The contract which the appellant asks to have specifically enforced was made on June 25, 1955, between the respondents Oak, Amren, Daigle and MacKinnon, hereinafter referred to as "the prospectors", and Harquail who was acting as agent for the appellant. On June 29, 1955, the prospectors repudiated that contract by their conduct in entering into a contract with the respondent CanadianCartwright Pipelines and Petroleums Limited giving to that company the option to purchase the 37 mineral claims which formed the subject matter of the contract of June 25, 1955.
For the reasons given by my brother Judson I agree with his conclusions (i) that no valid distinction can be drawn between the position of the appellant during the period from June 25 to June 30, 1955, and what would have been its position if the first payment of $25,000 had been actually paid, and (ii) that the option granted by the contract of
June 25, 1955, created an equitable interest in the claims and was rendered void because it was given and taken against the express prohibition contained in regulation 9(1).
The second of these conclusions is based on the decision way v. Gomm.' It has been suggested that we ought not to follow that case, but in my opinion it was rightly decided.
It is said that the decision of the Court of Appeal in
Manchester Ship Canal Company v. Manchester Racecourse
Company', conflicts with Gomm. In the Manchester case it was sought to enforce a conditional "right of pre-emption"
contained in a contract which had been validated by
Statute; no price was named in the contract but the trial judge, Farwell J., and the Court of Appeal held, against the argument of the defendant, that the price was ascertainable. Farwell J. used the expression "I think that clause 3 creates an interest in the land . . But even if it does not create an interest in the land . . ." and went on to hold the plaintiff entitled to succeed on another ground based on the decision in Willmott v. Barber.' In the judgment of the Court of Appeal Gomm's case is not mentioned by name although it had been cited in argument. The only reference to the question whether the right of pre-emption created an interest in land is found in the following passage at p. 50: The Court then went on to uphold the decision of Farwell J. on the ground that the case fell within the principle of Willmott v. Barber, supra and of Lumley v. Wagner'. An expression of opinion by the learned Lords Justices who composed the Court in the Manchester case is, of course, entitled to great weight but if they had intended to negative the principle enunciated in Gomm it seems to me that they would have stated their reason for so doing. Be this as it may, in so far as the two cases are in conflict I prefer the decision in Gomm on the point with which we are concerned and think that we should follow it.
I wish to add some observations as to two other suggested objections to the conclusion that the option was rendered void by regulation 9(1).
First, it is said that the contract contemplates that, upon performance of all its terms by the appellant, the 37 claims are to be transferred not to the appellant but to a company to be incorporated. Accepting this as the correct construction of the contract, I am unable to find that the appellant's case is assisted. The appellant cannot be heard to say that there did not exist on June 29, 1955, a contract, specifically enforceable in equity, binding the prospectors to hold the option open, and, ultimately, if all the stipulated payments were made, to convey the claims, nor can it be heard to say that it had not the right to enforce that contract, for it seeks to support a judgment in its favour decreeing specific performance thereof. I have already indicated my agreement with the view that the specifically enforceable contractual right to require the holders of the claims to convey them constitutes an interest in the claims; that interest must on the critical date, June 29, 1955, have been held by someone and unless that someone was the holder of a licence as required by regulation 9(1) the acquisition of that interest was forbidden. The appellant is not assisted by saying "True, I had no licence but I was acquiring the interest for someone else who likewise had.no licence, and & indeed no existence". In my view, the effect of the contract was that on the execution of the agreement of June 25, 1955, e the appellant acquired an interest- in the claims which
- Cartwnight J. interest by the terms of the contract it was obligated to w h cause to be transferred to a company to be incorporated at some future time. The legal position would be the same whether the actual transfer of the claims were made from the. prospectors direct to the new company or from the prospectors to the appellant and from the latter to the new company.
Secondly, it is said that, by analogy with certain cases dealing with the rule against perpetuities, even if in so far as it creates an interest in the claims the contract of
June 25, 1955, is rendered void by regulation 9(1) it may still be enforced as a personal obligation binding the prospectors.
The effect of the cases referred to is conveniently summarized as follows, in Halsbury's Laws of England, 2nd ed., vol. 25, at p. 109:
A contract relating to a right of or equitable interest in property in futuro may be intended to create a limitation of land only, in which case, if the limitation is to take effect beyond the perpetuity period, the contract is wholly void and unenforceable; or the contract may, upon its true construction, be a personal contract only, in which case the rule does not apply to it; or it may, upon its true construction, be, as regards the original covenantor, both a personal contract and a contract attempting to create a remote limitation, in which case the limitation will. be bad for perpetuity, but the personal contract will be enforceable, if the case otherwise admits, against the promisor by specific performance or by damages, or against his personal representatives. in damages only.
In all cases it is a question of construction whether the contract is intended to create a limitation of property only, or a personal obligation only, or both.
In my respectful' view the supposed analogy does not lead to the suggested result. Contracts in so far as they are merely personal are outside the rule against perpetuities altogether. We are not concerned with that rule in the case at bar. The question before us is whether or not on the true construction of regulation 9(1) the contract of June 25, 1955, was forbidden by that Regulation, which has the force of a statute.
The regulation reads as follows:
Developer's and Miner's licence shall prospect for minerals upon land subject to these regulations, or stake out or record. any location, and no Cartwright J. person, mining partnership or company not a holder of a Prospector's, Developer's and Miner's licence shall acquire by transfer, assignment or otherwise howsoever any mineral claim or any right or interest therein for which a lease or a patent has not been issued.
To determine whether the contract contravenes the regulation it is necessary to consider the nature of the rights which it conferred upon the appellant. The argument of counsel for the respondents that the contract was too vague and uncertain to be specifically enforceable was rejected by the learned trial judge and by the majority in the Court of Appeal and the appellant is seeking to uphold a judgment for the specific performance of the contract as construed by the learned trial judge. The manner in which he construed it appears from paras. 2, 3 and 5 of the formal judgment of April 10, 1956, which read as follows:
2. AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Defendant Canadian Pipelines and Petroleums Limited do cause the said mineral claims known as 1.0. 1 to 12 inclusive, to be recorded in the names of the Defendants A. Oak, A. Amaren, S. Daigle and Jock MacKinnon jointly, failing which that the Mining Recorder do cancel the title of the Defendant Canadian Pipelines and Petroleums Limited to the said mineral claims and do record the same in the names of the Defendants A. Oak, A. Amaren. S. Daigle and Jock MacKinnon jointly, that the Mining Recorder do issue Certificates of Record of the said mineral claims to the said Defendants A. Oak, A. Amaren, S. Daigle and Jock MacKinnon jointly, that the Defendants A. Oak, A. Amaren, S. Daigle and Jock MacKinnon do execute in blank a Transfer of the said mineral claims, that the said Defendants and the Defendant Canadian Pipelines and Petroleums Limited do thereupon deposit in escrow at the Canadian Bank of Commerce at Uranium City, in the Province of Saskatchewan, in accordance with the said Agreement, the Certificates of Record and Transfers in blank of the said mineral claims known as 1.0. 1 to inclusive, Missing Link 1 to 9 inclusive, and E.O. 1 to 16 inclusive, that in the event of the Defendants A. Oak, A. Amaren, S. Daigle and Jock MacKinnon. or any of them, neglecting or refusing to execute or deliver to the said Bank any of the said Certificates of Record and Transfers in blank, that the Mining Recorder do execute and deliver over to the said Bank the necessary Certificates of Record and Transfers in blank of the said mineral claims, and that upon the receipt by the Bank of the said Certificates of Record and Transfers in blank of all the said mineral claims the Plaintiff do pay to the Defendants A. Oak, A. Amaren, S. Daigle and Jock MacKinnon, the sum of $25,000.00. ADJUDGE that the date of the first option payment of $25,000.00 under the said Agreement be fixed at four months after the said Certificates of Record and Transfers in blank of all the said mineral claims are deposited in escrow at the said Bank, as aforesaid, that the date of the second option payment of $50,000.00 be fixed at four months thereafter, or so & long as is necessary to assure to the Plaintiff the privilege of drilling on the ice during the months of January and February, that the date of et al. the third option payment of $50,000.00 be fixed at eight months thereafter, and that the date of the fourth and final option payment ofCartwright J. $50,000.00 be fixed at eight months thereafter.
5. AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that the Injunction with respect to the said mineral claims granted by The Honourable Mr. Justice Dorion on the 20th day of July, 1955, and continued by the Honourable Mr. Justice Graham on the 6th day of September, 1955, be continued, except as herein otherwise ordered, until further order.
The injunction granted by Doiron J. which is continued by the terms of para. 5 is not copied in the appeal case but its effect is stated as follows in the appellant's factum: On July 20th, 1955, Frobisher commenced this action for specific performance of its agreement with the prospectors and on the same date obtained an injunction restraining the Respondents from selling, transferring or otherwise disposing of or entering upon, drilling, exploring, developing, operating or otherwise dealing with the mining claims until the final disposition of the action.
It appears from this that the contract has been construed as conferring upon the appellant not only the right to call for a conveyance of the claims to a company to be incorporated when all the payments stipulated have been made, but also the right during the currency of the option, to the exclusion of all of the respondents, to enter upon drill and explore the mining claims. It is my opinion that on this construction of the contract the appellant, during the currency of the option, could have maintained an action of trespass not only against a stranger who entered on the claims but also against the respondents if they did so. I find myself quite unable to say that the appellant in these circumstances did not "acquire by transfer, assignment or otherwisehowsoever . . any right or interest in the claims". It appears to me that it acquired, by contract, the exclusive right to enter upon drill and explore the claims during the currency of the option and the right to compel their conveyance upon completion of the option payments. On any reasonable view of the meaning of the words "right" and "interest" as used in the regulation I am of opinion that what the appellant acquired under the contract falls within one or other or both of those words. The very wide meaning ordinarily attributed to both of these words may conveniently be found in "The Dictionary of English Law" by eta.
Earl Jowitt at p. 1560, sub. verb. "Right" and p. 991, sub. verb. "Interest".
Authority is scarcely needed for the proposition that a contract which is expressly or implicitly prohibited by statute is illegal and that what is done in contravention of the provisions of an act of the legislature cannot be made the subject matter of an action, but reference may be made to the judgment of Lord Ellenborough in Langton v. Hughes'.
I would dispose of the appeal as proposed by my brother Judson.
J.:-For the reasons given by my brothers Cartwright and Judson, with which I am in agreement, I would dispose of the appeal of Frobisher and the cross-appeal of Oak and Amren as proposed by my brother Judson.
J. (dissenting):-On June 1955, the respondents Oak and MacKinnon made a discovery of uranium ore on Stewart Island in the Lake Athabaska district of Saskatchewan. The discovery was made on mining claims owned jointly by the respondents Oak, Amren, Daigle and MacKinnon (hereinafter referred to as "the prospectors"). By an agreement in writing, dated June 25, 1955, the prospectors granted to James A. Harquail, a mining engineer and geologist employed by the appellant (which company is hereinafter referred to as "Frobisher"), an option in the following terms:
Toronto, Ontario-in consideration of the sum of S1.00 (one dollar), receipt of which is hereby acknowledged, an option effective to noon- June 30, 1955-to purchase said mineral claims from the undersigned under the terms of the following deal:
CDN. PIPE- On receiving transfers to above claims in good order-on, or as & close as possible to June 30th, 1955-said transfers to be turned over to Uranium City Bank of Commerce branch at which time sum of $25,000.00 et al. (twenty-five thousand dollars) will be issued to MacKinnon and partners. (Vendors).
Martland J. New company to be formed in which vendors will receive 10o (ten percent) of authorized stock.
Firm cash. Option Payments
1st option-Nov. 1, 1955 ....................
8 25,000.00 2nd option-March 1, 1956 ................
50,000.00 3rd option-November 1, 1956 ..............
50,000.00 4th option-July 1, 1957 ...................
50,000.00 $200,000.00 The above agreement shall be binding on the executors, heirs, etc. of the people signing.
Oak" "Albin Amren" "S. Daigle" "Jock MacKinnon" "A.
Witness to above four signatures.
Signed in the Settlement of Uranium City, Saskatchewan.
Claims IO-1 to incl.-S-30628 to S-30639 inc.
Claims Missing Link-1-9 incl.-S-46551 to S-46559 inc.
Claims EO-1 to incl-Being recorded June 27-No S numbers The respondents Morrisroe and Meschi, although they had knowledge of the existence of the agreement made between the prospectors and Harquail, subsequently persuaded the prospectors to enter into a written agreement, dated June 29, 1955, under which the prospectors purported to grant to Canadian Pipelines and Petroleums Limited (hereinafter referred to as "Pipelines") an option on the same mining claims on terms similar to those contained in the agreement with Harquail.
Cases cited
-
of Willmott v. Barber
of Willmott v. Barber, supra