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1920 Supreme(SC) 58
Privy Council
Lord Atkinson, Lord Dunedin , Viscount Cave, Lord Buckmaster, Justice Viscount Haldane, JJ.
King -Appellant
Versus
Paulson and others -Resopndent
On Appsal from the Supreme Court of Canada
Decided On : 02-08-1920
Blake , Paulson, Charles Russel and Co., Smellie, International Coal and Coke Co., G. Lawrence, M. Machnaghten , T. Mathew, Thomson, Bischoff , Coxe, Redden Bischoff, Macmaster
Receipt of rent by a lessor with knowledge of a breach constitutes an irrevocable election to treat the lease as subsisting, waiving the right to forfeit. This principle overrides contractual requirements for written waivers to prevent the lessor from treating the lessee as both a tenant and a trespasser.
Headnote:(A) Dominion Lands Act - Sections 23, 24, 47; Order in Council regarding coal mining leases - Waiver of forfeiture - Receipt of rent by a lessor with knowledge of a breach constitutes an irrevocable election to treat the lease as subsisting, thereby waiving the right to forfeit.
(B) Contractual requirements for written waivers - A provision requiring waivers to be expressed in writing does not override the principle of election by conduct when rent is accepted. A lessor cannot treat a lessee as a lawful tenant for the purpose of receiving rent while simultaneously treating them as a trespasser by cancelling the lease for the same period.
Facts of the case:
A lease for coal mining was granted with a condition to commence active operations within one year and work a mine within two years. The lessee failed to comply with these conditions but continued to pay rent, which the lessor accepted. The lessor subsequently attempted to cancel the lease via written notice after a third party expressed interest in the land, despite having accepted rent for a period that extended beyond the purported cancellation date.
Findings of Court:
The acceptance of rent constituted a waiver of the right to forfeit the lease. Furthermore, the notice of cancellation was insufficient as it stated the lease "has been cancelled" rather than "is hereby cancelled," and there was no evidence that the notice was validly served on the lessee.
Issues: Whether the receipt of rent with knowledge of a breach constitutes a waiver of forfeiture despite a contractual requirement for written waivers, and whether the notice of cancellation was legally sufficient.
Ratio Decidendi: A lessor who accepts rent with knowledge of a breach makes an irrevocable election to treat the lease as subsisting. This prevents the lessor from "blowing hot and cold" by accepting rent for a period while claiming the lease was cancelled during that same period. Such an election by conduct is not negated by a clause requiring waivers to be in writing.
Result: Appeal dismissed.
Legal Category Hierarchy
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property law
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leases
- forfeiture and waiver
- mining leases
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leases
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administrative law
- statutory interpretation
Lord Atkinson :-
This is an appeal by special leave from a judgment of the Supreme Court of Canada, dated 29th December 1915, which reversed a judgment dated 15th April 1914, of the Exchequer Court of Canada, by which latter judgment it had been declared that a lease, dated 8th August 1904, granted by the Crown to the first-named respondent, had been forfeited or cancelled and set aside. In the information filed by the Crown, out of which this appeal has arisen, it was prayed not only that this lease of 8th August 1904, should be declared as above but that in the alternative it might be adjudged, in the event of the latter being found not to have been forfeited, that a subsequent lease dated 28th June 1910, made by the Crown to the second respondent had been made inadvertently and should be cancelled, and that it should be adjudged that the International Coal and Coke Co., Ld., should be ordered to indemnify the appellant for all expenses, loss, or damage resulting from the refusal of the plaintiff to revive the lease which had been granted to the respondent Paulson. By the decree of the Supreme Court of Canada it was ordered and adjudged that the appeal should be allowed, the judgment of the Court of Exchequer reversed, and the information of His Majesty dismissed, and that His Majesty should pay to the appellant Paulson his costs in the Court of Exchequer and in the Supreme Court. No order was made on the prayer for alternative relief.
Sect. 23 of the Dominion Lands Act (R. S. Can., 1886, c. 54) provides as follows :
"Sections (eleven and twenty-nine in every surveyed township throughout the extent of the Dominion lands are hereby set apart as an endowment for purposes of education, and shall be designated school lands: and they are hereby withdrawn from the operation of the clauses of this Act which relate to the sale of Dominion lands and to homesteads rights therein : and no right to purchase or to obtain homestead entry shall be recognised in connection with the said sections, or any part of them."
By S. 24 it is directed that school lands shall be administered by the Minister of the Interior under the direction of the Governor in Council. S. 47 of the same statute runs thus :
"Lands containing coal or other minerals, whether in surveyed or unsurveyed territory, shall not be subject to the provisions of this Act respecting sale or homestead entry but shall be deposed of in such manner and on such terms and conditions as are from time to time, fixed by the Governor in Council, by regulations made in that behalf."
By order in Council of 11th June 1902, in virtue of the provision of S. 47 of the Dominion Lands Act, the issue of leases of school lands in Manitoba and the North-west Territories for coalmining purposes was authorized for the development of coal mines underlying such school lands, subject to terms and conditions of which the first and sixth are alone material on the hearing of this appeal, and are as follows :
"(1) Leases of school lands for coal-mining purposes shall be for a period not exceeding ten years and shall only be granted to applicants, in the order of their applications, who have satisfied the Minister of the Interior of their means and ability to work efficiently the mines applied for. (6) Failure to commence active operations within one year and to work the mine within two years after the commencement of the terms of the lease or to pay the ground rent or royalty as before provided, shall subject the lessee to the forfeiture of the lease and to resumption of the land by the Crown."
The term of ten years mentioned in the first condition was afterwards extended to twenty years.
In their Lordships' view these are dominating provisions. Any clauses introduced into bases of mines or mining rights purporting to have been granted under the authority of the Order in Council inconsistent with them, or encroaching upon them, would be unauthorized and might be ultra vires. It would be wholly otherwise if the clauses
