Champlain inc., the

Court held that "Division cannot logically be characterized as

reproduction." Consequently, the transfer of the ink from a legally

obtained reproduction poster to a canvas does not constitute a reproduction

because "The process began with a single poster and ended with a single

poster."

Has the infringer taken a substantial part of the work?

Has there been consent?

(ii) Infringement of moral rights: There are three enforceable moral rights that are

intended to prevent prejudice to the honour and reputation of the author:

Attribution: The right of attribution allows authors to ensure taht their names are attached to the work. In Theberge v. Galeria d'Art du Petit Champlain inc., the

Court noted that "the respondent could have asserted a moral right to be publicly

identified with his artistic work" in response to the elimination of his signature.

Integrity: The right of integrity provides an author with a further degree of control over the work after it is sold. In Snow v. The Eaton Centre Ltd. (1982), 70 C.P.R.

(2d) 105 (Ont.H.C.), the court held that decorating Snow's legally acquired artistic

work with Christmas ornaments constituted a violation of the integrity of his

work.

Association / disassociation:


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(III) Defences:

(i) Fair dealing involves the legitimate use of a work for private study, research,

criticism, review, or news reporting. In making its determination a court will look to:

The purpose of the dealing

The character and amount of dealing

Whether or not there were alternatives to copying

The nature and effect of the copying on the work


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f. (Intellectual property) Trademarks: A trademark is a word or words, symbol, or

design that is used to distinguish one person's good or services from another's in the

marketplace. In Mattel Inc. v. 3894207 Canada Inc., the Court stated that trademarks are

a guarantee of origin and inferentially, an assurance to the consumer that the quality will be what he or she has come to associate with a particular trademark.

(I) Criteria for trademark:

(i) A trademark is a word and/or symbol that is used in relation to goods or services

and distinguishes a traders goods or services from that of another.

(ii) Prior or actual use of a mark is necessary for both common law and statutory

protection. In the absence of use, a registered mark can be expunged pursuant to Trade-

Marks Act s.45(3).

(iii) There are three types of trademark: Ordinary marks: Words/symbols that

distinguish the goods or services of a specific firm; Certification marks: Goods/services

that meet a standard set by a governing organization; and Distinguishing guises: Shaping

of wares or their containers, or a mode of wrapping or packaging wares.

(II) Trademark infringement tests

(i) Infringement: Violation of the exclusive right to use the mark.

Passing off: o Reputation (or goodwill) acquired by the plaintiff in the mark o Misrepresentation leading to confusion (see trademark confusion at ii),

as determined either by an expert witness or survey data.

o Damage to the plaintiff caused by confusion, such as decrease in sales or damage to reputation through confusion.

(ii) Confusion: In opposition proceedings under the Trade-Marks Opposition Board,

the applicant must establish on a balance of probabilities that there is no likelihood of

trademark confusion, which arises if it is likely in all the surrounding circumstances

that the prospective purchaser will be led to the mistaken inference "that the wares or

services associated with those trade-marks are manufactured, sold, leased, hired or

performed by the same person, whether or not the wares or services are of the same

general class." There are five non-exhaustive factors to be considered under the notion of

surrounding circumstances:

The inherent distinctiveness of the TM/N and the extent to which they have become known

The length of time the TM/N have been in use

The nature of the wares, services, or business

The nature of the trade

The degree of resemblance between the TM/N in appearance or sound and the ideas suggested by then.


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(iii) Dilution: Use of a similar mark that may tarnish the marks image or reduce its drawing power.

(III) Defences

(i) No defence of lack of intent to trespass: Since trademarks are deemed to be

proprietary rights in accordance with Edelsten v. Edelsten (1863), 1 De G.J. & S. 185, 46

E.R. 72, if the respondent's activities constitute trespass on the marketing territory

established by the trademark, then it would be no defence for the respondent that it did

not intend to trespass.

(IV) Remedies: Available remedies include (a) damages resulting from the

infringement of the exclusive right, (b) accounting of profits after unjust enrichment, (c)

injunction, and (d) delivering up the infringing materials.


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g. (Intellectual property) Patents:

(I) Criteria for patent: Patent law protects inventions (defined as "any new and useful

art, process, machine, manufacture or composition of matter") and "new and useful

improvements of existing inventions." There are four criteria for patentability:

(i) Patentable subject matter: Patents cover the embodiment of an idea and therefore

do not apply to newly discovered natural law, scientific principle, or abstract theory (e.g.

business methods and higher life forms in Canada).

(ii) Novelty: The invention must not have been previously disclosed and become

known or otherwise made available to the public.

(iii) Non-obvious: The item for which a patent is sought cannot be immediately

obvious to technicians fluent in similar technologies. In Apotex Inc. v. Sanofi-Synthelabo

Canada Inc. (2008) SCC 61, the Court held that the proper approach to non-obviousness

is to ask if a technician would "in the light of the state of the art and of common general

knowledge as at the claimed date of invention, have come directly and without difficulty

to the solution taught by the patent."

(iv) Utility: Precludes products that have no useful function or that do not work.

(v) Registration requirements: Title page, abstract, disclosure, claims

(II) Patent infringement test:

(i) Claims construction: Construe the patent to determine whether it is valid and to

determine the scope of the monopoly (based on the claims in the patent):

Validity: Criteria for patent (see I)

Scope: The reasonable applicability (e.g. patent on vacuum vs. car)

(ii) If the patent is valid, the court will determine whether the infringing product

"appropriates the substance "(pith and marrow). If the defendant uses the "essential

teachings of the claims compared to the prior art," then there is infringement. In

Monsanto Canada Inc. v. Schmeiser [2004] 1 S.C.R. 902, 2004 SCC 34, the Court held

that t basic principle in determining whether the defendant has used a patented invention is whether the inventor has been deprived, in whole or in part, directly or

indirectly, of the full enjoyment of the monopoly conferred by the patent.

(III) Defences:

(i) Experimental and non-commercial uses are not infringements

(IV) Remedies: Available remedies include (a) damages resulting from the

infringement of the exclusive right, (b) accounting of profits after unjust enrichment, (c)

injunction, and (d) delivering up the infringing materials.


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2. Possession

Trespass can be defined as an unjustifiable interference with possession.

a. Possession: Possession can create proprietary interests. However, possession is

relative and may play a role in the extinguishment of property rights. Possession has two

main factors and can be remedied equitably based on fairness:

(I) Intent

(II) Control: The requisite extent of control is determined by the context: the unique nature and the custom and practice of the conduct in question:

(i) Full control: According to Grays rule in Popov v. Hayashi, the actor must retain control of the [item] after incidental contact with people and things.

Baseballs: In Popov v. Hayashi, the court held that Popov did not achieve full possession because has not established by a preponderance of evidence that he would have retained control of the ball after all momentum ceased and after any

incidental contact with people or objects.

(ii) Partial control (constructive possession): Cases that recognize possession before

full control is achieved require that (a) the actor be actively and ably engaged in efforts to establish complete control and (b) such efforts must be significant and they must be reasonably calculated to result in [full control] at some point in the near future.

Hunting and fishing wild animals: In Pierson v. Post 3 Caines 175 (S.C.N.Y., 1805), the Court affirmed that a wild beast mortally wounded, or greatly maimed, cannot be fairly intercepted by another, whilst the pursuit of the person

inflicting the wound continues.

(III) Pre-possessory interests: In Popov v. Hayashi, the court held that possession is a process that culminates in full possession. A pre-possessory right is a qualified right to possession which can support a cause of action for conversion. A legally recognizable pre-possessory right can be established on two factors: (a) significant but incomplete

steps to achieve possession of a piece of abandoned personal property and (b) the effort is

interrupted by unlawful acts of others.

(IV) Fairness: In Popov v. Hayashi, the court held that where more than one party has a valid claim to a single piece of property, the court will recognize an undivided interest

in the property in proportion to the strength of the claim [tenants in common, see

B.2.d.].


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b. Acquisition of title by adverse possession (squatters): Title can be ousted by others

that are able to make a claim for a possessory title. The onus of establishing title by

possession is on the claimant (squatter). In Pflug and Pflug v. Collins, [1952] O.R. 519,

the court developed the Pflug squatters test for attempting to establish a possessory title:

(I) Actual possession for the statutory period by the squatter or through those whom

the squatter claims.

(II) Such possession was with the intention of excluding from possession the owner or

persons entitled to possession. In Re St. Clair Beach Estates Ltd. v. MacDonald et al.

(1974) 5 O.R. (2d) 482, the court held that the test for exclusion is whether the squatter

precluded the owner from making the use of the property that s/he wanted to make of it.

In Keefer v. Arillota, the court held that the historical owners of the contested strip and the historical squatters had an amicable relationship.

(III) Concurrent discontinuance of possession for the statutory period by the owners

and all others entitled to possession. In Great Western R. Co. v. Lutz (1881), 32 U.C.C.P.

166, the court held that the constructive possession which a legal owner has of the whole

property is not ousted simply because he is not in actual possession of the whole in other words, possession of the part is possession of the whole if the possessor is the legal

owner.

In Keefer v. Arillota, the court held that the historical owners of the contested strip of land did not discontinue their possession of any party of the strip of land other than the portion at the rear occupied by the [squatters] garage. Thus while the garage has passed to the squatters, the rest of the strip was in use.


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c. Relativity of title (finders):

(I) Abandonment and loss: Finder of a chattel only acquires rights to it where the

chattel has been abandoned or lost.

(i) Finders/occupiers have the greatest claim when the chattel has been abandoned.

There are two components to an abandonment:

Intention to relinquish the title or an indifference to the fate of the chattel

A sufficient act of divestment In Chappell v. United States 119 F.Supp.2d 1013 (U.S. Dist. Ct., W.D. Missouri, 2000),

the Court held that money found in a cars gas tank during a criminal investigation was (a) sufficiently divested (b) in pursuit of an intent to relinquish the chattel. However, the

government has been on constructive notice since the 1970s that drug criminals often stash items in the car, thereby undermining their claim.

(ii) Loss: Loss is distinguished from mislaid. No rights are acquired f the chattel was

mislaid, and it is instead treated as being in the finders custody until the true owner materializes.

(II) Rights of the finder: Finders acquire a possessory interests, but not full owernship

of the chattel: a finder [of abandoned property] acquires title good against the world, except those with a continuing antecedent claim i.e. a previous possessor. In Parker v. British Airways Board, the Court established five rights and obligations of the finder:

The finder of a chattel acquires no rights over it unless (a) it has been abandoned or lost and (b) he takes it into his care and control.

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

Subject to the foregoing and to point 4 below, a finder of a chattel acquires a right to keep it against all but the true owner or those in a position to claim

through the true owner or one who can assert a prior right to keep the chattel

which was subsisting at the time when the finder took the chattel into his care and

control. o Rationale: In Parker v. British Airways Board, the Court state that lost

property would be subject to a free-for-all in which the physically weakest

would go to the wall in the absence of this rule. o In Armory v. Delamirie (1722), the Court held that the jeweller clearly

had no rights in relation to the jewel immediate before the boy found it

and any rights which he acquired stemmed from the boy himself.

Unless otherwise agreed, any servant or agent who finds a chattel in the course of his employment or agency and not wholly incidentally or collaterally thereto

and who takes it into his care and control does so on behalf of his employer or

principal who acquires a finders rights to the exclusion of those of the actual finder. Different rules apply to collateral finding and contractors.


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A person having a finders rights has an obligation to take such measures as in all the circumstances are reasonable to acquaint the true owner of the finding and

present whereabouts of the chattel and to care for it meanwhile. o In Bridges v. Hawkesworth (1851), the Court held that by giving the item

to the Hawkesworth to advertise to the original owner, Bridges was

reasonably exercising his duty to acquaint without abandoning the

property.

o In Parker v. British Airways Board, the Court held that by giving the item to BAB on conditions, Parker was reasonably exercising his duty to

acquaint without abandoning the property.

(III) Rights of the occupier: Constructive possession seems to be relevant, but it

doesnt arise automatically there must be (a) a manifest intention to exercise control and (b) reasonable efforts in pursuit of this intention. In Parker v. British Airways Board,

the Court established four rights and liabilities of the occupier:

An occupier of land has rights superior to those of a finder over chattels in or attached to that land and an occupier of a building has similar rights in respect of

chattels attached to that building, whether in either case the occupier is aware of

the presence of the chattel. In Elwes v. Briggs Gas (1886), the Court held that chattels lodged in the land should be treated as analogous to fixtures. However,

this would appear to confer a right to the occupier greater than the original owner.

An occupier of a building has rights superior to those of a finder over chattels upon or in, but not attached to, that building if, but only if, before the chattel is

found, he has manifested an intention to exercise control over the building and

the things which may be upon it or in it. o In Bridges v. Hawkesworth (1851), the Court held that Hawkesworth

never had custody and protection of the item prior to Bridges discovery. o In Parker v. British Airways Board, the Court held that BAB was required

to manifest their intention explicitly and failed to do so, indicated that in

certain contexts an intention can be inferred (e.g. bank vaults, private

homes)

An occupier who manifests an intention to exercise control is under an obligation to take such measures as in all the circumstances are reasonable to

ensure that lost chattels are found and, upon their being found to acquaint the true owner of the finding and to care for the chattels meanwhile

o In Parker v. British Airways Board, [1982] 1 Q.B. 1004, the Court held that while BAB exercised control over individuals and particular types of

prohibited items, it did not take the necessary steps to regularly search for

such non-prohibited items.

An occupier of a chattel, e.g. a ship is to be treated as if he were the occupier of a building


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d. Transfer of titles through delivery (gifts): A gift is a gratuitous transfer of the

ownership of property. It is one of two primary means of passing title (bargain/sale and

gift). Gifts are distinguished by an absence of consideration. In effect, a valid gift

transfers title from the donor to the donee. Once the requirements for a gratuitous transfer

have been satisfied, the transfer is irrevocable. Equity will not perfect an imperfect gift.

(I) Inter vivos (IV) gifts: The plaintiff bears the onus of establishing the necessary

elements of a gift of chattels effected by delivery. There are three essential elements of a

valid gift of a chattel IV:

(i) Intention to gift: A voluntary intention to make a gift concurrent with delivery.

The donor must have the capacity to give the gift the ability to comprehend the legal effect of the gift. Intention may be proved in two ways:

Words of gift usually accompany gifts and serve to evince (a) the intention and delineate (b) the object, (c) timing, and (d) extent of the intended benefaction.

o In Re Ridgeway (1885) 15 QB 447, the court held that referring to port as Toms port or Alices port constituted words of gift.

Unusual circumstances may be imagined where other means fulfil those functions where the purported donee proves the existence of a present, unequivocal donative intention, attended by the requisite certainty as to object, extent, and

whether the gift would take immediate effect (Nolan v. Nolan & Anor).

(ii) Intention to accept: Intention to express on the part of the donee to accept the gift.

Intention to accept requires (a) an understanding of the transaction and (b) a desire to

accept the title. There is a presumption of acceptance.

(iii) Delivery is the legal act essential to complete the gift by transferring both

possession and ownership of the chattel to the donee.

Action: In The National Trustees Executors and Agency Company Limited v. O;Hea [1905] 29 VLR 815, the court stated that It would be dangerous to relax a rule which requires some visible act as an essential, when the only other essential

is that certain words should be spoken. In Nolan v. Nolan & Anor, the court held that while some cases of common establishments suggest that more relaxed rules

should apply, maintaining the requirement of an act may forestall litigation.

There are five types of valid acts of delivery:

o Substitution / declaration of trust: A declaration that the donor will be held on trust for the donee will be binding.

o Actual delivery: Manual or physical transfer of the goods. In Re Ridgeway (1885) 15 QB 447, the court held that there was

no delivery because the port remained within the fathers possession in the cellar.

In Re Cole (1964), the court held that there was no attempt by the husband to give up control to his wife.

In Re Bayoff Estate, the court held that the transfer of the keys but not the paperwork for a safety deposit box does not constitute

sufficient delivery for IV.


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o Constructive delivery: Relevant considerations are (a) whether the donor retained the means of control and (b) whether all that can be done has been

done to divest title in favour of the donee.

Where the nature or bulk of the goods renders manual delivery impossible or impractical, acts falling short of manual delivery

have been held sufficient to signal a change in possession. For

example, transferring a key without retaining a duplicate

constitutes constructive delivery.

Where the donee is already in possession or has custody of the chattels. In Stoneham v. Stoneham [1919] 1 Ch 149, the court held

that where possession precedes manifested intention, a further

delivery or a change of possession is unnecessary.

o Symbolic delivery: Where goods are virtually incapable of being transferred manually, some representation of the goods may be handed

over, rather than effective means of control (e.g. a photograph of the items

may suffice). However, it is unlikely to be appropriate (mention on exam).

o Deed: Physical delivery can be replaced by transfer with a deed. Deeds are almost certainly more effective than delivering the object.

Authorization: In Nolan v. Nolan & Anor, the court held that there was no valid delivery because Unauthorized appropriation by the purported donee could not constitute a valid delivery on any view.


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(II) Donatio Mortis Causa (DMC) gifts: In Canada, DMC does not apply to land. In

Rushka v. Tuba (1986), 50 Sask. R. 152 (Sask. Q.B.), the Court held that there were three

essential elements of a donation mortis causa gift:

(i) Impending death from an existing peril: The gift must be made in contemplation

(though not expectation) of impending death. There is no need to be in a state of extremis

or sudden peril. However, it is unclear whether the test is subjective, objective, or both.

(ii) Delivery or constructive delivery of the subject matter: In Kooner v. Kooner 100

D.L.R. (3d) 76, 1979 786 (S.C.), the Court held that the standard for transfer of control is

lower in DMC cases than IV cases, such that a transfer of partial control that would not

validate an IV gift could validate a DMC gift. See c.(I)(iii).

Terminating donor control: In Re Bayoff Estate and Re Lillingston [1952] 2 All E.R. 184 (Ch.D.), the court held that the transfer of the keys but not the

paperwork for a safety deposit box constitutes sufficient delivery for DMC (but

not IV) because the transfer of the keys deprived the owner of further direct

access.

(iii) The gift is only to take effect upon death and will revert to the donor should

he/she recover.

Presence of wills: In Re Bayoff Estate, the court held that by his words [Bayoff] indicated that he wished Simard to have immediate ownership of the contents of

the safety deposit box and did not suggest that the gift was to take effect only if he died because he was simultaneously writing a will, thereby dividing issues

between those that take effect upon death (in the will) and those that take effect

immediately.


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(III) Perfecting gifts: Equity will not perfect an incomplete gift.

Deed: In appropriate cases a gift may be perfected by deed without actual delivery.

Death / executor: In Strong v Bird (1874) All E.R. Rep. 230 (Eng. Ch. Div.), the court held that a gift if left unfulfilled will be enforced if (a) the intention to make

gift continued until the death of the owner and (b) the donee is named and later

becomes an executor under the will of the donor, since executors assume control

which is a functional equivalent to delivery.

o In Re Bayoff Estate, the court held that Simards status as the executrix permitted her to activate the exception.


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B. Shared ownership

1. Creation and presumptions of shared ownership

a. Personal property / personalty: There is a common law presumption to create a

JT for personal property. In Re Bancroft, the Court held that a bequest to a number of persons without any accompanying explanatory words creates a [JT]. The presumption can be rebutted in two ways:

Words of severance: see 3.a.(I).

Equity is contrary to the principle of survivorship. In cases of (a) two or more people advancing money on a mortgage, (b) partnership property, or (c) purchase

prices being provided unequally, equity holds that TIC will be established based

on contribution.

b. Land: There is a statutory presumption in favour of TIC for land (Conveyancing

and Law of Property Act, s.13): applies to land transferred by any letters patent, assurance or will ... in fee simple or for any less estate but not to personalty or partnership property (Partnership Act s.23). The presumption can be rebutted where (a)

an intention to create a joint tenancy can be evidenced with either strict language (i.e. "To

A and B as joint tenants") or similar language supported by contextual factors (i.e. "To A

and B jointly") and (b) the four unities are present.


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2. Types of shared ownership:

a. Tenancy by the entireties: Based on the doctrine of marital unity. No longer

relevant in light of modern legislation and social norms.

b. Coparcenary: Where at common law or by custom land descended on intestacy

not, as usually was the case, to a single heir but to two or more persons. No longer

relevant in light of s.14 of the Estates Administration Act, which holds that this situation

is ruled by tenants in common.

c. Joint tenancy (JT): Two or more people together own the same interest. This

fundamental concept gives rise to two main features:

(I). Four unities established by Blackstone must all be present for the creation and

continuation of a JT:

(i) Unity of possession: Each joint tenant is entitled, concurrently with the other joint

tenants, to possession of the whole of the land that is the subject of the joint tenancy.

(ii) Unity of interest: Each joint tenant must be the same de juris (not de facto)

interest in terms of their extent, nature, and duration (see Freehold interests at C.1).

Different future interests will defeat unity of interest.

(iii) Unity of title: Each joint tenants title must be derived from the same document or occurrence.

(iv) Unity of time: Each joint tenants title must vest at the same time. However, the unity of time is not required for a joint tenancy created by (a) a will or (b) a conveyance

employing a use.

(II). Right of survivorship: Where one of the joint tenants dies, their interest passes to

the other joint tenants to the exclusion of the descendants of the joint tenants.

d. Tenancy in common (TIC): Express creation requires certain words: Failed

attempts to create a joint tenancy will create a TIC. Operation of law (e.g. CLPA s.14).

Where a joint tenancy has been severed.

(I). Unity of possession: The only unity that is required is unity of possession. Each

joint tenant is entitled, concurrently with the other joint tenants, to possession of the

whole of the land that is the subject of the joint tenancy.

(II). Passes to estate (will or intestacy)


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3. Severance: There are two general connotations of 'severance' relevant to

distinguishing JT and TIC:

a. Words of severance: In the determination of whether a JT or a TIC has been

initiated, words of severance are taken to denote an intention to create a TIC: equally, amongst and even jointly (depending on context) are seen as words of severance.

In Re Bancroft, the Court held that words of severance (specifically "in equal shares per stirpes") in a clause relating to one contingency could not be read into

a clause relating to a different contingency.

b. The transformation or conversion of a JT to a TIC by one of four general means

whereby either the unities of title or interest or the right of survivorship is destroyed. In

Re Denny [1947] .J.R. 1029 and Flynn v. Flynn, [1930] I.R. 337, the court held that the

onus to demonstrate that there has been a severance lies on those who so contend.

(I) Unilateral action (common law):

(i) Transfer to a third party: If A and B are JT and A conveys to C, then B and C are

TIC (no time, title). Likewise, if A, B, and C are JT and C conveys to D, then A and B

continue to hold as JT while D holds a 1/3 interest as a TIC.

DMC: In Re Sorensen & Sorensen, the court held that an attempted gift of land was insufficient because (a) there was no effective delivery and (b) there is no

DMC in respect of land in Canada.

(ii) Transfer to joint tenant: If A and B are JT and A conveys to B, then B has sole

title.

(iii) Declaration of trust: Declarations of trust are sufficient delivery for an IV gift.

In Re Sorensen & Sorensen, the court held that "the only act that severed the titles was the gift to the son by declaration of trust of the wife of the beneficial interest

in the titles."

(iv) Lease for a term of years to a third party: In Cowper v. Fletcher (1865), 122 E.R.

1270, the court held that a lease for a term of years by one joint tenant severs the tenancy.

If A and B are JT and A conveys to C for a term of years, B and C and subsequently A

and B are TIC.

In Re Sorensen & Sorensen, the court held that the lease arrangement was insufficient: did not interfere with the chief characteristic of a joint tenancy, viz survivorship

(v) Insufficient: Several unilateral actions have been deemed to be insufficient for

severance:

Granting an encumbrance, such as an easement

Lease for a term other than years: In Re Sorensen & Sorensen, the court held that the lease arrangement for the lifetime of the wife was insufficient because it did not interfere with the chief characteristic of a joint tenancy, viz survivorship: (a)


23

death of wife: lease terminates, husband retains full ownership; (b) death of

husband: husband retains full ownership and lease merges in the fee.

Discontinued action by one party: In Munroe v. Carlson, [1976] 1 W.W.R. 248, the court held that the bringing of an action alone for partition where the action is

subsequently discontinued is not sufficient o constitute a severance.

Mortgage: In Re Sorensen & Sorensen, the court held that mortgage was insufficient because it did not interfere with the right of survivorship: upon the death of either the husband or wife the security would not continue

Will: In Sorenson, the Court held that the execution of the will was insufficient: execution of a will cannot sever a [JT] because the right of survivorship activates before execution.

Unilateral declarations: In Re Sorensen & Sorensen, the court recognized that "the weight of authority is that the declaration by one party of an intention to sever

alone without any other act an without acceptance by the other joint tenants does

not sever the tenancy."

(II) Mutual agreement (equity): Need not be an enforceable agreement. The aim is to

prevent people from reneging on a commitment to give up their right to survivorship.

Subsequent conduct: In Re Sorensen & Sorensen, the court held that Mrs. Sorensen's "subsequent conduct" (e.g. making alternative attempts at severance)

prevents the inference that the "Settlement Agreement" which agreed to the

division of the title to the matrimonial home (ostensibly undermining the unity of

title) constituted severance.

(i) Insufficient: Several mutual agreements have been deemed to be insufficient for

severance (unless there is an agreement to divide the proceeds of sale):

Sale or lease by all of the joint owners: A sale or lease by all of the joint owners does not result in severance because this arrangement is compatible with the

continuation of joint ownership in relation to the proceeds of sale (e.g. If A and B

are JT and sell to C and D, JT may continue in the profit earned by A and B as

well as the land under C and D).

Agreement to sell in the future

(III) Course of dealing (equity): Any course of dealing sufficient to intimate that the

interests of all were mutually treated as constituting tenancy in common.

Mutual or joint wills: In Szabo v. Boros (1967), 60 W.W.R. 754, the court held that the right of survivorship is eliminated where all joint tenants leave the

property to each other in their wills as a course of dealing.

Failed negotiations: Even failed negotiations can lead to a finding of severance, although this seems harsh and counter-intuitive.

(IV) Operation of law (statute and common law):

(i) General legal exceptions: Examples include bankruptcy, lawful execution,

murder, and the Ontario Family Law Act.


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(ii) Judicial order of partition or sale: Where co-owners cannot agree on how to

govern the real estate, then, at the demand of any one or more co-owners, the co-

ownership relationship will be ended by court order and the co-owned property will be

partitioned or sold:

Partition: Property divided up, with discrete portions of the fee granted exclusively to each co-owner by the court in accordance with the co-owners proper co-ownership interests therein.

o In Re Sorensen & Sorensen, the court held that "the bringing of an action alone for partition where the action is subsequently discontinued is not

sufficient o constitute a severance."

Sale: When the property does not lend itself to partitioning, court can order the co-owned property to be sold, with the net proceeds from the sale distributed

amongst the co-owners in their proper proportions.

o In Popov v. Hayashi, the court held that "both plaintiff and defendant have an equal and undivided interest in the ball" and "the ball must be sold and

the proceeds divided equally between the parties."

4. Rights and responsibilities of share ownership: Courts have broad jurisdiction to

make just and fair allowance allowances on termination of co-ownership. There are two

main categories for repayment:

a. Accounting for benefits of occupation:

(I) Occupation rent as of right: where one co-owner unlawfully ousts the other.

Actual ouster: Physically locked out

Constructive ouster: Conduct of co-tenant deprives enjoyment

(II) Occupation rent by consent: where there is an agreement that the occupying co-

owner will pay occupation rent to the non-occupying co-owner.

(III) Entitlement to a just share: An action for an accounting may be brought by a joint tenant or tenant in common against a co-tenant for receiving more than the co-

tenants just share (Courts of Justice Act s. 122(2))

Note: Only applies to benefits from the land itself (e.g. mining, rents), not things on the land (e.g. farming, business venture profits).

(IV) Waste: Use of the land which would unreasonably diminish the value of the property (see Waste at C.2.b.II).

(V) Equitable accounting for improvements made and encumbrances suffered

(appears to be restricted to partition and sale or analogous proceedings).

b. Expenditures relating to property: Generally, tenants are liable for capital and

current expenditures in proportion to their share of the property (e.g. mortgage payments,

improvements, etc.)


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C. Freehold estates

1. Freehold interests: Whether an interest is vested or contingent is a matter of legal

characterization by the courts. The courts have developed several presumptions that

influence the characterization process:

Presumption against intestacy: While it is possible that a testator would intend to die partially intestate, courts generally presume that the purpose of creating a will

is to avoid the rules of intestacy. Where there is vagueness or ambiguity (i.e. two

or more possible constructions), the courts will favour a construction that the

whole estate is to be disposed of by the will.

Construction in favour of early vesting: In McKeen Estate v. McKeen Estate, the court reaffirmed that The courts are inclined to hold 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. o In McKeen Estate v. McKeen Estate, the court held that there was

sufficient ambiguity or about to activate the construction in favour of early vesting because the phrase if they are both alive at the time of the death of the survivor of me and my said wife made it was unclear whether the gifts to the sisters were contingent on their surviving the wife.

Browne v. Moody postponement rule: In Browne v. Moody, [1936] O.R. 422 (P.C.), the court held that a gift is prima facie vested if the postponement is to allow for a [LE].

o In McKeen Estate v. McKeen Estate, the court held the reason for postponement of the distribution to the testators sisters is simply that a [LE] was previously given to the widow.


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a. Vested interests are present rights to present or future enjoyment.

Vested in interest: Present right to future enjoyment.

Vested in possession: Present right to present enjoyment (seisin).

Note: The right of reverter produced by determinable interests (see b.II.ii) is a vested interest.

(II) Condition subsequent (now until): Present right to present and future enjoyment (vested in interest and possession), but subject to the possibility of divesting on the

occurrence of a specified event.

(i) Defeasible interests are produced by are conditions subsequent that brings an

estate to a premature end (where the terminating event is external to the limitation a divided clause from the grant). The grantor retains a right / power of re-entry, which is

a contingent interest because termination is not inevitable.

Magic words: provided that, on condition that, but if, if it happens that

Effects of invalidity: Invalidity destroys the condition and produces absolute ownership.

o In Re Czykalenko (1983), the court held that a provision that gives the trustee absolute discretion over the distribution of the gift was a condition

subsequent that was invalid for uncertainty.

(ii) Determinable interests are produced by a condition subsequent that brings the

estate to its natural end (where the terminating event is an integral and necessary part of

the formula from which the size of the interest is to be ascertained). The grantor retains a

right of reverter, which is a vested interest because termination is inevitable (see a).

Magic words: while, during, as long as, until, whilst

Effects of invalidity: Invalidity destroys the whole transfer of gift because the condition and property are integral.


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b. Contingent interests are future rights that are dependent upon the occurrence of an

event. Very small differences in the language can produce vastly different results for

invalidity.

(I) Conditions precedent (not until): No present right to present or future enjoyment; The condition must be met before the interest vests.

Magic words: when, at a given age, upon, shall attain

Effects of invalidity / impossibility: Usually destroys the whole transfer (see 4.a.I).

o Cy-pres doctrine (see public policy at 4.b.III): Where conditions precedent in trusts for valid charitable purpose[s] are rendered impossible /invalid after some time, the cy-pres doctrine permits courts to

revise the terms so as to carry out the settlors intention as nearly as possible. In order to achieve charitable status, a trust must (a) have a valid

charitable purpose (i.e. poverty relief, education, religion, or other benefits

to community), (b) be wholly and exclusively charitable in purpose, and

(c) promote the public benefit.

In Re Leonard Foundation Trust, the court held that 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 [extremely racist] trust into accord with

public policy.


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2. The common law recognizes three forms of freehold estate:

a. Fee tail (FT): To A, and thereafter to the heirs of his body. The FT was an interest in land impressed with a special rule of descent: it passed to the heirs of the body

of the first taker until the particular line of descent became extinct. The FT is effectively a

series of LEs. The initial grantee is the tenant in possession and his/her heirs are the

tenants in tail. For all intents and purposes the FT no longer exists in Canada.

b. Life estate (LE): To A for As life or to A for Bs life. The LE grants full use of the property for the duration of the measuring life or cestui que vie (CQV). In

attempting to characterize conveyances, the court focuses on the intention of the

conveyance magic words of LE conveyance are not necessary.

Where the CQV is the grantor, the LE is an estate pur sa vie (PSV).

Where the CQV is the grantee or one of several grantees, the LE is an estate pur autre vie (PAV).

o If the grantor predeceases the grantee / CQV, the grantees / CQVs interest ends and the FS returns to grantor.

o If the grantee / CQV predeceases the grantor, the property will devolve with the rest of the grantees / CQVs estate for the period of the grantees / CQVs life.

(I) Power of encroachment: LEs can be conveyed with a power to encroach upon

capital for proper maintenance.

(II) Waste: Technically, waste consists of any act which alters the nature of the land,

whether for the better or for the worse. Its object is to prevent a limited owner, such as a

tenant for life or years, despoiling the land to the prejudice of those in reversion or

remainder. Remedy is to bring an action for damages or to apply for an injunction. Types

of waste:

Ameliorating waste: alterations that improve the land. Counter-intuitively, this may be actionable especially if it changes the character of the land but generally is not.

Permissive waste: failure to conduct repairs and to do other things that ought to be done. Unless a duty to repair is contained in the document granting the interest

(grant), a life tenant cannot be compelled to repair.

Voluntary waste: the doing of that which ought not to be done, which damages the land. Extends to cutting timber, but not non-timber, trees; opening new mines, but

not exploiting old ones.

Equitable waste: grant may render the life tenant unimpeachable for waste, but liability remains for flagrant voluntary waste and wanton acts of destruction.

Equitable waste is that which a prudent man would not do in the management of his own property.

(III) Heating, repairs, and insurance:


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c. Fee simple (FS): To A and his heirs. The FS is the closest approximation to absolute ownership in the Canadian tenurial property law regime: property is held

exclusively and is in principle transferrable for an infinite period, though if there are no

heirs the interest escheat to the Crown in accordance with the Escheats Act.

(I) Power of disposition: FS includes a general power of disposition IV that is not

possible under LE. In Re Taylor, the court stated that The interest more closely approximates an absolute interest because he may exercise for himself one of the

incidents of ownership; namely, the right to freely alienate during his lifetime.


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3. Conveyance: Conveyances can be either inter vivos (IV) or testamentary. It often

falls to the courts to characterize conveyances.

a. Rules of interpretation: There are different rules of interpreting IV and

testamentary conveyances:

(I) IV conveyances: Under the Ontario Conveyancing and Law of Property Act s.5,

words of limitation are not necessary to transfer a FS IV where there are any other words sufficiently indicating the limitation intended but only if an as far as a contrary intention does not appear from the conveyance.

(II) Testamentary conveyances: Under the Ontario Succession Law Reform Act s.26, a

grant in a will of a FS is presumed even absent words of limitation except when a contrary intention appears by the will. The court has developed a number of principles of testamentary interpretation:

Whole will and intention: The leading principle of construction is that the testators intention is collected from a consideration of the whole will taken in connection with any evidence properly admissible and the meaning of the will and

of every part of it is determined according to that intention.

o Dominant > subsidiary intention: In Unger v. Gossen, the court held that the testators dominant intention or overriding concern was to benefit her nephews and her subsidiary intention was to avoid benefitting a

communist state; the dominant intention overrode the condition that the

nephews immigrate to Canada because (a) it represented a subsidiary

intention that (b) was no longer relevant, (c) the testator did not know that

it was legally impossible, and (d) the testator was mentally incapable of

amending the will between drafting and death.

o Presumed intention to gift where condition precedent is impossible: In Re MacDonald (1971), 18 D.L.R. (3d) 521 (Ont. H.C.), the court held that

where a testator grants a bequest subject to a condition which is

impossible, the dominant intent must be the gift, subject to the possibility

of rebuttal where it can be shown that the principal concern of the testator

was the condition.

Shellys case: The rule in Shelleys case stipulates that a LE conveyance that extends the grant to the grantees heirs is effectively a FS conveyance.

Doctrine of repugnancy: In Re Walker, the court affirmed that The Court has then to endeavour to give such effect to the wishes of the testator as is legally

possible, by ascertaining which party of the testamentary intention predominates

and by giving effect to it, rejecting the subordinate intention as being repugnant to

the dominant intention. o Logical inconsistency: Repugnancy analysis requires some logical

inconsistency between competing options. In Re Taylor, the court refused

to apply a repugnancy analysis because There is no logical inconsistency requiring the court to choose between two alternative intentions which are

opposed.


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b. Characterizing conveyances:

(I) LE vs. FS

(i) Power of disposition: In Re Jones [1898] 1 Ch. 438, the court held that where a

LE conveyance is coupled with a power of disposition IV, the donee takes an absolute

interest.

In Re Walker, the court held that the testamentary provision that sought to convey any undisposed property after a LE conveyance to the deceaseds wife was by negative implication a conveyance of the power to dispose and consequently

effected a FS conveyance.

(ii) Power of encroachment: In Re Taylor, the court held that Where the testator uses plain language to indicate an intention to give a [LE] only, that interest is not enlarged to

an absolute interest because the testator has declared that the donee is to have the right in

her discretion to encroach on capital for her proper maintenance.

Depletion: In Re Taylor, the court held that the possibility that encroachment may deplete the property and consequently deprive the remainderman does not create a

FS.


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4. Impossibility and invalidity: The courts may declare conditions precedent or

conditions subsequent to be impossible or invalid, thereby altering the character of the

conveyance (see 1).

a. Impossibility: A condition is impossible if it cannot be fulfilled.

In McKinnon v. Lundy (1893), the court held that Where a condition precedent becomes impossible of performance, and though there be no default or laches on

the part of the devisee himself, the device fails [W]here the condition is impossible in its creation, if the condition is precedent, the devise being of real

estate is itself void.

(I) Realty: If the condition cannot be performed, the gift fails.

(II) Personalty: If the condition was the sole motive and cannot be performed, the gift

fails. However, if the condition was not the sole motive for the conveyance, then:

(i) No conditions, absolute transfer: The impossible conditions will be disregarded

and an absolute interest conveyed in one of three scenarios:

The grantor knew that the conditions are impossible to perform (see the presumption in Re MacDonald at 3.a.II).

The acts of the grantor cause the impossibility.

Performance of the conditions would be contrary to law. o In Unger v. Gossen, the court held that the testators dominant intention or

overriding concern was to benefit her nephews and her subsidiary intention was to avoid benefitting a communist state; the dominant

intention overrode the condition that the nephews immigrate to Canada

because (a) it represented a subsidiary intention that (b) was no longer

relevant, (c) the testator did not know that it was legally impossible, and

(d) the testator was mentally incapable of amending the will between

drafting and death.

(ii) No conditions, no transfer: The impossibility of the condition voids the transfer

in one of two conditions:

The impossibility was unknown to the grantor.

The impossibility arose subsequently due to an act of God, operation of law, or an act of the grantor.


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b. Invalidity: There are four main grounds for invalidity:

(I) Uncertainty: If the condition is too imprecise, it will be invalid for uncertainty. A

different standard applies depending on whether the condition is precedent or subsequent:

Condition precedent (lower standard): The court must know with certainty whether a particular claimant has me the condition: condition must be capable of being given some plausible meaning.

Condition subsequent (higher standard): The court must know in advance of the even what will bring the grantees interest to an end: in Claverling v. Ellis, the court held that the donee must be able to see precisely and distinctly from the outset of those actions that will lead to a loss of the interest. Conditions

subsequent are more vulnerable to invalidity based on uncertainty.

The different standards can lead to problematic results because it does not give effect to

the testators intention, perhaps on the basis of a minor difference in language.

There are two types of uncertainty:

(i) Evidential uncertainty: has the grantor expressed intent clearly enough?

(ii) Conceptual uncertainty: are the words in the condition too vague for the courts to

apply?


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(II) Breach of the legal remainder rules: According to Ziff, the legal remainder rules have ceased to have contemporary significance. While the rules do not generally apply to wills, equitable transfers, or trusts, the fourth rule sometimes applies to wills and

all rules apply to IV conveyances.

(i) Remainder after a FS is invalid.

(ii) Remainder must be supported by a prior freehold estate because there can be no

abeyance of seisin.

E.g. From A to C if she attains 21 is invalid because there is no seisin prior to the condition precedent but From A to B for life, remainder to C if she attains 21 is valid because B has seisin until death with a possible reverter to A if B dies before the condition precedent.

(iii) Remainder must await the end of the prior estate.

E.g. To B for LE on condition that B does not marry C but if B marries C, remainder to D in FS is invalid because the FS cuts down the defeasible LE but To B for LE until B marries C, remainder to D in FS is valid because Bs marriage is a determinable limit on Bs LE.

(iv) Remainder must vest during the prior estate or at the moment that it determines.

A remainder is initially valid but may not survive it if fails to vest on the termination of

the prior estate (the wait and see rule).

E.g. Re Crow (1984): To R and W for life, remainder to their children. If R and W have no children, remainder to their nieces or nephews. Testator died in 1926 and both R and W have no nieces and nephews at death. However, some nieces

and nephews appeared after Ws death. The court held that Ws share went back into the residue.


35

(III) Public policy: Conditions to conveyances cannot violate public policy. Courts

have looked to widespread or generally-accepted principles as a guide to defining the

public policy (e.g. constitutional principles, legislation, international treaties).

Note: The Charter of Rights and Freedoms is not binding in property matters within the public sphere.

CLPA s.22 stipulates that: Every covenant made that restricts the sale, ownership, occupation or use of land because of the race, creed, colour,

nationality, ancestry or place of origin of any person is void and of no effect.

(i) Cy-pres doctrine: Where conditions precedent in trusts for valid charitable purpose[s] are rendered impossible /invalid after some time, the cy-pres doctrine permits courts to revise the terms so as to carry out the settlors intention as nearly as possible. In order to achieve charitable status, a trust must (a) have a valid charitable purpose (i.e.

poverty relief, education, religion, or other benefits to community), (b) be wholly and

exclusively charitable in purpose, and (c) promote the public benefit.

In Re Leonard Foundation Trust, the court held that 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 [extremely racist] trust into

accord with public policy.


36

(IV) Rules against perpetuities (RAP): [N]o interest is good unless it must vest, if at all, not later than 21 years after some life in being who was alive or en ventre sa mere at

the creation of the interest. The rule does not apply to vested interests only interests that will vest at some point in the future. In determining whether the time is too remote,

consideration will be given to the possible rather than the probable. There are four

elements to the RAP:

(i) The RAP applies to contingent remainders and executory interests not to vested interests.

(ii) The date of the creation of the interest is dependent upon the nature of the

instrument containing the gift.

Testamentary: The perpetuity period begins with the death of the testator.

IV transfer: The perpetuity period begins from the date the instrument takes effect.

(iii) To constitute a life or lives in being, four conditions must be met:

1. Measuring lives must be human. 2. The person(s) must be living at the date of the creation of the interest (see ii). 3. A group of persons, if used, must not be capable of increasing in number after the

date of creation of the interest (see ii). E.g. Is it possible that more people will

enter the group more than 21 years after the creation of the interest (see ii)? There

is a presumption of fertility:

Fertile octogenarian: E.g. to A [80 yrs] for life, then As children for their lives, then to As grandchildren who attain age 21. Only A is a life in being because she could theoretically have more children.

Precocious toddler: E.g. to A for life, then for such of As grandchildren living at my death or born five years thereafter who shall attain age 21. Only A is a life in being; A could have a child that has its own child in less

than five years, thereby increasing the number of grandchildren.

Perpetuities Act, s.7(1)(a) provides that it shall be presumed, (i) that a male is able to have a child at the age of fourteen years or over, but not

under that age, and (ii) that a female is able to have a child at the age of

twelve years or over, but not under that age or over the age of fifty-five

years

To maximize the perpetuity period, a royal lives clause may be added to the instrument vesting of some interests are postponed until 21 years after the death of the last lineal descendent of a named sovereign living at

the date of the creation of the interest.

4. A group of persons, if used, must be ascertainable at the date of creation of the interest (see ii). The group designated cannot be so numerous so at to be

unascertainable.

(iv) If, at the commencement of the perpetuity period, it is theoretically possible to

construct circumstances in which vesting would occur outside of the period, then the


37

RAP is infringed. However, Ontario has adopted a wait and see policy under the Perpetuities Act:

s.3: No limitation creating a contingent interest in property shall be treated as or declared to be invalid as violating the rule against perpetuities by reason only of

the fact that there is a possibility of such interest vesting beyond the perpetuity

period.

s.4: (1) Every contingent interest in property that is capable of vesting within or beyond the perpetuity period is presumptively valid until actual events establish,

(a) that the interest is incapable of vesting within the perpetuity period, in which

case the interest...shall be treated as void or declared to be void; or (b) that the

interest is incapable of vesting beyond the perpetuity period, in which case the

interest shall be treated as valid or declared to be valid


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5. Public policy and restraints on alienation

Not all restraints on alienation are legitimate. The standard for restraint validity is

whether the condition takes away the whole power of alienation substantially. The standard is flexible and may be breached if one, two, or all three of the types of restraint

have been imposed:

a. Forfeiture

b. Promissory

c. Disabling restraints: Disabling restraints prohibit alienation in one of three ways:

(I) Mode of transfer:

(II) Class of recipients:

First refusal: Pre-emptive rights of first refusal are generally not objectionable. However, pre-emptive rights of first refusal combined with a fixed price that does

not change to reflect changed circumstances are generally objectionable.

o In Re Rosher (1884), 26 Ch. D. 801, the court held that a restraint holding that a son could not sell the land without first offering it to his mother for

$3000 despite the actual value of $15,000 was an invalid restraint on

alienation and the transfer was valid. Note: Had the mother simply been

given the right of first refusal at the prevailing market rate, there probably

would have been no difficulty.

(III) Time period of transfers:


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D. Trusts: A means of holing property pursuant to which the legal and equitable

interests in the same property are held by two different entities or persons. The common

law only recognizes the legal interests (LI) while equity protects the holder of the

equitable interest (EI). LI remains with the trustee while the beneficial interest / EI is

held by the beneficiary. The trustee is subject to equitable obligations consistent with the

position they were put in vis--vis the beneficiary. Where the trustee does not act in the

best interests of the beneficiary or breaches their obligations, the beneficiary can take

action against the trustee.

Use, confidence, and trust are synonymous.

Executed vs. executory trusts: Executed trusts are those in which the settlor has specified the objects of the trust/ executory trusts are those in which some further

action must be taken before the objects [].

Bare vs. simple trusts: Bare trust arises where the settlor can reclaim his or her property. A simple trust is any other trust that is not a bare trust.

Higher vs. lower sense: In the higher sense, a trust refers to an abstract fiduciary duty. The lower sense refers to ordinary trusts.

1. Actors: Trusts have three main actors:

a. Settlor / feoffor: The person who creates the trust. If a trust is created in a will,

then the settlor is the testator.

b. Beneficiary / cestui[] : The person that holds the equitable title to the property. []


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c. Trustee / feoffee: The person that holds legal title to the property and owes certain

obligations to the beneficiary. Failure to exercise the powers or fulfil duties may be a

breach of trust which will in turn give rise to an equitable remedy for the purpose of

putting the beneficiary in the position they should have been.

(I) Fiduciary relationship: Trustee must act in the best interests of the beneficiary,

placing the beneficiarys interests ahead of its own interest. There are three characteristics of a fiduciary relationship:

The fiduciary has scope for the exercise of some discretion, because they are vested with powers.

The fiduciary can exercise their discretion so as to affect the beneficiarys legal or practical interests.

The fiduciary must exercise their discretion in the interests of the beneficiary.

(II) Trustee Act duties: The TA imposes several duties: duty to safeguard, preserve

and enhance the assets of the trust; duty to distribute the trust assets to the beneficiaries;

obligation to act impartially; duty to keep accounts ready for inspection by the

beneficiaries; duty to provide information.

(III) Agency: An agent has express or implied authority to act on behalf of another

person the principal. Distinct from a fiduciary relationship:

An agency relationship is personal whereas trust relationship is based on property.

Agents generally do not have title to property while trustee must have title to the trust property

Agency arises by agreement between parties


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2. Types of trusts: There are two broad types of trusts:

a. Express trusts: Trusts that are created intentionally.

(I) Types of express trusts: There are two main types of express trusts:

A trust for persons sets out the individuals by name or class who are to enjoy trust property.

A trust for purposes sets out a task that the creator of the trust wishes the trustee to perform through use of the trust property

(II) Requirements: There are four main requirements for express trusts:

(i) Capacity: Must be of legal age; must have sufficient mental capacity; must have a

property interest that can constitute the trust (see iii).

(ii) Three certainties:

Certainty of intention to create the trust: The settlor must have manifested an unequivocal intention to create a trust. There must be an intention that the trustee

is placed under and obligation to hold property on trust for the benefit of some

person(s) / purpose(s).

o Certainty is a matter of construction (i.e. no magic words). o Trusts of real property must be in writing. Trusts of personalty need not be

in writing.

Certainty of subject matter: o A trust must have property that can be clearly identified as its subject

matter. Property must be either ascertained or ascertainable:

Ascertained: Where property is a fixed amount or a specific piece of property.

Ascertainable: Where a method by which the subject-matter can be identified is available from the terms of the trust or otherwise.

o The terms must define the portion each beneficiary is to receive or must vest the discretion to decide the allocation in the trustee. The trust must set

out the property which each beneficiary is entitled to share.

In some circumstances, courts will rely on the equitable maxim that equity is equality to resolve any uncertainty.

o There must be certainty of objects. The beneficiaries must be described in terms clear enough that the trustees obligations can be properly discharged:

With fixed trusts, the trustee has no discretion as to distribution, so the beneficiaries must be listed or readily identifiable as a class

With discretionary trusts, the trustee has discretion as to distribution, but certainty is necessary as to the criteria for

distribution


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(iii) Constituted: Trust is constituted when title to the property is conveyed to the

trustee. Once constituted, the trust cannot be undone by the settlor unless there is a power

of revocation built into the trust. There are two types of conveyance:

Direct transfer: e.g. Unto and to the use of A on trust for B

Automatic: e.g. I hold this property on trust for B

(iv) Observe formalities: Certain technical requirements, often statutory, must be

satisfied or the trust will be void. These vary depending on whether the trust is inter vivos

or testamentary. These formalities are often less rigid in the context of the trust because it

is an equitable remedy, and any court is going to exercise its equitable jurisdiction in

determining whether or not a trust exists.


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b. Trusts created by operation of law: There are two types of trusts created by

operation of law:

(I) Resulting trusts: In Pecore v Pecore, the SCC held that [a] resulting trust arises when title to property is on one partys name, but that party, because he or she is a fiduciary or gave no value for the property, is under an obligation to return it to the

original title owner. The property then springs back to the original owner. The principle difference between resulting trusts and other trusts relates to intention: Concerned with

presumptions about the intention of the title holder.

E.g. The resulting trust arises as soon as an equitable obligation on B to hold property upon trust for C. B may need to obtain a court judgement if C resists Bs request for transfer of the property but judgements merely declare the trust and do

not cause it to arise.

(i) Resulting trusts can be created in three ways:

(Automatic) Where a trustee holds property under the terms of an express trust and the trust fails in whole or in part.

o E.g. From A unto and to the use of B to the use of C until she turns 21. If C turns 21 or dies before 21, there will be property left over held by B

on resulting trust for A.

(Presumed) Where A purchases property and title is taken in the name of B, or jointly in the names of both A and B.

(Presumed) Where A voluntarily and gratuitously transfer property into the name of B or into the joint names of A and B.

(ii) Presumptions:

Presumption of resulting trust: Equity prefers bargains to gift. Gratuitous transfers are treated with suspicion. Another area where a presumption of resulting trust

applies is in respect of the common intention resulting trust. This will arise in

cases where the parties expressly or implicitly shared an intention that property

held in the name of B was to be shared by A and B. Note that, as with almost all

presumptions, the presumption of resulting trust can be rebutted if sufficient

evidence is provided

o E.g. If A purchases property with her own money but places LI in the hands of B, equity will require that A retain a beneficial interest .

Presumption of advancement: In some circumstances, a resulting trust is not presumed; rather, there is a presumption of an intention to benefit a particular

individual. The presumption arises by the beneficiarys membership of a particular class of people. Despite equitys reluctance to perfect imperfect gifts, this is one area in which the law aims to give effect to beneficent intentions.


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(II) Constructive trust: Constructive trustees are distinct: constructive trustees are no

subject to the full list of obligations the main obligation is usually re-conveyance of any ill-gotten gains. There are two types of constructive trusts in Canada:

(i) Good conscience constructive trusts: In Soulous v Korkontzilas, the court developed a four-point test for GCCTs:

The defendant must have been under an equitable obligation in relation to the activities giving rise to the assets in his hands.

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 defendant.

The plaintiff must show a legitimate reason for seeking a property remedy either personal or related to the need to ensure that others like the defendant remain

faithful to their duties.

There must be no factors which would render imposition of constructive trust unjust in all the circumstances of the case (e.g. the interests of intervening

creditors must be protected).

(i.i) Institutional constructive trust (ICT): ICTs are considered to be a GCCT. ICTs

will be applied to property obtained by a wrongful act of the defendant, most notably

property obtained as a result of a breach of fiduciary duties. When a defendant has

obtained property by wrongful act, a constructive trust may be imposed in favour of the

beneficiary.

See Attorney General for Hong Kong v Reid (1994).

The existence of a fiduciary relationship imposes significant restraints on the actions of the fiduciary (absent informed consent of the principal). The standard

may be breached even if the fiduciary acts in good faith.


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(ii) Remedial constructive trusts: A constructive trust that may be imposed as a

remedy to unjust enrichment. A pre-existing fiduciary relationship is unnecessary: [t]he imposition of a constructive trust can both recognize and create a property right (Lac Minerals v International Corona Resources). However, on the facts of a particular case,

other forms of remedy might be more appropriate.

Unjust enrichment occurs where there the plaintiff proves the first three and the defendant fails to prove the fourth:

o Enrichment: Has the defendant been enriched in some way as a result of the plaintiffs actions?

o Deprivation: Did the receipt of benefits by the defendant result from a deprivation of the plaintiff?

o Absence of juristic reason: Is there any juristic reason for the enrichment? The plaintiff must show that no juristic reason from an established

category exists to deny recovery. Established categories include: contracts,

donative intent (gift), or other valid common law, equitable, or statutory

obligation. A defence may fall into an established category or may be a

special reason that does not form an established category or simply fail.

o Reasonable expectation / public policy: The defendant attempts to raise issues to rebut unjust enrichment.

The traditional scope of unjust enrichment has been to provide remedies either for (1) an unintended transfer or (2) a total failure of consideration.

o E.g. Accidentally paying a bill twice the second payment is unjust enrichment of Rogers.

Note: See Peter v Beblow for additional rules.


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E. Priority and registration

1. Common law priorities: The common law determined priority by looking for

seisin and documents.

a. 1-LI 2-LI: Qui prior est tempore, porior est jure (Prior) First in time is first in right. E.g.: If B transfers to C where A is the rightful owner,

Caveat emptor: Burden is on C to ensure that good title is being passed.

b. 1-EI 2-LI: Equitys darling A bona fide purchaser for value without notice will defeat prior EI. E.g. A agrees to sell to B (creating an EI) but subsequently conveys

to C; if C had no notice of Bs prior interest, Cs claim prevails.

Any fraud on Cs part will defeat their claim: She who comes to Equity must come with clean hands

C must give adequate consideration: Equity will not assist a volunteer

c. 1-LI 2-EI: Nemo dat quod non habet (Nemo) One cannot give that which one does not have. However, this is not an absolute rule. E.g. If A purports to sell to C but

had already sold to B, then B is the actual owner. Generally, the LI prevails, but fraud or

gross negligence on the part of the holder of the legal interest might cause the equitable

claim to prevail

In Northern Counties v Whipp, the court held that a 1-LI prevailed over a 2-EI on the grounds that a 2-EI will prevail only where the owner of the 1-LI (or her

agent) has assisted or connived at the fraud which has led to the creation of the subsequent equitable estate but not because of mere carelessness or want of prudence on the part of the legal owner.

d. 1-EI 2-EI: Qui prior est tempore, porior est jure (Prior) First in time is first in right. However, anyone relying on an equitable interest must have clean hands, so any

fraudulent or unfair behaviour will relegate one of the equitable interests.

Exception for 1-EI fraud: In CIBC Mortgage Corp v Quassa, the court recognized that courts have refused to recognize a priority under this rule where there is evidence of fraud or negligence on the part of the mortgage

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