In 1951, George Purchased a Piece of Property in a Cottage

question 36

Essay

In 1951, George purchased a piece of property in a cottage resort area. The property was subject to a restrictive covenant running with the land until August 1, 2050, that the property shall never be sold, assigned, transferred, or leased to any person born in the State of Israel. In January 2004, George entered into an agreement of purchase and sale with another individual. The purchaser through his solicitor submitted the following requisition on title: "in view of the fact that the purchaser herein was born in the State of Israel, I require a release from the restrictions imposed on the land, and that the restrictive covenant be struck out, voided and of no effect." George was only too happy to provide this release, however, an adjoining landowner wished to enforce the restrictive covenant. Together, George and his purchaser made an application to the courts to have the restrictive covenants struck down as against public policy. Discuss the issues raised in this case, from a perspective of the 1950s and the perspective of the 21^st century and render a reasoned decision. Regardless of your answer, if the covenant was upheld, suggest an alternative way this sale may be affected without violating the covenant.
D.L.R. (Ont. H.C.)
Re Drummond Wren, [1945] 4
D.L.R. 674 (not followed).

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Definitions:

Expected Excess Return

The return expected on an investment over and above the risk-free rate, taking into account both the risk involved and the time value of money.

Beta

A measure of a stock's volatility in relation to the overall market; it indicates the risk associated with a particular equity in comparison to the market as a whole.

Expected Return

The anticipated profit or loss from an investment, based on historical data or statistical analysis, often used as a forecast.

Standard Deviation

A statistical measure that quantifies the amount of variation or dispersion of a set of data values, commonly used in finance to assess the volatility of investment returns.