Boulevard Heights, Limited (Defendant) Appellant;
and
Charles B. Veilleux (Plaintiff) Respondent
1915: October 25, 26; 1915: November 2.
Present:—Sir Charles Fitzpatrick C.J. and Idington, Duff,
Anglin and Brodeur JJ.
ON APPEAL FROM THE APPELLATE DIVISION OF THE SUPREME COURT OF
ALBERTA.
Construction of statute—Sales of subdivided lands—Registration
of plans—Prohibitive sanction—"Land Titles Act" 6 Edw. VII., c. 24, s.s.
7 (Alta.); 4 Geo. V., c. 2, s. 9; 5 Geo. V., c. 2, s. 25 (Alta.)—Retrospective
legislation—Illegality of contract—Remission—Recovery of money paid—Right of
action—Practice— Pleading—Appeal.
[Page 185]
The effect of the amendment to the Alberta "Land Titles
Act," 6 Edw. VII., ch. 24, by 1 Geo. V., ch. 4, sec. 15(25), adding the
seventh sub-section to section 124 of that Act, is to prohibit sales of lands
subdivided into lots according to plans of subdivision until after the
registration of the plans in the proper land titles office and also to render
any sales made in contravention of the prohibition inoperative.
The vindicatory sanction imposed by the statute is directed
against the vendor and where there is no presumption of knowledge of the
invalidity on the part of the purchaser he cannot be deemed in pari delicto with
the vendor and is not deprived of the right of action to set aside the
agreement and recover back moneys paid thereunder.
After the judgment appealed from had been rendered the statute
was further amended (5 Geo. V., ch. 2, sec. 25) by the addition of sub-section
8(a) providing that the seventh sub-section could not be pleaded
or relied upon in any civil action or proceeding by a party to any such
agreement when the plan in question had been registered before the action or
proceeding was instituted or where it was the duty of the party pleading to
make such registration.
[Page 186]
Held, that, as the last amending Act was not a statute
declaratory of the law as it stood at the time when the judgment appealed from
was rendered, and as appeals to the Supreme Court of Canada are not of the
nature of re-hearings to which the principle of the decision in Quitter v.
Mapleson (9 Q.B.D. 672) applies, the restricting provisions can have no
effect upon the decision of the present appeal.
Judgment appealed from (8 West. W.K. 440) affirmed.
APPEAL from the judgment of the Appellate Division of the
Supreme Court of Alberta,
affirming the judgment of Walsh J., at the trial,
by which the plaintiff's action was maintained with costs.
The circumstances of the case and the questions in issue on
the present appeal are stated in the judgments now reported.
A. H. Clarke K.C. for the appellants.
M. B. Peacock for the respondent.
THE CHIEF JUSTICE.—This is an appeal from the Supreme
Court of Alberta. The action was brought for return of moneys paid on account
of a contract for the purchase of lands and for a declaration that the contract
was rescinded. The judgment at the trial was in favour of the plaintiff. This
judgment was affirmed by the full court and I can see no reason to interfere
with the conclusion reached below.
The appeal is dismissed with costs.
IDINGTON J.—This is an action to rescind an agreement for
the sale of lots in a subdivision, and the appeal must turn upon the meaning to
be given to the section of an Alberta Act, which reads as follows:—
[Page 187]
No lots shall be sold under agreement for sale or otherwise
-according to any townsite or subdivision plan until after the same has been
duly registered in the land titles office for the registration district in
which the land shewn on said plan is situate; providing that this section shall
not apply to any plan now in existence and approved by the Minister.
This was in force at the time when, the agreement in question was
entered into. It seems, therefore, to be the very thing which the Act
prohibits, for, admittedly, there was no plan registered when it was entered
into.
The respondent was ignorant of that fact and brought this action
for rescission the next day after his discovery thereof.
The purpose of the Act may primarily have been the convenience of
those having to deal with registrations, but the court of appeal suggests
another purpose had in view by the legislature was to protect intending
purchasers from possible fraud by manipulation of unregistered plans. I think
we must feel bound to give due weight to that view resting upon knowledge of
local conditions which we may not as clearly apprehend as the local courts.
It is by accepting that view that the respondent is entitled to
succeed herein.
He comes, thus, within a class of whom each person is entitled,
when acting in ignorance of an illegality tainting a contract he has entered
upon, to recover from the other party to the contract, notwithstanding the
illegality.
Had he known the fact when entering into the contract, or
possibly when acting under the contract in a way to ratify it, he could hardly
claim to recover.
The Act was amended after judgment was given
[Page 188]
herein by the court of appeal, and the
amendment, it is urged, does away with his right therein.
Whatever might be said in the ease of such an amendment as
appears, enacted before the hearing in appeal, cannot, I think, help the
appellant now.
That judgment was right when given. We can only give the judgment
which the court below appealed from should have given. To go further would be
to exceed our jurisdiction.
I think, therefore, the appeal must be dismissed with costs.
DUFF J.—I have no difficulty in reaching the conclusion
that, apart from the enactments discussed below, the respondent is entitled to
rescind the agreement in question on the ground of misrepresentation, on the
principle of Redgrave v. Hurd;
and this, of course, would entail the consequence that he is entitled to
recover back the moneys paid under the agreement.
It is necessary, however, to notice the points upon which the
argument chiefly proceeded (touching certain legislation), and which are dealt
with in the judgments, of the other members of the court. I entertain no doubt
that sub-section 7 of section 124 of the "Land Titles Act," which is
in the following words:—
No lots shall be sold under agreement for sale or otherwise
according to any townsite or subdivision plan until after the same has been duly
registered in the land titles office of the registration district in which the
land shewn on said plan is situate; providing that this section shall not apply
to any plan now in existence and approved by the Minister,
[Page 189]
does prohibit any agreement for the sale
of "lots"—"according to any townsite or subdivision plan until
after the same has been duly registered"; and that, consequently any such
agreement, made in the circumstances mentioned, though de facto complete,
is by reason of this enactment legally inoperative.
It does not, however, necessarily follow, where moneys have been
paid under such a transaction in professed and intended performance of the
obligations supposed to be thereby created, that such moneys can be recovered
back by the party paying them on discovering that the transaction was illegal.
The law of England as touching the right to recover back moneys paid or
property delivered under an unlawful agreement or the right to set such an
agreement aside was fully discussed in the case of Lapointe v. Messier,
and, for convenience, I quote from my own judgment, at pages 287, 288 and 289:—
The general rule of the English law is stated in the
judgment of Lord Mansfield, in Holman v. Johnson.
"The objection that a contract is immoral or illegal,
as between plaintiff and defendant, sounds at all times very ill in the mouth
of the defendant. It is not for his sake, however, that the objection is ever
allowed, but it is founded in general principles of policy, which defendant has
the advantage of contrary to the real justice as between him and the plaintiff,
by accident, if I may say so. The principle of public policy is this: ex
dolo malo non oritur actio. No court will lend its aid to a man who founds
his cause of action upon an immoral or illegal act. If from the plaintiff's own
stating or otherwise the cause of action appears to arise ex turpi causa, or
the transgression of a positive law of the country, there the court says he has
no right to be assisted. It is upon that ground the court goes; not for the
sake of the defendant, but because they will not lend their aid to such a
plaintiff. So, if the plaintiff and the defendant were to change sides, and the
defendant was to bring his action against
[Page 190]
the plaintiff, the latter would then
have the advantage of it; for where both are equally in fault, potior est
conditio defendentis."
There are, however, apparent exceptions to this rule and the
question is whether or not the present case comes within any of those
exceptions. These exceptions have been stated in two text books of high repute
and in two comparatively recent judgments. And, before considering the scope of
them in their application to this case, it will be convenient to reproduce the
passages: 1st Pollock on Contracts, pages 404, 405: —
"Money paid or property delivered under an unlawful
agreement cannot be recovered back, nor the agreement set aside at the suit of
either party—unless nothing has been done in the execution of the unlawful
purpose beyond the payment or delivery itself (and the agreement is not
positively criminal or immoral);
"Or unless the agreement was made under such
circumstances as between the parties that, if otherwise lawful, it would be
voidable at the option of the party seeking relief.—Note (b).—This form
of expression seems justified by Harse v. Pearl Life Assurance Co..
"Or in the case of an action to set aside the agreement, unless in the
judgment of the court the interests of the third persons require that it should
be set aside."
Secondly, Anson on Contracts, pp. 253-4: —
"But there are exceptional cases in which a man may be
relieved of an illegal contract into which he has entered; cases to which the
maxim just quoted does not apply. They fall into three classes: (1) The
contract may be of a kind made illegal by statute in the interests of a
particular class of persons of whom the plaintiff is one; (2) the plaintiff may
have been induced, to enter into the contract by fraud or strong pressure; (3)
no part of the illegal purpose may have been carried into effect before it is
sought to recover the money paid or goods delivered in furtherance of it."
The first of the judgments is in Kearley v. Thomson,
where Lord Justice Fry says (pp. 745-6): —
"To that general rule there are undoubtedly several exceptions,
or apparent exceptions. One of these is the case of oppressor and oppressed, in
which case usually the oppressed party may recover the money back from
the" oppressor. In that class of cases the delictum is not par, and,
therefore, the maxim does not apply. Again, there are other illegalities which
arise where a statute has been intended to protect a class of persons, and the
person seeking to recover is a member of the protected class. Instances of that
description are familiar in the case of contracts void for usury under the old
statutes, and other instances are to be found in the books under other
statutes, which are, I believe, now repealed, such as those
[Page 191]
directed against
lottery keepers. In these cases of oppressor and oppressed, or of a class
protected by statute, the one may recover from the other, notwithstanding that
both have been parties to the illegal contract."
In the present case it may be suggested that the respondent
(brings himself within either one of two of the exceptions mentioned. First
(and as I have intimated this is sufficient for disposing of the appeal), that
the agreement was made under such circumstances that if otherwise lawful it
would have been voidable at the option of the respondent, Secondly, that the enactment
was intended to afford protection to a particular class of persons of whom the
respondent is one. It is open to doubt, I think, whether the respondent does in
truth bring himself within this last mentioned exception. I am disposed to
think the better view to be that this enactment is intended to serve the
general public interest in the security and certainty of title which is one of
the main objects of the "Land Titles Act."
Assuming, however, as some of my learned brothers think, that the
respondent has a status to set aside the agreement on the ground of illegality
alone, then it become necessary to consider the contention of Mr. Clarke that
the rights of the parties are governed by sub-sections 8(a) and
8(b) of section 124, which subsections were enacted on the 17th of
April, 1915, after the judgment of the Appellate Division of Alberta now
appealed from was delivered; (5 Geo. V., ch. 2, sec. 25). If we are governed by
these amendments in the decision of this appeal, then the respondent must fail
in so far as his case rests upon the illegality of the agreement of sale.
There can be no doubt, I think, that if these amend-
[Page 192]
merits had been enacted before the
hearing of the appeal by the Appellate Division of Alberta, that court would
have been governed by them in the disposition of the appeal. Quilter v. Mapleson.
The question Ave have to consider is another question. The Legislature of
Alberta has no authority to prescribe rules governing this court in the
disposition of appeals from Alberta; and the enactments invoked by Mr. Clarke,
which do not profess to declare the state of the law ait the time the action
was brought, or at the time the judgment of the Appellate Division was given,
can only affect the rights of the parties on this appeal to the extent to which
the statutes and rules, by which this court is governed permit them so to
operate.
In my judgment, the appeal to this court is an appeal strictly so
called, not an appeal by way of rehearing. The "Supreme Court Act"
(sec. 51), expressly declares that this court should give the judgment which
ought to have been given by the court below, and there are no words
corresponding to those of Order 58, Rule 2, of the Judicature Rules, which
enable the court of 'appeal to
make any further
or other order as the case-may require.
Speaking generally, subject to some special provisions of the Act
which have no present application, and to some exceptions established for the
purpose of preventing the abuse of the right of appeal, it is the duty of this
court to give the judgment which the court below ought to have given according
to the state of the law on which it was the duty of that court to base its
judgment.
[Page 193]
ANGLIN J.—The contract under which the payments that the
plaintiff claims to recover back were made was, in my opinion, unquestionably
in contravention of sub-section 7 of section 124 of the "Land Titles
Act" of Alberta (2 Geo. V., ch. 4, sec. 15, sub-sec. 25). I cannot assent
to Mr. Clarke's contention that what this statute forbids is not the making of
an agreement for the sale of lots on an unregistered plan, but the conveyance
or transfer of lots sold under such an agreement. It is the sale under an
agreement (or otherwise) which is prohibited and that is effectuated by the
agreement itself which vests in the purchaser the equitable title to the lots
agreed to be sold. The agreement was, therefore, illegal and void.
The amending -statue of 1915, although made applicable to pending
litigation, is not declaratory of the law as it stood at the time of the
contract in question or at any subsequent period anterior to its enactment. It
became law only after the judgment of the Appellate Division in this case had
been delivered. This court is bound by statute to render the judgment which the
court appealed from should have given —of course upon the law as it was when
that court delivered judgment. The appeal to this court is upon a case stated
and it is not a re-hearing such as would render applicable the principle of the
decision in Quilter v. Mapleson.
It is impossible to say that the provincial appellate court should have given
effect to an amendment of the statute law which was not in force when it
rendered judgment. Nor can an amendment not declaratory in its nature, such as
was that dealt with in Corporation of Quebec v. Dunbar,
[Page 194]
cited by Mr. Clarke, enable us to say
that the law was at the date of the judgment appealed from what the subsequent
amendment has made it. I express no opinion as to how far such a declaratory
amendment enacted by a provincial legislature after a right of appeal to this
court had arisen would be binding on us.
Ordinarily, a party to an illegal contract cannot recover back
moneys paid under it. But to this rule the law admits of an exception in favour
of a plaintiff whom it does not regard as in pari delicto with the
defendant. In the present case it is the sale, not the purchase, of land
according to an unregistered plan which is forbidden. The penalty provided by
sub-section 8 of section 124 of the "Land Titles Act" (4 Geo. V. (2nd
Sess.), ch. 2, sec 9, sub-sec. 4), is, as I read it, imposed on the vendor. He
is the "offender" who sells. The seller may be presumed to know
whether the plan according to which he is selling is or is not registered.
There is no ground for a presumption of like knowledge on the part of the
purchaser. Moreover, there is reason to believe that the statute was passed for
the protection of purchasers. These are circumstances which, upon the authorities,
suffice to relieve the present plaintiff, as a party not in pari delicto, from
the operation of the rule which would, otherwise, disentitle him to sue for the
recovery back of money paid under an illegal agreement.
It is unnecessary to consider the other grounds on which the
respondent claimed to be entitled to rescission.
The appeal, in my opinion, fails and must be dismissed with
costs.
[Page 195]
BRODEUR J.—This is an action in rescission of an agreement
for sale based upon three grounds:—
1. Illegality of
the contract;
2. Defendant's
inability to make title;
3. Misrepresentation
of the vendors.
The illegality of the contract is invoked by the purchaser who
claims that it was made in contravention of a statute passed in 1912 (sub-sec.
7, of sec. 124, "Land Titles Act"), declaring that
no lots shall be
sold under agreement for sale, or otherwise, according to any townsite or
subdivision plan until after the same has been duly registered in the land
titles office.
The lots of land in question in this case were shewn on a
subdivision plan that was not registered as required by that statute.
The trial judge and the Appellate Division of the Supreme Court
came to the conclusion that the agreement for sale should be rescinded in view
of that prohibitory law. I concur in the reasons given by the trial judge, Mr.
Justice Walsh.
But, since the judgment of the court of appeal was rendered, on
the 12th of March, 1915, the Legislature of Alberta has amended the "Land
Titles Act," on the 17th of April, 1915 (5 Geo. V., ch. 2, sec. 25), and
has enacted sub-sections 8(a) and 8(b) of section 124,
which provide as follows:—
8(a). No party to any sale or agreement for sale
shall be entitled in any civil action or proceeding to rely upon or plead the
provisions of sub-section 7 of this section, if the plan of subdivision by
reference to which such sale or agreement for sale was made was registered when
such action or proceeding was commenced, or if, pursuant to the arrangement
between the parties, it was the duty of the party who seeks to rely upon or
plead the provisions of such sub-section to himself register such plan of
subdivision or cause the same to be registered.
[Page 196]
8(b). The costs of pending proceedings to which
sub-section 8(a) applies shall be disposed of as if the
said sub-section had not been passed.
The question which is raised as a result of that new legislation
is whether we should give effect to it or not in this case.
By the "Supreme Court Act," section 51, this court may
dismiss, an appeal or give the judgment which the court whose decision is
appealed against should have given.
At the time the court below was considering this case, the
statute now invoked had not been passed. It could not be then acted upon by
that court. Our duty is to render the judgment which the court below should
have rendered.
The Legislature of Alberta could not pass any legislation that
could interfere with the powers vested in and restrictions imposed on this
court by the Federal Parliament.
If it was a declaratory law that had been passed by the
provincial legislature, of course we would be bound by it.
I am of opinion that the judgment of the Supreme Court of Alberta
should be confirmed with costs.
Appeal dismissed with costs.
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