ONSC 7589 COURT FILE NO.: 2692/17 DATE: 20181213

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

Wonderland Power Centre Inc. Plaintiff

J. Goudy, for the Plaintiff

• and -

Post and Beam on Wonderland Inc. Defendant

P. Duffy, M. Currie, for the Defendant

HEARD: April 13, May 16, 2018

JUDGMENT

Templeton J.

Factual Background

[1] The Plaintiff (“Wonderland”) currently owns and operates a commercial development on Wonderland Road South in London, Ontario known as the “Wonderland Power Centre”. The Centre consists of multiple buildings and space leased to commercial enterprises on four abutting parcels of land (PIN #08209-0411; PIN #08209-0417; PIN #08209-416; and, PIN #08209-0636).

[2] At one time, Wonderland Power Centre (Holdings) Inc. (“Holdings”) owned part of one these parcels. That property was identified at that time as PIN #08209-0200. For the sake of clarity, Holdings was ultimately amalgamated with Wonderland Power Centre Inc. under the Plaintiff’s name Wonderland Power Centre Inc. (“Wonderland”).

[3] The City of London was targeting this land, identified as Part Lot 36, Concession 2, having a frontage of approximately 415 feet and a depth of 162 feet for purchase or expropriation for the construction of a public library.

[4] On or about January 10, 2001, the City of London received a written proposal for the purchase of this property from the owner which included a number of conditions two of which were (a) that the land could not be used for commercial purposes; and, (b) that the vendor reserves the right to re-purchase the land in the event that the library is re-located.

[5] On or about January 25, 2001, the London Public Library Board (“the Library Board”)/City of London received a further written proposal which included the same two conditions outlined above referring to the prohibition of commercial use and transfer of title of the property back to the vendor at a price based on fair market value in the event the use of the property as a library ends.

[6] Negotiations continued between Holdings and the Library Board. They eventually settled on a purchase price and other terms and conditions including the deposit of a restrictive covenant prohibiting commercial use of the property. They did not reach an agreement with respect to Holdings’ request for the right of first refusal to purchase the property back in the event of a termination of the library services by the City.

[7] On or about March 16, 2001 Holdings and the Library Board entered into a written Agreement of Purchase and Sale. The Library Board agreed to the payment of $675,000 to Holdings. In para. 7.02 of the Agreement, the Library Board acknowledged that the lands owned by Holdings lying adjacent to the defined property were intended to be developed by Holdings for a range of commercial uses.

[8] The Library Board further agreed “ to accept title to the Property subject to a restriction which runs with the land prohibiting commercial usage of the Property”.

[9] On April 3, 2001, the Library Board was authorized to acquire the property together with rights of way for access to Wonderland Road and all required servicing easements at a price not to exceed $675,000 and, failing an agreement with Holdings, to commence expropriation proceedings.

[10] According to the Parcel Register, on October 11, 2001, at 15:07, an Instrument identified as “APL ANNEX REST COV” with the Registration Number ER127568 was deposited on title by Holdings. This document was an Application to Annex Restrictive covenants.

[11] Wonderland has produced a copy of the Application it sent to the Land Registrar which was marked “Receipted as ER127568 on October 11, 2001 at 15:07” . For ease of reference, this Application shall be referred to as Application “A” in this decision.

[12] In Application “A”, the Applicant was identified as Holdings and the Restrictive covenant was defined as follows:

A restrictive covenant is hereby registered against the lands described as Part Lot 36, Concession 2 being Parts 1 &2, PL 33-R-14721, London/Westminster which prohibits the owners, occupiers of the land and any successors and assigns, from carrying on any commercial use on the property for a period of fifty (50) years commencing October 11, 2001.

This restrictive covenant benefits the lands described as Part Lot 36, Con 2. now designated as Pts 3 through 20, PL33R-14721 London/Westminster, being part of PINS 08209-0200 and 08209-0199.

[13] Two parcels of land were to be benefitted by the Restrictive covenant, namely, PIN #08209-0200 and PIN #08209-0199.

[14] PIN #08209-0200 contained Parts 3 through 13 and Part 20 on Reference Plan 33R-14721 and was owned by Holdings. PIN #08209-0199 contained Parts 14 through 19 on Reference Plan 33R-14721and was also owned by Holdings.

[15] This Application was electronically signed by counsel for Wonderland on October 11, 2001.

[16] On October 12, 2001, the Transfer of the property from Holdings to the Library Board was deposited on title at 12:11 with the Registration Number ER127682.

[17] The effect of the transfer was to split PIN #08209-200 into two parts. The Library property, being Parts 1 and 2 on Plan 33R-14721 was created as a new parcel being PIN #08209-244. Ownership of the balance of the property namely, Parts 3 through 13 and Part 20 on Plan 33R-14721 remained with Holdings and formed part of PIN #08209-0636 and Parts 14 through PIN #08209-0417.

[18] In 2002, the Library Board constructed a new public library on the land it had acquired from Holdings and operated a library at that location.

[19] In 2005, Holdings was amalgamated with the Plaintiff, Wonderland.

[20] In or about 2015, the Library Board decided to list the property for sale. The real estate brokerage contacted Wonderland to see if it would be interested in buying the property back but in view of the listed price of over $5 million and the restrictive covenant on title prohibiting commercial use, Wonderland declined. On June 16, 2015, the President of Wonderland also notified the listing agent that the Restrictive covenant was a “material part of the original sale and will not be removed.”

[21] The property was advertised for sale by the real estate broker and listed for $5,400,000. Included in the description of the property details on the Notice, the agent included the following, “ See broker for restrictive covenant details ”.

[22] A second document in this regard which is entitled Application to Annex Restrictive covenants has been filed with the Court. This document is marked “Registered as ER127568 on October 11, 2001 at 15:07” . For ease of reference, this Application shall be referred to as Application “B” in this decision.

[23] The Applicant in Application “B” was also identified as Holdings BUT the Restrictive covenant was defined simply as follows:

A restrictive covenant is hereby registered against the lands described as Part Lot 36, Concession 2 being Parts 1 &2, PL 33-R-14721, London/Westminster which prohibits the owners, occupiers of the land and any successors and assigns, from carrying on any commercial use on the property for a period of fifty (50) years commencing October 11, 2001.

[24] Application “B” also appears to have been electronically signed by counsel for Wonderland on October 11, 2001 and is identical in form and substance but for the two distinctions set out below.

[25] At the time of the listing for sale of the property by the Library Board, it was this Restrictive covenant as set out in Application “B” that was on title to the property.

[26] In early 2017, York Developments (London) Inc. (“York”), the parent company of Post and Beam, commenced negotiations with the Library Board and the City of London with respect to the Library property.

[27] In or about May, 2017, York received an opinion that the Library property was zoned for use as office space.

[28] At or about the same time, York also received a legal opinion that the Restrictive covenant that was registered on title was not enforceable. As indicated, the Restrictive covenant was the covenant set out in Application “B” above.

[29] On August 4, 2017, York purchased the property for approximately $2.7 million.

[30] On the same day, Post and Beam served a Notice terminating a lease it had entered into with the London Public Library Board apparently on August 1, 2017, effective December 4, 2017.

[31] The Library Board ended its operations at that location on or about November 4, 2017.

[32] On October 17, 2017, Post and Beam entered into a Lease with a company called Zomaron Inc. (“Zomaron”). Zomaron is a digital payment services and financial technology firm that provides payment solutions for other companies. It operates a call centre to assist its clients with respect to processing payments seamlessly and immediately. In the Lease agreement, Zomaron agreed to rent the property purchased by Post and Bean from the Library Board. The former library has been renovated to meet its needs.

[33] On November 16, 2017, Wonderland’s counsel wrote to Post and Beam to request confirmation that neither Post and Beam nor any tenant or occupant of the property would use the property for commercial purposes on or before October 10, 2051.

[34] Wonderland relied on s. 119(10) of the Land Titles Act [1] (the “ Act ”) in this regard,

Where a condition or restriction has been registered as annexed to land, the condition or restriction is as binding upon any person who becomes the registered owner of the land or a part thereof as if the condition or restriction had been in the form of a covenant entered into by the person who was the registered owner of the land at the time of the registration of the condition or restriction.

[35] Post and Beam did not reply.

[36] On November 30, 2017, Wonderland commenced an action against Post and Beam.

The Restrictive Covenant

[37] As noted above, two documents entitled “Application to Annex Restrictive covenants” have been filed into evidence with the Court.

[38] There are two distinctions between them:

(a) Application “A” contains a statement that identifies the benefitting lands AND is marked as “ Receipted as ER127568 on October 11, 2001 at 15:07”; whereas

(b) Application “B” is silent with respect to the identification of the benefitting lands AND is marked as “ Registered as ER127568 on October 11, 2001 at 15:07”

[39] The benefitting lands referred to Application “A” are the adjacent lands that are owned by Wonderland.

[40] There is no explanation in the evidence as to the difference between the words “Receipted” and “Registered” from the Land Title Registrar’s perspective. It raises the question as to whether Application “A” was ever endorsed as “registered” on title by the Land Registrar but that calls for speculation at this point in time.

[41] According to the evidence before me, it does appear that Application “B” was submitted to the Land Registrar on or about January 9, 2002 and thereafter certified.

[42] In her Affidavit and under cross-examination, Elizabeth Cormier, the real estate lawyer for Holdings at the time of the sale of the property to the Library Board has deposed as follows:

• On October 11, 2001, she submitted an Application to Annex Restrictive covenants s. 119 for electronic registration. This Application was “Application “A” and was stamped as receipted and marked as Instrument No. ER127568. The Restrictive covenant contained the following two statements:

A restrictive covenant is hereby registered against the lands described as Part Lot 36, Concession 2 being Parts 1 &2, PL 33-R-14721, London/Westminster which prohibits the owners, occupiers of the land and any successors and assigns, from carrying on any commercial use on the property for a period of fifty (50) years commencing October 11, 2001.

This restrictive covenant benefits the lands described as Part Lot 36, Con 2. now designated as Pts 3 through 20, PL33R-14721 London/Westminster, being part of PINS 08209-0200 and 08209-0199.

• The Application was marked as having been signed by Ms. Cormier electronically on October 11, 2001 and submitted electronically to the Land Registrar by her law firm Patton and Associates, on October 11, 2001.

• She thereafter provided a copy of the Application she had submitted to the Land Registrar to her client, Holdings, in her reporting letter dated October 26, 2001 and referred to the restrictive covenant in this letter as follows:

Restrictive covenant – We confirm having prepared and registered an Application to Annex Restrictive covenants, which was registered electronically as Instrument No. ER127568 on October 11, 2001.This restrictive covenant prevents the owners and occupiers and any successors and assigns from carrying on any commercial use on the property known as Parts 1 and 2, Plan 33R-14721 for a period of 50 years commencing October 11, 2001. We advise however that the Ontario Land Registrar is authorized to remove restrictive covenants from title to any property after a period of 40 years.

• In the months following the closing of this transaction, this Application (Application “A”) was modified by way of Application “B”.

• She does not recall the circumstances of the deletion of the second statement in the original restrictive covenant.

• As part of the transaction, the Library Board was obtaining an easement over property owned by Holdings.

• The Land Registrar required changes to the Transfer document confirming the transfer of title from Holdings to the Library Board.

[43] Ms. Cormier went on to describe the registration process. I accept her evidence in this regard as both credible and reliable.

[44] As provided for in s. 78 of the Act , instruments are submitted for registration to the Land Registry Office and receipted at the time of submission. Registration of an instrument is completed when it is certified by the Land Registrar.

[45] Prior to certification, the Land Registrar may notify the party submitting the Instrument or the party’s solicitors, that the Instrument contains a material error, omission or deficiency or that there is evidence lacking that the Land Registrar considers requisite. At that time, the Land Registrar consisted of staff in the local Land Registry Office No. 33 in London.

[46] When a change to the Instrument is required by the Land Registrar, the Registrar communicates electronically or by telephone with the solicitor who signed the Instrument and specifies the change that is required before the Instrument can be registered on title. The solicitor then has the opportunity to satisfy the Registrar’s requirements. If those demands are not met, the Instrument will not be certified and/or registered on title.

[47] Once an Instrument is submitted to the Land Registrar, it cannot be changed by the solicitor and the solicitor has no access to the Instrument unless and until notification is received from the Land Registrar as set out above.

The Problem

[48] Section 119 (3) of the Act states as follows

Upon the application of the owner of land that is being registered or of the registered owner of the land, the land registrar may register as annexed to the land, a covenant that the land or a specified part thereof is not to be built upon, or is to be or is not to be used in a particular manner, or any other covenant running with or capable of being legally annexed to the land.

[49] Section 119 (4) states that a covenant shall not be registered under subsection (3) unless,

(a) the covenantor is the owner of the land to be burdened by the covenant;

(b) the covenantee is a person other than the covenantor;

(c) the covenantee owns the land to be benefitted by the covenant and that land is mentioned in the covenant (my emphasis); and

(d) the covenantor signs the application to assume the burden of the covenant .

[50] Clearly the restrictive covenant that was on title at the time of the sale of the Library property to York did not comply with s. 119 (4)(c).

[51] The requirement that the land to be benefitted by the covenant was to be described in the covenant was acknowledged by Ms. Cormier in her Affidavit.

[52] It is Ms. Cormier’s position that the only possible explanation for the deletion of the second statement in the restrictive covenant set out on the Application she submitted is that the Land Registrar directed that the second statement be removed as a condition of the certification of the restrictive covenant. Absent a requirement by the Land Registrar to do so, she would not have deleted the second statement.

[53] The second distinction between the two Applications is consistent with this position. Her Application which included a restrictive covenant that complied with the legislation was marked only as having been “Receipted”. It is the non-compliant restrictive covenant (as set out in Application “B”) that was marked “Registered”.

[54] I am entirely satisfied on all of the evidence before me and find that Ms. Cormier intended to and did initially comply with all of the requirements of the Act with respect to the Restrictive covenant set out in Application (A) in her electronic filing with the Land Registry. Indeed, there is no evidence to the contrary.

[55] However, it appears that for some reason, the Application originally submitted by Ms. Cormier was not actually registered on title by the Land Registrar. On the other hand, an amended and for the reasons set out below, legally unenforceable restrictive covenant was.

[56] Unfortunately, because the Land Registrar has not retained its documents and Ms. Cormier no longer has her file, there is no documentary evidence either confirming or clarifying the circumstances surrounding the subsequent fundamental change to the restrictive covenant and ultimately its legal effect.

[57] Post and Beam submits that when the Land Registrar directs modifications to a restrictive covenant, the lawyer is responsible for assessing the impact of any change and ensuring that the restrictive covenant as registered is valid. In this case, Ms. Cormier resubmitted the Application to Annex in a form that did not identify the benefitting land and it was this form that was accepted for registration. There is no evidence before the Court that she challenged the direction of the Land Registrar at the time or took any other steps in this regard.

[58] Wonderland submits that the Court may treat Application “A” as extrinsic evidence sufficient to satisfy the requirements related to the identification of the lands to be benefited.

The Orders sought by the parties:

[59] The positions of the parties are set out in their requests.

[60] Wonderland seeks the following orders:

(i) an interim and interlocutory injunction pursuant to s. 101 of the Courts of Justice Act restraining the Post and Beam and its agents, employees, successors and assigns, including any tenants or occupants from carrying on any commercial use on the property located at 3200 Wonderland Road south, London, Ontario being the whole of PIN #08209-0244;

(ii) a declaration that the Defendant’s property located at 3200 Wonderland Road south, London, Ontario being the whole of PIN #08209-0244 is subject to a restrictive covenant that (a) prevents its use for commercial purposes; and (b) runs with the land and is binding upon the Defendant and its agents, employees, successors and assigns, including any tenants or occupants;

(iii) an order to rectify the Register for Land Titles in accordance with s. 160 of the Land Titles Act, R.S.O. 1990, c. L-5, if it is found that the restrictive covenant as registered on title to the Defendant’s property as Instrument No. ER127568 on October 11, 2001 does not run with the land and/or is otherwise not binding on the Defendant and its agents, employees, successors and assigns, including any tenants or occupants.

[61] Post and Beam seeks the following orders:

(i) an order granting summary judgment dismissing the action;

(ii) a declaration that the restrictive covenant is not enforceable;

The Law and Analysis

The test for Summary Judgment

[62] The parties do not disagree with respect to the test for summary judgment.

[63] When a Court is satisfied that there is no genuine issue for trial, summary judgment shall be granted.

[64] On a motion for summary judgment, the Court is entitled to assume that the record contains all of the evidence that the parties will present at trial.

[65] The onus is on the moving party to satisfy the test.

The enforceability of the restrictive covenant currently registered on title

[66] If a party imposes a restrictive covenant and intends the benefit of that condition to attach to and run with other lands, then those other lands ought to be clearly defined and set out in the land registry and certified ownership. [2]

[67] Wonderland acknowledges that in its current registered form, the restrictive covenant does not clearly define the lands to be benefited by the covenant. It submits, however, that the Court may treat Application “A” as extrinsic evidence sufficient to satisfy the requirements related to the identification of the lands to be benefited.

[68] In Galbraith v. Madawaska Club Ltd. [3] , the Supreme Court of Canada found that a restrictive covenant not referring to the intended dominant tenement did not run with the land and the requirement that the deed so define the land to be benefitted as to make it easily ascertainable is a minimum requirement.

[69] The Court went on to state that

A restrictive covenant contained in an agreement which omits all reference to any dominant land, although it sets out the restrictions placed upon the servient land, is unenforceable by the covenantee against a successor in title of the covenantor, since such an agreement expresses no intention that any other lands should be benefited by the covenant… and in the absence of any attempted annexation of the benefit to some particular land of the covenantee, the covenant is personal and collateral to the conveyance as being for the benefit of the covenantee alone.

[70] There is a presumption against finding that a restrictive covenant runs with the land and such covenants are unenforceable unless certain conditions are met.

[71] The Court in Pottruff v. Five Oaks Christian Workers Centre [4] defined those conditions

(a) the covenant must be negative in substance;

(b) the covenantor must be the owner of the land to be burdened by the covenant;

(c) the covenantee must own the land to be benefited by the covenant;

(d) there must be a defined servient tenement and the benefit must be annexed to dominant lands, ascertainable with reasonable certainty; and

(e) the covenant must not be unlawful as offending public policy or otherwise.

[72] In Jain v. Nepean (City) [5] , the Court wrote the following

In Di Castri, The Law of Vendor and Purchaser, 2nd ed. (1976), the characteristics essential to constitute a restrictive covenant are described in para. 369 at p. 331:

A covenant to qualify as a true restrictive covenant and thus run with the land and pass as an appurtenance thereto must possess the following characteristics: (1) it must be negative in substance; (2) there must be a defined servient land subject to the burden of the covenant and the benefit must be annexed to dominant land ascertainable with reasonable certainty ; the mere fact that at the date of the agreement the vendor owns other land capable of being regarded as a "dominant tenement," but not expressly referred to in the agreement, is not a sufficient compliance with the rule that at the date of the agreement there must be a coexistence of the dominant and servient tenements (my emphasis); the fact that the agreement also contains words to the effect that the restriction is "for the benefit of the vendor" does not advance matters where he is the alleged covenantee; the land to be benefited must be referred to or described in the deed itself. Extrinsic evidence is admissible only in the exceptional case, and only to explain the meaning of any ambiguity arising in the deed; (3) the covenant must agglutinate to the dominant land itself so that in terms of user or value there is an aggrandizement of ownership; and (4) it must not be unlawful as offending public policy or otherwise.

[73] I am satisfied that except for the condition set out in (d) above, the conditions for a restrictive covenant are met.

[74] But for the same reasons as set out in Kolias v. Owners: Condominium Plan 309 CDC [6] , I am not prepared to treat Application “A” as extrinsic evidence in this case with respect to the missing description/definition.

[75] As the Court noted in Jain v. Nepean (City) , extrinsic evidence is admissible only in the exceptional case. I am not satisfied that the case before me is “exceptional”.

[76] As in Kolias , the restrictive covenant under consideration does not contain any reference whatever to the existence of an intended dominant tenement and I find the opinion of the Court Kolias to be applicable here,

Therefore, even if the law allowed extrinsic evidence to resolve ambiguous descriptions of dominant tenements, there is no such ambiguity here. This omission is not equivalent to an ambiguity. Ambiguity must exist in the language of the restrictive covenant as written. It cannot be created by the evidence sought to be adduced: Fridman, The Law of Contract in Canada 445-46 (5th ed. 2006). The chambers judge, therefore, erred in law when he admitted extrinsic evidence to identify the dominant tenement in this case.

[77] In consideration of all of the evidence before me and the application of these principles of this law to the facts in this case, I am satisfied and find that the restrictive covenant currently registered on title is unenforceable. I therefore declare, as requested by Post and Beam, that the restrictive covenant as registered on title to the Defendant’s property as Instrument No. ER127568 on October 11, 2001 does not run with the land and is not binding on the Defendant and its agents, employees, successors and assigns, including any tenants or occupants.

[78] But the issues raised at this hearing do not end there. As indicated, Wonderland has sought an order granting the remedy of rectification in the event that the current restrictive covenant is found to be unenforceable.

Should the Court permit rectification in the circumstances ?

[79] Rectification is an equitable remedy available to a Court to correct an error of expression in a written document [7] .

[80] The principles of rectification were described by Mr. Justice Binnie of the Supreme Court of Canada decision in Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd. [8] ,

Rectification is an equitable remedy whose purpose is to prevent a written document from being used as an engine of fraud or misconduct “equivalent to fraud”. The traditional rule was to permit rectification only for mutual mistake, but rectification is now available for unilateral mistake (as here), provided certain demanding preconditions are met. Insofar as they are relevant to this appeal, these preconditions can be summarized as follows. Rectifiation is predicated on the existence of a prior oral contract whose terms are definite and ascertainable. The plaintiff must establish that the terms agreed to orally were not written down properly. The error may be fraudulent, or it may be innocent. What is essential is that at the time of execution of the written document the defendant knew or ought to have known of the error and the plaintiff did not. Moreover, the attempt of the defendant to rely on the erroneous written document must amount to “fraud or the equivalent of fraud”. The court’s task in a rectification case is corrective, not speculative. It is to restore the parties to their original bargain, not to rectify a belatedly recognized error of judgment by one party or the other…

[81] Section 160 of the Act refers to the concept of rectification and provides as follows

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.

[82] As noted in prior judicial decisions, it is of significance that both ss. 160 and 159 of the Act begin with the words “Subject to any estates or rights acquired by registration under this Act.” The Land Titles system provides to an owner, the right to rely upon the title abstract as an accurate reflection or mirror of the state of title that he/she has or will acquire. [9]

[83] In this case, there is no question that Post and Beam acquired good and effective title to the subject property from the Library Board.

[84] Although Post and Beam’s contract regarding the purchase and sale of this property was not with Wonderland, Wonderland has applied to the Court as a person “aggrieved by an entry made, or by the omission of an entry from the register”. I am satisfied that it has statutory standing to advance its claim.

[85] The Court's powers of rectification under ss. 159 and 160 of the Act are qualified or limited by reference to the indefeasibility of title that follows from registration. But a purchaser only obtains the benefit of indefeasible title if he or she is a bona fide purchaser for value without notice .

[86] In McIsaac v. Salo [10] , the Ontario Court of Appeal held that

the statutory remedy of rectification is available where a party has actual notice of an interest in land that varies from the interest shown in the register.

[87] In this case, I find that although Post and Beam was a successor to the original agreement between the Library Board and Wonderland regarding the restrictive covenant, Post and Beam had notice that a restrictive covenant existed in Land Titles.

[88] The evidence shows that Cushman & Wakefield, the listing agent for the property on behalf of the Library Board, included a reference to the existence of a restrictive covenant in its advertisement of the sale of the property: “See broker for restrictive covenant details”.

[89] In addition, during the course of its negotiations to purchase the property from the Library Board, Post and Beam received legal advice that a restrictive covenant was on title but that it was unenforceable.

[90] Finally, the restrictive covenant was specifically referred to and attached as Schedule “C” to the Agreement of Purchase and Sale between the Library Board and Post and Beam.

[91] Prior to closing, therefore, Post and Beam were fully aware that (a) the subject property was located adjacent to a large multi-commercial shopping and business area identified in the advertisement as “Wonderland Power Centre”; (b) the property was just “steps” away from Wonderland Power Centre which consisted of “major retailers” according to the same advertisement; and, (c) Wonderland had applied for and obtained a restrictive covenant which prohibited the owners, occupiers of the land and any successors and assigns of the property to be purchased from the Library Board from carrying on any commercial use on the property for a period of fifty (50) years commencing October 11, 2001.

[92] With full knowledge of the restriction regarding commercial use of the property, Post and Beam proceeded with the purchase in any event. In my view, the knowledge and willingness of Post and Beam to run the risk that the restrictive covenant could or would not be rectified militate in favour of a finding that it would be unjust not to rectify the restrictive covenant.

[93] The Court of Appeal in McLean v. McLean [11] held that “(equity) continues to have application to claims governed by the Land Titles Act … The ordinary civil burden of proof on a balance of probabilities is the standard that now applies to all civil actions, including a claim for rectification.”

[94] The rectification of the restrictive covenant does not impact the indefeasibility of Post and Beam’s title to the property that followed from registration. It does impact the use and enjoyment to which that property may be put but Post and Beam will be entitled to continued and unimpaired, uninterrupted ownership of the property itself.

[95] In all of the circumstances, I therefore grant Wonderland’s request for an order to rectify the Register for Land Titles in accordance with s. 160 of the Act to the extent necessary to ensure that the restrictive covenant runs with the land and is enforceable.

Should the Court grant an injunction in the circumstances?

[96] Notwithstanding the permission for rectification, it is my view that in the current factual circumstances of this case, a Court would be hard pressed to grant an interim injunction even if it were to find a breach of a negative covenant by Post and Beam with respect to its current tenant.

[97] The test for an interim injunction was established in RJR-MacDonald Inc. v. Canada (Attorney General) [12] : (a) there must be a serious issue to be tried; and, (b) a demonstration that irreparable harm will result if the relief is not granted; and, (c) an assessment of the balance of convenience to the parties.

[98] In my view, Wonderland has not met part two of this test and the request for an injunction must be dismissed. There is no probative evidence before me that any irreparable harm that Wonderland may suffer cannot be quantified in monetary terms and cannot be cured.

[99] With respect to part three of the test, I am satisfied that Post and Beam and more particularly, its current tenant , will suffer greater harm from the granting of an interlocutory injunction.

[100] The current occupant of the property owned and leased by Post and Beam is a company identified as Zomaron Inc. There is evidence before the Court from the President, C.E.O. and co-founder of this company which I accept.

[101] Zomaron is a Canadian company that provides payment solutions or financial technology and assistance to and for other companies. It operates a call centre which runs every business day to support its business clients and ensure that their payments can be processed seamlessly and immediately. Zomaron’s customers rely on its services to provide immediate payment solutions to problems they encounter.

[102] Zomaron has committed approximately $200,000 to purchase furniture, equipment and retrofits. It currently employs approximately 65 people and in the next year plans to expand its business into the United States and increase its staff to reach approximately 100.

[103] Zomaron has been identified as a “fast-growing London digital company.”

[104] There is no probative evidence before me that Post and Beam by virtue of the business of this particular tenant will cause any harm to Wonderland or any tenant located in the dominant tenement or the Wonderland Power Centre. There is no evidence before me that Zomaron is even competing with any of the tenants located in the dominant tenement or the Wonderland Power Centre or offers remotely comparable services to clients and/or customers.

[105] An injunction is a discretionary equitable remedy. In all of the current factual circumstances, I decline to grant an interlocutory injunction. I must emphasize, however, that this decision is based on the business of the current occupant of the property in question, namely, Zomaron.

Should Summary Judgment be granted?

[106] The test for a permanent injunction is different.

[107] In Adline Communications Inc. v. Buckley Insurance Brokers Ltd. , the Ontario Court of Appeal held as follows

The British Columbia Court of Appeal recently considered the test for a permanent injunction and its relationship to the test for an interlocutory injunction. In the decision under review in Cambie Surgeries Corp. v. British Columbia (Medical Services Commission) , 2010 BCCA 396 , 323 D.L.R. (4th) 680 , the trial judge granted permanent injunctive relief based on the test for an interlocutory injunction. Despite the parties’ agreement that the trial judge correctly set out the test, the British Columbia Court of Appeal held that the wrong test had been applied and reversed the trial decision.

Justice Groberman, writing for the court, explained that the RJR-Macdonald test is for interlocutory – not final or permanent – injunctions. At para. 24 of Cambie Surgeries , he explained that the RJR-Macdonald test is designed to address situations in which the court does not have the ability to finally determine the merits of the case but, nonetheless, must decide whether interim relief is necessary to protect the plaintiff’s interests.

In paras. 27-28 of Cambie Surgeries , Groberman J.A. explained:

Neither the usual nor the modified test discussed in RJR-MacDonald has application when a court is making a final (as opposed to interlocutory) determination as to whether an injunction should be granted. The issues of irreparable harm and balance of convenience are relevant to interlocutory injunctions precisely because the court does not, on such applications, have the ability to finally determine the matter in issue. A court considering an application for a final injunction, on the other hand, will fully evaluate the legal rights of the parties.

In order to obtain final injunctive relief, a party is required to establish its legal rights. The court must then determine whether an injunction is an appropriate remedy. Irreparable harm and balance of convenience are not, per se , relevant to the granting of a final injunction, though some of the evidence that a court would use to evaluate those issues on an interlocutory injunction application might also be considered in evaluating whether the court ought to exercise its discretion to grant final injunctive relief….

I would adopt this reasoning. The RJR-Macdonald test is designed for interlocutory injunctive relief. Permanent relief can be granted only after a final adjudication. Different considerations operate and, therefore, a different test must be applied, pre- and post-trial.

[108] In my view, the claim for a permanent injunction at large on the basis of a breach of negative covenant requires a trial. The issues are contested and each party ought to have the right to be heard with fulsome and detailed evidence in support of their respective positions.

[109] For this reason, as well, the summary judgment motion is dismissed.

Conclusion

[110] For the foregoing reasons:

(a) the motion for summary judgment is dismissed;

(b) the motion for a declaration that the restrictive covenant registered against the lands described as Part Lot 36, Concession 2 being Parts 1 & 2, PL 33-R-14721, London/Westminster which prohibits the owners, occupiers of the land and any successors and assigns, from carrying on any commercial use on the property for a period of fifty (50) years commencing October 11, 2001 is unenforceable, is granted ;

(c) the motion for rectification of the said restrictive covenant such that the covenant reads as follows and runs with the land is granted:

A restrictive covenant is hereby registered against the lands described as Part Lot 36, Concession 2 being Parts 1 &2, PL 33-R-14721, London/Westminster which prohibits the owners, occupiers of the land and any successors and assigns, from carrying on any commercial use on the property for a period of fifty (50) years commencing October 11, 2001.

This restrictive covenant benefits the lands described as Part Lot 36, Con 2. now designated as Pts 3 through 20, PL33R-14721 London/Westminster, being part of PINS 08209-0200 and 08209-0199.

(d) the motion for an interim injunction is dismissed; and

(e) there shall be a trial with respect to the following claims:

(i) a declaration that the Defendant Post and Beam has breached the restrictive covenant;

(ii) a permanent injunction restraining Post and Beam and its agents, employees, successors and assigns, including any tenants or occupants of Post and Beam’s property from breaching the restrictive covenant;

(iii) damages for breach of the restrictive covenant;

(iv) pre-judgment and post-judgment interest;

(v) costs

[111] The parties may make brief submissions with respect to costs in writing if they are unable to agree bearing in mind the outcome as set out herein.

Justice L. Templeton

Released: December 13, 2018

ONSC 7589 COURT FILE NO.: 2692/17 DATE: 20181213 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: Wonderland Power Centre Inc. Plaintiff - and – Post and Beam on Wonderland Inc. Defendant JUDGMENT Templeton J. Released: December 13, 2018

[1] R.S.O. 199, C. L. 5 [2] Campbell v. Cowdy, Re (1928), 1928 ON SC , 61 OLR 545 (CA) [3] Galbraith v. Madawaska Club Ltd., 1961 SCC , [1961] S.C.R.639 [4] (1999), 23 R.P.R. (3d) 114 [5] Jain v. Nepean (City), 1989 ON SC , 69 OR (2d) 353 [6] Kolias v. Owners: Condominium Plan 309 CDC, 2008 ABCA 379 , 440 AR 389 [7] Rectification in Property Law , Julian Greenhill, pla.org.uk [8] Sylvan Lake Golf & Tennis Club Ltd. v. Performance Industries Ltd., 2002 SCC 19 , [2002] 1 S.C.R. 678 [9] Spencer v. Salo 2012 ONSC 337 , [2012] OJ No 202 [10] McIsaac v. Salo 2013 ONCA 98 [11] McLean v. McLean 2013 ONCA 788 , 2013ONCA 788 [12] RJR-MacDonald v. Canada (Attorney General) [1994] S.C.R. 311