Dated: 20010810 2001 SKCA 85 Docket: 3091 THE COURT OF APPEAL FOR SASKATCHEWAN Coram: Tallis, Sherstobitoff and Jackson JJ.A. SCURRY-RAINBOW OIL (SASK) LTD. and TARRAGON OIL AND GAS LIMITED and HARRY ERNEST TAYLOR and MAXX PETROLEUM LTD. RESPONDENTS COUNSEL: Mr. Brian J. Scherman and Mr. David G. Gerecke for the Appellants Mr. James S. Ehmann and Mr. Keith D. Boyd for the Respondents DISPOSITION: On Appeal From: QB 2112/94, J.C. of Regina Appeal Heard: September 26, 2000 Appeal Allowed: August 10, 2001 Written Reasons: August 10, 2001 Reasons By: The Honourable Mr. Justice Tallis In Concurrence: The Honourable Mr. Justice Sherstobitoff In Dissent: The Honourable Madam Justice Jackson TALLIS J.A. [1] The principal question on this appeal is whether the appellants' oil and gas "top lease" with the late Harry Herbert Taylor should be rendered void by the rule against perpetuities. In reasons now reported [1998 CanLII 14009 (SK QB), 170 Sask. R. 222], the learned trial judge held that the lease was void because it breached that rule and allowed the respondents' action for declaration to that effect. He allowed the counterclaim by the appellant Tarragon against the respondent Maxx Petroleum Ltd. for breach of confidence with consequent directions for an accounting and assessment of damages.[1] [2] The background and essential facts with respect to this controversy are not in dispute. [3] On April 26, 1949, the late Harry Herbert Taylor (father of the respondent Harry Ernest Taylor) granted ten-year primary term lease to Imperial Oil Ltd. of "all the petroleum and natural gas and related hydrocarbons, except coal and valuable stone, within, upon or under" the land described as The East Half of Section Fifteen (15), in Township Four (4), Range Thirty-two (32), West of the Principal Meridian in the Province of Saskatchewan, in the Dominion of Canada, containing One Hundred and Sixty (160) acres, more or less, according to Dominion Government Survey thereof. Minerals Included. Under the habendum clause in this lease, the primary term was for ten years from April 26, 1949, and "for so long thereafter as leased substances were produced from the lands". There was no production and the lease expired at the end of the primary term April 25, 1959. [4] On August 7, 1950, Harry Herbert Taylor signed an agreement entitled "Assignment and Conveyance of Petroleum and Natural Gas Royalty and Lease of Minerals" in which he was the grantor and Freeholders Oil Company Limited was the grantee. Under the terms of this "top lease" Mr. Taylor granted petroleum rights in the same half section to Freeholders upon expiration of the Imperial Oil lease dated April 26, 1949.[2] [5] Since the threshold issue at trial was whether this agreement of August 7, 1950 was void by reason of the common law rule against perpetuities, we find it convenient to reproduce the relevant parts of it: AND WHEREAS by Petroleum and Natural Gas Lease dated the "26th" day of "April", A.D. 19"49", (hereinafter referred to as "the drilling lease"), made between the GRANTOR as lessor and "Imperial Oil Limited" (hereinafter called "the lessee"), the GRANTOR has demised and leased to the LESSEE the petroleum, natural gas and related hydro‑carbons within, upon or under the above described land subject to the payment to the GRANTOR of gross royalty of twelve and one‑half per cent. (12½%) of all of the production of the said petroleum, natural gas and related hydro‑carbons or any of them, produced, saved and marketed from the said lands during the currency of the said drilling lease; AND WHEREAS the said gross royalty represents an undivided twelve and one‑half per cent. (12½%) interest in the petroleum, natural gas and related hydro‑carbons within, upon or under the said land, and the GRANTOR has the right to assign the same; AND WHEREAS the parties hereto have agreed that the GRANTOR will assign, transfer and convey to the GRANTEE all of the GRANTOR`S right, title to, and interest in the said gross royalty, and that in consideration of such assignment the GRANTEE will allot and issue to the GRANTOR one fully paid‑up share in the capital stock of the GRANTEE for the GRANTOR`S gross royalty interest in every two (2) acres of the above described land; AND WHEREAS it has been further agreed by and between the parties hereto that should the said drilling lease between the GRANTOR and the LESSEE terminate from whatsoever cause, or be avoided, or become null and void, or become unenforceable by the LESSEE at any time within period of forty‑two (42) years from the day of the date hereof, then and in that event, all the mines, minerals and mineral rights within, upon or under the above described land shall be subject to the terms of the lease as hereinafter provided, and the GRANTEE will allot and issue to the GRANTOR additional fully paid‑up shares in the capital stock of the GRANTEE in such amount as shall increase the number of shares allotted and issued to the GRANTOR to one share for every acre of the above described land, which shares shall be allotted and issued to the GRANTOR upon receipt of actual notice from the GRANTOR that the said drilling lease has been terminated, cancelled, avoided, or has expired; NOW THEREFORE THIS INDENTURE WITNESSETH and it is agreed by and between the parties hereto as follows: 1. Assignment— The GRANTOR doth hereby assign, transfer and set over to the GRANTEE all that portion of the gross royalty reserved and payable to the GRANTOR under the terms of the said drilling lease between the GRANTOR and the LESSEE amounting to the full twelve and one‑half per cent. (12½%) of all of the production of petroleum, natural gas and related hydro‑carbons, or any of them, produced, saved and marketed from the above described land, to have and to hold the same unto the GRANTEE, its successors and assigns absolutely and forever, together with all such powers and remedies as are given or reserved to the GRANTOR under the said drilling lease between the GRANTOR and LESSEE in the observance or performance of any covenant contained therein, and in the event of default of payment or delivery of the said gross royalty, and for all purposes whatsoever the GRANTEE shall be subrogated to all the rights and remedies of, and shall stand in the position of, the GRANTOR. 2. Lease to Grantee— UPON AND IN THE EVENT OF the termination, cancellation, avoidance or expiration of the said drilling lease between the GRANTOR and the LESSEE, and in consideration of the covenants of the GRANTEE herein contained, the GRANTOR DOTH HEREBY GRANT AND LEASE UNTO THE GRANTEE all the mines, minerals and mineral rights, including the petroleum, natural gas and all related hydro‑carbons (hereinafter referred to as "the minerals") within, upon or under the above described lands and all the right, title, estate and interest of the GRANTOR in and to the minerals or any of them within, upon or under any lands excepted from, or roadways, lanes, or rights‑of‑way adjoining the lands aforesaid together with the exclusive right and privilege to explore, drill for, win, take, remove, store and dispose of, the minerals, and insofar as the GRANTOR has the right so to grant, and for the said purposes, the right of entering upon, using and occupying the said lands or so much thereof and to such extent as may be necessary or convenient, TO HAVE AND TO ENJOY the same for term of ninety‑nine (99) years from the date hereof, renewable at the option of the GRANTEE, and so long thereafter as the minerals or any of them are produced from the said lands. 3. Application for Shares— The GRANTOR hereby applies for membership in and subscribes for and agrees to take up "Three Hundred and Twenty (320)" shares with nominal or par value of One Dollar ($1.00) per share in the capital stock of the GRANTEE, and tenders the within assignment in full payment of one‑half (½) of the said shares, and the within lease in full payment of the balance of the said shares, and hereby requests that the said shares be allotted to the GRANTOR and that such shares be issued as fully paid and non‑assessable and that certificate or certificates for the said shares be issued in the name of the GRANTOR as herein set out, and acknowledges to have received copy of the prospectus of the GRANTEE. 4. Acceptance by Grantee— The GRANTEE covenants and agrees to accept the within assignment as payment in full for one‑half (½) of the said shares and to allot and issue to the GRANTOR one‑half (½) of the said shares as fully paid and non‑assessable; and the GRANTEE accepts the within lease as payment in full for the balance of the said shares and upon the effective date of the said lease agrees to allot and issue to the GRANTOR the balance of the said shares as fully paid and non‑assessable. 5. Payment to the Grantor— The GRANTEE shall have the full and absolute right to deal with, or dispose of the gross royalty hereby assigned or any part thereof, and/or the said minerals or any of them, as the case may be, PROVIDED that the GRANTEE shall pay to the GRANTOR twenty per cent. (20%) of the benefits received by the GRANTEE from any such disposition whether the same consist of cash consideration or royalty interest under drilling lease, or otherwise. [Emphasis supplied] [6] Although the issue is whether this 1950 Freeholders agreement is void under the common law rule against perpetuities, we find it convenient to outline the chronology of events after that date in rather brief terms. [7] On September 26, 1961, Harry Herbert Taylor and Freeholders entered into further agreement which changed the consideration payable under the original agreement from 20% of the net benefit to 3.5 of the gross oil royalties: See Exhibit A-7.[3] [8] In 1964 Freeholders merged with Scurry Oil and several other companies to become Scurry-Rainbow Oil. On June 1, 1993, Scurry Rainbow Oil sold the Freeholders lease with Harry Herbert Taylor to Tarragon Oil and Gas Limited. [9] Harry Herbert Taylor died in 1969. His son Harry Ernest Taylor became the owner of the land in question and on June 1, 1998 he recognized and signed the assignment of Scurry's interest to Tarragon: See Exhibit A-9.[4] [10] In March 1993, Maxx Petroleum Ltd. expressed an interest to Tarragon in obtaining lease or sublease for the Taylor land covered by its lease. When this proposal was rejected, Maxx proposed "seismic option" whereby they would have the option of conducting the drilling but would not be obligated to do so. This proposal was also rejected by Tarragon. [11] In October 1993, Maxx and Tarragon reached an agreement in principle for "farmout" arrangement whereby Maxx committed to drill the Taylor lands for Tarragon. Before finalizing this agreement Maxx was to conduct due diligence inquiries which included an investigation into the validity of Tarragon's lease. To further the finalization of the agreement, Tarragon allowed Maxx to use copy of the original 1950 Freeholders lease which Maxx had been unable to obtain on its own. [12] After making these inquiries Maxx concluded that the original Freeholders lease with Harry Herbert Taylor was void under the rule against perpetuities and on November 16, 1993, it entered into its own oil and gas lease with the respondent Harry Ernest Taylor in respect of the land involved in the original lease. [13] The background to this course of dealing can best be summed up by reference to the following passages of the trial judge's findings: [13] now turn to what transpired between the plaintiff, Maxx Petroleum Ltd., and the defendant, Tarragon Oil and Gas Limited. As to them, make the following findings of fact. [14] In 1993 the plaintiff, Maxx Petroleum Ltd., was active in south east Saskatchewan and was interested in leasing the mineral interests contained in the Taylor lands. letter to this effect was sent on March 19, 1993, to the defendant, Tarragon Oil and Gas Limited. After those interests were acquired by Tarragon on June 1, 1993, Tarragon informed Maxx that it was not interested in lease. [15] However, discussions continued and by letter dated October 8, 1993, Maxx proposed farmout agreement in respect to the Taylor lands. Mr. Michael Geldert, an employee of Tarragon, prepared farmout agreement and sent it to Maxx. The next thing he heard was that lawyer acting for Maxx would attend to examine the documentation. In fact, the title and lease document, being the Freeholders lease of August 7, 1950, were provided by Tarragon on November 5, 1993. Subsequently, on November and again on November 16, 1993, the lawyer attended at the offices of Tarragon and reviewed the three files which related to the Taylor lands. [16] In the meantime, on November 5, 1993, Maxx engaged Western Land Services Co. Ltd. to obtain petroleum and natural gas leases from Harry Ernest Taylor and this was done in respect to each of the two subject quarter sections of land on November 16, 1993. The two leases were assigned to Maxx on February 3, 1994. Earlier, on December 1, 1993, Maxx had obtained an assignment of the interest which United Rayore Gas Ltd. had in two well bores located on one of the Taylor quarter sections of land and surface lease in respect thereto. [17] In late November or early December, 1993, Geldert was advised by Mr. James Urquhart of Maxx Petroleum Ltd. that there was problem with Tarragon's title to the mineral interest in the Taylor lands. The source of the problem was stated to be the rule against perpetuities. On some later occasion, Urquhart told Geldert that Maxx would not be proceeding with the farmout agreement. Instead, on June 8, 1994, Maxx launched an application by originating notice to vacate the caveats relating to the Freeholders lease. In time trial was ordered. [18] It was always understood by Mr. Geldert on behalf of Tarragon and Mr. Urquhart on behalf of Maxx that there was farmout agreement in principle, but that there would be no binding agreement until "due diligence" was completed and Maxx was satisfied that Tarragon had good title and could convey such title. To this end the documents were sent to the lawyer so legal analysis could be done. If there were any problems with the title Tarragon anticipated that Maxx would join with Tarragon in seeking resolution. However, neither party had ever before experienced situation where it was suggested the lease creating the interest was void. [14] The concept of "top leases" is not unique or unusual in the Saskatchewan oil and gas industry. The evidence adduced at trial established that there are hundreds of such leases in this Province. Tarragon holds approximately 180 leases in the same form as the lease in question. These leases involve approximately 51,558 acres.[5] Other companies hold approximately 1,943 such leases which involve approximately 400,000 acres.[6] [15] In some jurisdictions "top leases" are considered accepted business practice in the oil and gas industry: See for example Roach: The Rule Against Perpetuities The Validity of the Oil and Gas Top Deed in Texas After Peveto Starkey (1983) 35 Baylor Law Review 399 particularly at 409. [16] Although these "top leases" have been attacked on other grounds, this is the first case before the Saskatchewan Courts in which the rule against perpetuities has been advanced to void such lease. The earlier litigation which was spawned by the discovery of oil in some of the areas covered by the "top leases" focussed essentially on the grantors' pleas of non est factum or breach of s. 17 of The Securities Act, R.S.S. 1940, c. 287, as amended. In Meyers v. Freeholders Oil, supra, Martland J., speaking for the Court, reviewed the background of the "top leasing" programme of Freeholders and went on to reject the grantor's claim for declaration that the lease to Freeholders was "not est factum, illegal and void". The Court also held that breach of s. 17(1) of The Securities Act did not void the lease.[7] [17] Given the fact that earlier litigation, even at the Supreme Court level, did not raise any issue over the rule against perpetuities, one can fairly assume that until recent times, practitioners in the field did not consider such "top leases" to be vulnerable.[8] Furthermore, in 1958 the solicitors for Freeholders obtained written opinion that the top lease in issue did not violate the rule.[9] [18] The learned trial judge held that the Freeholders lease of August 7, 1950 was void because it contravened the rule against perpetuities. We find it convenient to refer to the following passages from his reasons: [20] The plaintiffs [respondents on this appeal] argue that the Freeholders lease did not effect vesting of the mineral interest until after the expiration of the Imperial Oil lease of April 26, 1949. Such vesting would be too remote and would render the lease void. On the other hand, the defendants [appellants] argue that there was an immediate vesting of the mineral rights and it was only possession which was deferred. If this interpretation is correct, then the lease is valid. [21] The total law against perpetuities encompasses variety of situations, only one of which involves remoteness of vesting. However, it is this situation which has come to be known as the modern rule against perpetuities. full discussion of this subject is to be found in the work, Anger and Honsberger Real Property, by Oosterhoff and Rayner, 2nd ed. (Toronto: Canada Law Book, 1985) commencing at p. 435. The classic statement of the modern rule as stated by Professor J.C. Gray is this: 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. See Morris and Leach, The Rule against Perpetuities, 2nd ed. (Toronto: Carswell, 1962), at p. and Anger and Honsberger Real Property, supra, at p. 441. [22] The rule is not concerned with the duration of an interest, but only an interest which vests too remotely. It invalidates only the latter. This is the result if there is any possibility that the interest may vest outside the perpetuity period. The possibility that vesting may occur within the perpetuity period will not save the transaction. The period generally commences on the date on which the instrument creating the interest takes effect. Where there is no life in being, which is the case herein, then the interest must vest within twenty‑one years of its creation, which in this instance would be August 7, 1950, being the date of the Freeholders lease. [23] In deciding whether there has been breach of the rule against perpetuities, the crucial determination is the time of vesting. To answer that question one interprets the contract by the ordinary rules of construction. The rule against perpetuities plays no role in that process. It is only after the time of vesting has been ascertained, that determination can be made about whether that time is too remote and therefore in contravention of the rule. The process is described in this way in Anger and Honsberger Real Property at p. 466: The validity of limitation in an instrument depends on the time of its vesting, which is determined by construing the language of the instrument by the ordinary rules of construction. The traditional English approach as regards interests which may be void under the rule against perpetuities is one of remorseless construction. Lord Selborne explained this approach as follows in Pearks v. Moseley: You do not import the law of remoteness into the construction of the instrument, by which you investigate the expressed intention of the testator. You take his words, and endeavour to arrive at their meaning, exactly in the same manner as if there had been no such law, and as if the whole intention expressed by the words could lawfully take effect. do not mean, that, in dealing with words which are obscure and ambiguous, weight, even in question of remoteness, may not sometimes be given to the consideration that it is better to effectuate than to destroy the intention; but do say, that, if the construction of the words is one about which Court would have no doubt, though there was no law of remoteness, that construction cannot be altered, or wrested to something different, for the purpose of escaping from the consequences of that law. Thus one begins by attempting to ascertain the intentions of the parties by giving to the words used their ordinary meaning. [37] In this case, the following words are essentially what govern the grant and indicate the intention of the parties: UPON AND IN THE EVENT OF the termination, cancellation, avoidance or expiration of the said drilling lease [i.e. with Imperial Oil Ltd.] the GRANTOR DOTH HEREBY GRANT AND LEASE UNTO THE GRANTEE all the mines, minerals and mineral rights TO HAVE AND TO ENJOY the same for term of ninety‑nine (99) years from the date hereof ." To my mind, in the context in which they are used, the usual and ordinary meaning of the word "upon" and the phrase "in the event", connote time and condition and not property or an interest in property. [40] From the foregoing, it is clear and unambiguous to me that the opening phraseology in the impugned clause speaks to contingency and to the future. To ascribe to those words definition equivalent to way of describing reversionary interest is to distort the words beyond recognition. Nowhere in my reading did come across any suggestion that such an interpretation could be justified. In my opinion, it could not and decline to attempt to do so. [48] As in para. of the Freeholders agreement, this recital speaks to the grant and lease becoming effective on the termination of the then existing lease. At this late date the parties were still using terminology which spoke to contingency and futurity. When weigh these various pieces individually and as whole am convinced that it was intended by the parties to have contingent relationship with future vesting as to the reversionary interest in the mines and minerals. As there was possibility that the interest would not vest within 21 years, the rule against perpetuities was breached and the agreement is void. [49] In coming to my conclusion have taken into account the observations of counsel for the defendants in respect to various aspects of the Freeholders agreement. These have been outlined above. However, have concluded that while the particular words and phrases can be read as suggesting present vesting, they are not necessarily inconsistent with future vesting. On the other hand, when read them in conjunction with the other clauses and as parts within the whole of the agreement, conclude that the correct interpretation is that it was intended that there be future vesting. [19] The learned trial judge rejected the appellants' contention that the "top lease" in question should be removed from the ambit of the rule against perpetuities. Although such leases do not offend the policy behind the rule, he held that any modification of the rule is best left to the legislature. This is made clear in the following passages: [53] In Scurry‑Rainbow Oil Ltd. v. Galloway Estate, 1993 CanLII 7025 (AB QB), [1993] W.W.R. 454 (Alta. Q.B.) Madam Justice Hunt discusses the rule against perpetuities in the context of oil and gas interests. She was specifically concerned with gross royalty trust agreements and concluded that they did not prevent ". the development and utilization of the lands. Therefore, the policy behind the Rule is not offended." See p. 510, para. 171. [54] In my opinion, like conclusion is probably correct in respect to top leases of mineral rights. They do not remove land from commercial development and activity, but rather encourage it. This being so, it would not be contrary to the public interest to remove such leases from the ambit of the rule against perpetuities. [56] In any event, the fact remains that the Legislature of this province did consider abolishing the rule against perpetuities. For whatever reason, it chose not to do so. For me to now abolish the rule or suspend its operation as to oil and gas leases, or even just in respect to the subject Freeholders lease, would be presumptuous and inappropriate. Accordingly, decline to do so. [20] With respect to Tarragon's counterclaim for breach of confidence, the learned trial judge found for Tarragon. His essential reasons are found in the following passages: Breach of Confidence [62] The leading authority on the topic of breach of confidence is Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] S.C.R. 574. Mr. Justice La Forest, at p. 635, set out what is required to establish breach of confidence: can deal quite briefly with the breach of confidence issue. have already indicated that Lac breached duty of confidence owed to Corona. The test for whether there has been breach of confidence is not seriously disputed by the parties. It consists in establishing three elements: that the information conveyed was confidential, that it was communicated in confidence, and that it was misused by the party to whom it was communicated. With those three elements in mind turn to the particular facts. [63] At all relevant times form of the Freeholders lease was on file with the Corporations Branch of Saskatchewan Justice. As well, the caveat based on the actual Freeholders lease with Taylor largely sets out what is contained in Clauses and of the lease. In consequence, it is argued on behalf of the plaintiffs that the Freeholders lease was in the public domain and cannot be the subject of breach of confidence. do not see it that way. [64] Maxx Petroleum Ltd. was very interested in developing or participating in the development of the mines and minerals within the Taylor land. Mr. James Urquhart acknowledged that attempts had been made to obtain copies of the Freeholders lease, but they had proved unsuccessful. Thus, while the documents in the Land Titles Office and the Corporations Branch could enable one to speculate about the contents of the Taylor lease and do so with some confidence as to accuracy, one could not be certain about the actual terms of the lease. That uncertainty precluded Maxx from simply proceeding on its own. [65] Rather Maxx chose to negotiate farmout agreement with Tarragon. This was tantamount to joint venture and the parties reached an agreement in principle. The only matter to be resolved was for Maxx to satisfy itself that Tarragon had good title. This involved due diligence examination and for that purpose Tarragon opened its files and disclosed to Maxx the only existing copy of the agreement between Freeholders and Taylor. The document was provided for only one reason, namely: to enable Maxx to ascertain whether Tarragon had good title and in consequence to decide whether or not to proceed with the venture. It was never intended to provide information to Maxx whereby it could undermine the interest of Tarragon. However, when Urquhart's suspicions about the lease were confirmed that very thing was done. [66] When relate the facts to the essential elements of breach of trust, my conclusions are these. First, the information was confidential. It was not available anywhere else and Tarragon considered it to be confidential. Secondly, the information was shared and communicated in confidence. The parties were in the process of finalizing commercial arrangement and both recognized that the document and information therein was provided for the singular purpose of doing the due diligence examination. Thirdly, the information was misused by Maxx. It went beyond the due diligence and used the information to obtain result which was to its exclusive benefit and to the detriment of Tarragon. It clearly precluded the possibility of Tarragon obtaining any benefit in respect to the mines and minerals within the Taylor lands. The whole process of confidentiality was designed and intended to prevent this very result. [67] Where there has been breach of confidence, there normally is an attempt to restore the injured party to its former state through the declaration of trust with an attendant accounting along with an award for damages. That basic approach is appropriate in this case. However, cannot at this time delineate the specifics of the trust or calculate the quantum of damages and therefore reserve same. [68] At trial it was agreed amongst counsel that the quantification of any accounting or damages should be left to another day and those matters should be reserved. In addition, will want to hear submissions as to what exactly is the interest of Tarragon which is held in trust. Is it entitled to the entire lease interest or should it be restricted to what was agreed upon in the proposed farmout agreement? Accordingly, reserve the stipulated matters and if counsel are unable to resolve them, they shall have the Local Registrar arrange date when further submissions may be presented. III The Rule Against Perpetuities [21] The learned trial judge adopted the classic statement of the modern rule as stated by Professor J.C. Gray:[10] 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. [22] The learned author of Halsbury's Laws of England, (4th ed.), Volume 35, summarizes the rule in the following passage at p. 615: 1008. An executory devise or other future limitation to be valid must vest, if at all, within life or lives in being and 21 years and possible period for gestation after; it is not sufficient that it may vest within that period. It must be good in its creation, and, unless it is created in such terms that it cannot vest after the expiration of life or lives in being and 21 years and the period allowed for gestation, it is not valid, and subsequent events cannot make it valid. [Footnotes omitted.] [23] The exact period of 21 years is the full extent of the perpetuity period in all cases where no life is indicated for the purpose, or where every life indicated has predeceased the testator.[11] [24] The term "perpetuity" literally means something that lasts forever, but as used in this context it is generally used to refer to limitations of contingent future interests which may or will not vest beyond the period prescribed by the rule. In this context perpetuity is limitation upon the common law right of every person to dispose of his land to any other person at his or her discretion. This has led some writers to suggest that the rule against perpetuities is really rule against remoteness of vesting rather than rule against perpetuities.[12] [25] Before the enactment of the Statute of Wills, 32 Hen. VIII and the Statute of Uses, 27 Hen. VIII, c. 10 (1535) in England, it appears that no question of remoteness in the creation of estates and interests had come before the English Courts. [26] Executory limitations, like other classes of future interest, were ordinarily created and were common testamentary method of providing for the future disposition of testator's property. Such executory limitations created by will were, as to real property, called executory devises and were employed in creating future interests which the strict common law rules of conveyancing did not countenance. The common law did not allow remainder or other legal estate to be limited after fee. But under the Statute of Uses, and even before they were legalized by that statute, species of limitations known as "shifting or springing uses" was recognized, which permitted ulterior estates to be created to arise on the defeasance of prior estates in the same property, contrary to the strict rules of the common law. [27] The Statute of Uses provided that the legal title should follow the beneficial interest and vest in the cestuis que use "after such quality, manner, form and condition as they had before in or to the use confidence or trust that was in them". Prior to the statute, deeds of bargain and sale and of covenant to stand seised did not operate to convey the title, but only the right to beneficial use. As affecting the land itself, they were regarded as executory contracts. At law they were of no force as conveyances. In equity they were enforced by requiring the person in whom was the legal title to hold that title for the benefit of the person to whom the right of use had been transferred. The result of the Statute of Uses was the coming into use of several new modes of conveying legal estates that were wholly unknown to the common law. [28] After the passage of the Statute of Wills and following the analogies furnished by conveyances to uses and in support of the intention of the testator, Courts gradually came to recognize the validity of limitations not permitted in conveyances under the common law. [29] Executory devises came into use after the Statute of Wills and were allowed out of indulgence to testators, that they might, without the intervention of trustees to preserve remainders, establish future interests in strict settlement beyond the reach of those who had the prior estates. The original purpose of such devises was to carry into effect the will of the testator and give effect to limitations over which could not operate as contingent remainders by common law rules. Such stringent rules were derived from principle of English feudal law that an estate of freehold must be created to commence immediately.[13] In the period after passing of the Statute of Uses and Statute of Wills, the transfer of estates to take effect in the future began to encounter restrictions in various ways. Express covenants against alienation were introduced but English Courts of the day thwarted this means of preserving family estates by refusing, on grounds of public policy, to enforce such covenants. [30] Executory limitations were another method adopted to further the objects of the landowning class. Under the early law and the Statute of Users these limitations were created by deed as springing and shifting uses which had various aspects of perpetuity. [31] means of limiting their scope was found in the "rule against perpetuities" so that shifting or springing use, to be valid, must not by possibility be so limited that it will not take effect within the time allowed by this rule. [32] As matters developed, the rule's usual application and effect was to prohibit or invalidate attempts to create by limitation, whether executory or by way of remainder, future interests or estates, the vesting of which is postponed beyond the prescribed period. [33] We do not find it necessary to trace the historical development of this rule against perpetuities in connection with executory limitations but it is important to observe that the rule had its origin in reference to executory devises of chattels real, and may be traced to early English decisions that certain testamentary decisions were void as against public policy because the estates devised were inalienable or indestructible. The objection of remoteness was not at first suggested but over time it became the doctrine now embodied in the rule. [34] The origins of the rule must be passed upon and considered in light of the economic, social and political forces at work in seventeenth century England.[14] [35] The genesis of the rule that became known as the rule against perpetuities is the Duke of Norfolk's Case, 22 Eng. Rep. 931 (1682); Chan. Cas. (1681-1698). In this case Lord Nottingham held that the validity or invalidity of future interest depended on its remoteness, and not on the nature of the contingency, and that the contingency was required to occur within life or lives in being. [36] In this case the Earl of Arundel and Surrey created two trust indentures that were intended to provide for his family, and more particularly to guard against the consequences of the insanity of his eldest son Thomas. After reserving life estates to himself for life and then to his widow, the Earl gave to named trustees term of 200 years, which was followed by remainders to his younger children. [37] Under the trust, the income derived from the barony of Grostock was to go to the Earl's second son, Henry, and his issue during the life of the eldest son Thomas; but if Thomas should die without having issue in the lifetime of Henry, and if further, Henry should become the Earl by inheritance, Henry was to have no further rights to the rents and profits, which were then to go to the third son, Charles. In distilled form, these were the relevant limitations of the trust: an absolute equitable interest in the term in Henry, followed by springing executory interest in Charles, conditioned on the happening of two events which would have to occur within Charles' life if he we to take anything. [38] Henry succeeded to the Earldom and became Duke of Norfolk. He challenged the interest of his brother Charles. [39] With that turn of events Charles brought bill in Chancery to demand the benefit of the term because the specified conditions on his taking had been fulfilled. The Duke of Norfolk ("Henry") resisted the claim on the ground that the gift to Charles was in the nature of perpetuity and therefore void. [40] The issue presented to Lord Nottingham was whether the gift to Charles was perpetuity. If so, Henry would be lawfully entitled to the interest in the barony of Grostock given him by his father's trust because the gift to Charles would be void. [41] Although Charles' claim found support in the clear intention of his father, most of the lower court judges who first heard the case held that the interest was void. [42] When the case finally came before the Chancellor, the Earl of Nottingham in 1681, he called upon three judges of the common law courts to advise him. The clash between equity and the common was demonstrated in this case. [43] The common law judges were of the opinion that the impugned interest was in the nature of perpetuity and therefore void. Lord Nottingham accepted the argument that the contingency upon which the disposition of the property turned was certain to happen within short period of time so it would not be correct to characterize the gift as perpetuity. [44] In his judgment, Lord Nottingham did refer to certain types of conveyances that he would be unwilling to countenance because they tended in the direction of perpetuity.[15] But when pressed to respond to the fears of the other judges, he declined to tell them where he would draw the line:[16] Object. They will perhaps say, where will you stop, if not at Child and Bayly's [79 Eng. Rep. 393 (1618)]Case? Answ. Where? why everywhere, where there is not any Inconvenience, any Danger of Perpetuity; and whenever you stop at the Limitation of Fee upon Fee, there we will stop in the Limitation of Term of Years. No Man ever yet said, Devise to Man and his Heirs, and if he die without Issue, living B. then to B. is naughty Remainder, that is Pell's and Brown's [Cro. Jac. 592, 79 Eng. Rep. 504 (1620)]Case. Now the Ultimum quod sit, or the utmost Limitation of Fee upon Fee, is not yet plainly determined; but it will be soon found out, if Men shall set their Wits on Work to contrive by Contingencies to do that, which the Law has so long laboured against; the Thing will make it self evident, where it is inconvenient, and, God forbid, but that Mischief should be obviated and prevented. have done with the legal Reasons of the Case: It is fit for us here little to observe the equitable Reasons of it; and think this Deed is good both in Law and Equity; and the Equity in this Case is much stronger, and ought to sway Man very much to incline to the making good this Settlement, if he can. Certain aspects of this case and the early rule are summed up by Haskins in the following statements:[17] Nottingham did refer to certain types of conveyances that he would be unwilling to countenance because they tended in the direction of perpetuity. Nottingham noted with approval the decision in Pells v. Brown [supra], where the fee simple was cut short by an executory interest in the lifetime of living person: such "Fee upon Fee" was clearly permissible. Another case cited in Nottingham's opinion was Cotton v. Heath [1 Roll. Ab. 612, Pollex 26, Eng. Rep. 500 (1638)], which involved an 18-year term to followed by remainder to for life, remainder to the first issue of for life. The Chancellor stated that "this Contingent upon Contingent was allowed to be good, because it would wear out in short Time." [Id. at 35, 22 Eng. Rep. at 952]. Wood v. Sanders, [1 Ch. Cas. 131, 22 Eng. Rep. 728 (1669)], decided in 1669, was also cited with approval by Nottingham because the case involved contingency that would take effect within two lives in being. Nottingham applauded Wood v. Sanders, which was decided by Sir Orlando Bridgman himself and the Earl referred to Bridgman with "great Reverance and Veneration for his Learning and Integrity." [3 Ch. Cas. at 36, 22 Eng. Rep. at 953]. Lord Nottingham evidently wished to permit some typing up of land by the "dead hand" and was willing to concede that the ability to control the future ownership of land for at least one lifetime, and probably two, was something the law should allow. What evolved from his decision, however, was not rule for perpetuities, but rule of perpetuities. Admittedly, Charles' interest in the term for years was not destructible, but neither should it be void because Charles' interest would "wear itself out" in single lifetime. Lord Nottingham's resolution of the perpetuities problem was the kind of decision that would please Tory landowners of the 1680's. These landowners did not want complete destructibility, which could ruin the family estate in generation. They did want freedom to transfer land, but they also wanted some means of protecting the family from lunatics, wastrels, gamblers, and the like by maintaining some degree of control over the future disposition of the land. Lord Nottingham provided them with compromise between complete alienability and the power to tie up land for perpetuity. Nottingham's successors were to give even more power to the dead hand, so that in the end the conveyancers and their clients prevailed. What the Chancellor did was consistent with the thinking behind Manning's Case [8 Co. 94b (1609)], which validated certain future interests in terms for years and, more importantly, with the logic of Pells v. Brown, which had upheld the indestructibility of executory interests. The Chancellor's definition of perpetuity as an interest that might exceed the duration of some measuring life was but small step from the modern definition of perpetuity as an interest that will not necessarily take effect within life or lives in being and twenty-one years. The judges of succeeding decades were to formulate the rule in its modern form, but Lord Nottingham effectively took the first step in holding Charles' interest to be valid. [45] Although Lord Nottingham declined to draw the line in precise terms in the Duke of Norfolk's Case, supra, his definition of perpetuity as an interest that might exceed the duration of some measuring life ultimately led to the modern definition of perpetuity as an interest that will not necessarily take effect within life or lives in being and twenty one years. [46] Lloyd v. Carew (1697), Show. P. C. 137 established that for certain purposes the postponement of the time of vesting of future estate might be deemed reasonable beyond life or lives in being and could be allowed in the case of an infant. Thus, the conclusion was reached that the period of 21 years could be period in gross and one not dependant on the minority of any person. Finally, the rule was extended so as to cover the time necessary for the birth of posthumous children. It would appear that 21 years was introduced to provide for the minority of child born, and nine or ten months was allowed to let in posthumous child.[18] In recent times this approach has spawned the suggestion that the duration of male life in being should be defined as his reproductive capacity, including any post-mortem period during which his sperm remains fertile in sperm bank, in order to account for the possibility of child through modern medical techniques.[19] [47] In Cadell v. Palmer, [1833] VII Bligh N.S. 745, Eng. Rep. 745, the Court of Chancery essentially reaffirmed Lloyd v. Carew, supra, at p. 759: [240] The Lord Chancellor.—I propose to move the House to concur in giving judgment according to the unanimous opinion of the Judges now delivered. The two last questions were put with view to the arguments at the bar, and the origin of the rule against perpetuity, as applicable to executory devises. The rule originally introduced was limited to life, then to lives in being, and afterwards was extended, for convenience, to the end of the infancy of the children of the person to whom the life estates were limited. The rule might have been considered as established by decision of this House, in the case of Lloyd v. Carew [supra]. As to the doubt which has been expressed, whether the rule has been adopted in the practice or opinion of conveyancers, the passages cited from Fearne on Executory Devises, in the opinion just delivered, shew that it was the settled opinion of that great conveyancer and lawyer, that the term of twenty-one years after lives in being, might be added as term in gross. Mr. Butler, the able editor of Mr. Fearne's book, in his commentary upon this question, confirms the opinion of his author. The opinion of Lord Mansfield was the same; nor is the doctrine impeached by the dicta of Lord Kenyon in Long v. Blackall [7 T.R. 100]. The doctrine may now be considered as finally settled, and the judgment, in accordance with the opinion delivered, ought to be affirmed. Judgment affirmed. [48] In Canadian Long Island Petroleums Ltd. et al v. Irving Industries(Irving Wire Products Division) Ltd. et al, 1974 CanLII 190 (SCC), [1975] S.C.R. 715, the Court held that clause in an agreement between joint owners governing operation and development of certain oil properties did not engage the operation of the rule. Under this clause in the agreement each party was given the right of first refusal to acquire the other party's participating interest. Since each party argued that upon the occurrence of certain event, which was within its own control, the other party would have first right of purchase for 30 day period. Given the language of the governing clause, the Court held that the agreement was personal and did not create an interest in land to which the rule could be applicable. [49] In the course of his reasons, Martland J., speaking for the Court, distilled the history of the rule in the following passages at pp. 726-27: In considering the application of the rule against perpetuities in the circumstances of the present case it is useful to consider its background. The history of the rule is outlined in Cheshire's Modern Real Property, 10th ed., at pp. 234 and 235, as follows: The history of the rules whereby settlors have been prevented from limiting remote interests, is the history of conflict between two antagonistic ideas. On the one hand there is the desire of the man of means to regulate the future enjoyment of his property for as long period as possible. The right of making settlement or will is potent weapon in the hands of declining man, and unless human nature is transformed, the opportunity it offers of fixing the pecuniary destinies of the coming generations will not be neglected. landowner, unless he gives thought to the fiscal consequences, is not always content to leave large estate at the free disposal of son. Old age especially, satisfied with its own achievements and often irritated by the apparent follies of degenerate time, is inclined to restrain each generation of beneficiaries within close limits, and to provide for series of limited interest. landowner views the free power of alienation with complacency when it resides in his own hand, but he does not feel the same equanimity with regard to its transfer to others. "But the freedom of alienation and devise was not congenial to the spirit in which great landowners viewed their land. To preserve their family name and position, 'to keep the land in the family,' seemed to them desirable and even laudable object, to restrain any individual holder of the land from dealing with it so as to interfere with the interest of subsequent generations of the family in the family land was necessary means to this end. To contrive restraints on alienation and succession which the law would enforce, to ascertain the furthest limits up to which the law would allow the grasp of the dead hand to be kept on the hand of the living, was the task set by the great landowners before their legal advisers." (Scrutton, Land in Fetters, p. 108.) This aspiration, however, soon aroused the antagonism of the courts. The law is moved, and from the earliest times always has been moved, by deep-seated antipathy to this human love of power. It is one thing to permit the free power of alienation, another to allow it to be exercised to its own destruction. The view of the law is that no disposition should be allowed which tends to withdraw land from commerce, and in pursuance of this policy two rules have emerged which have successfully prevented the particular evil of "perpetuities," though they are essentially different from each other in nature. The first, directed against inalienable interests and often called the old rule against perpetuities, forbids the creation of any form of unbarrable entail; the second, the modern rule against perpetuities, invalidates an interest that may vest at too remote date in the future. [50] In Scurry-Rainbow Oil Ltd. v. Galloway Estate, 1993 CanLII 7025 (AB QB), [1993] W.W.R. 454 (Alta. Q.B.), Hunt J. (now J.A.) addressed the question whether certain gross royalty trust agreements were void under the rule against perpetuities. In the course of her reasons she referred to the policy behind the rule in the following passages at pp. 509-10: 169 It is also worth considering the purpose behind the Rule and its relationship to decisions as to when the Rule has been offended. Morris and Leach, The Rule Against Perpetuities, 2nd ed. (London: Stevens Sons, 1962), have observed at p. 26: The Rule against Perpetuities is one of those precepts of judge-made law which, in the interest of producing workable and satisfactory law fashioned in the public interest, declares that certain intentions of settlor or testator may not be carried out. In any system of private property prohibitory rule is not lightly to be invoked. The prohibition should be imposed only upon interests the creation of which would offer real threat to the public interest. The method by which or the words in which person seeks to create particular series of interests should be immaterial; if the series of interests ties up the property for too long, the offending interests should be held void, but if the series of interests is found not to violate sound policy, they should be held valid. There is no justification for declaring that given series of interests can be created by one method or one formula of language and not by others; the policies underlying the Rule against Perpetuities have no relation to types of instruments or forms of expression. (emphasis added) 171 There is nothing in the nature of these royalty arrangements that in any way prevents the development and utilization of the lands. Therefore, the policy behind the Rule is not offended. IV Object and Purpose of the Rule [51] Given the historical background of the rule and in light of the social, economic and political times in which it was formulated, the object and purpose of the rule is obvious. However, we find it convenient to restate the basis for the rule. [52] The underlying and fundamental purpose of the rule is founded in the public policy of preventing the fettering of the marketability of property over long periods of time by indirect restraints upon its alienation. The general purpose of the rule is to prevent the tying up of property to the detriment of society in general. [53] The exclusion of property from the stream of commercial development for extended periods of time was perceived by the law as public evil. Since alienability is the object, the destruction of future interests is the means employed to obtain this object. The rule against perpetuities was developed as device to cut out the limitations which, if they were allowed to take effect, would produce the consequences which were sought to be avoided. Since this approach was adopted particularly in relation to devolution of estates, the judge-made rule limited the extent to which the "dead hand" could control contingent devolution. [54] The basis for the rule is succinctly summed up in Halsbury's Laws of England, supra, in this way at p. 605 at para. 1001: 1001. Basis of the rules affecting perpetuities. The rules of law affecting perpetuities are based upon considerations of public policy. Although the principle of private ownership requires that an owner of property is to have power to dispose as he thinks fit, either during life or on death, of his whole interest in the property he owns, public policy requires that the power should not be abused. Accordingly, from early times, the law has discouraged dispositions of property which either impose restrictions on future alienations of that property, or fetter to an unreasonable extent its future devolution or enjoyment. [Footnote omitted] [55] In footnote 1, the learned author refers to these considerations of public policy articulated in early decisions: These considerations were stated in Stanley Leigh (1732) Wms 686 at 688 per Jekyll MR, to be 'the mischief that would arise to the public from estates remaining for ever or for long time inalienable or untransferable from one hand to another, being damp to industry and prejudice to trade, to which may be added the inconvenience and distress that would be brought on families whose estates are so fettered'. See also Fearne's Contingent Remainders (10th Edn) 562 et seq, Butler's notes; Lewis's Law of Perpetuity 3; Duke of Norfolk Howard (1683) Vern 163 at 164, HL; Taylor Atkyns Horde (1757) Burr 60 at 115, 116 per Lord Mansfield CJ; Duke of Marlborough Earl Godolphin (1759) Eden 404 at 416; Re Parry and Daggs (1885) 31 ChD 130 at 134, CA per Fry LJ; Re Ashforth, Sibley Ashforth [1905] Ch 535 at 542 per Farwell J; Re Earl of Stamford and Warrington, Payne Grey [1912] Ch 343 at 367, CA; Re Leek, Baron Darwen Leek [1969] Ch 563 at 585, [1968] All ER 793 at 800, 801, CA; Gray's Rule against Perpetuities (4th Edn) 268; Morris and Leach's Rule against Perpetuities (2nd Edn) 26-29. Rule Prevailing Over Intention [56] The common law rule against perpetuities prevails over intention because it is not rule of construction, but rule of property. Given the nature of the rule, and under strict mechanistic application of the rule, it is to be applied irrespective of the question of intention. This means that in the field of administration of estates, the intent of the testator, if it runs counter to the rule, is defeated. In some instances the cy pres doctrine had been invoked to ameliorate the harshness of the rule against perpetuities. [57] Accordingly, the orthodox rule against perpetuities is not to be tested by actualities, but by possibilities. Vesting within the period must be evident at that time without regard to subsequent events. One of the essential elements of the orthodox rule is that at the time the future interest is created, it must appear that the condition precedent to vesting must necessarily happen, if it happens at all, within the prescribed period. mere possibility, or even probability, that the estate or interest may vest within the time is not enough. [58] Given the historical object and purpose of this judge-made rule against perpetuities, the appellants argue that the principal justification for application of the rule does not exist in this case and accordingly the rule should not be applied to the "top lease" in question. [59] Although number of other grounds of appeal were raised and fully argued, this threshold issue proceeds on the assumption that rigid and mechanistic application of the rule would render the top lease void. Having raised this threshold issue in this way, the appellants stress the trial judge's finding that the policy behind the rule was not offended by this top lease.[20] [60] The respondents contend that this judge-made rule is of such extensive application and so firmly imbedded in our system of jurisprudence as not to be disturbed except by statute. [61] We now turn to consideration of this threshold issue. As earlier noted in our consideration of the object and purpose of this rule, it was designed to further alienability and to prevent the tying up of property within the family line for generation on generation. The exclusion of property from the channels of commercial development for extended periods of time was considered to be public evil. [62] Since the judge's finding that the policy behind the rule is not offended by the "top lease" in this case, we only need to refer to its commercial background in brief terms. In Meyers v. Freeholders Oil, supra, the Supreme Court of Canada outlined the nature of the Freeholders "top leasing" programme that dates back to the 1950s. As earlier noted, the evidence at trial indicated that there are hundreds of such leases in existence in Saskatchewan leases that might run afoul of the orthodox rule notwithstanding the fact that parties and their successors relied upon them for fifty years. [63] "Top leases" are an accepted business practice in the oil and gas industry. They increase actual drilling and competitiveness because oil companies whose leases have been "topped" have greater incentive to drill on leased lands. If they do not, they stand to lose the lease and make way for someone else to drill. [64] This top leasing programme is not limited to Saskatchewan. Such leases are considered accepted business practice in other jurisdictions and one can trace their origin to the American oil and gas industry which pre-dates the development of the industry in Western Canada. In Nantt v. Puckett Energy Co., 382 N.W. 2d 655 (N.D. 1986), the North Dakota Supreme Court described top leasing as "useful and widespread business practice in the oil and gas industry in North Dakota, as well as other regions". [65] In the case before this Court, the Freeholders "top lease" does not offend the policy behind the rule against perpetuities. The provisions in this "top lease" encourage commercial development and drilling activity on the land. In commercial sense, the provisions do not clog alienation. [66] Given the development of top leasing as useful and desirable type of transaction in the oil and gas industry, the application of the orthodox rule against perpetuities does not reflect modern realities. When the rule was formulated by judges in earlier times, top leases in the oil and gas industry were not contemplated. [67] It could not have been intended to apply to such transactions and no worthwhile social or economic purpose is served by applying it to this type of transaction in the oil and gas industry. When the rule is transposed from its original setting and is placed among interests unknown at the time, the appellants contend that it must be justified by new conditions before being permitted to strike down considered transactions of this nature. [68] The appellants argue that these factors militate against rigid mechanistic operation and application of the rule in the present case. Since the "top lease" encourages commercial development in the industry rather than offending the object and purpose of the rule, they argue that its application cannot be justified. In this case the "lease" which has existed since 1950, was entered into in good faith and acted upon by all the parties involved for many decades. [69] In many instances exceptions have been created to this rule. Speaking generally, some of these exceptions might well have the effect of allowing an interest to remain uncertain beyond the rule period. Nevertheless, several exceptions of this type are well established, such as gifts to charities, rights of entry, possibilities of reverter, resulting trusts, and covenants running with the land: Also see Halsbury's Laws of England, supra, p. 612, para. 1006, Unobjectionable perpetual interests. [70] Furthermore, application of the "wait and see" doctrine would validate the impugned top lease in this case because the interest actually vested within the perpetuity period. Dissatisfaction with the harshness of the "certainty of vesting" requirement under the orthodox rule of perpetuities spawned what has become known as the "wait and see" doctrine. In some jurisdictions this doctrine has been adopted by statute.[21] In other jurisdictions the dissatisfaction with the harshness of the "certainty of vesting" requirement led some courts, even in the absence of statute modifying the rule, to relieve against such severity by substituting for the "certainty of vesting" requirement, rule permitting consideration of events occurring after inception of the instrument which are relevant to the vesting of future instrument, so that if the contingency upon which the interest is limited actually occurs within the period of the rule, the interest is valid.[22] [71] We now consider whether it is open to this Court to consider the policy considerations that gave rise to the rule. Is the Court bound to apply the rule although the "top lease" in question does not offend the policy of the rule and in fact has the opposite effect by encouraging commercial development and activity on the land? [72] In Meyers v. Freeholders Oil, supra, the Supreme Court was not faced with challenge to the Freeholders top lease. The Court was required to pass on other issues that have been canvassed earlier in these reasons. [73] The Supreme Court of Canada has considered the Rule in at least 28 cases.[23] In each of these cases the Court merely applied the Rule or considered whether the impugned conveyance fell within the rule. It does not appear that the Supreme Court has considered the validity of the policy considerations that spawned the Rule which must be considered in light of modern commercial conditions. Since the socio-economic and political conditions which gave rise to the creation of the Rule no longer exist, we consider that it is open to this Court to consider the application of such rule in the context of a commercial instrument such as the top lease in question. [74] We find it convenient to consider several illustrations of judicial intervention to modify or do away with significant judge-made rules. [75] In Arthur Hall Co. (a firm) v. Simons et al, [2000] All E.R. 673 (H.L.), the House of Lords held that lawyers are no longer entitled to enjoy immunity from suit in their conduct as advocates in criminal and civil proceedings. This decision took English law in new direction, ending the ancient immunity of barristers or advocates, called "forensic immunity". This departure from the rule of "forensic immunity" was significant particularly in light of the decisions in Rondel v. Worsley, [1967] All E.R. 993 (H.L.) and Saif Ali v. Sydney Mitchell Co. et al, [1978] All E.R. 1033 (H.L.), which had reaffirmed the rule. [76] The Law Lords revisited the historical and public policy rationale for forensic immunity and then proceeded to deal with modern conditions that militated against continuation of the rule. In the circumstances we do not find it necessary to canvass the detailed reasons for abrogating the judge-made rule of "forensic immunity". It is significant that after looking to practices adopted in Australia, New Zealand, the European United and the United States, the Law Lords found the decision of Krever J. in Demarco v. Ungaro (1979), 1979 CanLII 1993 (ON SC), 95 D.L.R. (3rd) 385 (Ont. H. Ct. Jus.), to be persuasive. Speaking generally, that decision determined that there was no evidence that the work of the Canadian Courts required such immunity or would be hampered without it. After reviewing the background to the rule of forensic immunity and considering the various factors in the context of present day conditions, Krever J. concluded that the "forensic immunity" rule was inappropriate in Canadian law. [77] The House of Lords also looked to treatment of other professionals. Both Lord Steyn and Lord Hoffmann noted that there are many other professions where people have conflicting duties, and make difficult decisions in difficult circumstances.[24] There could be no justifiable exception for lawyers in light of the significant liabilities that doctors face. [78] After determining that continuation of the rule of "forensic immunity" could no longer be justified, the Law Lords turned to the question whether abolition of this judge-made immunities rule was better left for Parliament. In the opinion of Lord Steyn, it would be an abdication of responsibility to leave this matter to the Parliament. This made clear in the following passage:[25] The background to this provision is, of course, the judicially created immunity of barristers, which in 1967 was held by the House to be founded on public policy. And it will be recollected that Lord Reid observed that public policy is not immutable. Against this background the meaning of 62 is clear. It provides that solicitor advocates will have the same immunity as barristers have. In other words, the immunity of solicitors will follow the fortunes of the immunity of barristers, or track it. Section 62 did not either expressly or by implication give Parliamentary endorsement to the immunity of barristers. In these circumstances the argument that it is beyond the power of the House of Lords, which created the immunity spelt out in Rondel v. Worsley, to reverse that decision in changed circumstances involving different balance of policy considerations is not right. Should the House as matter of discretion leave it to Parliament? This issue is more finely balanced. It would certainly be the easy route for the House to say 'let us leave it to Parliament'. On balance my view is that it would be an abdication of our responsibilities with the unfortunate consequence of plunging both branches of the legal profession in England into state of uncertainty over prolonged period. That would be disservice to the public interest. [79] In Morguard Investments Ltd. v. De Savoye, 1990 CanLII 29 (SCC), [1990] S.C.R. 1077, the question was whether recognition should be given by the Courts in one Canadian province to the judgment of Court in another Canadian province in personal action brought in the latter province at time when the defendant did not live there. [80] Canadian jurisprudence had long accepted the rule in Emanuel v. Symon, [1908] K.B. 302 (C.A.) which refused to enforce the judgment of an Australian Court in England. In Symon, the Court held that the defendant either had to be in the jurisdiction or have submitted to the English Courts to enforce judgment. In the course of his extensive reasons, La Forest J., speaking for the Court, pointed out that there are many cases throughout Canada where two persons have entered into contract in one province, frequently when both were resident there at that time, but the plaintiff found it impossible to enforce judgment given in that province because the defendant had moved to another province when the action was brought. [81] After reviewing all the relevant considerations in the context of modern commerce, La Forest J. concluded that the earlier rules with respect to reciprocal enforcement had to be adjusted in light of changing world order. This is made clear in the following passages at pp. 1097-98: The approach adopted by the English courts in the 19th century may well have seemed suitable to Great Britain’s situation at the time. However, this may not have been perceived as too serious difficulty by English courts at time when it was predominantly Englishmen who carried on enterprises in far away lands. As well, there was an exaggerated concern about the quality of justice that might be meted out to British residents abroad. The world has changed since the above rules were developed in 19th century England. Modern means of travel and communications have made many of these 19th century concerns appear parochial. The business community operates in world economy and we correctly speak of world community even in the face of decentralized political and legal power. Accommodating the flow of wealth, skills and people across state lines has now become imperative. Under these circumstances, our approach to the recognition and enforcement of foreign judgments would appear ripe for reappraisal. Certainly, other countries, notably the United States and members of the European Economic Community, have adopted more generous rules for the recognition and enforcement of foreign judgments to the general advantage of litigants. [82] Applying this approach, La Forest J., speaking for the Court, held that in modern times, and in Canadian context, the restrictive rule articulated in Emanuel v. Symon, supra, was no longer appropriate. The extreme inequities of having enforcement barred on the technicalities of jurisdiction could not be supported in the context of federal system of government. [83] The American experience with "on completion" leases is significant. This type of lease is entered into, but provides that its term is not to commence until after notice to the lessee that the construction of the building is complete or substantially complete and ready for occupancy. This condition leaves the lessor and lessee exposed to the bare possibility, at the time the lease is executed, that the estate thereby granted will not commence within the prescribed period of the Rule. This is the case even if the lease provides for construction of the building with due diligence.[26] [84] These on completion leases have received mixed treatment by American courts. Some courts have held that such "on completion" leases violate the Rule and others have upheld on completion leases.[27] In Wong v. DiGrazia, [1963] 386 P. 2d 817; 35 Cal. Rptr. 241, the Supreme Court of California was faced with an attack on such lease. It arose in this way. When dispute developed as to which party should pay for an expensive sprinkler system that was required by the San Francisco Building Code, the lessor relied on the rule against perpetuities to avoid the lease and invalidate the agreement. In rejecting this argument, the Court held that the nature of the circumstances showed that the contemplated building was to be completed within reasonable time and that such reasonable time was less than 21 years. Given this factual finding, the Court determined that the lessee's interest would either vest or fail during the statutory period and any breach of the leasing agreement would be remediable within such period. [85] Tobriner J., speaking for the Court, addressed the question how the Court should consider the rule in the modern context. The Court emphasized that the Rule must be considered and applied in light of its objectives and the commercial considerations of modern society. The following passages at p. 823 stress that the rule cannot be justified in modern commercial context by policy considerations behind its formulation and creation in the 17th century: The rule against perpetuities originated as rule of property law during the mercantilistic period of English history. Thus the "celebrated decision which marks the beginning of the modern rule against perpetuities," The Duke of Norfolk's Case, was decided in 1682. (3 Simes Smith, The Law of Future Interests (2d ed. 1956) 1211 at p. 91.) The social order of 1682 demanded as to its property transactions certainty in title and fixation of ownership; the idea of titles which had not vested or ownership which remained inchoate was necessarily anathema. Indeed, the basic purpose of the rule was to limit family dispositions, and in that context the period of lives in being plus 21 years served as proper measurement. Only later by an overextension of nineteenth century concepts did the courts apply the rule to commercial transactions. (See Leach, Perpetuities: New Absurdity, Judicial and Statutory Correctives (1960) 73 Harv. L. Rev. at p. 1322.) Rules which bear such birthmarks assume different aspect when they are applied to contracts or leases in modern society whose economic structure rests upon planning for the future and whose life blood is credit. Since the rule against perpetuities was born in society which extolled the tight ownership of inherited real property, it does not facilely operate as to commercial agreements in today's dynamic economy. "The period of lives in being and 21 years, which works admirably with regard to gift transactions for family purposes, has no significance in the world of commercial affairs," (Leach, Perpetuities in Nutshell (1938) 51 Harv. L. Rev. 638.) [1] Certainly our function is not to interpret the rule so as to create commercial anomalies. lease to commence upon completion of the leased building is common business arrangement. Such clause is standard provision of leases in shopping centers, which have been and are being constructed throughout the country; the parties to such transactions do not suspect that the rule will be extended to invalidate their agreements; even the attorneys who draw the leases may excusably not anticipate such application. Surely the courts do not seek to invalidate bona fide transactions by the imported application of esoteric legalisms. Our task is not to block the business pathway but to clear it, defining it by guideposts that are reasonably to be expected. As was pointed out in (1959) 47 Cal. L. Rev. 197, 200: "[A] strict and literal application of the Rule Against Perpetuities to lease of this nature can do little to serve the basic purpose behind the rule and can result only in placing an unnecessary commercial transaction." We therefore do not propose to apply the rule in the rigid or remorseless manner characterized by some past decision; instead we shall seek to interpret it reasonably, in the light of its objectives and the economic conditions of modern society. [Footnotes omitted.] In 1987 the Saskatchewan Law Reform Commission recommended abolition of the Rule. This is made clear in the letter of June 3, 1987 accompanying its Report to the Minister of Justice: The Rule Against Perpetuities and the related Rule against Accumulations constitute complex and technical body of law designed to meet the needs of bygone era. Today, the Rules are often source of "pitfalls for the unwary", and unpredictable in impact. On occasion, discovery of perpetuities problem has led to protracted and expensive litigation from which no one really benefits. The very complexity of the Rules may have served as disincentive to review them. Nevertheless, Alberta, British Columbia, and Ontario have attempted to reform the Rules, and Manitoba has abolished the. The Commission, after an examination of the Rules as they apply in Saskatchewan, has also concluded that they should be abolished. [86] The respondents vigorously argue that this judge-made rule against perpetuities is of such extensive application and so firmly imbedded in our legal system that it should not be modified or disturbed except by statute. They submit that it is the exclusive province of the legislature to abolish or limit the application of the rule. [87] The respondents further point to the fact that Bill No. 42 An Act to abolish the Rules Against Perpetuities and The Accumulation Act and to enact Consequential Amendments was introduced in 1995. When presented for second reading, the debate was adjourned on April 25, 1995 and apparently the matter died on the Order paper. The tone of the short debate indicated some concern with the complete abolition of the rules as recommended by the Law Reform Commission. There was also an expressed appreciation of the need to improve competitiveness in the oil and gas industry. [88] In support of their vigorous argument that matters of this nature are best left to the Legislature, the respondents point to the words of caution from the Supreme Court of Canada in R. v. Salituro, 1991 CanLII 17 (SCC), [1991] S.C.R. 654 at pp. 666 and 670 where Iacobucci J. stated:[28] (2) Limits on the Power of the Courts to Change the Common Law In keeping with these developments, this Court has signalled its willingness to adapt and develop common law rules to reflect changing circumstances in society at large. In four recent cases, Ares v. Venner, 1970 CanLII (SCC), [1970] S.C.R. 608, Watkins v. Olafson, supra, R. v. Khan, 1990 CanLII 77 (SCC), [1990] S.C.R. 531, and R. v. Seaboyer, 1991 CanLII 76 (SCC), [1991] S.C.R. 577, this Court has laid down guidelines for the exercise of the power to develop the common law. The common theme of these cases is that, while complex changes to the law with uncertain ramifications should be left to the legislature, the courts can and should make incremental changes to the common law to bring legal rules into step with changing society. However, brief review of these cases is warranted. Conclusion These cases reflect the flexible approach that this Court has taken to the development of the common law. Judges can and should adapt the common law to reflect the changing social, moral and economic fabric of the country. Judges should not be quick to perpetuate rules whose social foundation has long since disappeared. Nonetheless, there are significant constraints on the power of the judiciary to change the law. As McLachlin J. indicated in Watkins, supra, in constitutional democracy such as ours it is the legislature and not the courts which has the major responsibility for law reform; and for any changes to the law which may have complex ramifications, however necessary or desirable such changes may be, they should be left to the legislature. The judiciary should confine itself to those incremental changes which are necessary to keep the common law in step with the dynamic and evolving fabric of our society. [89] In Salituro, supra, the Supreme Court of Canada affirmed the decision of the Ontario Court of Appeal which refused to apply the common law rule of spousal incompetence in the case of spouses who are separated without reasonable hope of reconciliation. [90] The Supreme Court held that while there are changes to the common law that are best left to the legislature, the change made by the Ontario Court of Appeal in the case before it was not an example of such change. The Supreme Court rejected the argument that the various amendments which have been made to s. of the Canada Evidence Act, R.S.C., 1985, c. C-5, since 1906 indicate that Parliament had effectively turned its mind to the common law rule making spouse an incompetent witness and that the rule must therefore have been effectively adopted by Parliament. Put another way, the Court rejected the contentions that the pattern of legislation showed parliamentary intention to retain the common law rule making spouse an incompetent witness in the circumstances of the case. [91] In Tolofson v. Jensen, 1994 CanLII 44 (SCC), [1994] S.C.R. 1022, the Court was faced with somewhat similar situation in civil action arising from an automobile collision that occurred in Saskatchewan. The plaintiff Tolofson was passenger in car owned and operated by his father. He was seriously injured in collision with vehicle driven by the defendant Jensen, who was resident of Saskatchewan and his vehicle was registered and insured in Saskatchewan. The Tolofsons were residents of British Columbia. [92] The plaintiff brought action for damages in British Columbia. The parties operated on the assumption that the action was barred under Saskatchewan law by virtue of the twelve-month limitation period in that province. [93] In the course of preliminary proceedings, the question arose whether the lex fori governed or whether you look to the lex loci delicti to determine whether an actionable wrong was established. The Court decided that the lex loci delicti must govern. In so doing, the Court declined to follow its earlier decision in McLean v. Pettigrew, 1944 CanLII 69 (SCC), [1945] S.C.R. 62, which held that the lex fori must govern even though the conduct complained of was not actionable under the law of the place of the wrong. In effectively overruling its earlier decision, the Court found that it rested on such an insecure foundation based on earlier English cases that it could not be justified. [94] Since the Court held that Saskatchewan law applied to the claim in tort, an important subsidiary issue arose whether the limitation period prescribed by Saskatchewan law should be characterized as substantive or procedural. The Court held that this provision was substantive. In so doing, it departed from the traditional common law view that statutes of limitation are general considered procedural. [95] After coming to the conclusion that such rule could not be justified in modern conditions, La Forest J. considered whether it was necessary to await legislation to deal with the problem. The following passages in the reasons address this concern at pp. 1071-72: The Court circumvented the distinction between the plaintiff's right and her remedy by holding that the termination of limitation period vests rights in the defendant. Chouinard J., at p. 49, quoted with approval Lord Brightman in Yew Bon Tew v. Kenderaan Bas Mara, [1983] A.C. 553 (P.C.), at p. 563: In their Lordships' view, an accrued right to plead time bar, which is acquired after the lapse of the statutory period, is in every sense right, even though it arises under an act which is procedural. It is right which is not to be taken away by conferring on the statute retrospective operation, unless such construction is unavoidable. [Emphasis added.] While correctly considering that statute of limitation vests right in the defendant, the Privy Council in Yew Bon Tew continued to cling to the old English view that statutes of limitation are procedural. Nonetheless the case seems to me to demonstrate the lack of substance in the approach. The British Parliament obviously thought so. The following year the rule was swept away by legislation; the Foreign Limitation Periods Act, 1984, (U.K.) 1984, c. 16, declared that foreign limitation periods are substantive. do not think it is necessary to await legislation to do away with the rule in conflict of laws cases. The principle justification for the rule, preferring the lex fori over the lex loci delicti, we saw, has been displaced by this case. So far as the technical distinction between right and remedy, Canadian courts have been chipping away at it for some time on the basis of relevant policy considerations. think this Court should continue the trend. It seems to be particularly appropriate to do so in the conflict of laws field where, as stated earlier, the purpose of substantive/procedural classification is to determine which rules will make the machinery of the forum court run smoothly as distinguished from those determinative of the rights of both parties. [96] Given the trial judge's conclusion and our concurring view that the object and purpose of the rule against perpetuities is not offended by the top lease in question, we are persuaded that this is an appropriate case for this Court to intervene and determine that the top lease in question is not rendered void. In arriving at this conclusion, we find the reasoning and approach of the Supreme Court of Canada in cases such as Salituro, Tolofson and Morguard to be persuasive. As well, the decision of the House of Lords in Arthur Hall demonstrates the need to reexamine archaic rules of common law which cannot be justified in modern society. [97] The genius of the common law lies in its adaptiveness to changing times. Its basic principles were not meant to become rigid formulae, inflexible and resistant to new developments or changing concepts in the commercial world. Since common law rules are judge-made rules, the Court can make exceptions to such rules when changing conditions so mandate. Common law rules may be tweaked to do justice between the parties when rigid and mechanistic application of rule would run counter to the object and purpose of the rule. [98] Given our conclusion on this threshold ground of the appeal we do not find it necessary to address the appellants' other grounds of appeal which primarily focussed on whether the learned trial judge erred in his interpretation of the top lease. However, these points are clearly preserved for future consideration on further appeal. As well, the cross appeal is rendered moot by our decision on the threshold question, but it too is preserved for future consideration. [99] In the result, the within appeal is allowed with costs in this Court on double Column V and the action for a declaration that the top lease is void is dismissed with costs in Queen's Bench on the applicable column. DATED at the City of Regina, in the Province of Saskatchewan, this 10th day of August, A.D. 2001. TALLIS J.A. concur SHERSTOBITOFF J.A JACKSON J.A. (in dissent) Introduction [100] This appeal requires the Court to test the limits of its authority to change an established principle of common law, notably, the application of the rule against perpetuities to a particular type of oil and gas lease. [101] Tarragon Oil and Gas Limited appeals decision declaring top lease void as offending the Rule against Perpetuities. top lease is an oil and gas lease granted by landowner with the intent of “topping” an already granted oil and gas lease or, as it is sometimes referred to "the head lease." top lease is intended to permit its holder to drill or mine after the head lease expires and may have the effect of compelling the holder of the head lease to proceed with production. [102] As part of its appeal, Tarragon asks this Court to declare the Rule against Perpetuities abolished as it relates to top leases. The ramifications of such declaration are largely unknown and may be significant. Hundreds of leases affecting thousands of oil and gas producing acres in southeastern Saskatchewan may be affected. Moreover, it is an area of the law where the legislature has already been asked to legislate, attempted to do so and then, in the face of opposition, let the bill die on the order paper. The Court is now asked to effect what that bill would have accomplished. [103] For my part, since have concluded that the Rule against Perpetuities applies to this top lease, the Court should not modify the Rule in the face of the significance of such modification, the efforts of the legislature to legislate and our inability to deal with such issues as the retrospective operation of our decision. [104] In the case at hand, Harry Herbert Taylor (“Taylor Senior”) owned certain parcel of land (the “Taylor land”). On April 26, 1949, he granted an interest in the mineral rights in this land to Imperial Oil (the “Imperial Lease”). The Imperial Lease had term of ten years and “for so long thereafter as the leased substances were produced from the lands.” On August 7, 1950, Taylor Senior and Freeholders Oil entered into top lease for the same rights in the Taylor lands (the “Top Lease”). The Top Lease purported to grant the mineral rights in the Taylor land to Freeholders Oil when the Imperial Lease expired, and it is this Top Lease which is at the centre of the controversy in this case. [105] Since Imperial Oil did not exercise its rights in relation to the Taylor land, the Imperial Lease expired on April 25, 1959. [106] In September of 1961, Taylor Senior and Freeholders entered into second agreement whereby Freeholders agreed to pay Taylor Senior 3.5% of the gross royalties from the oil taken under the Top Lease instead of the 20% of the net benefit to which the parties had previously agreed. Counsel on both sides referred to this 1961 Agreement in interpreting the Top Lease. [107] Freeholders Oil merged with Scurry Oil and number of other companies to become Scurry-Rainbow Oil in September 1964. On June 1, 1993, Scurry-Rainbow sold the Top Lease to Tarragon Oil and Gas Limited, the appellant on this appeal. [108] Taylor Senior died in 1969. descendant, Harry Ernest Taylor (“Taylor”), now owns the land. Taylor recognized the assignment of Scurry’s interest to Tarragon on June 1, 1993 by signing the assignment agreement. [109] In March of 1993, Maxx Petroleum Ltd., the respondent on this appeal, advised Tarragon of its wish to lease or sublease the Taylor lands, but Tarragon was not interested. In August of the same year, Maxx proposed “seismic option” whereby it would have the option of drilling the Taylor lands. Tarragon did not accept this proposal either. Then, around October 8, 1993, Maxx and Tarragon reached an agreement in principle for “farm out” arrangement, whereby Maxx agreed to drill the Taylor lands for Tarragon. [110] To complete the 1993 farm out arrangement, Maxx wished to investigate the strength of Tarragon’s lease. To do so, Tarragon gave Maxx copy of the original 1950 Top Lease which Maxx had been unable to obtain on its own. After reviewing the Top Lease, Maxx concluded that it offended the Rule against Perpetuities. As consequence, Maxx entered into its own lease with Taylor respecting the mineral rights in the Taylor lands on November 16, 1993. Subsequently, Maxx and Taylor commenced this litigation asking for declaration that the Top Lease was void, as being contrary to the Rule against Perpetuities, which would mean that Tarragon held no interest in the Taylor lands. Application of the Rule against Perpetuities [111] As will be seen, notwithstanding Tarragon's many arguments to the contrary, the perpetuities part of this appeal is really the simplest. At bottom, the Rule against Perpetuities is rule of construction of agreements. The issue in this case is: when under the Top Lease will the interest that Taylor Senior granted to Freeholders vest? With that question in mind, few rules of interpretation, as cited by Maxx's counsel, bear repeating. [112] First, there is the rule which favours early vesting (see Canada Permanent Trust Co. v. Lasby et al, 1984 CanLII 2449 (SK QB), [1985] W.W.R. 489 (Sask. Q.B.)). While the Rule against Perpetuities favours early vesting, this is only presumption and can be rebutted by clear language to the contrary (see B. Ziff, Principles of Property Law (Toronto: Carswell, 1993) at 174). To assist the Court to find clear language, one can look to the terms of the contract as whole, including the recitals, to eliminate any ambiguity in the operative clause (see G.H.L. Fridman, The Law of Contract in Canada, 3d ed., (Toronto: Carswell, 1994) at 469; Re British Columbia Hydro Power Authority v. Gregory Manufacturing Ltd. et al. (1979), 1978 CanLII 2013 (BC SC), 93 D.L.R. (3d) 503 at 507 (B.C.S.C.); Wells v. Blain et al., 1926 CanLII 134 (SK CA), [1927] D.L.R. 687 at 705 (Sask. C.A.); and Co-operative Trust Co. of Canada v. Receveur et al. (1985), 1985 CanLII 2376 (SK CA), 40 Sask. R. 315 (C.A.)). Subsequent conduct can also aid the interpretative exercise provided that there is genuine ambiguity between varying interpretations of contract (see Canadian National Railways v. Canadian Pacific Ltd., 1978 CanLII 1975 (BC CA), [1979] W.W.R. 358 at 372-73 (C.A.); Cadbury Schweppes Inc. v. FBI Foods Ltd. (1996), 1996 CanLII 3352 (BC CA), 23 B.C.L.R. (3d) 325 at 338 (C.A.) appeal to the S.C.C. allowed on other grounds 1999 CanLII 705 (SCC), [1999] S.C.R. 142; Erehwon Exploration Ltd. v. Northstar Engineer Corp. (1993), 1993 CanLII 7238 (AB QB), 15 Alta. L.R. (3d) 200 at 236 (Q.B.)). [113] The clause to be construed is section of the Top Lease: 2. Lease to Grantee UPON AND IN THE EVENT OF the termination, cancellation, avoidance or expiration of the said drilling lease between the GRANTOR and the LESSEE, and in consideration of the covenants of the GRANTEE herein contained, the GRANTOR DOTH HEREBY GRANT AND LEASE UNTO THE GRANTEE all the mines, minerals and mineral rights, including the petroleum, natural gas and all related hydro‑carbons (hereinafter referred to as “the minerals”) within, upon or under the above described lands and all the right, title, estate and interest of the GRANTOR in and to the minerals or any of them within, upon or under any lands excepted from, or roadways, lanes, or rights‑of‑way adjoining the lands aforesaid together with the exclusive right and privilege to explore, drill for, win, take, remove, store and dispose of, the minerals, and insofar as the GRANTOR has the right so to grant, and for the said purposes, the right of entering upon, using and occupying the said lands or so much thereof and to such extent as may be necessary or convenient, TO HAVE AND TO ENJOY the same for term of ninety‑nine (99) years from the date hereof, renewable at the option of the GRANTEE, and so long thereafter as the minerals or any of them are produced from the said lands. The key words are those which begin the section by saying “Upon and in the event” of the termination of the prior lease, the subsequent lease comes into effect. [114] To satisfy the Rule against Perpetuities, one must be able to conclude, as matter of interpretation that the interest in land will vest within 21 years of the date of the contract (see E.H. Burn, Cheshire's Modern Law of Real Property, 12th ed. at 320). The classic statement of the modern Rule against Perpetuities is that stated by Professor J.C. Gray in The Rule against Perpetuities, (4th ed.), s.201: No interest is good unless it must vest, if at all, not later than 21 years after some life in being at the creation of the interest. As there is no life in being in this case, the interest must vest within 21 years of its creation, which in this instance would have been August 6, 1971, being 21 years after the date of the Top Lease. The difference has been expressed as one between “this lease now, to enjoy when the old one expires” and “this lease when the old one expires.” On this appeal, in my opinion, the Court is confronted with grant of the latter form that does not inevitably become effective within 21 years. [115] It should be noted that the Rule against Perpetuities is not concerned with the duration of an interest, but only that an interest may vest at remote time in the future. The rule invalidates interests in land that vest too remotely. (See: J.H.C. Morris and W.B. Leach, The Rule against Perpetuities, 2nd ed., pp.1 2.) This will occur if there is any possibility that the interest may vest outside the perpetuity period. Neither the possibility nor the fact that vesting may occur within the perpetuity period will save the transaction (See: A.H. Oosterhoff and Rayner, p.447). Rather the document is construed as of the date of execution. (See: Megarry and Wade, Real Property, 3d., p.218). If it vests within the perpetuity period, that is considered to be matter of happenstance as far as the application of the Rule is concerned. [116] The trial judge concluded that the words “upon” and “in the event” do not indicate, as Tarragon suggests, some restriction on the timing of enjoyment alone. Using “plain language” approach, he read these words as saying “if and when” the Imperial Lease expires, the Top Lease comes into effect. As he succinctly put it, “in the context in which they are used, the usual and ordinary meaning of the word ‘upon’ and the phrase ‘in the event’, connote time and conditions and not property or an interest in property” (see para. 37 of the trial judgment). The trial judge’s interpretation of section is supportable one. [117] Tarragon argues that only enjoyment is postponed because section indicates that the lease is given “to have and to enjoy for term of ninety-nine (99) years from the date hereof.” Tarragon argues further that the time limit of 99 years from the date of signing, which is when all parties would have known the Imperial Lease was in effect, gives an immediate vested interest with only possession and enjoyment delayed. But this sentence ties the right to “enjoy” (in the present tense) to the 99-year limit. Enjoyment cannot be had in the present, from the “date hereof," but is postponed until the Imperial Lease expires which could occur at some indefinite point in the future. [118] The trial judge read the 99-year term as imposing limit upon how long the Top Lease might possibly endure rather than as providing an immediate vesting. In other words, the section grants right to have and enjoy with an upper limit of 99 years, but the right to enjoy only takes effect “upon and in the event” of the termination of the Imperial Lease. [119] To read the “99 years” sentence as Tarragon suggests requires this Court simultaneously to accept that there is an immediate granting of the right to have and to enjoy, but that Tarragon does not have the right to enjoy immediately. Present enjoyment in the terms of “enjoyment from the date hereof” is impossible. Contrary to the position taken by Tarragon, this is much more than postponement of enjoyment. Rather, it is an outright postponement of the granting of any interest at all. [120] The words “[I]n and upon the event of ...” contemplate the possibility that the Imperial Lease may not come to an end. The grant of the Top Lease contained in section was only to take effect upon and in the event of the termination, cancellation, avoidance or expiration of the Imperial Lease. The Imperial Lease was for term of ten years from its date and for such additional period thereafter as the leased substances or any of them were produced from the Taylor Land. Thus, this is case of “this lease when the old lease expires,” not “this lease now, to enjoy when the old one expires” which is the classic analysis associated with interpreting when an interest in land is to vest. Because the granting of the Top Lease was contingent upon the termination of the Imperial Lease, and because that termination was an uncertain event, the Rule against Perpetuities voids the Top Lease. [121] Since do not find the operative clause to be ambiguous, it is not strictly necessary to look beyond the operative clause of the agreement. Nonetheless, note in passing that the recitals contained in the Top Lease and subsequent conduct bear out the interpretation that the interest created by the Top Lease was not to come into effect until after the expiry of the Imperial Lease. The Top Lease’s fifth recital reads as follows: AND WHEREAS it has been further agreed by and between the parties hereto that should the said drilling lease between the GRANTOR and the LESSEE terminate from whatsoever cause, or be avoided, or become null and void, or become unenforceable by the LESSEE at any time within period of forty‑two (42) years from the day of the date hereof then and in that event, all the mines, minerals and mineral rights within, upon or under the above described land shall be subject to the terms of the lease as hereinafter provided, and the GRANTEE will allot and issue to the GRANTOR additional fully paid‑up shares in the capital stock of the GRANTEE in such amount as shall increase the number of shares allotted and issued to the GRANTOR to one share for every acre of the above described land, which shares shall be allotted and issued to the GRANTOR upon receipt of actual notice from the GRANTOR that the said drilling lease has been terminated, cancelled, avoided, or has expired; The Grantor is Taylor Senior, the Lessee is Imperial Oil and the Grantee is Freeholders. This clause contemplates that "should" the Imperial Lease expire in 42 years, the Top Lease will come into effect. From this, one may conclude that there had been no prior grant contemplated by the 1950 Top lease and thus no possible vesting until the Imperial Lease comes to an end which may occur after the perpetuity period. [122] Sections and of the Top Lease are also worth noting: 3. Application for Shares The GRANTOR hereby applies for membership in and subscribes for and agrees to take up “Three Hundred and Twenty (320)” shares with nominal or par value of One Dollar ($1.00) per share in the capital stock of the GRANTEE, and tenders the within assignment in full payment of one‑half (½) of the said shares, and the within lease in full payment of the balance of the said shares, and hereby requests that the said shares be allotted to the GRANTOR and that such shares be issued as fully paid and non‑assessable and that certificate or certificates for the said shares be issued in the name of the GRANTOR as herein set out, and acknowledges to have received copy of the prospectus of the GRANTEE. 4. Acceptance by Grantee The GRANTEE covenants and agrees to accept the within assignment as payment in full for one‑half (½) of the said shares and to allot and issue to the GRANTOR one‑half (½) of the said shares as fully paid and non‑assessable; and the GRANTEE accepts the within lease as payment in full for the balance of the said shares and upon the effective date of the said lease agrees to allot and issue to the GRANTOR the balance of the said shares as fully paid and nonassessable. [123] As can be seen, section of the Top Lease makes reference to the “effective date” of the Top Lease. Dictionary definitions provided by Maxx indicate that “effective” means “coming into operation,” “date on which contract takes effect,” “being in effect” and “operative.” [124] Thus, the lease, if not immediately effective makes no immediate grant. Further, sections and of the Top Lease provide that payment for the lease is not to occur immediately, but only upon the expiration of the Imperial Lease. In contrast, payment for the other portion of the agreement (an assignment of Taylor Senior’s interest in the Imperial Lease to Freeholder's Oil) occurred immediately. This, too, leads to conclusion against immediate vesting. [125] As to subsequent conduct, we need only look at the 1961 Agreement. This is the agreement whereby Freeholders changed the way in which Taylor Senior would be paid under the Top Lease. As the trial judge emphasized, the 1961 Agreement provides “said grant and lease [the Top Lease] to become effective on the termination, cancellation, avoidance or expiration of the then existing lease [the Imperial Lease].” These words confirm that the grant itself is to occur and to become effective when the original lease expires. [126] This interpretation of the Top Lease accords with the American authorities which have been cited to us. In each of Stoltz, Wagner Brown v. Duncan (1976), 417 F. Supp. 552 (United States District Court, W.D. Oklahoma); Peveto v. Starkey (1982), 645 S.W. 2d 770 (Supreme Court of Texas); Hammans v. Bright Company (1996), 924 S.W. 2d 168 (Texas Court of Appeals), the courts were concerned with wording strikingly similar to that contained in the Top Lease. In each case, the court concluded that words like "Upon and in the event" or “effective only upon” offended the Rule against Perpetuities. [127] As second argument, Tarragon argues that immediate vesting occurred because it was only the natural termination of prior, particular estate (the Imperial Lease) that prevented it from taking effect in possession. In Simes, Handbook of the Law of Future Interests (2d ed., 1966) at p. 186, this appears: SIGNIFICANCE OF VESTED OR CONTINGENT CONSTRUCTION 90. In general, future interest is vested when there is no condition precedent to its taking effect in possession other than the termination of prior estates, however and whenever that may occur; but if there is such condition precedent, then the interest is contingent. Sometimes the terms contingent and vested refer to the question whether or not there is condition of survivorship; but that terminology is not employed here. In determining whether an interest is vested or contingent, it is necessary to ascertain what language creates condition precedent, and what does not. That is the subject of this chapter. [bolding in original] Doubtless the concept of vested interest goes back to feudal notions of the vested remainder in land. This interest was subject to no condition precedent other than the termination of prior estates. On the other hand, if remainder in land was subject to any condition precedent, other than the termination of prior estates, however and whenever that might occur, then it was said to be contingent. Eventually these concepts were extended to future interests generally, both in land and in things other than land. Thus, in general, we can say that, if future interest is subject to no condition precedent, other than the termination of prior estates, however and whenever that may occur, it is vested; otherwise it is contingent. [emphasis added and footnotes omitted] This statement of the law is confirmed in Ziff Principles of Property Law (1993) at p. 174: Property interests are either vested or contingent. An interest is vested when no condition or limitation (including the ascertainment of the identity of the recipient) stands in the way of enjoyment, other than the natural termination of the prior particular estate. [emphasis added] So, in transfer “to for life, remainder to B”, the interests of both recipients are vested. The life estate is vested in possession, and is currently entitled to possession. B’s interest is also vested since the right to possession is not delayed by any condition other than the natural determination of the prior particular estate (of A). This remainder is vested in interest, but not in possession. [emphasis in original] In my opinion, if there is bar to the granting itself, including the termination of prior estate, the rule cited would not seem to apply. There still must be present grant. [128] Tarragon argues that notwithstanding this view, the rule pertaining to “prior, particular estates” saves the Top Lease. Their counsel cited two cases to us: Lundy v. Maloney (1861), 11 U.C.C.P. 143 and Mann, Crossman Paulin Ltd. v. The Registrar of the Land Registry, [1918] Ch. 202. Lundy involved grant to widow for life or until remarriage and Mann involved fixed term lease. Either the subsequent grants did not involve language as exists here or the grants were inevitable. Even if the termination of the Imperial Lease is inevitable, which the trial judge did not find it to be, the actual granting under the Top Lease is not inevitable within the 21-year window thereby violating the Rule. The Top Lease did not effect vesting of the mineral rights until after the Imperial Lease might expire. [129] As support for this view of the nature of the prior interest, one may look to “Top Leases and the Rule against Perpetuities”, 10 Pepperdine Law Review 773 (May, 1983) at 779-81, where the author writes that “[s]ince the vesting of the top lease is contingent upon the occurrence of ‘an uncertain future event’ (the cessation of production in paying quantities), it is subject to the Rule against Perpetuities.” The author was referring to top leases generally speaking, which by their very nature, offend the Rule unless carefully drafted wording is chosen. [130] For all these reasons, conclude that the Top Lease offends the Rule against Perpetuities and is therefore void. Ratification and Novation [131] Tarragon argued that when Taylor Senior executed the 1961 Agreement, he either ratified the Top Lease or effected novation of it. The trial judge rejected these submissions saying “[s]ince the Freeholders agreement [the Top Lease] was void, it follows that there is nothing which is capable of being ratified, renewed or enforced.” [132] While Tarragon accepts that there are numerous authorities which hold that void agreement is incapable of ratification (as cited in Cheshire Fifoot Furmston's Law of Conflict, 12th Edition, 1991 at p.477 and G.H.L. Fridman in The Law of Contract in Canada, 2nd Edition, 1986 at p.138), their counsel argues for principled review of this hypothesis. He asserts that in each of the cases cited by the learned authors the void agreement could not be ratified because the ratification was “tainted” by the continuation of the circumstances that made the agreement void in the first place. As the argument proceeds, if the Top Lease were void when executed, nonetheless, by the time the 1961 Agreement was executed, the interest held by Freeholders had vested, and therefore, the Top Lease was no longer tainted for having offended the Rule against Perpetuities. But this would be variation on the "wait and see" doctrine which is not part of the law of perpetuities. It would also mean that there would be time when the Top Lease was not in force, i.e., from 1950 until 1961 and then was made effective without the parties consciously turning their minds to the issue. Tarragon argues that we should presume that Taylor Senior knew his lease was void and, thus, the 1961 Agreement was his attempt to revive the agreement. In support of this proposition, Tarragon cites two cases: Murdoch v. Canadian Superior Oil Ltd. et al. (1968), 1969 CanLII 767 (AB CA), 68 W.W.R. 390 (Alta. C.A.) affirmed (1969), 1969 CanLII 925 (SCC), 70 W.W.R. 768 (S.C.C.), [1969] S.C.R. vi (note) and Canadian Superior Oil Ltd. et al. v. Paddon-Hughes Development Co. Ltd. and Hambly, 1970 CanLII (SCC), [1970] S.C.R. 932. These authorities address the question of the ratification of expired leases which were once valid. An expired lease does not have the same legal nature as void agreement. One is capable of ratification, but the other is not. [133] Even if were to give effect to this argument and hold that Taylor Senior ratified the Top Lease by his execution of the 1961 Agreement, it would still lead to conclusion that the Top Lease as ratified was void because the circumstance that makes it so is the wording of the agreement itself. Interpretation of the agreement to determine whether it contravenes the Rule against Perpetuities must be made as the date of execution. If this agreement were permitted to be ratified, the text of the agreement itself, that very thing which made the agreement void, would still carry on and form the relationship between the parties. The “taint,” as it were, would continue. [134] At bottom, the same principles govern “novation.” Black's Law Dictionary defines "novation" as the substitution of new contract between the same or different parties. Tarragon argues that Taylor Senior by his conduct must be taken to have agreed to new, and independent contract with Freeholders. As authority for the proposition that parties to contract may by their conduct enter into new contract in substitution for prior, void contract, Tarragon referred the Court to Dorsch v. Freeholders Oil Co. Ltd. (1964), 1964 CanLII 401 (SK CA), 48 W.W.R. 257 (Sask. C.A.). [135] In Dorsch, this Court held that the parties, by their subsequent conduct, adopted an independent, new agreement for one that the Court had found to be void. The Court said this (at p. 271): To establish an independent contract, the shareholder must be aware of his position and in view of such knowledge must conduct himself in such way that new contract to retain the shares can be presumed. In the present case the respondent was aware that no prospectus had been delivered to him. He is presumed to know the law. In light of this knowledge the respondent: (1) Accepted and retained (for about four years) the share certificates mailed to him; (2) Allowed the appellant to treat him as shareholder by mailing notices of meetings, director's reports and other company communications to him; (3) Attended and voted at two annual general meetings of the shareholders of the company; (4) made no protest of his being treated as shareholder until his solicitor sent the notice of repudiation to the appellant on May 22, 1956. .. These are all matters which can be considered and am of the opinion that from them new independent contract to accept the shares can be presumed. Using this reasoning Tarragon argues that Taylor Senior must be taken to have known the law and, therefore, is presumed to know that the Top Lease was void as violating the Rule against Perpetuities. Impressed with this knowledge, Tarragon argues that Taylor Senior received and accepted shares in Freeholders pursuant to the Top Lease and executed the 1961 Agreement whereby he chose to receive gross royalty in exchange for the mines and minerals—all of which are said to create new independent contract. [136] To find in Tarragon's favour on this point, the Court would have to be satisfied that the parties created new contract and did so in circumstances where they knew or ought to have known that the original one was invalid. In my opinion, this test cannot be met. In Dorsch the original contract for the sale of shares was rendered void because the company had failed to provide the prospective shareholder with copy of the company's prospectus. Following the share purchase, the land owner conducted himself as shareholder including participating in annual meetings. To apply the presumption to Taylor Senior that he must be taken to know that the Top Lease was void for having offended the Rule against Perpetuities stretches the presumption. Moreover, the 1961 Agreement merely modifies the terms of another agreement, made with full, albeit misplaced, confidence that the original agreement was valid, and in force. To find the intention for new, independent contract on the basis of what is essentially modification of Taylor Senior’s consideration under the 1961 Agreement is not the foundation of new and independent contract. Thus, this ground of appeal must too fail. Abolishing the Rule as it relates to Top Leases [137] That then brings us to consideration of whether this Court should abolish the Rule, as matter of policy, as it relates to this top lease, and by extension to all top leases in similar form. Tarragon invites this Court to use the reasoning contained in R. v. Salituro, 1991 CanLII 17 (SCC), [1991] S.C.R. 654 at 670 and Porto Seguro Companhia De Seguros Gerais v. Belcan S.A. et al., 1997 CanLII 308 (SCC), [1997] S.C.R. 1278 at 1292 to do so. [138] While both Salituro and Porto Seguro speak of the courts' power to strike down or modify the common law, it is not limitless power. If one examines these two decisions, and the authorities to which they refer, the changes which they bring about are not changes of this nature, ie., the interpretation of standard agreement involving real property which could affect the contractual rights of many parties not before the courts. The courts in this province have always exercised caution in dealing with real property matters, for fear of affecting rights of which we cannot be aware. While numerous examples abound, an example of such caution can be seen in the very same sitting of the legislature which generated this appeal. See Developments Inc. v. Norac Systems International Inc., William Philip Strelioff, et als., 2000 SKCA 109 (CanLII). [139] The matter is best put by Iacobucci J. in Salituro where he writes (at p. 670): [I]n constitutional democracy such as ours it is the legislature and not the courts which has the major responsibility for law reform; and for any changes to the law which may have complex ramifications, however necessary or desirable such changes may be, they should be left to the legislature. The judiciary should confine itself to those incremental changes which are necessary to keep the common law in step with the dynamic and evolving fabric of our society. On this point, one should also look at such decisions as Watkins v. Olafson et al. 1989 CanLII 36 (SCC), [1989], S.C.R. 750 and Winnipeg Child and Family Services (Northwest Area) v. G. (D.F.) 1997 CanLII 336 (SCC), [1997], S.C.R. 925. [140] In Winnipeg Child and Family Services, child welfare agency sought an order requiring that pregnant woman who was addicted to glue-sniffing be committed so as to prevent her from using intoxicants during her pregnancy. McLachlin J. (as she then was) referred to Watkins and Salituro. Having reviewed the principles contained in these decisions, she stated (at p.940): ...As general rule, judicial change is confined to incremental change “based largely on the mechanism of extending an existing principle to new circumstances”; courts will not extend the common law “where the revision is major and its ramifications complex”. She expanded on this (at p.941): The proposed changes to the law of tort are major, affecting the rights and remedies available in many other areas of tort law. They involve moral choices and would create conflicts between fundamental interests and rights. They would have an immediate and drastic impact on the lives of women as well as men who might find themselves incarcerated and treated against their will for conduct alleged to harm others. And, they possess complex ramifications impossible for this Court to fully assess, giving rise to the danger that the proposed order might impede the goal of healthy infants more than it would promote it. In short, these are not the sort of changes which common law courts can or should make. These are the sort of changes which should be left to the legislature. [141] Counsel for Maxx also drew the Court's attention to the House of Lords decision in Ward et al. v. Van De Loeff et als. (1924), A.C. 653 which specifically addresses the possibility of the Court making changes to the Rule against Perpetuities (at p.679): All the same in these cases the rule is fatal even to gifts so innocuous, and cannot doubt that such result is both mischievous and unfortunate, in many directions, in this notably, that it brings sound principle into entirely gratuitous discredit. Nevertheless most fully agree that the rule is not to be whittled away by the Courts even for such reason as that. It is too well authenticated in all its recognized incidents to be any longer under the control of any Court. It is the Legislature alone, which, maintaining the salutary purpose of the rule in its proper application, can, if it pleases, remove from it those incidents or excrescences which, without assisting to achieve its legitimate object, have done much mischief in other directions. [emphasis added] [142] As noted by both parties, there are “hundreds” of similar leases to the one held by Tarragon leaving the implications of decision not to apply the Rule to this Top Lease largely unknown. For example, if one changes the facts so as to have this be an action between Taylor and Maxx only, it becomes less clear that upholding the Top Lease is the appropriate judicial response. Such change to the facts drives one to consider the history of oil exploration in Saskatchewan and the interaction of oil companies and farmers. [143] When oil was first discovered in Leduc, Alberta in 1947, oil companies rushed to sign up farmers in the southern parts of Saskatchewan and Alberta. The farmers, and indeed the oil companies, knew little of the significance of this discovery and the potential wealth to be derived therefrom. These agreements tied up the land, prevented the farmer from seeking better agreements elsewhere and, given the speed of the sign up process, often left the farmer with small compensation for the nonrenewable resource. review of the litigation coming from this jurisdiction over the last forty years demonstrates the farmers' desire to obtain relief from bad bargains struck in haste. By “topping” the head lease, top lease had the capacity to alleviate the situation somewhat, but only if the holder of the top lease moved to generate production from the land. If the lease holder failed to so move, the farmer was still left with recalcitrant oil company and the possibility that when drilling ultimately commenced, changed circumstances might mean that the farmer would see little profit. [144] Admittedly, these are very much policy considerations, but the arguments on the other side are no less so. My point is that the Courts are not equipped to weigh the legitimacy of these concerns whereas the Legislature is. [145] Furthermore, through the vehicle of statute law, the Legislature can accomplish many things that the Courts through pronouncement cannot. The Legislature can abolish the Rule against Perpetuities as it relates to future leases, or only those where reliance on the Rule cannot be proven or, still yet, can declare that an equitable “wait and see” or “cy pres” approach should be adopted to save top leases in circumstances such as occurred here. Legislatures in other jurisdictions have enacted laws which address these issues: see the Perpetuities Act, R.S.A. 1980, c. P-4 and the Perpetuities Act, R.S.O. 1990, c. P-9, and in particular, s. 14 (added following further report by the Law Reform Commission to address the special issues pertaining to profits prendre). The Legislature can also exempt those lands involved in cases which have found their way to the Courts. The Courts cannot perform this fine surgery. We can only abolish the law as it relates to top leases or declare it to be inapplicable to this Top Lease which may amount to the same thing. [146] Particular mention must be made of the question of restrospectivity. Canadian courts have not taken unto themselves the power to declare their decisions to be prospective only. Canadian common law continues to recognize the principle that judicial decision is declaratory of the law as it was, is and always will be until future court interprets the law differently. There is merit to this approach. Nonetheless, the possibility that someone has relied on the law being interpreted in particular way or has rights taken away retroactively is, nonetheless, troubling and has been extensively treated by the American courts. [147] In Linkletter v. Walker, 381 U.S. 618 (1965) the Supreme Court of the United States rejected earlier jurisprudence, for example, Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), which applied new law to transactions that took place before the date of the law-changing decision. Linkletter held that the parties should be governed by the law in effect at the time the court renders new decision. The United States Supreme Court’s approach to retroactivity has been much criticized (Kermit Roosevelt III, “A Little Theory is Dangerous Thing: The Myth of Adjudicative Retroactivity” (1999) 31 Conn. L. Rev. 1075, online: Information Society Project http://infosociety.law.yale.edu/papers/dangerous.html. Notwithstanding this criticism, if Linkletter were the law in Canada, Maxx would not suffer the penalty of change in the law which will be the consequence of failing to apply the common law as it existed prior to this decision. [148] It is not as if this is the first time that the Rule has been applied in modern context. See, for example, Canadian Export Gas Oil Ltd. v. Flegal and Flegal, 1977 CanLII 670 (AB QB), [1978] W.W.R. 185 (Alta.S.C. T.D.) and Harris v. Minister of National Revenue (1966), 1966 CanLII 58 (SCC), 57 D.L.R. (2d) 403. In both of these cases, the facts evoke sympathy for the abolition of the Rule, but the Rule was not abolished. [149] The force of these arguments increases when one considers not only that the Law Reform Commission of Saskatchewan recommended that the Legislature abolish the Rule and that the Legislature decided to act on the Commission's recommendation, but for some reason, decided not to proceed with draft legislation. Debate on Bill No. 69 being “An act to abolish the Rules Against Perpetuities and The Accumulations Act and to enact Consequential Amendments” was adjourned on April 21, 1995 after these comments were made by the justice critic of the day: However, Mr. Speaker, we’ve also found that as we’ve reviewed the matter and reviewed the Bill, we’ve had the opportunity to discuss this matter with some lawyers, and we are not so sure that the Bill is as inconsequential as the former Justice minter suggested. In spite of what the former minister said, the rule regarding perpetuities affects more than the land holdings of British aristocrats. And believe we had couple of individuals from Saskatoon join us yesterday afternoon, and they came to our office and indicated that they have some grave concerns based on some of the comments that we had made previous. It is far-reaching, well-established principle of law around the world with deep implications for contract law and the implementation of wills. In light of this, Mr. Speaker, it seems that our ... and our caucus believes that to simply abolish the rule regarding perpetuities is rash and should be reconsidered more carefully. The rule regarding perpetuities, Mr. Speaker, exists in most British common law and American jurisdictions in one form or another. Mr. Speaker, doubt that the minster could name many jurisdictions where it does not exist. The one example that does immediately spring to mind is Quebec, but that province does not follow British common law so it perhaps is not the best example to cite. Mr. Speaker, many jurisdictions have substantially altered the perpetuities rule and have dispensed with the legal reference to the rule in Whitby v. Mitchell and The Accumulations Act of 1800. Certainly if the government wanted to bring forward some reforms to the rule rather than offhandedly abolishing it, we would feel much more comfortable with the situation. Mr. Speaker, we realize that this matter has been considered by the Law Reform Commission and therefore is probably not something that the government has lot of ideological stake in. However it is our advised opinion that this legislation could cause considerable upset and confusion in the business community. Contracts and wills going back generations have been formulated on the existence of the rule regarding perpetuities in this province. Since this legislation is retroactive back to the formation of the province, every single one of these contracts could well be thrown into confusion. Mr. Speaker, before we could support this Bill, we would have to be convinced by the government that they have studied these potential effects and have plan to manage any legal problems that may arise from this Bill. Mr. Speaker, the former minister of Justice mentioned that this Bill was prompted by complaints brought forward by the oil and gas industry. Certainly our caucus understands how much this industry contributes to this province and we would not want to stand in the way of any measures that would improve the competitiveness of it. However, we have been advised that the province of Alberta retains modified perpetuities rule. Now, Mr. Speaker, would find it hard to believe that the province of Alberta would retain anything that would not favour the oil and gas industry. So again, Mr. Speaker, our caucus is not entirely comfortable with the drasticness [sic] of this Bill; we would rather see the rule modified rather than abolished. However we will, for the moment, bow to the expertise of the Law Reform Commission. None the less, think we should take bit more time and spend few more days reviewing this piece of legislation before we would proceed to Committee of the Whole, where I’m sure we will have number of questions. And indeed, Mr. Speaker, we want to make sure we’ve taken the time to have given everyone who has some concerns regarding the Bill and the problems that it may affix to them, the opportunity to speak to us. And therefore, Mr. Speaker, would move adjournment of debate at this time. Debate adjourned. That we are immune from whatever pressure may have been brought to bear on the Legislature should not embolden us to take the step it drew back from making. [150] That leads us to the question whether the policy behind the Rule Against Perpetuities is so destructive of commercial interests as to compel this Court's intervention. As counsel for Maxx points out, the policy behind the Rule against Perpetuities is to prevent interference with the alienation of property beyond certain period of time. The policy has been more particularly explained by the various authorities he cited to us. For example, in Halsbury's Laws of England, 4th ed., vol. 35 at p.483, it is said: The rules of law affecting perpetuities are based upon considerations of public policy. Although the principle of private ownership requires that an owner of property is to have power to dispose as he thinks fit, either during life or on death, of his whole interest in the property he owns, public policy requires that the power should not be abused. Accordingly, from early times, the law has discouraged dispositions of property which either impose restrictions on future alienations of that property, or fetter to an unreasonable extent its future devolution or enjoyment. [151] In Anger and Honsberger Law of Real Property, 2nd ed., the authors state at p.443: ... the modern rule against perpetuities was rendered necessary in order that future interests arising under the Statute of Uses and the Statute of Wills, which were indestructible under the common law remainder rules and the rules against unbarrable entails, might be controlled. The control was exercised by requiring that such interests must vest within specified time. Although not itself concerned with inalienability, the rule was born out of the same concern for free alienability of land that produced the rules against unbarrable entails. Inalienability was considered harmful because it stagnated land the primary source of economic wealth in earlier times. This arose because the various devices which tended to perpetuity created only limited interests in land, interests which either might be defeated or which might not arise until some future time. The owners of such interests had difficulty selling them and at the same time were loath to expend moneys to improve the land. This was thought to be inappropriate since it impoverished the nation's resources and diminished its wealth. The rule against perpetuities did not, of course, prohibit the creation of limited interest, but did have the effect of reducing the consequences of such interests by requiring that they must become vested within life in being plus twenty-one years from the creation of the interest. [152] Brian A. Yaworski in an article entitled “Perpetuities Problems in Farming Arrangements and Other Earning Arrangements” in Oil and Gas Title Opinions Are They Necessary? How Are They Prepared? (Insight Press, 1990) observed at p.2 of the article: The answer to these and similar questions is within the rules of law affecting perpetuities. These rules of law are based upon considerations of public policy. Although the principles of private ownership dictate that the owner of property shall have the power to dispose of it as he thinks fit, public policy discourages dispositions of property which either impose restrictions on future alienations of that property or fetter to an unreasonable extent the future enjoyment or use of that property. The rules are not intended to stimulate development per se, but do attempt to avoid the sterilizing effect which results when future contingent interests can vest so remotely that it is virtually impossible to identify ownership of land for such purposes as conveyancing, taxation and settlement of estates. [emphasis added] [153] In Canadian Export Gas Oil Ltd. v. Flegal and Flegal, 1977 CanLII 670 (AB QB), [1978] W.W.R. 185 (Alta.S.C. T.D.), Stevenson J. stated the rationale behind the Rule against Perpetuities as follows at pp.190-91: What is the rationale behind the rule? confess to having suggested to counsel that we were considering conflict between technical rules rather than principles. However, am in agreement with the statement in the American Law of Property, vol.6, p.146, that the policy behind the rule is to favour free alienation and full use of property. It is designed to achieve balance between freedom of disposition and stagnation (Morris and Leach, p.15). That was the policy of the common law, and the modern adoption of perpetuities legislation confirms that this is not an archaic common law technicality, the reasons for which have now ceased to exist. [154] Finally, in Canadian Long Island Petroleums Ltd. and Sadim Oil Gas Co. Ltd. v. Irving Industries (Irving Wire Products Division) Ltd. and Irving Industries (Foothills Steel Foundry Division) Ltd. 1974 CanLII 190 (SCC), [1975] S.C.R. 715, Martland J. stated the policy behind the Rule against Perpetuities (at p.399): am in agreement with the views expressed in judgment of the Circuit Court of Appeal, Fifth Circuit, by Strum, District Judge, in the case of Weber v. Texas Co. (1936), 83 F. 2d 807 at 808: The rule against perpetuities springs from considerations of public policy. The underlying reason for and purpose of the rule is to avoid fettering real property with future interests dependent upon contingencies unduly remote which isolate the property and exclude it from commerce and development for long periods of time, thus working an indirect restraint upon alienation, which is regarded at common law as public evil. [155] The long history of the rule and these recent expressions of support for its continued existence compel one to reconsider the words of Lord Blanesburgh in Ward et al. v. Van De Loeff et al. supra. After decrying the result which the Rule demanded he had to reach in that case, he wrote "...the rule is not to be whittled away by the Courts even for such reason as that. It is too well authenticated in all its recognized incidents to be any longer under the control of any Court. It is the Legislature alone, which, maintaining the salutary purpose of the rule in its proper application, can, if it pleases, remove from it those incidents or excrescences which, without assisting to achieve its legitimate object, have done much mischief in other directions." [156] In short, the Rule against Perpetuities applies to this Top Lease and, in those parts of North America most like us with respect to oil and gas production, the southern and western States, the Rule has been applied to the very same type of lease. If modification is required, the courts should follow the lead of the other provinces and leave the Legislature to enact whatever legislation it deems appropriate. Cross-appeal [157] now turn to the cross-appeal. After having entered into its own lease with Taylor Junior, Maxx Petroleum commenced an action against Tarragon, in its own name and in that of Taylor Junior, for declaration that the Top Lease was void as being contrary to the Rule against Perpetuities. Tarragon counterclaimed for (i) an injunction restraining Maxx and Taylor (the two defendants by counterclaim) from asserting any claim based on the confidential information; (ii) an injunction restraining them from making any use of this information; (iii) an accounting of any profits; (iv) declaration that they are constructive trustees of any property acquired by their wrongful use of the confidential information; and (v) damages. [158] In support of its counterclaim, Tarragon alleged that Maxx could only obtain access to the Top Lease by virtue of their negotiations which were intended to lead to farm-out agreement. Tarragon asserted that the lease was highly confidential and contained confidential information and that Maxx owed it duty of confidentiality not to use the information in any way and, in particular, not to Tarragon's detriment. [159] The trial judge reviewed Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 CanLII 34 (SCC), [1989] S.C.R. 574. He noted that the test for breach of confidence has three parts (at p. 636 in Lac Minerals): 1. the information used must be confidential; 2. the information used must have been communicated in confidence; and 3. the information must have been misused by the party to whom it was communicated. [160] The trial judge found that form of the Top Lease was on file with the Corporations Branch of Saskatchewan Justice. In addition, the caveat based on the actual Top Lease with Taylor set out largely what is contained in sections and of the lease. Nonetheless, the trial judge concluded that Maxx could not be certain about the actual terms of the lease and chose instead to negotiate formal agreement with Tarragon. As result of these negotiations, Tarragon provided copy of the Top Lease to Maxx for the purposes of due diligence searches and not to provide information to Maxx whereby it could undermine Tarragon’s interest. [161] The trial judge analysed the principles in Lac Minerals, applied them to the facts of the case and concluded that there had been breach of confidence. [66] When relate the facts to the essential elements of breach of trust, my conclusions are these. First, the information was confidential. It was not available anywhere else and Tarragon considered it to be confidential. Secondly, the information was shared and communicated in confidence. The parties were in the process of finalizing commercial arrangement and both recognized that the document and information therein was provided for the singular purpose of doing the due diligence examination. Thirdly, the information was misused by Maxx. It went beyond the due diligence and used the information to obtain result which was to its exclusive benefit and to the detriment of Tarragon. It clearly precluded the possibility of Tarragon obtaining any benefit in respect to the mines and minerals within the Taylor lands. The whole process of confidentiality was designed and intended to prevent this very result. [162] However, he also absolved Taylor Junior from any wrongdoing with these words: ¶69 Finally, it is noted that the plaintiff, Harry Ernest Taylor, had at best peripheral interest in the action. There is nothing to suggest that he was involved with what transpired between the corporate parties or that he breached any confidence and no liability can flow to him. In reality, he is party simply because he owns the land. [163] The trial judge went on to consider how to compensate Tarragon. These are his conclusions: 67 Where there has been breach of confidence, there normally is an attempt to restore the injured party to its former state through the declaration of trust with an attendant accounting along with an award for damages. That basic approach is appropriate in this case. However, cannot at this time delineate the specifics of the trust or calculate the quantum of damages and therefore reserve same. 68 At trial it was agreed amongst counsel that the quantification of any accounting or damages should be left to another day and those matters should be reserved. In addition, will want to hear submissions as to what exactly is the interest of Tarragon which is held in trust. Is it entitled to the entire lease interest or should it be restricted to what was agreed upon in the proposed farmout agreement? Accordingly, reserve the stipulated matters and if counsel are unable to resolve them, they shall have the Local Registrar arrange date when further submissions may be presented. He ordered that judgment should include these terms: 70 (3) declaration that the plaintiff, Maxx Petroleum Ltd., holds as trustee for the defendant, Tarragon Oil and Gas Limited, an interest in the mines and minerals within, upon or under the lands described in para. (1) above and the said defendant is entitled to an accounting in respect thereof; (4) an order that the defendant, Tarragon Oil and Gas Limited is entitled to damages from the plaintiff, Maxx Petroleum Ltd.; (5) that the calculation of the value of the interest of the defendant, Tarragon Oil and Gas Limited, in the aforesaid mines and minerals and the accounting in respect thereof and the assessment of the quantum of damages is reserved and hearing in respect to those matters is adjourned to date to be fixed by the Local Registrar in consultation with counsel. Thus, while the trial judge did not order an injunction restraining Maxx from future use, he nonetheless declared Maxx to be trustee of the mineral rights for Tarragon and ordered not only an accounting but an award of damages. He reserved the calculation of the value of the interest, the accounting of the profits and the damages award until another day. Maxx appeals the finding of breach of confidence and also the remedies imposed on it by the trial judge for the breach of confidence. [164] The trial judge's findings that: (a) the Top Lease was confidential; (b) the Top Lease was communicated in confidence; and (c) the Top Lease was used for purpose other than that for which it was given, are all findings of fact for which evidence exists. These findings, as matters of fact, are unassailable upon application of the usual standards of appellate review. However, his implied finding of loss and his decision to impose the remedies of constructive trust, an accounting of profits and damages raise number of issues. [165] The principal thrust of Maxx's argument is that Tarragon did not prove loss which is compensable, or if it did, it did not prove that Maxx caused such loss. Since Tarragon's agreement with Taylor is void ab initio, as the argument goes, Taylor is left in the same position before, as after, the breach of confidence. Tarragon still has void agreement. As consequence, Tarragon suffered either no loss, the loss would have occurred in any event (when the agreement would have been challenged by someone else) or the void nature of the agreement means that Maxx did not cause the loss. [166] agree with Maxx that the remedy of damages is not available to Tarragon. Causation, at least with respect to damages, remains part of the law of breach of confidence (see: Cadbury Schweppes Inc. F.B.I. Foods Ltd. 1999 CanLII 705 (SCC), [1999] S.C.R. 142) and was not proven in this case. Binnie J. speaking for the Court in Cadbury referred at several points to the need to restore the confider to the position he or she would have been in “but for” the breach of confidence (see, for example, para. [61]). In this case, the “but for” approach does not result in damages as the agreement would still be void. Maxx did not cause Tarragon's loss. Whether Maxx used Tarragon's copy of the Top Lease to sign its own lease with Taylor or not, the result is the same: Tarragon would still have void agreement with Taylor. [167] With respect to the other remedies of constructive trust and accounting, the Supreme Court of Canada has not yet spoken on whether causation plays role. In Cadbury Schweppes, the plaintiff had waived any claim for an accounting such that the Court did not have to address the issue of whether causal link must exist before court can impose remedy such as constructive trust or an accounting for profits. (See: Professor Leonard Rotman “Juice Formulation is not Rocket Science” and other Observations: Cadbury Schweppes Inc. v. FBI Foods Ltd., 31 Ottawa Law Review 243 at pp. 248 and 264). Professor John McCamus in his article “Equitable Compensation and Restitutionary Remedies: Recent Developments” Special Lectures of the Law Society of Upper Canada 1995: Law of Remedies: Principles and Proofs at pp. 326 to 328 speculates that there is the potential for different principles to apply to equitable compensation. [168] If one reasons by analogy from such cases as Attorney General v. Observer [1988] W.LR. 776 (H.L.), cited by Professor McCamus (at p. 337), it would seem that plaintiff need not prove that the profits would have flowed to him or her when the defendant has breached confidence. (See also: Rotman, supra at p. 264.) Similar considerations should prevail with respect to the remedy of the constructive trust. In my opinion, once the plaintiff has proven breach of confidence and the defendant has derived benefit from it, the plaintiff is entitled to remedy. [169] While Maxx did not cause Tarragon's loss, it nonetheless has committed an actionable wrong in breaching Tarragon's confidence, derived benefit from it and equity now demands remedy. The issue is the form that remedy should take. As Professors McCamus and Maddaugh state in The Law of Restitution (1990) at 676, once the plaintiff has proven all matters necessary for its case, the plaintiff may compel the defendant to disgorge his or her unjust enrichment either through an accounting of profits, or, possibly quantum meruit claim for the reasonable value of information provided may be made. The authors then discuss the expansion to the list of disgorgement remedies effected by Lac Minerals to include constructive trust. [170] As the Supreme Court of Canada affirmed in Cadbury Schweppes, the Court's task in selecting the appropriate remedy is to meet the needs of equity demanded by the particular facts having regard for variety of factors including the value of the information disclosed. On the question of the value of the information, the Court in Cadbury referred to Lord Denning's analysis in Seager v. Copydex, Ltd. (No. 2), [1969] All E.R. 718 where for the purposes of assessing equitable compensation, he divided confidential information into three categories: “nothing very special,” “something special” and “very special indeed,” as follows (at pp. 719‑20): The difficulty is to assess the value of the information taken by the defendant company. The value of the confidential information depends on the nature of it. [1] If there was nothing very special about it, that is, if it involved no particular inventive step but was the sort of information which could be obtained by employing any competent consultant, then the value of it was the fee which consultant would charge for it; because in that case the defendant company, by taking the information, would only have saved themselves the time and trouble of employing consultant. But, on the other hand, [2] if the information was something special, as, for instance, if it involved an inventive step or something so unusual that it could not be obtained by just going to consultant, then the value of it is much higher. It is not merely consultant's fee, but the price which willing buyer ‑‑ desirous of obtaining it ‑‑ would pay for it. It is the value as between willing seller and willing buyer. [3] ... if the plaintiff is right in saying that the confidential information was very special indeed, then it may well be right for the value to be assessed on the footing that, in the usual way, it would be remunerated by royalty. The court, of course, cannot give royalty by way of damages; but it could give an equivalent by calculation based on capitalisation of royalty. Thus it could arrive at lump sum. Once lump sum is assessed and paid, then the confidential information would belong to the defendant company in the same way as if they had bought and paid for it by an agreement of sale. [171] From the trial judge's findings, we must conclude that, notwithstanding the somewhat public nature of the information disclosed, Maxx had decided that the only way to obtain the necessary information was through Tarragon. This places the information more in the second category than the first and, might at first instance, compel this Court to impose more stringent remedy than might be imposed for information of lesser significance. [172] However, in this case, other considerations come into play. In addition to considering the value of the information to Maxx, the Court must give weight to the trial judge's decision to absolve one of the defendants on the counterclaim, Taylor, from any wrongdoing. As regards Taylor, the Top Lease has always been void and he would have been free to contract with whomsoever he wished. Because of this, minerals gained from the Taylor lands must compensate him in accordance with his new agreement with Maxx. From Taylor's perspective, he would not want to maintain the status quo being the 1961 rental with Tarragon. In crafting any remedy, one must also keep in mind that Tarragon had not been drilling the land and was prepared to enter into farm out arrangement with Maxx whereby Maxx would assume certain amount of risk in exchange for share of profits. [173] While recognize that constructive trust of the mineral interest would be available for breach of confidence (see Lac Minerals and, in particular, the comments of Wilson J. at p. 632), practically speaking the dynamics of the relationship in this case do not permit this remedy. speak specifically of Taylor's presence and the need to maintain the contract between Maxx and Taylor. Taylor has now chosen to contract with Maxx not Tarragon. Taylor cannot be compelled to contract with Tarragon and Maxx could not be expected to continue to drill, pay Taylor his increased profit and continue to account to Tarragon by means of constructive trust. The remedy here cannot penalize Maxx to the extent that it refuses to drill and leaves Taylor without an effective contracting partner. [174] Nor is this particularly valuable property such that changes in value or future profits must accrue to Tarragon through the vehicle of proprietary remedy like constructive trust (on this point see Lac Minerals at pp. 678 679). On the evidence before us, Maxx opened well on the Taylor lands for six months in 1994 and then closed it. The profits to Maxx do not exceed $20,000. [175] On the other hand, an accounting of profits to the date of trial permits the Court to give effect to the need to denounce the breach of confidence without overly penalizing the wrongdoer. It is not complete answer to Tarragon's claim, but, in many respects, the remedies of constructive trust and an accounting would overlap. The only potential loss for which Tarragon has not received remedy is with respect to future profits. But any concern in this regard is tempered by the other considerations previously mentioned including the limited value of the interest, the need to compensate Taylor Junior in accordance with the new agreement and the fact that at bottom all Tarragon had was void agreement. It would seem to be the type of broadly equitable result contemplated by the Supreme Court in Cadbury Schweppes (see para. [176] The cross-appeal is allowed to this extent: the trial judge's declaration of constructive trust and damages is set aside. The only remedy available to Tarragon is an accounting for profits to determine the net amount of profit derived from the drilling to the date of trial which amount is to be paid to Tarragon. Disposition and Costs [177] With that, would dismiss the appeal and allow the cross-appeal to the extent indicated. Maxx shall have its costs on the appeal in the usual way. With respect to the cross-appeal, Maxx is entitled to single column costs only. [178] The trial judge made no order as to costs as success had been divided. Maxx appealed this order, but as success on the counterclaim continues to be divided, am not disposed to interfere with the trial judge's decision. DATED at the City of Regina, in the Province of Saskatchewan, this 10th day of August, A.D. 2001. JACKSON J.A. [1] 1998 CanLII 14009 (SK QB), 170 Sask. R. 222, para. 70. [2] "top lease" is one which takes effect upon the termination of prior existing lease: Meyers et al v. Freeholders Oil Co. Ltd., 1960 CanLII 93 (SCC), [1960] S.C.R. 761 at 766 per Martland J. [3] Appeal Book, Vol. I, p. 127(a). [4] Appeal Book, Vol. I, p. 132(a). [5] Appeal Book, Vol. VII, pp. 198-200 and 222 and Appeal Book, Vol. V, p. 753(a), Exhibit D-38. [6] Appeal Book, Vol. VIII, p. 233 and Appeal Book, Vol. V, p. 808(a), Exhibit D-42. [7] This provision reads: 17a. (1) No person shall call at any residence and: (a) trade there in any security; or (b) offer to trade there or at any other place in any security; with the public or any member of the public. [8] See also: Prudential Trust Company et al v. Forseth et al, 1959 CanLII 48 (SCC), [1960] S.C.R. 210 and Prudential Trust company Limited et al v. Olson, 1959 CanLII 49 (SCC), [1960] S.C.R. 227. [9] See written opinion dated November 6, 1958 by Professor Bora Laskin (as he then was) to E. J. Moss. Appeal Book, Vol. V, pp. 783(a)-85(a). [10] See 170 Sask. R. 231, para. 21. [11] Halsbury's Laws of England, (4th ed.), Vol. 35, p. 624, para. 1016. [12] See for example Appeal of Mifflin, 121 Pa. St. 205, 15 525 at 526 with particular reference to Gray: Rule Against Perpetuities. [13] Bunch et al v. Nicks et al, S.W. 563 at 564: It was principle of the feudal law of England that "an estate of freehold must be created to commence immediately." "For," says Blackstone, "it is an ancient rule of the common law that an estate of freehold cannot be created to commence in futuro; but it ought to take effect presently, either in possession or remainder; because at common law no freehold in lands could pass without livery of seizin, which must operate either immediately, or not at all. It would therefore be contradictory if an estate which is not to commence till hereafter could be granted by conveyance which imports an immediate possession." [14] For an interesting analysis of the political and legal historical background to this rule See: Haskins: Extending the Grasp of the Dead Hand: Reflections on the Origins of the Rule Against Perpetuities, 126 U. of Pa. L. Review 19 (November 1977). [15] See 22 Eng. Rep. 948. [16] See 22 Eng. Rep. 953. [17] Haskins: Extending the Grasp of the Dead Hand: Reflections on the Origins of the Rule Against Perpetuities, supra, (footnote 14) at pp. 43-44. [18] Halsbury's Laws of England, supra, p. 615, para. 1008. [19] See for example Leach, Perpetutities in the Atomic Age: The Sperm Bank and the Fertile Decedent, 48 A.B.A. J. 942, (Oct. 1962); Schulyer, The New Biology and The Rule Against Perpetuities, 15 U.C.L.A. L. Rev. 420, (Feb. 1968). [20] 170 Sask. R. 242, para. [54] In my opinion, like conclusion is probably correct in respect to top leases of mineral rights. They do not remove land from commercial development and activity, but rather encourage it. This being so, it would not be contrary to the public interest to remove such leases from the ambit of the rule against perpetuities. [21] See for example Halsbury's Laws of England, supra, p. 616, para. 1009. [22] See Grynberg v. Amerada Hess Corp. (DC Colo) 342 F. Supp. 1314, Phelps v. Shropshire, 254 Miss. 777; 183 So. 2d 158; 20 A.L.R. 3d 1086 and Merchants National Bank v. Curtis, 98 N.H. 225; 97 A.2d 207. [23] See: Canadian Long Island Petroleums Ltd. v. Irving Wire Products, 1974 CanLII 190 (SCC), [1975] S.C.R. 715; Harris v. Minister of National Revenue, 1966 CanLII 58 (SCC), [1966] S.C.R. 489; Jewish National Fund (Keren Kayemeth Le Israel) Inc. v. Royal Trust Co. et al, 1965 CanLII 49 (SCC), [1965] S.C.R. 784; Frobisher Ltd. v. Canadian Pipelines Petroleums Ltd. et al, 1959 CanLII 47 (SCC), [1960] S.C.R. 126; Auld v. Scales, 1947 CanLII 22 (SCC), [1947] S.C.R. 543; Weinblatt v. Kitchener (City), 1968 CanLII 31 (SCC), [1969] S.C.R. 157; J.E. Gibson Holdings Ltd. v. Principle Investments Ltd., 1964 CanLII (SCC), [1964] S.C.R. 424; Halifax (City) v. Vaughan Construction Co. Ltd., 1961 CanLII 105 (SCC), [1961] S.C.R. 715; Jewish Home for the Aged of B.C. v. Toronto General Trusts Corp., 1961 CanLII 295 (SCC), [1961] S.C.R. 465; Prudential Trust Co. Ltd. v. Forseth, 1959 CanLII 48 (SCC), [1960] S.C.R. 210; Re Cox, 1952 CanLII 13 (SCC), [1953] S.C.R. 94; Halifax School for the Blind v. Chipman et al, 1937 CanLII 47 (SCC), [1937] S.C.R. 196; Guardian Realty Co. v. John Stark Co. (1922), 64 S.C.R. 207; McFarland v. Hauser et al, 1978 CanLII 164 (SCC), [1979] S.C.R. 337; Hofer et al v. Hofer et al, 1970 CanLII 161 (SCC), [1970] S.C.R. 958; Towle Estate v. Minister of National Revenue, 1966 CanLII 40 (SCC), [1967] S.C.R. 133; Prudential Trust Co. Ltd. v. Olson, 1959 CanLII 49 (SCC), [1960] S.C.R. 227; Royal Trust Co. et al v. Crawford et al, 1955 CanLII 36 (SCC), [1955] S.C.R. 184; Beard et al v. Barrett et al, 1954 CanLII 21 (SCC), [1955] S.C.R. 93; Canadian Pacific Railway v. Turta, 1954 CanLII 58 (SCC), [1954] S.C.R. 427; Ernst v. Zwicker (1897), 1897 CanLII 93 (SCC), 27 S.C.R. 594; Blackburn v. McCallum (1903), 1903 CanLII 68 (SCC), 33 S.C.R. 65; Re Hammond Estate, 1935 CanLII (SCC), [1935] S.C.R. 550; Fasken v. Fasken, 1953 CanLII (SCC), [1953] S.C.R. 10; Re Ganong Estate, 1940 CanLII 56 (SCC), [1941] S.C.R. 125. [24] At pp. 682-94. [25] At pp. 684-85. [26] See: Haggerty v. City of Oakland, (1st Dist.) 161 Cal. App. 2d 407. [27] See: 61 Am Jur 2d, pg. 62, para. 52. [28] Also See: Winnipeg Child and Family Services (Northwest Area) v. G. (D.F.) (1998), 1997 CanLII 336 (SCC), 152 D.L.R. (4th) 193; [1997] S.C.R. 925.
The Court of Appeal was required to determine the limits of its authority to change the application of the Rule against Perpetuities, an established common law principle, to a particular type of oil and gas lease. In 1950 Taylor entered a 'top' (head) lease for mineral rights with Freeholders Oil, effective upon the expiry of Imperial's interest in 1959. The new owner of the land recognized the assignment of the 1961 top lease sold to Tarragon in 1993. After reaching an agreement in 1993 in principle for a 'farmout' arrangement whereby Maxx agreed to drill the lands for Tarragon, Maxx concluded the top lease offended the Rule against Perpetuities and entered its own lease with the landowner. The trial judge held the 1950 Freeholders lease was void because it contravened the Rule against Perpetuities; although top leases do not offend the policy behind the rule, any modification of the rule is best left to the legislature; there was a breach of confidence. HELD: The appeal was allowed with costs on double column V. The action for a declaration that the top lease is void was dismissed with costs in Queen's Bench. 1)The top lease in question was not void as it did not offend the object and purpose of the Rule. The reasoning and approach of the Supreme Court of Canada in Salituro, Tolofson and Morguard was persuasive. The decision of the House of Lords in Arthur J S Hall demonstrates the need to re-examine archaic rules of common law which cannot be justified in modern society. The genius of the common law lies in its adaptiveness to changing times. Its basic principles are not meant to become rigid formulae. Common law rules may be tweaked to do justice between the parties when a rigid and mechanistic application of the rule would run counter to the object and purpose of the rule. Since the socio-economic and political conditions which gave rise to the creation of the Rule no longer exist, it was open to the Court to consider the application of the rule in the context of a commercial instrument such as the top lease in question.  2)Although top leases have been attacked on other grounds, this was the first case before the Saskatchewan Courts in which the Rule against Perpetuities has been advanced to void such a lease. The historical background and object and purpose of the rule were reviewed. The general purpose is to prevent the tying up of property to the detriment of society in general. The common law rule against perpetuities prevails over intention because it is not a rule of construction, but a rule of property. A mere possibility, or even a probability that the estate or interest may vest within the time is not enough. The 'wait and see' doctrine has been adopted by statute in some jurisdictions.DISSENT: The Court should not modify the Rule in the face of the significance of such a modification, the efforts of the legislature to legislate and the inability to deal with such issues as the retrospective operation of such a decision. The Rule against Perpetuities applies to this top lease. As there is no life in being in this case, the interest must vest within 21 years of its creation which would have been 1971. The Rule is not concerned with the duration of an interest but only that an interest may vest at a remote time in the future. The rule invalidates interests in land that vest too remotely.