Skip to main content

Full text of "Report on basic principles of land law"

See other formats


REPORT 



BASIC PRINCIPLES OF LAND LAW 



ONTARIO LAW REFORM COMMISSION 



k T*j 



Ontario 



REPORT 

ON 

BASIC PRINCIPLES OF LAND LAW 



ONTARIO LAW REFORM COMMISSION 




Ontario 



1996 



The Ontario Law Reform Commission was established by the Ontario Government in 1964 as an 
independent legal research institute. It was the first Law Reform Commission to be created in the 
Commonwealth. It recommends reform in statute law, common law, jurisprudence, judicial and 
quasi-judicial procedures, and in issues dealing with the administration of justice in Ontario. 



Commissioners 

John D. McCamus, MA, LLB, LLM, Chair 
Nathalie Des Rosiers, LLB, LLM* 
Sanda Rodgers, BA, LLB, BCL, LLM* 
Judge Vibert Lampkin, LLB, LLM* 

Counsel 

J.J. Morrison, BA (Hon), LLB, LLM, Senior Counsel 
Donald F. Bur, LLB, LLM, BCL, PhD 
Barbara J. Hendrickson, MA, LLB, LLM 

Chief Administrator 

Mary Lasica, BAA 

Secretaries 

Tina Afonso 
Cora Calixterio 



* 



These Commissioners served during the deliberations concerning this report. Their appointments expired, however, 
prior to its publication. 



The Commission's office is located on the Eleventh Floor at 720 Bay Street, Toronto, Ontario, 
Canada, M5G 2K1. Telephone (416) 326-4200. FAX (416) 326-4693. 



Canadian Cataloguing in Publication Data 

Ontario Law Reform Commission. 
Report on basic principles of land law 

Includes bibliographical references. 
ISBN 0-7778-5945-9 

1 . Real property-Ontario. I. Title. 

KE0236.057 1997 346.713'043 C97-964005-9 




Ontario 



Ontario 
Law Reform 
Commission 



The Honourable Charles Harnick 
Attorney General for Ontario 



Dear Attorney: 



I have the honour to submit the Ontario Law Reform Commission's Report 
on Basic Principles of Land Law. 



December, 1996 




i^Ot 



John D. McCamus 
Chair 



[iii] 



Digitized by the Internet Archive 

in 2011 with funding from 

Osgoode Hall Law School and Law Commission of Ontario 



http://www.archive.org/details/reportonbasicpriOOonta 



TABLE OF CONTENTS 

Page 

Preface v 

CHAPTER 1 INTRODUCTION 1 

CHAPTER 2 THE BASIS OF LANDHOLDING IN ONTARIO 5 

1 . Tenurial System of Landholding in England 5 

2. The Relevance of Tenure in Ontario 7 

3. Reform of the Basis of Landholding 9 

CHAPTER 3 SUCCESSIVE ESTATES AND INTERESTS IN LAND 11 

1 . Introduction 11 

2. Outline of Present Law and Its Historical Development 11 

(a) Introduction 11 

(b) The Legal Remainder Rules 14 

(c) Equitable Interests Under Uses 17 

(d) Statute of Uses 18 

(e) Successive Interests Created by Will 21 

(f) Waste 24 

(g) Dealings with Settled Estates 28 

5. Reform 30 

(a) Introduction 30 

(b) Outline of Reforms in Other Jurisdictions 30 

(c) Reform in Ontario 43 

(i) General 43 

(ii) Transactions to which Statutory Trust Will Apply 48 

(hi) Nature of the Statutory Trust 56 

(iv) Determination of Statutory Trustees 57 

(v) Interrelationship between Statutory Trust, General Law of Trusts, and 

Express Terms of Settlement 58 

(vi) Protection of Purchasers 59 

(vii) Occupation of Land by Beneficiary 59 

[v] 



VI 

CHAPTER 4 QUALIFIED ESTATES AND INTERESTS IN LAND 61 

CHAPTER 5 THE RULE IN SHELLEY'S CASE 65 

1. Historical Development, Rationales, and the Present Law 65 

2. Reform 69 

CHAPTER 6 CO-OWNERSHIP 73 

1 . Summary of the Present Law 73 

(a) Nature and Types of Co-ownership 73 

(b) Creation of Co-ownership 77 

(c) The Use of Land by Co-Owners 80 

(i) Accounting for Benefits of Occupation 80 

a. Ouster 80 

b. Agreement 81 

c. The "Statute of Anne" 81 

d. Waste 82 

e. Equitable Accounting 83 

f . The Family Law Act 85 

(ii) Claiming for Expenditures Related to Property 86 

(d) Severance of Joint Tenancy 89 

(i) Severance by Act of the Parties 89 

a. Introduction 89 

b. Destruction of One of Four Unities 90 

c. Severance by Agreement 93 

(ii) Severance by Unilateral Act 95 

(iii) Severance by Operation of Law 96 

(e) Partition or Sale 97 

2. Reform 104 

(a) Assimilation of Law Relating to Real and Personal Property 104 

(b) Terminology 104 

(c) Nature and Types of Co-ownership 105 

(i) The Four Unities 105 



Vll 

(ii) Tenancy by the Entireties and the Rule in Re Jupp 107 

(d) Creation of Co-Ownership 108 

(e) The Use of Property by Co-owners 109 

(f) Severance of Joint Tenancy 113 

(i) Severance by Destruction of the Three Unities 113 

(ii) Severance by Operation of Law 115 

(iii) Unilateral Severance by Act of a Party 116 

(g) Severance by Agreement 120 

(h) Termination of Co-ownership 120 

CHAPTER 7 EASEMENTS AND PROFITS 125 

1 . Introduction 125 

2. Summary of the Present Law 126 

(a) Nature and Requirements of Easements and Profits 126 

(b) Creation of Easements 129 

(i) Introduction 129 

(ii) Easements Arising by Implication 130 

a. The Rule in Wheeldon v. Burrows 131 

b. The "General Words" Statutory Provision 131 

c. "Indeed" Easements 132 

d. Easements of Necessity 133 

(iii) Prescriptive Easements 133 

(c) Extinguishment of Easements 138 

(i) Express Release 138 

(ii) Abandonment 1 38 

(iii) Unity of Ownership and Possession 138 

(iv) Effect of Land Titles Act and Registry Act 139 

3. Reform 139 

(a) Approaches to Reform 139 

(b) Proposed Reforms 141 

(i) Easements in Gross 141 

(ii) Creation of Easements and Profits 146 



Vlll 



a. Introduction 146 

b. The "General Words" Statutory Provisions 146 

c. Prescriptive Easements and Profits 147 

(iii) Modification and Extinguishing of Easements 154 

SUMMARY OF RECOMMENDATIONS 157 



PREFACE 



Throughout the almost thirty-two years of its existence, the Ontario Law Reform 
Commission has continued to devote some of its resources to research on the modernization of 
the law concerning the ownership of land. The law of property is an obvious topic for a 
provincial law reform commission. Land law is needlessly complex and archaic. It is often 
obscure. The law is replete with terminology that lay persons and many lawyers find difficult to 
comprehend. Many of its rules bear the hallmarks of the social, economic, political and legal 
conditions of the distant past. The law contains many traps for the unwary. Although these traps 
can normally be avoided by clever lawyering, they are capable of producing substantial injustice 
for individual Ontarians on a virtually random basis. 

The very first report of the Ontario Law Reform Commission, published in 1965, led to 
reform of an aspect of property law, the rule against perpetuities. Since then, a number of 
Commission Reports have touched upon various aspects of property law, including reports on 
landlord and tenant, the law of condominium, the law of mortgages, the law on covenants 
affecting freehold land, and a report concerning the new phenomenon of timesharing. 
Additionally, the Commission's major reports concerning the administration of estates, the law 
of trusts and, most recently, the law of charities consider important questions concerning the 
ownership of land. There is, therefore, a measure of appropriateness, if not a touch of irony, in 
the fact that this last substantive report of the Ontario Law Reform Commission, prior to its 
sunsetting at the end of this month, addresses three fundamental areas of land law in which 
modernization of the law of Ontario appears desirable. 

The completion of this report on basic principles of land law owes much to the work of 
our Project Director, Timothy G. Youdan, of the Ontario Bar. Much of the work on the 
Director's Report was undertaken by then Professor Youdan, of Osgoode Hall Law School of 
York University, while on sabbatical leave in 1991-92. On his behalf, we should like to express 
appreciation to the Master and Fellows of St. Catherine's College, Oxford where Professor 
Youdan spent his sabbatical leave as a Visiting Fellow and to the Librarian and staff of the 
Bodleian Law Library where much of his research was conducted. After completing the 
Director's Report, Professor Youdan continued to provide much valuable advice to the 
Commission. His involvement with the project continued after he joined the Toronto law firm of 
Davies, Ward and Beck. The Commission is extremely grateful to Mr. Youdan for his initial 
work on the project and his perseverance in enabling the Commission to see the project through 
to its completion. 

We also wish to express our appreciation for the contributions to this project of previous 
Commissioners. The Commission gratefully acknowledges our indebtedness to the earlier work 
of Mr. Justice Mendes Da Costa who, prior to his tenure as Chair of the Commission, prepared 
working papers which were of considerable assistance to Mr. Youdan, especially in his work on 
future interests. Also, Mr. Youdan benefited from the work done in draft by Dr. H. Allan Leal, a 



[ix] 



member of the Commission for more than two decades who also served as its Chair. A number 
of previous Commissioners, Madam Justice Abella, who was then Chair of the Commission, 
Professor Richard E.B. Simeon, then Commission Vice-Chair, and Commissioners Earl A. 
Cherniak and Margaret A. Ross of the Ontario Bar participated in the majority of the 
Commission deliberations concerning this project. 

The Commission is very grateful, as well, to the members of an Advisory Board struck by 
the Commission to assist us in this work. The members of the Committee were 
Ernest F. Gutstein, Garth Manning, Q.C. and Paul M. Perell, all of the Ontario Bar, Dean 
Eileen E. Gillese and Professor Albert H. Oosterhoff, of the Faculty of Law of the University of 
Western Ontario and Professor Arnold S. Weinrib of the Faculty of Law of the University of 
Toronto. The Board provided valuable advice to Mr. Youdan and to the Commission at various 
stages in this project and we are most appreciative of their assistance. 

Preparation of the final version of this report was undertaken by Commission staff some 
time after the decision of the Government of Ontario to terminate the existence of the 
Commission on December 31st, 1996. We are therefore especially appreciative of the efforts of 
the Commission staff and counsel who devoted themselves with characteristic diligence and 
good cheer to the task of preparing this final substantive report of the Commission. Commission 
Counsel, Barbara Hendrickson, ensured that the final version of the report accurately reflected 
the deliberations of the Commission concerning the subject matter of the report. Under severe 
time constraints, Doreen Potter aided the Commission once again by partially editing the text 
and footnotes of the report and Cora Calixterio endured several rounds of revisions to the 
manuscript and prepared its published version. The Commission is very grateful to each of these 
individuals. 



December 1996 



CHAPTER 1 



INTRODUCTION 



The basic principles of Ontario land law are derived from English common law, 
supplemented by old English statutes which were either made part of Ontario law by reception 
in 1792 or were the models from which Ontario statutes were copied. Considerable reform of 
basic principles of land law has been enacted in other Commonwealth countries, including 
England, and the United States of America. In Canada, including Ontario, there has been little 
significant reform of basic principles although there has been reform in particular areas such as 
residential tenancies and condominiums. 

The Ontario Law Reform Commission has published various reports dealing with 
particular topics relating in varying degrees to land law. One significant reform to basic 
principles, the statutory changes to the perpetuity rule, was based on the Commission's reports 
on the rule published in 1965 and 1966. The Ontario condominium system was also based on 
the Commission's Report on the Law of Condominium (1967). In addition, the Commission has 
dealt with landlord and tenant law in its two reports on that topic. More recently, the following 
reports have been published: Report on the Law of Trusts (1984), Report on the Law of 
Mortgages (1987), Report on Timesharing (1988), Report on Covenants Affecting Freehold 
Land (1989), and Report on Administration of Estates of Deceased Persons (1991). Three areas 
of land law remain in which reform is desirable. These are successive interests, co-ownership, 
and easements. 

Four themes are apparent in our views as to the desirability of reform and in the shape of 
the reforms proposed. First, we have been concerned to bring up to date areas of law afflicted 
with archaic principles and rules. The law of successive interests provides many striking 
examples. This area of law is subject to a body of highly complex and often obscure rules, many 
of which have no functional justification in modern Ontario. They are the product of history, 
mainly English medieval and Tudor history. It is true that many of these rules, such as the legal 



i 



2 



One exception is reform of the rule against perpetuities, first enacted in The Perpetuities Act, 1966, S.O. 1966, 
c. 113. See now Perpetuities Act, R.S.O. 1990, c. P.9. 

See the Condominium Act, R.S.O. 1990, c. C.26. 



[1] 



-1 

remainder rules and the rule of Purefoy v. Rogers, can be, and routinely are, circumvented by 
appropriate drafting. However, this does not mean that their continuation in the law is not 
harmful. Considerable cost is incurred in the time spent by the skilled practitioner in acquiring 
and maintaining the knowledge needed in order to ensure appropriate circumvention of archaic 
rules. 4 In addition, these rules are on occasion not circumvented so that they apply with 
unpredictable and capricious consequences, most probably after expensive litigation. Or, just 
about as bad, they are held after such litigation to have no application. Ironically, the expense of 
this sort of litigation is likely to be borne by the less well off since persons with modest property 
holdings are more likely to neglect to obtain the skilled advice that should lead to circumvention 
of the rules. Finally, there are some bodies of archaic doctrine that are not readily circumvented 
even by skilled drafting. 

A second theme is clarification. This is closely related to modernization of archaic doctrine 
since archaic doctrines tend to be obscure, mainly because their rationales are unrelated to 
modern conditions. More generally, we have attempted to identify and reform areas of law that 
require clarification. The rights and obligations of co-owners in the occupation and management 
of co-owned land provides an example. This is an important area of law having practical effect 
on the lives of many people and yet the law is often unclear. We shall propose a statutory 
formulation of the rights and obligations of co-owners, providing a clear and fair system for 
guiding behaviour and resolving disputes. 

A third theme is the re-evaluation of conceptual explanations for existing doctrines. This 
point can best be clarified by an example. In the present law of co-ownership, the concept of the 
"four unities" has a pervasive impact on the operation of the law. On the one hand, the four 
unities limit the types of arrangements that may be created as joint tenancies. On the other hand, 
they provide the key concept for determining the ways in which a joint tenancy may be 
"severed" by being changed into a tenancy in common. We shall evaluate the functional 
justifications for these roles played by the four unities and we shall propose removal of their 
relevance. Instead, we put forward new rules for the creation and severance of a joint tenancy. 

The fourth theme is simplification of the law by assimilation of doctrines. One example is 
the continuing distinctions in the present law between real and personal property. Generally, 
there is no justification in modern circumstances for such differences, and in this report we 
continue the trend to removing them. For example, our proposed reform of the law dealing with 
successive interests will have the practical effect of removing a large body of special rules 
applicable only to land and will make the same doctrines apply to real and personal property. 
The other major examples of assimilation of doctrine is the increased assimilation of covenants 
affecting land and of easements which will be carried out by our proposals on easements. 



(1671),2Wms.Saund.380. 

See, also, B.E. Jacob. "The Law of Definite Elements: Land in Exceptional Packages" (1982), 55 So. Cal. L. Rev. 
1369, at 1395: "The despair of property teachers and their students is an important justification for reform in this 



area. 



Chapter 2 of the report briefly reviews the basis of landholding in Ontario, and the 
conclusion is reached that the tenurial theory that land is held of the Crown has no practical 
effect in modern law so that nothing would be usefully achieved by replacing it with a theory of 
"allodial" landholding. Chapters 3 to 5 review a wide range of doctrine relating to successive 
interests in land and contain comprehensive recommendations for reform. Chapter 6 similarly 
reviews co-ownership and proposes comprehensive reform. Chapter 7, on the other hand, does 
not comprehensively deal with reform of easements but proposes reforms where most required, 
and in doing so builds on the work done in our Report on Covenants Affecting Freehold Land. 
As mentioned above, our proposals will lead to substantial assimilation of covenants and 
easements. 



CHAPTER 2 



THE BASIS OF LANDHOLDING 
IN ONTARIO 



1 . TENURI AL SYSTEM OF LANDHOLDING IN ENGLAND 

The English legal historian S.F.C. Milsom observed that in parts of "our books on 
property law... the reader can sometimes wonder what century he is in." Remarkably, this can 
be said with as much, or more, force, with respect to Ontario. In order to put in context 
discussion about the basis of landholding in Ontario it is, therefore, necessary to survey, 
albeit very briefly and necessarily superficially, historical developments in England dating as 
far back as the Norman Conquest. 

The Conquest enabled the Norman kings to turn England into the "most perfectly 
feudalized" of all countries. The Crown laid claim to all the land which was then granted to 
new tenants or re-granted to existing ones. The Crown did not make absolute grants. The 
grantees from the Crown ("tenants in chief) were tenants of the Crown, persons who had a 
continuing relationship with their lord, the king. The Crown retained ownership and the 
tenants held the land of the King in return for the performance of specialized services. 

The services required to be provided by the tenants were many and various, dealing 
with the whole range of the needs of the King, his government and household, including such 
things as the provisions of armed men, the saying of masses, the performance of duties at the 
royal household, and the supply of food. 

As well as the feudal services owed by a tenants to his lord, certain "incidents" of tenure 
provided important benefits for the lord. "Relief was payable to the lord on the death of the 
tenant in order to permit succession of the tenancy; if a tenant died leaving an infant heir, the 



1 



Historical Foundations of the Common Law (2d. ed., 1981), at viii. 

For more detailed surveys, see A.H. Oosterhoff and W.B. Rayner, eds., Anger and Honsberger's Law of Real 
Property (2d ed., 1985), at 14-25; E.E. Gillese, ed., Mendes da Costa and Balfour's Property Law: Cases, Text 
and Materials (2d ed., 1990), ch. 6; R. Megarry and H.W.R. Wade, The Law of Real Property (5th ed., 1984), 
at 35-43; and B. Ziff, Principles of Property Law (2d ed., 1996), at 50-57. 

F. Pollock and F.W. Maitland, History of English Law Before the Time of Edward I (2d ed, 1 898) vol. I, at 235. 

[5] 



child became the ward of the lord who was entitled to the profits from the land during the 
wardship; and if the tenant died without an heir, the land "escheated", or went back to the 
lord. 

Until the position was changed by statute in 1290, tenants were free to create new 
tenurial relationships in a process (known as "subinfeudation") rather like sub-letting in the 
modern law. Land was granted by the tenants in chief to others, to hold of them in return for 
such services as might be reserved by the grant. Such grantees from the tenants in chief could 
in their turn grant land to others in like manner. 

The statute of Quia Emptores of 1290 prevented further subinfeudation after that date. 
However, it provided that tenants, other than tenants in chief (who required the Crown's 
consent), could freely dispose of their land by substitution. When a grant by substitution was 
made to C by a tenant, B, who held the land of a lord, A, B dropped out of the picture, being 
replaced by C: no new tenure was created between B and C; instead, C would hold the land as 
tenant of A who would be substituted for B in the feudal structure. 

The feudal system of landholding had two important and inter-related elements: the 
personal relationship of lord and tenant and the provision of services in return for the holding 
of land. The significance of both elements declined early in the medieval period. After the 
statute of Quia Emptores, successive dispositions by substitution weakened the personal tie 
between lord and tenant. Moreover, most tenure in the course of time became tenure in which 
the Crown was, or was deemed to be, the lord. This occurred because many tenures came to 
an end through escheat, no new tenures could be created except ones in which the Crown was 
lord, and proof of a tenurial relationship often disappeared and it was presumed that in the 
absence of proof to the contrary tenure was with the Crown. In addition, the feudal services 
declined in importance. Many were commuted from personal service into money payments 
(thus illustrating the decline in the personal tie between lord and tenant) and as the value of 
money declined the money payments became insignificant. 

Tenure, as a relationship between Crown and tenant, retained importance only because 
of fiscal considerations. Although the feudal services declined in importance, the feudal 
incidents, which generally were not fixed at stated amounts of money but were entitlements 
to the profits from the land for certain periods of time, remained important sources of royal 
revenue up to the seventeenth century. 

After the defeat of the Royalists in the Civil War and the establishment of Parliament's 
control over taxation in the seventeenth century, tenure lost even its fiscal importance, a process 
that was formalized by the Tenures Abolition Act, 1660 which converted most tenures into free 
and common socage and abolished all fiscally important tenurial incidents except for escheat. 



18Edw. I,c. 1 and c. 2 (U.K.). 
12Cha.2,c.24(U.K.). 



The twentieth century property reforms in England finally ended all importance of tenure by 
converting copyhold tenure into freehold tenure of free and common socage and by abolishing 
escheat. 7 Although it remains "in one sense true to say that all land in England was vested in the 
Crown; a subject can hold it only as tenant", the "tenurial relationship is now so slender that it 

o 

can in practice be ignored" and the owner of an estate in fee simple (the largest unit of 
ownership in land) can be treated as the owner of the land. 

2. THE RELEVANCE OF TENURE IN ONTARIO 

Subject to any title to land retained by Canadian First Nations, title to ungranted land in 
Canada belongs to the Crown, and the Crown means for this purpose the Crown in right of a 
province with respect to land in the province. 

Section 43 of the Constitution Act, 1791, provides as follows: "[A]ll lands which shall be 
hereafter granted within the said province of Upper Canada, shall be granted in free and 
common soccage, in like manner as lands are now holden in free and common soccage, in that 
part of Great Britain called England..." In theory, therefore, the system of tenurial landholding 
was introduced into Upper Canada and land granted by the Crown in Ontario continues to be 
held "of the Crown" with the Crown and the grantee, or any person taking the grantee's place, 
having a continuing tenurial relationship. 

However, in practice this tenurial relationship is of no importance. From the establishment 
of the province of Ontario, no service has been generally performable in respect of tenure by 
free and common socage. To the extent that the grantee owes any particular obligation with 
respect to the land grant it flows from the terms of the grant rather than from the fact of tenure. 
In addition, there are now no incidents relating to tenure by free and common socage. The only 
incident that used to be relevant to this form of tenure was escheat. 



10 

n 



Law of Property Act, 1922, 12 & 13 Geo. 5, c. 16 (U.K.), s. 128 and 12th Sched., para. (1); Administration of 
Estates Act, 1925, 15 & 16 Geo. 5, c. 23 (U.K.), ss. 45, 46, and 2nd Sched., Pt. 1. 

For discussion about the different types of escheat, see infra. "Escheat propter delictum tenentis (for felony) no 
longer existed in 1925. The Corruption of Blood Act 1814 [54 Geo. 3, c. 145 (U.K.)] had restricted it to cases of 
petit treason and murder, and the Forfeiture Act of 1870 [33 & 34 Vict., c. 23 (U.K.)] completely abolished it, 
together with the Crown's prerogative right of forfeiture for high treason": Megarry and Wade, supra, note 2, 
at 34. 

Megarry and Wade, ibid., at 13. 

See St. Catherine's Milling and Lumber Co. v. The Queen, [1887] S.C.R. 577, at 599; appeal dismissed (1888), 14 
A.C. 46. See, also, Doe d. Burkv. Cormier (1890), 30 N.B.R. 142; R. v. Guthrie (1877), 41 U.C.Q.B. 148 at 154. 
See, also, D. Butt, Land Law (3d ed., 1996), at 59-60; B.H. Davis, Introduction to Real Property (1979), at 19-20 
(New Zealand); G.W. Hinde, D.W. McMorland, and P.B.A. Sim, Land Law (1978), at 18 (New Zealand). 

Constitution Act, 1867, 30 & 31 Vict, c. 3 (U.K.), s. 109; subject to ss. 108, 117. 

31 Geo. 3, c. 31 (Imp.). The reception of English law as provided by Property And Civil Rights Act, 1792, 32 
Geo. 3, c. 1 (U.C), s. 3 (see now Property and Civil Rights Act, R.S.O. 1990, c. P. 29, s. 1) had similar effect. 



Escheat as an incident of feudal tenure has survived until modern times. It occurred whenever the 
tenancy terminated. It was a principle of feudal law that someone must always be seised of the 
land and since all land was held of some superior lord, when a tenancy came to an end the land 
would again come into possession of the lord. 

Escheat was of two types, namely propter defectum sanguinis and propter delictum tenentis. The 
former occurred when the tenant died without heirs. Escheat of the second type occurred when a 
tenant was attainted for a felony, but in this case... the Crown could hold the land for a year and a 

12 

day and was permitted to commit waste during that time. 

Escheat propter delictum tenentis was abolished in Canada in 1892. Escheat propter 
defectum sanguinis was replaced in Ontario by section 47(7) of the Succession Law Reform 
Act. 14 It provides: 

47. — (7) Where a person dies intestate in respect of property and there is no surviving spouse, 
issue, parent, brother, sister, nephew, niece, or next of kin, the property becomes the property of 
the Crown, and the Escheats Acts applies. 

Although the marginal note describes this subsection as "Escheat", this is misleading. 
Escheat applied only where the owner of an estate in fee simple in real property died without 
heirs, whereas section 47(7) applies to "property". It thus replaces the common law principle of 
bona vacantia, which was applicable to personal property, as well as escheat. Section 47(7) also 
has a different effect from escheat. Escheat was a process which involved the termination of the 
tenant's estate and the consequent return of the land to the lord. Section 47(7) assumes the 
continuation in existence of the property of the intestate and provides for it passing to the 
Crown. The Crown, therefore, takes the property as the "ultimate heir". 15 

The Ontario Escheats Act 16 is similarly misleadingly entitled. Section 1 (1) provides: 

1. — (1) Where any property has become the property of the Crown by reason of the person last 
seised thereof or entitled thereto having died intestate and without lawful heirs, or has become 
forfeited for any cause to the Crown, the Public Trustee may cause possession thereof to be taken 
in the name of the Crown, or, if possession is withheld, may cause an action to be brought for the 
recovery thereof, without an inquisition being first made. 



12 
13 

14 
15 
16 



Oosterhoffand Rayner, supra, note 2, at 22-23. 

Criminal Code, 1892, 55-56 Vict., c. 29 (Can.), s. 965. See now Criminal Code, R.S.C. 1985, c. C-46, s. 6(l)(b) as 
rep. & sub. by R.S.C. 1985, c. 27 (1st Supp.). 

R.S.O. 1990, c. S.26. 

See, also, Ultimate Heir Act, R.S.A. 1980, c. U-l. 

R.S.O. 1990, c. E.20. 



This statute is not restricted to real property but extends to "any property". The section applies 
whenever property has vested in the Crown by virtue of section 47(7) of the Succession Law 
Reform Act or because of forfeiture. It then regulates the effect of the Crown's succession to such 
property. 

3. REFORM OF THE BASIS OF LANDHOLDING 

The state of New York abolished the principle of tenure in relation to freehold estates in 
land early in the nineteenth century. After the American War of Independence, land in New 
York which had been owned by supporters of the Crown was forfeited and in 1779 made the 
subject of non-tenurial, or "allodial", ownership by the Act Concerning Tenures. At the time, 
the status of other land, which was held in socage tenure, was not altered except that the people 
of the State displaced the Crown as the lord. However, in the wholesale revision of the land law 
of New York State carried out in 1828-1829, tenure of freehold land was abolished and allodial 
land ownership established. 

As early as 1 826 James Humphrey, an English reformer, had advocated similar reform in 
England. The matter was considered by the Real Property Commissioners in their Third 
Report but they came out against recommending abrogation of tenure. In modern times, 
abolition of tenure was also proposed in the Survey of the Land Law of Northern Ireland: 



21 



As a result of the Tenures Abolition Act (Ireland) Act 1662 the feudal system of tenure has 
now little significance in our system of land law. Primogeniture and the concept of escheat, along 
with dower and curtesy, were abolished by the Administration of Estates (N.I.) Act 1955. But 
there still remains one cornerstone of the feudal system of landowning; the theory that all land in 
the United Kingdom is still ultimately held under the Crown. This theory has no practical 
significance because the feudal incidents attaching to ownership and services have long since been 
abolished, and any exercise of rights of paramount ownership by the Crown, such as compulsory 
acquisition of property for public purposes, is now invariably made under statutory powers. We 
can see no justification for retaining this feudal theory in the mid twentieth century and 
recommend its abolition, so that the fee simple absolute in possession would become equivalent in 
so far as the law permits to absolute ownership. The abolition of feudal tenure would facilitate the 
repeal of many old statutes of little relevance today. 



17 
18 
19 



20 
21 



See R.L. Fowler, History of the Law of Real Property in New York (1895), at 89. 

Ibid. 

Observations on the actual state of the English Law of Real Property, with the outline of a Code (1826). 
Humphreys' work influenced the New York reform. See American Law of Property (1952) at 65; B. Rudden, "A 
Code too soon: The 1826 property code of James Humphreys: English rejection, American reception. English 
acceptance" in P. Wallington and R.M. Merkin, eds., Essays in Memory of Professor F.H. Lawson (1986). 

Pari. Papers 1831-2, vol. XXIII, at 323. 

Survey of the Land Law of Northern Ireland (1971) by a working party of the Faculty of Law, The Queen's 
University, Belfast (Chair: L.A. Sheridan) (a report to the Director of Law Reform for Northern Ireland) at 13-14. 
See, also, Law Commission (New Zealand), A New Property Law Act (Report No. 29, 1994) at 13, 55. 



10 



[The proposal] would not make any change in the substance of the law of Northern Ireland. 
It is proposed principally in order to facilitate the repeal of statutes, including the Tenures 
Abolition Act (Ireland) 1662. 

We take the view that statutory abrogation of tenure of freehold land is unnecessary since 
it has become obsolete. The only practical importance it ever had in Ontario was with respect to 
escheat and that is now comprehensively dealt with by statute. Tenure is not even indirectly 
important today. It does not have any impact on the drafting of legal documents. Nor does it 
have any continuing effect on the development of the law. 






CHAPTER 3 



SUCCESSIVE ESTATES AND 
INTERESTS IN LAND 



1. INTRODUCTION 

In this chapter, we shall deal generally with successive estates and interests in land. 
However, two topics that fall within this area of law, qualified estates and interests in land and 
the Rule in Shelley's Case, also require separate treatment. They are dealt with in chapters 4 
and 5 respectively. 

2. OUTLINE OF PRESENT LAW AND ITS HISTORICAL DEVELOPMENT 

(a) Introduction 

We shall make recommendations for reform of the law affecting successive estates and 
interests in land. In order to put the difficulties in the present law, and our recommendations, in 
context it will be convenient to outline certain aspects of the present law and its historical 
development. First, certain ideas, terms and distinctions that are fundamental to the system of 
the present law will be briefly explained. 

The common law system of landholding provides extraordinary flexibility. Ownership 
may be split in various ways, including what Maitland described as division in accordance with 
the plane of time. Interests can be created whose extent is determined not only spatially but also 
temporally. Leasehold interests are ones whose maximum duration is fixed in time. They 
developed outside the common law system of estates and, indeed, for many purposes are 
classified as personal property (or at lease as a hybrid form known as "chattels real"). Freehold 
interests are of uncertain duration. There were three types of freehold estates in land at common 
law: life estate, estate in fee simple and estate in fee tail. A life estate will last as long as the life 



(1581), 1 Co. Rep. 93b. 

For more detailed surveys, see A.H. Oosterhoff and W.B. Rayner, eds., Anger and Honsberger's Law of Real 
Property (2d ed., 1985), at 77-223, 301-432; R. Megarry and H.W.R. Wade, The Law of Real Property (4th ed., 
1975), at 38-109, 1 1 76-86; and B. Ziff, Principles of Property Law (2d ed., 1996), at 203-09, 227-34. 

F. Pollock and F.W. Maitland, History of English Law Before the Time of Edward I (2d ed., 1898) vol. II, at 10. 

Megarry and Wade, supra, note 2, at 4 1 . 



[Ill 



12 



of an individual, normally but not necessarily the holder of the estate. Until modern times, an 
estate in fee simple could be described as an estate for so long as the current holder of the estate 
or any of his heirs, whether descendants or not, were alive. If he died without such heirs the 
estate terminated and the land escheated to the lord. Now, the estate may be accurately described 
as continuing forever. Not only may the owner of the estate dispose of the estate by inter vivos 
conveyance or by will, if she or he dies without heirs the estate does not terminate but becomes 
the property of the Crown. An estate in fee tail continues for as long as the holder of the estate 
or any of his descendants live. It has not been possible since May 27, 1956 to create such an 
estate tail in Ontario. Section 4 of the Conveyancing and Law of Property Act provides as 
follows: 

4. A limitation in a conveyance or will that before the 27th of May, 1956, would have created 
an estate tail shall be construed as an estate in fee simple or the greatest estate that the grantor or 
testator had in the land. 

Interests in land can exist in possession, in remainder, or in reversion: 

An estate in possession gives an immediate right to possession and enjoyment of the land. 
Estates in remainder or reversion, on the other hand, are future interests, and meanwhile some 
other person is usually entitled in possession. 'Remainder' signifies a future gift to some person 
not previously entitled to the land. 'Reversion' signifies the residue of an owner's interest after he 
has granted away some lesser estate in possession to some other person. 

For example, if A, the owner of an estate in fee simple, granted an estate to B for life 
and thereafter to C in fee simple, B would have a life estate — an estate in possession — and C 
would have an estate in fee simple in remainder — a future interest. If A had merely granted 
an estate to B for life, A would have retained a reversion in fee simple. It should be 
emphasized that in these examples C's remainder and A's reversion are future interests only 
in the sense that entitlement to possession is postponed; they are present interests in the sense 
that C's remainder and A's reversion are presently existing proprietary interests. 

The interests in these examples are all vested in interest. Although C's remainder and 
A's reversion are not vested in possession, since the right to possession is B's during B's 
lifetime, they are vested in interest since no contingency need be satisfied for the right to 
possession arise. Interests "are vested if they are presently ready to take effect in possession 
... upon the natural determination of the preceding estate or estates. [An interest] is contingent 



Succession Law Reform Act, R.S.O. 1990, c. S.26, s. 47(7). See supra, ch. 2, sec. 2. 
R.S.O. 1990, c. C.34. 

7 

Megarry and Wade, supra, note 2, at 44. 



13 



if it is limited to an unborn or unascertained person, or if it is subject to a condition 

g 

precedent." 

Interests in land may be absolute or qualified and they may be qualified in two 
conceptually distinct ways; they may be qualified either by a determining event or by a 
condition subsequent. An example of the first type would be a conveyance by A to B in fee 
simple until B should marry C; an example of the second type would be a conveyance by A to B 
in fee simple on condition that B does not marry C. Although the difference between the two is 
merely a matter of wording, it has important practical consequences in present law, which we 
shall explain in chapter 4. However, it can conveniently be mentioned here that in the case of a 
determinable interest the grantor retains an entitlement known as a possibility of reverter 
whereas in the case of an interest subject to a condition subsequent the grantor retains a right of 
re-entry. At one time these entitlements were not alienable, whether inter vivos or by will. 
Clearly, they may now be disposed of by will. Section 2 of the Succession Law Reform Act 9 
provides as follows: 

2. A person may by will devise, bequeath or dispose of all property (whether acquired before or 
after making his or her will) to which at the time of his or her death he or she is entitled either at 
law or in equity, including, 



(b) contingent, executory or other future interests in property, whether the testator is or is 
not ascertained as the person or one of the persons in whom those interests may 
respectively become vested, and whether he or she is entitled to them under the 
instrument by which they were respectively created or under a disposition of them by 
deed or will; and 

(c) rights of entry, whether for conditions broken or otherwise. 

In addition, section 1 of the Conveyancing and Law of Property Act provides that a 
contingent, executory or future interest, a possibility coupled with an interest in land and a 
present or future right of entry upon land may be disposed of by deed. However, this may 
possibly not extend to all rights of re-entry. 

It has been pointed out that the section does not appear to authorize the conveyance of a 
mere possibility before breach of a condition, as such possibility is not coupled with an interest in 
land, and the section does not authorize conveyance of a right of entry after breach of a condition 



8 
9 
10 



Oosterhoff and Rayner, supra, note 2, at 391 
Supra, note 5. 
Supra, note 6. 



14 



because it does not include such a right of entry. Under the corresponding Imperial Real 

12 

Property Act, it was similarly held that the provision does not relate to a right to re-enter for 
condition broken but only to an original right where there has been a disseisin or where the party 

13 

has a right to recover land and only his right of entry remains. 

Finally, a brief comment should be made on the concept of seisin because of its 
importance in the formation of rules that currently exist in Ontario. Seisin may be described as 
the possession of land enjoyed by the holder of a freehold estate. It was important in the 
formation of legal rules because (among other things) feudal services and incidents could be 
enforced only against the person seised of land; and conveyance of freehold estates in land could 
originally only be made by feoffment with livery of seisin, a ceremony in which seisin was 
passed from transferor to transferee. 

(b) The Legal Remainder Rules 

The validity of contingent remainders in the early common law is obscure. However, in 
time their creation was allowed at common law but subject to certain restrictive rules. These 
rules are described here as the legal remainder rules. 

An argument can be made that these rules were not, and should not have been, received 
into Ontario as part of the general adoption of English law since their rationales were obviously 
irrelevant to circumstances in Upper Canada at the end of the eighteenth century. However, in a 
few cases these rules have been applied in Ontario, including a case decided in 1984; it has 
never been held or stated judicially that they are inapplicable; and it is generally assumed that 
they are applicable. 

The first rule is that there can be no remainder after a grant in fee simple. This rule 
appears reasonable even to the modern mind where the first grant is an estate in fee simple 
absolute. For example, if A purported to grant an estate in fee simple to B with remainder to C in 
fee simple the remainder to C would be void. The rationale appears to be that the grant to B 



n 

12 
13 
14 
15 
16 

17 



Robinette, "Real Property", 9 C.E.D. (Ont.) 176; Baldwin v. Warner; Baldwin v. Canadian Pacific Ry. Co. (1892), 
22 0.R.612(H.C). 

1845, 8 & 9 Vict, c. 106 (U.K.), s. 6. 

Oosterhoffand Rayner, supra, note 2, at 308, where the relevant English cases are cited. 

See, for example, S.F.C. Milsom, Historical Foundations of the Common Law (2d ed., 1981), at 192-99. 

Re Crow (1984), 48 O.R. (2d) 36 (H.C.). For discussion about this case see infra, this ch., sec. 2(e). 

The numbering of the rules is not related to their importance or chronological development, but it is convenient to 
refer to the rules by number. 

Applied in Re Chauvin (1920), 18 O.W.N. 178 (H.C.). 



15 



exhausts A's interest in the property so that there is nothing left to give to C after B's interest. 
However, the rule was applied even where the grant to B was a qualified fee simple. Although A 
can grant a determinable fee simple and retain an interest known as a possibility of reverter or 
can grant a conditional fee simple and retain an interest known as a right of re-entry, A cannot at 
common law limit a remainder in favour of C to take effect on the termination of B's interest. 

The second rule is that a 
remainder must be supported by a prior particular estate of freehold created by the same 

18 

instrument. It cannot be allowed to spring up in the future after an hiatus... 

For example, if A purports to convey an interest to B (who at the time is aged 19) if and 
when B attains 21, the conveyance will be void at common law and B will obtain no interest. On 
the other hand, an interest could have been validly created if, for example, A had conveyed to X 
for life, remainder to B in fee simple if and when B attains 21 . As long as B attains 21 during the 
lifetime of X the contingent remainder would vest in interest at that time and would vest in 
possession on the death of A. In this example, the remainder is supported by a prior particular 
estate of freehold: X's life interest. 

The basic idea behind this rule was that there must, at the time of grant, be an immediate 
passage of seisin. This, in turn, was required since the method of conveying a freehold estate in 
land was originally feoffment with livery of seisin. A feoffment required the transferor at the 
moment of feoffment to make a symbolic delivery of seisin to the transferee. This could only be 
achieved if there existed at that time a grantee capable of receiving seisin. In addition, this rule 
may be explained by the closely-related reason that the importance of seisin within the feudal 
system required that there always be someone with seisin since the person seised of land was the 
person subject to feudal obligations and the only person against whom certain actions relating to 
land could be brought. It was, therefore, a maxim of the common law that seisin must not be in 
abeyance. 

The third rule is that a remainder must await the regular ending of the prior particular 
estate. We have already mentioned that an interest may be made subject to a condition 
subsequent along with the retention by the grantor of a right of re-entry — a right to terminate the 
estate if the condition is broken. For example, A can convey land to B for life provided that B 
does not marry C. However, pursuant to the common law rule under consideration here, 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. Assume, for example, that A conveys land to 
B for life on condition that B does not marry C and if B does marry C his life estate to terminate 



18 

Oosterhoffand Rayner, supra, note 2, at 392. 



19 

In Savill Brothers, Ltd. v. Bethell, [1902] 2 Ch. 523 (C.A.), it was held that this rule continued to apply despite the 
fact that the rationale for it had disappeared. 



16 



and an estate in fee simple in favour of D to take effect. The provision in favour of D would be 
void. 

The rule is based on the common law principle that only the party from whom a condition 
moves — the grantor or his heirs — can take advantage of a condition broken. This principle was 
itself related to the common law attitude towards the passage of seisin. An estate in remainder 
was regarded by the common law as an estate that was created by and that commenced upon the 
original livery of seisin. A grantor, by the act of re-entry, would re-acquire that seisin which had 
passed from him by the original feoffment. But, according to the common law, it was not 
otherwise possible validly to interrupt the passage of seisin set in motion by the initial act of 
livery of seisin. 

Even at common law this rule could easily be circumvented by appropriate drafting. For 
example, if A conveyed land to B for life or until B should marry C, remainder to D in fee 
simple, the remainder to D would be valid. B would take a determinable life estate; that is, B's 
interest may continue for his life or may determine sooner on the occasion of B's marriage to C. 
The limitation in favour of D would constitute a valid limitation by way of remainder since the 
event of B's marriage to C would not operate to determine B's life estate prematurely. It would 
merely mark the duration of B's estate so that, on the marriage, B's life estate would end 
regularly. 

21 

As stated in Anger and Honsberger s Law of Real Property, 

[the] fourth common law remainder rule requires that a remainder vest during the 
continuance of the prior particular estate or at the moment that it determines. 

22 

The operation of the rule is explained as follows: 



20 

21 

22 



In addition, if a right of re-entry is now alienable by the grantor, a grantor can circumvent the rule by reserving a 
right of re-entry and then assigning that right to the third party. 

Oosterhoffand Rayner, supra, note 2, at 394. 

Ibid. The rule in Festing v. Allen (1843), 12 M. & W. 279, was a corollary to the fourth rule: "If the remainder is 
to a class, as in a grant 'to A for life, remainder to such of his children as attain the age of 21 ', the remainder will 
be good as to those of A's children who are 21 at A's death. Children who qualify thereafter cannot take, even 
though they would not be excluded under the class closing rules.": Oosterhoffand Rayner, supra, note 2, at 394. 

The effect of the fourth rule was ameliorated in one respect. It was established in Reeve v. Long (1695), 
3 Lev. 408 "that if an estate be limited by will to a person for life with remainder to his child and he dies before 
the child is bom but while it is en ventre sa mere, and it is subsequently bom, such posthumous child is treated as 
being bom in the father's lifetime so as to make the remainder vest in time": Oosterhoffand Rayner, supra, note 2, 
at 401-02. This rule was extended by s. 45 of the Conveyancing and Law of Property Act, supra, note 6, to inter 
vivos dispositions. 



17 



The limitation may be so worded as to stipulate for a gap, in which case it is void, as in a 
grant 'to A for life, remainder to B when he reaches age 21 after A's death.' On the other hand, if 
the gap may or may not occur at the time of the determination of the prior estate, the law permits 
the remainderman to wait and see until that time. If the remainder is then vested, it is allowed to 
take effect; if it is not, it is void. Hence, in a grant 'to A for life, remainder to B when he marries' 
(B being a bachelor), B's remainder will be valid if he has married when A dies; if he has not, it 
will fail. 

Where a remainder is initially valid under this rule but will be invalidated if it does not 
turn out to vest during or at the moment of determination of the prior estate, the validity of the 
remainder will depend on the date of termination of the prior estate. This may terminate 
naturally, for example, by the death of a prior life tenant, or it may occur artificially. For 
example, the prior estate could be destroyed by forfeiture, surrender, merger or disclaimer. 
Section 35 of the Conveyancing and Law of Property Act 13 has partially abolished artificial 
destruction of contingent remainders: 

35. Every contingent remainder is capable of taking effect notwithstanding the determination 
by forfeiture, surrender or merger of any preceding estate of freehold. 

The abolition is only partial since destruction of a prior estate may occur in other ways, 
notably disclaimer which is not mentioned in section 35. In addition, section 35 does not apply 
to the natural determination of a prior estate. 

This rule, which is closely related to the second legal remainder rule, rests, like the second 
rule, on the importance attached by the common law to seisin and thus to the idea that there 
must always be someone with seisin. The second and fourth legal remainder rules also carried 
out a policy of preventing the creation of interests operating too far into the future. However, 
because of the development of uses and the impact of the Statute of Uses, they were not an 
effective way of controlling perpetuities. This policy was more effectively carried out by the 
modern rule against perpetuities, the main principles of which were developed in the last quarter 
of the seventeenth century. 

(c) EQUITABLE INTERESTS UNDER USES 

A use is the predecessor of the modern trust. Like a trust, it had the effect of separating 
legal title from equitable or beneficial entitlement. 

There was a variety of reasons for the development of the use. For present purposes, and 
by way of illustration, it is sufficient briefly to mention two objectives of landowners: the desire 
to give land by will and the desire to avoid feudal incidents. By the end of the thirteenth century 



23 ibu. 

Infra, note 26. 



18 



it became established that, apart from customs in particular localities, real property could not be 
devised by will. However, this prohibition could be circumvented by a use. Assume, for 
example, that X wished his interest in certain land to go on his death, not to his eldest son, A, but 
to a younger child, B. He could, prior to the enactment of the Statute of Uses, achieve his object 
by conveying the land to P, Q and R to the use of himself until his death and thereafter to the use 
of B. Alternatively, if he did not at that time wish to make a final decision he could direct that 
after his death it be held to such use as he should appoint. So too, by resort to the device of a 
use, could a landowner avoid incidents of tenure. Assume that X was the owner of an estate in 
fee simple and his heir, A, was an infant aged 10 years. On the death of X, the fee simple estate 
would pass by descent to A and onerous feudal incidents, such as relief, wardship and marriage, 
would become applicable. To avoid this result, X could convey the fee simple estate to P, Q and 
R to the use of X until his death and thereafter to the use of A. On X's death, the feudal incidents 
would not accrue since they occurred when a person seised of land died or when an infant heir 
became seised, and under this arrangement Q, P and R were seised of the land on the death of X. 

In cases where the holder of a legal title refused to honour his undertaking and carry out 
the terms of the use, the common law courts did not intervene. Instead, by the end of the 
fifteenth century, the Chancellor, exercising an equitable jurisdiction, intervened to protect the 
position of a beneficiary under a use. It was accepted that seisin and common law title were 
vested in feoffees to uses (P, Q and R in the examples above). However, the feoffees to uses 
were required to act in accordance with good conscience and thus not to exercise their common 
law rights in a manner inconsistent with the obligations they had undertaken under the 
conveyance to uses. The rights so acquired by a beneficiary under a use were initially regarded 
as personal in nature but they evolved into proprietary interests. There thus emerged an 
equitable system of landowning. 

Generally, in fashioning this equitable system of landholding, equity replicated the system 
at common law. However, in important respects equity departed from the common law. In 
particular, none of the four common law remainder rules applied to equitable interests under 
uses. Those rules could, therefore, easily be circumvented merely by conveying land to persons 
to hold to the use of another person or other persons intended to benefit from the land. Those 
interests which could validly exist as equitable interests but which would have been void at 
common law as infringing the remainder rules are known as equitable executory interests. 

(d) The Statute of Uses 

During the Tudor period the Crown responded to the development of uses by getting 
Parliament to pass legislation to thwart their utilisation as a means of avoiding feudal incidents. 



25 



J.H. Baker, "Introduction", in J.H. Baker, ed., The Reports of Sir John Spelman, Vol. II, Selden Society, vol. 94 
(1977), at 192. 



19 



The practice of putting lands in use had so drastically reduced the incidence of these casual 
benefits [i.e. the feudal incidents], by ensuring that no sole tenant ever died seised, that they 
became almost obsolete. The Crown, always lord and never tenant, obviously suffered the most in 
this respect, gaining nothing in return. The legislation of Henry VII and Henry VIII concerning 
uses was therefore a direct counter-attack on what was seen from above as tax evasion. 

The culmination of this legislation was the Statute of Uses, 1535, which has been re- 

27 

enacted in Ontario and is still part of Ontario law. As re-enacted, it provides, inter alia, as 
follows: 

2. Where any person stands or is seized of and in lands ... to the use, confidence or trust, of any 
other person, or of any body politic, ... in every such case such person and body politic ... shall 
from henceforth stand and be seized ... of and in the same lands ... to all intents, constructions and 
purposes in the law, of and in such like estates as they had, or shall have, in use, trust or 
confidence of or in the same. 

The main purpose of the Statute of Uses was prevention of the separation of legal and 
equitable ownership. The technique used to achieve this was "execution" of the use. The 
Statute annexes to the equitable interest held by the beneficiary "the actual seisin and legal 

28 

estate" so that the legal title acquired by the beneficiary pursuant to the Statute is co- 
extensive with the equitable interest granted under the use. 

The Statute was designed to prevent avoidance of feudal incidents. It was probably not 
intended to prevent avoidance of the legal remainder rules. Certainly, it became established 
that it did not have this effect. The Statute said that uses would be executed so that the 
beneficiaries would become "seized ... of and in such like estates as they had, or shall have, in 
use ..., of or in the same." It became established that, generally, the beneficiary under the use 
obtained a legal title equivalent to the beneficial interest given under the use: it was irrelevant 
that the interest was inconsistent with the legal remainder rules. These new interests became 
known as legal executory interests. 29 



26 27 Hen. 8, c. 10 (U.K.). 

27 

The Statute of Uses, R.S.O. 1897, c. 331, reproduced in R.S.O. 1980, App. A. See, also, An Act respecting Real 
Property, R.S.O. 1897, c. 330, reproduced in R.S.O. 1980, App. A. 

28 

Gamble v. Rees (1850), 6 U.C.Q.B. 396, at 406 (C.A.). 

29 

The process by which execution of the use occurred in the case of executory interests gave rise to theoretical 
difficulties that were solved by statute (Oosterhoffand Rayner, supra, note 2, at 422-23): 

When the use is of a contingent remainder or is otherwise executory ... it cannot be executed until 
it vests and it cannot vest unless it has a particular estate of freehold to support it. For that reason, the 
Ontario Conveyancing and Law of Property Act [supra, note 6, s. 34] provides that, where by any deed, 
will or other instrument, any land is limited to uses, all uses thereunder, express or implied, immediate 
or future, contingent, executory or to be declared under any power contained in the instrument, shall 
take effect as they arise by force of the seisin originally vested in the person seised to uses, and the 



20 



However, not all limitations in a grant to uses were treated as legal executory interests. 

30 

Under the rule known as the rule in Purefoy v. Rogers a limitation contained in a grant to 
uses which, at the time of its inception, can possibly be valid as a legal remainder is treated as 
a legal remainder rather than as an executory interest. Therefore, it remains subject to the 
legal remainder rules and is invalidated if it turns out to infringe those rules. Assume that land 
is conveyed to P, Q and R to the use of A for life, remainder to B in fee simple if and when 
he attains the age of 2 1 . The Statute of Uses executes the use so that P, Q and R drop out of 
the picture and A and B obtain legal interests. B's remainder will comply with the legal 
remainder rules if B obtains 21 during the lifetime of A. It is, therefore, treated as a legal 
remainder and if A happens to die before B obtains 21 B's interest is invalidated. 

The Statute of Uses does not execute all uses. Two examples are most important. First, 
the statute never applied to "active uses", a use where, by the terms of the grant, active duties 
are imposed on the "feoffees to uses" or trustees. In this situation, the use is not executed, 
legal title is retained by the trustees, and the beneficiaries' interests remain equitable. Even 
after the Statute of Uses, therefore, the legal remainder rules had no application to such 
equitable interests. Most modern trusts, it should be pointed out, are ones where the trustees 
have active duties to perform and thus are unaffected by the Statute of Uses. 

The second important example is where there is a "double use" or a "use upon a use". 
This was established by the courts as a generally available method of circumventing the 
Statute of Uses in the second half of the seventeenth century. By this time Parliament had 
obtained control from the Crown over taxation, the fiscal importance of feudal incidents had 
ended, and the Statute of Uses had become unimportant as a mechanism for preserving 
Crown revenues. The operation of a use upon a use may be illustrated by an example. 
Assume that X conveys Blackacre "to A in fee simple to the use of B in fee simple to the use 
of C in fee simple". The Statute of Uses executes the first use — that in favour of B — but that 
exhausts its effect with the result that B was left holding to the use of, or (as it became usual 
to express it) on trust for C. When this device became established, the same result could be 
achieved by conveying "to B in fee simple, to the use of B in fee simple, in trust for C in fee 
simple" or even by conveying "unto and to the use of B in fee simple, in trust for C in fee 
simple". In all these examples, B would hold the legal estate on trust for C. 



continued existence in him or elsewhere of any seisin to uses or scintilla juris shall not be necessary to 
support or give effect to the future, contingent or executory uses, nor shall such seisin to uses or 
scintilla juris be deemed to be suspended or to remain or subsist in him or elsewhere. 

The reference to scintilla juris is due to the fact that, before the Statute of Uses, the seisin of the 
grantee to uses supported contingent uses in remainder but, upon passage of the Act, no estate was left 
in the grantee to uses, so the courts adopted the fiction that nevertheless a possibility of seisin, scintilla 
juris, or little spark of the law, remained in the grantee, which was sufficient to give effect, whenever 
necessary, to contingent and other executory uses. 



30 



(1671),2Wms.Saund.380. 



21 



This device of a use upon a use enabled once more the creation of purely equitable 
interests, even where the trustee had no active duties to perform. These equitable interests 
under trusts were treated the same as equitable interests under uses prior to the Statute of 
Uses. Most importantly, equity did not apply any of the four legal remainder rules to these 
equitable interests and it became possible once again to create equitable executory interests. 
The most important aspect of this development in the present context is the escape that it 
provided from the rule in Purefoy v. Rogers. Since the rule in certain circumstances treats a 
legal interest as a legal remainder rather than a legal executory interest, it has no application 
to an interest that is exclusively equitable. Assume that X conveys Blackacre "unto and to the 
use of P, Q and R in trust for A for life, remainder in fee simple in trust for B, if and when B 
should attain the age of 21 years". Even if A died before B attains 21, B's interest will not 
fail. Blackacre will be held on a resulting trust for X unless and until B satisfies the 
contingency by attaining the age of 21. 

(e) Successive Interests Created by Will 

It appeared that the Statute of Uses frustrated landowners' ability to dispose of land on 
death through the device of a use. Indeed, it is often said that this was one of the grievances 
leading to the rebellion known as the Pilgrimage of Grace. In response, the Statute of Wills, 
1540, largely restored the power to make wills of real property. The Act empowered owners 
of land in fee simple to devise all land held in socage tenure and two-thirds of land held in 

32 

tenure by knight service. With the abolition of military tenure in 1660, all land became 
freely devisable. 

If real property was given by will subject to a passive use, the use was executed as in an 
inter vivos conveyance, although the theoretical explanation for this was debated. In addition, 
the courts accorded to limitations contained in a will that were not expressed as subject to 
uses the same effect as they would have done if uses had been so expressed. Accordingly, 
whether or not the language of uses was used, provision could be made by will for interests, 
described as legal executory devises, not complying with the legal remainder rules. 

Like inter vivos conveyances, trusts can be created that are not executed and turned into 
legal devises. As with inter vivos conveyances, this occurs where the Statute of Uses has no 
application, for example, where there is an active use or trust, or where a use upon a use is 
created. 



31 32 Hen. 8, c. 1 (U.K.). 

32 Tenures Abolition Act, 1660, 12 Cha. 2, c. 24 (U.K.). 



22 



If such a trust is not created, subject to an argument based on section 2(1) of the Estates 
Administration Act, a provision made by will was, like an inter vivos conveyance, subject to 
the rule in Purefoy v. Rogers. 

Section 2(1) of the Estates Administration Act provides as follows: 

2. — (1) All real and personal property that is vested in a person without a right in any other 
person to take by survivorship, on the person's death, whether testate or intestate and despite any 
testamentary disposition, devolves to and becomes vested in his or her personal representative 
from time to time as trustee for the persons by law beneficially entitled thereto, and, subject to the 
payment of the person's debts and so far as such property is not disposed of by deed, will, contract 
or other effectual disposition, it shall be administered, dealt with and distributed as if it were 
personal property not so disposed of. 

This provision, the precursor of which was enacted in 1886, deals with both testate and 
intestate succession. It follows from section 2(1) that legal title to all of a testator's or 
intestate's property, including real property, devolves on death to the personal representative 
and this legal title is held by the personal representative as trustee. The persons beneficially 
entitled under a will or under the intestacy rules constitute the beneficiaries of this statutory 
trust. 

The effect of an English provision equivalent to section 2(1) of the Estates 
Administration Act was considered in Re Robson. In this case, a testator devised certain 
freehold land, "The Oaks", unto and to the use of his daughter during her life and from and 
after her decease to the use of such of her children in fee simple as should attain the age of 21 
years and if more than one in equal shares as tenants in common. The testator died in 1905 
and the life tenant in 1915. At the date of her death she left four children surviving her, the 
two plaintiffs who had at that date each attained the age of 2 1 and the two defendants, both of 
whom had not attained that age. The court was asked to determine whether the plaintiffs were 
entitled to "The Oaks" to the exclusion of the two infant defendants. 

The testator had died after the enactment of the English Land Transfer Act, 1897, 
which provided, like section 2(1) of the Ontario Estates Administration Act, that on death real 
estate devolved to and became vested in the personal representatives. Therefore, at the date of 
the testator's death the limitations to the children did not take effect at common law but, 
arguably, took effect as equitable interests. However, the testator's executors had assented to 
the devise at some time during the life tenancy so that, from the date of this assent, the 
children's interests had become clothed with legal title. Nevertheless, the court held that the 



33 R.S.O. 1990, c. E. 22. 

34 [1916] ICh. 116. 

60 & 61 Vict, c. 65 (U.K.). 



23 



plaintiffs were not entitled to "The Oaks" to the exclusion of the two infant defendants. In 



arriving at this conclusion, Astbury J. stated 



36 



In the present case there was clearly an assent to the devise at some time during the life 
tenancy. From the date of this assent the property vested in the life tenant and remaindermen 
according to the limitations of the will; but ... the equitable contingent remainders which, having 
regard to the provisions of the Land Transfer Act, were originally created by the will retained their 
initial immunity from destruction though clothed from the date of such assent with the legal estate. 

Had the limitations to the children not been treated as creating purely equitable 

37 

interests, they would, under the rule in Purefoy v. Rogers, have been treated as legal 
contingent remainders since at their inception they were capable of complying with the legal 
remainder rules. They would, therefore, have been required to comply with the fourth rule — 
that a remainder must vest during the continuance of the prior particular estate or at the 
moment of its determination. The interests of the two plaintiffs had so vested but those of the 

38 

defendants had not. Therefore, under the rule in Festing v. Allen, the plaintiffs would have 
been entitled to the exclusion of the defendants. 

The Robson case is authority for the proposition that where, on death, legal title by 
statute devolves to and becomes vested in the personal representative, a limitation contained 
in a will need not comply with the fourth legal remainder rule and equitable interests so 
created by will retain their initial immunity from destruction although they may subsequently 
be clothed with legal title. If this principle is correct, it would seem to be of general 
application and it should apply to each of the four legal remainder rules. 

The effect of section 2(1) of the Estates Administration Act fell to be considered in the 
recent Ontario case of Re Crow. Unfortunately, an argument based on section 2(1) was, 
apparently, not put to the court and Re Robson was not cited. In Re Crow the testator devised 
an undivided share of land to his grandson William for life with remainder to the children of 
his grandsons Charles and Joseph. Charles and Joseph did have children but they were not 
born until after the life tenant William had died. At the death of the testator, the limitations 



36 
37 
38 
39 



40 
41 



Re Robson, supra, note 34, at 124. 

Supra, note 30. 

Supra, note 22. 

As was pointed out in Re Robson, supra, note 34, a similar view to that taken by Astbury J. had previously been 
taken in two Australian decisions, although in neither of these cases was the question of the effect of a subsequent 
assent or executor's deed discussed: Re Beavis (1906), 7 S.R. (N.S.W.) 66 (S.C.); Re Campion, [1908] S.A.L.R. 1 
(F.C., S.C.). See, also, Re Malin, [1912] V.L.R. 259, at 263; and Barrett v. Barrett (1918), 18 S.R. (N.S.W.) 637, 
at 640. 

Supra, note 33. 

Supra, note 15. 



24 



were capable of complying with the legal remainder rules since Charles and Joseph might 
have had children born before the death of William whose interests would have vested during 
the prior particular estate. Therefore, under the rule in Purefoy v. Rogers the limitations 
would be treated as legal remainders subject to the legal remainder rules. As it turned out that 
the interests of the children of Charles and Joseph did not vest during, or at the moment of, 
termination of the prior particular estate, these interests were void, unless there was a trust 
affecting them. 

There were two possible arguments that there was such a trust. First, it was argued that 
the will created an express trust under which the trustees had active duties to perform, thus 
excluding the operation of the Statute of Uses and the rule in Purefoy v. Rogers. This 
argument was explicitly rejected on the basis that the executors had no active duties at the 
termination of the life estate. The second possible argument was that based on section 2(1) of 
the Estates Administration Act which, as mentioned above, was not considered by the court. It 
was, therefore, held that the interests of the children of Charles and Joseph were void. 

The decision in Re Crow is criticized in an editional note in the Ontario Reports* 2 and in 
an annotation in the Estates and Trusts Reports. Nevertheless, it remains a decision that 
may be cited in support of the view that the rule in Purefoy v. Rogers may apply to gifts by 
will as well as inter vivos conveyances and it demonstrates the danger that the complex and 
archaic rules summarized here may produce unjustifiable and capricious results. 

(0 Waste 

Where different persons are entitled to successive interests in property, a system of rules 
is required to balance the interests of those in present possession against the interests of those 
who will or may become entitled to possession in the future. Outside of the law of trusts, the 
main body of law designed to do this balancing is the law of waste. 

Apart from laws — such as the law of nuisance, zoning by-laws or planning controls — 
created in the interests of neighbouring land-owners or the general public, the owner of an 
estate in fee simple is not generally subject to control in her or his possession of the land. 
This is not surprising in the case of an estate in fee simple absolute, since the owner of such 
an estate is in effect absolute owner: "The holder of [such an estate] has, as an incident of his 
estate, the right to exercise acts of ownership of all kinds, including the commission of waste, 
such as felling trees, mining and pulling down buildings." Even where the estate is 



42 (1984), 48 O.R. (2d) 36. 

43 

T.G. Youdan, "Annotation — Future Interests and the Rule in Purefoy v. Rogers: The Unnecessary Application of 
Archaic and Capricious Rules"(1985), 17 E.T.R. 3. 

44 

See Oosterhoffand Rayner, supra, note 2, at 166-73. 
45 Ibid., at 122. 



25 



qualified — where it is determinable or subject to a condition subsequent — it seems that the 
holder of the fee is generally not impeachable for waste. However, it has been said that the 
holder of an estate in fee simple subject to an executory gift over "is in the same position as a 
life tenant without impeachment for waste and may not commit equitable waste, that is, 
wanton or malicious acts, such as destruction of houses or felling of trees left for ornament or 
shelter." 4 In addition, a will or settlement may expressly prohibit waste and such a provision 
can be enforced by injunction. 

The law of waste has been developed mainly in the context of possession of land by 
tenants for life, although even in this context the relevant statutory provisions are based on 
early medieval English statutes and there has been little recent case-law. 

The Conveyancing and Law of Property Act provides as follows: 

29. A dowress, a tenant for life or for years, and the guardian of the estate of a minor; are 
impeachable for waste and liable in damages to the person injured. 

30. An estate for life without impeachment of waste does not confer upon the tenant for life 
any legal right to commit waste of the description known as equitable waste, unless an intention 
to confer the right expressly appears by the instrument creating the estate. 

31. Tenants in common and joint tenants are liable to their co-tenants for waste, or, in the 
event of a partition, the part wasted may be assigned to the tenant committing the waste at the 
value thereof to be estimated as if no waste had been committed. 

32. Lessees making or suffering waste on the demised premises without licence of the lessors 
are liable for the full damage so occasioned. 

The essence of "waste" is that it is an act that causes injury, or does lasting damage, to 
the land. There are four types of waste: ameliorating, voluntary, permissive and equitable. 



46 

47 
48 
49 
50 
51 



See Oosterhoff and Rayner, ibid., at 122; B.M. Sparks, "A Decade of Transition in Future Interests" (1959), 45 
Va. L. Rev. 339, at 351; A. Dunham, "Possibility of Reverter and Powers of Termination — Fraternal or Identical 
Twins?" (1952), 20 U. Ch. L. Rev. 215, at 218-20; Re Gilbert, [1959] O.W.N. 294, at 296. 

Oosterhoff and Rayner, supra, note 2, citing Turner v. Wright (1860), 2 De G.F. & J. 234, at 246. 

Statute ofMarlbridge, 1267, 52 Hen. 3, c. 23 (U.K.), and Statute of Gloucester, 1278, 6 Edw. 1, c. 5 (U.K.). 

Supra, note 6. 

The use of land by co-owners is discussed infra, ch. 6. 

See Drake v. Wigle (1874), 24 U.C.C.P. 405, at 409, 419 (C.A.); Holderness v. Lang (1886), 1 1 O.R. 1 (C.A.); and 
McPherson v. Giles (1919), 45 O.L.R. 441 (H.C.). 



26 



Ameliorating waste is defined as follows by Anger and Honsberger's Law of Real 
Property: 

Any act which changes the character of property is, technically, waste. Ameliorating waste is that 
which results in benefit and not in an injury, so that it in fact improves the inheritance. Examples 
of this kind are the turning of pasture land into arable land and vice versa and the conversion of 
rundown dwellings into modern, productive shops. Unless the character of the property is 
completely changed, it is unlikely that a court will award damages or grant an injunction for 
ameliorating waste as between a life tenant and a remainderman. 

Permissive waste connotes failure to act, for example, allowing buildings to become 
dilapidated by failing to repair. A tenant for life is, it seems, not impeachable for such waste, 
unless a duty to repair is provided by the instrument of grant. 

Voluntary waste connotes the committing of a positive, wrongful action. It may be, for 
example, an act of voluntary waste to tear down and remove a building. Although there is 
little Canadian authority on this point, it seems that it is also voluntary waste for a life tenant 
to open and work a mine, but not to work an already open mine. It is also voluntary waste 
for a tenant to cut timber, and this is the aspect of waste that has provoked the most judicial 
discussion. It has been said that whether the cutting of any kind of tree is waste depends on 
whether the act is such as a prudent farmer would do upon his own land, having regard to the 
land as an inheritance, and whether there is, as a result, a diminution in the value of the 
land. 55 The traditional approach has been to separate trees into timber and non-timber trees. 
Generally, it is an act of waste to cut down timber trees and whether trees are classified as 
timber trees depends on local custom and value in the area. Exceptionally, even timber trees 
may be cut without committing waste. For example, it has been held not to be waste to clear 
land by the removal of timber trees, for the purpose of bringing it into cultivation. 

A tenant for life is liable for voluntary waste, although he or she may by the term of the 

58 

grant be made unimpeachable for such waste. 



52 
53 

54 
55 
56 
57 
58 



Oosterhoffand Rayner, supra, note 2, at 168. 

See Patterson v. Central Canada Loan and Savings Co. (1898), 29 O.R. 134 (Div. Ct); Currie v. Currie (1910), 
20 O.L.R. 375 (H.C.); Re Darch (1914), 6 O.W.N. 107 (H.C.). But see Morris v. Cairncross (1907), 14 O.L.R. 
544 (Div. Ct). 

See Toronto Harbour Commissioners v. Royal Canadian Yacht Club (1913), 15 D.L.R. 106 (Ont. H.C.). 

Lewis v. Godson (1888), 15 O.R. 252 (Q.B.D.). 

Currie v. Currie, supra, note 53. 

See Drake v. Wigle, supra, note 5 1 . 

See, e.g., Re Hawkins (1920), 19 O.W.N. 18 (H.C.). 



27 



Where a tenant for life is so exonerated for liability for waste, there was no liability for 
waste at common law. Nevertheless, where the waste amounts to acts of wanton destruction, 
the tenant for life could be restrained, in equity, by injunction. Activity of this character came 
to be called equitable waste. Section 30 of the Conveyancing and Law of Property Act 59 
makes such sort of waste actionable at common law as well as in equity although it also 
expresses the principle that a tenant for life may be expressly permitted by the instrument of 
grant even to commit equitable waste. 

The remedies available for waste are summarized as follows by Anger and 



Honsberger 's Law of Real Property: 



60 



If a life tenant commits waste he is liable in damages which generally amount to the decrease in 
the value of the reversion, less an allowance for immediate payment. In certain cases, exemplary 
damages may be awarded. Alternatively, or in addition, an injunction may be granted to prevent 
threatened or apprehended waste or the repetition of waste. However, as an injunction is 
discretionary, it may be refused where the waste is minor and not likely to be repeated. If the 
waste has resulted in a profit to the life tenant, for example, by the sale of minerals or timber, 
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. 

The law of trusts provides a different way of balancing the interests of persons with 
successive interests in land. Rather than giving the person entitled to a possessory interest the 
right to exploit the land but then subjecting that exploitation to the restrictions imposed by the 
law of waste, the law of trusts ordinarily separates management of the land from enjoyment 
of the benefit of the land. Unlike a legal life tenant, a life tenant under a trust — an equitable 
life tenant — is ordinarily not entitled to possession of land subject to the trust. Instead, the 
trustees are entitled to possession, although they are ordinarily not entitled personally to 
occupy the land, and the tenant for life is entitled to the net income derived from the land. 
However, the terms of the trust may confer an entitlement to possession on the tenant for 
life. In addition, it seems that the court has discretion to give possession to an equitable 



59 

60 
61 

62 

63 



Supra, note 6. This provision was first enacted in Ontario as s. 17(3) of The Ontario Judicature Act, 1881, 
44 Vict., c. 5 (Ont.). 

Oosterhoff and Rayner, supra, note 2, at 166-67. 

It should be noted that a trustee may also be a beneficiary and a trust instrument may confer particular powers on 
persons other than the trustees. Also, the trust instrument may confer on a beneficiary the right of possession and 
the right to exercise particular acts of management. 

See Taylor v. Taylor (1875), L.R. 20 Eq. 297, at 303; Whiteside v. Miller (1868), 14 Gr. 393; Orford v. Orford 
(1884), 6 O.R. 6 (H.C.); Re Cunningham (1917), 12 O.W.N. 268 (H.C.); Homfray v. Homjray (1936), 51 B.C.R. 
287 (S.C.). 

See Hefferman v. Taylor (1888), 15 O.R. 670 (H.C.); Ex parte Middleton, [1983] Qd. R 170, at 172. 



28 



tenant for life "upon his giving security or an appropriate undertaking to protect the trustees 
and preserve the property for the benefit of those entitled after the life tenant's death." 

Trustees are subject to duties and have powers relating to the management of the 
property subject to the trust. These powers and duties are often expressly set out in the trust 
instrument. Subject to the effect of the trust instrument, the general law, including the 
provisions of the Trustee Act, provide relevant powers and duties. In the exercise of their 
powers and duties, trustees are subject to fiduciary obligations. In particular, they are subject 
to a duty to exercise care and prudence and to act impartially as between a tenant for life and 
a person with a remainder interest. 

(g) Dealings with Settled Estates 

At common law the holder of a limited estate can alienate his or her interest but cannot 
convey an estate greater than his or her own. If, for example, A is a tenant for life she can 
alienate her estate but all the grantee would acquire would be an estate pur autre vie, an estate 
for the life of A. Similarly, the life tenant can lease or mortgage her interest but, of course, 
any interest so granted will not bind the remainderman. More extended powers of disposition 

67 

are conferred by the Settled Estates Act which is, in the main, based on the English Settled 
Estates Act, 1877. 68 

The Settled Estates Act confers power to make leases, without any application to court, 
for a term not exceeding 21 years. In addition, the Act enables persons with an interest in 
any settled estate to apply to the court, and it confers on the court power to authorize certain 
dispositions. For this purpose, "settled estate" is defined to mean "land and all estates or 



64 

65 
66 

67 
68 



69 
70 
71 



P. Butt, Land Law (3d ed., 1996), at 59-60. See Taylor v. Taylor, supra, note 62; Re Bagot's Sett., [1894] 1 
Ch. 77. 

See Ontario Law Reform Commission, Report on the Law of Trusts (1984), ch. 4. 

See, for example, Re Chupryk (1980), 1 10 D.L.R. (3d) 108 (Man. C.A.). 

R.S.0. 1990, c. S.7. 

40 & 41 Vict., c. 18 (U.K.). The Ontario legislation was first introduced by The Settled Estates Act, 1895, 58 Vict., 
c. 20 (Ont.). Earlier English legislation previously applied in Ontario pursuant to The Judicature Act, R.S.O. 1887, 
c. 44, s. 32(1) which provided that the High Court should have the same jurisdiction as the Court of Chancery in 
England had on March 18th, 1865, inter alia, "in regard to leases and sales of settled estates...". Further the Act to 
amend the law respecting the Lease and Sale of Settled Estates, 1890, 53 Vict., c. 14 (Ont.), contained provisions 
regarding renewal clauses in leases of settled estates. These provisions were repealed by s. 50 of the 1895 Act 

Supra, note 67, s. 32. 

The persons who may apply are designated by the Settled Estates Act, ibid., s.18. 

Ibid., s. 1(1). 



29 



interests in land that are the subject of a settlement". "Settlement" is, in turn, defined 72 to 
mean "a statute, deed, agreement, will or other instrument, or any number or such 
instruments, under or by virtue of which land or any estate or interest in land stands limited to 
or in trust for any persons by way of succession, including any such instruments affecting the 
estates of any one or more of such persons exclusively". The Settled Estates Act applies, 
therefore, whether or not the land is held on trust where land is held for any interest less than 
an estate in fee simple absolute, and is not restricted to circumstances where there is a life 
estate. 

The Act enables the court to authorize leases, sales and mortgages of settled land. Sales 



and mortgages are provided for in section 13 



73 



13. — (1) The court, if it considers it proper and consistent with a due regard for the interests 
of all parties entitled under the settlement, and subject to the provisions and restrictions in this 
Act, may, 

(a) from time to time authorize a mortgage of the whole or any part of any settled estate 
for the purpose of raising money to repair, rebuild or alter any existing building upon 
the estate, or otherwise to build upon or improve the same, or for the purpose of raising 
money to pay off and discharge wholly or in part any encumbrance thereon; 

(b) from time to time authorize a sale of the whole or any part of any settled estate or of 
any easement, right or privilege, of any kind, over or in relation to the same, or of any 
timber not being ornamental timber growing on the settled estate; 



(2) Such mortgage shall be authorized where the court is of the opinion that the interests of 
the estate or any part thereof or of the persons entitled to the estate or any part thereof require, or 
will be substantially promoted by such mortgage. 



Money arising from dispositions under the Act may, if the court thinks fit, be paid to 
trustees; otherwise it is paid into court and applied as the court from time to time directs to 
specified purposes, including the purchase of other land to be settled in the same manner as 
the land in respect of which the money was paid. 



72 Ibid., s. 1(1). 

73 

Leases are dealt with in the Settled Estates Act, ibid., ss. 2-12. 
74 Ibid., s. 23. 



30 



3. REFORM 

(a) Introduction 

The legal remainder rules, the law of waste and the Settled Estates Act deal with 
different aspects of the law affecting successive interests in land. The remainder rules purport 
to control the nature of the successive interests that may be created; the law of waste controls 
the use of land by persons entitled to possession of it in circumstances where others will be 
entitled to future possession; and the Settled Estates Act provides a system for facilitating 
dealings with land subject to successive interests, generally requiring court involvement. 
However, these three topics can conveniently be dealt with together for the purpose of 
consideration of reform. The most important factor that makes such joint treatment 
appropriate is the impact of the law of trusts on the three topics. Where successive interests in 
land are created under a trust — as they normally are in practice — the legal remainder rules 
are completely circumvented; the law of waste is unimportant since the trust divorces 
management of the land from benefit from it and makes provision for the trustees' 
management powers and duties, either expressly in the terms of the trust or under the general 
law of trusts; and the Settled Estates Act is similarly unimportant because of the provisions 
made for dealings with the land by the trustees. 

In this section, we shall outline the reforms carried out or proposed in other jurisdictions 
affecting these three topics. We shall then describe the system we propose for Ontario. 

(b) Outline of Reforms in Other Jurisdictions 

Nineteenth century English reforms dealt in separate ways with the legal remainder 
rules and with facilitation of dealings with land subject to successive interests. The law of 
waste was not reformed. 

The first reforms affecting the impact of the legal remainder rules provided the model 
for equivalent reforms in Ontario, and other jurisdictions. In particular, section 8 of the Real 

76 

Property Act, 1845, which abolished the artificial destruction of contingent remainders by 
forfeiture, surrender or merger, was the model for what is now section 35 of the Ontario 

77 

Conveyancing and Law of Property Act. 



75 

76 
77 



However, this is not true of trusts under the English Settled Land Act, 1925, 15 & 16 Geo. 5, c. 18 (U.K.) under 
which the tenant for life exercises powers as a trustee but is also a beneficiary. See infra, this ch., sec. 3(b). 

8&9Vict.,c. 106 (U.K.). 
Supra, note 6. 



31 



78 

The further reforms effected by the Contingent Remainders Act, 1 877 was copied in 
some jurisdictions but it has no Ontario counterpart. It abolishes the Rule in Purefoy v. 
Rogers? 9 as well as artificial destruction of contingent remainders by disclaimer. It did this 
by providing in effect that contingent remainders should, if the particular estate determined 
before the remainder vested, take effect as an executory limitation, if it was capable of being 
valid as such. 

The Land Transfer Act, 1 897, was the model for provisions in other Commonwealth 
jurisdictions, including the Ontario provision which is now section 2(1) of the Estates 

82 

Administration Act. It provided that a deceased person's property passed to his or her 
personal representatives who became trustees for the persons beneficially entitled. English 
case-law established that this had the effect of making equitable all interests created by will, 

83 

thus excluding any application to wills of the legal remainder rules. 

The English 1925 reforms dealt comprehensively with various aspects of property law 
including both the legal remainder rules and facilitation of dealings with land subject to 
successive interests. The scheme also made the law of waste of greatly reduced importance. 
These reforms have generally not been followed in other jurisdictions. 

After the 1925 reforms, the only freehold estate that could exist in England was a fee 
simple absolute in possession. Where successive interests are created, whether by will or inter 

85 

vivos, these interests are subject to a trust: 

The scheme of the [legislation] is to provide that after 1 925 only two kinds of legal estate can 
exist, the fee simple absolute in possession and the lease. Apart from leases, therefore, all interests 



78 
79 
80 



81 
82 
83 
84 

85 



40 & 41 Vict, c. 33 (U.K.). 

Supra, note 30. 

The drafting of the Act has been criticized in Megarry and Wade, supra, note 2, at 1 184, n. 66: 

The Act was not well drafted. Its main provision did not seem to fit the obvious case where no use or will 
was employed, e.g., a grant by deed to A for life, remainder to his first son to attain 21; for in such a case, if there 
had been no particular estate, the remainder could never have been valid. Yet this type of case must surely have 
been intended to be within the benefit of the Act. Nor did the Act provide clearly for class gifts. 

Supra, note 35, s. 1(1). 

Supra, note 33. 

Re Robson, supra, note 34. See supra, this ch., sec. 2(e). 

For detailed treatment of this legislation, see Megarry and Wade, supra, note 2, at 123-40, 31 1-416, on which this 
outline is based. 

Ibid., at 123-24. The relevant provisions, s. 1(1), (2), and (3) of the Law of Property Act, 1925, 15 & 16 Geo. 5, 
c. 20 (U.K.), are quoted; see infra, this ch., sec. 3(c)(ii). 



32 



derived out of the fee simple must now be equitable: life interests, ... and the remainders or 
reversion (even though in fee simple) expectant upon them, determinable fees ... and so on, must 
all now be mere equitable interests. That is to say, in any such cases the fee simple absolute in 
possession, the legal estate, is held upon trust to give effect to the lesser interest in equity. By 
transitional provisions this scheme was applied to all such interests existing at January 1, 1926, as 
well as to all future cases. 

Because all future interests in England are necessarily equitable the legal remainder 
rules have no possible application. 

There were also various reforms in nineteenth century England of the law affecting 
dealings with land subject to successive interests. Some statutes dealt with particular aspects 
of land management. Statutes of more general application were passed in 1856 87 and 
1877, 88 the latter statute being the model on which the Ontario Settled Estates Ac? 9 is based. 
Like the Ontario Act, these statutes empowered the tenant for life to grant leases for not more 
than twenty-one years on specified conditions and empowered the court to authorize dealings 
such as sales, mortgages, and leases for more than twenty-one years. 

More radical reform was carried out by the Settled Land Act, 1882: 90 

The general scheme of the Act was to give the tenant for life under the settlement wide powers of 
dealing with the land free from the trusts of the settlement without the consent of the other 
beneficiaries, or application to the court, just as if he were owner in fee simple; the rights of the 
beneficiaries were protected in the case of a sale by shifting the settlement from the land to the 
purchase-money, which had to be paid into court or into the hands of the trustees. The purchaser 

91 

would have no concern with the trusts of the settlement. 

The policies expressed in the 1882 Act were continued in the property reforms of 1925. 
Except where a trust for sale is created, every settlement of land is dealt with by the Settled 
Land Act, 1925. Partly because of provisions designed to overcome difficulties of English 
conveyancing practice, this Act is very detailed and complicated. It will suffice for our 
purpose to highlight some of its main features. First, a comment should be made on the 



86 

87 
88 
89 
90 
91 
92 



See, for example, Settled Estates Drainage Act, 1840, 3 & 4 Vict, c. 55 (U.K.); Settled Estates Drainage Act, 
1845, 8 & 9 Vict, c. 56 (U.K.). See Megarry and Wade, supra, note 2, at 313-14. 

Settled Estates Act, 1856, 19 & 20 Vict, c. 120 (U.K.). 

Settled Estates Act, 1877, supra, note 68. 

Supra, note 67. See supra, this ch., sec. 2(g). 

45 & 46 Vict, c. 38 (U.K.). 

Megarry and Wade, supra, note 2, at 3 17. 

Supra, note 75. 



33 



bifurcated treatment in the English 1925 property legislation accorded to land subject to 
successive interests. The legislation creates two separate regimes: one, applicable where the 
land is subject to a trust for sale, is dealt with in the Law of Property Act, 1925 the other, 
applicable where there is no trust for sale, is dealt with in the Settled Land Act. A trust for 
sale will ordinarily arise because of express provision in the instrument creating the 
arrangement. The explanation for this extraordinary complexity lies in English conveyancing 
practice in times prior to the 1925 legislation which produced two major ways of dealing with 
successive interests in land, a duality of treatment that formed the model for the 1925 
legislation. These conveyancing practices are conveniently outlined in the following extracts 

94 

from Peter Butt's Land Law, an Australian text: 

The traditional form of settlement used by the landed classes in England was known as the strict 
settlement, the immediate purpose of which was to retain the family estates in the hands of 
successive eldest sons. Substantial landholding brought with it not only economic but also 
political power, and the perpetuation of the family estate was a crucial element in the perpetuation 
of the family influence and prestige.... 

Put simply, the desired object of retaining the land within the family was achieved by 
creating a life estate in favour of the settlor's eldest son, followed by estates in tail made to the 
settlor's eldest and other sons according to seniority, with an ultimate remainder to the heirs 
general of the eldest son ... 

During the 19th century the trust for sale of land came to be used more and more frequently 
as an alternative to the strict settlement when the object was not so much to retain the land in the 
family as to use it as a fund for the benefit of the family as a whole. This type of settlement, 
known as a trader 's settlement because of its use in settling fortunes made in commerce, was 
achieved by conveying the land to trustees upon trust to sell it and hold the proceeds upon the 
desired trusts, thus providing a simple means for the accurate division of the property. 

In addition, it became usual to give the trustees power to postpone the sale, so that the land 
could be retained, not only until a more favourable market arose, but also during such time as the 
beneficiaries preferred to enjoy the land itself rather than its money value. 

The Settled Land Act, 1882 applies to any "settlement" except where there is a trust for 
sale. A settlement is defined, putting it broadly, as any instrument under which land stands 
limited in trust for (a) any persons by way of succession, (b) an estate in fee simple or a 
leasehold estate contingently on the happening of any event or (c) for an infant. Generally, 
the legal estate is vested, not in the trustees of the settlement, but in the tenant for life. As 



93 
94 
95 
% 

97 



Supra, note 85. 

Supra, note 64, at 207-1 1 . 

Supra, note 90, s. 1(1), (7). 

Ibid., s. 1(1). The definition is quoted in full, infra, this ch., sec. 3(c)(ii). 

See Megarry and Wade, supra, note 2, at 325-27. 



34 



under the Settled Land Act, 1882, the tenant for life has various powers of dealing with the 
land generally exercisable without application to court. Some powers can be exercised 
unilaterally without notice to anyone; other powers require the consent of the trustees or, 
failing that, court approval; but most powers, such as power of sale, lease or mortgage, can be 
exercised unilaterally by the tenant for life merely by giving notice of exercise to the 
trustees. In the exercise of these powers, the tenant for life is in an unusual position because 
he or she is a beneficiary under the settlement but also in the exercise of the powers is a 

99 

trustee for the other beneficiaries. In general, the tenant for life's statutory powers can be 
widened by express provision of the settlement but they cannot be "ousted, curtailed or 
hampered". ' The trustees of a settlement under the Settled Land Act have a subsidiary 
position. However, they do have the important function of being the persons designated to 
receive the purchase money from a purchaser of land subject to the settlement. 101 

As already mentioned, a different scheme applies where a settlement is subject to a trust 
for sale. In this case, the relevant provisions are in the Law of Property Act, 1925. Again, 
the provisions are detailed and complicated and again only some of the main points will be 
outlined here. It should first be mentioned that the term 'trust for sale' is misleading in so far 
as it suggests that the settlement will only be temporary. A power to postpone sale is implied 
by statute, unless ousted by express provision, and in many cases the trust for sale will 
continue for a long period of time. The main difference between a trust for sale under the Law 
of Property Act and a settlement under the Settled Land Act is that in a trust for sale all the 
powers of dealing with the land are given to the trustees. They are given all the powers that 
both a tenant for life and trustees would have under the Settled Land Act, 1925. They have, 
therefore, for example, full powers of sale, mortgaging and leasing, without (generally) 
consent of or notice to anyone. In addition, the proceeds of sale or other capital money is 
payable to them. However, it is provided, notwithstanding any express provision to the 
contrary that such proceeds of sale or capital money "shall not be paid to or applied by the 
direction of fewer than two persons as trustees for sale, except where the trustee is a trust 



98 

Ibid., at 358-77. 
" Ibid., at 319. 

100 Ibid., at 379. 

101 Ibid, at 377, 402-03. 

102 

Supra, note 85. 

103 «... 

Ibid., s. 25. 

104 

Megarry and Wade, supra, note 2, at 385. 

105 

Supra, note 75, s. 28(1). 



35 



corporation." 106 There is also a provision dealing with consultation with beneficiaries, but 
"the provision is weak": 

Although all the powers belong to the trustees, they must in some cases be exercised in 
accordance with the wishes of the beneficiaries: in relation to the exercise of all their powers 
(and not merely their power of sale) the trustees must, so far as practicable, consult the persons 
of full age for the time being beneficially interested in possession in the rents and profits of the 
land until sale ... and must, so far as is consistent with the general interests of the trust, give 
effect to their wishes, or to the wishes of the majority in terms of value. But ... this provision is 
confined to trusts for sale which either are created by statute or show an intention that this 
provision is to apply. The majority of express trusts for sale are thereby excluded. In any case, a 
purchaser is not concerned to see that the trustees have complied with this requirement, though a 

108 

beneficiary may restrain a trustee who seeks to sell in breach of it. 

Although the position is not completely clear, it seems that generally the trustees' 
powers cannot be cut down by express provision but they may be made subject to consent of 
other persons. 109 Special provision is made by statute for occupation of land subject to a trust 
for sale: the trustees may permit a person with an immediate life interest in the whole 
property to occupy the property. Provision is also made for delegation of powers to 
beneficiaries: trustees "may revocably and in writing delegate certain powers to the person of 
full age (not being merely an annuitant) who for the time being is beneficially entitled in 
possession to the net rents and profits of the land for his life or any less period." 

Fundamental reform of the English system was recommended by the Law Commission 
in 1989. The Commissioners proposed that the dual system (under which settlements fell 
within the purview of the Settled Land Act, while trusts for sale were governed by the Law of 
Property Act) be abolished. This could be accomplished by repealing the Settled Land Act. 
Moreover, it was recommended that the trust for sale be replaced by a simpler and more 
suitable form of trust under which trustees would have the power (as opposed to the duty) to 
sell lands held on trust, coupled with a power to retain the land. In England the recently 



106 
107 
108 
109 
110 
111 



Ibid., ss. 2(i), (ii), 27(2). 

U.K., Law Commission, Transfer of Land: Trusts of Land (Law Comm. No. 181, 1989), at 4. 

Megarry and Wade, supra, note 2, at 397. 

Ibid., at 394-95. 

Ibid., at 396. 

Ibid., at 9. A similar position was previously taken in the Survey of the Land Law of Northern Ireland (1971) by a 
working party of the Faculty of Law, The Queen's University, Belfast (Chair: L.A. Sheridan) at 4, 34-36. 



36 



112 

enacted Trusts of Land and Appointments of Trustees Act, 1996 has adopted this basic 



approach. 



Apart from Manitoba, no Canadian province has carried out any fundamental reform 



113 



affecting the legal remainder rules. Only Prince Edward Island adopted legislation based 



114 



on the English Contingent Remainders Act, 1877, other provinces either having no 
legislation at all or, like Ontario, having legislation similar to section 8 of the English Real 
Property Act, 1845. 



115 



So far as facilitation of dealings with settled land is concerned, Manitoba has enacted 
fundamental reform and a measure of reform has been proposed in British Columbia. 
Otherwise, most provinces have legislation similar to Ontario's Settled Estates Act. The 

117 

position is summarized as follows by Anger and Honsberger's Law of Real Property: 

118 1 19 

[The English Settled Estates Act, 1877] was adopted in British Columbia, Ontario, and, in 

120 rr-rt 

part, in New Brunswick. The Act was also held to be applicable in Nova Scotia by reason of 

121 

the Judicature Act which confers on the Supreme Court of that province all powers exercisable 

122 

by the English High Court of Justice on October 1, 1884. 



112 

113 
114 
115 

116 
117 
118 
119 
120 
121 
122 



1996, c. 47 (U.K.). The Settled Land Act, c. 47 (U.K.) will continue to apply to existing settlements that fall under 
that Act. 

Real Property Act, R.S.P.E.I. 1988, c. R-3, s. 10. 

Supra, note 78. 

Supra, note 76. Such legislation was expressly enacted in New Brunswick: Property Act, R.S.N.B. 1973, c. P-19, 
s. 9. The English Act would have been received into Alberta, British Columbia, Manitoba, and Saskatchewan. See 
Oosterhoffand Rayner, supra, note 2, at 404, n. 17 and at 71-74. 

Supra, note 67. See supra, this ch., sec. 2(g). 

Oosterhoffand Rayner, supra, note 2, at 701-02. 

Land (Settled Estate) Act, R.S.B.C. 1979, c. 215, later rep. by S.B.C. 1989, c. 64, s. 8. 

Settled Estates Act, supra, note 67. 

Trustees Act, R.S.N.B. 1973, c. T-15, ss. 44-48. 

S.N.S. 1919, c. 32, ss. 15, 16. See now Judicature Act, R.S.N.S. 1989, c. 240, s. 4. 

Re Baugild, [1954] 3 D.L.R. 586 (N.S.S.C). 



37 



In Saskatchewan, an earlier version of the English statute, the Settled Estates Act, 1856, 123 
was held to be applicable under the rules of reception of English law, it being thought suitable to 
conditions in Saskatchewan. 

In Manitoba, where there is no settled estates legislation, it has been held that the court does 
not have the inherent equitable jurisdiction to empower the life tenant to raise money for repairs 
on the security of a mortgage which is binding on the remainderman. In appropriate 
circumstances, however, the life tenant or the remainderman may seek or be compelled to suffer 

125 

partition or sale under the Law of Property Act. 

Since the publication of the last edition of Anger and Honsberger, fundamental reform, 
initiated by the Manitoba Law Reform Commission, has been carried out in Manitoba in 
the context of abolition of the rules against accumulations and perpetuities. 127 The 
Commission considered that the perpetuity rule existed primarily as a mechanism for 
balancing the interests of the creator of a settlement against the interests of present and future 
beneficial owners. However, in the context of trusts, the Commission argued that that 
balancing is now done effectively by the rule in Saunders v. Vautier 12 * as modified by 

129 

variation of trusts legislation. Under this body of law, the interests of beneficial owners are 
protected by the ability of sui juris beneficiaries (where all the beneficiaries of a trust are 
ascertained and sui juris) to terminate the trust and by the court's jurisdiction to approve 
variation or termination on behalf of beneficiaries who are unascertained or not sui juris. The 
interests of the creator of the trust are protected by the requirement that the court consent to 
variation or termination. 

The Commission also pointed out the rarity of successive interests being created except 
under a trust. When so created, it is 

more than likely ... because a testator with his home-drawn will has stumbled into them, or a 
draftsman has made an error. 



123 
124 
125 
126 
127 

128 
129 



Supra, note 87. 

Re Moffat Estate (1955), 16 W.W.R. 314 (Sask. Q.B.). 

See Re Chupryk, supra, note 66. 

Report on the Rules against Accumulations and Perpetuities (1982). 

See The Perpetuities and Accumulations Act, S.M. 1982-83-84, c. 43, now R.S.M. 1987, c. P33 (also C.C.S.M. 
c. P33). 

(1841), 4 Beav. 115, [1835-42] All E.R. Rep. 58. 

The Trustee Act, R.S.M. 1970, c. T160, s. 61, as rep. & sub. by S.M. 1982-83-84, c. 38, s. 4, now R.S.M. 1987, 
c. T60 (also C.C.S.M., c. T60), s. 61. 



38 



Today's immediate and successive estates are created behind a trust, and are therefore 
uniformly equitable. 

In this context, the Commission considered how the balancing should continue to be 
achieved in the rare cases where common law successive interests are created. The reform 
preferred was the abolition of legal successive interests and their replacement by statutory 
trusts: 

The Commission is of the view that if section 61 is to perform the same 'balancing role' as the 
perpetuity rule, that it should apply to the same degree as that rule. This objective can be achieved 
in one of two ways. First, the section 61 jurisdiction could be made applicable to all successions 
of limited interest, whether common law or behind a trust, in equity. Alternatively, one could 
abolish common law or legal interests by deeming them to be held on trust for the owners of the 
estate. 

The Commission recommends the second alternative. The abolition of common law estates 
has occurred elsewhere; England and Wales abolished them in 1925. The route therefore has been 
taken previously, and in this respect differs from the former which, to our knowledge, is without 

132 

precedence. The abolition of common law estates is also the preferred choice because it would 
prevent the occurrence of the difficult problems that can arise as between common law life tenant 
and remainderman. 

The Commission therefore recommends: 

10. That common law successive estates be deemed to be held on trust for the owners of 
those estates. The trustees would be the adult and capacitated estate beneficiaries, and 
they would hold the legal or other title to the underlying property in trust for all vested 
and contingent beneficiaries, whether born, capacitated, ascertained, or otherwise. 

Reform of the law relating to facilitation of dealings with land subject to successive 
interests was recommended by the Law Reform Commission of British Columbia in its 
Report on the Land (Settled Estate) Act. This Act, like the Ontario Settled Estates Act, 

1 36 

is based on the English legislation culminating in the Settled Estates Act, 1877. Like the 



130 
131 

132 

133 
134 
135 
136 



Manitoba Law Reform Commission, supra, note 126, at 12. 

Ibid., at 58-59. The Commission's recommendation was implemented by The Perpetuities and Accumulations Act, 
supra, note 127, s. 4. See infra, this ch., sec. 3(c)(ii), (iv) for discussion of the details of the provision. 

This is the route that was later recommended by the Law Reform Commission of British Columbia in its Report 
on the Land (Settled Estate) Act (1988). 

Ibid. 

Land (Settled Estate) Act, supra, note 118. 

Supra, note 67. 

Supra, note 68. 



39 



Ontario Act, it gives the tenant for life power to grant certain leases; otherwise transactions 

137 

can only be authorized by the court. 

The Commission recommended that the Act should be repealed on the grounds that it is 
complex, difficult to understand and unduly detailed and particular. In two areas in which the 
Act applies — landholding by infants and land held subject to a trust — it was considered 
unnecessary that the Act be replaced by other legislation. As far as infants were concerned, 13 

there is no need to provide additional legislation to protect infants who hold land, or to empower 
the courts to authorize transactions relating to land owned by infants. These issues are already 
addressed by the Infants Act. 

Where a trust instrument does not provide appropriate administrative powers, powers 
are supplied by the Trustee Act. It was true that the British Columbia Trustee Act is 
"decades out of date". 140 However, in the view of the Commission this did not necessitate 
new legislation pending a review of the Trustee Act. Where the beneficiaries are all 
ascertained, sui juris, and in agreement, the trust can be terminated, and where there are 
unborn, unascertained, or non sui juris beneficiaries, the court can approve a variation, 
including one dealing with administrative powers, under the Trust and Settlement Variation 
Act ul 

However, the position was different with respect to legal successive interests: 

The only area of utility of the Land (Settled Estate) Act relates to administrative powers needed 
when land is held in a series of limited legal interests. 



Three options for reform in this context were considered. First, 



143 



some antipodean jurisdictions have consolidated settled estates legislation in legislation similar to 
the British Columbia Trustee Act. Where there is a succession of life interests in the absence of a 
trust, the life tenant has the powers conferred on trustees. 



137 
138 
139 
140 
141 
142 
143 



See supra, this ch., sec. 2(g). 

Law Reform Commission of British Columbia, supra, note 132, at 16. 

R.S.B.C. 1979, c. 414. 

Law Reform Commission of British Columbia, supra, note 132, at 19. 

R.S.B.C. 1979, c. 413 (title am. by S.B.C. 1989, c. 64, s. 33) (formerly Trust Variation Act). 

Law Reform Commission of British Columbia, supra, note 132, at 19. 

Ibid. For discussion of these reforms, see infra, this ch., sec. 3(b). 



40 



This option was rejected because the administrative powers in the British Columbia 
Trustee Act are "decades out of date." The second option was that "legislation might 
provide a comprehensive scheme for dealing with limited legal interests". 145 This was 
rejected: 

It is uncommon today for people to create limited legal interests. For that reason, it would appear 
undesirable to enact legislation dealing with administrative powers that may be relied upon in 
relation to common law settlements of land. 

The third option, which was the one recommended, was that 

an amendment should be made to the Trust Variation Act, to provide that a life tenant may apply 
to vary the terms of the settlement. It should be sufficient to provide that for the purposes of the 
Trust Variation Act, a settlement of land which involves limited legal interests shall be deemed to 
be a trust in favour of persons incapable of consenting to an arrangement. In this way, the court 
will have adequate powers to deal with any administrative issue that may arise with respect to life 
tenants, and others having limited legal interests in land. 

The Australian treatment of successive interests amounts to a patchwork of partial reform. 
The law affecting the legal remainder rules has been dealt with in a variety of ways in the 
different states but in all of them reform has been taken further than in Ontario. In all states 
except Queensland, successive interests may be legal or equitable. In New South Wales 
and Western Australia, statutes provide that legal executory interests may be created 
without the need for the instrument expressing a use: 

44. — (2) Every limitation which may be made by way of use operating under the Statute of 
Uses or this Act may be made by direct conveyance without the intervention of uses. 



144 


Ibid. 


145 


Ibid. 


146 


Ibid. 


147 


Ibid. 



148 



149 
150 



All Australian jurisdictions have provisions (equivalent to s. 2(1) of the Ontario Estates Administration Act, supra, 
note 33) that the whole of the legal estate of a deceased person vests in the personal representatives on trust for 
those beneficially entitled: Wills, Probate and Administration Act, 1898 (N.S.W.), s. 44; Administration and 
Probate Act, 1958 (Vict.), s. 13; Succession Act, 1981 (Queensland), s. 44; Administration and Probate Act, 1919 
(S. Aus.) ss. 45, 46; Administration Act, 1903 (W. Aus.), s. 8; Administration and Probate Act, 1935 (Tas.), s. 4. 

Australian case-law has interpreted this as having the result that testamentary gifts are equitable so that the 
legal remainder rules are inapplicable. See note 39, supra. 

For consideration of the meaning of this term, see supra this ch., sec. 2(d). 

Conveyancing Act, 1919 (N.S.W.), s. 44(2). The Property Law Act, 1969 (W. Aus.), s. 39 is virtually identical. 



41 



More recent legislation in New South Wales and Victoria has repealed the Statute 
of Uses 153 so that equitable interests under passive uses may be created without the need for 
expressing a use upon a use. Where legal interests are created, all states make the legal 
remainder rules generally inapplicable by the adoption either of legislation based on the 
English Real Property Act, 1 845, section 8, and the Contingent Remainders Act, 1 877, 156 or 

157 

legislation of equivalent effect. 

More fundamental reform was enacted in Queensland in 1974, implementing 
recommendations of the Queensland Law Reform Commission in its Report on Property Law 

1 58 

Reform. Under these reforms, future freehold interests in land are necessarily equitable. 

159 

Sections 19 and 30 of the Property Law Act, 1974, do this by providing as follows: 

19. After the commencement of this Act the following estates of freehold shall be capable of 
being created and, subject to the provisions of this Act, of subsisting in land — 

(a) estate in fee simple; 

(b) estate for life or lives. 

30. — (1) A future interest in land validly created after the commencement of this Act shall take 
effect as an equitable and not a legal interest. 



151 
152 
153 
154 

155 
156 

157 

158 
159 

160 



Imperial Acts Application Act, 1969 (N.S.W.), s. 8. 

Imperial Acts Application Act, 1980 (Vict.), s. 5. See, also, Imperial Acts Re-Enactment Act, 1980 (Vict.), s. 6. 

Supra, note 26. 

For discussion about the impact in New South Wales of the repeal of the Statutes of Uses on the operation of s. 44 
of the 1919 Conveyancing Act, supra, note 150, see Butt, supra, note 64, at 163-64. 

Supra, note 76. 

Supra, note 78. See Conveyancing and Law of Property Act, 1884 (Tas.), ss. 80(2), 81; Property Law Act, supra, 
note 150, s. 26(1), (2); Property Law Act, 1958 (Vict.), ss. 191, 192. 

See Conveyancing Act, supra, note 150, s. 16(1); Law of Property Act, 1936 (S. Aus.), s. 25. This legislation was 
based on the recommendations of the English Real Property Commissioners' Third Report (1832). 

Queensland Law Reform Commission, Report on Property Law Reform (1973). 

1974, No. 76. 

Ibid., s. 30(1) as am. by 1986, No. 26, s. 4(1) Sch. Section 30(2) prohibited in the future the registration of the 
interest of a remainderman. Section 30(3) provided that s. 30 should not have retrospective effect: 

30. — (3) This section shall not apply to any future interest — 

(a) created before the commencement of this Act whether that interest arose or arises before or 
after the commencement of this Act; or 

(b) created or arising by virtue of section 22 [which deals with the abolition of estates tail]. 



42 



(4) In this section "future interest" means — 

(a) a legal contingent remainder; and 

(b) a legal executory interest. 

These reforms are complemented by the repeal of the Statute of Uses, the consequences 
of which are spelled out by section 7 of the Act: 

(1) Interests in land which under the Statute of Uses could before the commencement of this 
Act have been created as legal interests shall after the commencement of this Act be capable of 
being created as equitable interests. 

(2) Notwithstanding subsection (1), an equitable interest in land shall, after the commencement 
of this Act, only be capable of being validly created in any case in which an equivalent equitable 
interest in property real or personal could have been validly created before such commencement. 

In Queensland the legal remainder rules no longer have any application and a remainder 
or executory interest necessarily takes effect as an equitable interest whether or not a use or 
trust is expressed. Moreover, because of the repeal of the Statute of Uses even a passive trust 
of land may be created without the need to express a use upon a use. 

The Australian states deal with the facilitation of dealings with land subject to 
successive interests in three different ways. First, New South Wales and South 
Australia 164 have legislation similar to Ontario's Settled Estates Act under which the tenant 
for life has power unilaterally to grant certain leases but otherwise the concurrence of the 
court is required for the exercise of powers affecting the settled land. Second, Tasmania 
and Victoria have legislation based on the English Settled Land Act, 1882, under which 
various powers, such as sale, leasing and mortgaging, are conferred on the tenant for life 
without need for application to court. However, in Victoria the tenant for life needs the 
concurrence of the trustees for the exercise of most powers and in Tasmania the trustees have 



161 

162 

163 
164 
165 
166 
167 
168 



This provision does not alter what would, even without it, be the effect of the repeal of the Statute of Uses. See 
H. Tarlo, "Property Law Reform in Queensland" (1974), 8 U. Queensland L.J. 205, at 21 1. 

For a review of this legislation, see A.J. Bradbrook, S.V. MacCallum, and A.P. Moore, Australian Real Property 
Law (1991), at 455-59, 467-84. 

Conveyancing and Law of Property Act, 1898 (N.S.W.), ss. 37-81. 

Settled Estates Act, 1880 (S. Aus.). 

Supra, note 67. 

Settled Land Act, 1884 (Tas.). 

Settled Land Act, 1958 (Vict). 

Supra, note 90. 



43 



power to refer matters to court. Third, Queensland and Western Australia have repealed 
previous legislation based on the English 1882 Act. Instead, land subject to successive 
interests is assimilated with the law of trusts. A wide range of powers affecting the land is 
conferred on trustees and where there are no trustees but the land is subject to a settlement the 

169 

same powers are conferred on the tenant for life. 

The reform of successive interests in New Zealand is similar to the reforms in the 

170 

Australian states. The Statute of Uses was repealed as long ago as 1905; legal executory 

171 

interests may be created without the need for any use; the legal remainder rules have been 
abolished by a provision similar to the English Contingent Remainders Act, 1877; 172 and 
dealings with settled land are facilitated by the application of powers of trustees to a tenant 

173 

for life under a settlement where there are no trustees. 

In the United States, the legal remainder rules have generally been abolished. 174 In some 
jurisdictions this was done by express statutory provisions; in others, it was done by judicial 

175 

decision. The Restatement of Property states that the rules are not part of American law. 

(c) Reform in Ontario 

(i) General 

In considering possible reforms we have had four closely related points in mind. First, 
we have aimed for simplicity, avoiding complexity where possible. Second, reform should 
provide a fresh start so that archaic concepts and terminology are wholly removed. For 
example, in New Zealand most of the problems caused by the legal remainder rules have 
been solved but in a way that requires continued understanding of the old system. The point 

176 

is well made by a New Zealand text: 



169 
170 
171 
172 
173 
174 

175 
176 



See Trustees Act, 1962, No. 78 (W. Aus.), s. 109(1); Trusts Act 1973, No. 24 (Queensland), s. 6. 

Property Law Act, 1905 (N.Z.), s. 121 and 5th Sch. See, also, Property Law Act, 1952 (N.Z.), s. 46. 

Property Law Act, 1952 (N.Z.), s. 14. 

Ibid., s. 20. 

Trustee Act, 1956 (N.Z.), s. 88. 

See American Law of Property (1952), Vol. 1, at 518-20; J. Dukeminier and M. Johanson, Wills, Trusts and 
Estates (4th ed., 1990), at 644-45; O.L. Browder, "Future Interest Reform" (1960), 35 N.Y.U.L. Rev. 1255, at 
1259-60; Sparks, supra, note 46, at 350-51. 

American Law Institute, Restatement of the Law of Property (1936) §240. 

G.W. Hinde, D.W. McMorland, and P.B.A. Sim, Land Law (1978), at 349-50. 



44 



The present-day law of [New Zealand] governing future interests other than reversions is a 
patchwork derived from the characteristics of and the distinctions between remainders and 
executory interests, together with certain statutory modifications which have greatly simplified the 
effect of the law. Nevertheless, the old terminology is retained in the present-day statutory 
provisions and the modern law can therefore be explained only by reference to the underlying 
principles. 

Third, we have taken account of the fact that legal successive interests are very rarely 
created. Where they are created, it is usually where an arrangement has been made without 
legal advice or where a professional advisor has done so by mistake. Invariably, where a 
person wishes to create successive interests a skilled professional draftsperson will use a trust. 
It is therefore only in rare cases that the three branches of law considered in this section — the 
legal remainder rules, the law of waste and the Settled Estates Act — have any application 
where land is subject to successive interests. This is because the use of a trust circumvents the 
legal remainder rules and generally confers on the trustees powers of management over the 
land as well as powers to carry out dealings with the land. In general, we think that the law 
should, unless there is a compelling reason to the contrary, provide similar consequences for 
the settlement created mistakenly or without the benefit of skilled advice as would have 
occurred if a skilled draftsperson had devised the transaction. This point favours therefore the 
application of a trust even where the settlor has not so provided. 

Fourth, we have also noted that the trust arrangements provided by skilled draftspersons 
generally avoid the need for applications to court. As we have already stated, trustees are 
generally given a wide range of administrative powers, including such powers as power to 
sell or mortgage trust property. Although any system should provide adequate protection for 
the interests of beneficiaries, this should be done where possible without the inconvenience 
and expense of court intervention. 

We turn now to consider the case for reform of the three bodies of law considered in 
this section. 

First, we consider that the case for reform, indeed abolition, of the legal remainder rules 
is overwhelming. As we have already shown, the rationales for these rules are completely 
unrelated to modern Ontario. Indeed, they never had had any relevance in Ontario or Upper 
Canada. It is true that they do not usually cause practical difficulty because they can be 
completely circumvented by the device of a trust and usually are so circumvented. But there 
is no point in the retention in the law of rules which can be so avoided, particularly when the 
rules, like these, are complex, difficult to learn and easily forgotten. Moreover, the 
application of the rules is capricious, occurring only where by accident a professional has so 
drafted an arrangement that a rule is attracted or where a lay person has similarly attracted the 
application of a rule. Where one of the rules does apply, the consequence may be extremely 



45 



serious, wholly invalidating a provision. As was said by a commentator in relation to the 

177 

recent case of Re Crow: 

The testator's intention was reasonable and clearly expressed and the decision frustrating it should 
be a matter for serious concern. It was caused by the application of rules which for several 
hundred years have not had functional justification in the land of their origin and which in Canada 

178 

have never had any useful purpose. 

179 

The extent of abolition of these rules in other jurisdictions varies. But it is fair to say 
that in nearly all American jurisdictions, in all the Australian states and in New Zealand 
reform has been taken considerably further than in Ontario. Moreover, the rules were 
comprehensively abolished in England, the land of their origin, in 1925, and whenever this 
area of the law has in modern times been comprehensively reviewed total abolition of the 
rules has been recommended. In Manitoba, in particular, this recommendation was speedily 
implemented by legislation. 

Quite simply, there is no argument for retention of the legal remainder rules and the 
case for their abolition is overwhelming. 

The case for reform of the law dealing with the obligations of persons in possession of 
land subject to successive interests — the law of waste — is less starkly obvious. However, 
there is little modern case-law on the application of the law of waste to a tenant for life and 
the bulk of the existing case-law deals with problems, such as cutting timber, that 
preoccupied the rural societies of earlier generations. The chief reason for this lack of modern 
case-law is the rarity of successive interests existing outside of trusts. Trusts law provides a 
more contemporary system for dealing with the use of land subject to successive interests and 
it is, indeed, the system that is invariably chosen by the settlor or testator who has the 
advantage of skilled professional advice. 

The law concerning dealings with land subject to successive interests is in Ontario 
mainly set out in the Settled Estates Act, which is clearly in need of reform. We agree with 



177 
178 



179 
180 



Supra, note 15. 

Youdan, supra, note 43, at 3. See, also, A.J. McClean, "The Rule Against Perpetuities, Saunders v. Vautier, and 
Legal Future Interests Abolished" (1983), 13 Man. L.J. 245, at 265; A.M. Sinclair, "The Law of Real Property of 
New Brunswick: Some Proposals" (1968), 18 U.N.B. L.J., at 5-7; American Law of Property, supra, note 174, at 
518-19; F.R. Crane, "The Law of Real Property in England and the United States: Some Comparisons" (1961), 36 
Ind. L.J. 282, at 292; S.M. Fetters, "Destruction ity of Contingent Remainders" (1967), 21 Ark. L. Rev. 145, 
at 146. 

See the outline of reforms in other jurisdictions supra, this ch., sec. 3(b). 

Supra, note 67. 



46 



the view of the British Columbia Law Reform Commission concerning legislation similar to 
the Ontario Act: 

Certainly, the Land (Settled Estates) Act should not be retained in its current form. It is complex, 
intricately drafted legislation, difficult to comprehend and little used today. Like much nineteenth 
century legislation, it addresses in detail issues relating to procedure which modem legislation 
would leave to be resolved by the Rules of Court, and it defines the kinds of transactions that may 
be authorized with excruciating particularity. If one were to approach the Land (Settled Estate) 
Act with a view to redrafting it, all of its provisions could be replaced with a single section which 
permitted the courts to authorize the exercise of any power necessary for the management or 
administration of settled land. 

For the reasons we have already summarized, the Law Reform Commission of British 
Columbia did not favour such a replacement of the Land (Settled Estate) Act. 1 * 2 Instead, it 
recommended an amendment to the variation of trusts legislation so that it would apply to 
common law settlements. 

For two reasons, we differ from the approach adopted by the Law Reform Commission 
of British Columbia. First, we consider the expense and inconvenience of litigation should be 
avoided unless court intervention is necessary in the circumstances of a particular case. 
Secondly, one of the premises of the reasoning of the Law Reform Commission of British 
Columbia is inapplicable in Ontario. The British Columbia Commission recognized that in 
the Commonwealth, the "thrust of reform" has been to repeal settled estates legislation and to 
make the administrative powers applicable to trusts apply also to settled land that is not 
subject to a trust. This type of reform was considered 

not a particularly useful thing to do, however, if, as in British Columbia, the legislation that 
confers these administrative powers is decades out of date. 

By contrast, the Ontario Law Reform Commission has already reviewed the law of 

1 86 

trusts, and in particular trustees' administrative powers, in the Report on the Law of Trusts. 
We therefore recommended that the proposed revised Trustee Act should include a 
comprehensive list of powers for trustees, including trustees of settled land, and we set out 



181 
182 
183 
184 
185 
186 



Law Reform Commission of British Columbia, supra, note 132, at 16. 

Supra, note 118. 

Compare Ontario Law Reform Commission, supra, note 65, at 234. 

Law Reform Commission of British Columbia, supra, note 132, at 16. 

Ibid., at 20. 

Supra, note 65. 






47 



187 

the recommended powers. These recommendations would give trustees a full range of 
powers to deal with and manage trust property, including powers of sale, mortgaging and 

188 

leasing land. They would apply to every trust, subject to any contrary provision in the trust 
instrument. 

The three areas of law considered in this section could be improved by distinct sets of 
reform. For example, the legal remainder rules could be directly abolished (and the option of 
creating successive interests as legal or equitable thus continued) and the settled estates 

189 

legislation modernized. However, we consider it preferable to make a single reform dealing 
with the problems in all three areas. Expressed broadly, the reform we recommend is that 
there should be a trust whenever successive interests in land are created. Accordingly, if no 
trust is expressly created, a statutory trust will apply. This reform would make section 35 of 
the Conveyancing and Law of Property Act redundant and that provision should therefore be 
repealed. 

By dealing in a unified way with the problems caused by legal successive interests, the 
proposed reform has the advantage of simplicity. It would also remove altogether from the 
law the concepts and terminology relating to legal remainders and legal executory interests. 
Moreover, this reform would not introduce a new and unfamiliar system. It would simply 
make applicable to those rare cases where successive legal interests are created the system 
invariably chosen by settlors with skilled professional advice. It may be added that the 
proposed system is, in general terms, the one chosen by those Commonwealth jurisdictions — 
England, Queensland, and Manitoba — which in modern times have reformed the law relating 
to common law successive interests. Since this reform would cause the implication of a 
comprehensive range of trustees' administrative powers, it would reduce the need for court 

190 

intervention. 



187 
188 



189 



190 



Ibid., ch. 4. 

The recommendations extended to trusts of land presently subject to the Settled Estates Act, supra, note 67, and it 
was recommended (Ontario Law Reform Commission, supra, note 65, at 234-35) that this Act should be made 
inapplicable to settlements of land by way of trust. The Commission did not deal with common law settlements, 
considering that it would be more appropriate to deal with them "in the context of a comprehensive review of land 
law" (ibid, at 236). 

See McClean, supra, note 178, at 266. See, also, J.M. Glenn, "Perpetuities to Purefoy: Reform by Abolition in 
Manitoba" (1984), 62 Can. Bar Rev. 618. 

This is assuming the implementation of the recommendations made by the Commission in its Report on the Law 
of Trusts, supra, note 65. 

The proposed reform would also have the advantage of assimilating the law of real and personal property: 
see A. Pottage, "Law Com. 181: Reforming Trusts of Land" (1989), 52 Mod. L. Rev. 683, at 684. The rationales 
for distinct bodies of law applying to real and personal property are largely derived from historical forces that are 
no longer relevant. The assimilation of the two bodies of law is a pervasive theme of the Ontario Law Reform 
Commission's Report on Administration of Estates of Deceased Persons (1991). 



48 



It may be argued that the proposed reform will remove a settlor's choice of creating 
legal successive interests and will thus frustrate rather than facilitate settlors' intentions. 191 
However, the proposal will facilitate settlors' intentions by the removal of the legal remainder 
rules which may occasionally frustrate them. In addition, it is extremely rare that a well- 
advised settlor would purposefully create legal successive interests. Moreover, the law of 
trusts allows a settlor substantial choice over the terms of the arrangement created. In 
particular, the trustees' administrative powers and duties implied by law only take effect 
subject to any expression of the settlor's contrary intention. 

We shall now sketch in general terms the way the proposed statutory trust would have 
an impact on the problems caused by common law successive interests. Then, we shall deal 
with various points of detail concerning the proposed scheme. 

The statutory trust would have the result that the successive interests created would take 
effect in equity, thus making the legal remainder rules obsolete. In addition, we recommend 

192 

that the Statute of Uses be repealed so that legal executory interests would also become 
obsolete and trusts, whether active or passive, could be created without the need for 
expressing a use upon a use. Since the law dealing with the use of settled land and 
management of it would be derived from trusts law, the law of waste would be unimportant 
with respect to the obligations of a beneficiary in possession. Finally, since the law of trusts, 
along with the full range of administrative powers proposed in our Report on the Law of 
Trusts, would apply whenever property is subject to successive interests, dealings with settled 
land would be facilitated, generally without the need for any court intervention. The new 

193 

system would take the place of that provided in the Settled Estates Act, and we recommend 
that that Act be repealed. 

We turn now to consider details of the proposed statutory trust. 

(ii) Transactions to which Statutory Trust Will Apply 

It will first be convenient to consider relevant definitions in other legislation and in 
other jurisdictions. 

The present Ontario Settled Estates Act applies to any settled estate, which is 
defined as "land and all estates or interests in land that are the subject of a settlement". 



191 

See McClean, supra, note 178, at 266. 

192 

Supra, note 27. 

193 o 

Supra, note 67. 

194 

Ibid. 

195 

Ibid.,s. 1(1). 



49 



Settlement, in turn, is defined as a "statute, deed, agreement, will or other instrument, or any 
number of such instruments, under or by virtue of which land or any estate or interest in land 
stands limited to or in trust for any persons by way of succession ...". As Megarry and 
Wade 197 state in relation to the equivalent definition in the English Settled Land Act, 1882: 198 
"Thus, every grant or devise of a limited interest {e.g. for life ... or for a conditional or 
determinable fee) created a succession, and therefore a settlement." 

In England, successive interests in land are dealt with by a combination of the Law of 
Property Act, 1925 199 and the Settled Land Act, 1925 200 in the detail and complexity that is 
characteristic of the 1925 property legislation. The former Act restricts the types of estates 
and interests in land that may exist at common law, thus resulting in successive freehold 
interests being equitable; the latter Act, defining "settlement" for the purpose of that Act, is 
built on the definition that formed the model for the Ontario Settled Estates Act but is 
expressed in much greater detail. 

Section 1(1), (2) and (3) of the Law of Property Act, 1925 provide as follows: 

1. — (1) The only estates in land which are capable of subsisting or of being conveyed or created 
at law are — 

(a) an estate in fee simple absolute in possession; 

(b) a term of years absolute. 

(2) The only interests or charges in or over land which are capable of subsisting or of being 
conveyed or created at law are — 

(a) an easement, right, or privilege in or over land for an interest equivalent to an estate in 
fee simple absolute or a term of years absolute; 

(b) a rentcharge in possession issuing out of or charged on land being either perpetual or 
for a term of years absolute; 

(c) a charge by way of legal mortgage; 

(d) land tax, title rentcharge, and any other similar charge on land which is not created by 
an instrument; 

(e) rights of entry exercisable over or in respect of a legal term of years absolute, or 
annexed, for any purpose, to a legal rent charge. 



196 
197 
198 
199 

200 



Ibid. 

The Law of Real Property (5th ed., 1984), at 3 18 [footnote omitted]. 

Supra, note 90. 

Supra, note 85. 

Supra, note 75. 



50 

(3) All other estates, interests, and charges in or over land take effect as equitable interests. 

Subsections (1) and (4) of section 1 of the Settled Land Act, 1925 provide as follows: 

1. — (1) Any deed, will, agreement for a settlement or other agreement, Act of Parliament, or 
other instrument, or any number of instruments, whether made or passed before or after, or partiy 
before and partly after, the commencement of this Act, under or by virtue of which instrument or 
instruments any land after the commencement of this Act, stands for the time being — 

(i) limited in trust for any persons by way of succession; or 

(ii) limited in trust for any person in possession — 

(a) for an entailed interest whether or not capable of being barred or defeated; 

(b) for an estate in fee simple or for a term of years absolute, subject to an executory 
limitation, gift, or disposition over on failure of his issue or in any other event; 

(c) for a base or determinable fee or any corresponding interest in leasehold land; 

(d) being an infant, for an estate in fee simple or for a term of years absolute; or 

(iii) limited in trust for any person for an estate in fee simple or for a term of years absolute 
contingently on the happening of any event; or 

(iv) [repealed by Married Women (Restraint upon Anticipation) Act, 1949, s. 1(4), Sch. 2]; 

(v) charged, whether voluntarily or in consideration of marriage or by way of family 
arrangement, and whether immediately or after an interval, with the payment of any less 
period, or of any capital, annual, or periodical sums for the portions, advancement, 
maintenance, or otherwise for the benefit of any persons, with or without any term of 
years for securing or raising the same; 

creates or is for the purposes of this Act a settlement and is in this Act referred to as a settlement, 
or as the settlement, as the case requires ... 

(4) An estate or interest not disposed of by a settlement and remaining in or reverting to the 
settlor, or any person deriving title under him, is for the purpose of this Act an estate or interest 
comprised in the subject of the settlement and coming to the settlor or such person under or by 
virtue of the settlement. 

The Queensland reform did not make the statutory trust apply in all cases where 
successive interests are created. It applies only to "future interests" and that term is 



201 

For discussion about the effect of this word, see J. Hill, "The Settled Land Act 1925: Unresolved Problems" 
(1991), 107 L.Q. Rev. 596, at 598-99. 

202 

The reference to a trust is unimportant since provisions of the Law of Property Act, 1925, supra, note 85, have the 
consequence that generally the interests mentioned can only exist under trusts. See Megarry and Wade, supra, 
note 197, at 344-45. 



51 



.203 



restrictively defined. Section 30(1) and (4) of the 1974 Property Law Act provide as 
follows: 

30. — (1) A future interest in land validly created after the commencement of this Act shall take 
effect as an equitable and not a legal interest. 



(4) In this section "future interest" means — 

(a) a legal contingent remainder; and 

(b) a legal executory interest. 

This definition can be criticized for keeping alive the terminology of "legal contingent 
remainder" and "legal executory interest". It is also restricted in its reach. One commentator 
has criticized the definition's failure to extend to all future interests: 204 

205 

The proposal is confined to legal contingent remainders and legal executory interests, but 
the reason for this limitation is not clear. It would, surely, be preferable for the clause to apply to 
all future interests of whatever kind, including reversions and vested remainders. The possibility 
of confusion would then be greatly lessened and the situation would be the same as in England 
where all remainders and reversions (other than upon terms of years) must fall into the class of 
future interests, the legal estate being vested in some person as trustee. 

Section 4(1) of the Manitoba Perpetuities and Accumulations Act' provides that 
"[successive legal interests... take effect in equity behind a trust....". 

207 

Section 1 of the Act defines "successive legal interest": 

1. In this Act ... 'successive legal interest' includes 

(a) the first or particular interest, 

(b) any following interest, whether the following interest is future, vested or 
contingent or is an executory interest, or a determinable or defeasible interest, or 
any interest over thereupon, and 

(c) a general or special power of appointment, 



203 
204 
205 

206 
207 



Supra, note 1 59. 

Tarlo, supra, note 1 6 1 , at 2 1 1 . 

The comment was made with reference to the recommendation of the Queensland Law Reform Commission, 
supra, note 158, which was implemented by the Property Law Act, 1974, supra, note 159. 

Supra, note 127. 

Ibid., as am. by S.M. 1990-91, c. 1, s. 205. 



52 



but does not include the interests of landlords and tenants within the meaning of The 
Landlord and Tenant Act or the Residential Tenancies Act 

We agree with the basic thrust of the Manitoba provision but there are some difficulties 
with it and we make the following comments. First, we agree that the succession of interests 
created by a landlord and tenant relationship should not be subjected to the statutory trust. 
However, we would add that a leasehold interest created by that relationship is capable of 
being the subject matter of successive interests which should come within the definition. For 
example, if L leases land to T for twenty-five years the arrangement should not come within 
the definition but if T then grants the lease to A for life, remainder to B, that arrangement 
should come within the definition. 

Second, the definition retains concepts and terminology of the system that should be 
made obsolete. This has the disadvantageous effect of requiring continued understanding of 
that system. More importantly, it is arguable that the nature of the definition has the result 
that the legislation fails to validate interests that would have had no validity under the legal 

208 

remainder rules. This point has been made by Professor McClean: 

These provisions are open to two interpretations. It may be that in the interpretation of any 
document, which on its face purports to create successive legal interests, one immediately assumes 
a vesting of legal title in trustees in accordance with section 4(3) ... Whatever the difficulties that 
arise from this approach, it has one great advantage. It by implication abolishes the common law 
rules relating to the creation of legal interests.... 

The other possible interpretation of the legislation is that one must first decide whether or 
not valid successive legal interests have been created. The legislation itself does not say how that 
is to be done. One must assume, therefore, that common law rules continue to apply. If according 
to those rules no valid interest was created then the legislation turning legal into equitable would 
be inapplicable for there would be no legal interest created in the first place. Unfortunate though 
this result may be, the language of the legislation tends to support the second interpretation. 
Section 4(1) states that 'successive legal interests take effect in equity as interests behind a trust.' 
That, it seems, assumes a valid series of successive legal interests. That interpretation is reinforced 
by the reference to executory interests in the definition of successive legal interests in section 1 . 
That assumes that one has to go through the process of deciding whether or not there is a valid 
legal executory interest before it is then turned into an equitable interest under the provisions of 
section 4. 

Third, even apart from the fundamental point made by Professor McClean, certain 
arrangements which should be included arguably are omitted from the definition. For 
example, a determinable fee simple along with a possibility of reverter or a fee simple subject 
to a condition subsequent along with a right of re-entry do not appear to come within the 
specific inclusions mentioned in paragraphs (i) and (ii) 209 (although these arrangements may, 



208 

Supra, note 178, at 267-68. 

209 „ _, 

See Glenn, supra, note 189, at 666, n. 96. 



53 



perhaps, be held to be included since they do involve an element of successiveness of 
interests and the definition does not purport to be conclusive). Another example where there 
is perhaps an even greater danger that the arrangement would not come within the definition 
of "successive legal interest" is where land is granted contingently on the happening of an 

. 210 

event: 

Here too there will usually be an element of succession, although sometimes there may not; for it 
is possible for the settlor to direct that the rents and profits shall meanwhile be accumulated for the 
eventual beneficiary, within the limits allowed by the rule against accumulations. 

Finally, we question whether powers of appointment should be expressly included in 
the definition. Where they are part of an arrangement that includes successive interests, the 
arrangement should give rise to the statutory trust but this does not require any express 
mention of powers of appointment. Paragraph (iii) of the Manitoba definition appear to deem 
"a general or special power of appointment" to be a "successive legal interest" whether or not 
a succession of interests is created. The English 1925 legislation in general makes powers of 

211 

appointment equitable but this was done as part of the policy of facilitating conveyancing. 

212 

It is not necessary in order to deal with the problems created by successive legal interests 
and it does not appear that it is necessary in order to facilitate conveyancing in Ontario. 

In determining the best way of expressing the transactions to which the statutory trust 
will apply we have particularly taken account of the following factors. First, the relevant 
provisions should avoid using concepts and terminology deemed from the system intended to 
be made obsolete. Second, the provisions should be drafted so that the statutory trust will 
apply to arrangements that could not be valid as common law interests. Third, the provisions 
should avoid the detail and complexity of, for example, the English provisions. In particular, 
the interests, such as easements and mortgages, set out in section 1(2) of the Law of Property 
Act, 1925 should not give rise to the statutory trust. But explicit mention of their exclusions is 
not necessary since they would not be thought to come within the concept of successive 
interests. Conversely, explicit inclusion of most of the interests elaborately set out in 
section 1(1) of the Settled Land Act, 1925 is not necessary since they would be considered 
to come within that concept. However, where the statutory trust should apply to an 
arrangement and it is reasonably arguable that it does not give rise to successive interests, the 
arrangement should be explicitly mentioned. 



210 
211 
212 
213 
214 



Megarry and Wade, supra, note 197, at 344. 

Law of Property Act, 1925, supra, note 85, s. 1(7). 

See Megarry and Wade, supra, note 197, at 491-92. 

Supra, note 75. 

See, also, Megarry and Wade, supra, note 197, at 343. 



54 



We recommend formulations along the following lines: 

(1) Whenever successive interests in land are created a trust will be deemed to occur in 

those cases where a trust would otherwise not have been created. Accordingly, the 
estate in fee simple or leasehold interest (as the case may be) in the land will be 
held on trust to give effect to the successive interests in equity. 

(2) A leasehold interest of a tenant and the reversionary interest of a landlord will be 
deemed not to be successive interests in land. 



215 
216 

217 
218 



Law of Property Act, 1925, supra, note 85, s. 1(6). 
Ibid., s. (l)(ii)(d). 

See, also, Land (Settled Estates) Act, supra, note 1 18, s. 4. 
Law Comm. No. 181, supra, note 107, at 15. 






(3) Without prejudice to the generality of the expression "successive interests in land" the 
following will, for avoidance of doubt, be deemed to be successive interests in land: 

(a) a determinable fee simple along with the possibility of reverter (and equivalent 
interests in leasehold land); 

(b) a fee simple subject to condition subsequent along with the right of re-entry (and 
equivalent interests in leasehold land); and 

(c) "springing interests", that is interests subject to conditions precedent, even where 
no prior interest is conferred on another person. 

At this point, we should comment on the effect of the minority of an owner of land. At 
common law a minor can hold a legal or equitable interest in land but even where the minor 
has an absolute interest the land is not readily marketable since any disposition by a minor is 
voidable at the minor's option. The solution adopted in England was to provide that a minor 
cannot hold a legal estate in land 215 and to make the machinery of the Settled Land Act, 

716 717 _ 

1925 come into operation when there is a purported conveyance of land to a minor. This 

218 

approach would be continued under the recent proposals made by the Law Commission: 

Minority will remain a disability and an attempted conveyance to a minor will take effect as a 
declaration of trust, the land being held by the relevant trustee or trustees under the new system. 
Where the conveyance is made inter vivos, the grantor will hold the land as trustee for the minor. 
Where the disposition is testamentary, the personal representatives of the settlor will act as 
trustees. Where land is conveyed to a minor jointly with an adult, the adult will hold the land on 
trust for himself and the minor, as joint tenants or as tenants in common according to the terms of 
the conveyance. 



55 



In Ontario, a minor can hold a legal estate in land and dealings with any interest in land 
of a minor are facilitated by court intervention under section 59 of the Children 's Law Reform 
Act} 19 It provides as follows: 

59. — (1) Upon application by the parent of a child or any other person, the Ontario Court 
(General Division) by order may require or approve, or both, 

(a) the disposition or encumbrance of all or part of the interest of the child in land; 

(b) the sale of the interest of the child in personal property; or 

(c) the payment of all or part of any money belonging to the child or of the income from 
any property belonging to the child, or both. 

(2) An order shall be made under subsection (1) only where the Court is of the opinion that the 
disposition, encumbrance, sale or payment is necessary or proper for the support or education of 
the child or will substantially benefit the child. 

(3) An order under subsection (1) may be made subject to such conditions as the Court considers 
appropriate. 

(4) The Court shall not require or approve a disposition or encumbrance of the interest of a child 
in land contrary to a term of the instrument by which the child acquired the interest. 

(5) The Court, where it makes an order under subsection (1), may order that the child or another 
person named in the order execute any documents necessary to carry out the disposition, 
encumbrance, sale or payment. 

(6) The Court by order may give such directions as it considers necessary for the carrying out of 
an order made under subsection (1). 

(7) Every document executed in accordance with an order under this section is as effectual as if 
the child by whom it was executed was eighteen years of age or, if executed by another person in 
accordance with the order, as if the child had executed it and had been eighteen years of age at the 
time. 

(8) No person incurs or shall be deemed to incur liability by making a payment in accordance 
with an order under clause (l)(c). 

Generally, we think that it is preferable if dealings in land can be facilitated without the 
need for the expense and inconvenience of court intervention. Also, we think it appropriate that 
the statutory "fall-back" solution should generally mirror the sorts of arrangements made by 
persons with skilled professional advice and such persons ordinarily utilise a trust in giving 
valuable property to minors. 

Nevertheless, we do not make any recommendation with respect to landholding by 
minors. This topic does not concern the basic principles of land law. Rather, it concerns the 



219 R.S.O. 1990,c.C12. 



56 



rights and protections of persons under legal disability. Any reform would be more 
appropriately considered from that general perspective. 

(iii) Nature of the Statutory Trust 

We have no doubt that two characteristics of the English system should not be 
introduced in Ontario. First, there is no justification for the dual system under which some 
settlements not subject to a trust for sale are governed by the rules in the Settled Land Act, 
1925 and settlements subject to a trust for sale are governed by the Law of Property Act, 
1925. 220 This dual system has not been adopted in any other jurisdiction. Even in England the 
Settled Land Act option is virtually never purposefully chosen. And in its recent report, the 
Law Commission recommended "that it should no longer be possible to create Settled Land 
Act settlements and that, consequently, all successive interests should fall under the new 

x » 221 

system . 

Second, the statutory trust should not be a trust for sale, as provided presently in 
England under the provisions of the Law of Property Act, 1925. That arrangement is 
inappropriate with respect to land that ordinarily is intended to be held indefinitely. It is 
confusing to the people involved in the arrangement and it may create inappropriate results. 

222 

As was stated in the Survey of the Land Law of Northern Ireland, 

[t]he objection to imposing a trust for sale in all cases is that in many cases it is not what the 
parties want, for the trust involves an obligation to sell with a mere power to postpone. Since this 
power must be exercised unanimously, a single trustee could force a sale against the wishes of the 
majority. 

The English Law Commission has also recommended replacement of the statutory trust for 
sale: 223 

We confirm our initial preference for a single trust of land to apply to both concurrent and 
successive interests in land. The interests themselves will be unchanged: the difference lies in the 
trust machinery. Under the new system, trustees will hold the legal estate on trust with a power to 
sell and a power to retain the land, and, as at present, it will always be possible to convey the legal 
estate free of equitable interests. 



For criticism see, for example, G.A. Grove, "Conveyancing and the Property Acts of 1925" (1961), 24 Mod. L. 
Rev. 123; R. Maudsley, "Escaping the Tyranny of Common Law Estates" (1977), 42 Mo. L. Rev. 355. 

Law Comm. No. 181, supra, note 107, at 12. 

Supra, note 111, at 35. See, also, O.R. Marshall, "A Critique of the Property Legislation of Western Nigeria" 
(1965), 1 Nigeria L.J. 151. Under the present English system a statutory trust for sale occurs when land is held by 
joint tenants or tenants in common. 

223 

Law Comm. No. 181, supra, note 107, at 9. 



220 

221 

222 



57 



The recommendation of the Law Commission that the land will be held "on trust with a 
power to sell and a power to retain" has been criticized by one commentator: 224 

A final point is that the Report throughout refers to the land as being held with power to 
retain and power to sell. This seems odd. In theory, it should be a trust to retain or sell: there 
should be an underlying obligation of some sort. Trustees must exercise powers unanimously and 
if they are divided then they must have some guidance as to what they should do. The obvious 
answer is that they do not sell if they are divided and this shows a trust to retain with a power to 
sell. It may be replied that on an application to the court the discretion is such that it is irrelevant 
that there is such a trust. Yet it is wrong to assume that all cases will end up in court, particularly 
as regards successive interest trusts. Nor is it likely that the court will want to interfere with 
trustees' decisions where the trustees are independent at least where occupation by a beneficiary is 
not involved. 

We recommend that under the proposed new system, the statutory trust will be a trust to 
hold — or retain — the land. In general, the statutory trust will be subject to all of the rules of 
general trusts law. Among other things, the trustees will have the usual range of trustees' 
administrative powers, including a power of sale. 

(iv) Determination of Statutory Trustees 

Since the statutory trust will apply in circumstances where a trust has not been expressly 
created it is necessary to have rules determining who should be the trustees. We have 
considered three possible approaches. 

225 

First, the English Law Commission recommended as follows: 

Where successive interests are created, the trustees will be either those persons appointed by 
the settlor or, failing this, whoever has the legal estate currently vested in him. Where 
necessary, the court will have recourse to the power which it currently possesses under 
[section 41 of the Trustee Act]. 

Under this approach, the trustees in a disposition by Will will be the personal 
representatives and, in an inter vivos transaction, the settlor will become trustee: 

Thus if A purports to convey land to X for life, remainder to Y in fee simple, X and Y can 
only have equitable interests. It follows that A has not disposed of the legal estate and will 
hold it on trust for X and Y. A may use the normal statutory powers to appoint trustees in his 
place or appoint another trustee to act with him. 



224 

R. Smith, "Trusts of Land Reform" [1990] Conv. 12, at 15. 

225 

Law Comm. No. 181, supra, note 107, at 17. 



226 

Smith, supra, note 224, at 22. 



58 



A second possible approach is to make the tenant for life (or other person beneficially 
entitled to possession of the land) the trustee. A variant of this approach is a combination of 
the tenant for life having powers of dealing with the land along with another person or other 
persons having a limited trustee role. This approach is essentially that adopted by the English 

227 

Settled Lands Acts of 1882 and 1925 and of legislation in Queensland and Western 
Australia. 

The third approach is that adopted in Manitoba, under which trustees are all the adult 



and capacitated beneficiaries of the statutory trust 



229 



In considering the most suitable approach, we have assumed that typically the issue will 
arise in a family context. Often, the settlement will be created by a will and the tenant for life 
will often be a surviving spouse and the other beneficiaries will be children of the testator. 

All three of the approaches considered have the advantage that they enable the statutory 
trustees ordinarily to be determined without the need for court intervention. Of the three 
approaches, we have decided that the Manitoba approach should be adopted in Ontario. In a 
case where the transferor to testator has not made provision for powers to deal with the land 
being given to any particular person or persons (which typically will be the case where 
successive interests in land are created without a trust) it is, we believe, preferable that all 
capacitated beneficiaries should be involved in the decision-making. In most cases, they will 
be able to agree on the decisions that need to be taken. If they cannot agree, the matter should 
be resolved by the court. 

Accordingly, we recommend that the trustees of the statutory trust will be the adult and 
capacitated beneficiaries of the statutory trust. 

(v) Interrelationship between Statutory Trust, General Law of Trusts, and 
Express Terms of Settlement 

210 

We have already mentioned that one reason why we differ from the approach adopted 
by the Law Reform Commission of British Columbia in its Report on the Land (Settled 

23 1 

Estates) Act is that the Ontario Law Reform Commission has already reviewed the law of 

212 

trusts, and in particular trustee's administrative powers, in the Report on the Law of Trusts. 



227 

See supra, this ch., sec. 3(b). 

228 

See supra, this ch., sec. 3(b). 

229 

See supra, this ch., sec. 3(b). 

230 

See supra, this ch., sec. 3(c)(i). 

231 

Supra, note 132. 

232 

Supra, note 65. 






59 



The proposed revised Trustee Act will give trustees a full range of powers to deal with and 
manage trust property, including powers of sale, mortgaging and leasing land. These powers 
would apply to every trust, subject to any contrary provision in the trust instrument. We now 
confirm that the proposed statutory trust should be subject to the revised Trustee Act. 

Accordingly, we recommend that, subject to the recommendation below relating to 
occupation of land, the statutory trust should be subject to the general law of trusts, including 
the provisions of the proposed revised Trustee Act. 

(vi) Protection of Purchasers 

Since the statutory trust will, subject to any special provision, constitute a trust within 
the general law of trusts, we recommend that the provisions recommended in the Report on 

233 

the Law of Trusts relating to the protection of purchasers apply to purchasers from trustees 
of the statutory trust. Putting it broadly, these provisions may be summarized by three points. 
(1) As we have already stated, the trustees are given a comprehensive range of administrative 
powers, including a power of sale; (2) subject to point (3), purchasers are entitled to assume 
that trustees have the powers they purport to exercise and that they are exercising them 
properly; (3) but this protection is not available to a purchaser who has actual notice that 

235 

the trustees do not possess the power or that they are exercising it improperly. These 
provisions are, we think, as apt in relation to the statutory trust as to express trusts and 
therefore we do not recommend any special modification to them. 

(vii) Occupation of Land by Beneficiary 

Where successive common law interests are created under the present law, some 
person — for example, the tenant for life — is entitled to both possession of and enjoyment 
from the land. Where successive interests exist under a trust, the trustees have possession and, 
moreover, beneficiaries do not have a right of occupation unless the terms of the trust so 
provide. The statutory trust will therefore prevent beneficiaries from having a right of 
possession, unless special provision is made for that purpose. 



233 



234 



235 



Ibid., at 169-70, and see recommendations 78 and 79, at 183. 

For this purpose, "purchaser" is widely defined. The draft revised Trustee Act defines purchaser as "a 
purchaser for value, and includes a mortgagee and any other person who for value has received an interest in or 
claim upon trust property": ibid., at 480. 

Under recommendations made in the Report on Administration of Estates of Deceased Persons, supra, note 190, 
at 261, purchasers would also be bound by any restrictions provided by a will if, and to the extent that, the 
restrictions are noted on the estate trustee certificate. 

However, even a purchaser with actual notice of impropriety receives protection if the trust property was held by 
an intervening purchaser without actual notice of impropriety: Report on the Law of Trusts, supra, note 65, 
recommendation 79, at 183. 



60 



In the Report on the Law of Trusts the Commission's recommended administrative 
powers included provision for trustees to 

purchase or rent living accommodation or construct a house on land held by them for the purpose 
of providing a home for the person entitled to the income of the money expended in respect of the 
purchase, or to the income to be expended in respect of the rent, or to the income of either the land 
or the money expended in respect of the purchase or construction, if in any case under this clause, 
the person for whom the living accommodation is provided consents thereto. 

This power does not explicitly relate to retaining a residence included in the property 
originally settled. Nevertheless, it seems that it would implicitly empower trustees to permit 
the use of such property as a residence. 

At most, this provision gives the trustees a power; it does not give any beneficiary any 
entitlement to possession, or even occupation, of the land. In addition, it extends only to the 
use of land as a residence. It does not permit occupation of land for a business, such as 
farming. 

This is one area where there is a strong argument that special provision should be made 
for the proposed statutory trust. Generally, we have taken the view that the statutory trust 
should be assimilated with express trusts. As well as having the advantage of simplicity, this 
position will generally facilitate the purpose of the settlor or testator. However, in this context 
the position may be different. A settlor or testator who creates successive interests without a 
trust is likely to have acted without skilled professional advice and such a person may well 
assume that the tenant for life (or other person with a present interest) is entitled to 
occupation and possession of the land, as, indeed, is the case under the present law. In these 
circumstances, we consider it appropriate, and recommend, that a right of possession should 

237 

be conferred on a beneficiary with a present, vested interest in the land. 



236 

Report on the Law of Trusts, ibid., at 501 (s. 35(k) of draft Revised Trustee Act). See, also, ibid., at 245-46, 307. 

237 

See, also, the recommendations of the English Law Comm. No. 181, supra, note 107, at 24. 



CHAPTER 4 



QUALIFIED ESTATES AND 
INTERESTS IN LAND 



In chapter 3 we touched on the fact that interests in land may be absolute or qualified. 
There are two distinct categories of qualified interests which are generally referred to as, 
respectively, determinable interests and interests subject to a condition subsequent. The 
difference between them is a matter of wording: 

It will be seen that the difference is really one of words; the determining event may be worked into 
the limitation in such a way as to create either a determinable [interest], or [an interest] defeasible by 
condition subsequent, whichever the grantor wishes. The question is whether the words limit the 
utmost time of continuance of the estate, or whether they mark an event which, if it takes place in the 
course of that time, will defeat an estate already granted; in the first case the words take effect as a 
limitation, in the second as a condition. A limitation marks the bounds or compass of the estate, a 
condition defeats the estate before it attains its boundary. 

A determinable interest is suggested by words such as "as long as", "until" or "while" 
whereas an interest subject to a condition subsequent is suggested by words such as 
"provided that" or "on condition that." However, the type of interest created depends on the 
construction of the instrument as a whole. Thus, all of the words and the way in which they 
are arranged is relevant. 

The distinction between the two types of interests is, therefore, a matter of wording and 
it is a fine one at that. Nevertheless, very important consequences depend on the distinction. 
First, a determinable interest ends automatically when the determining event occurs whereas 



R. Megany and H.W.R. Wade, The Law of Real Property (5th ed., 1984), at 69-70 [footnotes omitted]. 

See A.H. Oosterhoff and W.B. Rayner, eds., Anger and Honsberger's Law of Real Property (2d ed., 1985), 
at 305-06. 

See P. Devonshire, "Possibilities of Reverter and Rights of Re-entry for Condition Broken: The Modern Context 
for Determinable and Conditional Interests in Land" (1990), 13 Dalhousie L.J. 650. See, also, B. ZifF, Principles 
of Property Law (2d ed., 1996) at 204-06. 

See Oosterhoff and Rayner, supra, note 2, at 126. 

In addition to the differences mentioned in the text, one of the legal remainder rules — the rule that a remainder 
must await the regular ending of the prior particular estate — applies to an interest subject to a condition 
subsequent but not to a determinable interest. 



[61] 



62 



an interest subject to a condition subsequent does not automatically end when the condition is 
broken: "If the event which gives rise to defeasance occurs, the estate may be ended if, and 
only if, the right of entry is exercised." 

Second, the consequence of invalidity of the determining event or condition, as the case 
may be, is markedly different. If a condition subsequent is void, the condition is struck down 
and the interest is left free of the condition. If a determining event is invalid, the whole gift 
fails. 

Third, certain provisions which would be invalid as conditions subsequent will be valid 
as determining events. For example, if property is given subject to a condition subsequent 
that the holder of the estate does not become bankrupt the condition is void whereas an estate 
determinable upon bankruptcy may be created. Similarly, a condition in general restraint of 

Q 

marriage is void whereas it is generally possible to make an estate determinable on marriage. 

Fourth, at common law it seems that the rule against perpetuities did not apply to a 
possibility of reverter taking effect on the determination of an estate. It did, however, apply to 
a right of re-entry. This distinction was criticized by the Commission in our Report on the 
Rule Against Perpetuities'. 

Whether a donor uses the technical language of a condition subsequent or the language of limitation, 
the property is tied up indefinitely for the remote future in exactly the same way and therefore if the 
rule affects the right of re-entry, it should also affect the possibility of reverter in order to free the 
property from this remote interest. To have a difference in result depending on a mere matter of 
words does not seem to make sense and brings the law into disrepute, as well as acting as a snare for 
the draftsman. 

The Commission's recommendations were implemented by section 15(1) of the 
Perpetuities Act which provides that a possibility of reverter on the determination of any 
determinable interest in real or personal property is subject to the rule against perpetuities, as 
modified by the Act in the same way as a right of entry. Both types of interest are subject to 
a perpetuity period which is the shorter of the normal period of relevant lives in being and 
twenty one years or forty years. 



6 

7 

8 

9 

10 

11 

12 



Oosterhoffand Rayner, supra, note 2, at 306. 

See Megarry and Wade, supra, note 1 , at 74. 

Ibid., at 73-74. 

Report No. 1 (1965), at 33. 

R.S.O. 1990, c. P.9 (first enacted S.O. 1966, c. 1 13, s. 15(1)). 

It also refers to a possibility of resulting trust on the assumption that possibility of reverter is not an apt term to 
describe the grantor' s entitlement arising as a determination of a determinable interest under a trust. 

It also refers to an equitable right in personal property on the assumption that right of entry is not an apt term 
with respect to personal property. 



63 



Apart from the reform made to the operation of the perpetuity rule, the other practical 
consequences continue to flow from the characterization of something as a determinable 
interest or an interest subject to a condition subsequent. However, as we have mentioned, the 
difference between the two is a mere matter of wording. There is no difference between the 
grantor's objective in both types of arrangement which is that the grantee' s estate should 
come to an end on the occurrence of a particular event. The only possible justification for 
the two different verbal arrangements, with their different practical consequences, is that the 
grantor who knows how to use the right words is able to signal the set of desired 
consequences. However, this is not a compelling justification. Many grantors (including those 
with professional drafters) fail to signal sufficiently clearly which sort of interest they intend 
to create. Moreover, even where the words habitually used to describe one sort of interest is 
used there is a danger that the practical consequences of that type of interest were not in fact 
intended. In this situation, one court may accord the words used their normal effect and the 
grantor's intention thereby be frustrated. Another court may treat the words used in 
unorthodox fashion in order to arrive at the result considered desirable, in the process 
diminishing any certainty that that particular forms of words will in fact lead to particular 
consequences. 

The difficulties associated with the present law are well illustrated by Re McColgan. A 
house was given by will to the testator' s executors and trustees "to hold as a home for Mary 
Kovalchik ... until her death or until she is not residing therein personally". This wording on 
any orthodox view was apt to produce a determinable interest, not an interest subject to a 
condition subsequent. However, it was arguable that the reference to "residing therein 
personally" was uncertain and therefore void. If this was so and if the limitation was 
interpreted as a determinable interest, Mary Kovalchik would take no interest at all. The court 
avoided this result by holding that a condition subsequent was created and that the 
uncertainty of the condition left Mary Kovalchik with a life interest free of any condition. 

There is also no justification for the position under the present law that a condition 
subsequent may be invalid as repugnant to the interest granted or as against public policy but 
that the same result may be achieved by drafting the arrangement as a determinable interest. 
This point was well made by Professor Glanville Williams: 

Another case where the law has become lost in mere words is in the famous distinction between 
'but' and 'until' — a distinction that an Irish judge considered to be 'little short of disgraceful to our 



13 

14 

15 
16 



See Devonshire, supra, note 3, at 654; A. Brudner, "The Unity of Property Law" (1991), 4 Can. J. L. Juris. 3; 
G. Williams, "Language and the Law" (1945), 61 L.Q. Rev. 71; L.W. Waggoner, "Reformulating the Structure 
of Estates: A Proposal for Legislative Action" (1971-72), 85 Harv. L. Rev. 729, at 736. 

See, also, A. Dunham, "Possibility of Reverter and Powers of Termination — Fraternal or Identical Twins" 
(1952), 20 U. of Ch. L. Rev. 215, at 216-217. 

(1969), 4 D.L.R. (3d) 572 (Ont. H.C.). 

Supra, note 13, at 79. 



64 



17 

jurisprudence.' If A gives property on trust to B, 'but if B marries then to C, the gift to C is struck 
out because it tends to induce B to remain unmarried, and the procreation of legitimate children is 
regarded as a public interest. Thus on this form of words B will take absolutely. But if the words used 
were 'on trust for B until he marries and thenceforth for C , the gift would be valid and B would lose 
the property if he were to marry. The difference is supposed to be between a gift subject to a 
condition subsequent and a determinable limitation. Yet the intention in each case is that B shall 
enjoy the property until he marries and that thereafter C shall enjoy it. Thus the referent ... is the 
same. If the referent is the same the meaning must be the same. And if it is against public policy to 
tolerate the situation when one form of words is used, it must necessarily be against public policy to 
tolerate the same situation when the other form of words is used. No amount of subtle distinguishing 
between the emotional nuances of the two forms of words can affect this proposition. 

For all these reasons we recommend that the continuing distinctions between a 
determinable interest and an interest subject to a condition subsequent should be abrogated. This 
abrogation should apply to interests held under trusts as well as common law interests and 
should extend to interests in personal as well as real property. This abrogation should be 
achieved, we recommend, by providing that language that at common law would create a 
determinable interest will instead create an interest subject to a condition subsequent. 18 

We have given particular consideration to the fact that under the present law some 
arrangements are valid when drafted as determinable interests but invalid when drafted as 
interests subject to condition subsequent. Our proposal will have the effect of preventing the 
creation of such arrangements as valid interests. In general, we consider this a reasonable result 
since, as Professor Williams argued, the public policy argument applies whatever the form in 
which the interest is granted. However, one type of arrangement, the protective trust, should 
receive special treatment. One element of a protective trust is a life interest determinable on 
events such as bankruptcy or attempted alienation and the arrangement would be invalid if 
treated as an interest subject to conditions subsequent. Protective trusts are commonly used; they 
involve complex policy arguments; and they were the subject of the recommendations for their 
regulation made by the Ontario Law Reform Commission in the Report on the Law of Trusts. 

Accordingly, we recommend that notwithstanding our main recommendations, protective 
trusts should remain valid subject to our recommendations made in the Report on the Law of 
Trusts. 



17 
18 

19 



Re King (1892), 29 L.R. Jr. 401, at 402, per Porter M.R. 

See, also, the reform effected in Kentucky: Ky Acts 1960, ch. 1674. See O.L. Browder, "Future Interest Reform" 
(1960), 35 N.Y.W.L. Rev. 1255, at 1262; Waggoner, supra, note 13, at 734. See, also, Devonshire, supra, 
note 3, at 680-82; B. Ziff, supra, note 3, at 21 1-12. 

(1984), at 362-65. 



CHAPTER 5 



THE RULE IN SHELLEY'S 
CASE 



1. HISTORICAL DEVELOPMENT, RATIONALES, AND THE PRESENT LAW 

Before discussing the Rule in Shelley's Case, two technical expressions must be 
explained: "words of purchase"and "words of limitation". Words of purchase identify the 
person to whom an estate is given. The word "purchase" is misleading to the modern reader 
since it does not imply that the person bought the estate; instead, it means a person who 
obtains the estate otherwise than by descent, that is, otherwise than inheritance on the 
intestacy of the owner of the estate. Words of limitation describe the nature of the estate 
given to the person. At common law, except for some unimportant exceptions, the only words 
of limitation apt to create an estate in fee simple were the words "and his [or her] heirs". 
Accordingly, in a grant "to X and his heirs", the words "to X" are words of purchase and the 
words "and his heirs" are words of limitation. 



(1581), 1 Co. Rep. 93b. See A.H. Oosterhoff and W.B. Rayner, eds., Anger & Honsberger's Law of Real 
Property (2d ed., 1985) at 405-16; B. Ziff and M.M. Litman, "Shelley's Rule in a Modern Context: Clearing the 
'Heir'" (1984), 34 U.T.L.J. 170. 

The position has now been changed by statute. The Conveyancing and Law of Property Act, R.S.O. 1990, c. 
C.34, s. 5, provides as follows: 

5. — (1) In a conveyance, it is not necessary, in the limitation of an estate in fee simple, to use the 
word 'heirs'. 

(2) For the purpose of such limitation, it is sufficient in a conveyance to use the words 'in fee 
simple' or any other words sufficiently indicating the limitation intended. 

(3) Where no words of limitation are used, the conveyance passes all the estate, right, title, interest, 
claim and demand that the conveying parties have in, to, or on the property conveyed, or expressed or 
intended so to be, or that they have power to convey in, to or on the same. 

(4) Subsection (3) applies only if and as far as a contrary intention does not appear from the 
conveyance, and has effect subject to the terms of the conveyance and to the provisions therein 
contained. 

(5) This section applies only to conveyances made after the 1st day of July, 1886. 

Section 26 of the Succession Law Reform Act, R.S.O. 1990, c. S.26 provides: 

26. Except when a contrary intention appears by the will, where real property is devised to a person 
without words of limitation, the devise passes the fee simple or the whole of any other estate or interest 
that the testator had power to dispose of by will in the real property. 



[65] 



66 



The Rule in Shelley's Case was described as follows in the modern Ontario case of Re 
Rynard: 

The rule provides that where the ancestor by gift or conveyance takes an estate of freehold, 
and in the same gift or conveyance an estate is limited, either mediately or immediately, to his 
heirs in fee ... or in tail, in such cases the words 'to his heirs' are words of limitation of the estate 
and not words of purchase. 

Assume that Blackacre is conveyed or devised to A for life, remainder to the heirs of A. 
The Rule has the effect that A ("the ancestor") takes not only a life estate but also an estate in 
fee simple. In addition, the life estate merges with the estate in fee simple, leaving A with an 
estate in fee simple. If Blackacre is conveyed or devised to A for life, remainder to B for life, 
remainder to the heirs of A (subject to the effect of the reasoning in Re Rynard), the Rule 
applies so that A obtains an estate in fee simple but because of the interposed life estate given 
to B there is no merger. The result will be that Blackacre is held for A for life, remainder to B 
for life, remainder to A in fee simple. 

The Rule is a rule of law, not merely a rule of construction, so that it is irrelevant that 
the grantor intended A to have only a life estate. However, there is an initial question of 
construction which is whether the grantor in referring to the heirs of A, or like words, was 
referring to the "whole inheritable issue taking in a course of succession" as opposed to a 
group such as the intestate successors of A. Only in the former case does the Rule apply. As 
Lord Macnaghten said in Van Grutten v. Foxwell, 

the question now in every case must be whether the expression requiring exposition, be it 'heirs' 
or 'heirs of the body', or any other expression which may have the like meaning is used as the 
designation of a particular individual or a particular class of objects, or whether, on the other 
hand, it includes the whole line of succession capable of inheriting. 

The Rule only applies where the estate given to the "ancestor" is an estate of freehold 
and it thus only applies to limitations affecting real property. The Rule applies to equitable as 
well as to legal interests but the interests limited to the "ancestor", and to the heirs, must be of 
the same quality: both legal or both equitable. 



(1981), 31 O.R. (2d) 257, at 259 (C.A.). 

Van Grutten v. Foxwell, [1897] A.C. 658, at 684 (H.L.). 

Ibid, at 677. However, it may be that this initial question of construction is answered differently, according to 
whether the instrument is a deed or a will (R. Megarry and H.W.R. Wade, The Law of Real Property (5th ed., 
1984), at 1 163 [footnotes omitted]): 

In a conveyance inter vivos the only words to attract the Rule were 'heirs' or 'heirs' followed by words 
of procreation. The Rule did not apply to 'heir' in the singular, for 'heir' was not an apt word of 
limitation for an estate of inheritance. In a will, on the other hand, the testator's intentions were 
regarded to this extent, that it was a question of construction whether the remainder was intended to be 
given to the heirs generally or to a persona designata, i.e. one specific person. In the former case the 
Rule applied; in the latter it did not. 



67 



The Rule in Shelley's Case has been described as "one of the deepest mysteries of the 

f% "7 

common law" and a variety of suggestions have been made as to the rationale for it. One 
possibility is that the Rule was designed to prevent the avoidance of feudal incidents. It was 
taken for granted by Wilson J. A. in Re Rynard that this was the Rule's rationale: 8 

The rule had its origins in an even more ancient rule of law that whenever an ancestor 
received an estate for life, his heir could not under the same conveyance receive an estate 'by 
purchase' but only 'by descent'. The reason for this was that in feudal times the lord of the manor 
received the fruits of his seigneury only when there was a descent of land upon the heir. If this 
descent were avoided by a purported gift to the heir on the death of the life tenant, the lord was 
viewed as having, in effect, been defrauded. Accordingly, the rule in Shelley 's Case denied the 
effect of a remainder gift to the heirs of A and treated the gift of a life estate to A with remainder 
to his heirs on his death as a gift to A absolutely, his heirs taking only by descent on his death. 
Thus were the incidents of feudal tenure preserved to the lord of the manor and the invidious 
intent of the conveyancer frustrated. 

The Rule may also be viewed as a rule designed to avoid perpituitous arrangements. 
The medieval origin of the Rule may be explained by the general non-acceptance at the time 
of contingent remainders. Since a gift to the heir of a living person is necessarily contingent, 
the Rule had the positive effect of treating a purported but invalid contingent remainder as 
creating a valid interest for the "ancestor". However, contingent remainders became accepted 
in the sixteenth century, subject to certain restrictive rules. An explanation for the continued 
vigour of the Rule may lie in the nature of the limitations that attracted the Rule. The Rule 
applied where there was a limitation to the "heirs" of the ancestor but, because of the 
principle of primogeniture, such reference could not be to a group of persons identified at the 
death of the "ancestor" but must have been to a line of generations of heirs. It is difficult to 
determine what would have been the nature of the interests of such successive heirs if the 
Rule had not applied. Moreover, such interests, if valid and if unaffected by the Rule, would 
have created perpituitous arrangements of an extreme kind. The Rule may be viewed, 
therefore, as a rule against perpetuity. 

The principle of primogeniture has been abolished for over a century in Ontario and 
the natural meaning of "heirs" is now the intestate successors of the "ancestor". This is 
expressly provided for in wills. Section 27 of the Succession Law Reform Act, replacing 
earlier legislation, provides as follows: 



9 
10 



A.W.B. Simpson, A History of the Land Law (2d ed., 1986), at 96. 

See Simpson, ibid., at 96-100; ZifTand Liitman, supra, note 1, at 251; American Law Institute, Restatement of 
the Law, Second: Property: Donative Transfer: Tentative Draft No. 10 (March 30, 1987), at 174-85. 

Re Rynard, supra, note 3, at 259-60. 

An Act to Abolish the Rights of Primogeniture, 1 85 1 , 1 4 & 1 5, Vict., c. 6 (U.C.). 

Supra, note 2. 



68 



27. Except when a contrary intention appears by the will, where property is devised or 
bequeathed to the 'heir' or 'heirs' of the testator or of another person, the words 'heir' or 'heirs' 
mean the person to whom the beneficial interest in the property would have gone under the law of 
Ontario if the testator or the other person had died intestate. 

Because of this changed meaning to the word "heirs", one might have expected that, at 
least in the case of wills, the Rule would have become obsolete. However, the modern 
Ontario Court of Appeal case of Re Rynard shows that this has not occurred. 

The testator, in Re Rynard, died in 1934. By her will she provided that her son, 
Kennedy, should, subject to the payment of certain annuities, have the use of her farmlands 
during his life and that after his death $1,500 was to be paid out of the lands to her son, 
Bernard, and the balance was to go "to the heirs of my son, Kennedy". She further provided 
that Kennedy was not to sell or mortgage his interest and that it was determinable "should 
any creditor attempt to seize, attach or sell his life estate", and in that event his life estate was 
to become possessed by Bernard. Kennedy argued that the Rule in Shelley's Case applied so 
that he was absolutely entitled to the farmlands. 

At first instance 12 Walsh J. held that the Rule was inapplicable. Among other things, he 

1 1 
relied on section 31 of the Wills Act, which was the predecessor to section 27 of the 

Succession Law Reform Act. The provision had the effect, he considered, that the word 

"heirs", in the absence of indication to the contrary, meant Kennedy's intestate successors 

and thus did not refer to the whole line of succession. 

The Court of Appeal agreed that the Rule in Shelley's Case was inapplicable but 
rejected the reason given by Walsh J. In particular, it was held that section 3 1 of the Wills Act 
was "intended merely to negate the principle of primogeniture" and that it did not affect the 
applicability of the Rule in Shelley's Case. Despite this, the Court of Appeal held that the 
testator in referring to the heirs of Kennedy was not referring "to the whole of [his] 
inheritable issue". 15 The Court of Appeal relied on the fact that Kennedy's life interest was 
determinable so that the Rule would not have "the effect of turning his life estate into a fee 
simple absolute with all the incidents that adhere in law to such an interest". The fact that 
this life estate was determinable was also considered, independently of its significance in 

17 

interpreting the testator's intention, a ground for holding the Rule inapplicable: 



n 

12 
13 
14 
15 
16 
17 



Supra, note 3. 

Re Rynard (1979), 27 O.R. (2d) 619 (H.C.). 

R.S.O. 1970, c. 499. At the time the will was made, The Wills Act, R.S.O. 1929, c. 149 was in force. 

Re Rynard, supra, note 3, at 262. For criticism of this reasoning, see Ziffand Litman, supra, note 1, at 190-94. 

Re Rynard, supra, note 3, at 264. 

Ibid., at 265. For criticism, see Ziffand Litman, supra, note 1, at 190-91. 

Re Rynard, supra, note 3, at 266. 



69 



[Kennedy] has something less than a complete life interest in this case. He has, in fact, a 
determinable life interest and it cannot on the basis of [the provisions of the will] be said that 
Kennedy and his 'heirs' together have the entirety. Accordingly, apart altogether from the 
question whether or not the testator intended when she used the word 'heirs' to refer to the whole 
inheritable issue of Kennedy, the rule would be inapplicable on this ground. 

Unfortunately, the reasoning of the Court of Appeal on this point as an independent ground 
of decision adds further to the confusion surrounding the Rule. Commentators have described 
it as "clearly incorrect" for the following reasons: 

First, there is clear authority that the rule applies to determinable life estates. Secondly, the 
court falls prey to the common misconception that merger is an integral part of Shelley's rule. 
Merger forms no part of that rule, although it may operate after Shelley has transformed the 

20 

interests created in the instrument. Challis describes the interrelationship between Shelley's rule 
and the doctrine of merger in the following terms: 'If the subsequent limitation to the heirs 
follows immediately, without the interposition of any mesne estate, upon the prior freehold, the 
freehold is generally merged in the inheritance in possession. If any estate sufficient to prevent 
merger is interposed, or if, by any reason of any other circumstances, merger is prevented from 
taking place, he takes two distinct estates, a freehold in possession and an inheritance in 
remainder.' 

2. REFORM 

Whatever the uncertainties about the rationales for the creation and continuance of the 
Rule in Shelley's Case in medieval and Tudor England, it is clear that there is no rationale 
that justifies its continued existence in the law of Ontario. In addition, change in the intestacy 
laws and consequent change in the common meaning of the word "heirs", along with the rule 
of construction expressed in section 27 of the Succession Law Reform Act, could have been 
used to sustain the view that the Rule had become obsolete, at least in the case of wills. 
However, this view was rejected by the Ontario Court of Appeal in Re Rynara 1 and 
abrogation of the rule requires legislation. It is true that the Rule is not often invoked and, 
even where it is, the Rule is rarely applied, but this does not mean that it does not cause 
harm: 

Individuals continue to be victimized by Shelley, notwithstanding that the courts almost 
invariably conclude that the conveyance in question is not caught by the rule. They are victims of 



18 
19 
20 
21 

22 
23 



Ziffand Litman, supra, note 1, at 189. 

Ibid., at 189-90. 

Law of Real Property (3d ed., 191 1), at 153. 

Supra, note 2. 

Supra, note 3. 

Ziffand Litman, supra, note 1, at 171. 



70 



the financial and psychological costs of litigation, and because the rule appears to be devoid of 
social utility it cannot help but breed cynicism in the litigants. 

The Rule has been judicially held inapplicable in Alberta 24 but otherwise reform has not 
been carried out in Canada. Reform has been widespread in other jurisdictions. 25 The Rule 
has been abolished in nearly all jurisdiction of the United States; in nearly all states of 

27 28 29 

Australia; in New Zealand; and in England. The English provision, section 131 of the 

30 

Law of Property Act, 1925, is as follows: 

Where by any instrument coming into operation after the commencement of this Act an interest 
in any property is expressed to be given to the heir or heirs or issue or any particular heir or any class 
of the heirs or issue of any person in words which, but for this section would, under the rule of law 
known as the Rule in Shelley's case, have operated to give to that person an interest in fee simple or 
an entailed interest, such words shall operate in equity as words of purchase and not of limitation, 
and shall be construed and have effect accordingly, and in the case of an interest in any property 
expressed to be given to an heir or heirs or any particular heir or class of heirs, the same person or 
persons shall take as would in the case of freehold land have answered that description under the 
general law in force before the commencement of this Act. 



24 



25 



26 



27 



28 
29 



30 
31 



Re Simpson, [1927] 4 D.L.R. 817 (Alta. S.C., App. Div.), aff d on other grounds [1928] S.C.R 329; Re Budd 
(1958), 12 D.L.R. (2d) 783 (Alta. S.C.). 

Various commentators have urged abolition of the Rule. See, for example, Ziff and Litman, supra, note 1; 
A.M.Sinclair, "The Law of Real Property of New Brunswick: Some Proposals" (1968), 18 U.N.B L.J. 1.; 
J.A. Webster, "A Relic North Carolina Can Do Without— The Rule in Shelley's Case" (1966), 45 N.C.L. Rev. 3. 

See J.V. Orth, "Requiem for the Rule in Shelley's Case" (1989), 67 N.C.L. Rev. 681; J. Dukeminier and 
S.M. Johanson, Wills, Trusts and Estates (4th ed., 1990), at 703; American Law Institute, supra, note 7, 
at 273-77. 

Queensland: Property Law Act 1974, No. 76, s. 28; New South Wales: Conveyancing Act 1919, s. 17; Victoria: 
Property Law Act, 1958, s. 130; Western Australia: Property Law Act, 1969, s. 27. 

The Queensland reform implemented a recommendation of the Queensland Law Reform Commission, Report on 
Property Law Reform (1973). 

For discussion of the Australian reforms, see M.A. Neave, C.J. Rossiter, and M.A. Stone, eds., Sackville & 
Neave's Property Law: Cases and Materials (4th ed. 1988), at 185-86; P. Butt, Land Law (3d ed., 1996) at 120; 
G.W. Hinde, D.W. McMorland, and P.B.A. Sim, Land Law (1978), at 331. 

Property Law Act, 1952 (N.Z.), s. 22. 

The abolition of the Rule in Shelley's Case, supra, note 1, was also recommended for Northern Ireland in the 
Survey of the Land Law of Northern Ireland (1971) by a working party of the Faculty of Law, The Queen's 
University, Belfast (Chair: L.A. Sheridan) (report to the Director of Law Reform for Northern Ireland), 
at 105-07. 

15 & 16 Geo. 5, c. 20 (U.K.). 

The reference to operation "in equity" is because of the scheme of the English legislation that successive 
interests necessarily occur under a trust. 



71 



Similarly, we recommend that the Rule in Shelley 's Case be abrogated. In one respect, 
we disagree with the position taken in England. The English provision, in its concluding part, 
requires a reference to heir or heirs to mean the person who would have been the heir under 
the common law rules of inheritance. Section 27 of the Ontario Succession Law Reform Act 32 
already provides that, subject to contrary intention, a reference to heir or heirs of the testator 
or another person means the person who would have taken on the intestacy of the testator or 
the other person. It thus embraces as "heirs" the persons who would under the modern law 
take an intestacy. This inclusion of all of the intestate successors accords with the intention a 
grantor would most likely have in modern Ontario. 

Accordingly, we further recommend that in the context of the abrogation of the Rule in 
Shelley's Case references to the heir or heirs of a person should in the case of inter vivos 
conveyances, as well as wills, mean the intestate successor or successors of the person. 



32 

Supra, note 2. 



CHAPTER 6 



CO-OWNERSHIP 



1. SUMMARY OF THE PRESENT LAW 

(a) Nature and Types of Co-ownership 

Chapters 3 to 5 of this report dealt with successive interests in land in which the 
enjoyment of property is divided temporally. Co-ownership is concerned with the 
simultaneous possession of the same piece of land by one or more persons. 

The two main types of co-ownership are joint tenancy and tenancy in common. The 
fundamental concept behind joint tenancy is that two or more people together own the same 
interest. This was traditionally expressed by saying joint tenants were seised "per mie et per 
tout\ meaning that "each joint tenant holds the whole and holds nothing, that is, he holds the 
whole jointly and nothing separately". This fundamental concept gives rise to two main 
features: the four unities and the right of survivorship. 

The four unities that must be present for the creation and continuation of a joint tenancy 
are the unities of possession, interest, title, and time. The unity of possession "refers to the fact 
that 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". The unity of interest requires that the 
interest of each joint tenant be "the same in extent, nature and duration". For example, there can 
be no joint tenancy if one person's interest is indefeasibly vested and another's is subject to a 
condition subsequent. 

The unity of title means that each joint tenant's title must be derived from the same 
document or occurrence. The unity of time means that each joint tenant's title must vest at the 
same time. However, unity of time is not required for a joint tenancy created by will or by a 



Interests may be held in a combination cf successive and concurrent interests. For example, land may be conveyed 
to X for life, remainder to Y and Z in fee simple as joint tenants. 

Coke upon Littleton (19th ed., 1832), at 186a. 

E.E. Gillese, ed., Property Law: Cases, Text and Materials (2d ed., 1990), at 18:12. 

R. Megarry and H.W.R. Wade, The Law of Real Property (5th ed., 1984), at 420. 



[73] 



74 



conveyance employing a use. For example, a joint tenancy may be created by a gift by will of 
land to the children born to A, even though the children's interests will each vest at the time of 
their respective births. 

The right of survivorship (or jus accrescendi as it is often called) is the right of the 
surviving joint tenants to take the interest of a pre-deceasing joint tenant. However, in theory 
this is a misleading way of expressing the right: the death of one joint tenant does not cause 
an interest to pass to, or be taken by, the survivors; they are left as before but simply share 
their ownership with one less person. As Latham C.J. put it in the Australian High Court case 
of Wright v. Gibbons, 

[i]f one tenant dies his interest is extinguished. He falls out, and the interest of the surviving joint 
tenant is correspondingly enlarged. 

As we shall discuss below, a joint tenancy may be converted into a tenancy in common 
(which carries no right of survivorship) by a process known as severance. However, 
severance may not be effected by will, so that if a joint tenant purports to devise his or her 
interest in the property by will, the surviving joint tenants will benefit from the right of 
survivorship and the devisee will take nothing. 

A tenancy in common differs from a joint tenancy in two main ways. First, the only 
unity that is required is unity of possession. Unlike joint tenants, tenants in common have 
distinct, separate interests so that there is no reason why they should have unity of interest, 
title, or time. Tenancy in common does require unity of possession. Tenants in common have 
equal rights of possession over the whole of the land. Otherwise, they would not be co- 
owners at all. 

Secondly, tenants in common do not have a right of survivorship. When one tenant in 
common dies, his or her interest in the land does not pass to the surviving tenants in common 
but forms part of the deceased's estate and passes in accordance with the will or intestacy 
rules. 

Two other forms of co-ownership are no longer important and, indeed, probably no 
longer exist in Ontario. Tenancy by the entireties was an arrangement that at one time applied 
to married persons. 

At common law, when property was conveyed to a husband and wife in any estate in such a way 
that had they been strangers they would have taken as joint tenants, they took rather as tenants by 
the entireties. This was so because of the doctrine of unity of legal personality, according to which 
husband and wife were considered in law as one: to the four unities of time, title, interest and 
possession was added a fifth unity, unity of the person. The unity was so complete that neither 



5 



(1949),78C.L.R.313,at323. 

It should be noted that the other unities may be satisfied also. The fact that all four unities are present does not 
mean that the arrangement is necessarily a joint tenancy. 



75 



spouse was regarded as having even a potential share in the property, both were seised together as 
one individual of the whole, that is, of the entirety. They were, in other words, together tenants of 
the entirety. From this flows one of the most important features of a tenancy by the entireties: its 
unseverability. And it follows from this unseverability that the right of survivorship is 
indestructible. 

Q 

In some provinces tenancies by the entireties have been explicitly abolished. In 
England and Australia, the married women's property legislation, which substantially 
diminished the concept of unity of husband and wife, has been treated as removing the basis 
of tenancy by the entireties and consequently of impliedly abolishing that form of co- 
ownership. The same position was taken in Ontario until the decision in Campbell v. 
Sovereign Securities & Holdings Co., when the Court of Appeal approved the view that 
tenancy by the entireties could still be created in Ontario. Since the decision in that case the 

12 13 

Family Law Reform Act and more recently the Family Law Act have replaced the Married 
Women's Property Act and have re-stated the abrogation of the concept of unity of husband 
and wife. Section 64 of the Family Law Act provides as follows: 

64. — (1) For all purposes of the law of Ontario, a married person has a legal personality that is 
independent, separate and distinct from that of his or her spouse. 

(2) A married person has and shall be accorded legal capacity for all purposes and in all 
respects as if he or she were an unmarried person and, in particular, has the same right of action 
in tort against his or her spouse as if they were not married. 

(3) The purpose of subsections (1) and (2) is to make the same law apply, and apply equally, 
to married men and married women and to remove any difference in it resulting from any 
common law rule or doctrine. 



7 

8 

9 

10 

11 



12 
13 
14 
15 



J.M. Glenn, "Tenancy By The Entireties: A Matrimonial Regime Ignored" (1980), 58 Can. Bar Rev. 71 1, at 715. 

See, for example, Law of Property Act, R.S.A. 1980, c. L-8, s. 5. 

See Megarry and Wade, supra, note 4, at 461. 

See Registrar General ofN.S. W. v. Wood (1926), 39 C.L.R. 46. 

[1958] O.R. 441, afTd [1958] O.W.N. 414 (C.A.). The Campbell case was restrictively treated in Re Demaiter & 
Link, [1973] 3 O.R. 140 (Co. Ct). Note also s. 13(2) of the Conveyancing and Law of Property Act, R.S.O. 1990, 
c. C.34, which provides that s. 13 applies "notwithstanding that one of such persons is the spouse of another of 
them". 

R.S.O. 1980, c. 152, rep. by S.O. 1986, c. 4, s. 71. 

R.S.O. 1990.C.F.3. 

R.S.O. 1970, c. 262, rep. by S.O. 1978, c. 2, s. 82. 

First enacted as The Family Law Reform Act, 1975, S.O. 1975, c. 41, s. 1. 



76 



One commentator has argued that the predecessor to this provision — section 1 of the 

17 • 

Family Law Reform Act — did not necessarily abrogate tenancy by the entireties. The 
argument goes as follows. The provision clearly removes a husband's marital rights over his 
wife's property so that, among other things, the provision abrogates his common law right 
during the parties' joint life times to the control and enjoyment over property held as tenants 
by the entireties. However, that leaves the husband and wife on an equal footing so that, in 
accordance with section 64(3) of the Family Law Act, section 64(1) has no application to a 
tenancy by the entireties. 

Against this, it can be strongly argued that the unity of husband and wife was the basis 
of tenancy by the entireties and that the basis has been clearly removed. 18 In addition, 
survival of tenancy by the entireties is inconsistent with the very widely shared assumption 
that husbands and wives can hold land as joint tenants and that they can sever their joint 
tenancies and convert them into tenancies in common. 

Mention should be made here of a common law rule that, like tenancy by the entireties, 
is related to the concept of unity of husband and wife. This is the rule of construction (which, 
for convenience, may be referred to as the rule in Re Jupp ) that, in the absence of a contrary 
intention, a conveyance or gift by will to husband and wife and a third party gave the 
husband and wife only half and the third party took the other half. In England, it was held in 

20 

Re Jupp that the rule survived the passing of the Married Women's Property Acts and the 

21 

rule was subsequently abrogated by section 37 of the Law of Property Act, 1925, which 
provides: 

37. A husband and wife shall, for all purposes of acquisition of any interest in property, under a 
disposition made or coming into operation after the commencement of this Act, be treated as two 
persons. 

In Ontario, it is strongly arguable that the basis of this rule has been removed by 
section 64(1) of the Family Law Act but the argument might be made that section 64(3), by 
limiting the purpose of section 64(1) to producing equality between husbands and wives, 



16 
17 
18 



19 

20 
21 



Glenn, supra, note 7. 

Supra, note 15. 

This position is consistent with s. 13(2) of the Conveyancing and Law of Property Act, supra, note 11. 
Section 13(1) creates a presumption in favour of tenancy in common rather than joint tenancy where land is 
transferred to two or more persons. Section 13(2) provides that: 

13. — (2) This section applies notwithstanding that one of such persons is the spouse of another of 
them. 

(1988), 39 Ch.D. 148. See D. Mendes da Costa, "Co-ownership under Victorian Land Law" (1961-62), 3 Mel. 
U.L. Rev. 137, 306, 433, at 166. 

Ibid. 

15 & 16 Geo. 5, c. 20 (U.K.). 



77 



makes section 64(1) inapplicable to a rule of construction that equally affects husbands and 
wives and affects the rights of both of them vis-a-vis third parties. 

The fourth kind of co-ownership that at one time could exist was coparcenary. This 
occurred 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. For example, if a person died intestate 
survived only by two daughters, the daughters took as coparceners. In Ontario, coparcenary 
on intestacy is expressly abrogated by section 14 of the Estates Administration Act which 
has the effect that if real property becomes vested in two or more persons on intestacy, they 
take as tenants in common. 

(b) Creation of Co-ownership 

At common law there was a presumption of joint tenancy (rather than tenancy in 
common) so that a transfer of title to co-owners produced a joint tenancy if the four unities 
were satisfied and an intention to create a tenancy in common was not established. However, 
in at least three sets of circumstances equity took a different view and presumed a tenancy in 
common rather than a joint tenancy, and to some extent this equitable position remains 
relevant today. First, where two or more persons advance money on mortgage, it is 
presumed in equity that their title as mortgagees is held as tenants in common. Second, it is 
the orthodox view that partnership property is presumed in equity to be held by partners as 
tenants in common. A different position might appear to have been taken by Middleton J. in 
the briefly reported case of Harris v. Wood 16 where he stated as follows: 

Partners carry on business jointly, and upon the death of one partner the whole partnership 
estate vests in the survivor. The surviving partner then asserts in his own name the rights of the 
firm. It, therefore, follows that the style of cause should be amended ... The more material 
question is as to the ability of the surviving partner to give a good title if the defendant is entitled 
to a reconveyance. It is admitted that the transaction was a partnership transaction, and it follows 



22 



23 



24 

25 
26 



Compare the reasoning in Re Jupp, supra, note 19, and see, also, the argument mentioned above in relation to 
tenancy by the entireties. 

Coparcenary also occurred when the owner of an entail died without having barred the entail and was survived by 
female heirs. Although no new estates tail can be created in Ontario after May 27, 1956 (Conveyancing and Law 
of Property Act, supra, note 1 1, s. 4) it is still possible, although extremely unlikely, that persons might take as 
coparceners under an entail created prior to May 27, 1956. See Gillese, supra, note 3, at 18:10. 

Coparcenary is mentioned in current Ontario statutes: Limitations Act, R.S.O. 1990, c. L.15, s. 11; Partition Act, 
R.S.O. 1990, c. P.4, s. 2; Settled Estates Act, R.S.O. 1990, c. S.7, s. 18(2). 

R.S.O. 1990, c. E.22. In addition, descent upon intestacy to the common law heir was abolished by the Act to 
Abolish the Right of Primogeniture, 1851, 14 & 15 Vict, c. 6 (U.C.). 

See Malayan Credit Ltd v. Jack Chia - MP H Ltd., [1986] A.C. 549 (PC). 

(1915), 7 O.W.N. 61 1, at 612-13 (H.C.). In Hegerman v. Rogers, [1971] 3 O.R. 600 (H.C.), Wright J. took Harris 
v. Wood as holding that partners take partnership land as joint tenants; he felt bound to follow the decision, 
although he argued that it was wrong; but he finally decided that taking of title as joint tenants was irrelevant since 
the joint tenancy had been severed. See, also, Higgins v. Orson Ins. Co. (1981), 36 O.R. (2d) 79 (H.C.). 



78 



... that the whole property, upon the dissolution of the partnership, became vested in the surviving 
partner ... 

I had some doubt whether [section 13] of the Conveyancing and Law of Property Act affects 
the matter in hand. On consideration, I do not think it does. The fact that the transaction is a 
partnership transaction, and that the property was conveyed to the partners, as partners, 
sufficiently demonstrates that the holding is as joint tenants and not as tenants in common. 

Although the reasoning in Harris v. Wood is somewhat confusing, it seems that it is not 
in fact inconsistent with the traditional view that partners are presumed in equity to take 
partnership property as tenants in common. The findings in Harris v. Wood that in litigation 
involving the partnership the surviving partner represents the firm and that the surviving 
partner is able to convey title to partnership property involve only the view that the partners 
were joint tenants at common law and that the surviving partner became at common law the 
sole owner by survivorship. This does not imply that the survivor did not hold the property on 
trust for himself and the estate of the deceased partner as tenants in common in equity. 

The third situation where equity presumes a tenancy in common is where the purchase 
price for the property is provided unequally. For example, assume that A and B purchase 
property, A paying seventy-five percent and B twenty-five percent, and title is put in the 
name of B alone. Subject to proof of a contrary intention, B would hold the property on a 
resulting trust for A and B as tenants in common with A having a seventy-five percent share 
and B a twenty-five percent share. A similar result would follow if title had been put in the 
names of A and B. Subject to the effect of section 13 of the Conveyancing and Law of 
Property Act, 21 A and B would be joint tenants at common law but they would hold title on 
trust for themselves as tenants in common in the proportions described above. It is not clear 
what the position is if title is put in the name of A alone but A and B contributed equally to 
the purchase price. It is clear that A would, in the absence of proof of a contrary intention, 
hold title on a resulting trust for A and B. What is not clear is whether in equity A and B are 

28 

joint tenants or tenants in common with equal shares. In Delehunt v. Carmody the High 
Court of Australia, relying on the indirect effect of a provision equivalent to section 13 of the 
Conveyancing and Law of Property Act, held that A and B were equitable tenants in common 
with equal shares. In fact, it is strongly arguable that, even apart from the indirect effect of 
section 13, a beneficial tenancy in common is presumed to be created when interests are 

29 

created under a resulting trust, whether those interests are unequal or equal. 

We have made several references to section 13 of the Conveyancing and Law of 
Property Act. In circumstances in which it applies this provision reverses the common law 



27 
28 
29 

30 



Supra, note 11. 

(1986), 161 C.L.R. 464. 

See J. Maxton, "Beneficial joint tenancies: some recurring problems", [1987] N.Z.L.J. 382; S.M. Bandali, 
"Injustice and Problems of Beneficial Joint Tenancy" (1977), 41 Conv. 243, at 254-55. 

Supra, note 1 1 . 



79 



presumption and creates a presumption in favour of tenancy in common. It provides as 
follows: 

13. — (1) Where by any letters patent, assurance or will, made and executed after the 1st day of 
July, 1834, land has been or is granted, conveyed or devised to two or more persons, other than 
executors or trustees, in fee simple or for any less estate, it shall be considered that such persons 
took or take as tenants in common and not as joint tenants, unless an intention sufficiently appears 
on the face of the letters patent, assurance or will, that they are to take as joint tenants. 

(2) This section applies notwithstanding that one of such persons is the spouse of another of 
them. 

3 1 

In addition, section 14 of the Estates Administration Act, which has been mentioned 
above in the context of the abolition of coparcenary, provides: 

14. Where real property becomes vested under this Act in two or more persons beneficially 
entitled under this Act, they take as tenants in common in proportion to their respective rights, 
unless in the case of a devise they take otherwise under the will of the deceased. 

In addition, section 14 of the Conveyancing and Law of Property Act provides: 

14. Where two or more persons acquire land by length of possession, they shall be considered 
to hold as tenants in common and not as joint tenants. 

Section 13 of the Conveyancing and Law of Property Act applies only to "land". The 
common law presumption in favour of joint tenancy has therefore not been altered with 
respect to pure personalty. Consequently, where there is a composite gift to two or more 
persons consisting of both land and pure personalty there will be a presumption of joint 
tenancy with respect to the personalty and a presumption of tenancy in common with respect 
to the land. 

It appears that section 13 does not apply to partnership property. Section 23 of the 
Partnership Acts provides as follows: 

23. Where land or any heritable interest therein becomes partnership property, unless the 
contrary intention appears, it is to be treated as between the partners, including the representatives 
of a deceased partner, and also as between the heirs of a deceased partner and his or her executors 
or administrators as personal or movable and not real or heritable estate. 



31 

32 
33 
34 



Supra, note 24. 

Compare s. 14 of the Estate Administration Act, ibid., which applies to "real property' 

See Re Gamble (1906), 13 O.L.R. 299 (H.C.). 

R.S.O. 1990, c. P.5. 



80 



Since land which is partnership property is treated as between the partners as if it is 
personal property, section 13 does not apply and as far as common law title is concerned the 
common law presumption in favour of joint tenancy continues. This, it must be emphasized, 
does not affect the equitable presumption in favour of tenancy in common, affecting the 
equitable interests of the parties. Even with respect to land, section 13 of the Conveyancing 
and Law of Property Act does not apply in all circumstances in which persons become co- 
owners since it only applies where land is "granted, conveyed or devised" by "any letters 
patent, assurance or will". There are two main situations outside the scope of this provision. 
First, it was held in Campbell v. Sovereign Securities & Holding Co. that a written contract 
for the purchase of land is not an "assurance" within the section and that therefore the section 
does not apply in the determination of the effect of such a contract. Second, co-ownership 
may arise because of such doctrines or remedies as proprietary estoppel, constructive trust or 
resulting trust, in circumstances where the co-ownership is not derived from any instrument 
at all. 

(c) The Use of Land by Co-owners 

(i) Accounting for 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 other co- 
owners for the benefits derived from possession. 

Mere occupation by a co-owner will not impose a liability to account even if the occupation is 
sole or one co-owner has made more by his or her occupation. This is so because the non- 
occupying co-owner cannot, by failing to exercise his or her right to occupation, establish a claim 

37 

for compensation against another co-owner who is lawfully exercising his or her own rights. 

There are exceptional situations in which one co-owner may be required to account to 
other co-owners for the benefits of occupation — for what is often referred to as "occupation 
rent". 

a. Ouster 

Liability to pay an occupation rent occurs when one co-owner has unlawfully "ousted" 
another. Clearly, ouster includes actual expulsion. It probably also includes violent or 
threatening conduct on the part of one that makes it intolerable for the other to remain. It 



35 

Compare Harris v. Wood, supra, note 26, at 613. 

Supra, note 11. 

37 

Gillese, supra, note 3, at 18: 1 1-12. 



Dennis v. McDonald, [1981] 1 W.L.R. 810 (Fam. Div.), varied [1982] 1 All E.R. 590 (C.A.). 



81 



may extend further to cases where one party's conduct (whether or not violent) "made 
conditions intolerable" for the other or even to cases where the circumstances (whether or 
not fault is attributed to either party) makes it intolerable or unreasonable for the parties 
jointly to possess the property. 

b. Agreement 

An agreement between co-owners may make one liable to account. There are two main 
types of such agreement. First, the co-owners may have agreed to one having sole possession 
on the terms of making rental or other payments. Second, one co-owner may have agreed to 
act as agent or, as it is often put in archaic language in this context, as bailiff of the other co- 
owner 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 an accounting in certain circumstances. The relevant provision, 
which was first passed in England in 1704 and is often referred to as the "Statute ofAnne", 
has been re-enacted in Ontario as section 122(2) of the Courts of Justice Act, which 
provides: 

122. — (2) An action for an accounting may be brought by a joint tenant or tenant in common, 
or his or her personal representative, against a co-tenant for receiving more than the co-tenant's 
just share. 

It is well established that under this provision, 

a co-owner must account to his fellows for benefits which he receives, as co-owner, from third 

43 

parties, but not for benefits which he takes from the soil as a result of his own exertions. 

For example, in Henderson v. Easson one co-owner, who was in sole occupation and 
farmed the property, was not liable to account for the profits obtained. In Osachuk v. 



39 
40 

41 
42 
43 
44 

45 



Baker v. Baker (1976), 24 R.F.L. 145, at 149 (B.C.S.C). 

See Dennis v. McDonald, supra, note 38, at 816; Moss v. Moss (1986), 5 R.F.L. (3d) 62 (Nfld. U.F.C.). Contrast 
Carkeekv. Tate-Jones, [1971] V.R. 691 (S.C.); Belcherv. Belcher (\9S0), 19 R.F.L. (2d) 352 (B.C.S.C). 

4 Anne, c. 16 (U.K.), s. 27. 

R.S.O. 1990,c.C43. 

Mendes da Costa , supra, note 19, at 140. 

(1851), 17 Q.B. 701. For a similar modern Canadian case, see Reid v. Reid (1978), 87 D.L.R. (3d) 370 (Sask. 
Q.B.). 

There are a number of authorities that deal with a co-tenant's liability to account for profits realized from 
exploitation of the property. Some of them are summarized as follows by the Alberta Institute of Law Research 
and Reform, Partition and Sale (Report No. 23, 1977), at 30-31 : 



82 



Osachuk 46 husband and wife were co-owners of a house divided into two apartments. On 
their separation the husband remained in sole occupation of one apartment and the other 
apartment subsequently became vacant. It was held that the husband was not liable to account 
for the benefit of his sole occupation or for the rents that might have been obtained from the 
vacant apartment. 

d. Waste 

The law of waste applies to co-owners, section 3 1 of the Conveyancing and Law of 

AH 

Property Act providing: 

3 1 . — Tenants in common and joint tenants are liable to their co-tenants for waste, or, in the 
event of a partition, the part wasted may be assigned to the tenant committing the waste at the 
value thereof to be estimated as if no waste had been committed. 

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: 48 

Unlike a life tenant or a lessee, a co-tenant in fee simple may use the property in the same manner 
as would an owner who did not share title with co-owners, subject only to a duty to act 
reasonably. A co-owner can cut mature timber which is not of special value as ornamental timber 
... Similarly, a co-tenant can develop and operate mines. Therefore, if these acts are not waste, 
what acts would constitute waste as between co-tenants? The answer is, any conduct which would 
unreasonably diminish the value of the property. Malicious conduct would be included. 

Ontario authority, it may be added, places emphasis on whether the act of the co-owner 
amounts to destruction of the property. Spragge V.C. stated in Dougall v. Foster: 



[A]ssuming that a co-tenant may reasonably exploit the land, even if its value is thereby reduced, must he 
account to his co-tenants for any profits? The English courts permitted an accounting in [Job v. Potton 
(1875), L.R. 20 Eq. 84] and Glyn v. Howell, [1909] 1 Ch. 666. There are a multitude of cases in the United 
States, and in the overwhelming majority of them the co-tenant was required to account for any profits 
derived from activities which permanently reduced the value of the land. Authority on the point in Canada is 
thin, and inconsistent. In Rice v. George (1873), 20 Gr. 221 ... the court held that a co-tenant was not 
required to account for profits realized from the sale of timber. In Curtis v. Coleman (1875), 22 Gr. 561 ... 
the court required a co-tenant to account for profits derived form the sale of plaster from plaster beds on the 
land. 

These authorities raise the issue whether the profits came within the Statute of Anne, supra, note 41. They may 
also be viewed as raising the issue whether the activity in question amounted to waste. See infra, this ch., 
sec. 1(d). 



46 
47 
48 
49 



(1971), 18 D.L.R. (3d) 413 (Man. C.A.). 

Supra, note 11. 

Alberta Institute of Law Research and Reform, supra, note 45, at 30. 

(1853), 4 Gr. 319, at 327. 



83 



It is clear that a tenant in common has not an unlimited power to do as he will with the estate; for 
though the court is slow to interfere between tenants in common, yet where one commits any act 
amounting to destruction, he will be restrained ... 

And in that case the digging of clay for making bricks was restrained. 

e. Equitable Accounting 

It is sometimes argued that there is a general equitable jurisdiction to make allowances 
between co-owners. It appears, however, that this jurisdiction only applies in partition and 
sale or analogous proceedings and even in such proceedings the court's power to order 

52 

payment of occupation rent may be limited to the situation where the party to be charged 
claims an allowance in respect of outgoings related to the property. Moreover, it seems that a 
claim for contribution in respect of certain outgoings will not open the claimant up to being 
charged with occupation rent. In Mastron v. Cotton it was held that a joint tenant was 
entitled to credit for making mortgage payments and paying taxes, and for repairs, but that 
she would only be allowed such credit on account of interest, taxes, and repairs if she 
submitted to an allowance for use and occupation. Claiming an allowance for payment of 
mortgage principal did not similarly render her liable to occupation rent. 

The rationale that has been suggested for this special treatment of payments of 
mortgage principal is that they increase the capital value of the co-owner's equity in the 
property. However, this rationalization is unconvincing since a claim for the cost of 
improvements which have increased the capital value of the property does give rise to 
liability for occupation rent. In Australian cases co-owners have been entitled to obtain 
reimbursement, without becoming liable for occupation rent, for "rates and roadmaking 
charges" and mortgage payments, rates and taxes, and fire insurance premiums. 56 The 
rationale in these cases was that the payments were in respect of joint liabilities of the co- 
owners. In some Canadian cases co-owners have been held entitled to credit for various 



50 

51 

52 

53 
54 
55 
56 



See Law Reform Commission of British Columbia, Report on Co-ownership of Land (1988) at 10, 16-18; R.P. 
Meagher, W.M.C. Gummow, and J.R.F. Lehane, Equity: Doctrines and Remedies (2d ed., 1984), at 635-36. 

See Mastron v. Cotton, [1926] 1 D.L.R. 767, at 768 (Ont. S.C., App. Div.). See, also, the discussion by 
A.J. Bradbrook, S.V. MacCallum, and A.P. Moore, Australian Real Property Law (1991), at316. 

See, for example, Osachuk v. Osachuk, supra, note 46. But the statement in Mastron v. Cotton, supra, note 51, 
quoted infra, suggests the possibility of some flexibility. 

Supra, note 5 1 . See, also, Osachuk v. Osachuk, supra, note 46. 

See Osachuk v. Osachuk, ibid., at 435. 

Carkeek v. Tate-Jones, supra, note 40. 

Scapinello v. Scapinello, [1968] S.A.S.R. 316. 



84 



57 

payments without the court adverting to liability for occupation rent. The best view may be 
that 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. In the leading Ontario 

58 

case of Mastron v. Cotton, Ferguson J.A. expressed the relevant principle as giving the 
court such flexibility: 

While the general rule is that one joint tenant, unless ousted by his co-tenant, may not sue 
another for use and occupation, it seems clear that when the joint tenancy is terminated by a Court 
order for partition or sale, the Court may in such proceedings make all just allowances and should 
give such directions as will do complete equity between the parties ... 

What is just and equitable depends on the circumstances of each case. For instance if the 
tenant in occupation claims for upkeep and repairs, the Court, as a term of such allowance, usually 
requires that the claimant shall submit to an allowance for use and occupation ... Again, if one 
tenant has made improvements which have increased the selling value of the property, the other 
tenant cannot take the advantage of increased price without submitting to an allowance for the 
improvements ... And, once again, when, as here, one tenant has paid more than his share of 
encumbrances, he is entitled to an allowance for such surplus. 

These allowances being made as equitable allowances, there may as a matter of course be 
circumstances under which they should not be made. For instance, the circumstances may indicate 
that the improvements were made or t{ie surplus payments were made or intended to be made as 
gifts by one tenant to the other.... 

In cases where a co-owner is required to pay occupation rent, no clear principle has 
emerged for measuring the occupation rent payable. In Irrsack v. Irrsack the amount 
ordered was one-half of the rent "that these premises would attract". In Dennis v. 
McDonald, 60 in the context of a jurisdiction with a rent control system providing for rent of 
some properties at a "fair rent" without account being taken of scarcity, it was held that a co- 



tenant in possession should pay compensation by reference not to a market rent but "a fair 

61 62 

rent ... eliminating the scarcity element". In Leake v. Bruzzi, the court in effect treated the 
occupation rent as equivalent to the interest element of the mortgage payments made by the 



57 



58 
59 
60 
61 
62 



Crooks v. Crooks (1977), 30 R.F.L. 351 (B.C.S.C.) (payments for mortgage, taxes, fire insurance, improvements, 
and repairs but not entitled to credit for water and sewer rates); Sawyers v. Sawyers (1978), 3 R.F.L. (2d) 158 (Ont. 
H.C.) (payments relating to promissory notes and mortgage in respect of purchase of property, taxes, insurance, 
repairs, maintenance, and improvements); Smith v. Davis (1978), 6 R.F.L. (2d) 378 (B.C.S.C.) (payments for 
mortgage, taxes, insurance, improvements). 

Supra, note 51, at 768. 

(1978), 93 D.L.R. (3d) 139 (Ont. H.C). 

Supra, note 38 (C.A.). 

Ibid., at 593. 

[1974] 1 W.L.R. 1528(C.A). SeeSuttillv. Graham, [1977] 1 W.L.R. 819,at821 (C.A.). 



85 



co-tenant in possession. In Baker v. Baker, Craig J. said that "occupation rent is not 
necessarily measured by either the rental value of the property or the rent which an ousted 
owner may have to pay for accommodation elsewhere" and decided that "[hjaving regard to 
all the circumstances" it was "'just' to fix the occupation rent in this case at $125 a month, 
that is, the same amount as the mortgage payments [made by the co-tenant in possession]". 

/ The Family Law Act 

The Family Law Act creates special rules and confers on the court special powers in 
relation to a matrimonial home, whether or not the home is owned by the spouses as co- 
owners. Although section 19 of the Act provides that both spouses have an equal right to 
possession of the matrimonial home, that entitlement may be affected by a separation agreement 
or court order. In particular, the court may order that one spouse have exclusive possession of 

67 

the home. Obviously, there is a practical interrelationship between one spouse's exclusive 
possession of the home and other claims between the spouses. 

69 

As pointed out by the Supreme Court of Canada in Lamb v. Lamb,, an exclusive possession 
order may affect the quantum of support that should be ordered. If the dependent spouse is granted 
possession of a home, the financial needs of that spouse may be significantly reduced. Where the 
other spouse has an interest in the home, that spouse is already indirectly providing for one of the 
major living costs of the dependent spouse. The relationship between the equalization claim under 
Part I of the Act and an order for exclusive possession of a matrimonial home is perhaps less 
obvious, but often no less significant. In particular, orders for possession in favour of a spouse 
who does not have an ownership interest in the home may affect the other spouse's ability to 
satisfy an equalization claim through the payment of a monetary sum. 

Section 24 of the Family Law Act gives the court considerable flexibility in devising 
appropriate orders relating to the matrimonial home. The court may, among other things, 



63 
64 
65 
66 



67 
68 
69 



Supra, note 39, at 154. 

Supra, note 13. 

"Matrimonial home" is defined in the Family Law Act, ibid., s. 18. 

It is Part II of the Family Law Act, ibid., which deals with possession of the matrimonial home. The general 
definition of "spouse" in s. 1(1) applies to determine who is covered by Part II. It stipulates that a spouse is "either 
of a man and woman who, (a) are married to each other, or (b) have together entered into a marriage that is 
voidable or void, in good faith on the part of the person asserting a right under this Act". Therefore, persons who 
cohabit without going through any marriage ceremony are not covered by Part II: B. Hovius and T.G. Youdan, 
The Law of Family Property (1991) at 580. For discussion about occupational rights of cohabitees, see ibid., 
at 580-85. 

For further discussion, see infra, this ch., sec. 1(e). 

Hovius and Youdan, supra, note 66, at 607. 

(1985),46R.F.L.(2d)l(S.C.C). 



86 



21. — (l)(c) direct a spouse to whom exclusive possession of the matrimonial home is given 
to make periodic payments to the other spouse; 



(e) order a spouse to pay for all or part of the repair and maintenance of the matrimonial 
home and of other liabilities arising in respect of it, or to make periodic payments to 
the other spouse for those purposes ... 

(ii) Claiming for Expenditures Related to Property 

In certain circumstances one co-owner can obtain reimbursement from other co-owners 
with respect to expenditures relating to the property. In numerous cases reimbursement has 

70 7 1 72 73 

been obtained for mortgage payments, improvements, taxes, fire insurance premiums, 
upkeep and repairs, and expenses from litigation with a third party. 

Where the expense relates to a joint obligation of the parties it appears that the claim for 
reimbursement may be made at any time since the right of reimbursement is a right of 

76 

contribution analogous to that between co-sureties and co-insurers. 

Although it has been suggested that there is a general equitable jurisdiction to account 
as between co-owners, it appears that outside of the right of contribution mentioned above, 
the right of reimbursement may be claimed only in proceedings for partition and sale or 



70 



71 



72 



73 

74 

75 
76 



See Mastron v. Cotton, supra, note 51; Scapinello v. Scapinello, supra, note 56; Osachuk v. Osachuk, supra, 
note 46; Leake v. Bruzzi, supra, note 62; Leippi v. Leippi, [1977] 2 W.W.R. 497 (Man. C.A.); Kimmel v. Kimmel 
(1977), 5 R.F.L. (2d) 203 (Ont. H.C.); Crooks v. Crooks, supra, note 57; Zelezniak v. Senkiw, [1978] 5 W.W.R. 
187 (Man. Q.B.); Sawyers v. Sawyers, supra, note 57; Smith v. Davis, supra, note 57; De Freitas v. De Freitas 
(1979), 10 R.F.L. (2d) 238 (Ont. C.A.); Manley v. Schiller (1980), 18 R.F.L. (2d) 109 (B.C.S.C); Yee v. Yee 
(1990), 25 R.F.L. (3d) 366 (Ont. C.A.). 

See Handley v. Archibald (1899), 30 S.C.R. 130 at 141; Mastron v. Cotton, supra, note 51; at 768; Nemeth v. 
Nemeth (1967), 64 D.L.R. (2d) 377 (B.C.S.C); Crooks v. Crooks, supra, note 57; Sawyers v. Sawyers, supra, 
note 57; De Freitas v. De Freitas, supra, note 70; Smith v. Davis, supra, note 57; Manley v. Schiller, supra, 
note 70; Re Kneebone andMatheson (1981), 124 D.L.R. (3d) 538 (P.E.I. S.C.). 

See Mastron v. Cotton, supra, note 5 1 ; Nemeth v. Nemeth, supra, note 7 1 ; Scapinello v. Scapinello, supra, note 
56; Carkeek v. Tate-Jones, supra, note 40; Kimmel v. Kimmel, supra, note 70; Crooks v. Crooks, supra, note 57; 
Sawyers v. Sawyers, supra, note 57; Smith v. Davis, supra, note 57; Zelezniak v. Senkiw, supra, note 70; Re 
Kneebone and Matheson, supra, note 7 1 . 

See Scapinello v. Scapinello, supra, note 56; Crooks v. Crooks, supra, note 57; Smith v. Davis, supra, note 57; 
Sawyers v. Sawyers, supra, note 57; Re Kneebone andMatheson, supra, note 71. 

See Mastron v. Cotton, supra, note 51; Nemeth v. Nemeth, supra, note 71; Crooks v. Crooks, supra, note 57; 
Kimmel v. Kimmel, supra, note 70; Sawyers v. Sawyers, supra, note 57; Zelezniak v. Senkiw, supra, note 70. 

See Gage v. Mulholland (1869), 16 Gr. 145. 

See P.D. Maddaugh and J.D. McCamus, The Law of Restitution (1990), at 199. 



87 



analogous proceedings. A rationale for denying relief while co-ownership lasts was given 

78 

by Brett M.R. in Leigh v. Dickeson: 

The cost of the repairs to the house was a voluntary payment by the defendant partly for the 
benefit of himself and partly for the benefit of his co-owner; but the co-owner cannot reject the 
benefit of the repairs, and if she is held to be liable for a proportionate share of the cost, the 
defendant will get the advantage of the repairs without allowing his co-owner any liberty to 
decide whether she will refuse or adopt them. 

Maddaugh and McCamus comment as follows on this rationale: 

The analysis offered by Brett M.R. would account for the denial of relief where the repairs or 
improvements are unnecessary or of no use to this inactive co-tenant. But where, for instance, the 
repairs in question may be viewed as an unavoidable burden of ownership, on what policy basis 
should recovery be denied? A more comprehensive explanation for the "no liability" rule would 
be that the relationship of co-owners generates a number of complex cost allocation problems 
which ought, for reasons of convenience, to be resolved on the basis of mutual agreement. Where 
the co-tenants cannot agree on such fundamental questions, partition is an appropriate and 
available solution to their problems. At that point, an accounting will be taken in order to prevent 
the unjust enrichment of one co-tenant at the expense of the other. 

Accounting at the time of partition or sale is justified on the basis that, 

... the benefit conferred is now, in effect, a liquid asset in the hands of the co-tenant. This being 
so, the benefited co-tenant will not be unfairly prejudiced by the imposition of liability and, 
accordingly, a restitutionary liability to account arises. 

Two comments should be made on reimbursement for improvements. First, it is 
established in Australia that a co-owner's claim for an allowance arising from 
improvements creates a proprietary interest, in the nature of an "equity", but this view has not 

O 1 

been accepted in Canada. Secondly, the measure of compensation with respect to 
improvements is the amount of the outlay to the extent that the value of the property has been 



improved 



82 



77 
78 
79 
80 
81 

82 



See supra, this ch., sec. 1(c) and infra, sec. 1(e). 

(1884), 15Q.B.D.60,at65. 

Supra, note 76, at 746-47. 

See Brickwoodv. Young (1905), 2 C.L.R. 387. 

See Ruptash & Lumsden v. Zawick, [1956] S.C.R. 347; Gillese, supra, note 3, at 18:30-31. But see 
A.H. Oosterholf and W.B. Rayner, eds., Anger and Honsberger's Law of Real Property (2d ed. 1985), at 800-01, 
which describes the Australian position as representative of Canadian law. 

See Bradbrook, MacCallum, and Moore, supra, note 51, at 462. See, also, Oosterhoff and Rayner, supra, note 81, 
at 800-01; Re Knee bone and Matheson, supra, note 71, at 543. 



88 



Before leaving this summary of the present law, comment should be made on the 
multitude of cases dealing with spouses and unmarried cohabitees in which a variety of 
doctrines is used to determine that parties have beneficial interests not corresponding with 
legal title. The effect of these doctrines may be to create beneficial ownership or to adjust the 
size of the beneficial shares of co-owners. Two doctrines can conveniently be briefly 
mentioned. 

First, the presumption of resulting trust has the effect that parties are presumed to have 
beneficial interests proportionate to the contributions to the purchase price of the property. 83 
In some cases payments of mortgage installments have been treated as equivalent to 
contributions to the purchase price and in other cases, where one party pays the mortgage 
installments, contributions by the other party have also been treated as equivalent to 
contributions to the purchase price. Finally, the making of improvements to property have, 
again, been treated as equivalent to contributing to the purchase. 

Second, the principle of unjust enrichment has in recent years largely displaced the 
presumption of resulting trust as a means of affording redress in circumstances such as those 
described above. The principle of unjust enrichment applies when (1) one party is enriched, 
(2) the other party suffers a corresponding deprivation, and (3) there is an absence of any 
juristic reason — such as a contract or disposition of law — for the enrichment. The 
establishment of unjust enrichment gives the court considerable flexibility in determining the 
appropriate remedy. Sometimes, the claimant will obtain a beneficial interest in property by 
virtue of the imposition of a constructive trust; other times the claimant will obtain a personal 
remedy so that he or she receives an amount of money. 

There has rarely been consideration of the interrelationship between these developments 
in presumptive resulting trusts and unjust enrichment, on the one hand, and the traditional 

85 

principles affecting the entitlements of co-owners, on the other hand. 



83 
84 
85 



For detailed treatment, see Hovius and Youdan, supra, note 66, chs. 5, 6. 

For detailed treatment, see Hovius and Youdan, ibid., ch. 7. 

But see Ruff v. Strobel (1978), 86 D.L.R. (3d) 284 (Alta. S.C., App. Div.); Paterson v. Paterson (1979), 108 
D.L.R. (3d) 234 (Man. Q.B.); Vandongen v. Royal (1990), 38 E.T.R. 69 (Ont. Dist. Ct); Maddaugh and 
McCamus, supra, note 76, at 745-47 (in relation to improvements). Compare the Australian case of Muschinski v. 
Dodds (1985), 160 C.L.R. 583. Cohabitees purchased land at a cost of $20,000, partly for a home and partly for a 
business. The total cost of purchasing and improving the land was about $27,750 of which the woman spent about 
$25,250 and the man about $2,500. Title to the land was put in both their names as tenants in common. It was held 
that the presumption of resulting trust arising out of the provision by the woman of the whole of the purchase price 
was rebutted by the evidence which showed the parties' intention that each of them should have a one-half 
beneficial interest. However, it was also held, by a majority, that each party was entitled to be repaid the amount 
of his or her contribution. The result was that the disproportionate financial contributions were reflected in the 
amount to which each was entitled to be repaid but they shared equally in any enhancement in value. Deane J. 
(with whom Mason J. agreed, Gibbs C.J. having a different reason for the same conclusion) put the decision on 
the basis of unconscionability. The principle, he stated (at 623): 

operates where the substratum of a joint relationship or endeavour is removed without attributable blame and 
where the benefit of money or other property contributed by one party on the basis and for the purposes of 
the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it 



89 



Two comments may be made concerning this. First, courts have often distinguished 
between payments before and payments after separation so that the former is treated as altering 
beneficial entitlements whereas the latter is treated as relevant to the traditional accounting 
between co-owners. Second, the traditional principles relating to accounting between co- 
owners may properly be treated as based on the principle of unjust enrichment (although they 
were developed before the articulation of unjust enrichment as part of Canadian law) and their 
development is capable of being guided by reference to that principle. 

(d) Severance of Joint Tenancy 

(i) Severance by Act of the Parties 

a. Introduction 

The main feature which distinguishes joint tenancy from tenancy in common is the right 
of survivorship which is an incident of joint tenancy. However, joint tenants are not bound to 
maintain their co-ownership as joint tenancy: they may convert it into a tenancy in common 
by the process known as severance. 

In a frequently quoted passage, Sir W. Page Wood V.C. described severance in 

87 

Williams v. Hensman: 

A joint tenancy may be severed in three ways: in the first place, an act of any one of the persons 
interested operating upon his own share may create a severance as to that share. The right of each 
joint-tenant is a right of survivorship only in the event of no severance having taken place of the 
share which is claimed under the jus accrescendi. Each one is at liberty to dispose of his own 
interest in such a manner as to sever it from the joint fund — losing, of course, at the same time, 
his own right to survivorship. Secondly, a joint tenancy may be severed by mutual agreement. 
And, in the third place, there may be a severance by any course of dealing sufficient to intimate 
that the interests of all were mutually treated as constituting a tenancy in common. When the 
severance depends on an inference of this kind without any express act of severance, it will not 
suffice to rely on an intention, with respect to that particular share, declared only behind the backs 
of the persons interested. 

Although there is some authority maintaining that the second and third methods 

88 

mentioned in Williams v. Hensman are two distinct methods of severance, it is convenient to 
divide severance into two main categories. First, there is severance by destruction of one of 
the four unities (that is, the first category in Williams v. Hensman). Second, there is severance 



86 
87 
88 



was not specifically intended or specially provided that that other party should so enjoy it. The content of the 
principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the 
relevant property to the extent that it would be unconscionable for him so to do. 

See, for example, Robertson v. Robertson (1972), 6 R.F.L. 35 (Ont. C.A.). 

(1861), 1 John & H. 546, at 557-58. 

See Burgess v. Rawnsley, [1975] Ch. 429 (C.A.). 



90 



by express or implied agreement (that is, the second and third categories in Williams v. 
Hensmari). 

b. Destruction of One of Four Unities 

In the same way that a joint tenancy may only be created if the four unities are present, 
so a joint tenancy cannot continue to exist if one of the four unities is destroyed. The unity of 
time is relevant only to the creation of a joint tenancy and destruction of the unity of 
possession would cause co-ownership to end altogether, since unity of possession is the one 
unity required for a tenancy in common. Consequently, a joint tenancy may be severed, and 
so converted into a tenancy in common, by destruction of either the unity of title or the unity 
of interest. 

Therefore, if a joint tenant alienates her or his interest to a third party, the third party 
takes the interest as a tenant in common since unity of title is broken. Even where no 
alienation occurs at common law, severance may take place in equity. For example, 
severance in equity will be effected by a specifically enforceable contract by a joint tenant to 
alienate his or her interest: 

This is an example of the application of the general principle that if a decree of specific 
performance is available the promisee will be regarded as having acquired an equitable interest 
from the date of the making of the contract or covenant. 

Similarly, there will be severance in equity where a joint tenant declares a trust of her or 
his interest. 

Where severance occurs in equity, but not at common law, the right of survivorship will 
continue to exist at common law but not in equity. Assume that A and B were joint tenants. A 
declares a trust of her interest for the benefit of C. B then dies. At common law, A becomes 
sole owner of the property but she holds title on trust for C as to a one-half share and for the 
estate of B as to the other one-half share. 

Where a joint tenant does an act affecting his or her interest, but which falls short of 
total alienation at common law or in equity, it is not always clear whether there has been 
severance. Different types of transactions may be conveniently considered in turn. 



89 



A.J. McClean, "Severance of Joint Tenancies" (1979), 57 Can. Bar Rev. 1, at 14. 

Compare the effect of the granting of an option. In Re McKee and National Trust Co. (1975), 56 D.L.R. (3d) 190 
(Ont. C.A.), a joint tenant husband granted the joint tenant wife an option to purchase his interest in the joint 
tenancy. It was held that the option, by itself, did not effect a severance unless and until it was exercised. See 
McClean, ibid, at 15. 



91 



First, the granting of a life estate by a joint tenant holding an estate in fee simple has 
given rise to some diversity of view, one view introducing the idea of a temporary suspension 
of the joint tenancy. Professor McClean describes these views as follows: 90 

Littleton stated that if a joint tenant created a life estate and either the grantor or his co-owner died 
during the currency of that estate, the right of survivorship did not operate, and the heirs of the 
deceased co-owner succeeded to his interest. Coke agreed but added the comment that if the life 

91 

tenant died before the joint tenants, the right of survivorship is revived on his death. This is 
sometimes described as a temporary suspension of joint tenancy, and therefore of the right of 
survivorship, during the term of the inferior estate. Such modern authority as there is favours the 
view that there is a severance when the life estate is granted, but the texts do not squarely face the 
issue of whether it is total or temporary. 

Although the Alberta Appeal Division in Sorenson v. Sorenson held that there was no 
severance when one joint tenant granted a life estate to the other, the grant of a life estate 
does destroy "the unity of interest and the immediate joint right to possession" 93 and it ought 
to be treated as bringing about a complete severance. 

A similar variety of views have been suggested with respect to the granting of a lease of 
her or his interest by a joint tenant of an estate in fee simple. However, the "preponderance of 
the later authorities supports the view that the granting of the lease effects a complete 

95 

severance". This seems correct in principle since the grant of a lease, like a life estate, 
destroys "the unity of interest and the immediate joint right to possession". 

It is clear that the creation by one joint tenant of a non-possessory encumbrance, such as 
a rentcharge or easement, affecting his or her interest does not effect a severance. However, 
the effect of a mortgage is less straightforward. At common law the granting of a mortgage 
severed the joint tenancy since the common law mortgage took effect by way of a 
conveyance of title from mortgagor to mortgagee. The uncertainty has arisen because in 
some jurisdictions statute provides for mortgages taking effect not by way of conveyance but 

QQ 

by way of security, as a charge against the mortgagor's title. Until recently, a mortgage 



90 Ibid., 2X1. 

91 

For Ontario approval of this view, see Power v. Grace, [1932] O.R. 357, at 360 (C.A.). 
92 (1977), 90 D.L.R. (3d) 26 (Alta. App. Div.). 

93 

McClean, supra, note 89, at 9. 

94 Ibid., at 10. 

95 „ . 

Ibid., at 8. 
% Ibid.,al9. 

97 Ibid., at 12. 

98 Ibid. 



92 



under the Registry Act in Ontario took effect by way of conveyance whereas one under the 
Land Titles Act 100 took effect as a charge. As was explained in the Report on the Law of 
Mortgages: 

Prior to the enactment of the Land Registration Reform Act, 1984, upon registration of a mortgage 
of land registered under the Registry Act, legal title to the land was actually transferred to the 
lender. Accordingly, a mortgage contained words of conveyance. By contrast, under the land titles 
system in Ontario, governed by the Land Titles Act, title is not, in law, transferred to the lender, 
whatever the form of the instrument; rather, a security agreement merely creates a 'charge' against 

102 

the land. Accordingly, there is no requirement of a conveyance of any estate to create an 
enforceable security interest. The charge is merely registered against the title and the borrower 
remains the registered legal owner. 

The position is now the same in Ontario with respect to a mortgage of land subject to 
the Registry Act as under the land titles system. The Land Registration Reform Act provides 
that a mortgage is a "charge" on property and section 6(1) provides that "[a] charge does 
not operate as a transfer of the legal estate in the land to the chargee". It has been held in 

106 

Australia that legislation equivalent to the Ontario Land Titles Act and Land Registration 
Reform Act, has the effect that a mortgage does not sever a joint tenancy. This view has, 
moreover, been applied in Canada. 107 



99 

100 

101 

102 

103 

104 

105 



106 



107 



R.S.O. 1990, c. R.20. 

R.S.O. 1990, c. L.5. 

Ontario Law Reform Commission, Report on the Law of Mortgages (1987), at 17. 

Land Titles Act, supra, note 100, s. 93. 

R.S.O. 1990, c. L.4. 

Defined by ibid., s. 1. 

The Land Registration Reform Act, ibid., s. 6(3) provides: 

6. — (3) Despite subsection (1), a chargor and chargee are entitled to all the legal and equitable rights and 
remedies that would be available to them if the chargor had transferred the land to the chargee by way of 
mortgage, subject to a proviso for redemption. 

In Lyons v. Lyons, [1967] V.R. 168 (S.C.) it was argued that an equivalent provision "meant that the mortgagee 
was still in substance vested with title, and therefore it followed that the mortgage severed the joint tenancy. The 
court held that the section did not go as far as vesting title in the mortgage, and that that was the crucial question 
in deciding if there had been a severance": McClean, supra, note 89, at 13). 

Lyons v. Lyons, supra, note 105, not accepting the contrary argument advanced by Mendes da Costa, supra, 
note 19, at 447-54. 

Re Foort and Chapman (1973), 37 D.L.R. (3d) 730 (B.C.S.C). Compare Sorenson v. Sorenson, supra, note 92, at 
at 35-36. See McClean, supra, note 89, at 12-13. 



93 



Generally, severance by destruction of one of the four unities occurs when one joint 
tenant alienates his or her interest. However, it will also occur when a joint tenant changes his 
or her interest by increasing it. 

c. Severance by Agreement 

109 

The English Court of Appeal in Burgess v. Rawnsley took the position that the second 
and third methods of severance described in Williams v. Hensman were in fact distinct 
methods of severance. As Professor McClean summarized it: 

Rule 2 encompassed express agreement, be it an express agreement to sever, or be it an express 
agreement not in itself directed to severance as such, but from which an inference of severance 
could be drawn. Rule 3 on the other hand covered circumstances not involving any agreement, but 
where it could be inferred that the parties formed a 'common intention' to hold their property as 
tenants in common. 

However, as Professor McClean goes on to comment: 

These distinctions are difficult to follow. In every case under Rules 2 and 3 the issue is whether 
the parties did something from which it can be inferred that they intended to treat their interest as 
a tenancy in common. Whatever the supporting evidence, one is really looking for an agreement, 
and it is nonetheless an agreement if it is referred to as a 'common intention'. 

The easy case is where the parties make an express agreement directed to the point of 
severance. Otherwise, the question is whether the court can infer an agreement to sever or 
whether the parties by their conduct treated themselves as tenants in common. 

Nothing would be gained by here reviewing comprehensively the case-law on this 

1 n 

topic. However, it should be emphasized that in borderline cases the determination whether 
an agreement to sever has occurred depends on the court's evaluation of a wide range of 
relevant facts. The Ontario case of Robichaud v. Watson may be taken as illustrative. 
Raymond Robichaud and the defendant June Watson began cohabiting in 1971 and in that 
year they bought a home as joint tenants. They separated in 1974, when Watson and the 
couple's children remained in England after the family had gone there for a holiday. 



108 

See McClean, ibid., at 5. 

109 

Supra, note 88. 
Supra, note 87. 

Supra, note 89, at 15-16. 

"2 „., 

Ibid., at 16. 

113 

For a detailed review,see McClean, ibid., at 18-25. 

1 M (1983), 147 D.L.R. (3d) 627 (Ont. H.C.). 



94 



Robichaud returned to Canada and lived in the jointly-owned home until his death in 1979. 
During the period between 1974 and 1979 Robichaud made improvements to the property, 
paid all outgoings, including mortgage payments, and received rent from tenants. In 1975 
Watson instructed an Ontario lawyer "to do whatever was necessary to recover her equity in 
the property". 115 The lawyer wrote to Robichaud asking Robichaud to contact him to discuss 
Watson's obtaining her "net equity out of the home. Robichaud, also, instructed a lawyer 
and the two lawyers conducted inconclusive negotiations: 

[The two lawyers] then began negotiations on a without prejudice basis. The negotiations were 
aimed at settling the claim of June Watson for her equity in the house and her claim for the value 
of her household furnishings and car. June Watson testified that she had no idea at this time as to 
the value of her share. She was not interested in the property as such and was content that 
Robichaud take over as long as she got her fair share out of the house. On behalf of Mr. 
Robichaud, [his lawyer] had made a cash offer of settlement by letter of November 1, 1976. The 
offer was eventually rejected by June Watson and her solicitor as being inadequate. No further 
offers were exchanged and negotiations ceased. [Robichaud's lawyer] testified that he and his 
client, Robichaud, discussed the possibility of taking partition proceedings but Robichaud lacked 
the financial retainer to go ahead at the time. 

There were no further negotiations nor were any legal proceedings taken by either party up 
to the time of Robichaud's death. 

It was held that the joint tenancy had been severed prior to the death of Robichaud. In 
coming to this conclusion Griffiths J. took account of a wide range of relevant 
circumstances: 

I have concluded that the negotiations carried on between the parties through their solicitors in 
this case clearly indicated that each regarded themselves as tenants in common, that their interests 
had been severed and what was at issue in the negotiations was the value only of their respective 
interests. June Watson instructed her solicitor to conduct negotiations solely with a view to 
obtaining payment to him of the value of her beneficial interest in the property. She wanted cash 
and upon receiving the appropriate amount she would have released her interest in the property to 
Robichaud. That the parties considered their interests severed is further evidenced by the fact that 
Robichaud enjoyed sole possession of the property and paid all mortgage payments and other 
expenses necessary to maintain title from 1974 to his death. June Watson never again visited the 
property nor did she make any payments on account of the mortgage or municipal taxes before 
Robichaud's death. 

Three points should be emphasized about severance by agreement. First, severance may 
be effected informally. The agreement may be express or inferred and it is not required to be 



Ibid. These are the words of the judge, Griffiths J. 
Ibid. These are the words used in the lawyer's letter. 

117 Ibid.,2X62,\. 

118 Ibid., at 636. 



95 



made in, or be evidenced by, any particular form. It has been suggested that the Statute of 
Frauds applies to an agreement to sever. However, the Statute is concerned with the 
bringing of actions to enforce contracts. Severance is not within the ambit of the Statute since 
it "automatically effects a severance" without the need for enforcement by action or 
otherwise. 

Second, severance by agreement between the parties effects severance in equity but not 
at common law. For example, if A and B, originally joint tenants, agreed that they should 
hold their interests as tenants in common, that agreement would not affect their joint tenancy 
at common law. If, therefore, A died, B would be sole owner at common law but would hold 
that title on trust for A's estate as to a one-half share and for himself as to the other one-half 
share. 

The third point that should be emphasized is that parties may effect a severance by 

122 

course of conduct even where they do not realize that that is what they are doing. For 
example, joint tenants may believe themselves already to be tenants in common or they may 
not appreciate the difference between joint tenancy and tenancy in common. Nevertheless, 
their conduct may show that they were treating themselves in ways that the law recognizes as 
characteristic of tenants in common, and this conduct may effect a severance. 

(ii) Severance by Unilateral Act 

Although there are a few authorities stating the contrary, it appears that — apart from 
pursuant to statutory provision — severance may not be effected by a mere declaration of 
intention. However, severance of a joint tenancy does not depend on the agreement of all 
the joint tenants. It is clear that one joint tenant, without consent of or even notice to the other 
joint tenants, may engage in a transaction which destroys one of the four unities and thus 
severs the joint tenancy. 

At common law, if a joint tenant wished to sever the joint tenancy unilaterally without 
alienating his or her interest, he or she had to resort to some artifice. For example, he or she 
could convey his or her interest to a compliant third party on the understanding that it would 
be conveyed back again. Alternatively, he or she could convey his or her interest to a third 



119 
120 



121 
122 

123 



McClean, supra, note 89, at 16-17. 

R.S.O. 1990, c. S.19. Section 4 provides as follows: 

4. No action shall be brought ... to charge any person upon any contract or sale of lands, tenements or 
hereditaments, or any interest in or concerning them ... unless the agreement upon which the action is 
brought, or some memorandum or note thereof is in writing and signed by the party to be charged therewith 
or some person thereunto by him lawfully authorized by the party. 

Burgess v. Rawnsley, supra, note 88, at 444. 

McClean, supra, note 89, at 17-18. 

For a review of the authorities, see McClean, ibid., at 25-3 1 . 



96 



party to hold it on trust for him or her. However, in Ontario, as well as in other jurisdictions, 
it is unnecessary to resort to such strategems since statute provides that the owner of an 
interest in land may make a conveyance to himself or herself. 124 A joint tenant may, 
therefore, make a conveyance of his or her interest to himself or herself. He or she will then 
hold under a different instrument from the other joint tenant, thus destroying unity of title and 

125 

so severing the joint tenancy. 

Not only may severance be carried out without the agreement or consent of the joint 
tenants, it can be done even without the giving of notice to them. For example, in Re 
Murdoch and Barry a husband and wife were joint tenants of a cottage property. Shortly 
before her death the wife conveyed a one-half interest in the property to herself with the 
expressed intention of severing the joint tenancy. By her will she left her entire estate to her 
sister. The husband had no knowledge of the execution of the deed of conveyance by his wife 
until after her death. It was held that the joint tenancy was severed from the time of the 
making of the conveyance by the wife. 

(iii) Severance by Operation of Law 

In the same way that an act of the parties may sever a joint tenancy by destruction of 
one of the four unities, severance may also occur because of some event or action of a third 
party causing destruction of a unity. For example, the bankruptcy of a joint tenant has the 
effect of severing the joint tenancy as does the making an order for partition. In addition, 

127 

section 26 of the Family Law Act deems a severance to have occurred when a spouse dies 
owning an interest in a matrimonial home with a person other than the other spouse: 

26. — (1) If a spouse dies owning an interest in a matrimonial home as a joint tenant with a third 
person and not with the other spouse, the joint tenancy shall be deemed to have been severed 
immediately before the time of death. 

Severance may also occur when a judgment creditor of a joint tenant takes steps to 
execute the judgment against property of the debtor. The difficult question is at what stage of 
the process severance occurs. 128 In Power v. Grace 1 the Ontario Court of Appeal held that 



124 
125 



126 
127 
128 

129 



Conveyancing and Law of Property Act, supra, note 1 1 , s. 4 1 . 

See McClean, supra, note 89, at 6. Where the jointly owned property is a matrimonial home, severance by 
conveyance to oneself does not amount to disposing of or encumbering an interest in a matrimonial home and is 
not therefore subject to the restrictions provided by the Family Law Act, supra, note 13, s. 21: Home v. Home 
Estate (1987), 8 R.F.L. (3d) 195 (Ont. C.A.). 

(1975), 64 D.L.R. (3d) 222 (Ont. H.C.). 

Supra, note 13. 

See Ontario Law Reform Commission, Report on the Enforcement of Judgment Debts and Related Matters 
(1981), at 24-25. 

Supra, note 91. 



97 



the mere filing of a writ with the sheriff is not enough. Concerning what steps are sufficient, 
Grant J.A. said: 

The effect of the authorities is ... that, until execution against the lands is actually commenced by 
advertisement ... or probably by an actual seizure upon the lands themselves ... there is no such 
effect wrought upon the title or interest of the joint tenant (the judgment debtor) as will operate to 
sever the joint tenancy. 

Severance by operation of law should be considered in the context of one other area of 
law. Where one joint tenant unlawfully kills another a rule of public policy prevents the killer 
from obtaining a benefit from the killing. The right of survivorship takes effect at common 
law but the killer holds the property as a constructive trustee so that, in a two-person joint 
tenancy, the killer holds the property on trust, as to half for himself or herself and as to the 
other half for the estate of the victim. The effect of this is that the unlawful killing does not 
itself cause a severance but a severance in equity will ordinarily be a consequence of the 

131 

imposition of the constructive trust. 

132 

In the Report on Administration of Estates of Deceased Persons, the Commission 
explicitly addressed the application of the public policy rule to joint bank accounts and 
recommended that the same rule should apply as in the case of joint tenancy: 

With respect to joint bank accounts, we see no reason why the general approach that is taken to 
joint tenancy should not apply. Accordingly, we recommend that, where, in the case of a joint 
bank account, one joint tenant has killed another, and the court has applied the public policy rule, 
the joint tenant who has unlawfully caused the death should hold the whole bank account as 
constructive trustee, with his beneficial interest held in trust for himself and the beneficial interest 
of the victim held in trust for the persons entitled to share in the estate of the victim. We further 
recommend that there should be a. prima facie presumption that the beneficial interests are equal. 

(e) Partition or Sale 

The unity of possession is essential to both joint tenancy and tenancy in common. 
Consequently, the division of the land between the co-owners, or sale of the land and division 
of the proceeds of sale, terminates the co-ownership. 



130 
131 



Ibid., at 362. 

See Schobelt v. Barber (1966), 60 D.L.R. (2d) 519 (H.C.); T.G. Youdan, "Acquisition of Property by Killing" 
(1973), 89 L.Q. Rev. 235, at 249-50, 253-55; Maddaugh and McCamus, supra, note 76, at 488-90; Ontario Law 
Reform Commission, Report on Administration of Estates of Deceased Persons (1991), at 155. 

132 /&</., at 158. 



98 



Apart from tenancy by entireties, co-owners were always free to partition the land by 

133 

agreement between themselves. However, in the early common law, in the absence of such 
agreement, partition could only be obtained in coparcenary, a form of co-ownership created 
by operation of law. This was extended by statute in sixteenth century England to joint 
tenancy and tenancy in common. At about the same time the Court of Chancery "developed 
its jurisdiction in this area. The Chancery jurisdiction superseded in practice the writ of 
partition given by the old statutes." In Ontario, jurisdiction over partition was first 
conferred on the Court of King's Bench and the County Courts in 1832. 1 7 Jurisdiction was 

138 

additionally conferred on the Court of Chancery in 1850. Originally, the court's 
jurisdiction to order partition did not extend to ordering a sale of the property and division of 
the proceeds. That power was progressively introduced in nineteenth century legislation. 139 

The court's jurisdiction over partition and sale is now regulated by the Partition Act. 140 
Sections 2 and 3 provide as follows: 

2. All joint tenants, tenants in common, and coparceners, all doweresses, and parties entitled to 
dower, tenants by the curtesy, mortgagees or other creditors having liens on, and all parties 
interested in, to or out of, any land in Ontario, may be compelled to make or suffer partition or 
sale of the land, or any part thereof, whether the estate is legal and equitable or equitable only. 

3. — (1) Any person interested in land in Ontario, or the guardian of a minor entitled to the 
immediate possession of an estate therein, may bring an action or make an application for the 
partition of such land or for the sale thereof under the directions of the court if such sale is 
considered by the court to be more advantageous to the parties interested. 



133 



134 
135 
136 
137 
138 

139 

140 



An agreement to partition land comes within s. 4 of the Statute of Frauds, supra, note 120, so that ordinarily 
enforceability depends on the agreement being in or being evidenced by writing. In addition, s. 9 of the 
Conveyancing and Law of Property Act, supra, note 1 1, provides: 

9. A partition of land, an exchange of land, an assignment of a chattel interest in land, and a surrender in 
writing of land not being an interest that might by law have been created without writing, are void at law, 
unless made by deed. 

1539, 31 Hen. 8, c. 1 (U.K.); 1540, 32 Hen. 8, c. 32 (U.K.). 

B. Laskin, Cases and Notes in Land Law (1958), at 401. 

For a review of the legislation, see Silva v. Silva (1990), 30 R.F.L. (3d) 117 (Ont. C.A.), at 121-23. 

An Act to Provide for Partition of Real Estates 1 832, 2 Will. 4, c. 35 (U.C.). 

An Act for the more effectual Administration of Justice in the Court of Chancery in Upper Canada, 1850, 13 & 14 
Vict, c. 50 (U.C.). 

See Ontario Power Co. v. Whattler (1904), 7 O.L.R. 198 (Div. Ct.); Re Hutcheson and Hutcheson, [1950] 2 
D.L.R. 751(Ont.C.A.). 

Supra, note 23. 



99 



(2) Where the land is held in joint tenancy or tenancy in common or coparcenary by reason of 
a devise or an intestacy, no proceedings shall be taken until one year after the decease of the 
testator or person dying intestate in whom the land was vested. 

The natural meaning of section 3(1) has been cut down by judicial decision and a 
restrictive view taken of the persons who may bring an application for the partition. 141 It 
seems to be well established that all applicants must have "an estate in possession or have the 
immediate right to its possession". For example, it has been held that a mortgagee of the 
interest of one co-owner, who had not gained an enforceable right to possession, had no 
standing to apply. Similarly, a co-owner entitled in remainder subject to a prior life interest 
may not apply for partition against the co-owner remainderman, even though the partition 
sought would not affect the position of the tenant for life. In addition, the Partition Act 
only applies as between concurrent owners so that a tenant for life may not obtain partition 
against persons with remainder interests and, conversely, such persons may not obtain 



partition against a tenant for life. 



147 



Although it was considered that earlier partition legislation mandated an order for 
partition where it was sought by an applicant with standing to ask for it, it has for many years 
been established in Ontario that the court has a discretion whether to order partition. 

149 

Nevertheless, an applicant, in general, has a prima facie right to partition so that "the Court 
should ... compel a partition if no sufficient reason appears why such an order should not be 
made". In some cases — and they may be said to represent the orthodox view — a narrow 
view has been taken of what would constitute sufficient reason to refuse an order so that 
"where there is a 'prima facie' right to partition or sale which the applicant seeks to enforce 
without vexation or oppression, and the applicant comes to Court with clean hands, the order 



141 

142 
143 

144 
14S 
146 
147 
148 

149 
150 



Except where the distinction between partition and sale is material, subsequent references to partition include sale 
and division of proceeds. 

Laskin, supra, note 135, at 402. 

See Re Garnet & McGoran (1980), 1 17 D.L.R. (3d) 649 (Ont. H.C.); T.D. Bank v. Morison (1984), 47 O.R. (2d) 
524 (Co. Ct). 

See Morrison v. Morrison (1917), 39 O.R. 163. 

See Bunting v. Servos, [193 1] O.R. 409. But contrast Re Chupryk (1980), 1 10 D.L.R. (3d) 108 (Man. C.A.). 

See Re Morris (1983), 138 D.L.R. (3d) 1 13 (Ont. H.C.). But contrast Re Chupryk, supra, note 145. 

See Murcarv. Bolton (1884), 5 OR. 164 (Q.B.D.). 

See Re Hutcheson and Hutcheson, supra, note 139, and see the review of legislation and cases in Silva v. Silva, 
supra, note 136, at 121. 

Special considerations apply to co-owning spouses of a matrimonial home. 

Re Hay & Gooderham (1979), 24 O.R. (2d) 701, at 703 (Div. Ct). 



100 



sought is of right". On this view an application for partition would not be refused merely 
on the ground of balance of convenience or even hardship. 152 

This orthodox position requires modification, at least in the context of joint ownership 
of the matrimonial home by spouses. The special rights and obligations of spouses will 
therefore be briefly surveyed; then consideration will be given to the question whether the 
orthodox position requires modification even where the co-owners are not spouses. 

Apart from their possessory rights as co-owners, co-owning spouses have possessory 
rights in the matrimonial home derived from their status as spouses. At common law, 153 those 
rights came from two sources. First, a wife's entitlement to support from her husband 
included the right to shelter. Second, each spouse had a right to the "consortium" of the other 
spouse, thus ordinarily entitling both to reside in the matrimonial home irrespective of title to 
the property. These common law occupational rights lasted only during the marriage and 
depended on the continuance of the right to consortium and, in the case of a wife, the right to 
be maintained. For example, a wife lost her right of occupation if she committed adultery. 

The common law was changed by the Family Law Reform Act, 1978, and the changes 
were continued, with some modifications, in the Family Law Act. Section 19 of this Act 
provides that both spouses have an equal right to possession of the matrimonial home. The 
right of possession is personal against the other spouse and ends when the marriage 
terminates 156 unless a separation agreement or court order provides otherwise. 

The court has power to make orders for exclusive possession. As well as excluding the 
other spouse this may also, as stated above, continue the right to possession after the parties 



151 



152 



153 
154 
155 
156 



Szuba v. Szuba, [1950] O.W.N. 669, at 673. See Davis v. Davis, [1954] O.R. 23 (C.A.); Bisson v. Luciani (1982), 
37 O.R. (2d) 257 (H.C.). 

However, J.M. Glenn, in "Partition — Weighing of Relative Hardship — Interrelationship of The Partition Act and 
The Married Women's Property Act" (1976), 54 Can. Bar Rev. 149, at 150 observed that: 

where inconvenience or hardship will result, the courts have sometimes been able to place their refusal 
[to order partition] within the generally accepted parameters of discretion, by holding that the resultant 
hardship was intended by the applicant, who was therefore acting maliciously, vexatiously or 
oppressively. 

See Hovius and Youdan, supra, note 66, at 575-76. 

S.0. 1978, c. 2. 

Supra, note 13 , Part II. See, generally, Hovius and Youdan, supra, note 66, ch. 19. 

This position is slightly modified by s. 26(2): 

26. — (2) Despite clauses 19(2)(a) and (b) (termination of spouse's right of possession), a spouse who has 
no interest in a matrimonial home but is occupying it at the time of the other spouse's death, whether under 
an order for exclusive possession or otherwise, is entitled to retain possession against the spouse's estate, 
rent free, for sixty days after the spouse's death. 



101 



157 i • 

cease to be spouses. In exercising the power to determine whether one spouse should have 

158 

exclusive possession, the court is directed by statute to consider a range of relevant factors: 

(a) the best interests of the children affected; 

(b) any existing orders under Part I (Family Property) and any existing support orders; 

(c) the financial position of both spouses; 

(d) any written agreement between the parties; 

(e) the availability of other suitable and affordable accommodation; and 

(f) any violence committed by a spouse against the other spouse or the children. 
When considering the best interests of the children affected, the court is to consider: 159 

(a) the possible disruptive effects on the child of a move to other accommodation; and 

(b) the child's views and preferences, if they can reasonably be ascertained. 

Before the enactment of the Family Law Reform Act, 1978, a spouse's right of 
occupation of a matrimonial home could be regulated under section 12 of the Married 
Women's Property Act. It was established that where the matrimonial home was jointly 
owned by the spouses an order for partition or sale under the Partition Act should not be 
made without prior consideration of spousal rights of occupation. Moreover the court had a 
discretion under the Married Women's Property Act, at least where the spouse in occupation 
had been deserted by the other spouse. This discretionary power was 

to be exercised according to all the circumstances of the case, including (but not limited to) the 
financial position of the spouses, whether there are children and who has custody of them, the 



157 

158 
159 
160 
161 
162 



An order for exclusive possession is registrable against land, both under the Registry Act, supra, note 99 and the 
Land Titles Act, supra, note 100: Family Law Act, supra, note 13, s. 27. 

Family Law Act, ibid., s. 24(3). 

Ibid., s. 24(4). 

Supra, note 14. 

See Maskewycz v. Maske wycz (1973), 13 R.F.L. 210 (Ont. C.A.). 

See Glenn, supra, note 152, at 149; A. Bissett- Johnson and W.H. Holland, Matrimonial Property Law in Canada 
at 1-44. But contrast the unorthodox view expressed in Re Yale and McMaster (1974), 18 R.F.L. 27 (Ont. H.C.) 
that a deserted spouse had a right to occupy the matrimonial home and that the Married Women's Property Act, 
supra, note 14, did not confer discretion. 



102 



existence or otherwise of other proceedings between the spouses, and the competing needs of [one 
spouse] to realize upon [his or] her interest and of the [other spouse] to have a place to live. 

When the Married Women's Property Act was repealed by the Family Law Reform Act, 
1978, section 12 of the former Act was replaced by section 7 of the latter Act. The current, 
equivalent provision is section 10 of the Family Law Act. It provides as follows: 

10. — (1) A person may apply to the court for the determination of a question between that 
person and his or her spouse or former spouse as to the ownership or right to possession of 
particular property, other than a question arising out of an equalization of net family properties 
under section 5, and the court may, 

(a) declare the ownership or right to possession; 

(b) if the property has been disposed of, order payment in compensation for the interest of 
either party; 

(c) order that the property be partitioned or sold for the purpose of realizing the interests in 
it; and 

(d) order that either or both spouses give security, including a charge on property, for the 
performance of an obligationlmposed by the order, 

and may make ancillary orders or give ancillary directions. 

Cases decided after the enactment of the Family Law Act have established that the 
Partition Act, as well as the special provisions in the Family Law Act, applies to co-owning 
spouses. However, the obtaining of an order for exclusive possession by one joint tenant 
will prevent partition and sale until the order expires or is discharged. 

It follows that a court should not order partition and sale of a jointly held matrimonial home where 
one spouse seeks an exclusive possession order until it is decided that the latter should not be 
granted. 

Nevertheless, a co-owning spouse's claim for exclusive possession does not necessarily 
preclude partition or sale. It is a relevant factor that must be considered. If, therefore, a co- 



161 

Maskewycz v. Maskewycz, supra, note 161, at 238. 

164 

Sworn, note 13. 

See Silva v. Silva, supra, note 136. 

166 

See Hovius and Youdan, supra, note 66, at 602. 
167 Ibid., at 602-03. 

168 

See Silva v. Silva, supra, note 136. 









103 



owning spouse's claim for exclusive possession would clearly fail, an order for partition 
sale may be made. 



or 



It is now convenient to return to the situation where co-owners are not spouses and to 
consider whether the orthodox position referred to earlier requires any modification in this 
context. When co-owners are not spouses — whether because they once were spouses but 
ceased to be so at marriage termination or because they never were married — the special 
rights of possession of the matrimonial home conferred on spouses naturally do not 
ordinarily apply. The issue is whether, nevertheless, the courts have a more flexible 
discretion to refuse an application for partition or sale than that suggested by the orthodox 
view. 

171 

In Re Yale and McMaster the view was taken that the court had a discretion under the 
Partition Act that went beyond consideration of vexatious or oppressive conduct. Rather, an 
applicant's prima facie entitlement to partition or sale could be refused on grounds of relative 
hardship to the co-owners. This discretion, it was held, could be exercised where the co- 
owners were not spouses. Re Yale and MacMaster was subsequently approved by the Ontario 

172 

Divisional Court in MacDonald v. MacDonald. However, the reasoning in the case is open 
to criticism 173 and it is unclear whether it correctly states the current law. 1 4 Also, it should be 
added that, although the co-owners in Re Yale and MacMaster were not spouses, that was 
because they had been divorced prior to the application for partition and sale. It seems that 



169 



170 

171 
172 

173 
174 



Ibid. The cases are inconsistent in deciding whether partition or sale should be made pursuant to s. 3 of the 
Partition Act, supra, note 23, or s. 10 of the Family Law Act, supra, note 13. Compare Grail v. Grail (1990), 30 
R.F.L. (3d) 454 with Genttner v. Genttner (1989), 23 R.F.L. (3d) 25 (Ont. Dist. Ct). Other cases also require court 
authorization for sale, pursuant to s. 23 of the Family Law Act: Alessandro Building Corp. v. Rocca (1987), 
9 R.F.L. (3d) 422 (Ont. H.C.); Re Ali (1987), 5 R.F.L. (3d) 228 (Ont. H.C.). Compare Sullivan v. Sullivan (1986), 
2 R.F.L. (3d) 251 (Ont. Dist. Ct.). 

A separation agreement or a court order may provide for rights of occupation to continue after termination of the 
marriage. 

Supra, note 162. 

(1976), 30 R.F.L. 187. See also Makins v. Makins (1978), 2 R.F.L. (2d) 104 (Ont. U.F.C.). 

See Glenn, supra, note 1 52. 

See the more recent case of Silva v. Silva, supra, note 136, where Finlayson J.A. stated (at 122-23): 

Very recent cases have fleshed out the application of judicial discretion under the Partition Act. Most 
notable of these is Batler v. Batler (1988), 67 O.R. (2d) 355 ... (H.C.). In Batler, a husband sought an order 
for partition and sale of jointly owned recreational property. Although Granger J. found that he had no 
jurisdiction to order the sale of the property under the F.L.A., he found that the sale could be ordered 
pursuant to the Partition Act. Granger J. noted ... that 'an application by a joint tenant for sale should only be 
refused if the application is vexatious or malicious.' He then stated that, if the wife were to resist the order 
for sale successfully, she should have obtained an order for exclusive interim possession of the property or 
have demonstrated that her claim at trial would be prejudiced by an immediate sale. It appears that 
Granger J. held that the boundaries of judicial discretion to refuse an order under s. 2 of the Partition Act 
extended to cases where immediate sale would prejudice the claims of the respondent under the F.L.A. at 
trial .... 



104 



consideration of relative hardship has not occurred in partition application relating to co- 
owners who have never been married or to a partition application not relating to property that 
was or had been a matrimonial home. 

It has already been mentioned that at one time sale in lieu of partition could not be 
ordered unless the co-owners all agreed. The remedy of sale and division of the proceeds, as 
an alternative to partition, was progressively introduced in nineteenth century legislation. 
Section 3(1) of the Partition Act now provides that sale is available if it is "considered by the 
court to be more advantageous to the parties". In theory, therefore, partition remains the 

175 

primary remedy. In practice, however, co-ownership very often relates to residential 
property that cannot readily be physically divided so that sale is ordered much more 
frequently than partition. 

2. REFORM 

(a) Assimilation of Law Relating to Real and Personal Property 

This report is concerned with the basic principles of land law and, accordingly, we have 
generally not considered principles affecting personal property. However, a pervasive theme 
of our recommendations for reform in several reports, including this one, is the increased 
assimilation of the law relating to real and personal property. 

Persons may own personal property, both chattels and intangible property, as co-owners 
and even under the present law generally the same principles apply to co-owners of personal 
property as to co-tenants of real property. In the recommendation for reform that we shall be 
making, there is no justification for the continuation or creation of any distinction between 
real and personal property. Accordingly, we recommend that the proposed reforms should 
apply, mutatis mutandis, to personal property as well as real property. 

(b) Terminology 

Generally, in this report we have dealt with substantive changes to the law and we have 
not recommended a new system of terminology. However, for two main reasons, we do 
recommend the use of new terminology in the context of co-ownership. First, the term 
"tenancy" is misleading to non-lawyers in the context of co-ownership since it invites 
confusion with the relationship of landlord and tenant. Second, the essential difference 
between joint tenancy and tenancy in common is the right of survivorship associated with 
joint tenancy. We consider it preferable that the difference should be indicated by the 
terminology. 

Accordingly, we recommend that there should be two categories of co-ownership which 
will be described as co-ownership with right of survivorship and co-ownership without right 
of survivorship. 



175 

See Cook v. Johnston, [1970] 2 O.R. 1 (H.C.); Dibattista v. Menecola (1990), 74 D.L.R. (4th) 569 (Ont. H.C.). 



05 



Despite this recommendation, in the discussion that follows we shall generally maintain 
the use of existing terminology, so that the effect of our recommendations can clearly be 
understood in the context of the present law. 

(c) Nature and Types of Co-ownership ' 76 

(i) The Four Unities 

The satisfaction of the four unities is essential to the creation of a joint tenancy in the 
present law. Of these, the unity of possession is also essential for a tenancy in common and 
expresses the functional requirement of co-ownership that co-owners concurrently share the 
possession of land. The other three unities are not necessary for a tenancy in common. These 
three unities are derived from the dogma traditionally expressed by saying that joint tenants 
are seized "per mie et per tout". However, it is suggested that they do not carry out any 
useful policy in the modern law. 

So far as the creation of a joint tenancy is concerned, the unities of time and interest are 
most important. The unity of time has not in fact been strictly required since a joint tenancy 
may be created by will or under a use in which the interests of joint tenants do not vest at the 
same time. 179 However, there is no functional reason why the requirement should be excused 
in gifts by will or under uses but not in an inter vivos conveyance not employing a use. 
Whatever the manner of creation, a joint tenancy should be capable of being created under 
which the interests of joint tenants vest at different times. 



176 



177 
178 
179 



The radical reform of total abolition of beneficial joint tenancy (that is, leaving joint tenancy as available only for 
trustees) has been suggested by some commentators (Bandali, supra, note 29; M.P. Thompson, "Beneficial Joint 
Tenancies: A Case for Abolition?", [1987] Conv. 29; Maxton, supra, note 29) and has been enacted in a few 
American jurisdictions (see J. Dukeminier and J.E. Krier, Property (2d ed., 1988), at 282). However, we think that 
joint tenancy, along with its right of survivorship, provides a convenient form of arrangement which should not be 
abolished. As one commentator put it (A.M. Prichard, "Beneficial Joint Tenancies: A Riposte", [1987] Conv. 273, 
at 274): 

Against all this is the clear fact that many people are genuinely attracted to the survival aspects of joint 
tenancy. Not just married couples in the first romantic flush, wishing to demonstrate the full commitment of 
their mutual vows, but also unmarried siblings anxious to secure the smooth transmission of ownership as 
death overtakes each of them in their family home; or the father or mother in business with a child, wishing 
to effect just such a smooth transmission whether deaths do or do not occur in expected order. Should such 
people be told by the law that their simple wish should not be attainable in their purchase deed but should 
require the immediate execution of a perhaps complex and expensive will as well ...? With money and other 
property they can have the very useful apparatus of joint accounts and joint ownership — how useful, anyone 
advising a recent widow or widower can readily testify. Or is [it being suggested] that that apparatus too 
should be done away with so as to meet the possible desires of soured co-owners? 

See Dukeminier and Krier, supra, note 176, at 280. 

The unity of title is important with respect to severance. See infra, this ch., sec. 2(0(0- 

Supra, this ch., sec. 1(a). 



106 



Because of the requirement of unity of interest, joint tenants must have equal interests. 
If, therefore, A and B acquire property and their intention is that A is to have a seventy-five 
percent share and B a twenty-five percent share, they must take as tenants in common. 
However, in some circumstances persons may wish to have shares of unequal amounts 
(perhaps because one contributed more to the purchase price than the other) so that in the 
event of severance, partition, or sale of the property during their joint lifetimes their unequal 
interests would be recognized, but that in the event of the death of one prior to any severance, 
partition, or sale, the survivor would be sole owner. 

The Law Reform Commission of British Columbia in its Report on Co-ownership of 

ISO 

Land, quoting its own Working Paper, gave one example in which parties might wish to 
have the benefit of such an arrangement: 

[A] husband and wife may purchase a matrimonial home with the wife putting up 80% of the 
money. They find the notion of a joint tenancy attractive for its right of survivorship, but fear that 
if the husband's business activities should lead to his bankruptcy, the trustee would be entitled to 
half the property. A form of joint tenancy which recognized unequal interests would seem to 
satisfy their needs. 

Another example would be unmarried cohabitees who purchase a home, with the 
woman putting up eighty percent of the money. The parties find the notion of a joint tenancy 
attractive for its right of survivorship. Specifically, the woman is happy that the man should 
become the sole owner of the home in the event of her death while the relationship is 
harmonious and prior to any severance, partition, or sale. However, the parties recognize that 
the relationship may break down, and in that event the woman would wish to have an eighty 
percent interest in the home recognized. 

The Law Reform Commission of British Columbia reviewed the ways parties might be 
able under the present law to structure co-ownership to provide for a right of survivorship 
even where co-owners have unequal interests in land. There are three main possibilities. First, 
it is probably possible for the parties to hold interests as tenants in common (and these 
interests could be held under a trust) subject to a right of survivorship. The main difficulties 
with such an arrangement are that its effects are uncertain, it would be difficult to make the 
right of survivorship removable (as it is, by severance, in a joint tenancy), and, more 
generally, it would require sophisticated drafting. Second, the "parties may simply enter into 
a contract which provides that on severance of the joint tenancy they will be entitled to 
defined unequal interests". This may be effective in defining rights of the parties between 
themselves but will not be apt in relation to third parties. Third, 

[i]t is also possible for co-owners to hold land as tenants in common in unequal shares. Each may 
then make a will leaving his or her interest to the others. This method is also open to objection, 



180 
181 



Supra, note 50, at 26-27. 
Ibid., at 32. 



107 



since a will may be revoked by operation of law, or its provisions varied in circumstances which 

182 

would not affect a joint tenancy. 

The requirement for unity of interest for a joint tenancy is derived only from the 
traditional conceptual attributes of joint tenancy. There is no functional reason for it. As we 
have shown, there are circumstances in which parties may reasonably wish to have a joint 
tenancy in which their interests are unequal, but the present law does not provide a 
convenient means of achieving that object. 

The unity of title tends to be more important in the context of the severance of joint 
tenancy (and we shall refer to it in the context of discussion of severance by destruction of 
the four unities). However, the point may conveniently be made here that, like the unities of 
time and interest, there is no functional reason why unity of title should be required for the 
creation of a joint tenancy. 

Accordingly, we recommend that the unities of interest, time, and title should be 
abrogated as requirements for a joint tenancy. Instead, the fundamental determining factor 
should (subject to the relevant presumptions) be solely one of intention: whether the parties 
intended the right of survivorship. 

(ii) Tenancy by the Entireties and the Rule in Re Jupp 

It is unlikely that an Ontario court would today hold that tenancies by the entireties or 

183 

the rule in Re Jupp remain part of Ontario law. Nevertheless, tenancy by the entireties was 
recognized in Campbell v. Sovereign Securities & Holding Co. ; the rule in Re Jupp has 
never been expressly abrogated in Ontario, whether by legislation or judicial decision; and 

185 

section 64(3) of the Family Law Act appears to limit the effect of section 64(1) in a way 
that can be used to support an argument for the continued existence of tenancies by the 
entireties and the rule in Re Jupp. We therefore recommend that tenancies by the entireties 

1 86 

and the rule in Re Jupp should both be explicitly abolished by legislation. 



182 
183 
184 
185 
186 



Ibid. 

Supra, note 19. 

Supra, note 1 1 . 

Supra, note 13. 

See, for example, the draft provision proposed by the British Columbia Law Reform Commission, supra, note 50, 
at 60: 

A husband and wife shall be treated as 2 persons for the purposes of acquisition of land under a 
disposition whenever made and, without restricting the generality of the foregoing, ownership of land 
by tenancy in entireties is abolished. 



108 



(d) Creation of Co-ownership 

We have pointed out in the summary of the present law the circumstances in which the 
statutory presumptions created by section 13 of the Conveyancing and Law of Property Act 

188 

and section 14 of the Estates Administration Act have no application. We have therefore 
considered whether the statutory presumption in favour of tenancy in common should be 
extended. We recommend that it should be extended in the following manner: 

(1) Under the present law, section 13 of the Conveyancing and Law of Property Act 
does not apply to property other than land and section 14 of the Estates 
Administration Act does not apply to personal property. In accordance with our 
general policy of assimilating real and personal property, we recommend that both 
these provisions should apply to all forms of property. However, in our view, joint 
tenancy is typically the desired form of co-ownership for spouses. Therefore we 
recommend that there should be a presumption of joint tenancy in the case of 

189 

property co-owned by spouses. We further recommend that "spouse" for this 
purpose should be defined as recommended in our Report on the Rights and 
Responsibilities of Cohabitants under the Family Law Act (1993). 

(2) One indirect effect of the recommendation in paragraph (1) above must be 
considered. Under the present law, the presumption is that common law title 
affecting partnership property is taken as joint tenants. This seems to be convenient 
since it enables surviving partners to make title, without the need for joining the 
personal representatives of deceased partners. Therefore, we recommend that if 
section 13 of the Conveyancing and Law of Property Act is extended to property 
other than land — thus including partnership property — an explicit exception should 
be made for partners so that they are presumed to take common law (as opposed to 
equitable) title as joint tenants. 

(3) We have mentioned that it was held in Campbell v. Sovereign Securities & Holding 
Co. that section 13 of the Conveyancing and Law of Property Act does not apply in 
the determination of the effect of a contract to transfer property to two or more 
persons. However, there is no reason why a distinction should be drawn in this 
context between a contract to transfer property and an instrument actually effecting 



Supra, note 1 1 . 
Supra, note 24. 

189 

Compare Law Reform Commission of Western Australia, Report on Joint Tenancy and Tenancy in Common 
(Project No. 78, November 1994), at 23, where a similar recommendation was made. 



109 



1 90 

a transfer. Accordingly, we recommend that section 13 should be extended to 
apply to a contract to transfer property to two or more persons. 1 l 

(4) We have mentioned that under current law persons may become co-owners by 
virtue of legal doctrines such as proprietary estoppel, constructive trust, and 
resulting trust. We consider it inappropriate to recommend a statutory rule to deal 
with these situations. First, they cover a range of situations in which different 
considerations are relevant so that any statutory formulation would have to be 
complex. Second, it seems that in these situations the equitable preference for 
tenancy in common will ordinarily prevail under the present law. Third, the present 
law does leave the court with some flexibility, as is appropriate in the situations 
dealt with by these doctrines. 

(5) Finally, on the basis of our recommendation relating to terminology, we 
recommend that the presumption should not be expressed as a presumption in 
favour of tenancy in common. Rather, it should be a presumption that there is no 
right of survivorship. 

(e) The Use of Property by Co-owners 

192 

We agree with the view of the Alberta Institute of Law Research and Reform that the 
principles of the present law do achieve a reasonable balance between the interests of co- 
owners in occupation of land and those out of occupation and between the interests of a co- 
owner who has paid for outgoings related to the property and one who has not. We also agree 
with the Alberta Institute that the law should be clarified by a legislative restatement of the 
relevant principles. However, we also consider that in certain respects the present law is 
unsatisfactory and that it should be changed by legislation. 

(1) The court should have jurisdiction to order payment of occupation rent in 
circumstances beyond the exceptional circumstances provided for in the present law. In 
particular, it is undesirable that entitlement to occupation rent may depend on the 
establishment of "ouster". Even if this concept extends beyond actual eviction or even violent 
or threatening behaviour, it appears that under the present law it requires evaluation of the 



190 



191 



192 
193 



It should be noted that a specifically enforceable contract for the sale of property is treated as giving an equitable 
interest in the property to the purchaser prior to conveyance of the legal title. 

Compare the position in British Columbia where the Property Law Act, R.S.B.C. 1979, c. 340, s. 1 1(1) provides as 
follows: 

11. — (1) Where, by an instrument executed after April 20, 1891, land is transferred or devised in fee 
simple, charged, or contracted to be sold by a valid agreement for sale in which the vendor agrees to 
transfer the land, to 2 or more persons, other than personal representatives or trustees, they are tenants 
in common unless a contrary intention appears in the instrument. 

Supra, note 45, at 34. 

Ibid., at 34-35. 



110 



conduct of the parties in order to determine responsibility for one party's not occupying the 
property. 194 For several reasons, this is unsatisfactory. First, a party may leave voluntarily but 
then, because of subsequent events, find it intolerable to return to occupation. For example, in 
Belcher v. Belcher 195 a wife was refused occupation rent in the following circumstances: 

The wife claimed occupational rent for the period from the date of separation to date of sale, based 
on her allegation that she was effectively ousted from the property. I have found that she left of 
her own will as a result of a matrimonial breakdown. In such circumstances, even though the 
husband thereafter took another woman into the house, thereby for practical purposes preventing 
the wife from returning, a claim for occupational rent cannot be maintained. The wife's remedy in 
such a case is to seek an order for partition and sale which will normally be granted in such 
circumstances as a matter of course. 

Even though it may be argued that circumstances such as these should be held to 
constitute ouster under the present law, the position should be clarified by legislation. 

Second, although the present law is reasonable in taking the position that a co-owner 
should not be able to obtain occupation rent by voluntarily not occupying the property, it is 
inappropriate that the court's power to order occupation rent should turn on determination of 
relative fault as between the co-owners. This is particularly apparent where the parties are 
spouses so that for other purposes in determining their entitlements fault has very reduced 

197 

importance. As was said m the British Columbia case of Donovan v. Donovan, ouster is an 
inappropriate concept in the context of spouses since the Family Relations Act "was 
apparently meant to exclude the conduct of the parties as a consideration in the 
reapportionment of family assets". 

For these reasons, we think that the court should have unrestricted discretionary power 
to order payment of occupation rent, the circumstances in which it came about that one party 
occupied the premises whereas another did not being simply matters to be taken into account 
in determining the appropriateness of occupation rent being paid. 

(2) In the exceptional cases where occupation rent may be ordered under the present 
law, the court, it seems, has flexibility in determining whether its payment should in fact be 

198 

ordered. However, legislation should make it clear that the court does have such flexibility. 
For example, one of two co-owners may voluntarily vacate the property. The other co-owner 
may remain in occupation, looking after the property and preventing its deterioration in 



194 

See Belcher v. Belcher, supra, note 40, and Carkeek v. Tate-Jones, supra, note 40. 

195 

Supra, note 40, at 356. 



196 

197 
198 



See Moss v. Moss, supra, note 40. In addition, the taking in of a person to share occupation may be treated as 
equivalent to winning rent from the property. 

(1986), 5 R.F.L. (3d) 1, at 5 (B.C.S.C). 

See Nemeth v. Nemeth, supra, note 71, and Bauerfindx. Bauerfind (1989), 19 R.F.L. (3d) 375 (Alta. Q.B.). 



Ill 



circumstances in which the occupation amounts to a burden to the occupier but provides a 
benefit to both co-owners. 

(3) It seems to be established that the maximum amount recoverable by a co-owner in 
respect of improvements is the lesser of the amount of the outlay and the amount by which 
the value of the property is increased. It seems that no allowance will be made for inflation 

199 

"so that the effuxion of time will substantially detract" from the improving party's claim. 
Legislation should make it clear that the court has sufficient flexibility to enable the effect of 
inflation to be taken into account. 

(4) It seems that under the present law the court's power to provide an allowance for 
expenditures applies only where a right to contribution arises from discharge of a joint 
obligation or in partition and sale or analogous proceedings. It is consistent with general 
principles of the law of restitution that, outside of the right to contribution from discharge of 
a joint liability, liability of one co-tenant to reimburse another for expenditures is generally 
restricted to circumstances where "the benefit conferred is ... a liquid asset". However, in 
some circumstances it may be appropriate for partition or sale to be postponed, but for 
accounting for use and occupation and expenditure for outgoings to be immediately 
determined. The court's power to order such accounting should not therefore be premised on 
an application or order for partition, sale, or analogous proceedings. 

Subject to the qualifications we shall mention, we recommend the adoption of legislation 

201 

similar to that enacted in Alberta, implementing the recommendations of the Alberta Institute 

202 

of Law Research and Reform. The relevant provisions are as follows: 

15. — (1) A co-owner may apply to the Court by originating notice for an order terminating the 
co-ownership of the interest in land in which he is a co-owner. 

(2) On hearing an application under subsection (1), the Court shall make an order directing 

(a) a physical division of all or part of the land between the co-owners, 

(b) the sale of all or part of the interest of land and the distribution of the proceeds of 
the sale between the co-owners, or 

(c) the sale of all or part of the interest of one or more of the co-owners' interests in 
land to one or more of the other co-owners who are willing to purchase the 
interest. 



199 

Bradbrook, MacCallum and Moore, supra, note 51, at 462. See, also, Mendes da Costa, supra, note 19, at 147. 

200 

Maddaugh and McCamus, supra, note 76, at 747. 

201 

Law of Property Act, supra, note 8, ss. 15-17. 

Supra, note 45. 



112 



16. Notwithstanding section 15(2), if an order is made under section 15(2)(b) and the highest 
amount offered for the purchase of the interest in the land is less than the market value of the 
interest, the Court may 

(a) refuse to approve the sale, and 

(b) make any further order it considers proper. 

17. — (1) In making an order the Court may direct that 

(a) an accounting, contribution and adjustment, or any one or more of them, take 
place in respect of the land, and 

(b) compensation, if any, be paid for an unequal division of the land. 

(2) In determining if an accounting, contribution or adjustment should take place or 
compensation be paid for an unequal division of the land the Court shall, without limiting itself 
from considering any matter it considers relevant in making its determination, consider whether 

(a) one co-owner has excluded another co-owner from the land; 

(b) an occupying co-owner was tenant, bailiff or agent of another co-owner; 

(c) a co-owner has received from third parties more than his just share of the rents from 
land or profits from the reasonable removal of its natural resources; 

(d) a co-owner has committed waste by an unreasonable use of the land; 

(e) a co-owner has made improvements or capital payments that have increased the 
realizable value of the land; 

(f) a co-owner should be compensated for non-capital expenses in respect of the land; 

(g) an occupying co-owner claiming non-capital expenses in respect of the land should be 
required to pay a fair occupation rent. 



Our qualifications on this recommendation are four in number. 

First, the Alberta legislation premises the court's power to order accounting on 
circumstances where an order for sale or partition is made or in the restricted circumstances 
set out in section 16(2). For the reasons given above, we prefer the proposal made by the Law 
Reform Commission of British Columbia which does not restrict the circumstances in 
which the court's powers may be exercised: 

On application by a co-owner, the court may 

(a) direct that an accounting, contribution and adjustment, or any one or more of them, take 
place in respect of a co-owner's interest, and 

(b) order that compensation, if any, be paid between co-owners. 



203 



Supra, note 50, at 65. 



113 



Second, both the Alberta legislation and the British Columbia proposal enable the court 
to take account of all relevant circumstances and also list relevant factors. We agree with this 
general approach except it should be made clear that the court has a discretion not only 
whether to order an accounting but also as to the quantum of any adjustment made and the 
legislation should express the relevance of the effect of changes in the value of the property. 

Third, in expressing the relevant factors the Alberta legislation reflects the present law, 
along with some features we consider to be unsatisfactory. 

(a) Section 17(2)(a) refers to exclusion of one co-owner by another. We agree that 
such exclusion is relevant, but the legislation should make it clear that occupation 
rent may be ordered to be paid outside of the exceptional situations under the 
present law. 

(b) It should be expressed as a relevant factor that a co-owner has not been reasonably 
able to enjoy her or his right of occupation, irrespective of any fault on the part of a 
co-tenant in occupation. 

(c) The term "bailiff used in section 17(2)(b) should be avoided since it is in this 
context an archaic term that does not usefully add anything to the term agent. 

Fourth, the British Columbia proposal would give the court an express power to order 
a lien to protect the position of a co-tenant who has incurred expenditures as follows: 

Where an amount is found recoverable under section 44 or section 47, the court may order 

(a) that a co-owner has a lien on the interest of another co-owner to secure payment of 
that amount, and 

(b) in default of payment of that amount within 30 days, or such other period as the 
court may direct after the date of service of a certified copy of the order on the co- 
owner, the sale of the co-owner's interest pursuant to the Rules of Court. 

We agree that the legislation should include such a power. 

Finally, in accordance with our general policy in favour of assimilating real and personal 
property, we recommend that the legislation should apply, mutatis mutandis, to personal 
property. 

(0 Severance of Joint Tenancy 

(i) Severance by Destruction of the Three Unities 

Under the present law the three unities are generally essential to the continuation as well 
as the creation of a joint tenancy. The destruction of one of these unities will, therefore, effect 



204 _., 

Ibid., at 67. 



114 



a severance, whether that destruction is caused by the act of a party or an external event or 
the act of a third party. 

We have already argued that the conceptual requirement of the four unities should not 
dictate whether a joint tenancy should be capable of existing in any set of circumstances. 
Instead, the fundamental determining factor should (subject to the relevant presumptions) be 
solely one of intention: whether the parties intended the creation of a joint tenancy. Similarly, 
the conceptual requirement of the four unities should not dictate whether a joint tenancy 
continues or is severed. The requirement of the continuation of the four unities is of little 
relevance to the merits of the question whether severance should in any given set of 

205 

circumstances be treated as having occurred. Several distinct problems are caused by the 
present law. First, severance by act of the parties may be caused by an act that the parties did 
not realize had the effect of causing severance. For example, one party may grant a lease of 
his interest or a party may have made a contract to sell her interest, which contract was by 
mutual agreement subsequently abandoned. There is no reason why a person would realize 
that those acts would cause severance. Nevertheless, severance would probably occur under 
the present law. Second, in cases where there is room for argument about whether severance 
occurred, courts will often be more concerned about the practical effect of the decision as 
well as, or perhaps more than, the impact of the circumstances on the four unities. Third, 
particularly because of the second point, it will often be difficult to predict whether a given 
transaction will be held to have effected a severance. 

For these reasons, we recommend that destruction of the three unities should not cause 
severance. Instead, we shall recommend a statutory way of effecting severance by act of party 
and we shall recommend also a statutory response to severance by operation of law. 
However, before dealing with the details of these proposals we should address the argument 
that third parties may be prejudiced by the abrogation of destruction of the four unities as a 
cause of severance. 206 For example, under the present law severance occurs when a joint 
tenant conveys his or her interest to a third party or even when they enter into a specifically 
enforceable contract, since the unity of title is destroyed. The third party is therefore 
unaffected by the subsequent death of the person with whom he or she had dealings. Under 
our proposal, the third party's entitlement to the property will be affected by the question of 
whether the appropriate procedure laid down for severance has been followed. If it has not 
and the co-owner entering into the transaction predeceases other joint tenants, her or his 
interest will disappear and the third party will have no claim against the property. However, 
we shall propose a simple method for a joint tenant to effect a unilateral severance and it will 
be easy for a third party to ensure that the requirements of that method are complied with. 
Moreover, we shall propose that registration of an instrument of severance will provide 
protection for a good faith purchaser of land. 



205 

See Law Reform Commission of British Columbia, ibid, at 38. 

206 

See Law Reform Commission of British Columbia, ibid, at 38, 40. 



115 



(ii) Severance by Operation of Law 

With the abrogation of destruction of the four unities as a mode of severance, it is 
necessary to deal with the circumstances in which severance should occur by operation of 
law. 

We recommend enactment of legislation under which the court has a general power to 

207 

determine severance by order so that a court order as a mode of severance will be provided 
for. This scheme will provide appropriate flexibility to deal with any unforeseen circumstances 
and at the same time provide clear rules to deal with the situations that occur with frequency. 

We recommend that bankruptcy of a joint tenant should, as in the present law, sever the 
joint ownership. This ensures that the interest of the bankrupt joint tenant is made available for 
creditors and their position is neither prejudiced by the death of the bankrupt nor advantaged by 
the death of another joint tenant. 

So far as execution by judgment creditors is concerned, we reaffirm the recommendations 

208 

made in the Report on the Enforcement of Judgment Debts and Related Matters. We outlined 
the problems caused by the present law as follows: 

With the sole exception of property held in joint tenancy, land in which a debtor has an interest at 
his death is available to creditors after he dies. Moreover, where the debtor's interest in land is of 
any kind other than an interest in joint tenancy, the creditor may protect his right to execution 
simply by filing a writ of fieri facias with the sheriff. Rather than proceed with a forced sale, he 
may choose to wait until the debtor transfers his interest or dies. So long as the writ is properly 
renewed, it will continue to bind the land to the extent of the debtor's former interest after its 
transfer or his death. The creditor then may seek payment of the judgment debt from the 
transferee — who is normally interested in obtaining clear title — or from the executor or 
administrator of the debtor's estate, as the case may be. The available evidence indicates that in 
fact this course is the one that most creditors follow with respect to enforcement against their 
debtors' interests in land. In the case of joint tenancies, however, this alternative is not a viable 
one, as death will extinguish the creditor's right to proceed against the debtor's interest in the 
land. 

Therefore, we believe that some change is required to ensure that the effectiveness of 
creditors' remedies against land no longer depends on the law respecting severance of joint 
tenancies and on whether the debtor joint tenant dies first .... 

210 

We then went on to make the following recommendations: 



207 
208 
209 
210 



Compare the proposal by the Law Reform Commission of British Columbia, ibid., at 61 . 

Supra, note 128, Part III. 

Ibid., at 25. 

Ibid., as summarized at 134. For discussion see ibid., at 29-3 1 . 



116 



Where a debtor is a joint tenant of land, the following rules should apply: 

(1) the filing of a writ of enforcement against the debtor should not sever the joint tenancy. 
Severance should occur only once the sheriff enters into a binding agreement of purchase 
and sale with a prospective purchaser at an execution sale; 

(2) where the debtor dies before severance, but after sale proceedings have been commenced, 
there should be a right of survivorship; however, subject to paragraph (3), the value of the 
debtor's interest in the hands of the surviving joint tenant should be subject to a charge to 
the extent of the debts of judgment creditors who have delivered writs of enforcement to the 
sheriff; and 

(3) with respect to the charge proposed above, 

(a) in the distribution of the debtor's estate, the former joint tenancy interest should be 
resorted to for the payment of debts only if the other property of the debtor has been 
exhausted and the creditors' debts remain outstanding, and 

(b) in order to determine the debtor's interest that should be available to creditors, there 
should be a statutory prima facie presumption that, where the deceased debtor and the 
surviving joint tenant were joint tenants in law, they also were joint tenants in equity. 

(iii) Unilateral Severance by Act of a Party 

It is a striking feature of the present law that severance may be effected unilaterally, 
without consent of or even notice to the other joint tenants. 

We have considered whether severance should require the concurrence of all the joint 
tenants. In Saskatchewan a joint tenancy may only be severed with the consent of all joint 
tenants, section 240 of the Land Titles Act 2n providing as follows: 

240. — (1) Notwithstanding anything in this or any other Act, where any land, mortgage, 
encumbrance or lease registered under this Act is held by two or more persons in joint tenancy, 
other than as executors, administrators or trustees, the joint tenancy shall be deemed not to have 
been severed by any instrument heretofore or hereafter executed by one of the joint tenants, or by 
more than one but not all the joint tenants, unless the instrument has been registered under this 
Act. 

(2) The registrar shall not accept for registration an instrument purporting to transfer the share 
or interest of any such joint tenant unless it is accompanied by the written consent of the other 
joint tenant or joint tenants, duly attested in accordance with section 63 or 64, as the case may 
require. 

We do not agree that consent of all joint tenants should be required for severance. 212 
The cardinal feature of joint tenancy, and the most important characteristic distinguishing it 
from a tenancy in common, is the right of survivorship. Ordinarily, this right of survivorship 



211 R.S.S. 1978, c. L-5. 

212 

Compare McClean, supra, note 89, at 38. 



17 



is only apt where the co-owners maintain harmonious relationships so that each is content for 
the other or others to benefit from the termination of a dying joint tenant, whatever should be 
the order of their deaths. Most often, of course, joint tenancy is used by married couples or 
unmarried cohabitees, often for ownership of the matrimonial home. When the relationship 
between joint tenants changes, or even when their wishes with respect to the property on 
death change, they should be free to terminate the right of survivorship unilaterally by 
severing the joint tenancy. Where the property is a matrimonial home, the parties' rights of 
occupation require protection and the right of a joint tenant to dispose of or encumber his or 
her interest should be curtailed. But that is the subject of special legislation in Part II of the 
Family Law Act. In any event, severance of a joint tenancy does not affect the right to 
possession of the property and it does not in itself result in any disposition of property. 214 

There may, it is true, be circumstances in which joint tenants may wish to bind 
themselves not to sever the joint tenancy. For this reason, the Law Reform Commission of 
British Columbia has recommended the continuation of the present law that ordinarily joint 
tenants are free unilaterally to sever a joint tenancy, but also that the law should be changed 
to provide for the parties' creation of joint tenancies that are only severable on consent: 215 

We have in mind an approach where the parties would decide for themselves, and designate at the 
time title in co-ownership is registered, whether or not a joint tenant can unilaterally sever his 
intent from the joint tenancy ... 

In our view, this approach should be adopted. If the parties fail to state whether or not consent is 
required for a joint tenant to sever his interest from the joint tenancy, it should be conclusively 
deemed that consent is not required. 

We agree that joint tenants should be free to bind themselves not to sever the joint 
tenancy, but a special form of joint tenancy is not required for that. Under the present law 
joint tenants are able to contract not to sever, and they may of course do this in complex 
fashion, for example by contracting to permit severance only in certain circumstances or on 
certain terms. Such a contractual arrangement is therefore flexible and gives rise to the 
normal range of contractual remedies. A party's ability to respond to breach of such a 
contract will, moreover, be strengthened by the recommendation we shall make below that a 
joint tenant should only be able to effect unilateral severance on giving written notice to the 
other joint tenants. 

We turn now to consideration of a requirement of notice-giving. Under the present law, 
severance may be effected unilaterally without notice to the other joint tenants. This has two 
undesirable effects. First, it is very easy for a joint tenant to commit, without detection, a 
fraud under which he is able to benefit from the right of survivorship if he survives the other 



Supra, note 13. 
See supra, note 128. 

215 

Law Reform Commission of British Columbia, supra, note 50, at 42. 



118 



joint tenants,but under which severance prior to death will be established if he dies first. The 



way this can be done is illustrated by an American commentator: 



216 



Take the case of H and W, a husband and wife who own their family residence property as joint 
tenants. H has a child, C, by a previous marriage. Without W's consent or knowledge, H executes 
a severance deed and deposits it in his safety deposit along with his will in which he leaves all of 
his property to C. Sometime later, either weeks, months or years, W dies. H retrieves his 
severance deed and [after] its destruction, H will have no difficulty in establishing clear title to the 
property as surviving joint tenant. If H dies before W, however, the severance deed will be 
discovered and recorded. W will be unsuccessful in her claim to the property as surviving joint 
tenant. Rather, she and C will hold title in equal undivided shares as tenants in common. 

Second, even apart from such fraud, it is inappropriate that one co-tenant should be 
ignorant of severance of the joint tenancy by another joint tenant and thus be prevented from 
arranging his or her affairs in the light of the changed status of the co-ownership. In 
particular, he or she is deprived "of an awareness of his right to provide for the transmission 

217 

of his interest by will". 

In order to overcome both of these undesirable results, we recommend that unilateral 

218 

severance should not take effect unless notice of severance is given to the other joint owners. 

We have recommended that severance should not be effected merely by destruction of 
one of the four unities and that severance should not take effect unless notice of severance is 
given to the other joint owners. The joint effect of these recommendations is that unilateral 
severance would be effected by, and only by, the giving of notice to the other joint owners. A 
consideration of the details of these recommendations will follow. 



216 

217 
218 



S.M. Fetters, "An Invitation to Commit Fraud: Secret Destruction of Joint Tenant Survivorship Rights" (1986), 55 
Fordham L. Rev. 173, at 175. 

Ibid., at 196. See, also, Re Sammon (1979), 94 D.L.R. (3d) 594, at 609 (Ont. C.A.). 

In England, the giving of notice is an additional method of severance. Section 36(2) of the Law of Property Act, 
1925, supra, note 21, provides as follows: 

36. — (2) No severance of a joint tenancy of a legal estate, so as to create a tenancy in common in land, 
shall be permissible, whether by operation of law or otherwise, but this subsection does not affect the right 
of a joint tenant to release his interest to the other joint tenants, or the right to sever a joint tenancy in an 
equitable interest whether or not the legal estate is vested in the joint tenants; 

Provided that, where a legal estate (not being settled land) is vested in joint tenants beneficially, and any 
tenant desires to sever the joint tenancy in equity, he shall give to the other joint tenants a notice in writing 
of such desire or do such other acts or things as would, in the case of personal estate, have been effectual to 
sever the tenancy in equity, and thereupon under the trust for sale affecting the land the net proceeds of sale, 
and the net rents and profits until sale, shall be held upon the trusts which would have been requisite for 
giving effect to the beneficial interests if there had been an actual severance. 

For discussion about the effect of this see, Burgess v. Rawnsley, supra, note 88. 

For consideration of reform in Australia, see Law Reform Commission of Western Australia, supra, note 189, 
at 33-38, and New South Wales Law Reform Commission, Unilateral Severance of a Joint Tenancy (1994). 



119 



In this context, it is important to take account of the functions performed by 
formality. 219 It would be possible to require the completion of a prescribed form or, further, 

220 

the registration of a document. However, we think such requirements would be more 
exacting than necessary. There is a danger that failure to comply with the required form, 
whether because of inadvertence or shortage of time, could occur quite frequently in 
circumstances in which there was no doubt that as a matter of substance notice was given. 
Unless the position was complicated by special relieving provisions, either dealing with 

221 

particular situations or giving the court a general power to dispense with the normal effect 

222 

of failure to comply with the required form, there would be a considerable danger of the 
formality impeding rather than facilitating the intention of co-owners. On the other hand, it is 
clear to us that the notice would suffer too much from uncertainty if it could be completely 
informal. We therefore recommend the compromise position that unilateral severance by a 
party should be in writing and signed, and should show an intention to terminate the right of 
survivorship. 

223 

The next issue that arises is how the notice should be given. We recommend that notice 
should be served in accordance with the rules provided for services under the Mortgages Act 224 

We have concluded above that neither the use of a prescribed form nor registration 
should be necessary in order to effect severance as between the parties. However, since under 
our proposed scheme the giving of notice is an essential requirement for unilateral severance, 
it is necessary to devise a method of securing a purchaser's title to an interest in land 
converted into tenancy in common by severance. In this context it would be appropriate to 

225 

provide for a prescribed form which would be registrable under the Registry Act and under 

226 

the Land Titles Act, and we so recommend. In addition, since a purchaser under the 
Registry Act would ordinarily be unable to determine whether a notice had been properly 
given, we recommend that a notice registered under the Registry Act should be deemed 



219 

220 

221 

222 

223 

224 
225 
226 



See, for example, L. Fuller, "Consideration and Form" (1941), Colum. L. Rev. 799, at 800 et seq.; AG. Gulliver 
and C.J. Tilson, "Classification of Gratuitous Transfers" (1941), 51 Yale L.J. 1; J. Langbein, "Substantial 
Compliance with the Wills Act" (1975), 88 Harv. L. Rev. 489, at 491-98. 

This is the reform proposed by the British Columbia Law Reform Commission, supra, note 50, at 43-45. 

See, for example, the consideration of "last minute severance" by the British Columbia Law Reform Commission, 
ibid., at 37, 46-47. 

See the dispensing power conferred on courts with respect to formal defects in wills in Manitoba and 
Saskatchewan: The Wills Act, R.S.M. 1988, c. W150, s. 23, as am. by S.M. 1995, c. 12, s. 2; The Wills Act, R.S.S. 
1978, c. W-14, s. 35.1 as en. by S.S. 1989, c. 66, s. 9. 

Cf. the proposal of the Law Reform Commission of British Columbia, Working Paper on Co-ownership of Land 
(1987), at 37, that notice should be served in accordance with the rules provided in the Rules of Civil Procedure 
for the service of originating process. 

R.S.O. 1990,c.M.40. 

Supra, note 99. 

Supra, note 1 00. 



120 



effective in favour of a bona fide purchaser for value without notice of any defect in the 
notice. 

(g) Severance by Agreement 

Under the present law, joint tenants may sever the joint tenancy by agreement and that 
agreement may be informal, even to the point that it is inferred from the parties' course of 
conduct. We have considered whether this method of severance should be abrogated, leaving 
only the proposed method of severance by signed writing. 227 Such a reform would have the 
advantage of simplicity and it would greatly increase the certainty in determination of 
whether and when a severance has occurred. Severance by course of conduct, in particular, 
depends on the court's evaluation of a wide range of relevant evidence and it is often difficult 
to predict whether severance will be held to have been effected. It may further be argued that 
severance should occur only when a severing party has made a deliberate decision to sever 

228 

the joint tenancy, whereas the present law on severance by agreement permits severance by 
parties who do not realize the effect of what they are doing. 

Despite the force of these arguments, we do not think the present law should be 
changed. Our chief concern with the change under consideration is that many joint tenants 
will be unaware of the law dealing with severance of joint tenancy and if only formal 
methods of severance were allowed, most would likely fail to achieve severance even where 
their mutual intention was inconsistent with continuance of joint tenancy. We therefore 
recommend the continuation of the present law so that severance may be effected by the 
agreement of joint owners, whether or not that agreement is informally expressed. Such 
agreement may, as in the present law, be express or implied and may be inferred from the 
parties' course of conduct. 

(h) Termination of Co-ownership 

The archaic and confusing provisions of the Partition Act 130 should, we recommend, be 
repealed. In enacting replacement provisions, three major issues arise: (1) the forms of property 
to which the legislation should apply; (2) the persons who may apply for relief; and (3) the 
nature of the powers made available to the court on the hearing of an application. 

(1) The property to which the Act applies. The present Partition Act applies only to land. 
In accordance with our general policy in favour of assimilating real and personal property, we 



227 

Compare the reform proposed by the Law Reform Commission of British Columbia, supra, note 223, that 
"severance of a joint tenancy should be effected only by an instrument registered against title to the land". 

228 

See Law Reform Commission of British Columbia, ibid., at 40. 

229 

See U.K. Law Commission, Trusts of Land (Working Paper No. 94, 1985), at 70. 

230 _ 

Supra, note 24. 



121 



recommend that the reformed law be made applicable to personal property as well as real 
property. 

(2) The persons who may apply for relief. The first question is whether the legislation 
should express in wide terms the persons who may apply, leaving it to the court to reject 
inappropriate applications, or whether the legislation should state with some particularity the 
persons with standing to apply. If the latter position is taken, the second question arises which is 
who should be specified as persons with standing. 

The former position on the first question has been taken in England. Section 30 of the 
Law of Property Act, 1925 deals with applications to court, among other things, for orders 
of sale of co-owned property and provides that "any person interested may apply", and the 

232 

Law Commission, in its Report on Transfer of Land: Trusts of Land, recommends 
continuation of this approach. The present Ontario law superficially appears to afford similar 

233 

flexibility. However, as mentioned above, it has been interpreted so that applicants must 
have "an estate in possession" or have "the immediate right to its possession". Partition and 
sale legislation in Alberta provides that a "co-owner" is defined to mean, 

joint tenants or tenants in common of an interest in land but does not include joint tenants or 
tenants in common of an interest in land who are holding the interest for common beneficiaries. 

The Law Reform Commission of British Columbia, in its Report on Co-Ownership of 
Land, also adopted the technique of specifying with some particularity the persons who 
may apply. It agreed with the Alberta legislation in enabling "co-owners", similarly defined, 



to apply but additionally included: 



236 



(b) a person who has obtained and registered a judgment against the interest of a debtor 
who is a co-owner; and 

(c) a person who has obtained a financial charge which satisfies the conditions of 
section (2), provided the debt obligation served by the financial charge is in default. 

One of the difficulties associated with the second approach is the risk that a category of 
individuals who might legitimately claim standing might be inadvertently omitted from the list. 
Accordingly, we recommend that the criterion for standing in a partition proceeding should be 



231 
232 
233 
234 

235 
236 



Supra, note 21. 

U.K. (Law Commission No. 181, 1989), at 22, 44. 

Supra, this ch., sec. 1(e). 

Law of Property Act, supra, note 8, ss. 14(a), 15(1), based on recommendations of Alberta Institute of Law 
Research and Reform, supra, note 45. 

Supra, note 50. 

See Law Reform Commission of British Columbia, ibid., at 68, s. 46 of draft Bill. 



122 



expressed broadly. We note that this approach is consistent with that taken in our Report on the 
Law of Standing. At the same time, it is our view that it would be helpful to articulate a non- 
exhaustive list of categories of parties who would have standing under the criterion, in the 
manner of the British Columbia proposal. More particularly, we recommend that the non- 
exhaustive list include a creditor who has the right to have the property seized and sold pursuant 
to a writ of seizure and sale. 

(3) The powers available to the court. The English legislation expresses the court's 

237 

powers in general terms: "the court may make such order as it thinks fit", whereas the present 

238 239 

Ontario provision, the Alberta reformed legislation, and the proposed British Columbia 
reforms specify the powers available to the court. We agree with the view that the legislation 
should explicitly limit the powers available to the court. 

Following the Alberta reformed legislation and the British Columbia proposed reform, we 
recommend that the powers that should be available are: 

(a) a physical division of all or part of the property between the co-owners; 

(b) the sale of all or part of the property and the distribution of the proceeds of the sale; 
and 

(c) the sale of all or part of the interest of one or more of the co-owners to one or more of 



the other co-owners who are willing to purchase the interest 



241 



In some cases where division of the property is appropriate it may be impractical to 
divide the property in a way that corresponds exactly with the size of the parties' 
entitlements. Accordingly, in circumstances in which a division of property in shares 
conforming to ownership is not possible, we recommend that the court have power to order 
division of property not conforming to ownership and in such a case to order payment of 
compensation in adjustment. The British Columbia proposed reform provides a useful 
model: 



237 
238 
239 
240 
241 



242 



Law of Property Act, 1925, supra, note 21, s. 30(1). 

Partition Act, supra, note 23, ss. 2, 3(1). 

Law of Property Act, supra, note 8, s. 15(2). 

Law Reform Commission of British Columbia, supra, note 50, at 69, draft Bill, s. 46(3). 

The conduct of the sale must, of course, be regulated. The British Columbia proposed reforms (ibid, at 69, s. 46 of 
draft Bill), provides: 

46. — (4) In making an order under subsection (3)(c) the court shall fix the value of the interest and 
the terms of the sale. 

(5) A sale under subsection (3)(b)(c) and the distribution of the proceeds of the sale shall be under the 
direction of the court subject to the Rules of the Court. 

Ibid, at 69, s. 47 of draft Bill. 






123 



47. If an order for a physical division under section 46 cannot be made in accordance with the 
co-owner's actual entitlement, the court may order that 

(a) the land be divided in portions that do not correspond to the co-owner's actual 
entitlement; and 

(b) compensation be paid in adjustment. 

The Alberta legislation makes it mandatory (subject only to the restricted circumstances 
set out in section 16) to make one of the listed orders. The British Columbia proposed 
reform, like the present Ontario law, affords the court a discretion to permit the co- 
ownership to continue. We think that the court should have such a discretion and so 
recommend. We also recommend that, as under the present law, the onus should be on the 
person opposing termination to justify that position. 245 

It is preferable for the court's exercise of discretion to be structured by statutory 
guidelines. The British Columbia proposal rejects this approach, section 46(3) of the draft 
legislation providing that, 

[u]pon hearing an application under subsection (1), the court, unless justice otherwise requires, 
shall make an order directing ... 

The English Law Commission has recommended a list of guidelines for the exercise of 
the court's discretion. Section 6(3), and (5) of the proposed Bill provide as follows: 

(3) In considering on such an application whether to order that land subject to a trust be sold, 
the court shall, subject to subsection (5) of this section, have regard — 

(a) to the intentions of the settlor; 

(b) to the purpose for which the land was acquired; 



243 



244 



245 



See Westlock Foods Ltd. v. Bonel Properties Ltd. (1981), 33 A.R. 1 (Q.B.). 

Section 16 of the Law of Property Act, supra, note 8, provides: 

16. Notwithstanding section 15(2), if an order is made under section 1 5(2)(b) and the highest amount 
offered for the purchase of the interest in the land is less than the market value of the interest, the Court 
may 

(a) refuse to approve the sale, and 

(b) make any further order it considers proper. 
Supra, note 50. Section 46(3) of the draft Bill, ibid., at 69, provides that, 

upon hearing an application under subsection (1), the court, unless justice otherwise requires, shall make an 
order ... 

See the British Columbia proposed reform, supra, note 50. 



124 



(c) if the land includes any dwelling, to the welfare of those residing in the dwelling, 
particularly any minor who occupies or might reasonably be expected to occupy it as 
his home; 

(d) to the wishes of any persons of full age who are entitled to interests in possession in the 
land or, in the case of a dispute between them, of the majority (according to the value 
of their combined interests) of those persons; 

(e) to the interests of any creditor who has obtained a charging order under the Charging 
Orders Act against any person for whose benefit any land subject to the trust is or may 
be held; and 

(f) to any other matters appearing to the court to be relevant. 

(5) Subsection (3) does not apply in the case of an application to which section 335A of the 
Insolvency Act 1986 applies (applications by the trustee of a bankrupt for the sale of land). 

We recommend an approach similar to that adopted by the English Law Commission. 

We consider that legislation should expressly deal with the interrelationship between the 
co-ownership provisions under consideration and the provisions in the Family Law Act 
applying to spouses. 247 Accordingly, we recommend that the legislation should confirm the 
position that has been adopted in the present law that (a) the co-ownership provisions apply 
to co-owning spouses and (b) the co-ownership provisions are subject to orders for exclusive 
possession made under the Family Law Act. 

We further recommend that the proposed legislation should spell out the implications of 
that interrelationship. 248 It should provide that the court may stay the co-ownership 
proceedings when an application for exclusive possession under the Family Law Act has been 
brought and that the court shall stay the co-ownership proceedings while such order remains 
in force. In addition, the court should have power to adjourn the co-ownership proceedings to 
enable a co-owner to bring an application for exclusive possession under the Family Law Act. 



246 „ 

Supra, note 13. 



247 
248 



See supra, this ch., sec. 1(e). 

This recommendation is similar to the proposed British Columbia reform, supra, note 50, at 70, s. 48 of the draft 
Bill. However, it should be noted that the British Columbia reform states that the court "shair stay proceedings 
where an application has been brought under the Family Relations Act, R.S.B.C. 1979, c. 121 . 



CHAPTER 7 



EASEMENTS AND PROFITS 



1. INTRODUCTION 

The previous chapters of this report deal with interests in land that confer a right to 
possession of the land. That right may be postponed to the future, as in future interests, or it 
may be shared with others, as in co-ownership. This chapter considers rights in land that fall 
short of a right to possession. Such rights are recognized in law. Some, such as rentcharges 
and mortgages, are concerned with providing security for the payment of money. Of these, 
mortgages was the subject of our Report on the Law of Mortgages. Others are concerned 
with the use of land. We have already dealt with some of these in our Report on Covenants 
Affecting Freehold Land. 3 The other important topic in this area is the law of easements and 
this, along with the closely related topic of proflts-a-prendre, is the subject of this chapter. 



There is, however, no clear-cut line that marks the boundary between the entitlements that may exist as easements 
and those that may not: 

[l]t follows from the general nature of the recognized interests in property that an easement cannot amount to 
a claim quite at variance with the proprietary rights of the servient owner. On the other hand, it is also quite 
obvious that an easement does to some extent detract from those rights. A right of way cuts down the 
servient owner's right to exclude people from his property or to develop it as he pleases; and a negative 
easement, such as light, also hinders development. The issue in fact is the perennial one of ... drawing the 
line, of deciding when the point has been reached that the right in question detracts so substantially from the 
rights of the servient owner that it must be something other than easement. 

A.J. McClean, "The Nature of an Easement" (1965), 5 U.W.O.L. Rev. 32, at 51. See, also, M.M. Litman and B.H. 
Ziff, "The Road Not Taken: Some Important Questions About the Nature of Easements" (1989), 50 R.P.R. 261. It 
should be noted that the decision in Shelf Holdings v. Husky Oil (1987), 52 Alta. L.R. (2d) 21 (Q.B.), criticized in 
the latter article, was reversed on appeal: (1989), 3 R.P.R (2d) 113 (Alta. C.A.). See, also, B. Ziff and M.M. 
Litman, "Easments and Possession: An Elusive Limitation", [1989] Conv. 296. 

2 

Ontario Law Reform Commission, Report on the Law of Mortgages (1987). 

Ontario Law Reform Commission, Report on Covenants Affecting Freehold Land (1989). 

[125] 



126 

2. SUMMARY OF THE PRESENT LAW 

(a) Nature and Requirements of Easements and Profits 

Before dealing with detail of the present law affecting easements, it is convenient to 
emphasize two ways in which easements and profits are proprietary rights. First, the benefit 
of the right passes as property. Moreover, where the right is connected with — "appurtenant 
to" — a particular piece of land, as under the present law it is required to be in the case of an 
easement, the right automatically passes with any transfer of the benefited land "so that the 
occupier for the time being can enjoy it". Second, the burden of an easement or profit 
necessarily affects a piece of land and that burden will, subject to compliance with 
registration provisions, affect successors in title to the burdened land. Indeed, third parties are 
affected by the easement or profit so that a third party who wrongfully interferes with it 
commits a tort. 

A profit may be defined as the right to go on the land of another and to take some part 
of the land, such as soil, gravel, minerals, oil, or natural gas, or to take wild animals or birds 
existing on the land. In order to qualify as a profit, the thing taken must be capable of 
ownership. A profit may be connected to — or "appurtenant to" — a piece of land or the 
benefit of the profit may be unconnected with any land, existing "in gross". 

Anger and Honsberger define an easement as follows: 

An easement is a privilege without profit annexed to land to utilize the land of a different owner 
(which does not involve the removal of any part of the soil or the natural produce of the land) or 
to prevent the other owner from utilizing his land in a particular manner for the advantage of the 
dominant owner. 



R. Megarry and H.W.R. Wade, The Law of Real Property (5th ed., 1984), at 835. 
See Ontario Law Reform Commission, Report on Limitation of Actions (1969), at 148: 

Minerals, however, may be sold so as to be owned separately from the land in which they exist. Such 
separate ownership of the minerals is not aprofit-a-prendre. Under a profit-a-prendre, ownership in the 
mineral does not pass until it has been extracted. Oil and gas 'leases', for example, may come within 
either of these categories, depending upon how they are framed .... 

Megarry and Wade, supra, note 4, at 850. 

A.H. Oosterhoff and W.B. Rayner, eds., Anger and Honsberger 's Law of Real Property (2d ed., 1985), at 925. 









127 



Following the judgment of the English Court of Appeal in Re Ellenborough Pari? it is 
conventional to describe easements as comprising four characteristics: 9 

(1) there must be a dominant and a servient tenement; 

(2) an easement must 'accommodate' the dominant tenement; 

(3) the dominant and servient tenements must 'not be both owned and occupied by the same 
person'; 

(4) a right over land cannot amount to an easement unless it is capable of forming the subject- 
matter of a grant. 

The first two requirements, as well as the definition of easements by Anger and 
Honsberger quoted above, emphasize that in Anglo-Canadian law an easement cannot exist 
independently of a benefited piece of land; it cannot exist in gross. This is unlike profits, 
which may exist in gross, and it is unlike the law in the United States where the common law 
was developed to permit easements in gross. In addition, other jurisdictions, including New 
Zealand, have provided by statute for easements in gross. 

The requirement that an easement must "accommodate" the dominant tenement is very 
similar, if not functionally the same, as the requirement in the law of covenants that a 
covenant "touch and concern" the land. 11 In Re Ellenborough Park 12 the English Court of 

13 

Appeal approved Cheshire's statement that: 

one of the fundamental principles concerning easements is that they must be not only appurtenant 
to a dominant tenement, but also connected with the normal enjoyment of the dominant tenant ... 
[W]e may expand the statement of the principle thus; a right enjoyed by one over the land of 
another does not possess the status of an easement unless it accommodates and serves the 
dominant tenement, and is reasonably necessary for the better enjoyment of that tenement .... 



10 

n 

12 
13 



[1956] Ch. 131, adopting the formulation in Cheshire, Modern Law of Real Property (7th ed., 1954), dXA56et seq. 
See Oosterhoff and Rayner, supra, note 7, at 925; Vannini v. Public Utilities Commission of Sault Ste. Marie 
(1973), 32 D.L.R. (3d) 661 (Ont. H.C.). 

The quotations that follow are taken from Re Ellenborough Park, supra, note 8, at 163 except that in the third 
characteristic. The equivalent requirement quoted in Re Ellenborough Park was that "dominant and servient 
owners must be different persons". However, as the formulation by Megarry and Wade, supra, note 4, at 837, 
quoted in the text, emphasizes, "the same person must not only own both tenements but also occupy both of them 
before the existence of an easement is rendered impossible. Thus there is no difficulty about the existence of an 
easement in favour of a tenant against his own landlord, or another tenant of his landlord, although the landlord 
owns the freehold of both dominant and servient tenements". 

See Oosterhoff and Rayner, supra, note 7, at 925-26. For discussion and critique of this rule see McClean, supra, 
note 1, at 36-42; M.F. Sturley "Easements in Gross" (1980), 96 L.Q. Rev. 557. See infra, this ch., sec. 3(b)(i). 

See Report on Covenants Affecting Freehold Land , supra, note 3, at 1 3, 1 5-16, 30. 

Supra, note 8, at 1 70. 

Supra, note 8, at 457. 



128 



Emphasis on the "normal" enjoyment of the dominant tenement is, however, open to 
criticism 14 and it may be that the principle should be more broadly stated so that "the test is 
whether the right makes the dominant tenement a better and more convenient property". 15 

Three issues were considered in Re Ellenborough Park in relation to the fourth 
characteristic of an easement: 

Whether the rights purported to be given are expressed in terms of too wide and vague a 
character; whether, if and so far as effective, such rights could amount to rights of joint 
occupation or would substantially deprive the park owners of proprietorship or legal possession; 
whether, if and so far as effective, such rights constitute mere rights of recreation, possessing no 
quality of utility or benefit; and on such ground cannot qualify as easements. 

The first of these issues does not distinguish an easement from other rights in property 
but it simply emphasizes that it must be sufficiently certain to be recognized as a property 
right. The second issue does identify an important characteristic of an easement: that it 
confers an entitlement falling short of possession. The third issue, which is framed in light of 
the facts in Re Ellenborough Park, does not relate to any general principle. However, it 
indicates, as also more generally do the other two issues, that the courts maintain control over 
the rights which will be allowed recognition as easements. The list of easements may not be 

IT 

closed, but the courts control entry to the list. 

1 8 

There are two main categories of easements that have received recognition. 
"Positive" easements give "the owner of land a right himself to do something on or to his 

20 

neighbour's land". Rights of way, right to take water, and right to have drainage pipes and 
sewers under land provide examples. "Negative" easements give the owner of land "a right to 

21 

stop his neighbour doing something on his [the neighbour's] own land". A right to light or a 



14 
15 



16 
17 

18 

19 

20 
21 



See Oosterhoffand Rayner, supra, note 7, at 927; McClean, supra, note 1, at 43-45. 

Megarry and Wade, supra, note 4, at 836. Compare the classic test for whether a covenant "touches and concerns" 
the land: "The covenant must either affect the land as regards made of occupation, or it must be such as per se, 
and not merely from collateral circumstances, affects the value of the land" (Rogers v. Hosegood, [1900] 
2 Ch. 388, at 395). 

Supra, note 8, at 164. 

See, also, Dyce v. Lady James Hay (1852), 1 Macq. 305, at 312-13: "The category of servitudes and easements 
must alter and expand with the changes that take place in the circumstances of mankind." 

However, the line between the two categories is not clean-cut. See McClean, supra, note 1 . For a discussion of the 
classification, see W.S. Holdsworth, A History of English Law (3d. ed., 1923) Vol. Ill, at 153-54. 

The American Law Institute, Restatement of the Law of Property (1944), §451, describes these as "affirmative" 
easements. 

Phipps v. Pears, [1965] 1 Q.B. 76, at 82 (C.A.). 

Ibid 






129 



right to create what would otherwise be a nuisance "by the discharge of gases, fluids, or 
smoke" provide examples. 

There are in fact very few negative easements. This is partly because the law of 
prescription does not work well in relation to negative entitlements. Such entitlements do 
not involve the dominant owner doing anything on the servient land. This may make it 
difficult for the servient owner to perceive that an easement may be in the process of creation 
against him or her; even if perceived, it may make it difficult for the servient owner to take 
action to prevent the prescriptive period running; and any appropriate action to prevent the 
period running may be inconvenient for the servient owner. For example, where a building on 
the dominant land is receiving support from a building on the servient land, termination of 
the prescriptive period may require removal of the support provided by the building on the 
servient land. 

A second reason for the recognition of only a few negative easements is that the 
development of restrictive covenants (the benefit of which cannot be acquired by 
prescription) as rights in land in the nineteenth century enabled the function that might have 
been carried out by negative easements to be carried out instead by restrictive covenants. 

(b) Creation of Easements 

(i) Introduction 

25 

There is a variety of methods by which easements may be created. All are to a greater 
or lesser extent related to the idea of acquisition by grant. The methods of acquisition may be 



22 



23 

24 

25 



Megarry and Wade, supra, note 4, at 908. Virtually all easements are negative in the sense that they do not require 
the servient owner to spend money: "It is most unlikely that a right would be accepted as an easement if it 
involves the servient tenant in the expenditure of money; for none of the recognized easements do so, except the 
obligation to fence land in order to keep out cattle, which has been described as "in the nature of a spurious 
easement" (Megarry and Wade, ibid., at 839, quoting Lawrence v. Jenkins (1873), L.R. 8 Q.B. 274, at 279). 

Compare McClean, supra, note 1, at 59-60. In the case of one of the most important negative easements, right to 
light, acquisition by prescription has been abolished in several jurisdictions, including Ontario: Limitations Act, 
R.S.O. 1990, c. L.15, s. 33. See Oosterhoffand Rayner, supra, note 7, at 961-62. 

See Report on Covenants Affecting Freehold Land, supra, note 3, at 24-25. 

Special mention must be made of the creation of an easement by operation of law through doctrines such as 
proprietary estoppel or acquiescence. The English Court of Appeal case of Crabb v. Arun District Council, [1976] 
Ch. 179, provides an example. (See, also, Ives (E.R.) Investment Ltd. v. High, [1967] 2 Q.B. 379 (C.A.) and the 
Ontario case of Classic Communications v. Lascar (1985), 51 O.R. (2d) 769 (H.C.)). The facts and decision in the 
Crabb case are conveniently summarized as follows by Oosterhoffand Rayner, supra, note 7, at 946-47: 

In Crabb v. Arun District Council a man owned a piece of land in a field. The local council 
commenced building a road near the field. The owner of the field wanted access to the new road. He 
was led to believe by the surveyor for the local council that he would be granted access. The surveyor, 
in fact, left a gap in the fence for it and the man acted on it. He sold adjoining land which had access to 
the new road without reserving a right of way, relying on the access he was led to believe he had been 
given. Sometime later, the council blocked up the gap and refused him access. He thus became land- 
locked. The English Court of Appeal held that while ... the man could not claim a right of way by 



130 



classified into three groups. Acquisition may be by express grant or reservation, by implied 
grant or reservation, or by prescription. In this last case, the grant is presumed by law and is 
a fiction. 

A deed is required for an express grant to be effective at common law but an equitable 
easement may be created where the parties enter into a specifically enforceable contract to 
grant an easement. At common law there was a technical difficulty in the making of a 
reservation of an easement in favour of land retained by a grantor. However, where the 
conveyance was executed by the grantee it was treated as making a re-grant of any easement 
expressed in favour of the grantor's retained land. Even in the absence of such execution by 
the grantee, "in equity the grantee would not be permitted to prevent the easement from being 
enjoyed by his grantor or those claiming under him". Statute has removed these technical 

28 

difficulties, section 44 of the Conveyancing and Law of Property Act providing as follows: 

44. Where by the terms of a conveyance of land a right of way or easement is reserved or 
excepted from the land thereby transferred or charged, such reservation or exception is effectual 
and shall be deemed always to have been effectual to vest the right of way or easement in the 
transferor or chargor of the land notwithstanding that the transferee or chargee does not execute 
the instrument. 

(ii) Easements Arising by Implication 

Various doctrines provide the basis for the implication of an easement where one is not 
expressly created. Although these doctrines are all concerned with the circumstances in which 

29 

the grant or reservation of an easement may properly be inferred, they overlap considerably 

30 

and the effect of their interrelationship is not always clear. 



necessity and that he had neither a grant nor the benefit of an enforceable contract, nor a prescriptive 
right, he had acquired a right of way by estoppel. The local council was estopped by their conduct from 
denying the man a right of access over their land to the highway. This equity gave rise to, and could be 
enforced by, a cause of action. 



26 
27 
28 
29 

30 



See Megarry and Wade, supra, note 4, at 855-56. 

OosterhofTand Rayner, supra, note 7, at 932. 

R.S.O. 1990, c. C.34. 

For discussion about the meanings of inferring intention in this context, see L. Berger, "Integration of the Law of 
Easements, Real Covenants and Equitable Servitudes" (1986), 43 Wash. & Lee L. Rev. 337, at 339-43. 

See, also, Restatement of the Law of Property, supra, note 19, which states a general principle that the creation of 
an easement may be inferred (§474) and then lists various matters which are factors in the operation of that 
general principle (§476). 



131 



a. The Rule in Wheeldon v. Burrows 



The Rule in Wheeldon v. Burrows is concerned with the "translation into easements" 



of rights over a grantor's retained land. As Megarry and Wade explain: 



33 



It is natural for this purpose to look at the grantor's previous use of the land, and to allow the 
grantee to take easements corresponding to the facilities which the grantor himself found 
necessary. Before the grant they cannot have been easements because of the common ownership. 
They are therefore called 'quasi-easements', i.e. rights which are potential easements in case of a 
division of the land. 

The Rule provides that on the grant by the owner of a piece of land of part of that land 
there will pass to the grantee all those quasi-easements which, first, were "continuous and 
apparent" and, second, which are necessary to the reasonable enjoyment of the property 
granted, and which have been and are at the time of the grant used by the owners of the 
entirety for the benefit of the part granted. This rule operates only to create easements in 
favour of a grantee; it does not create any easement in favour of the grantor with respect to 
retained land. 

b. The "General Words " Statutory Provision 

Section 1 5( 1 ) of the Conveyancing and Law of Property Act provides: 

37 

15. — (1) Every conveyance of land, unless an exception is specially made therein, includes 
all ... ways, waters, watercourses, lights, liberties, privileges, easements, profits ... hereditaments 
and appurtenances whatsoever to such land belonging or in anywise appertaining, or with such 
land demised, held, used, occupied and enjoyed or taken or known as part or parcel thereof ... . 



31 

32 
33 
34 



35 



(1879), 12 Ch. D. 31. The actual decision in the case was that an easement was not created because the rule 
formulated in the case did not apply to implication of a reservation of an easement in favour of a grantor. 

Megarry and Wade, supra, note 4, at 862. 

Ibid, [footnote omitted]. 

Wheeldon v. Burrows, supra, note 31, at 49. It may be that the second condition is an alternative rather than an 
additional condition. At one point in Wheeldon (at 49) they are treated as synonymous; in another (at 58) they are 
treated as alternatives. See Megarry and Wade, supra, note 4, at 862-63. There are two recent English cases on the 
Rule in Wheeldon; they do not seem to resolve this problem: see B. Ziff, Principles of Property Law (2d ed., 
1996), at 340. 

The Rule does apply where simultaneous grants are made to two or more grantees of land previously held as a 
single piece by the grantor. Compare Hardy v. Herr, [1965] 1 O.R. 102 (H.C.), aff d [1965] 2 O.R. 801 (C.A.). 
Reciprocal easements, for example where two houses support each other, provide an exception under which an 
easement may be implied in favour of a grantor, so that on the sale of one house an easement of support would be 
implied in favour of both grantor and grantee. However, this may be explained as being an "intended easement". 



36 



Supra, note 28. 

37 



A "conveyance" for this purpose includes a lease, among other things: ibid., s. 1(1). 



132 



The main purpose of the provision was to shorten conveyances by implying the 
verbiage that had previously been typically set out expressly in conveyances. For the most 
part the extraordinarily detailed list of items is unexceptional and is irrelevant to the creation 
of easements. Even the explicit references to easements and profits are of little importance 
since the provision "has no effect on existing easements or profits appurtenant to the land 
conveyed, which automatically pass with it, save that it precludes any argument that they 
were not intended to pass". However, the provision does have the important effect, unless 
there is provision to the contrary, of creating an easement or profit out of previously enjoyed 
ways, liberties, and privileges, and so on. For example, in International Tea Stores Co. v. 
Hobbs 39 a landlord had permitted his tenant to use a way across property that remained in the 
occupation of the landlord. Subsequently, the landlord sold the reversion to the previously 
leased property to the tenant. It was held that the tenant, by force of English legislation 
equivalent to section 15, acquired an easement of way. What had previously been a way 
enjoyed by permission was converted into an easement of way. 

Section 1 5 overlaps the Rule in Wheeldon v. Burrows. However, in important respects it 
has a considerably wider ambit. There is no requirement that the quasi-easement be 
"continuous" or "apparent" or that it be reasonably necessary to the enjoyment of the 
property conveyed. On the other hand, the House of Lords held in Sovmots Investments Ltd. 
v. Secretary of State for the Environment tha^the equivalent English provision only applies 
where there had been some diversity of ownership or occupation of the quasi-dominant and 
quasi-servient tenements prior to the conveyance. 

c, "Intended" Easements 

Even in circumstances outside those attracting the Rule in Wheeldon v. Burrows an 
easement, often referred to as an "intended" easement, may be implied on the basis that it is 
"necessary to give effect to the common intention of the parties". Although it is more 
difficult for a grantor than a grantee to establish an easement on this basis, an "intended" 
easement may be implied in favour of a grantor as well as a grantee. 



38 
39 
40 
41 
42 



Megany and Wade, supra, note 4, at 864. 

[1903] 2 Ch. 165. 

[1979] A.C. 144. 

Pwllbach Colliery Co. v. Woodman, [1915] A.C. 634, at 646. 

See Duchman v. Oakland Dairy Co., [1929] 1 D.L.R. 9 (Ont. App. Div.) and Barton v. Raine (1980), 29 O.R. (2d) 
685 (C.A.). 



133 



a\ Easements of Necessity 

These easements are closely related to "intended easements" and may in fact merely be 
illustrations of them. The classic example of an easement of necessity occurs where there is 
a grant of land, resulting in the land granted or land retained by the grantor having no means 
of access unless an easement is implied providing such access. As suggested by this example, 
an easement of necessity may be implied in favour of a grantor as well as a grantee. 

The necessity requirement is more stringent in easements of necessity than in the Rule 
in Wheeldon v. Burrows. For example, a convenient second method of access may be 
acquired as an easement under the Rule in Wheeldon v. Burrows. On the other hand, 

[i]f some other way exists, no way of necessity will be implied unless that other way is merely 
precarious and not as of right, or unless, perhaps, it would be a breach of the law to use that other 
way for the purpose in question. Nor will there be a way of necessity if the other way is merely 
inconvenient, as where the land abuts on a highway in a cutting twenty feet below; for the 
principle is that an easement of necessity is one 'without which the property retained cannot be 
used at all, and not one merely necessary at the reasonable enjoyment of that property'. 

(iii) Prescriptive Easements 

The law of prescriptive easements was summarized in the Commission's Report on 
ations ofActi 
have been added.) 

(b) Prescriptive Easements 



Limitations of Actions and it will be convenient to set out that summary here. (The footnotes 



For a prescriptive easement to arise, the claimant must show user 'as of right'. This means 
that he has enjoyed the easement as if he were entitled to it. The enjoyment must have been 
without force, without secrecy and without permission. (Nee vi, nee clam, nee precario are the 
expressions used in legal terminology.) A claimant to a right of way will not succeed if he had to 
break open a locked gate to achieve his use or where the adverse use has been continually 
contentious. Nor will he be successful if the adverse use is secret, although active concealment is 
not an essential ingredient of secrecy for this purpose. This may be illustrated by the underground 
discharge of waste from one property into another. Finally, if permission has been given by the 
owner of the land, a prescriptive easement cannot arise. It matters not how long ago that 
permission was given, or whether it was written or oral. Obviously, if an owner of land gives 
permission (i.e., a licence) to another to cross his land, the owner should not be subjected to a 



43 



44 



45 



See Wong v. Beaumont Property Trust Ltd., [1965] 1 Q.B. 173 (C.A.). In Nickerson v. Barraclough, [1981] 1 Ch. 
426, at 440 (C.A.), it was stated that "an easement of necessity is not founded on public policy at all but on an 
implication from the circumstances". 

Megarry and Wade, supra, note 4, at 860 [footnotes omitted], quoting from Union Lighterage Co. v. London 
Graving Dock Co., [1902] 2 Ch. 557, at 573. 

Supra, note 5, at 144-49 [footnotes omitted]. 



34 



claim for an easement merely because the person to whom he has given permission has taken 
advantage of that permission for a considerable length of time. 

The person claiming the easement must show that the owner of the land has acquiesced in 
his enjoyment. The latter must have acquiesced, yet not given permission. It is not always easy to 
tell whether or not there was, in fact, acquiescence or permission in a particular case. 

Under English law, prescriptive easement can arise in three ways: 

(i) at common law; 

(ii) under the doctrine of the lost modern grant; 

(iii) under the Prescription Act, 1832. 

In Ontario, prescriptive easements can only be created by the second and third methods. The 
English statute was adopted for Upper Canada in 1 847 and most of its provisions are now to be 
found in The Limitations Act. 

The Limitations Act expressly excludes the operation of prescription in certain situations. It 
has not been possible to acquire a prescriptive easement with respect to light in Ontario since 
1880. (See s. 33.) However, prescriptive easements of light which were acquired prior to 1880 are 
still valid to-day. Wires or cables on another's property cannot give rise to a prescriptive 
easement. (See s. 35.) Nor can prescription under The Limitations Act work against unsurveyed 
Crown lands. (See s. 41.) It does, however, apply to surveyed Crown lands. (See ss. 30 and 31.) 

(i) At Common Law 

At common law, a grant of an easement would be presumed if the enjoyment of the claimed 
right could be shown to have continued from time immemorial. Under the common law in 
England, this meant back to 1189, the first year of the reign of Richard I. Since it would be 
virtually impossible to show continuous enjoyment since 1189, the courts would presume that 
such long-term enjoyment existed if twenty years of user could be proved. However, the 
presumption could be rebutted by showing that at some time since 1 189 the adverse use did not 
exist. 



(ii) The Lost Modern Grant 

To overcome the obvious difficulties in establishing a prescriptive easement at common law 
so that legal support could be given to long established enjoyment, the English courts developed 
what Cheshire has described as 'the very questionable theory' of the lost modern grant. This 
judge-made rule was based on the court's presuming that, if actual enjoyment had been shown for 
a reasonable length of time, an actual grant had been made when the enjoyment began, but that 
the deed granting that easement had been subsequently lost. The speciousness of the fiction of the 
'lost' grant is demonstrated by the refusal of the courts (although there is some law to the 
contrary) to allow the presumption to be rebutted by evidence that no such grant was in fact 
made. 



46 



It seems that the doctrine does not apply if a grant could not possibly have been made. 



135 



The doctrine of the lost modern grant is part of the common law as it exists in Ontario. 

(Hi) The Prescription Act of 1832 

The relevant provisions of this statute were made applicable to Upper Canada in 1 847 and 
are now contained in sections 30 to 32, 34, 39 and 40 of The Limitations Act. 

The purpose of the 1832 statute was to reduce the uncertainties of establishing prescriptive 
easements at common law or under the lost modern grant doctrine, and avoid the problem of 
persuading juries to find that grants had been made and lost when it was obvious that this was not 
the case. 

The statute did not replace the common law and lost modern grant methods of acquiring 
prescriptive rights. It merely supplied a new and supposedly simpler method. Thus, in England, a 
prescriptive easement can still be claimed in three different ways and, in Ontario, in two. Because 
of the requirements of the provisions of the statute, there are occasions when a prescriptive 
easement cannot be successfully claimed under it but, nevertheless, can be either at common law 
or under the doctrine of the lost modern grant in England and under the latter in Ontario. 

The Act of 1832 is described by Megarry and Wade in their text on real property law as 'ill- 
drafted' and Gale, the author of the leading treatise on easements, wrote 'it certainly is to be 
lamented that its provisions were not more carefully framed'. These comments apply to the 
provisions as they have been carried forward into the present Ontario limitations statute. The 
prescription provisions of that enactment remain a mystery to many a practicing lawyer. 

Under these provisions, the following are the points of significance: 

1 . Section 3 1 establishes two different periods for the creation of prescriptive easements. 
These periods are twenty and forty years. 

The 20 year period 

After twenty years of adverse use, an easement cannot be defeated by showing that user 
began after 1 1 89. This merely facilities the operation of prescription at common law by 
eliminating one kind of defence. Thus, while an easement by prescription at common law 
could not be created in Ontario apart from this provision, section 31 makes 'time 
immemorial' irrelevant and enables a prescriptive easement to be created at common law in 
this province. Apart from showing user began after 1189, a claim for a prescriptive 
easement after twenty years' adverse use may still be defeated by any other defence that 
was available at common law. 



47 



For a recent confirmation, see Descar Ltd. v. Megaventures Corp. (1990), 72 O.R. (2d) 388 (H.C.). 



136 



The 40 year period 

After forty years of adverse use, the easement becomes 'absolute and indefeasible'. This is 
not as definite as it appears. The basic rule that prescription must operate for and against a 
fee simple estate still applies. Thus, a tenant cannot prescribe against his landlord and it is 
doubtful if a corporation can be prescribed against if it does not have the power to grant an 
easement. Also a claim based on forty years' adverse use may be defeated, as could a 
twenty year claim, by showing that the user was forcible or secret, or enjoyed by written 
permission. On the other hand, a forty year claim cannot be defeated, as a twenty year claim 
can, by proving it was enjoyed by oral permission. Furthermore, the disabilities that have to 
be taken into account in the running of the twenty year period under section 39 do not apply 
to the running of the forty year period. (Note, however, section 40.) 

Thus, section 3 1 may be said to operate both negatively and positively. It facilitates the creation 
of common law prescription by the elimination of a defence, on the one hand, and establishes a 
right, on the other. 

2. Section 31 only comes into play when there is litigation and the relevant period of 
user must immediately precede the bringing of the action. Thus, forty years of adverse 
use does not of itself create an 'absolute' prescriptive easement. An action must be 
brought and the necessary period of enjoyment must be immediately prior to the 
commencement of that action. 

3. The period must be 'without interruption'. This does not mean mere non-user by the 
person claiming the easement. It means that the claimant has not been obstructed from 
enjoying the use. 

4. No act is deemed to be an interruption for the purpose of section 3 1 unless the person 
claiming the easement has submitted to interruption for one year. 

Example of the operation of sections 31 and 32 

X has been crossing Y's property as if he had an easement for 19 years and one day. The 
next day Y prevents X from crossing by placing an obstruction in the way of passage. At 
this time, X has no right to cross as he cannot show twenty years of enjoyment. 

However, if X sues for a prescriptive easement one year from the day after he had enjoyed 
the use for nineteen years, he will succeed. X will now be able to show twenty years of 
enjoyment prior to bringing the action. The interruption will not count as it was for one year 
less a day. X could not have brought his action sooner as he would have been short of the 
twenty year period required. 

An action brought by X on the following day will be too late as the interruption will now 
have lasted a year and section 3 1 can no longer apply. 

The acquisition of an easement by adverse use or enjoyment is, of course, to be 
distinguished from the acquisition of title by adverse possession under sections 4 and 1 5 of The 
Limitations Act. Ten years of adverse possession gives rise to a possessory or 'squatter's' title, 
which is good against the world. The adverse use required for an easement does not amount to a 
dispossession and, of course, must be for the benefit of adjacent land. Adverse possession entails 
dispossession and does not depend for its existence on other land which will benefit. 



137 



Furthermore, the adverse enjoyment which gives rise to prescriptive easement is based on a 
presumed grant. It is presumed that the claimant had been granted the right to use the lands in the 
first place. Adverse possession raises no such presumption but, once it has lasted ten years, results 
in: 

(a) the dispossessed person being barred from suing for the recovery of the land; and 

(b) the dispossessed person's title to the land being extinguished. 

The law relating to prescription is both confusing and complex. Certainly, if prescription 
were to be retained, there should be substantial improvements. Confusion and difficulties under 
the present law arise from: 

1 . having two different methods of prescription when one would be sufficient; 

2. having two different periods under the stature when one would be sufficient; 

3. tying the prescription periods under the statute to the commencement of an action; 

4. requiring long periods of adverse enjoyment, considering that ten years' adverse 
possession is sufficient to create a possessory title; 

5. excluding from the periods required under the statute time when the servient tenement 
is owned by someone under a disability, when such persons usually have legal 
representatives who can act on their behalf; 

6. the poor drafting of the statutory provisions; 

7. the use of the fiction of the 'presumed' grant; 

8. the obscureness of the law as to the meaning of 'user as of right'; and 

9. the difficulty or undesirability, in some cases, of having to make 'interruptions' in the 
running of time by the creation of physical obstructions. 

C. Profits-a-Prendre 

(b) Prescriptive 

A profit-a-prendre may be claimed in Ontario by prescription either by virtue of the 
doctrine of the lost modern grant or under section 30 of The Limitations Act. Section 30 provides 
for the establishing of a prescriptive profit-a-prendre after thirty years of adverse use by the 
claimant, although the claim may be defeated on certain grounds. After sixty years, the section 
provides that the right to the profit-a-prendre become absolute (unless it can be shown that the 
adverse use was enjoyed by written consent). Prescription under The Limitations Act is not, 
however, applicable to unsurveyed Crown lands. (See s. 41.) 

Prescriptive profits-a-prendre in gross cannot be successfully claimed under the statute. 
They can, however, be established under the doctrine of the lost modern grant. 



138 



It should be added to the foregoing account of the law that neither an easement nor a 
profit can be acquired by prescription against land registered under the Land Titles Act?* the 
same provision, section 51(1), abolishing both adverse possession and prescription. 
Section 51(1) provides as follows: 

51. — (1) Despite any provision of this Act, the Limitations Act or any other Act, no title to and 
no right or interest in land registered under this Act that is adverse to or in derogation of the title 
of the registered owner shall be acquired hereafter or be deemed to have been acquired heretofore 
by any length of possession or by prescription. 

(c) Extinguishment of Easements 
(i) Express Release 



At common law an express release must be made by deed."" 



49 



In equity, however, an informal release will be effective provided it would be inequitable 
for the dominant owner to claim that the right still exists, as where he has orally consented 
to his light being obstructed and the servient owner has spent money on erecting the 
obstruction. 

(ii) Abandonment 

The essence of abandonment is conduct showing an intention to release. An easement 
will not be extinguished by non-user alone, but non-user of long duration may raise a 
rebuttable presumption of abandonment. 



48 
49 

50 



R.S.O. 1990, c. L.5. 

Megarry and Wade, supra, note 4, at 897 [footnotes omitted]. 

Ibid., at 899 [footnotes omitted]. 






(iii) Unity of Ownership and Possession 

As Megarry and Wade explain, an easement is only extinguished if there is unity of 
both ownership and possession: 

If the dominant and servient tenements come into the ownership and possession of the same 
person, any easement or profit is extinguished. Unity of possession without unity of ownership is 
not enough; and unity of ownership means acquisition of both tenements for a fee simple 
absolute. If there is only unity of possession the right is merely suspended until the unity of 
possession ceases. If there is only unity of ownership the right continues until there is also unity 
of possession. 



139 



(iv) Effect of Land Titles Act and Registry Act 

The Land Titles Act 51 provides for the statutory extinguishment after forty years of a 
"condition, restriction or covenant" which "has been registered as annexed to or running with 
the land". However, it appears that this provision does not apply to easements or profits and 
no other provision of the Land Titles Act provides for their statutory extinguishment. 

52 

The Registry Act, on the other hand, does provide for the statutory extinguishment of 
easements and profits in certain circumstances. Section 113(1) provides that a "claim" 
expires at the end of the "notice period" unless a "notice of claim" is registered. Claim is 
defined by section 111(1) to include an easement, and probably a profit, in a registered 
instrument. Section 1 13(2) provides that a notice of claim may be registered within the notice 
period or thereafter "before the registration of any conflicting claim". "Notice period" is 
defined by section 111(1) as forty years from registration of the instrument in question or 
forty years after registration of a notice of claim. The effect of all this is that generally an 
easement or profit will expire after forty years unless a notice of claim is registered in order 
to keep it alive. However, this is subject to an important exemption since section 113(5) 
provides that these provisions do not apply to: 

(a) a claim, 

(iv) of a person to an unregistered right of way or other easement or right that the 
person is openly enjoying and using. 

3. REFORM 

(a) Approaches to Reform 

During the last twenty years or so an argument has been made for the integration of 
doctrines relating to covenants, easements, and profits. In 1971 the English Law Commission 
in a working paper argued for legislative reformulation along lines different from the 
distinctions in the present doctrines. An integrated body of rules would apply to a new 
category of "Land Obligations" subdivided into five classes according to their nature. Several 



51 

52 

53 

54 
55 
56 



Supra, note 48, s. 119(9). 

R.S.O. 1990, c. R.20. The Registry Amendment Act, S.O. 1981, c. 17, s. 4, introduced a new Part III to the Registry 
Act,R.S.O. 1980, c. 445. 

See, generally, T.G. Youdan, "The Length of a Title Search in Ontario" (1980), 64 Can. Bar Rev. 507, at 519-31; 
and B. Bucknall, et al., "Title Searching under the Ontario Registry Act After Fire v. Longtin: A Consensus 
Position" (1996), 1 RPR. (3d) 173. 

For discussion about the effect of this provision, see Youdan, ibid., at 527-28. 

For discussion about the effect of this provision, see Youdan, ibid., at 530-3 1 . 

U.K., Law Commission, Transfer of Landf: J Appurtenant Rights (Working Paper No. 36). 



140 



American commentators, notably in a symposium in the Southern California Law Review in 
1982, have argued for integration to be effected by judicial development of the law. 57 One of 
these commentators, Professor Susan French, is the reporter for the servitudes section of the 
Third Restatement and in "Tentative Drafts" has formulated an exposition of doctrine 
integrating the law of covenants, easements and profits. 

The main thrust of the argument for integration is that the separate doctrines in the 
present law have developed for historical reasons whereas in contemporary society they all 
carry out the same basic functions and overlap considerably. The existence of such separate 
doctrines creates unnecessary doctrinal complication, which in turn causes difficulty in the 
application of the law. It also causes incoherence where different rules of different doctrines 
cause different results in circumstances where such variance cannot be functionally justified. 

In our Report on Covenants Affecting Freehold Lane? 9 we referred to this movement for 
integration but concluded against attempting such reform in the report: 60 

[W]e have concluded that such an approach would be overly ambitious within the limited context 
of the present Report. Although we do not wish to preclude the eventual assimilation of the 
several servitudes, we have determined that the proposals for reform made in this Report should 
deal only with positive and restrictive covenants, and should not address easements or profits a 
prendre. 

Those who oppose or are skeptical of integration argue that at least some important 
differences in the rules applicable in the existing doctrines are not merely the product of 
history but that "many of the variances in the rules are based upon sound policy and 
supported by community expectation". An important example of such variance is the group 
of doctrines in the law of easements providing for the implication of easements where they 
have not been expressly created. We outlined these doctrines in our "Summary of the Present 
Law" under the headings of: "The Rule in Wheeldon v. Burrows", "The 'General Words' 



57 



58 

59 
60 
61 



See, particularly, U. Reichman, "Towards a Unified Concept of Servitudes" (1982), 55 So. Cal. L. Rev. 1179; 
S.P. French, "Towards a Modern Law of Servitudes: Reweaving the Ancient Strands" (1982), 55 So. Cal. L. Rev. 
1261 (hereinafter referred to as French, "Towards a Modern Law"); S.P. French, "Servitudes Reform and the New 
Restatement of Property: Creation Doctrines and Structural Simplification" (1988), 73 Cornell L.Q. 928 
(hereinafter referred to as French, "Servitudes Reform"). 

For a brief comment along similar lines by an English writer, see P. Jackson, The Law of Easements and Profits 
(1978), at 2. See, also, several articles in 27 Conn. L. Rev. 1 19 et seq. (1994). 

American Law Institute, Restatement of the Law Thirdf] Restatement of the Law of Property (Servitudes) [:] 
Tentative Draft No. 1 (April 5, 1989); Tentative Draft No. 2 (April 5, 1991). 

Supra, note 3. 

Ibid., at 103. 

Berger, supra, note 29, at 368. See, also, L. Berger, "Unification of the Law of Servitudes" (1982), 55 So. Cal. L.J. 
1339. Compare CM. Rose, "Servitudes, Security, and Assent: Some Comments on Professors French and 
Reichman" (1982), 55 So. Cal. L. Rev. 1403. 



141 



Statutory Provision", "'Intended' Easements", and "Easements of Necessity". These doctrines 
have no counterparts in the law relating to positive or restrictive covenants. This, it is argued, 
is because the practical context of the types of rights created by easements, unlike those 
created by positive or restrictive covenants, make such doctrines appropriate. 

This argument is to some extent at least conceded by proponents of integration. For 
example, Professor French accepts that the proposed single body of doctrine will 
"occasionally [break] out one or more of the servitudes for separate treatment". 62 For 
example, she accepts that, 

[different rules ... may apply to finding affirmative easements by implication than apply to 
profits and different rules apply to implying negative and affirmative covenants. 

Doctrinal integration would, therefore, not be a simple process of making an existing 
body of doctrine apply in all the circumstances presently dealt with by positive covenants, 
restrictive covenants, and easements. Rather, it would require reformulation of large bodies of 
existing doctrine. Moreover, such reformulation would probably continue important 
distinctions similar to those in the present law. 

In the context of this report it is not possible to conduct a detailed review and 
reformulation of the areas dealt with presently by the law of easements and such a review and 
reformulation would be necessary if the law of easements was to be integrated with that 
dealing with covenants. Instead, we shall consider particular topics where reform of basic 
principles of the law of easements would be appropriate. In considering such reform, 
increased assimilation with the law of positive and restrictive covenants will be a very 
important factor. 

(b) Proposed Reforms 

(i) Easements in Gross 

We mentioned in the "Summary of the Present Law" the well-entrenched rule that an 
easement cannot exist independently of a benefited piece of land; it cannot exist in gross. 

Holdsworth argued that the main reason for this restrictive rule was that the medieval 
remedy for infringement of an easement, the assize of nuisance, "only lay for a freeholder 
against a freeholder" and that this procedural restriction became a rule of substantive law so 
that it remained even after the assize of nuisance became obsolete. A contributing factor may 



"Servitudes Reform", supra, note 57, at 95 1 . 



63 ibid 



Supra, note 18, at 156-57. 
65 Ibid., at 156. 



142 



have been that Roman law similarly restricted servitudes to ones that were connected with 
benefited land, and Roman law was influential in the nineteenth century systematization of 
the law of easements. 

A more substantial reason for the existence, or at least the continued existence, of the 
rule may have been concern about the detrimental impact an easement in gross might have on 
the servient tenement. The main point is that it is ordinarily fairly easy to locate and identify 
the owner of an easement connected to benefited land since the land, and its owner, will be 
readily identifiable; however, determination of the identity and location of the current owner 
of an easement in gross might cause more difficulty. This might have two possible effects. 
First, a potential purchaser of the servient land might be concerned about the difficulty and 
this might affect marketability of land. Second, the difficulty in determining the identity and 
location of the current owner of the easement might cause problems for an owner of the 
servient tenement who wished to negotiate the removal or modification of the easement. 68 
This problem would be particularly acute where the easement had long ago fallen into disuse 
and was therefore "a particularly appealing candidate for removal". All of these problems 
caused by difficulty in determining the identity and location of the current owner of an 
easement in gross would be particularly likely to occur in a jurisdiction, like that in England 
when the rule became established, lacking an effective system of recording title to land or 
documents relating to land. 

Whatever the reasons for the creation and continuance of the rule in Anglo-Canadian 
law, it causes inconvenience in modern law. There are various types of arrangements that 
cannot conveniently be structured through other legal concepts but could conveniently exist 

70 

as easements in gross. One commentator gives the following examples: 

Several possibilities seem feasible as easements in gross: the right to land helicopters proposed in 
Gale; easements for maintaining telephone, telegraph, power or cable television lines on 
another's land, or pipelines under it; the right to maintain advertising signs; or even the right of a 

72 

transport company to park lorries at convenient points along its normal routes. 



66 
67 

68 

69 

70 
71 
72 



Sturley, supra, note 10, at 562-63, mentions, but then convincingly demolishes, the additional argument "that an 
easement in gross, not being limited by the needs of the dominant tenement, is likely to burden the servient 
tenement with excessive use". 

See Sturley, ibid., at 563-67; French, "Towards a Modern Law", supra, note 57 at 1282, 1286; S.E. Sterk, 
"Freedom from Freedom of Contract: The Enduring Value of Servitude Restrictions" (1985), 70 Iowa L. Rev. 
615, at 650 (hereinafter referred to as Sterk, "Freedom of Contract"). 

See French, "Towards a Modern Law", supra, note 57, at 1286-87; French, "Servitudes Reform" supra, note 57, 
at 945-47; and Sterk, "Freedom from Freedom of Contract", supra, note 67, at 651. 

Sterk, "Freedom of Contract", ibid., at 651. 

Sturley, supra, note 10, at 559. 

See now S.G. Maurice, ed., Gale on Easements, (15th ed., 1986), at 44. 

This possibility was suggested by McClean, supra, note 1, at 40. 



143 



It is true that the more important of these possibilities — those relating to utilities and 
pipelines and so on — are often accommodated by special legislation. For example, the 
Ontario Water Resources Act provides that rights "in respect of water or sewage works, in 
favour of the Crown or any municipality having a contract with the Crown in respect of water 
or sewage works" may be valid and enforceable "although the right ... is not appurtenant or 
annexed to or for the benefit of any land of the Crown or the municipality". 

However, this ad hoc type of solution is not completely satisfactory. First, it does not 
deal with all arrangements that could conveniently exist as easements and, in particular, there 
will often be a time-lag between the development of some novel type of arrangement and any 
legislation passed to deal with it. Second, where there is an arrangement which could 
conveniently exist as an easement but which does not have the benefit of special legislation, 
courts will either have to strike down the arrangement as an easement or be forced into 
strained reasoning in order to uphold it. Vannini v. Public Utilities Commission ofSault Ste. 
Marie provides an example. A water main, belonging to the defendant Commission, was 
laid in land of the plaintiffs predecessor in title in 1909 at a time when no special legislation 
provided for the validity of such an arrangement as a easement in gross. It was held that an 
easement had been acquired by prescription. The argument that the defendant had no 
dominant tenement to which the casement was appurtenant was met with the argument, 
accepted by the court, "that the Commission in effect has ownership of the waterworks 
system and that this creates a dominant tenement". 

The third deficiency in the ad hoc statutory treatment of easements in gross is that it is 

76 

"necessarily expensive and inefficient". In the absence of compelling reason for the general 

77 

invalidity of easements in gross, they should be permitted by the general law and then the 
form and terms of each arrangement can be cheaply and efficiently determined by the parties 
able to negotiate them. 

There are, we suggest, no compelling reasons why easements in gross should not be 
permitted in modern Ontario law. In particular, the possible rationales based on difficulty in 
determining the identity and location of the owner of the easement have little force in modern 
Ontario and will have even less force if other reforms we propose are implemented. The main 



73 



74 

75 
76 
77 



R.S.O. 1990, c. O.40, s. 29(1). Compare the more general provisions in Alberta, British Columbia, and Manitoba: 
Land Titles Act, R.S.A. 1980, c. L-5, s. 72(1), as rep. sub. by S.A. 1985, c. 48, s. 2(16); Land Title Act, R.S.B.C. 
1979, c. 219, s. 214, as am. by S.B.C. 1989, c. 71, s. 11; 1992, c. 77, s. 3; Real Property Act, R.S.M. 1987, c. R.30 
(also C.C.S.M., c. R.30), s. 1 1 1, as am. by S.M. 1995, c. 16, s. 5. 

Supra, note 8. Vannini applied the similar English decision of Re Salvin 's Indenture, [1938] 2 Al 1 E.R. 498. For a 
similar Australian example, see Gas & Fuel Corp. of Victoria v. Barba, [1976] V.R. 755 (S. Ct), varied (1977), 
51 A.L.J.R.219(H.C.Aus.). 

Vannini v. Public Utilities Commission ofSault Ste. Marie, supra, note 8, at 666. 

Sturley, supra, note 10, at 565. 

Compare McClean, supra, note 1, at 40. 



144 



point is that the recording systems operative in Ontario — both the Registry Act™ and the Land 
Titles Act 19 — provide effective systems for maintaining a record of the owner of the 

Of) 

easement. In addition, difficulty caused by obsolete easements can properly be directly 
overcome by our proposed provisions for modification and discharge of easements. 81 

Easements in gross have been permitted in other common law jurisdictions. In the 
United States of America a rule prohibiting easements in gross was never established. 
Instead, it is a question of construction whether an easement is intended to be in gross or 
whether it is intended to be attached to a dominant tenement, although there is a strong 
constructional preference for finding an easement to be appurtenant rather than in gross. 
The difficulty that has been experienced in America law with easements in gross has related 

83 

to their assignability and inheritability. Originally, they were not assignable or inheritable 
but in modern times the position has changed so that the Restatement of the Law of Property, 
in 1944, took the position that: 

Easements in gross, if of a commercial character, are alienable property interests. 

The alienability of non commercial easements in gross is determined by the manner or the terms 
of their creation. 

As the leading treatise, Powell on Real Property, asserts, those sections of the Restatement, 

recognize the growing recognition of the assignability of all easements in gross except those 
demonstrably intended to benefit only the individual who is its first recipient. 



78 
79 
80 

81 

82 

83 
84 
85 
86 



Supra, note 52. 

Supra, note 48. 

Compare French, "Towards a Modern Law", supra, note 57, at 1286; French, "Servitudes Reform", supra, 
note 57, at 947; Sterk, "Freedom of Contract", supra, note 67, at 650; Sturley, supra, note 10, at 566-67. 

See infra, sec. 3(b)(iii). See French, "Towards a Modern Law", supra, note 57, at 1286-87; French, "Servitudes 
Reform", supra, note 57, at 947; Sterk, "Freedom of Contract", supra, note 67, at 651-52. 

P.J. Rohan, ed., Powell on Real Property (1991), s. 405. See, also, Restatement of the Law of Property, supra, 
note 19, §454; McClean, supra, note 1, at 40-42. 

Powell on Real Property, supra, note 82, s. 419; McClean, supra, note 1, at 40-42. 

Restatement of the Law of Property, supra, note 19, §489. 

Ibid., §491. 

Powell on Real Property, supra, note 82, s. 419. 



145 



Professor Susan French, the reporter for the servitudes section of the proposed new 
Restatement of Property, confirms this view that the law should not impose restrictions on the 

87 

assignability of the benefit of easements in gross. 

The rule forbidding easements in gross has been abrogated in New Zealand by 
section 122 of the Property Law Act, 1952, which provides as follows: 

122. An easement over land may be created without being attached or made appurtenant to 
other land, and such an easement shall run with and bind the land over which it is created, and all 
persons claiming title to that land by, through, or under the person creating the easement; and the 
easement so created shall be to all intents and purposes an incorporeal hereditament, and shall be 
assignable accordingly. 

It does not appear that this change has caused difficulties in New Zealand, and although 
a dominant tenement has not been an essential characteristic of an easement since 1952 it has 
been reported by a text that "in practice most easements are created to benefit other land". 88 

The final argument that may be made in favour of permitting easements in gross is the 
general goal of simplifying the law and the particular aim of assimilating easements, profits, 
and covenants. As mentioned in the "Summary of the Present Law", Anglo-Canadian law has 
always permitted profits to exist in gross. Moreover, in our Report on Covenants Affecting 
Freehold Landt 9 we recommended that the benefit of "land obligations" (the proposed term 
for positive and restrictive covenants affecting freehold land) "should be permitted to exist 
either as appurtenant to land or in gross". In coming to this conclusion, we considered the 
analogous area of easements and took the view then (as we do now) that the prohibitions on 
both easements in gross and covenants in gross were unjustified. If anything, the argument in 
favour of permitting easements in gross is even stronger than that in favour of permitting 
covenants in gross since the courts have controlled entry to the list of what may exist as 
easements and easements are negative in the sense that they do not involve the owner of the 
servient tenement incurring expenditure. 

We therefore recommend that easements should be permitted to exist as appurtenant to 
land or in gross. 



87 



88 
89 
90 
91 



French, "Towards a Modern Law", supra, note 57, at 1308. See American Law Institute, Restatement of the Law 
Third, supra, note 58, Tentative Draft No. 2, §§3.4-3.7. Nevertheless, the parties to the creation of an easement 
would remain free to incorporate into the terms of the easement restrictions on assignability subject to such 
general rules as ones relating to unreasonableness, restraint of trade, and unconscionability. 

G.W. Hinde, D.W. McMorland, and P.B.A. Sim, Land Law (1979), at 655. 

Supra, note 3. 

Ibid., at 111. 

Subject to the exceptional "spurious" easement to provide fencing. 



146 

(ii) Creation of Easements and Profits 

a, Introduction 

Reform of two aspects of the law relating to the creation of easements is, in our view, 
clearly required. The first — the "general words" statutory provision — is a minor topic but the 
case for reform is simple and strong. The second — creation by prescription — is a topic we 

92 

have already dealt with in our Report on Limitations of Actions. We can here usefully 
summarize the arguments for reform; refer to developments in other jurisdiction; subject to 
two qualifications, report our view that abolition of creation of easements and profits by 
prescription is appropriate; and consider a special provision dealing with mistake. 

b. The "General Words" Statutory Provision 

The aspect of this provision — section 15 of the Conveyancing and Law of Property 
Act — that is open to question is its ability to create an easement or profit not existing prior 
to the conveyance giving rise to the operation of the provision. This creative effect of the 
provision largely overlaps doctrines of the general law such as the rule in Wheeldon v. 

94 

Burrows, easements of necessity, and "intended" easements. However, as explained in the 
"Summary of the Present Law", the creative effect of section 15 can go beyond these 
doctrines in circumstances in which it is likely to cause unforseen and inappropriate results. 

To our knowledge, this problem has been addressed in only two other jurisdictions. In a 
discussion paper published in 1989 the Law Reform Committee of Victoria considered the 
effect of section 62 of the Victorian Property Law Act, a provision equivalent to section 15, 
and proposed that it should "be made clear that only existing easements and rights pass on 
transfer of the land". Such a reform has been enacted in Trinidad and Tobago where section 
94(5) of the Land Law and Conveyancing Act, 1981, provides: 

94. — (5)It is hereby declared that, from the commencement of this Act, this section does not 
operate to create in respect of or impose on any other land any easements, profits a prendre or 
similar rights and obligations. 



92 
93 
94 
95 
96 
97 



Supra, note 5. 

Supra, note 28. 

Supra, note 3 1 . 

Discussion Paper No. 15: Easements and Covenants (February 1989). 

Ibid., at 14. 

Statutes of Trinidad and Tobago, 1981, No. 20. 



147 



We recommend that legislation in Ontario should similarly declare that section 15 of the 
Conveyancing and Law of Property Act does not operate to create any easement, profit, or 
similar right. 

c. Prescriptive Easements and Profits 

The English Law Reform Committee considered the creation of easements and profits 

98 

by prescription in its Fourteenth Report, published in 1966. The Committee unanimously 
recommended that prescription should be abolished with respect to profits and, by an 8 - 6 
majority, recommended also the abolition of all methods of creation of easements by 
prescription. 

The Ontario Law Reform Commission, in our Report on Limitation of Actions 
published in 1969, reviewed the arguments made by both the majority and the minority of the 
English Committee and favoured the view that prescription should be abolished. There were 
four main arguments in favour of abolition. First, there is 

little, if any, moral justification for the acquisition of easements by prescription, a process which 
either involves an intention to get something for nothing or, where there is no intention to acquire 

99 

any right, is purely accidental. 

Second, abolition of prescriptive easements would reduce uncertainties affecting title to 
land. Third, a particular way in which certainty is affected is that persons should be able to 
rely on the registered records of title, a reliance that (at least under the present system) is not 
possible with respect to prescriptive easements. Fourth, if prescription were to continue, a 
simple and cheap method should be available to the servient owner to protect herself or 
himself against prescriptive easements being acquired. This could only be done by a system 
of registration, 

and there are considerable doubts as to the feasibility of this ... Even if it is feasible, it seems 
doubtful whether those exceptional cases where prescription does meet a genuine need ... would 
justify the elaborate administrative arrangements that a new system of registration would 

. 100 

involve. 

The majority of the English Committee compared acquisition of easements by 
prescription with acquisition of title by adverse possession and considered that different legal 
responses were appropriate. 

Certainty of title to land is a social need and occupation of land which has long been 
unchallenged should not be disturbed. Moreover, a squatter's occupation of land is sufficiently 



98 
99 
100 



U.K., Law Reform Committee, Acquisition of Easements and Profits by Prescription, Cmd. 3 100. 

Report on Limitation of Actions, supra, note 5, at 150, quoting Law Reform Committee, supra, note 98, at 1 1 . 

Report on Limitation of Actions, supra, note 5, at 151, quoting Law Reform Committee, supra, note 98, at 12. 



148 



notorious to invite preventive action. There is no comparable need to establish easements, and 

user even 'as of right' may be insidious. The creation of easements, which may limit the use or 

development of the servient land, should not be encouraged. No serious hardship would result if 

in future, subject to appropriate transitional safeguards, no easements could be acquired by 

. .. 101 
prescription. 

As well as favouring these arguments over the arguments advanced by the minority of 
the English Committee, the Ontario Law Reform Commission pointed out that, "[i]n Ontario 
prescriptive easements occur relatively infrequently, although it would not be true to say they 
are rarities". 102 Moreover, in the three situations where they were most likely to occur — 
overhanging projections, easements of support, and cottage rights of way — it was considered 
likely "that prescription would be less rather than more likely to arise in the future". 103 With 
regard to the practical operation of the law of prescription in the present law it should be 
emphasized that neither an easement nor a profit can be acquired by prescription against land 
registered under the Land Titles Act. The Ontario Law Reform Commission also 
considered that there appeared "to be no valid reason for retaining prescription" for profits. 
It therefore recommended, subject to transitional provisions and to a qualification relating to 
overhanging projections occurring by mistake, that the creation of easements and profits by 
prescription be abolished. 

The transitional provisions recommended by the Ontario Law Reform Commission 
were based on those recommended by the English Committee. The rationale for them was 

107 

expressed by the Ontario Commission as follows: 

In recommending the abolition of the creation of prescriptive easements and profits-a- 
prendre, the Commission does not intend that the position of persons who have the required 
periods of adverse use to establish prescriptive rights should be affected. 

Under the doctrine of the lost modern grant, a person may have acquired a prescriptive 
easement whether or not an action has been brought to establish his rights. It is not intended that 
the recommended abolition of prescription affect this person's position, even if it is necessary for 
him to establish his rights by litigation subsequent to abolition. 

So far as prescription under The Limitations Act is concerned, the repeal of the relevant 
provisions should not affect the position of the person who has the required period of adverse use 



101 
102 
103 
104 
105 
106 
107 



Law Reform Committee, ibid., at 12. 

Report on Limitation of Actions, supra, note 5, at 154. 

Ibid. 

Supra, note 48, s. 51(1). 

Report on Limitation of Actions, supra, note 5, at 154. 

Ibid., at 156. 

Ibid, at 156-58. 









149 



but has not established his prescriptive right in an action as section 32 of that act requires. Thus, 
repeal of the relevant provisions of the statute should be subject to the position of any person who 
has the necessary period of adverse use, whether or not an action has been brought. 

There is one further transitional problem. Should persons who have had adverse use for an 
insufficient time to establish a prescriptive right at the time of abolition, be entitled to additional 
time in order to establish their prescriptive right? 

Where a person has enjoyed adverse use for an insufficient time, it may be argued that he 
has no right at all or that he has an accrued or inchoate right. Since his prescriptive right is based 
on long term enjoyment, can it be said that he has any 'rights' at all before he has the necessary 
period of enjoyment? On the other hand, it may be unfair to wipe out the position of the person 
who has a substantial but insufficient period of enjoyment. 

The [English] Committee felt that such a person had an accrued or inchoate right which 
should not be abrogated by abolition. That Committee recommended that, in order to effectuate as 
speedy a transition as possible, a twelve year transitional period be fixed after which it would not 
be possible to claim time for a prescriptive easement. 



This Commission agrees with the approach taken by the [English] Committee in giving 
recognition to periods of enjoyment insufficient to create prescriptive rights. However, the twelve 
year transitional period was undoubtedly chosen for the same reason as the minority selected it for 
their recommended prescription period. Twelve years is the time required in England to acquire 
title by adverse possession. In Ontario, the period is ten years. 

The Commission recommends a ten year transitional period. 

The Ontario Law Reform Commission was also concerned that so far as possible 
existing prescriptive easements and profits, along with those acquired during the transitional 

108 

period, should become discoverable through the land registration systems: 

The Commission considers that the balance is in favour of having a registration system that 
reflects the title. It therefore recommends that either a judgment or notice of claim be required to 
be filed in the appropriate registry or land titles office within two years after the end of the ten 
year transitional period. If such a judgment or notice of claim was not filed by that time, the 
prescriptive right would lapse. Thus, twelve years after the abolition, there would no longer be 
any unregistered prescriptive rights. A person who had a prescriptive right at the time of abolition 
would have twelve years to register it. There should be a requirement that the owner of the 
servient land be notified of any notices of claim so registered. 

The harshness of the registration requirement in those cases where the owners of the 
dominant lands would not be aware of the requirement could be tempered to a large extent by 
providing for an extension of time in cases of substantial hardship. The Commission recommends 
such an extension of time provision. 



108 



Ibid., at 160. 



150 



As mentioned above, the Ontario Law Reform Commission also expressed a 

i no 

qualification with respect to overhanging projections. It said this: 

With respect to overhanging projections, there should perhaps be a similar procedure for adjustment 
between adjoining owners as is provided by section 38 of The Conveyancing and Law of Property 
Act ... in cases where a person builds on another's property under a mistake of title. Section 38 does 
not, however, apply to situations where the mistake is one of identity rather than title. Overhanging 
projections would usually occur as a result of mistakes in identifying land. In any event, section 38 
will be reviewed in the Commission's Law of Property project. Then will be the appropriate time to 
consider whether it should extend to overhanging projections, or whether there should be a separate 
procedure for dealing with this problem. For the time being, the Commission makes no 
recommendation on this point. 

The Law Reform Commission of British Columbia considered the topic of prescriptive 
easements and profits in a report published in 1970. It reviewed the report of the Ontario 
Law Reform Commission and agreed that prescription should be abolished as a means of 
creation of easements and profits. It differed, however, from the Ontario Commission's 
recommendations relating to transitional provisions. First, mainly because prescriptive 
easements are extremely rare in British Columbia, it considered that protections for what the 
Ontario Commission described as "accrued or inchoate" rights, what the British Columbia 
Commission perhaps more aptly, called "ripening rights" was unjustified. Second, although 
it agreed that prescriptive rights existing at the date of abolition should not be abolished, it 
recommended a transitional regime that would be less favourable for the holders of 
prescriptive rights than the one recommended in Ontario. It agreed that there should be a 
system for registering a judgment or filing a notice of claim relating to an existing 
prescriptive right but considered that the appropriate period for taking such steps was five 
years after the time of abolition. The British Columbia Commission also decided that there 
should be no power to extend the time: 

[I]f there is to be a registration requirement, with failure to register resulting in the loss of the 
right, the Commission has concluded that there should be no extension procedure, as 
recommended by the Ontario Commission. 



We prefer a final cut-off point so that the law of prescription can be completely eliminated 
as a possible complicating factor in future dealing with land. 



109 

no 
m 

112 
113 



Ibid., at 157. 

The current provision is s. 37 of the Conveyancing and Law of Property Act, supra, note 28. 

Law Reform Commission of British Columbia, Report on Limitations[:] Part I— Abolition of Prescription (1970). 

Ibid., at 20. 

Ibid, at 21. 



151 



The recommendations of the British Columbia Commission were implemented by An 
Act to Amend the Land Registry Act which provided for a new provision, section 38A of 
the Registry Act, in the following terms: 

38A. — (1) Subject to subsection (2), all existing methods of acquiring a right in or over land by 
prescription are abolished and, without limiting the generality of the foregoing, the common law 
doctrine of prescription and the doctrine of lost modern grant are abolished. 

(2) A prescriptive right, whether judicially declared or not, ceases to exist five years after this 
section comes into force, unless the person asserting the right has before that date, 

(a) registered a judgment declaring his right; or 

(b) commenced an action to establish his right and registered a certificate of lis pendens 
in the land registry office for the land registration district in which the lands affected are situated. 

(3) The Prescription Act is repealed. 

Prescriptive easements and profits were also considered by the Manitoba Law Reform 
Commission in a report published in 1982. The Manitoba Commission agreed with both 
the Ontario and British Columbia Commissions in recommending abolition of creation of 
easements and profits by prescriptions. It also agreed with the British Columbia Commission 
in rejecting the Ontario Commission's recommendation for protection of "ripening" rights 
and in taking the view that the appropriate time for requiring registration of existing 
prescriptive rights was five years from the date of abolition. On the other hand, it agreed with 
the Ontario Commission's recommendation that there should be a provision enabling the 
court to extend the time for registering. However, it considered, 

that the Ontario recommendation would be improved by the addition of a provision allowing the 
court to extend the time for registration on the condition that the applicant pay the servient owner 
such compensation as the court may determine. 

The Manitoba Commission also emphasized the importance of landowners being made 
aware of the new regime and, in particular, of the importance of registering existing 
prescriptive easements: 

We are mindful of the fact that such registration requirements will affect the rights of landowners 
in the province. We believe that they should be made aware of the new requirements by public 



114 
115 
116 

117 



S.B.C. 1971, c. 30, s. 8. See now B.C. Land Title Act, supra, note 73, s. 24. 

Manitoba Law Reform Commission, Report on Prescriptive Easements and Profits-a-Prendre (1982). 

Ibid., at 27. See, also, Law Commission (New Zealand), A New Property Law Act (Report No. 29, 1994), at 27, 
179,384. 

Manitoba Law Reform Commission, supra, note 1 1 5, at 29. 



152 



advertising or by municipal notices distributed with property tax bill. Property owners should be 
informed of the specific date by which registration must be made, as well as the different 
registration requirements for land.... 

After reviewing our previous recommendations and the subsequent reports by the Law 
Reform Commission of British Columbia and the Manitoba Law Reform Commission, we 
reaffirm, subject to two qualifications, the recommendations made in our Report on 
Limitation of Actions. We should perhaps add that a further argument that may be made in 
favour of abolition of creation of easements and profits is the related goals of assimilation and 
simplification. Under the present law one of the major differences between restrictive 
covenants and easements is that restrictive covenants may only be created consensually 
whereas easements may be created by prescription. If prescription is abolished, easements 
will in this respect be assimilated to covenants. 

For convenience we set out here the summary of the relevant recommendations made in 
our Report on Limitation of Actions 



118 



1. Except for the transitional period recommended below, the right to acquire easements and 
profits-a-prendre by prescription in the future should be abolished, by 

(i) declaring by statute that the doctrine of the lost modern grant is no longer part of the law 
of Ontario; and 

(ii) repealing sections 30 to 35 and 39 to 41 of The Limitations Act and not replacing these 
provisions in any new limitations statute. 

2. Prescriptive easements and profits-a-prendre shall be capable of creation during a ten-year 
transitional period on the following basis: 

(i) as soon as the person having the benefit of the adverse enjoyment has the required period 
of enjoyment under the existing law; 

(ii) at the end of the transitional period, if there has been continuous adverse enjoyment for 
at least ten years, but insufficient length of enjoyment under the existing law. 

3. If the recommendation of abolition is implemented, then the requirement for an action 
provided by section 32 of The Limitations Act should not apply to persons 

(i) having, at the time of abolition, the required adverse enjoyment under the present law, 
and 

(ii) acquiring, during the transitional period, the required adverse enjoyment under the 
transitional provisions. 

4.(1) Prescriptive easements and profits-a-prendre should lapse two years after the end of the 
transitional period, unless the persons entitled to their benefit have filed a judgment or 
notice of claim in the appropriate registry or land titles office, such judgment or notice to be 



118 



Supra, note 5, at 169-61. 



153 



entered on the records relating to the appropriate servient tenement. Notification of the 
registration of any such notice of claim should be given to the owner of the servient land. 

(2) Where a person has failed to file his judgment or notice in time, he should be able to apply 
to apply to a judge of the county or district in which any of the relevant lands are situated 
for an extension of time on the grounds of substantial hardship. The extension should only 
be granted 

(i) if the applicant is able to demonstrate that the loss of enjoyment would result in 
substantial hardship, and 

(ii) if the applicant had been unaware of the registration requirement during the 
registration period. 

We mentioned that we have two qualifications to the confirmation of these 
recommendations. First, on reconsideration of the matter we agree with the British Columbia 
and Manitoba Commissions that there should not be protection for "ripening rights". A 
person who has not enjoyed the required twenty years' user at the date of abolition will have 
no existing rights affected by the abolition and that person's acquisition of an easement could 
always be prevented by the owner of the dominant tenement. Therefore the first qualification 
is that there is not sufficient reason to enable such a person to acquire an easement by 
prescription by a period of user falling short of that required under the present law. 
Accordingly, we no longer make the recommendation set out above numbered 2(ii). 

The second qualification is that the court's permitting of an extension of time for 
registration be subject to the condition that the applicant pay to the servient owner such 
compensation as the court may determine, and we so recommend. 

We turn now to the suggestion made in the Ontario Law Reform Commission's Report 
on Limitations of Actions relating to overhanging projections. The suggestion was that 
what is now section 37 of the Conveyancing and Law of Property Act should be extended 
to cover overhanging projections occurring because of mistake. Section 37(1) provides as 
follows: 

37. — (1) Where a person makes lasting improvements on land under the belief that it is the 
person's own, the person or the person's assigns are entitled to a lien upon it to the extent of the 
amount which its value is enhanced by the improvements, or are entitled or may be required to 
retain the land if the Ontario Court (General Division) is of opinion or requires that this should be 
done, according as may under all circumstances of the case be most just, making compensation 
for the land, if retained, as the court directs. 

In our previous report, the problem in the application of section 37 to overhanging 
projections was thought to be that the section does not "apply to situations where the mistake 



119 

Ibid.,2X\51. 

120 

Supra, note 28. 



154 



is one of identity rather than title". However, this does not seem to be the nub of the 
problem. The question whether section 37 applies where the mistake was one of "identity" 
rather than "title" is not restricted to overhanging projections or other potential easements. 
Moreover, the better view is that a distinction should not be drawn between mistakes of 
"identity" and mistakes of "title" in the application of section 37. 

The problem with the application of section 37 to overhanging projections is that the 
section does not provide an appropriate remedy. The remedy of lien in the first part of the 
provision is only appropriate where the value of the true owner's land has been enhanced by 
the improvement, something that is unlikely to have occurred where the improvement 
includes a projection overhanging the true owner's land. Similarly, retention of the affected 
land by the improver — the remedy provided in the second part of the provision — will not 
always be apt in the situation under consideration. What is required is that the court should 
have the additional power to order the creation of an easement in favour of the improver, 
subject to payment of such compensation as the court directs. 

We have referred to the problem as arising when an overhanging projection occurs by 
mistake since that is the way the problem was framed in the Report on Limitation of Actions. 
However, the problem, and its solution, should not be so restricted. For example, a person 
may have put up a building mistakenly believing that water pipes to it, or drains from it, or a 
pathway leading to it, were located on his or her own land whereas in fact they were on 
another's land. The court should in all these cases have the power to order the creation of an 
easement. 

Accordingly, we recommend that section 37(1) of the Conveyancing and Law of Property 
Act should be amended to read "where a person makes lasting improvements on land under the 
belief that it is the person's own, or under the belief that the person is entitled to do so...", and 
the section should be further amended in order to empower the court to order the creation of an 
easement subject, if the court so directs, to the payment of compensation. 

(iii) Modification and Extinguishing of Easements 

Under present Ontario law neither the court nor any other tribunal possesses power to 
modify or extinguish an easement on grounds such as obsolescence. The question that can be 
briefly addressed here is whether such a power should be enacted. 

Recent American literature 124 contains a lively debate on the question whether a 
modification or extinguishment doctrine should exist in American law. In this debate — which 



121 
122 
123 
124 



Report on Limitation of Actions, supra, note 5, at 157. 

See P.D. Maddaugh and J.D. McCamus, The Law of Restitution (1990), at 295-96. 

Ibid, at 292-94. 

See Reichman, supra, note 57, at 1233; French, "Towards a Modern Law", supra, note 57, at 1313; C.J. Berger, 
"Some Reflections on a Unified Law of Servitudes" (1982), 55 So. Cal. L.J. 1323, at 1330-31; R.A. Epstein, 



155 



is mainly focused on the development of judge-made law — it is assumed by all sides that the 
same issues and solutions apply to easements as well as positive and restrictive covenants 
(referred to in American law as real covenants and equitable servitudes). The predominant 
view is that there should be a judicial power of modification or extinguishment. Owners of 
dominant and servient land, it is considered, will not always be able to bargain between 
themselves to produce an efficient ordering of their interests. This may be because of such 
difficulties as the large number of people involved or the infancy or other disability of 
landowners. More controversially, some argue that the court should be able to step in where a 
landowner, acting as a "hold out" or otherwise using her or his position to extort "blackmail" 
money, is unreasonable in refusing to agree to modification or discharge. 

For the purpose of this report, it is not necessary to pursue these arguments. In relation 
to restrictive covenants, Ontario has had a judicial modification and extinguishment power 

125 

for many years and in our recent Report on Covenants Affecting Freehold Land we 
evaluated this existing power and decided both that it should be strengthened and that it 
should apply to positive as well as restrictive covenants (collectively described in the report 
as "land obligations"). 126 The question which does need to be considered here is whether 
there is any reason why such powers should not extend to easements. Two arguments are 
relevant. First, our earlier recommendation that it should be possible to have easements in 
gross was in part based on the argument that a modification or extinguishment power should 
be available to deal with possible difficulties caused by obsolete easements in gross. 

The second argument is directed at the related goals of assimilation and simplicity. We 
have taken the position that the law of covenants and easements in this area should, in the 
absence of good reason to the contrary, be assimilated, and thus simplified. 

Several Commonwealth jurisdictions have already enacted modification and 
extinguishment provisions which apply to both easements and covenants. This has been done 

127 128 129 

in most Australian states, in New Zealand and — within Canada — in British Columbia. 
In addition, the English Law Reform Committee, as well as the Law Commission in a 



"Notice and Freedom of Contract in the Law of Servitudes" (1982), 55 So. Cal. L.J. 1353, at 1364-68; Rose, 
supra, note 61, at 141 1-13; Sterk, "Freedom of Contract", supra, note 67, at 652-53; S.E. Sterk, "Foresight and the 
Law of Servitudes" (1988), 73 Cornell L.Q. 956; G.S. Alexander, "Freedom, Coercion, and the Law of 
Servitudes" (1988), 73 Cornell L.Q. 883, at 898. 



125 

126 

127 



128 
129 
130 



See Conveyancing and Law of Property Act, supra, note 28, s. 61(1); Land Titles Act, supra, note 48, s. 1 19(5). 
See Report on Covenants Affecting Freehold Land, supra, note 3, at 5 1 -56. 

Report on Covenants Affecting Freehold Land, ibid., at 51-56, 139-146. 

Conveyancing Act, 1919 (N.S.W.), s. 89(1); Property Law Act, 1974 (Queensland), s. 181; Transfer of Land Act, 
1893 (West Aus.), s. 129c. See M.A. Neave, C.J. Rossiter, and M.A. Stone, eds., Sackville & Neave, Property 
Law: Cases and Materials (4th ed., 1988), at 918; A.J. Bradbrook, S.V. MacCallum, and A.P. Moore, Australian 
Real Property Law ( 1 99 1 ), at 656. 

Property Law Act, 1952, s. 127. See, for example, Hinde, McMorland, and Sim, supra, note 88, at 723. 

Property Law Act, R.S.B.C. 1979, c. 340, s. 31, as am. by S.B.C. 1982, c. 46, s. 34. 

Supra, note 98, at 29. 



156 



working paper, and the Manitoba Law Reform Commission have recommended such 
legislation within their respective jurisdictions. 

It may be argued that easements by their nature are less likely than covenants to require 
modification or extinguishment on grounds of obsolescence and so on. This may be true, so 
that it may be the case that modification and extinguishment powers would not often be used 
in relation to easements, but this is not an argument for excluding the court's powers in 
relation to easements so that they would not be available in cases where they were needed. 133 

We can discern no good reason for continuing differences between covenants and 
easements with respect to the court's powers of modification and extinguishment. 
Accordingly, we recommend that the recommendations made by us in our Report on 
Covenants Affecting Freehold Land with respect to extinguishment and variation by the court 
of "land obligations" should apply, mutatis mutandis, to easements. 



131 

Supra, note 56, at 57. 

132 

Supra, note 1 1 5, at 34. 



133 



For application of Australian modification and extinguishment provisions to easements, see Manley Properties 
Ltd. v. Castrisos, [1973] 2 N.S.W.R. 420; Pieper v. Edwards, [1982] 1 N.S.W.L.R. 336; Ex parte Proprietors of 
"Averil Court" Building Units Plan No. 200, [1983] 1 Qd. 66. 



SUMMARY OF RECOMMENDATIONS 



The Commission makes the following recommendations: 

CHAPTER 3: SUCCESSIVE ESTATES AND INTERESTS IN LAND 

1 . We recommend statutory abolition of the legal remainder rules, (at 45) 

2. With respect to the obligations of persons in possession of land subject to successive 
interests, the reform we recommend, expressed broadly, is that there should be a trust 
whenever successive interests in land are created. Accordingly, if no trust is expressly 
created, a statutory trust will apply. This reform would make section 35 of the 
Conveyancing and Law of Property Act redundant and that provision should therefore be 
repealed, (at 47) 

3. We recommend that the Statute of Uses be repealed so that legal executory interests 
would also become obsolete and trusts, whether active or passive, could be created 
without the need for expressing a use upon a use. (at 48) 

4. The new system would take the place of that provided in the Settled Estates Act, and we 
recommend that that Act be repealed, (at 48) 

5. We make the following recommendations with respect to identifying the transactions to 
which the statutory trust will apply: 

(1) Whenever successive interests in land are created a trust will be deemed to occur in 
those cases where a trust would otherwise not have been created. Accordingly, the 
estate in fee simple or leasehold interest (as the case may be) in the land will be held 
on trust to give effect to the successive interests in equity. 

(2) A leasehold interest of a tenant and the reversionary interest of a landlord will be 
deemed not to be successive interests in land. 

(3) Without prejudice to the generality of the expression "successive interests in land" 
the following will, for avoidance of doubt, be deemed to be successive interests in 
land: 

(a) a determinable fee simple along with the possibility of reverter (and equivalent 
interests in leasehold land). 

(b) a fee simple subject to condition subsequent along with the right of re-entry 
(and equivalent interests in leasehold land). 



[157] 



158 



(c) "springing interests", that is interests subject to conditions precedent, 
where no prior interest is conferred on another person, (at 53-54) 



even 



6. We recommend that the statutory trust will be a trust to hold — or retain — the land, (at 57) 

7. We recommend that the trustees of the statutory trust will be the adult and capacitated 
beneficiaries of the statutory trust, (at 58) 

8. We recommend that, subject to the recommendation below relating to occupation of land, 
the statutory trust should be subject to the general law of trusts, including the provisions of 
the proposed revised Trustee Act set forth in our Report on the Law of Trusts, (at 59) 

9. We recommend that the provisions recommended in our Report on the Law of Trusts 
relating to the protection of purchasers shall apply to purchasers from trustees of the 
statutory trust, (at 59) 

10 We recommend that a right of possession and occupation should be conferred on a 
beneficiary with a present, vested interest in the land, (at 60) 

CHAPTER 4: QUALIFIED ESTATES AND INTERESTS IN LAND 

1 1 . We recommend that the continuing distinctions between a determinable interest and an 
interest subject to a condition subsequent should be abrogated. This abrogation should 
apply to interests held under trusts, as well as common law interests, and should extend to 
interests in personal as well as real property. It should be achieved, we recommend, by 
providing that language that at common law would create a determinable interest will 
instead create an interest subject to a condition subsequent, (at 64) 

12. Notwithstanding our main recommendations, we recommend that protective trusts should 
remain valid subject to the recommendations made in our Report on the Law of Trusts. 
(at 64) 

CHAPTER 5 THE RULE IN SHELLEY'S CASE 

1 3 . We recommend that the rule in Shelley 's Case be abrogated, (at 7 1 ) 

14. We further recommend that in the context of the abrogation of the rule in Shelley's Case 
references to the heir or heirs of a person should in the case of inter vivos conveyances, as 
well as wills, mean the intestate successor or successors of the person, (at 71) 

CHAPTER 6 CO-OWNERSHIP 

15. We recommend that our proposed reforms concerning co-ownership should apply, 
mutatis mutandis, to personal property as well as real property, (at 104) 



159 



16. We recommend that there should be two categories of co-ownership which will be 
described as co-ownership with right of survivorship and co-ownership without right of 
survivorship, (at 104) 

17. We recommend that the unities of interest, time, and title should be abrogated as 
requirements for a joint tenancy. Instead, the fundamental determining factor should 
(subject to the relevant presumptions) be solely one of intention: whether the parties 
intended the right of survivorship, (at 107) 

18. We recommend that tenancies by the entireties and the rule in Re Jupp should be 
abolished by legislation, (at 107.) 

19. We recommend that the statutory presumption in favour of tenancy in common should be 
extended in the following manner: (at 108-09) 

( 1 ) Under the present law, section 1 3 of the Conveyancing and Law of Property Act does 
not apply to property other than land and section 14 of the Estates Administration 
Act does not apply to personal property. In accordance with our general policy of 
assimilating real and personal property, we recommend that both these provisions 
should apply to all forms of property. However, in our view, joint tenancy is 
typically the desired form of co-ownership for spouses. Therefore we recommend 
that there should be a presumption of joint tenancy in the case of property co-owned 
by spouses. We further recommend that "spouse" for this purpose should be defined 
as recommended in our Report on the Rights and Responsibilities of Cohabitants 
under the Family Law Act ( 1 993). 

(2) One indirect effect of the recommendation in subparagraph (1) above must be 
considered. Under the present law, the presumption is that common law title 
affecting partnership property is taken as joint tenants. This seems to be convenient 
since it enables surviving partners to make title, without the need for joining the 
personal representatives of deceased partners. Therefore, we recommend that if 
section 13 of the Conveyancing and Law of Property Act is extended to property 
other than land — thus including partnership property — an explicit exception should 
be made for partners so that they are presumed to take common law (as opposed to 
equitable) title as joint tenants. 

(3) In Campbell v. Sovereign Securities & Holding Co., it was held that section 13 of the 
Conveyancing and Law of Property Act does not apply in the determination of the 
effect of a contract to transfer property to two or more persons. However, there is no 
reason why a distinction should be drawn in this context between a contract to 
transfer property and an instrument actually effecting a transfer. Accordingly, we 
recommend that section 13 should be extended to apply to a contract to transfer 
property to two or more persons. 



160 



(4) Under current law, persons may become co-owners by virtue of legal doctrines such 
as proprietary estoppel, constructive trust, and resulting trust. We consider it 
inappropriate to recommend a statutory rule to deal with these situations. First, they 
cover a range of situations in which different considerations are relevant so that any 
statutory formulation would have to be complex. Second, it seems that in these 
situations the equitable preference for tenancy in common will ordinarily prevail 
under the present law. Third, the present law does leave the court with some 
flexibility, as is appropriate in the situations dealt with by these doctrines. 

20. On the basis of the recommendation set out above relating to the terminology of co- 
ownership, we recommend that the statutory presumption in favour of tenancy in 
common should be expressed as a presumption that there is no right of survivorship, 
(at 109) 

21. We recommend the adoption of legislation which would both state for purposes of 
clarification and modify in some respects the law relating to the rights of co-owners in 
situations where a co-owner is not in occupation or is not contributing to the cost of 
expenses related to the property. Subject to the qualifications set out below, we 
recommend enactment of legislation similar to that enacted in Alberta, implementing the 
recommendations of the Alberta Institute of Law Research and Reform. The relevant 
provisions are as follows: (at 1 1 1-13) 

15. — (1) A co-owner may apply to the Court by originating notice for an order terminating the 
co-ownership of the interest in land in which he is a co-owner. 

(2) On hearing an application under subsection (1), the Court shall make an order directing 

(a) a physical division of all or part of the land between the co-owners, 

(b) the sale of all or part of the interest of land and the distribution of the proceeds of 
the sale between the co-owners, or 

(c) the sale of all or part of the interest of one or more of the co-owners' interests in 
land to one or more of the other co-owners who are willing to purchase the interest. 



16. Notwithstanding section 15(2), if an order is made under section 15(2)(b) and the highest 
amount offered for the purchase of the interest in the land is less than the market value of the 
interest, the Court may 

(a) refuse to approve the sale, and 

(b) make any further order it considers proper. 

17. — (1) In making an order the Court may direct that 

(a) an accounting, contribution and adjustment, or any one or more of them, take 
place in respect of the land, and 

(b) compensation, if any, be paid for an unequal division of the land. 



161 



(2) In determining if an accounting, contribution or adjustment should take place or 
compensation be paid for an unequal division of the land the Court shall, without limiting 
itself from considering any matter it considers relevant in making its determination, consider 
whether 

(a) one co-owner has excluded another co-owner from the land; 

(b) an occupying co-owner was tenant, bailiff or agent of another co-owner; 

(c) a co-owner has received from third parties more than his just share of the rents 
from land or profits from the reasonable removal of its natural resources; 

(d) a co-owner has committed waste by an unreasonable use of the land; 

(e) a co-owner has made improvements or capital payments that have increased 
the realizable value of the land; 

(f) a co-owner should be compensated for non-capital expenses in respect of the 
land; 

(g) an occupying co-owner claiming non-capital expenses in respect of the land 
should be required to pay a fair occupation rent. 



Our qualifications on this recommendation are four in number. 

(1) The Alberta legislation premises the court's power to order accounting on 
circumstances where an order for sale or partition is made or in the restricted 
circumstances set out in section 16(2). We prefer the following proposal made by the 
Law Reform Commission of British Columbia which does not restrict the 
circumstances in which the court's powers may be exercised: 

On application by a co-owner, the court may 

(a) direct that an accounting, contribution and adjustment, or any one or more of them, 
take place in respect of a co-owner's interest, and 

(b) order that compensation, if any, be paid between co-owners. 

(2) The Alberta legislation and the British Columbia proposal enable the court to take 
account of all relevant circumstances and also list relevant factors. We agree with 
this general approach except it should be made clear that the court has a discretion 
not only whether to order an accounting but also as to the quantum of any adjustment 
made and the legislation should express the relevance of the effect of changes in the 
value of the property. 

(3) In expressing the relevant factors the Alberta legislation reflects the present law, 
along with some features we consider to be unsatisfactory. 

(a) Section 17(2)(a) refers to exclusion of one co-owner by another. We agree that 
such exclusion is relevant, but the legislation should make it clear that 
occupation rent may be ordered to be paid outside of the exceptional situations 
under the present law. 



162 



(b) It should be expressed as a relevant factor that a co-owner has not been 
reasonably able to enjoy her or his right of occupation, irrespective of any fault 
on the part of a co-tenant in occupation. 

(c) The term "bailiff' used in section 17(2)(b) should be avoided since it is in this 
context an archaic term that does not usefully add anything to the term agent. 

(4) The British Columbia proposal would give the court an express power to order a lien 
to protect the position of a co-tenant who has incurred expenditures: 

Where an amount is found recoverable under section 44 or section 47, the court may 
order 

(a) that a co-owner has a lien on the interest of another co-owner to secure payment of 
that amount, and 

(b) in default of payment of that amount within 30 days, or such other period as the 
court may direct after the date of service of a certified copy of the order on the co- 
owner, the sale of the co-owner's interest pursuant to the Rules of Court. 

We recommend that the legislation should include such a power, (at 1 13) 

22. In accordance with our general policy in favour of assimilating real and personal property, 
we recommend that the legislation described in the previous recommendation should 
apply, mutatis mutandis, to personal property, (at 1 13) 

23. We recommend abrogation of the rule that destruction of the three unities causes 
severance of a joint tenancy, (at 1 14) 

24. We recommend enactment of legislation under which the court has a general power to 
determine severance by order, (at 1 15) 

25. We recommend that bankruptcy of a joint tenant should, as in the present law, sever the 
joint ownership, (at 115) 

26. We reaffirm the recommendations in our Report on the Enforcement of Judgment Debts 
and Related Matters with respect to execution by judgment creditors against a joint tenant, 
(at 115-16) 

27. We recommend that unilateral severance should not take effect unless notice of severance 
is given to the other joint owners, (at 118) 

28. We recommend that unilateral severance by a party should be in writing and signed, and 
should show an intention to terminate the right of survivorship, (at 1 19) 

29. We recommend that notice of unilateral severance should be served in accordance with 
the rules provided for service under the Mortgages Act. (at 1 19) 



163 



30. Under our proposed scheme the giving of notice is an essential requirement for unilateral 
severance. It is therefore necessary to devise a method of securing a purchaser's title to an 
interest in land converted into tenancy in common by severance. In this context it would 
be appropriate to provide for a prescribed form which would be registrable under the 
Registry Act and under the Land Titles Act, and we so recommend, (at 1 19) 

3 1 . We recommend that a notice registered under the Registry Act should be deemed effective 
in favour of a bona fide purchaser for value without notice of any defect in the notice, 
(at 119-20) 

32. We recommend the continuation of the present law so that severance may be effected by 
the agreement of joint owners, whether or not that agreement is informally expressed. 
Such agreement may, as in the present law, be express or implied and may be inferred 
from the parties' course of conduct, (at 120) 

33. The provisions of the Partition Act should, we recommend, be repealed and replaced by 
legislation which has the following features: 

(a) The property to which the Act applies. The present Partition Act applies only to land. 
In accordance with our general policy in favour of assimilating real and personal 
property, we recommend that the reformed law be made applicable to personal 
property as well as real property, (at 120-21) 

(b) The persons who may apply for relief. We recommend that the criterion for standing 
in a partition proceeding should be expressed broadly. For purposes of clarification 
and illustration, however, we recommend that the legislative provision include a non- 
exhaustive list of categories of individuals who come within the general criterion. 
More particularly, we recommend that this list include a creditor who has the right to 
have the property seized and sold pursuant to a writ of seizure and sale, (at 121) 

(c) The powers available to the court. We recommend that the powers that should be 
available to the court on an application should be explicitly limited and should 
include: 

( 1 ) a physical division of all or part of the property between the co-owners; 

(2) the sale of all or part of the property and the distribution of the proceeds of the 
sale; and 

(3) the sale of all or part of the interest of one or more of the co-owners to one or 
more of the other co-owners who are willing to purchase the interest, (at 122) 

We further recommend that the court have power to order division of property not 
conforming to ownership and in such a case to order payment of compensation in 
adjustment as was recommened in the British Columbia proposed reform, (at 122) 



164 



We further recommend that the court should have a discretion to permit the co- 
ownership to continue and that, as under the present law, the onus should be on the 
person opposing termination to justify that position, (at 123) 

Finally, we recommend that the court be given guidance in the exercise of this 
discretion in the form of guidelines in the manner recommended by the English Law 
Commission, (at 123-24) 

34. We recommend that the proposed legislation expressly deal with the interrelationship 
between the proposed co-ownership provisions and the provisions in the Family Law Act 
applying to spouses. Accordingly, we recommend that the legislation should confirm the 
position that has been adopted in the present law that (a) the co-ownership provisions 
apply to co-owning spouses and (b) the co-ownership provisions are subject to orders for 
exclusive possession made under the Family Law Act. (at 124) 

35. Further, we recommend that the proposed legislation should spell out the implications of 
the interrelationship between the co-ownership provisions and the Family Law Act as 
follows: 

(a) It should provide that the court may stay the co-ownership proceedings when an 
application for exclusive possession under the Family Law Act has been brought and 
that the court shall stay the co-ownership proceedings while such order remains in 
force. 

(b) In addition, the court should have power to adjourn the co-ownership proceedings to 
enable a co-owner to bring an application for exclusive possession under the Family 
Law Act. (at 124) 

CHAPTER 7 EASEMENTS AND PROFITS 

36. We recommend that easements should be permitted to exist as appurtenant to land or in 
gross, (at 145) 

37. We recommend the enactment of legislation declaring that section 15 of the Conveyancing 
and Law of Property Act does not operate to create any easement, profit, or similar right, 
(at 147) 

38. We reaffirm the recommendations made in the Report on Limitations of Actions 
concerning abolition of the right to acquire easements and proflts-a-prendre by 
prescription, subject to two qualifications. 

(a) The first qualification relates to our earlier recommendation that persons who had 
commenced a period of continuous adverse enjoyment prior to abolition should be 
allowed a transitional period of ten years within which a claim for an easement by 
prescription might be made if sufficient time had elapsed. We are now of the view that 
these "ripening rights" should not be protected and that a person who had enjoyed less 






165 



than twenty years of continuous adverse enjoyment would not have any right 
surviving abolition, (at 153) 

(b) The second qualification relates to our recommendation that a discretion be conferred 
on the court to permit an extension of time for fulfilling the registration requirement 
for easements and profits-a-prendre. We now recommend that, in such cases, the 
court may require the applicant to pay the servient owner such compensation as the 
court may determine, (at 153) 

39. We recommend that section 37(1) of the Conveyancing and Law of Property Act should be 
amended to read "where a person makes lasting improvements on land under the belief 
that it is the person's own, or under the belief that the person is entitled to do so...", and the 
section should be further amended in order to empower the court to order the creation of 
an easement subject, if the court so directs, to the payment of compensation, (at 154) 

40. We recommend that the recommendations made in our Report on Covenants Affecting 
Freehold Land with respect to extinguishment and variation by the court of "land 
obligations" should apply, mutatis mutandis, to easements, (at 156) 






I 



I 






Copies of this publication may be purchased from the Ontario Government Bookstore, 880 Bay Street, 
Toronto, or by mail order from Publications Ontario, 50 Grosvenor Street, Toronto, Ontario 
M7AIN8. Telephone (416) 326-5300. Toll free long distance 1-800-668-9938 



li