Melville v. McLaren, 2024 ONSC 6335

Melville v. McLaren, 2024 ONSC 6335

CITATION: Melville v. McLaren, 2024 ONSC 6335

DIVISIONAL COURT FILE NO.: 227/23

DATE: 20241118

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Sachs, Hebner, Davies JJ.

BETWEEN:

Janet Melville

Appellant

– and –

Shon McLaren

Respondent

COUNSEL:

Robert Malen, for the Appellant

Terrence Hill and Karen Shedden, for the Respondent

HEARD at Hamilton: June 4, 2024

REASONS FOR DECISION

Davies J.

1Sixty-six years ago, a restrictive covenant was registered against a property that was sold by Shon McLaren’s husband in June of 1958. The covenant prohibited the owner from constructing more than two homes on the property. The covenant had no fixed expiry date.

2In 2000, the property was bought by Bri-Mel Property Development Inc., a company controlled by Janet Melville’s husband. The property was subdivided into four building lots. Homes have been built on two lots. If the restrictive covenant is still valid, homes cannot be built on the two remaining lots.

3Ms. Melville owns one of the two vacant lots. Ms. McLaren still owns the property beside Ms. Melville’s property.

4Under the Registry Act, a restrictive covenant with no fixed expiry date was effective for 40 years. If, however, a Notice of Claim was registered, the restrictive covenant could be extended for another 40 years: Registry Act, R.S.O. 1990, c. R.20, ss. 111, 113.

5Ms. McLaren registered a Notice of Claim on the property in July 1998.¹

6The parties agree that if the property had remained under the Registry Act system, the restrictive covenant would remain in force until 2038. However, the property was converted from the Registry system to the Land Titles system on September 20, 2003 and is now governed by the Land Titles Act, R.S.O. 1990, c. L.5.

7Under the Land Titles Act, a “condition, restriction or covenant” with no fixed expiry date is deemed to expire forty years after it was registered: Land Titles Act, s. 119(9). Unlike the Registry Act, the Land Titles Act has no provision for renewing or extending a covenant (by filing a Notice of Claim or otherwise) before it is deemed to expire.

8In 2021, Ms. Melville asked the Land Registry Office to delete the restrictive covenant from her property and the Registrar agreed. The Registrar would not, however, remove the Notice of Claim registered in 1998 without a court order. Ms. Melville brought an ex parte motion for an order deleting the Notice of Claim from the property, which was granted in June 2022.

9In October 2022, Ms. Melville entered an agreement of purchase and sale to sell her vacant lot. Before the sale closed, Ms. McLaren registered a caution against the property claiming the restrictive covenant was still valid and the order deleting the Notice of Claim was “questionable.”

10Ms. Melville brought an application to delete the caution. Ms. McLaren brought a cross-motion to set aside the June 2022 decision to delete the Notice of Claim.

11On January 13, 2023, Justice Walters dismissed Ms. Melville’s application and granted Ms. McLaren’s cross-motion. Justice Walters set aside the June 2022 decision deleting the Notice of Claim and ordered the Land Titles Office to restore both the restrictive covenant and the Notice of Claim. Justice Walters accepted that under the Land Titles Act, a restrictive covenant without a fixed expiration date is deemed to expire 40 years after it is registered and cannot be extended. However, Justice Walters found that the covenant was “registered” when the Notice of Claim was filed in 1998 so the covenant is not deemed to expire until 2038.

12Ms. Melville appeals the decision of Justice Walters. Ms. Melville argues that Justice Walters erred in finding that filing a Notice of Claim under the Registry Act constitutes “registering” a restrictive covenant under the Land Titles Act. Ms. Melville submits the Notice of Claim filed in 1998 ceased to have any effect when the property was converted into the Land Titles system and the covenant is deemed to have expired in 1998 – 40 years after it was first registered in 1958 under the Registry Act.

13The question on this appeal is whether converting a property into the Land Titles system extinguishes rights and interests that existed under the Registry system by virtue of a Notice of Claim having been registered. Put slightly differently, the question is whether the provisions of the Land Titles Act that mandate the expiration of a restrictive covenant apply retrospectively to terminate a restrictive covenant that had been extended under the Registry Act. The answer to that question turns on the interpretation of several provisions of the Land Titles Act, and the interplay between the Land Titles Act and the Registry Act.

14Statutory interpretation is a question of law, and the standard of review is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8.

15In my view, Justice Walters was correct that the rights conferred by the Notice of Claim registered under the Registry system were not extinguished when Ms. Melville’s property was converted to the Land Titles system. Therefore, the restrictive covenant on Ms. Melville’s property will not expire until 2038.

16When engaging in an exercise of statutory construction, this Court must read the words of the act “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, at para. 21. The modern rule of statutory interpretation requires me to consider the plain language of the provision(s), the broader context of the legislation, the objective of the legislation and the Legislature’s intention.

17If the provision in question is in an Act that is part of a larger statutory scheme, the court should favour an interpretation that promotes “harmony, coherence and consistency” between statutes dealing with the same subject matter: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559; R. v. Ulybel Enterprises Ltd., 2001 SCC 56, [2001] 2 S.C.R. 867; Stoddard v. Watson, 1993 59 (SCC), [1993] 2 S.C.R. 1069.

18While a strict reading of only s. 119(9) of Land Titles Act may support Ms. Melville’s position that the restrictive covenant should be deemed to have expired in 1998, a more holistic reading of the provisions in the context of both the Land Titles Act and the Registry Act shows that Justice Walters was correct to find that the Notice of Claim survived the transfer into the Land Titles system and the restrictive covenant has not expired.

19Starting with the language of the Land Titles Act, s. 119(9) states as follows:

Where a condition, restriction or covenant has been registered as annexed to or running with the land and no period or date was fixed for its expiry, the condition, restriction or covenant is deemed to have expired forty years after the condition, restriction or covenant was registered, and may be deleted from the register by the land registrar.

20On a strict reading of s. 119(9) alone, one might conclude that the relevant date for determining when the restrictive covenant is deemed to have expired under s. 119(9) of the Land Titles Act is the date on which the covenant was first registered (which, in this case, was 1958) because the list of instruments in s. 119(9) does not include a Notice of Claim. However, it is not enough to simply consider the language of s. 119 of the Land Titles Act. I must also consider s. 119 in the context of the Land Titles Act as a whole and the interplay between the Registry Act, which expressly permits the extension of a covenant through a Notice of Claim, and the Land Titles Act, which does not. Based on a contextual reading of s. 119(9) of the Land Titles Act together with the relevant Registry Act provisions, I am satisfied that the Legislature did not intend to extinguish the rights conferred by a Notice of Claim registered under the Registry Act regime when a property is converted to the Land Titles system.

21First, under the Registry Act, the registration of a Notice of Claim was intended to be treated as the registration of the original instrument. Section 74(3) of the Registry Act states that registration of a notice under s. 113 of that Act “constitutes registration of the instrument referred to in the notice or statement.” In other words, the registration of the Notice of Claim in 1998 on the property was treated as a registration of the restrictive covenant under s. 74(3) of the Registry Act.

22Second, the purpose of a Notice of Claim under the Registry Act was to encumber the property until it expires or is renewed. Section 113(4) of the Registry Act says that once a Notice of Claim is registered, the “claim” will affect the land for the specified Notice period. “Notice period” is defined as 40 years after the later of the date on which the instrument was first registered or the date a notice of a claim was registered. The Notice of Claim, therefore, extended Ms. McLaren’s right to enforce the terms of the restrictive covenant on the property until 2038. That claim was valid and in existence when the property was transferred to the Land Titles system.

23Third, rights or interests that existed when the property was transferred from the Registry System to the Land Titles system carried forward. Section 46 of the Land Titles Act states that the registration of property for the first time in the Land Titles system “does not affect or prejudice the enforcement of any estate, right or interest” that exists in respect of the property. When the property was transferred to the Land Titles system in 2003, Ms. McLaren had a valid, registered “claim” under the Registry Act that conferred on her the right to enforce the terms of the restrictive covenant until 2038. Under s. 46 of the Land Titles Act, her rights and interests were not affected by the conversion.

24Fourth, the interpretation advanced by Ms. Melville is inconsistent with the presumption against interference with vested rights. Legislation should not be interpreted in a way that impairs existing substantive rights unless there is express language to that effect in the legislation or that result is a necessary implication of the legislation: Proctor & Gamble Inc. v. Ontario (Minister of Finance), 2010 ONCA 149, 99 O.R. (3d) 321, at para. 54, leave to appeal to S.C.C. refused, [2010] S.C.C.A. 149; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, 1975 4 (SCC), [1977] 1 S.C.R. 271, at pp. 282‑83, Hoggarth v. MGM Farms and Fingers Limited, 2015 ONSC 2494 at para. 91. In other words, we should not interpret s. 119(9) of the Land Titles Act in a way that impairs existing rights unless there is express language in the Act or unless impairing existing rights cannot be avoided without doing violence to the meaning and purpose of s. 119(9).

25The Land Titles Act does not contain a provision that expressly extinguishes rights and interests that existed under the Registry Act when the property was transferred. The question, therefore, is whether preserving the rights Ms. McLaren had before the property was transferred to the Land Titles system to enforce the restrictive covenant would do violence to the purpose of s. 119(9) of the Land Titles Act.

26There has been a consistent trend towards eliminating restrictive covenants with no fixed expiry date to streamline the title search process and to afford finality: Gold v. Chronas, 2015 ONCA 900, 128 O.R. (3d) 428 at paras. 48-49. The enactment of s. 119(9) of the Land Titles Act in its current form is the most recent step in that progression, which the court summarized in Andrews v. Rago, 2019 ONSC 800, 146 O.R. (3d) 53 at paras. 41-42, as follows:

[A]s long ago as 1952 the legislation provided for the removal of a restrictive covenant from the register when it expired by its terms. In 1962, the legislature took the next step of permitting a party to apply for the removal of a restrictive covenant 40 years after its registration, if the covenant contained no period or date fixed for its expiry. The 1979 amendment went even further, such that a restrictive covenant is now deemed to have expired 40 years after its registration where it contains no period or date for its expiry.

The most recent amendments make the expiry of such a covenant automatic, with the only formality being the removal of registration of the spent covenant upon request.

27I accept that s. 119(9) of the Land Titles Act is intended to increase certainty and finality by mandating the expiration of restrictive covenants after 40 years. However, preserving substantive rights that existed before property is transferred into the Land Titles system does not undermine the principles of certainty or finality. Interpreting s. 119(9) in a way that protects rights that existed under the Registry system cannot extend a condition, restriction or covenant beyond the statutory maximum of 40 years, thus assuring finality no more than 40 years after the property is converted. And preserving rights that existed under the Registry system does not create uncertainty. It simply changes the date on which the 40-year period starts to run. In this case, the right in question has a fixed date on which it is deemed to expire – 2038 – and it cannot be extended beyond that date.

28Finally, the interpretation proposed by Ms. Melville is inconsistent with the presumption against retrospective application of law. If we were to interpret s. 119(9) of the Land Titles Act to mean that it effectively terminates rights afforded by a valid Notice of Claim registered under the Registry Act, that would be a retrospective application of the law. Such an interpretation would attach a new consequence in the future to an event that took place before the land was subject to the Land Titles Act and would change the law from what it otherwise would have been if the land was not transferred: Elmer A. Drieger, “Statutes: Retroactive Retrospective Reflections” (1978) 56:2 Can Bar Rev 264, at 268-269.

29Courts should presume that legislation affecting existing substantive rights only operates prospectively (i.e. to future transactions) unless it is possible to “discern a clear legislative intent that it is to apply retrospectively”: R. v. Dineley, 2012 SCC 58, [2012] 3 S.C.R. 272, at para. 10. As I have already found, there is no express language to suggest that s. 119(9) was intended to apply retrospectively in a way that would interfere with existing rights or interests. And other provisions of the Land Titles Act, particularly s. 46, expressly provide that the rights and interests were not affected by the conversion. Because the intent was to preserve rights and interests that existed under the Registry Act when land was converted to the Land Titles system, I find that s. 119(9) must be interpreted as applying prospectively.

30I find that Justice Walters was correct that s. 119(9) does not extinguish Ms. McLaren’s right to enforce the restrictive covenant for 40 years after the Notice of Claim was filed in 1998. Applying s. 119(9) prospectively, Justice Walters was also correct that the restrictive covenant cannot be extended beyond 2038 and will be deemed to expire 40 years after the Notice of Claim was registered.

31The appeal is, therefore, dismissed.

32The parties agreed that the successful party on the appeal should be awarded $15,000 in costs. Ms. Melville shall, therefore, pay Ms. McLaren $15,000 in costs inclusive of HST and disbursements.

Davies J.

I agree: _______________________________

Sachs J.

I agree: _______________________________

Hebner J.

Footnotes

1. 1There were three separate proceedings over the validity of the Notice of Claim, the details of which are not pertinent to this matter. Ultimately, the court found the 1998 Notice of Claim was valid.