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Real Property - Rectification

. 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 considered an issue of rectification, here in a real property registration context:
[30] Rectification is an equitable remedy granted at the discretion of the motion judge. A discretionary order of a motions judge is subject to significant deference on appeal and should be interfered with only where the motion judge misdirected herself, came to a decision that is so clearly wrong that it amounts to an injustice, or gave no or insufficient weight to relevant considerations: see Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 27. In addition, an appellate court may intervene where the trial judge exercised his or her discretion based on a wrong principle: see Soulos v. Korkontzilas (1995), 1995 CanLII 2074 (ON CA), 25 O.R. (3d) 257 (C.A.), at paras. 6, 15, aff'd 1997 CanLII 346 (SCC), [1997] 2 S.C.R. 217. I am of the opinion that the motion judge exercised her discretion based on wrong principles, misdirected herself, and gave insufficient weight to relevant considerations.

....

[33] The motion judge correctly identified the issue – that rectification is not available against a bona fide purchaser for value with notice. ...

....

Rectification Analysis

[39] Wonderland’s motion for rectification was brought and granted under section 160 of the Land Titles Act:
Subject to any estates or rights acquired by registration under this Act, if a person is aggrieved by an entry made, or by the omission of an entry from the register, or if default is made or unnecessary delay takes place in making an entry in the register, the person aggrieved by the entry, omission, default or delay may apply to the court for an order that the register be rectified, and the court may either refuse the application with or without costs to be paid by the applicant or may, if satisfied of the justice of the case, make an order for the rectification of the register. [Emphasis added.]
[40] The “estates or rights acquired by registration under this Act”, as referred to in s. 160, are generally set out in s. 78(4) of the Act, which provides that an instrument is effective when registered “according to its nature and intent”:
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.
[41] Rectification of registered interests after purchase by a third party is of particular concern because of the importance of the reliability and integrity of the land registry to all aspects of land law and conveyancing. Certainty is critical to conveyancing. As stated by the Divisional Court per curiam in 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702, at paras. 13-14:
13 The LTA establishes the land titles regime in Ontario. Its essential purpose is to "provide the public with security of title and facility of transfer" by setting up a register and guaranteeing that the person shown as the registered owner is the legal owner, subject only to registered encumbrances and enumerated statutory exceptions.

14 There are three principles found in the land titles regime that together embody the doctrine of indefeasibility of title:
• The mirror principle, whereby the register is the perfect mirror of the state of title;

• The curtain principle, which holds that the purchaser need not investigate past dealing with the land, or search behind the title as depicted in the register; and

• The insurance principle, whereby the state guarantees the accuracy of the register and compensates any person who suffers loss as the result of an inaccuracy. [Citations omitted.]
The case continues on the inefficacy of rectification if a later purchaser takes title as "a bona fide purchaser for value without notice." [para 42-69].

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