Property Rights and the Rule Against Perpetuities
In Clarke v. Kokic, 2018 ONCA 705 (CanLII), the Ontario Court of Appeal ruled definitively on the application of the rule against perpetuities to real property easement rights.
Stuart Clark recently blogged on the rule in his blog, “Rule Against Perpetuities – It’s not so scary”. As stated by Stuart, “At its most simple, the rule against perpetuities can be understood as not allowing an individual to control the distribution or ownership of property for longer than the “perpetuity period”, with the perpetuity period equating to a “life in being” who is alive upon the death of the testator plus twenty one years.”
In Clarke v. Kokic, the Clarkes and the Kokics owned adjacent buildings. The Clarkes had an easement over part of the Kokics’ property. The Clarkes wanted to renovate their property by widening a doorway through which the easement passed. The Kokics interfered with the right of way, and the Clarkes applied for declaratory and injunctive relief.
One of the defences that the Kokics raised was that the easement was void because of the rule against perpetuities. The Court of Appeal rejected the argument. The Court of Appeal noted that the rule does not restrict the duration of property interests, but, rather, the length of time that may elapse between the creation of a contingent interest and the vesting of that interest. An express easement vests rights at the time of the grant of the easement, and there are no contingent interests. Thus, the rule does not apply.
The Court of Appeal referred to the 1991 decision of Sutherland Estate v. Dyer (1991 CanLII 7120 (ON SC). There, the court held that the rule did not apply to the granting of a right of first refusal. The court referred to a book by Professors Morris and Leach entitled The Rule Against Perpetuities, 2nd ed. (London: Stevens, 1962) and “a statement of the rule which must surely rank amongst the most concise yet all-embracing definitions of an important legal rule in all of English legal history”:
“No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest.”
The rule against perpetuities: still a little scary.
Have a great weekend.