Date: 20050202
Docket: T-1168-96
Citation: 2005 FC 163
Ottawa, Ontario, this 2nd day of February, 2005
Present: The Honourable Justice James Russell
BETWEEN:
ALLISON G. ABBOTT, MARGARET ABBOTT,
and MARGARET ELIZABETH McINTOSH
Plaintiffs
and
HER MAJESTY THE QUEEN
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
A. The Claim
[1] The Plaintiffs are seeking a declaration that certain residential leases in Riding Mountain National Park are entitled to a right of renewal every 42 years in perpetuity. The named Plaintiffs have made the claim for themselves and on behalf of other lessees of summer residences at the Park. All told, there are 33 Plaintiffs who trace their leasehold interests back to 33 leases granted by the Federal Crown in the Park between, approximately, 1934 and 1959.
[2] None of the Plaintiffs is an original leaseholder from the 1934-59 period. Some of them acquired their leasehold interests as a result of non-arms-length transactions that occurred within their respective families. The majority, however, come by their interests through arms-length assignments of the leasehold interest of the land in question.
[3] There are other parties who might have an interest in this litigation but who are not involved in the claim. This group includes: the original 33 lessees who acquired their interests from the Federal Crown between 1934 and 1959; intervening parties who bought and sold their leasehold interests before the Plaintiffs came into the picture; and parties who have acquired a leasehold interest in some of the properties since this claim was commenced on May 21, 1996.
B. Background
[4] The general narrative framework for this claim is not in dispute and the parties, when they differ, do so in terms of emphasis, interpretation and specific details. For purposes of the analysis that is to follow, the background can be summarized quite briefly.
[5] Riding Mountain National Park was designated one of Canada's national parks in 1930 when the National Parks Act, [1930] S.C.C. 33 came into effect.
[6] Beginning in 1930, and continuing until at least March 5, 1959, the Federal Crown granted leases to summer residents of the Park. Those leases contained options that allowed lessees to renew the terms for a further 42 years in perpetuity. The options were, of course, subject to certain conditions of renewal as stipulated in the leases. Until 1959, the Crown routinely granted its consent to leasehold assignments provided the rent had been paid, the terms of the lease had been fulfilled, and the cottage on the land was in good repair.
[7] On or about August 25, 1965, the Minister of Northern Affairs and Natural Resources, who was at that time responsible for national parks in Canada, wrote to all leaseholders in the national parks (including Riding Mountain) and told them there was to be a new policy governing leases in the parks. As a result of this new policy, one aspect of which was the reclaiming or recapture of privately held land for the benefit of the public at large, the Minister decided to require, as a condition of consent to a change in leasehold ownership, a surrender of the original lease and the execution of a new standard lease for a term of 42 years without any provision for further renewal.
[8] Between approximately March 26, 1965 and November 3, 1970, the Federal Crown acted upon the new policy outlined in the letter of August 25, 1965. At Riding Mountain, whenever the Minister's consent was sought for an assignment, it was only given following a surrender of the original lease containing the option for perpetual renewal and the execution of a new lease that did not contain such a right.
[9] In the case of 31 of the 33 Plaintiffs to this claim, the surrender in question was obtained from an assignee of the lease, and not the assignor who had originally leased the land from the Crown.
[10] After November 3, 1970, the Crown discontinued the practice of requiring a surrender and new lease when an assignment occurred and consent was requested.
[11] As of the date of the issuance of the Statement of Claim on May 21, 1996, all 33 Plaintiffs held leases for cottage lots at Riding Mountain that had originally been land leased to others between April 1, 1934 and March 5, 1959 under leases that contained options for perpetual renewal.
[12] At the date of the issuance of the Statement of Claim, all of the Plaintiffs held new leases that did not provide for a right of perpetual renewal. Some of the Plaintiffs were first time holders of such a new lease and some of them were subsequent assignees.
[13] From this brief outline, it is immediately apparent that a sense of grievance exists on the part of the Plaintiffs concerning the period from 1965 until 1970. This is when the Crown pursued its recapture policy by requesting a surrender of the old perpetual renewal leases and the entering into of new leases without an option for perpetual renewal as a condition of the Crown's consent to the assignment of a leasehold interest. It is this practice on the part of the Federal Crown that the Plaintiffs attack and against which they seek a declaration that the right of perpetual renewal for successive 42-year terms continues to exist for the leases in question.
C. Grounds
[14] The grounds upon which the Plaintiffs seek the declaratory relief in their Statement of Claim are important for the legal arguments advanced by both sides.
[15] The Plaintiffs say that they are entitled to enjoy, and have succeeded to, all of the rights, interests and entitlements that were granted under the original perpetual renewal leases.
[16] They say that the practice of the Crown between 1965 and 1970 that required a surrender of the perpetually renewal leases and the entering into of new leases as a condition of consent to assignment was carried on without right or lawful justification. Further, they say that the loss of the right to perpetual renewal occurred without consideration and is void and ineffective at law. In short, the Plaintiffs say that they are the beneficiaries of all of the provisions of the perpetual renewable leases that were improperly and unlawfully taken away by the Crown.
[17] To bolster their claim, the Plaintiffs also say that the loss of the right of perpetual renewal was effected by the Crown by the improper and unlawful exercise of the Crown's right to approve an assignment of lease. The Crown, they say, acted in excess of its rights under the perpetual renewal leases and did so for an improper purpose. Although the Statement of Claim doesn't exactly spell it out, the suggestion is (and much was made of this at trial) that the Crown's behaviour in this regard was unconscionable and resulted in the Crown's unjust enrichment, so that the Plaintiffs are entitled to restitution of the right of perpetual renewal that was unlawfully taken away.
D. Analysis
1. Entitlement
[18] The Plaintiffs' entitlement to the relief sought rests upon a bold assertion that the whole bundle of rights embodied in the original perpetual renewal leases has, over time and as a result of various assignments, devolved upon the Plaintiffs. In other words, they say that their right to the perpetual renewal option can be traced back to the original grant by the Crown and, notwithstanding the surrenders and the intervening new leases, they and their successors should continue to enjoy that right. There may be no privity of contract between the Plaintiffs and the Crown as regards the surrenders of the original leases and the initial grants of the new leases, but there is, say the Plaintiffs, privity of estate.
[19] The Plaintiffs' argument is that, because it became Crown practice to acquire surrenders from assignees of the perpetual renewal leases, it must be that those assignees acquired all rights (including the perpetual renewal option) under those leases prior to the surrender. Otherwise they would not have been able to effect the surrenders. And, if those surrenders can be shown to be void and ineffective, it must be that the whole interest in the perpetual renewal leases passed through time to the Plaintiffs.
[20] At the time of the issuance of the Claim on May 21, 1996, all 33 Plaintiffs held leases at Riding Mountain National Park on cottage lots that had, at one time, been leased to others under perpetual renewal leases granted between April 1, 1934 and March 5, 1959.
[21] Of that 33, 9 (possibly 10, depending upon the way the Oldcorn/Gilchrist lease is viewed) were first lessees of new leases in situations where transfers had occurred, surrenders had been given, and new leases entered into. Some of this group subsequently assigned the new leases to other parties.
[22] The rest of the group of 33 Plaintiffs at the time of the issuance of the Claim on May 21, 1996, are subsequent assignees of the leasehold interests and were not parties to the surrender and new lease arrangements concerning their respective lots.
[23] Generally speaking, then, when this law suit began, all of the Plaintiffs held new leases with no perpetual renewal clauses. Some of them were first holders of new leases resulting from the surrender arrangements, while others had entered the picture as a result of subsequent assignments.
[24] As regards those Plaintiffs who were original holders of new leases without perpetual renewal clauses and who were parties to the arrangements for the surrender and the granting of a new lease, the evidence suggests that, with one or two exceptions, they were assignees of the original perpetual renewal leases before they executed surrenders and entered into new leases. This means that, for some time at least (i.e. between the time of the assignment and the surrender) they were the recipient assignees of all rights under the original leases granted between 1934 and 1959, including the perpetual renewal options. With this group, then, there is an evident basis upon which to question the surrenders and the new leases because they were parties to the actual transactions with the Crown.
[25] As regards those lessees who acquired their interests as a result of subsequent assignments, my review of the assignment documentation shows that the following standard assignment clause was used to transfer the interests under the leases in question with only minor variations that are not material:
NOW THIS ASSIGNMENT WITNESSETH that in consideration of the sum of _________________ Dollars now paid by the said Assignee to the said Assignor (the receipt whereof is hereby acknowledged), the said Assignor DOES hereby GRANT, TRANSFER, ASSIGN and set over unto the Assignee ALL AND SINGULAR the lands and premises comprised and demised by the said Lease, together with the Appurtenances, and the said Lease and all benefit and advantage to be derived therefrom to have and to hold the same unto the Assignee, henceforth for and during the residue of the term hereby granted, and for all other the estate, term and interest (if any) of the Assignor therein, subject to the payment of rent and the performance of the Lessee's covenants and agreements in the said Lease reserved and contained.
[26] Clearly this clause assigns possession of the lands, the premises, the appurtenances, as well as the benefits contained in the actual lease being assigned. In addition, however, the clause contains a typical catch-all provision that grants an assignment "for all other estate, term and interest (if any) of the Assignor therein .... ." I agree with the Plaintiffs that the purpose of this provision is to ensure that any interest not identified in the specific lease is also conveyed to the assignee and that the words are broad enough to capture any right of renewal under the original perpetual renewal leases that may have been wrongfully surrendered and subsequently re-instated. Consequently, I am in agreement with the Plaintiffs that the assignment documentation is sufficiently comprehensive to create a possible chain of interest between original holders of perpetual renewal leases and the Plaintiffs sufficient to give them standing to bring this claim.
[27] This is not to suggest, however, that any of the parties who acquired new leases believed they were acquiring perpetual renewal clauses. What evidence we have of events that occurred so long ago suggests that assignees believed they were acquiring rights under the new leases that did not include perpetual renewal clauses, and that they were aware that there were other leases in the park that contained perpetual renewal clauses. However, there is no evidence as to what the expectations were as regards the impact of the words "for all other estate, term and interest (if any) of the Assigner therein ... ." There is no reason to suspect that had the attention of assignees been drawn to this provision they would not have expected it to include any perpetual renewal right that could be re-claimed at some time in the future. This does not seem to have been specifically discussed at the time, but there is no reason why these words should not have their full impact even if the parties did not specifically refer to them. The assignment documentation that was used was standard form. It would seem reasonable to assume that the assignees would expect to receive any rights that the wording of the documentation might, in law, convey to them, even if at that time they did not expect to receive perpetual renewal rights as part of the assignment.
[28] There is some evidence that at least some of the assignees thought there might be a political solution to the problem. But after so much time, it is not possible to say whether all of the assignees believed or expected this. My own view is that this does not really matter because both sides had legal advice and there is no reason why they should not have been bound by the terms of the documentation they signed. One of those terms suggests an assignment "for all other estate, term and interest," and I see no reason not to give full effect to these words as the basis for the claim in this lawsuit, even if the parties were not aware at the time of their full significance. This is why people go to lawyers and use standard form documentation.
2. The Validity of the Surrenders and the New Leases
[29] The Plaintiffs question the surrenders and the validity of the new leases on various grounds. They say that the surrenders of the perpetual renewal leases were ineffective at law, that they were wrongfully taken, and that the Crown wrongfully imposed a condition to its consent to the assignment of the original perpetual renewal leases by requiring surrenders and new leases that did not contain perpetual renewal clauses.
[30] The Plaintiffs attack the validity of the surrenders because they wish to show that there is no break in the chain of leasehold title between the original leaseholders under the perpetual renewal leases and the Plaintiffs.
[31] I have already indicated that I accept the position put forward by the Plaintiffs to the extent required to bring their claims in this lawsuit, but a declaration that the surrenders were invalid would raise further problems related to consents to assignments that were only granted by the Crown on condition of receiving a valid surrender.
[32] In their Statement of Claim, the Plaintiffs say that the surrenders were invalid because they were obtained without lawful justification, without consideration, and through an improper and unlawful exercise of the Crown's right to approve the assignments reserved under the old perpetual renewal leases.
[33] The Plaintiffs further elaborated upon this position at trial and asserted that the surrenders were obtained in an unconscionable manner in a situation of economic duress and clear and obvious inequality of bargaining power, and through the imposition of a condition for consent to assignment that the Crown had no legal or other right to impose.
[34] The final result, say the Plaintiffs, was the Crown's unjust enrichment and the need for restitution of the benefit extracted through a wrongful taking (i.e. the Crown's removing the perpetual renewal right) by the exercise of this Court's right to grant declaratory relief to the effect that the Plaintiffs are (or were) entitled to renew their leases when they expire for a further term of 42 years in perpetuity.
[35] Because of the historical dimensions to this claim, there is much that we do not know about the events surrounding the surrenders for the old perpetual renewal leases.
[36] From the evidence that we do have, however, it would appear that the following occurred:
a. in a letter of August 25, 1965, the Crown provided general notification to leaseholders of record in all national parks that a new national parks policy required leases in the parks to be standardized and aligned with the perceived requirements for the control of land use in Canada's national parks;
b. the Crown also made it clear in the letter of August 25, 1965 that:
..., in keeping with the objective of arriving at a reasonable standard form of lease for residential lands, where consent is requested to the assignment of any lease which has an unexpired term, including any renewal feature, greater than forty-two years such a lease will be replaced by the standard lease with the forty-two-year term;
c. the old perpetual renewal leases required that the Crown's consent to an assignment had to be obtained prior to the assignment;
d. there was no requirement in the old perpetual renewal leases that the Crown's consent to an assignment could not be unreasonably withheld;
e. notwithstanding the requirement in the old perpetual renewal leases that consent to an assignment had to have been obtained in advance, consent was sought in most cases after the assignments had been executed;
f. because of the practicalities of the situation (assignments occurring before consent was requested) the Crown, after a brief interim period, developed a practice of asking the assignee to surrender the old perpetual renewal lease and requiring a new lease as a condition to its consent;
g. the assignees, some of whom are Plaintiffs in this claim, were very upset by the Crown's practice of requiring surrenders and new leases;
h. we don't know in all instances what legal advice was sought, but there is clear evidence that at least some of the assignees received legal advice and objected to the new arrangements through their lawyers;
i. there is also evidence that at least some of the original assignees, through their lawyers, made it clear that they did not accept that the Crown could impose the surrender and new lease conditions as a condition of consent;
j. legal action was threatened in some instances, but none of the original assignees sought either to set aside the assignment on the basis that they were not getting what they had bargained for, or to proceed against the Crown on the basis that the surrenders and new leases were, under the circumstances, unlawful and/or inappropriate. Instead, the original assignees appear to have opted for the hope that, at some time in the future, a political solution could be found to their complaints.
[37] My conclusions on the evidence are that the original assignees felt the Crown's actions in requiring the surrenders and the new leases were unfair and unlawful, that the legal issues raised by the Crown's actions were canvassed at the time, and that a decision was made not to pursue legal action but to wait for a possible political solution. Consequently, all of the original assignees then proceeded to use their cottage lots and, in some cases, to assign their leases to others in arms-length sales, and to move forward on the basis that the Crown's actions would not be subjected to legal attack for the time being at least.
[38] This means that the issues raised by the Plaintiffs in this law suit concerning the wrongful and unlawful actions of the Crown in requiring surrenders and new leases as a condition to consent to assignment are far from new. What evidence we have makes it clear that they were issues that were raised and canvassed by at least some assignees at the time of the original assignments, and we have no evidence to suggest that other original assignees were not aware of them and/or did not have adequate legal advice before they made their decisions to execute the surrenders and enter into the new leases.
[39] The significant lapse of time since the transactions were entered into has to raise the issue of whether the law of limitations prevents the Plaintiffs from now coming to court and asking that the Crown's actions be declared unlawful. My review of the relevant law of limitations leads me to the conclusion that all of the Plaintiffs are now time-barred from asserting the claims found in the Statement of Claim. Consequently, there is little to be gained, in my view, from a review of the Crown's conduct in requiring the surrenders and the new leases.
3. Limitations of Actions
[40] Both sides agree that the relevant limitations statute in this case is the Manitoba Limitations of Actions Act c.c.s.m. c. L150. The Court agrees. Section 32 of the Crown Liability and Proceedings Act, R.S. 1985, c. C-50, in my view, dictates this conclusion.
[41] Although laches were raised in the pleadings, the Crown abandoned any defence based upon laches at the trial on the grounds that s. 2(1)(n) of the Manitoba Limitations of Actions Act, in effect, constitutes that statute as a complete code of limitations within the province by providing for "any other action for which provision is not specifically made in this Act within six years of the cause of actions arose."
[42] The Crown's abandonment of a laches defence means that the Court can proceed immediately to the relevant statutory provisions.
[43] Where the parties differ is over the applicable provision of the Act in this case. The Plaintiffs say that this claim is for the recovery of land, which brings Part IV of the Act into play. The Crown says the claim is equitable in nature and is not an action to recover land. Hence, Part IV of the Act does not apply and the proceedings are governed by either 2(1)(k) or 2(1)(n) of the Act.
[44] Sections 25 and 26 of the Act read as follows:
25. No person shall take proceedings to recover any land but within 10 years next after the time at which the right to do so first accrued to some person through whom he claims (hereinafter called "predecessor") or if such right did not accrue to a predecessor, then within 10 years next after the time at which such right first accrued to the person taking proceedings (herein after called "claimant").
26. Where the claimant or a predecessor has, in respect of the estate or interest claimed, been in possession of the land or in receipt of the profits thereof and has, while entitled thereto, been dispossessed or has discontinued such possession or receipt, the right to take proceedings to recover the land shall be deemed to have first accrued at the time of such dispossession or discontinuance of possession or at the last time at which any such profits were so received.
[45] The Plaintiffs point out that the definition of "land" found in s. 1 of the Act reads as follows:
"land" includes all corporal hereditaments, and any share of any freehold or leasehold estate on any interest in any of them.
[46] The Plaintiffs' argument is that all of the claimants in this case have present leases that extend until 2006 or 2007. Their predecessors have not been dispossessed in any way because the possession of the leasehold estate in the cottage lots has been continuous. Any dispossession at the time of the surrenders was made by assignees whose successors remain in possession. In other words, the Plaintiffs take the position that, by virtue of ss. 25, 26 and 30 of the Act, the action will not arise until a Plaintiff becomes dispossessed of the estate that the Plaintiff seeks to assert or claim. Hence, no limitation period has been triggered in the present case because no action has accrued.
[47] The Crown says that this is a claim for equitable relief so that the relevant limitation period is found in either s. 2(1)(k), or possibly s. 2(1)(n) of the Act, both of which clearly bar the action taken by the Plaintiffs.
[48] The Crown also says that Part IV of the Act is intended, and has been applied historically, to situations of adverse possession of land that do not arise on the present facts. And, even if ss. 25 and 26 were applicable to the Plaintiffs' claim, the claim is for the resurrection of a right of renewal of a leasehold interest, which means that it can be for no more than a claim for an "interest" in leasehold estate within the meaning of the definition of land found in s. 1 of the Act. If this is the case, then the action has to accrue when the claimant, or a predecessor, was dispossessed of that interest within the meaning of s. 26.
[49] In my view, the Plaintiffs' argument cannot succeed on this issue. Even if Part IV of the Act is applicable, s. 26 compels the Court by its plain wording, when addressing dispossession, to focus upon "the estate or interest claimed," so that physical dispossession of the cottage lot itself is not the issue. The Plaintiffs, at least as their Claim is worded, are attempting to reclaim a right of perpetual renewal which, at its highest, can only be described as an "interest" in a leasehold estate.
[50] Hence, their claim under ss. 25 and 26 of the Act had to accrue when the right of renewal was dispossessed or discontinued, which occurred when the perpetual renewal leases were surrendered.
[51] During the course of legal argument, counsel for the Plaintiffs sought to overcome this difficulty in various ways. First of all, counsel argued that time has not begun to run against the Plaintiffs under s. 26 of the Act because, if the surrenders of the perpetual renewal right are declared void, there has been no dispossession of that interest, so that the right to take proceedings to recover that interest has not accrued.
[52] In my view, this argument does not stand up to scrutiny. To begin with, dispossession of the right of perpetual renewal has occurred under the surrenders and the Plaintiffs, by this law suit, are seeking to re-instate that right. Thus it would lead to an absurdity if the Plaintiffs, or anyone else for that matter, could say that if a surrender they have executed is subsequently determined to be void there is no limitations issue because the voiding of the surrender means that dispossession has not occurred. It would mean, in effect, that actions that seek to void the surrender of an "interest" in land would never be time-barred through dispossession of that interest because voiding of the surrender cures the dispossession and prevents the action from accruing. This is an absurd result and, applying generally accepted principles of statutory interpretation, a purposive reading of the Act as a whole, and taking into account the ordinary and natural meaning of the words, I cannot accept that such a result was intended.
[53] In addition, if s. 26 of the Act (which deals specifically with actions that accrue by virtue of dispossession) does not lead to accrual in this case because a void surrender means that no dispossession has occurred, it means that s. 26 is not applicable to the case at bar. This does not mean that the Claim is not time-bared; it merely means that the relevant limitation period has to be sought in some other provision of the Act. The possibilities are s. 25, s. 2(1)(k) or s. 2(1)(n), all of which, in my view, bar the Plaintiffs in this claim. The Plaintiffs take the position that s. 2(1)(k) cannot apply because the claim involves an interest in land. Hence, if s. 26 does not come into play because no dispossession has occurred if the surrenders are void, then, in my view, we have to fall back on s. 25 or s. 2(1)(n). I accept the argument that the Act is intended to create a complete code of limitations in the province. Hence, there has to be some limitation period applicable to parties who seek to attack a surrender of an interest in land (accepting for the time being that the Plaintiffs are correct and this is an action to recover an interest in land). To say there is no accrual if the surrender is found to be void is to argue that the issue of accrual depends upon the result of the claim: if the Plaintiffs are successful in having the surrenders voided then no limitation period has started to run; if they are unsuccessful then, as a function of dispossession, they are out of time. I cannot believe that the Act intended such a result. The purpose of a limitations statute is to ensure that, generally speaking, claims are brought in a reasonably timely way. In my view, the Plaintiffs have not done that in this case. They seek the benefits from events that occurred long ago, but they must also accept the burdens.
[54] The Plaintiffs seek to rely upon the decision Dewar C.J., Q.B. in the Manitoba case of Young et al. v. Yoraitis 1980 109 D.L.R. (3d), 215. However, as the court pointed out in that case, no question of limitations arose because the 1973 judgment remained undisturbed and Albert Hamslit was thus divested of the interest in land in question and so became a bare trustee of that interest for the party adverse in interest. In other words, no limitation arose because a vesting of the interest had occurred, there was no release of that interest by the respondent, and there was no intervening interest created. The court concluded that "Proper disposition of the application requires that the matter be treated as though a vesting order had issued. When registered in 1973, the judgment had full force and effect and the rights of the respondent had not been barred or extinguished by statute" (pp. 217-218).
[55] No limitation arose in Young because the respondent's interest in land had already vested. In the present case, the Plaintiffs seek to reclaim an interest that has been divested (they say wrongfully) through the execution of a surrender of that interest. They have yet to show that the surrender was invalid. If they do that, they might be able to argue that the Crown holds the right of perpetual renewal in trust for them, until the formalities of resurrecting that interest are complied with. But that is the very issue to be decided in this case. There can be no vesting until they assert their claim and the Court decides in their favour. No trusteeship has yet been established. In my view, then, the Plaintiffs cannot avoid the limitations issue by saying, in effect, if they are correct and the surrenders are void, they have a perpetual renewal interest that the Crown holds for them as trustee, therefore they already have a vested interest in that right which avoids the limitations issues raised by the Crown.
[56] The Plaintiffs also say that they are not subject to a limitation of their action because the Crown subsequently affirmed their perpetual renewal right following the surrender and the execution of assignment and new leases. Before I consider that, it is helpful to bear in mind how the surrenders occurred.
[57] My review of the evidence concerning the surrenders and the execution of new leases that did not contain perpetual renewal clauses suggests that the relevant parties were well aware of the legal significance of those transactions, and that subsequent assignees were also aware that the leases they acquired did not contain perpetual renewal clauses. In so far as one can generalize about so many Plaintiffs and transactions that took place so long ago and, in some cases, involved other parties, what evidence we have makes it clear, in my view, that the parties involved were well aware that they were not acquiring perpetual renewal leases, but they completed the transactions anyway in the hope that, at some time in the future, the perpetual renewal right would be restored either through negotiations or political action. This was, however, no more than a hope, and some of the Plaintiffs in discoveries were quite candid that they were aware the perpetual renewal right might not be redeemed. They were willing to go ahead anyway.
[58] All of the relevant parties appear to have had independent legal advice at the time, and some of the lawyers involved made it quite clear to the Crown that they did not believe the Crown had the right to acquire the surrender of the perpetual renewal right in the way it did, and that the Crown should expect legal action. But no legal action was taken until this claim was commenced in 1996. There is evidence that the choice not to take legal action earlier was made freely, and after taking independent legal advice. Everyone seemed to hope the situation might change but, as one Plaintiff put it, they also hope for Christmas.
[59] So my conclusions on the evidence are that: the loss of the right was well recognized; the relevant parties had independent legal advice; the Plaintiffs or their predecessors knew that legal action against the Crown was possible; the Plaintiffs or their predecessors made a conscious decision not to take legal action but decided, rather, to hope that a political solution might be found at some time in the future.
[60] In view of this choice, freely made after legal advice, it seems to me that the relevant parties hoped for a solution, but were well aware that it was nothing more than a hope. They were prepared to live with the loss of the perpetual renewal right if need be, and they certainly did not wish to take legal action at the time of the surrender, the execution of the new leases, or upon the subsequent assignments of those leases. A decision to take legal action was not implemented until 1996.
[61] In my opinion, then, the relevant parties made a conscious and informed decision to forego any legal redress that might have been available to them and to go forward on the basis of a mere hope that a political solution might be found. The Plaintiffs cannot, then, complain on this basis that they should not be subject to a limitation of action. There is no evidence that anyone believed their legal rights would remain intact if they allowed time to run while they were attempting a political solution.
[62] Against this background, the only remaining issue is whether the Crown did subsequently confirm the perpetual renewal right in a way that prevents the Crown from now relying upon a limitation of action defence to this claim.
[63] My review of the evidence suggests that considerable uncertainty arose following the Supreme Court of Canada decision in R. v. Walker, [1970] S.C.R. 649 as to what the position of the Crown would be on perpetual renewal leases. The relevant documentation suggests significant discussion on this issue at all levels of government and administration, and a period during which the Crown actually contemplated re-instating the perpetual renewal right. But this was never actually done. A letter from Mr. Jean Chretien to Mr. Allen Sulatycky, M.P. for Rocky Mountain, gives some indication of what was happening:
Although we have accepted in principle the concept of reinstating to their original position lessees who complied with the request to surrender their perpetual leases in exchange for 42-year term ones, we still have to resolve the obvious legal obstacles.
[64] This period of uncertainty appears to have continued for some time and negotiations continued back and forth, sporadically at least, into the 1990s. However, my reading of the relevant correspondence and internal memoranda suggests that this was all part of the political process and the political discussion that the Plaintiffs and/or their predecessors in interest had chosen as an alternative to taking legal action. The hope was kept alive. But there is no evidence, in my view, that any of Plaintiffs or their predecessors were encouraged or led to believe by the Crown that they had a continuing legal interest acknowledged by the Crown in the perpetual renewal right that did not have to be asserted in a timely manner because the parties would eventually receive a reinstatement of the perpetual renewal right that had been surrendered. The Plaintiffs and their predecessors continued to try and effect a political solution to the problem. There is nothing to suggest that they could not (as had been threatened) have initiated legal proceedings at any time. Once again, the general approach appears to have been to hope for a political solution. There is no evidence before me that the Plaintiffs or their predecessors in interest refrained from taking legal action before 1996 because the Crown acknowledged that the right to perpetual renewal existed or would be given back to them. The affected parties were free to commence legal action at any time but chose not to do so until 1996. In reading those portions of the discovery transcripts entered into evidence at the trial, a general pattern emerges of legal rights voluntarily and knowledgeably foregone in favour of other solutions.
[65] The advent of a more active Cottage Owners Association and better organization made legal action more feasible in 1996 after the Crown had refused to re-grant the perpetual renewal right. But this does not mean that legal action could not, or should not, have been commenced earlier. The following exchange between Crown counsel at the examination for discovery of Mr. Andrew Stuart Craig at para. 37 seems typical to me:
Q. Is there any particular reason - just you personally, as a person who actually participated in that 1969 transaction, any reason that you have not initiated any legal action prior to now?
A. I was taking the advice of my legal counsel at that time and they didn't suggest we should take legal action. We thought we could do it without that, but I guess it didn't happen.
[66] Subsequent assignees and their legal counsel continued with the political option, looking for and exploiting wherever possible, changes of policy and changes of mood within the relevant government department. But subsequent assignees were aware of the problems when they acquired their leasehold interests and there is no evidence to suggest that they acquired those interests as a result of any action or representation on the part of the Crown, or that they refrained from taking legal action to re-acquire the perpetual renewal right as a result of any action or representation by the Crown. Confusion there may have been concerning the Crown's intentions for the perpetual renewal right following the Walker decision, but this did not prevent legal action during the relevant limitation period. I see no representation by the Crown that it would not rely upon its rights under any relevant limitation law or any evidence that the Plaintiffs, or their predecessors in title, were even encouraged to believe that the relevant limitations rules would not apply.
[67] Finally, on the limitation issue, the Plaintiffs say that there should be no limitation on the granting of declaratory relief in this context.
[68] The Plaintiffs argue that there should be no limitation period on the granting of declaratory relief, relying on Milliken & Co v. Interface Flooring Systems (Canada) Inc., [1996] F.C.J. No. 1571. At paragraph 25, Madam Justice Tremblay-Lamer states that:
I am of the opinion that the defendant's right in asserting that the s. 41 limitation period has no application with respect to injunctive relief. (emphasis added)
[69] Madam Justice Tremblay-Lamer goes on to state, at paragraph 26, that the rationale for the rule lies in the equitable nature of injunctive relief. In claims for injunction, or other equitable relief, "statutes limiting the time when an action may be brought should generally be considered inapplicable." The basis for this argument is that an injunction is designed to restrain future infringements. In the case at bar, the declaratory relief does fall within the limitation period, as it is non-injunctive relief that arises out of the past (the surrender). In my view, Milliken is not applicable with respect to the declaratory relief sought in this case.
[70] The Crown has referred the Court to Jeremy S. Williams, Limitations of Actions in Canada, Toronto, Butterworths at chapter 7.
[71] For a full historical perspective of limitations periods for actions to recover land, Mr. Williams consistently asserts and provides authority for the proposition that the "action for recovery of land is the successor to the action in ejectment" (p. 88) and that there must be an adverse possessor before time will start to run. At p. 94 Mr. Williams concludes as follows:
The accrual of the cause of action to recover land takes place when there is possession adverse to the owner. No right of action to recover land is deemed to accrue unless the land is in the possession of some person in whose favour the limitation period can run.
[72] It is by no means clear, in my opinion, that Part IV of the Act was intended only to cover actions for the recovery of land in the traditional sense described by Mr. Williams. However, assuming the traditional jurisprudence or the accrual of such an action continues to apply in Manitoba (and there is no suggestion in the statute or the case law that it does) on the facts of the present case it would be artificial to say that the interest in land claimed (i.e. the right of perpetual renewal) is "in the possession of some person in whose favour the limitation period can run." The fact is that the right of perpetual renewal was surrendered and is now possessed by no one, particularly not the Crown who is the landlord. Acceptance of the Plaintiffs action would mean that the action would never accrue provided the land interest itself remains in possession of a lessor or an assignee of the lessor. This result does not appear to me to be contemplated by s. 26 of the Act which specifically refers to possession by a claimant or a predecessor "in respect of the estate or interest claimed" and not in respect of the underlying freehold or leasehold interests.
[73] In my view, it is not necessary to decide the adverse possession issue raised by the Crown at this time. Even if I accept the Plaintiffs' position that this claim deals with an interest in land that is subject to Part IV of the Manitoba Act, in my view, and as previously discussed, the claim is still time-barred.
[74] Because this conclusion is dispositive of the whole claim, there is no point in examining in detail the grounds relied upon by the Plaintiffs to attack the surrenders and the new leases or to justify the declaratory relief sought.
ORDER
1. For the reasons given above, the Plaintiffs' claim is dismissed as being time-barred under the Manitoba Limitation of Actions Act.
2. The parties shall provide the Court with their discussion and authorities on costs for further disposition.
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JFC
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET:T-1168-96
STYLE OF CAUSE:ALLISON G. ABBOTT, MARGARET ABBOTT,
and MARGARET ELIZABETH McINTOSH
Plaintiffs
- and-
HER MAJESTY THE QUEEN
Defendant
PLACE OF HEARING:WINNIPEG, ALBERTA
DATE OF HEARING:SEPTEMBER 20, 2004
REASONS FOR ORDER: RUSSELL, J.
DATED:FEBRUARY 2, 2005
APPEARANCES:
Arthur J. Stacey FOR PLAINTIFF
Thompson Dorfman Sweatman LLP
2200-201 Portage Avenue
Winnipeg, MB
R3B 3L3
Paul Edwards & Jurgen Feldschmidt FOR DEFENDANT
Duboff Edwards Haight & Schachter
1900 - 155 Carlton Street
Winnipeg, MB
R3C 3H8