Supreme Court of Canada
Ocean Harvesters Ltd. v. Quinlan Brothers Ltd., [1975] 1 S.C.R. 684
Date: 1974-03-18
Ocean Harvesters Limited Appellant;
and
Quinlan Brothers Limited Respondent.
1973: November 27, 28; 1974: March 18.
Present: Ritchie, Spence, Pigeon, Laskin and Dickson JJ.
ON APPEAL FROM THE SUPREME COURT OF NEWFOUNDLAND ON APPEAL
Real property—Limitation of Actions—Possessory title—Exclusive possession—Intention of the parties—The Limitation of Actions (Realty) Act, R.S.N. 1952, c. 145, ss. 3, 8.
M. purchased the property in dispute at Bay de Verde on August 31, 1943, and on March 25, 1944, incorporated North Eastern Fish Industries Limited of which at all material times he was President and controlling shareholder and to which on May 2, 1944, he transferred certain assets but not the property in dispute which remained in his own name until his death in 1962. M. permitted North Eastern to use and occupy the property in dispute during the fishing season each year without rent passing. After M’s death in 1962 and after control of North Eastern had changed, it was asserted that North Eastern had become entitled to the property in dispute as a result of its possession which extended over a period of some twenty-one years, The Limitations of Actions (Realty) Act, R.S.N. 1952, c. 145 having established a limitation period of twenty years and that in the case of a tenant at will, the right of action to recover land or rent is to be deemed to have first accrued either at the termination of such tenancy or at the expiration of one year next after the commencement of such tenancy. The trial judge, Higgins J., found that the plaintiff had acquired possessory title, however this was reversed on appeal, when the Court, following Wills v. Steer (1907), 9 Nfld. L.R. 228, decided that the owner, M., had not been dispossessed nor had he discontinued possession.
Held: The appeal should be dismissed with costs.
On the facts of the case North Eastern did not have possession to the exclusion of the owner M.; its occupancy of the property for part of each year was not inconsistent with continued possession and control by M. in his personal capacity. A tenancy cannot be created in the absence of exclusive possession and whether or not exclusive possession is actually taken
[Page 685]
depends entirely on the surrounding circumstances, including the intention of the parties. The incongruity of M. retaining title but giving North Eastern such possession as would dispossess him would indicate that there was no intention to create a proprietary interest such as a tenancy at will.
Lynes v. Snaith, [1899] 1 Q.B. 486; Errington v. Errington, [1952] 1 All E.R. 149; Cobb v. Lane, [1952] 1 All E.R. 1199; Gray v. Richford (1878), 2 S.C.R. 431; Smith v. Lloyd (1854), 9 Ex. 562, 156 E.R. 240; Allen v. England (1862), 3 F. & F. 49; Radiach v. Smith (1959), 101 C.L.R. 209; Wills v. Steer (1907), 9 Nfld. L.R. 228; Thomas v. Sorrell (1673), Vaughan 330, 124 E.R. 1098, referred to.
APPEAL from the Supreme Court of Newfoundland on Appeal reversing the judgment of Higgins J. at trial. Appeal dismissed with costs.
P.J. Lewis, Q.C., and P.W. Davidson, for the appellant.
John J. O’Neill, Q.C., for the respondent.
The judgment of the Court was delivered by
DICKSON J.—This case concerns ownership of a two-storey frame building located at Bay de Verde, Newfoundland, used for receiving fresh fish. The respondent Quinlan Brothers Limited claims title under a registered conveyance from the administrator of the estate of the former owner, the late Silas W. Moores. The appellant Ocean Harvesters Limited claims that the late Mr. Moores’ title to the property was extinguished by virtue of The Limitation of Actions (Realty) Act of Newfoundland, R.S.N. 1952, c. 145, because North Eastern Fish Industries Limited, through whom Ocean Harvesters acquired title, were in possession of the property as tenant at will of the late Mr. Moores for a period in excess of twenty-one years. The unusual feature of the case is that at all material times Mr. Moores was President and controlling shareholder of North Eastern and completely dominated the Company. If the argument advanced on behalf of Ocean Harvesters is
[Page 686]
sound, however, Mr. Moores’ title was extinguished by effluxion of time and the operation of the Act and North Eastern gained a title by the fact of possession, good against the world, including Mr. Moores and the administrator of his estate. The pertinent parts of ss. 3 and 8 of the Act are:
3. No person shall make an entry or distress or bring an action to recover any land or rent, but within twenty years next after the time at which the right to make such entry or distress, or to bring such action, shall have first accrued to some person through whom he claims; or if such right shall not have accrued to any person through whom he claims, then within twenty years next after the time at which the right to make such entry or distress, or to bring such action, shall have first accrued to the person making or bringing the same.
8. When any person shall be in possession or in receipt of the profits of any land, or in receipt of any rent as tenant at will, the right of the person entitled subject thereto, or of the person through whom he claims, to make an entry or distress, or bring an action to recover such land or rent, shall be deemed to have first accrued either at the termination of such tenancy, or at the expiration of one year next after the commencement of such tenancy, at which time such tenancy shall be deemed to have determined:
…
The effect of these sections, which had their origin in 3 & 4 Wm. IV (Imp.) c. 27, enacted in 1833, was to do away with the earlier doctrine of adverse possession and, in the case of a tenancy at will, cause the statute to begin to run, at the latest and notwithstanding the permissive character of the occupation, at the expiration of one year from the commencement of the tenancy: Lynes v. Snaith. For the statute to run, however, a person other than the owner must be in possession, as a tenant at will. A tenancy at will is created when one person permits another to occupy lands on the agreement, express or implied, that the tenancy is determinable at the will of either. While exclusive possession may
[Page 687]
not always give rise to a tenancy (Errington v. Errington, Cobb v. Lane). I think it beyond question that a tenancy cannot be created in the absence of exclusive possession. Exclusive possession by the tenant is essential to the demise and the statute will not operate to bar the owner unless the owner is out of possession. In an early judgment of this Court, Gray v. Richford, at p. 454, Strong J. quoted Baron Parke in Smith v. Lloyd to this effect:
There must be both absence of possession by the person who has the right and actual possession by another, whether adverse or not, to be protected, to bring the case within the Statute.
and added, p.455:
In short, the Statute has no application, except so long as the title and possession are separate, when the possession is in the rightful owner Statutes of Limitation are not required.
The same thought had been expressed a few years earlier by Erle C.J. in Allen v. England, in these words:
But in my judgment every time Cox (the land owner) put his foot on the land it was so far in his possession, that the statute would begin to run from the time when he was last upon it.
More recent dicta will be found in a decision of the High Court of Australia, Radaich v. Smith, in which Windeyer J. made the following observations, p. 222, which, with respect, I would adopt:
What then is the fundamental right which a tenant has that distinguishes his position from that of a licensee? It is an interest in land as distinct from a personal permission to enter the land and use it for some
[Page 688]
stipulated purpose or purposes. And how is it to be ascertained whether such an interest in land has been given? By seeing whether the grantee was given a legal right of exclusive possession of the land for a term or from year to year or for a life or lives. If he was, he is a tenant.
The enquiry in the present case must be to determine whether North Eastern had a legal right to exclusive possession of the premises, the subject-matter of the litigation. The trial judge found that “the occupation of the premises by N.E.F.I.L. was continuous and exclusive for over twenty years”. The Court of Appeal reversed, purporting to follow Wills v. Steer. In that case one Murray permitted the plaintiff, a carpenter who had lost his workshop by fire, to make use of a workshop which stood on Murray’s land, as a carpenter’s shop. Over twenty years later the defendant entered upon the property and subsequently removed the workshop. The plaintiff took action asserting a right through uninterrupted occupation for over twenty years to that part of the property which included the workshop. Horwood C.J., who delivered the judgment of the Court, quoted what is now part of s. 4 of the Act, which fixes the time at which the right of recovery of persons who “have been dispossessed or have discontinued such possession” first accrues. That case turned on what is now s. 4 of the Act. The present case turns on what is now s. 8 of the Act. In that case the question was whether the owner had been dispossessed or had discontinued possession. The question was answered in the negative as it was by the Court of Appeal in the present case. With respect, the question which the Court of Appeal should have asked in the present case was whether, applying s. 8, North Eastern was in possession as a tenant at will and not whether, applying s. 4, Mr. Moore s was dispossessed or discontinued possession. Admittedly the difference is a narrow one.
[Page 689]
The vital facts are undisputed, save in one respect. In 1965 Mr. Frank Moores, negotiating for the sale of shares in North Eastern to Birds Eye Foods Limited, failed to disclose the interest of the Moores estate in the Bay de Verde property to which I have referred. It was indeed alleged he represented that North Eastern owned the property and Birds Eye would seem to have been under that impression. It is unnecessary to decide whether such representations were made as the outcome of this case is in my view in no way affected by events occurring after the death of Silas W. Moores and in which he played no part.
Silas W. Moores purchased the property at Bay de Verde on August 31, 1943. The following spring he incorporated North Eastern to carry on the processing of fish for the export market. The letters patent of incorporation were dated March 25, 1944 and on May 2, 1944 he transferred to North Eastern fishery assets which he owned, including a plant at Harbour Grace, but not the Bay de Verde property. The plant at Harbour Grace was supplied by fish from inshore fish-buying centres of which Bay de Verde was the most important. At each of these centres fresh fish were received, weighed, iced and stored prior to movement by truck to Harbour Grace for filleting, freezing and processing. Although Mr. Moores left the title to the Bay de Verde property in his own name from the date of purchase in 1943 until his death in 1962, he permitted North Eastern to use and occupy the property during the fishing season, some seven months, each year. The costs of maintenance and minor improvements to the property were paid by North Eastern but these costs were not substantial as none of them was capitalized for income tax purposes. At no time did the Bay de Verde property appear in the Schedule of Properties of the Company as a freehold or leasehold asset and it was not included in a mortgage given by North Eastern to its bankers in 1952. The only entries in the
[Page 690]
financial statements which could be identified with Bay de Verde were (i) an ice house valued at $706.37, shown in 1945 and 1946 following which the entry appeared under the name of Old Perlican, another fish-buying centre, and (ii) a Toledo scale purchased in 1965, several years after the death of Mr. Moores, for $1,669.83. The Company auditor and secretary were not aware of North Eastern’s use of the Bay de Verde property. No rental was paid by the Company to Mr. Moores for the use of the property but this should occasion little surprise as, save for very few, all of the shares of the Company were owned by Mr. Moores or members of his family. Mr. Moores was an astute man in sole charge of a large and successful business. He chose not to transfer the Bay de Verde property to the Company. Some properties were bought in his own name and some in the name of the Company. Some purchased in his name were later transferred to the Company, but not the Bay de Verde property. Although they were paid by North Eastern, Mr. Moores personally hired and fired the employees at Bay de Verde. He decided when operations at Bay de Verde would start each year and when they would stop. He made all decisions of any consequence. The title to the Bay de Verde property was found among his personal effects following his death. Possession by North Eastern was seasonal.
The appellant Ocean Harvesters faces the difficulty of establishing that the Company was in possession to the exclusion of the man who owned and controlled the Company. Without in any way blurring the separation of entity between a man and the Company he owns, in the present case I am quite unable to say whether, when Mr. Moores was at Bay de Verde, he was there as President of the Company or in his personal capacity. Nor can I say whether, when he gave instructions affecting the property, he
[Page 691]
did so, not as owner but as an officer of the Company and indeed to the exclusion of himself as owner. Whether or not exclusive possession is actually taken depends entirely on the surrounding circumstances, including the intention of the parties. There was nothing in writing between Mr. Moores and the Company to define the intent of Mr. Moores but the manifest incongruity of Mr. Moores retaining title but giving North Eastern such possession as would eventually dispossess him leads one to think that the relations between Mr. Moores and North Eastern were not intended to create any proprietary interest such as a tenancy at will. It will, of course, be observed that so long as Mr. Moores and his family owned the Company the legal position of each Mr. Moores and the Company vis-à-vis the Bay de Verde property was of no great importance. It only became important after the death of Mr. Moores and control of the Company passed to other hands. At that time the successors of the Company asserted a claim that the Company had been for more than twenty-one years in possession as tenant at will. In March 1965 Birds Eye Foods Limited purchased 51 per cent of the shares of North Eastern, withdrawing in December 1968 in favour of a Newfoundland crown corporation Harbour Grace Fisheries Corp. which acquired the assets of North Eastern and later sold those assets to Ocean Harvesters.
In my view on the facts of the case North Eastern did not have possession of the Bay de Verde property to the exclusion of Mr. Moores. The Company had occupancy for part of each year with his benevolent concurrence but such occupancy was not inconsistent with continued possession and control by Mr. Moores in a personal capacity. Exclusive possession imports the fact of sole possession or dominant control coupled with a legal right thereto against the world at large. Physical presence alone gives rise to a bare non-exclusive licence which
[Page 692]
makes the entry lawful, Thomas v. Sorrell, but does not create any estate in the land at law or in equity. That is what I think we have in this case.
I would dismiss the appeal with costs.
Appeal dismissed with costs.
Solicitors for the appellant: Lewis & Sinnott, St. Johns.
Solicitors for the respondent: O’Neill, Riche, O’Reilly St Noseworthy, St. Johns.
Email this Content