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What about the owner of other interests in the land such as owners of easements or mortgagees?The issue becomes even more complicated when one considers building contracts.Most commercial agreements contain a clause stating that the contract is binding upon and for the benefit of “successors.” For example, Article 10.1 of the CCDC Cost Plus Contract states that the contract “shall enure to the benefit of and be binding on…successors”. Recently, the Ontario Court of Appeal considered this issue in Brown v. Factual Background Let’s remind ourselves of the facts in Brown v. In 1953, a municipality signed an agreement with a farmer under which the municipality agreed to maintain and repair a storm sewer drainage system that it had constructed on and near the farmer’s lands.
The municipality, the Town of Belleville, defended the action on a number of grounds.
It said that the limitation period had expired because the Browns or their predecessors had long ago accepted the municipalities’ repudiation of contract.
The trial judge and the Court of Appeal rejected that position. Belleville also said that the Browns had no standing to sue because they were third parties to the 1953 agreement, and that contract law does not entitle third parties to enforce agreements.
Belleville also said that the Browns were not “successors” of the original farmer who entered into the agreement.
Nonetheless, it is my view that the Browns’ status as the successors of the original covenantee under the Agreement affords them the right to seek to enforce the original covenantor’s contractual obligations, as against the original covenantor. Sills’s successors, the Browns stood ready to comply with the activity required of them under the Agreement- the provision of access to their lands.
In all these circumstances, the application of the principled exception to the privity rule advances the interests of justice.” (emphasis added Analysis The Brown v.
Belleville decision answers one of the issues arising from “successor” clauses.
Based on that decision, a person falling within the clause does not have to worry about the old rule that contract law does not recognize the rights of third parties. Belleville, a later owner of the same land that is affected by the agreement is a successor.
The Court of Appeal held that, in light of more recent decisions of the Supreme Court, the Greenwood case had been largely over-ruled.
In any event, having regard to the enurement clause, the prohibition against third party enforcement of the agreement had little or no application.