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1920 Supreme(SC) 61
Privy Council
Lord Atkinson, Lord Dunedin , Viscount Cave, Justice Viscount Haldane, JJ.
Lampson -Appellant
Versus
City of Quebec -Resopndent
On appeal from the Supreme Court of Canada
Decided On : 05-08-1920
Charles Russell and Co., Harwood and Co., Stephenson, T. Mathew, Chapleau , La Rue, Macmaster
Important Points
Subject
Property Law - Leasehold/Emphyteutic Leases
Act Referred
Headnote
(B) Interpretation of Contracts - Plain meaning rule - Where the language of a deed is plain and unambiguous, it must be construed according to the words used - Parties cannot later assert an intention contrary to the express terms of the written agreement.
(C) Transfer of Rights - Agreement for sale - Where a contract stipulates that a deed of sale is to be executed upon the fulfillment of certain conditions (such as payment of a sum) before the property passes, the failure to execute said deed prevents the transfer of ownership, notwithstanding the payment of the price or the delivery of possession.
Facts of the case:
The appellant granted emphyteutic leases for two plots of ground. The original lessee assigned the interest to a third party, whose interest was subsequently seized and purchased by a municipal body for unpaid taxes. The municipal body then sub-leased the premises to a party under an agreement stating that upon payment of a specific sum, the municipal body would be obliged to execute a deed of sale of its rights in the emphyteutic lease, after which the sub-lessee would enter into full proprietorship. The sub-lessee paid the sum and remained in possession, but no deed was ever executed due to a dispute over the boundaries of the property. Upon expiration of the emphyteutic lease, the appellant sued the municipal body for rent arrears and damages. The municipal body contended that the sub-lessee had become the owner of the leasehold interest and was therefore liable.
Findings of Court:
The contested clause in the sub-lease created an option for the sub-lessee to require a deed of sale upon payment of the specified sum. The transfer of proprietorship was contingent upon the execution of that deed. Since no deed was executed, the sub-lessee remained a sub-lessee and did not acquire the interest in the emphyteutic lease.
Issues: Whether the payment of a sum and subsequent possession of premises, under a contract stipulating that a deed of sale would be executed upon such payment, was sufficient to transfer the leasehold interest without the actual execution of the deed.
Ratio Decidendi: The court held that the language of the contract governed the rights of the parties. Because the agreement explicitly provided for the execution of a deed as a condition for the transfer of proprietorship, the absence of the deed meant the property did not pass. Possession under a sub-lease does not equate to ownership of the head lease when the contract requires a formal conveyance.
Result: Appeal allowed.
Legal Category Hierarchy
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property law
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leases
- emphyteutic leases
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transfer of title
- conveyance by deed
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leases
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contract law
-
interpretation of contracts
- plain meaning rule
-
interpretation of contracts
Lord Atkinson :-
The point for decision in this appeal is a very short one, although it has given rise to considerable division of judicial opinion. The facts too are comparatively few and simple. The appellant and his late brother, Georges Lampson, deceased (of whom the appellant is the universal legatee), by two emphyteutic leases, both dated 22nd March 1888, demised to one Claude Giguere each of two plots of ground respectively in Champlain Ward in the City of Quebec, each for a term of twenty-five years from 30th April 1888, at a rent in each case of 25 dollars per annum, payable half-yearly on 1st May and 1st November in each year. Each lease contained two covenants by the lessee : first, that he would build a good house with brick or stone chimney within two years from the date of the lease, and keep the same in order and repair during the term of the lease ; and secondly, that he would at the end of the lease give up the rented premises to the lessor in good order and repair together with all improvements.
The true nature of an emphyteutic lease under the Civil Code of Lower Canada is not disputed. It is a contract by which the proprietor of an immovable conveys it for a time to another for a term not less than nine or more than ninety nine years, the lessee undertaking (1) to make improvements, and (2) to pay to the lessor an annual rent, and such other charges as may be agreed upon : Civil Code, art. 567. So long as the term lasts the lessee has all the rights attached to the quality of a proprietor; he may alienate, transfer, or hypothecate the immovable leased, without prejudice, however, to the lessor's rights: Civil Code Arts. 569-570. His interest may be seized as real property under execution against the lessee at suit of his creditors, and sold (art. 571 C.C.). He holds subject to all the real rights and land charges to which the property is subject (Art. 576. C.C.). He is bound to make the improvements that he has undertaken to make. He is bound to execute all necessary repairs (Art. 577 C.C.)..
Claude Giguere, the lessee, entered into possession, built a house as stipulated, and remained in occupation till 5th July 1893, when by a notarial deed he conveyed and assigned all his interest under these leases in the premises respectively demised by them to one Joseph Cote. During the same year Joseph Cote omitted to pay to the respondents the taxes due to them in respect of the demised premises. The respondent sued him to recover these taxes with the result that his estate and interest under the leases was taken in execution by the sheriff, who on 6th April 1894, sold it to the respondents, and by deed dated 10th October 1894, conveyed it to them. The respondents became liable to pay to the lessor or his representative the rents reserved by these leases, and to perform all the covenants by the lessee contained in them.
The respondents immediately after their purchase took possession of the premises purchased, and some months before the date of the sheriff's conveyance to them, by a notarial deed dated 31st July, 1894, leased them for a period of two years, i.e., from 1st August 1894, to 1st August, 1896 - at an annual rent of 100 dollars, to one
Madame Falardeau, wife of David Falardeau. This sub-lease - for such it may be styled - contained covenants by the sub-lessee Madame Falardeau, to pay quarterly in advance to the respondents the rent reserved, to pay to the appellant the rent reserved by the emphyteutic lease, to keep the premises in repair during her term, and at the end of the term to deliver them up in good repair and condition. This lease contained the following clause upon the construction of which the question for decision mainly turns:
"77 est convenu entreles parties que la dite Cite de Quebec sera tcnue et obligee de consentir a la dite Dame Falardeau, un litre de ventc de ses droits et pretentious stir les dits baux cmphijteotiques lorxque la dite soinme dedeux cents piastres aura, tie enlierement p
