The following changes apply to grants and devises subject to Ontario law and made after August 31,1966.
Perpetuities Act(1)
2 . . . except as provided by this Act, the rule of law known as the rule against perpetuities continues to have full effect.
The statutory modifications apply only to the extent that the Act changes the rule against perpetuities..
3. No limitation creating a contingent interest in real or personal property shall be treated as or declared invalid as violating the rule against perpetuities by reason only that there is a possibility of such interest vesting beyond the perpetuity period.
4(1) Every contingent interest in real or personal property that is capable of vesting within or beyond the perpetuity period is presumptively valid until actual events establish,
(a) that the interest is incapable of vesting within the perpetuity period in which case the interest, unless validated by the application of section 8 or 9, shall be treated as void or declared to be void; or
(b) that the interest is incapable of vesting beyond the perpetuity period, in which case the interest shall be treated as valid or declared to be valid.
Section 3 and 4 of the Act accomplish one thing. The time the perpetuity analysis is done changes from as of the time of the grant or devise to as of when the contingency ceases being contingent. It is no longer a case of probability, nor possibility; what happens is now the important factor. Assume the following grant made 31 October 1967;
---> Grant Unto and to A to the use of B for life, remainder to the use of C's grandchildren.
As of the time of the grant C has two children, but no grandchildren. This contingent remainder would have been destroyed by the rule against perpetuities at common law. It is possible that the children of C alive as of the time of the grant could die and C subsequently could have another child. [C3] That child, who is not a life in being, could give birth to a grandchild of C's more than 21 years after the death of C and all other lives in being. That would be beyond the perpetuity period, consequently the remainder would have been destroyed as of the time of the grant. Application of ss. 3 and 4 of the Act postpones the analysis. If a grandchild is born within the perpetuity period there is no violation of the rule.
Note this important fact. This section does not change the perpetuity period. If no grandchild of C was born inside the perpetuity period the contingent remainder will be destroyed. The important change made by this section is that the contingent remainder is not destroyed as of the time of the grant, but instead, as of the time of the violation of the rule against perpetuities.
Section 4(1) (a) and (b) of the Act simply mean that (i) if it is provable that the interest cannot comply with the rule against perpetuities the contingent remainder is destroyed, and (ii) if it is provable that the contingent remainder will comply with the rule against perpetuities the contingent remainder is not destroyed.(2)
6(1) Except as provided in section 9, subsection 13(3) and subsections 15(2) and (3), the perpetuity period shall be measured in the same way as if this Act had not been passed, but, in measuring that period by including a life in being when the interest was created, no life shall be included other than that of any person whose life, at the time the interest was created, limits or is a relevant factor that limits in some way the period within which the conditions for vesting of the interest may occur.
The perpetuity period remains a life in being plus twenty-one years. This section attempts to define which life in being is to be used to measure the perpetuity period for a specific grant or devise. It seems that the purpose of the section was to limit the lives in being that could be used to calculate the perpetuity period. It may not have succeeded. If it is true that a "condition for vesting to occur" includes the fact that the remainder must cease being contingent inside of the perpetuity period, it would seem that any person alive as of the time of the grant would be relevant to those "conditions", as the word is used in the section. Since the analysis is not done looking forward as of the time of the grant, this could result in searches for a person old enough to be a life in being, as the contingencies work themselves out. With an average life-span of 80 years, and some people living beyond 100 years of age, does this mean that the perpetuity period for a grant or devise made today is at least 121 years?
7(1) Where, in any proceeding respecting the rule against perpetuities, a question arises that turns on the possibility of a person having a child at some future time, then,
(a) it shall be presumed,
(i) that a male is able to have a child at the age of fourteen years or over, but not under that age, and
(ii) that a female is able to have a child at the age of twelve years or over, but not under that age or over the age of fifty-five;, but,
(b) in the case of a living person, evidence may be given to show that he or she will or will not be able to have a child at the time in question.
This section was enacted to change some of the possibilities considered when applying the common law rule. The common law didn’t assume that it was impossible for a woman or man of any age to have a child. Assume the following grant made 25 June, 1977;
---> Grant Unto and to A to the use of B for life, remainder to the use of the grandchildren of C.
At the time of the grant C was a women of 95 who had three children, but no grandchildren. At common law the contingent remainder would have violated the rule against perpetuities. It is possible that all the children of C alive as of the time of the grant could die. C could then have another child. This child, who is not a life in being, could give birth to the first grandchild of C more than 21 years after the death of C. This would violate the rule against perpetuities. The fact that the woman in question is 95 is not relevant Neither common law courts nor Equity courts presumed an upper or lower age for procreation.
Under the Act, it is now presumed that C can no longer have any children. The Act says she was beyond the age where childbirth is considered possible, unless proved otherwise. There can be no children of C who are not lives in being. Now, consider the possibilities. Either all of the children of C never have any children or at least one of the children of C has a child. The former leads to the conclusion that the remainder will never stop being contingent and s 4(1)(a) applies. The latter could not happen outside of the perpetuity period. Any child of C, who is a life in being, could not possibly give birth to a grandchild of C 21 years after that child's death. There must be a life in being alive as of the time that a grandchild of C is born if all the children of C are lives in being. Consequently, the contingent remainder does not violate the rule against perpetuities . Who would have standing to prove that C could still have had a baby? How could it be proved? C has no interest in proving it if she wants to preserve the contingent remainders that her future grandchildren could hold. The grantor or heir of the grantor would benefit if it could be proved and the contingent remainders destroyed. However note also s 4(1).
8(1) Where a limitation creates an interest in real or personal property by reference to attainment by any person or persons of a specified age exceeding twenty-one years, and actual events existing at the time the interest was created or at any subsequent time establish,
(a) that the interest would, but for this section, be void as incapable of vesting within the perpetuity period; but
(b) that it would not be void if the specified age had been twenty-one years, the limitation shall be read as if, instead of referring to the age specified, it had referred to the age nearest the age specified that would, if specified instead, have prevented the interest from being so void.
This section only applies to contingent remainders that will cease being contingent when someone reaches an age greater than twenty-one. Assume the following grant made on 7 July 1988.
---> Grant Unto and to A to the use of B for life, remainder to the use of the children of C at the age of 24.
At the time of the grant C had no children. Assume that C has a child one year after the time of the grant, and that one day after that A, B and C then die as a result of a tragic water-skiing accident. The balance of earth’s population (with the exception of the children of C) immediately die of grief. The perpetuity period would run out 8 July 2010, twenty-one years after the death of all lives in being. C's child would not reach the age of 24 until 7 July 2012. C's child could not satisfy the contingency within the perpetuity period. . This section of the Act allows the grant or devise to be read as if it had specified an age closest to the age specified that would not result in the remainder being destroyed by the rule against perpetuities. On these facts the grant shall be read as if it specified the age of twenty-two years and one day. That is the age closest to the age specified that would not result in a violation of the rule against perpetuities.
It is important to note that this section of the Act will not save a contingent remainder unless (i) the specified age is over twenty-one and, (ii) the contingent remainder can be saved by reading the grant or devise as if it had specified the age of 21. Assume the following grant made 22 July 1977. Note that the minimum reduction necessary to save the grant is made under this section of the Act.
---> Grant Unto and to A to the use of B for life, remainder to the use of the grandchildren of B at the age of 25.
As of the time of the grant B has no children. On these facts it a grandchild of B might be born outside the perpetuity period. If a grandchild of B was born twenty-one years, less one day, after the death of the last life in being, the age (3) specified in the grant would have to be read as if it specified at the age of one day to be in compliance with the rule against perpetuities. This grant would not be saved by the Act. Note section (b). If the grant or devise would still violate the rule against perpetuities even if the age specified had been 21, this section is of no assistance.
9(1) Where any disposition is made in favour of any spouse of a person in being at the commencement of the perpetuity period, or where a limitation creates an interest in real or personal property by reference to the time of death of the survivor of a person in being at the commencement of the perpetuity period and any spouse of that person, for the purpose of validating any such disposition or limitation, that but for this section would be void as offending the rule against perpetuities as modified by this Act, the spouse of such person shall be deemed to be a life in being at the commencement of the perpetuity period even though such person was not born until after that time.
This section allows the spouse of a person who is a life in being to be deemed a life in being even if the person was not alive at the time of the grant or devise. Consider the following made on 17 July 1971;
---> Grant To B for life, remainder to the spouse of B for life, remainder to the oldest child of B at the death of B or B's spouse, whichever is later.
As of the time of the grant, B is married and has two children. The remainder to the oldest child of B is contingent as it is not possible to identify the oldest child of B alive at the death of B or B's spouse until B and B's spouse are dead former persons. The contingent remainder violates the common law rule against perpetuities. It is possible that B's present spouse will die and that B will remarry a person who was not alive as of the time of the grant. It is also possible that the children of B alive at the time of the grant die, and B has another child. The child born after the grant and the second spouse are not lives in being. It is now possible that the holder of the contingent remainder could not be identified within the perpetuity period. B's second spouse may live more than twenty-one years after the death of B, or any other life in being.
This section of the Act deems the second spouse in this grant a life in being. There can no longer be a violation of the rule against perpetuities. When B and B's spouse have both died there are two possibilities. First, it will be possible to identify the eldest child. Second, there are no children. Neither of the possibilities gives rise to a perpetuities problem as B's spouse is deemed to be a life in being. At the time of the later of the deaths of B or B's spouse it will become immediately clear who is the eldest child of B (if there is one) and the remainder will cease being contingent.
1. R.S.O. 1990, P.9.
2. This seems somewhat redundant.
3. I am using the term age in the normal sense. That is, time measured since the birth of the person in question. For the purposes of perpetuity analysis this is a somewhat careless use of the term. Keep in mind that life begins at conception for the purposes of property law. If the person in the example was born one month after the death of B that person would still have been considered to be alive within the perpetuity period. The only change would be that the age nearest the age specified in the grant would be "at birth", although at birth the person is approximately nine months old.