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Real Property - Land Titles Act

. Martin v. 11037315 Canada Inc.

In Martin v. 11037315 Canada Inc. (Ont CA, 2022) the Court of Appeal considers the role of s.78(4) of the Land Titles Act in 'deferred indefeasibility'. As I am unfamiliar with this real estate concept, I link this Toronto lawyers' website on the issue: deferred indefeasability:
(2) Does s. 78(4) of the Land Titles Act preclude the court from interfering with 267’s title?

[57] On appeal, 267 argues that, under s. 78(4) of the Land Titles Act, it acquired absolute, indefeasible title to the subject property when 1103 transferred the property to it on January 8, 2020. 267 claims it did not have actual notice of any defect in 1103’s title at the time of the transfer and therefore submits that its title cannot be defeated. Accordingly, even assuming the application judge was entitled to set aside 1103’s default judgment for foreclosure, 267 asserts that its title cannot be impeached, and that it was not open to the application judge to order the sale of the property.

[58] Section 78(4) of the Land Titles Act reads as follows:
78(4) When registered, an instrument shall be deemed to be embodied in the register and to be effective according to its nature and intent, and to create, transfer, charge or discharge, as the case requires, the land or estate or interest therein mentioned in the register.
[59] In Stanbarr Services Limited v. Metropolis Properties Inc., at paras. 13-26, this court explained that, subject to limited exceptions, s. 78(4) of the Land Titles Act establishes a deferred indefeasibility of title regime that guarantees that a transfer in favour of a subsequent purchaser such as 267 is effective once registered. In the result, contrary to Ms. Martin’s submissions, if none of the exceptions to the deferred indefeasibility of title regime apply, a court order setting aside the default judgment for foreclosure could not defeat 267’s title. Statements to the effect that a foreclosure judgment can be set aside at any time in various decisions relied on by Ms. Martin do not alter this conclusion. None addressed setting aside a foreclosure judgment where a transfer to a subsequent purchaser was registered under the Land Titles system.

[60] One exception to the deferred indefeasibility of title regime is the fraudulent instruments exception set out in s. 78(4.1) of the Land Titles Act. There is no suggestion that this exception applies to the facts of this case.

[61] The actual notice exception recognized by the Supreme Court of Canada in United Trust Co. v. Dominion Stores Ltd., 1976 CanLII 33 (SCC), [1977] 2 S.C.R. 915 may be another exception.

[62] In United Trust Co., the day after purchasing a property, United Trust Co. locked out a tenant that had given the former owner notice of intention to exercise an option to renew its lease and had agreed with the former owner on the terms of a longer extension. Although it had actual notice of the tenant’s unregistered lease and the extension agreement, United Trust Co. nevertheless purported to terminate the tenant’s tenancy and claimed that, apart from fraud, under the Land Titles Act, “actual notice of a non-registered instrument is ineffective to put the burden of the encumbrance resulting therefrom upon a purchaser for value”: United Trust Co., at p. 948.

[63] The majority of the Supreme Court rejected United Trust Co.’s submission and held that the doctrine of actual notice was well established and that “such a cardinal principle of property law cannot be considered to have been abrogated unless the legislative enactment is in the clearest and most unequivocal of terms”: United Trust Co., at p. 953.

[64] In Stanbarr, this court noted that there may be a question whether, following the addition of the fraudulent instruments exception in s. 78(4.1) to the Land Titles Act in 2006, the doctrine of actual notice of a non-fraudulent defect continues to operate to defeat the interest of a bona fide purchaser for value who has notice of such defect. However, this court assumed the doctrine continued to apply for the purposes of that decision but found it unnecessary to decide the issue.

[65] Other decisions of this court post-dating the 2006 amendment to the Land Titles Act have held that the actual notice doctrine continues to exist: Manias v. Norwich Financial Inc., 2008 ONCA 532 and MacIsaac v. Salo, 2013 ONCA 98, 114 O.R. (3d) 226. No issue has been raised on this appeal concerning whether the doctrine continues to exist.

[66] This court has held that only bona fide purchasers for value without notice of an interest or claim that differs from what is shown on the register obtain the protection of s. 78(4): MacIsaac v. Salo, citing Durrani v. Augier (2000), 2000 CanLII 22410 (ON SC), 50 O.R. (3d) 353 (S.C.J.); and 719083 Ontario Ltd. v. 2174112 Ontario Inc., 2013 ONCA 11, aff’g 2012 ONSC 3815.
. Wonderland Power Centre Inc. v. Post and Beam on Wonderland Inc.

In Wonderland Power Centre Inc. v. Post and Beam on Wonderland Inc. (Div Ct, 2022) the Divisional Court states the legal effect of registration on title:
[35] Registration alone does not give an instrument force. Section 119(6) provides that: “[t]he entry on the register of a condition or covenant as running with or annexed to land does not make it run with the land, if such covenant or condition on account of its nature, or of the manner in which it is expressed, would not otherwise be annexed to or run with the land” (emphasis added).
. Wonderland Power Centre Inc. v. Post and Beam on Wonderland Inc.

In Wonderland Power Centre Inc. v. Post and Beam on Wonderland Inc. (Div Ct, 2022) the Divisional Court identifies the administrative (from the "Director of Land Registration or the Director of Titles") court appeal route in the Land Titles Act:
Jurisdiction

[29] There is a statutory right of appeal to the Divisional Court from an order of a Superior Court judge on issues under the Land Titles Act under s. 27 of the Land Titles Act. The Divisional Court granted Post and Beam leave to appeal the dismissal of its summary judgment motion. That appeal was consolidated with Post and Beam’s appeal of the rectification to the Court of Appeal by the order of Brown, J.A. dated June 28, 2019. The consolidated appeal was transferred to the Divisional Court by the order of Hourigan J.A. dated April 6, 2020.
. Gold v Chronas

In Gold v Chronas (Ont CA, 2018) the Court of Appeal set out some brief comments on the history of the Land Titles Act:
(2) The Land Titles Act

[32] Following their conversion to the system of land registration governed by the Land Titles Act, the appellants’ and respondents’ properties were classified as Land Titles Conversion Qualified (“LTCQ”) parcels.

[33] LTCQ parcels are converted to the Land Titles system without surveys or notice to owners: Marguerite E. Moore, Title Searching and Conveyancing in Ontario, 6th ed. (Markham: LexisNexis, 2010) at p. 294.

[34] Thus, LTCQ status does not guarantee boundaries: Land Titles Act, s. 140(2).[4] Further, LTCQ parcels are subject to mature adverse possession claims and prescriptive easements claims: Moore at p. 296. Under s. 44(1) of the Land Titles Act, they are also subject to any existing right of way or easement:
44.(1) All registered land, unless the contrary is expressed on the register, is subject to such of the following liabilities, rights and interests as for the time being may be subsisting in reference thereto, and such liabilities, rights and interests shall not be deemed to be encumbrances within the meaning of this Act:
....

2. Any right of way, watercourse, and right of water, and other easements.
[35] Conversion to the system of land registration governed by the Land Titles Act from the system of land registration governed by the Registry Act is authorized under s. 32 of the Land Titles Act,[5] which was first introduced in 1972.


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