CITATION: 923424 Ontario Limited v. 1695850 Ontario Inc., 2015 ONSC 3343

COURT FILE NO.: CV-13-495392

DATE: 20150527

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

923424 ONTARIO LIMITED

Applicant

– and –

1695850 ONTARIO INC.

Respondent

Wade Morris for the Applicant

Courtney A. Kazembe and Jayanta K. Singha for the Respondent

HEARD: May 12, 2015

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION

[1] The Applicant, 923424 Ontario Limited, whose principal is Charles Winder, owns three properties in Toronto, Ontario, registered under the Land Titles Act, R.S.O. 1990, c. L.5, with property identification numbers (PIN): (1) PIN 10323-0044 (LT); (2) PIN 10323-0102 (R); and (3) PIN 10323-0101 (R), and municipally known respectively as: (1) 40 South Station Street; (2) 36 South Station Street; and (3) 0 South Station Street.

[2] The Respondent 1695850 Ontario Inc., whose principal is Masum Hossain, owns a nearby property registered under the Land Titles Act, with PIN 10323-0038 LT, and municipally known as 1919 Weston Road.

[3] The Applicant applies for a declaration that as owner of 40 South Station Street, it has a right of way over the Respondent’s property at 1919 Weston Road and for related relief. In particular, the Applicant seeks an order rectifying the register for 1919 Weston Road to show a right of way granted in 1962 when the lands were registered under the Registry Act, now the Registry Act, R.S.O. 1990, c. R.20.

[4] For the reasons that follow, I grant the Application but without prejudice to an action for determination of whether the right of way has been abandoned or otherwise extinguished.

B. FACTUAL BACKGROUND

[5] Below is a sketch the four properties that are relevant to this Application.

South Station Street

40 South Station Street

[dominant]

1919 Weston Road.

[servient]

36 South Station Street

↓N

John

Street

0 South Station Street

Weston Road

[6] On October 25, 1954, Clifford Winder, Charles Winder’s father, purchased 40 South Station Street. The property was then in the former township of Weston and is now in the City of Toronto. At the time, the land was registered under the Registry Act. Mr. Winder subsequently demolished the blacksmith’s shed on the property, and constructed a single-storey 4,000 square foot building. The property was leased to the LCBO, then to Tower Realty, and then to Weston Montessori. It is now leased to the Islamic Guidance Education Centre. 40 South Station Street has an 18-foot access entrance on South Station Street and another 10-foot entrance from John Street.

[7] On January 24, 1962, Richardson Furniture and Electronic Company Limited, the then-owner of the property at 1919 Weston Road, granted Clifford Winder a right of way by Instrument Number 18730. The properties were then registered under the Registry Act. The dominant property for the right of way is 40 South Station Street. The servient property is 1919 Weston Road. The recitals in the right of way indicate that it was granted to clear up ambiguities with respect to an existing right of way.

[8] In November 1970, Clifford Winder purchased 36 South Station Street, which was improved by a one and a half storey wooden home. The property is currently used as a constituency office for a member of Parliament. In 1970, the land was registered under the Registry Act.

[9] In April 1987, Clifford Winder purchased 0 South Station Street, an unimproved property now used as a parking area. At the time, the land was registered under the Registry Act. The property has a “0” number because it has no structures. 0 South Station Street abuts the westerly and northern boundaries of 36 South Station Street.

[10] Clifford Winder passed away on March 3, 1990, and all his properties came to be owned by the Applicant, a land holding corporation, whose principal, as noted earlier, is Charles Winder, the son of the late Mr. Winder.

[11] On August 27, 2001, 40 South Station Street, 36 South Station Street, 0 South Station Street, and 1919 Weston Road were administratively converted to the Land Titles System with estates of “LT Conversion Qualified” (“LTCQ”). The conversion was part of a government program, and it was accomplished without notice to the landowners.

[12] The following table sets out the address, PIN, and property description of the properties converted from the Registry System to the Land Titles System.

Address

PIN

Property Description

40 South Station Street

10323-0044 (LT)

LT 26, 28-30, 27 PL 223 TWP OF YORK EXCEPT TW18594; PT LT 25 PL 223 TWP OF YORK AS IN TB733744 S/T TB733744 & T/W TW18730; TORONTO (YORK), CITY OF TORONTO [emphasis added]

36 South Station Street

10323-0102 (R)

PT LT 23-24 PL 223 TWP OF YORK AS IN TB733744 (FIFTHLY) T/W TB733744; TORONTO (YORK), CITY OF TORONTO

0 South Station Street

10323-0101 (R)

PT LT 23-25 PL 223 TWP OF YORK; PT LT 3 PL 38 WESTON AS IN TB404341 S/T TB404341; TORONTO (YORK), CITY OF TORONTO

1919 Weston Road

10323-0038 (LT)

PT LT 3-4 PL 38 WESTON; PT LT 24-25 PL 223 TWP OF YORK AS IN CY573748, S/T EASE OVER PT 1 ON PLN 66R-24138 AS IN AT2009545. TORONTO (YORK), CITY OF TORONTO

[13] It is to be noted that the property description for 40 South Station Street notes instrument “TW18730,” which is the grant of the right of way. Thus, the right of way that is the subject of this Application is noted on the Land Titles Act parcel register for 40 South Station Street (the dominant property) but the right of way is not noted on the parcel register for 1919 Weston Road (the servient property).

[14] All of the parcel registers state:

SUBJECT, ON FIRST REGISTRATION UNDER THE LAND TITLES ACT, TO:

SUBSECTION 44(1) OF THE LAND TITLES ACT, EXCEPT PARAGRAPH 11, PARAGRAPH 14, PROVINCIAL SUCCESSION DUTIES AND ESCHEATS OR FORFEITURE TO THE CROWN.

THE RIGHTS OF ANY PERSON WHO WOULD, BUT FOR THE LAND TITLES ACT, BE ENTITLED TO THE LAND OR ANY PART OF IT THROUGH LENGTH OF ADVERSE POSSESSION, PRESCRIPTION, MISDESCRIPTION OR BOUNDARIES SETTLED BY CONVENTION.

ANY LEASE TO WHICH SUBSECTION 70(2) OF THE REGISTRY ACT APPLIES.

[15] On June 7, 2006, the Respondent purchased 1919 Weston Road and, as just noted, there was a right of way registered on the title to 40 South Station Street under the Land Titles System at the time of purchase.

[16] Mr. Hossain deposed that shortly after his purchase, he spoke to Mr. Charles Winder who claimed an interest in a laneway over the Respondent’s property and who offered to purchase the land. Mr. Hossain did not wish to sell, but spoke to his lawyer who confirmed in writing that the Respondent owned the laneway and because the lands were registered under the Land Titles Act, “no opposing rights can be acquired by neighbouring property owners by adverse possession.”

[17] Mr. Winder was provided with a copy of the lawyer’s letter in August of 2007 and that seemed to put the matter to rest until August of 2013 when Mr. Winder wrote Mr. Hossain a letter requesting him to remove barriers blocking the entrance to the parking on 40 South Station Street.

[18] Further correspondence followed, with the Applicant claiming it owned a right of way over 1919 Weston Road and the Respondent alleging that 1919 Weston Road was never used as an access route to 40 South Station Street and denying the existence of a right of way.

C. STATUTORY BACKGROUND

[19] For the purposes of this Application, the relevant provisions of the Land Titles Act are set out below.

Effect of First Registration

Liability of registered land to easements and certain other rights

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:

45. Any right of way, watercourse, and right of water, and other easements.

46. Any title or lien that, by possession or improvements, the owner or person interested in any adjoining land has acquired to or in respect of the land.

Estate of first registered owner with absolute title

45. The first registration of a person as owner of land, in this Act referred to as first registered owner with an absolute title, vests in the person so registered an estate in fee simple in the land, together with all rights, privileges and appurtenances, free from all estates and interests whatsoever, including estates and interests of Her Majesty, that are within the legislative jurisdiction of Ontario, but subject to the following:

46. The encumbrances, if any, entered on the register.

47. The liabilities, rights and interests that are declared for the purposes of this Act not to be encumbrances, unless the contrary is expressed on the register.

48. Where the first registered owner is not entitled for the owner’s own benefit to the land registered, then as between the owner and any persons claiming under the owner, any unregistered estates, rights, interests or equities to which such person may be entitled.

Estate of owner registered with a qualified title

46. (1) The registration of a person as first registered owner with a qualified title has the same effect as the registration of such person with an absolute title, except that registration with a qualified title does not affect or prejudice the enforcement of any estate, right or interest appearing by the register to be excepted.

Court may order rectification

159. Subject to any estates or rights acquired by registration under this Act, where a court of competent jurisdiction has decided that a person is entitled to an estate, right or interest in or to registered land or a charge and as a consequence of the decision the court is of opinion that a rectification of the register is required, the court may make an order directing the register to be rectified in such manner as is considered just.

Application to court to rectify

160. 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.

D. DISCUSSION AND ANALYSIS

1. Preliminary Observations

[20] The discussion may begin by noting that the Application at bar is not a case about the acquisition of a prescriptive right of way. The Application is about whether pursuant to the Land Titles Act, a grant of a right of way should appear on the abstract of title of 1919 Weston Road.

[21] It also should be noted at the outset that although the evidentiary record contains some evidence from which it might be argued that the right of way was abandoned or otherwise extinguished, there was no cross-application, and the Respondent’s evidence about the use of the right of way was proffered to rebut the creation of a right of way by prescription or by operation of law.

[22] The Applicant, however, does not claim a right of way by prescription and relies exclusively on the fact that the right of way was a registered right of way under the Registry Act and noted on the title of the dominant property when it was converted to be registered under the Land Titles Act. The problem in this case is that when the servient property was converted to the Land Titles Act, the right of way was not expressly noted on the abstract of 1919 Weston Road.

[23] There is not a satisfactory evidentiary record to make a finding of abandonment or extinguishment, which is a question of fact, and, therefore, although it was alluded to, I make no finding about whether the right of way has been abandoned or otherwise extinguished. The Order I shall make is without prejudice to the Respondent’s rights to assert that the right of way has been abandoned or extinguished.

[24] With respect to the doctrine of abandonment, see: Bialkowski v. Cowling, 2015 ONSC 1744; McCormack v. Ciampanelli, 2012 ONSC 1702; Lywood et al. v. Hunt (2009), 2009 CanLII 25312 (ON SC), 97 O.R. (3d) 520 (S.C.J.), aff’d 2011 ONCA 229; 2108133 Ontario Inc. v. Kabcan Foods Ltd., [2009] O.J. No. 951 (S.C.J.); Phinny v. Macaulay, [2008] O.J. No. 3629 (S.C.J.); Jacuniak v. Tamburro, (2002), 2002 CanLII 49467 (ON SC), 59 O.R. (3d) 236 (S.C.J.); Overs v. ten Kortenaar, [2002] O.J. No. 822 (S.C.J.); Bison Realty Ltd. v. Athersych, [1998] O.J. No. 2358 (Gen. Div.); 455645 Ontario Ltd. v. Rousseau, [1981] O.J. No. 558 (H.C.J.); Liscombe v. Maughan (1929), 1928 CanLII 450 (ON CA), 62 O.L.R. 328 (S.C. App. Div.); Bell v. Golding, [1896] O.J. No. 41 (C.A.).

2. Analysis

[25] In 2006, when the Respondent acquired 1919 Weston Road, what the Respondent acquired was a “Qualified Title”, because the lands had previously (in 2001) been administratively converted to the Land Titles System from the Registry System and the administrators had conferred an estate of “LT Conversion Qualified” (“LTCQ”) for the registration of the lands under the Land Titles Act.

[26] In 2006, when the Respondent acquired 1919 Weston Road, it was alerted by the parcel register that, among other things, the lands were subject to s. 44(1) of the Land Titles Act.

[27] Paragraph 2 of s. 44(1) of the Act provides that unless the contrary is expressed on the register, the registered land is subject to certain liabilities, which include easements. Thus, in 2006, the Respondent was alerted to the fact that its land was potentially subject to rights of way unless the contrary was expressed on the register, which was not the case.

[28] When the Respondent acquired its qualified title in 2006, s. 46(1) of the Land Titles Act described the nature of the estate it acquired.

[29] Pursuant to s. 46(1) of the Act, the registration of a person as first registered owner with a qualified title has the same effect as the registration with an absolute title, except that registration of a qualified title does not affect or prejudice the enforcement of any estate, right or interest appearing by the register to be excepted. There were no exceptions noted on the register with respect to any right of way and thus the Respondent acquired the same title as the registration of an absolute title. But, as will immediately appear, an absolute title has qualifications of its own.

[30] Coming full circle, s. 45 of the Act describes the estate of a first registered owner with absolute title, and it provides that the Act vests the owner with an estate in fee simple, but subject to “the liabilities, rights and interests that are declared for the purposes of this Act not to be encumbrances”, which is the legislative draftsperson’s awkward reference to the overriding liabilities set out in s. 44(1) of the Act, which liabilities, as noted above, includes rights of way.

[31] Paragraph 2 of s. 44(1) refers to “any right of way” and Instrument TW18730, which was registered against the abutting dominant lands (40 South Station Street), is a right of way that was intended to qualify the title of 1919 Weston Road.

[32] Instrument TW18730 ought to have been noted against the title abstract to 1919 Weston Road when that property was administratively converted from the Registry Act to the Land Titles Act in 2001.

[33] It would seem that an administrative error was made in failing to note the right of way in both the dominant property, where it was noted, and also the servient property, where it was not noted, apart from the references to the provisions of the Land Titles Act, described above.

[34] The issue then becomes whether the administrative error should be fixed and the abstract rectified. Under s. 159 of the Act, set out above, the court may order rectification. Rectification is available where the court decides that a person is entitled to an interest in registered land and the court is of the opinion that a rectification of the register is required.

[35] In the case at bar, I am satisfied that subject to the possible abandonment or extinguishment of the right of way, the Applicant is the owner of the dominant property and has a right of way interest over the Respondent’s servient property, and the register should be rectified accordingly.

[36] There is some case law about the consequences of an administrative conversion of lands from the Registry Act to the Land Titles Act, but most of the cases deal with disputes about whether or not a landowner has acquired a perfected adverse possession claim before the servient lands were introduced into the Land Titles System. (Once lands are registered under the Land Titles System, an unperfected claim for adverse possession cannot be perfected because adverse possession is not possible pursuant to s. 51 of the Act. See: Gatz v. Kiziw, 1958 CanLII 12 (SCC), [1959] S.C.R. 10.)

[37] I have found only two cases about administrative conversions of lands from the Registry Act to the Land Titles Act that consider registered rights of way or registered indications of a right of way. These cases support my conclusion that subject to the possibility of abandonment or extinguishment, the register of the servient property should be rectified. The two cases are: McCormack v. Ciampanelli, supra and Hoggarth v. MGM Farms and Fingers Ltd., 2015 ONSC 2494.

[38] In McCormack v. Ciampanelli, the McCormacks owned 85 Dorothy Street, in Welland, Ontario (the dominant property) and Royton Industries Inc. owned the abutting property, 81 Dorothy Street (the servient property). The facts were that in 1964, while the properties were registered under the Registry Act, the McCormacks’ predecessor in title conveyed the property subject to a right of way that had been reserved in a previous severance of the lands. In 1998, the dominant property was administratively converted to Land Titles, but in the conversion, the dominant property no longer referred to the right of way as being “together with a right of way” but were shown as “subject to a right of way.”

[39] Meanwhile, between 1964 and 1998, the servient property was being transferred subject to the right of way. In 1998, the servient lands were administratively converted to Land Titles and by this time, the servient lands had been consolidated with other lands and a two-part description was used in the conveyancing. One part of the description referred to a Reference Plan that, in turn, referred to the right of way.

[40] In October 1998, the two-part description was used when the servient lands were conveyed to Royton Industries. Later that year, in December, 2008, a new Reference Plan was deposited, severing the servient lands again. The servient property was given a new PIN designation and a new legal description that referred to a new Reference Plan.

[41] In 2002, the McCormacks sought a declaration that title to the Royton Industries lands was subject to a right of way in their favour and for an order directing the Land Registrar to rectify the register by amending the legal description of the respective lands to include "together with a right of way" on the dominant land and "subject to a right of way" on the servient land.

[42] Justice W.L. MacPherson first considered whether the 1964 right of way had been extinguished as abandoned, and she concluded that the right of way had not been extinguished. Then, she considered whether the parcel register should be rectified to reflect the existence of the right of way, and she decided that the register should be rectified because although Royton Industries’ abstract did not refer to the right of way, it could not claim the status of a bona fide purchaser for value and thus when it purchased the property, the property was subject to the right of way.

[43] Justice MacPherson’s analysis is set out in paragraphs 46 to 53 of her judgment, where she stated:

46. Both the dominant and servient lands were converted to Land Titles on October 19, 1998. The Respondent submits that when he acquired title to the servient land in July 2008, there was no reference to the right of way in the property description of the Parcel Register for PIN 64106-0110 (LT) and as such he was a bona fide purchaser for value without notice.

47. In theory, the Land Title system of registration means that one need not look behind the en-tries in the Parcel Register as confirmed by Epstein J. in Durrani v. Anger. However, even this is not always an absolute guarantee of title. This is evident from s. 44 of the Land Titles Act which confirms that Certificates of Title are subject to certain claims and require further searches to be conducted with respect to a right of way, watercourse, right of water and other easements, as well as any encroachment or possessory rights that an owner of an adjoining land has acquired before the lands were brought into the Land Titles system

48. This is also clear from the reference in the Parcel Register for PIN 64106-0110 (LT) and most other Parcel Registers, that the Estate is Fee Simple LT Conversion Qualified and there is a specific note that reads "Adjoining properties should be investigated to ascertain descriptive inconsistencies, if any, with description represented for this property."

49. In this case, the Respondent submits that a review of title to the adjoining property (the dominant land) showed that it was subject to a right of way rather than having the benefit of a right of way. As such, there was no notice to any purchaser of the servient land of any obligation imposed by a right of way, particularly when this was coupled with a review of the description of the servient land, which did not specifically refer to a right of way.

50. It is self-evident that an error in the property description of the dominant land was made by the Land Registrar when the property was converted to Land Titles. While it is apparent that the words or abbreviation for "subject to a right of way" did not appear in the property description of the servient land, what it did refer to was "Parts 2 and 3 of 59R2058." It is inconceivable that the Land Titles Act would obviate the necessity of reviewing the Reference Plan referred to. A proper review would make it apparent that Parts 1, 2 and 3 are the lands described in Instrument No. 166458 (which was the June 1972 transfer from Ferguson to Liptaks) which confirms that the transfer is "subject to a right of way" as set out in a metes and bounds description. Further on the Reference Plan Part 3 is denoted as being "subject to a right of way."

51. A person has actual notice if he or she is aware of the existence of a legal right. It is not necessary that the person have knowledge of the precise details of that right. In this case, there was sufficient information in the property description to require additional inquiries to be made in order to determine the legal implications of the right of way denoted in the Reference Plan.

52. As conceded by the Applicant's counsel, unlike a Plan of Subdivision, a Reference Plan cannot create an interest in land where one does not exist. However, where an easement such as a right of way does exist through an express grant as was created in Instrument No. 19808B, which is confirmed in the subsequent instrument (Instrument No.166458), which instrument is then specifically referred to in the Reference Plan, and then referred to in the Property Description, I find it is sufficient to establish that the Respondent had actual notice of the right of way over the servient land.

53. The Respondent is not an innocent party and notwithstanding the overall objectives of the Land Titles legislation, I am satisfied of the justice of the case and that equity necessitates that an order be made requiring the Land Registrar to rectify the Parcel Registers for the dominant and servient lands as requested by the Applicant.

[44] Comparing and contrasting McCormack v. Ciampanelli to the case at bar, in McCormack v. Ciampanelli, a review of the title of the servient property before and after it was administratively converted into Land Titles indirectly revealed the existence of the right of way by referring to a Registered Plan that, in turn, referred to the right of way. In comparison, in the case at bar, the right of way would have been indirectly revealed by a search of the adjoining dominant property.

[45] In the case at bar, a search of the abutting dominant property would be necessary in order to ensure compliance with the Planning Act, R.S.O. 1990, c. P.13, to follow up on the alerts or warnings contained in the register about the qualified title, and to respond to the provisions of ss. 44(1) and 46(1) of the Land Titles Act. The right of way was noted in the register of the abutting property.

[46] In the case at bar, assuming that there is no abandonment or extinguishment of the right of way, I conclude that the Respondent, like Royton Industries in McCormack v. Ciampanelli, cannot rely on the absence of an express notice of the right of way on the servient land. As noted above, an error appears to have been made in the administrative conversion of the lands from the Registry Act to the Land Titles Act, but, in my opinion, the Respondent cannot rely on the error in the register for the servient property to take title free and clear of the right of way that was stated to exist in the abstract of the dominant property.

[47] In Hoggarth v. MGM Farms and Fingers Ltd., supra, there was a dispute between two groups of cottage owners of lots on a Plan of Subdivision in the Township of Oro-Medonte. The Plan of Subdivision had originally been registered in 1950, when the lands were registered under the Registry Act, and the Plan reserved certain rights in common. The subject lands were used for launching of boats, for access to various properties, for parking vehicles, for storage for surrounding properties, and for access to Lake Simcoe for swimming and for various recreational purposes.

[48] The Applicants sought an order declaring that these common lands in the Plan of Subdivision remained subject to rights of common usage. Justice DiTomaso concluded that the rights in common constituted a property right that had private and also quasi-public aspects. Further, he concluded that this property right had not expired before the administrative conversion of the lands from the Registry System to a qualified title under the Land Titles System. He held that the rights in common were not extinguished by the conversion of the lands to a qualified title under the Land Titles Act.

[49] Justice DiTomaso noted the various provisions of the Land Titles Act, set out above, and he concluded that the Applicants, who wished to preserve the rights in common, had satisfied the test of s. 44(1) of the Act in showing that the lands of the Plan of Subdivision were subject to “any right of way, watercourse, right of water, and other easement, unless the contrary is expressed on the register.”

[50] In paragraph 90 of his reasons in Hoggarth v. MGM Farms and Fingers Ltd., Justice DiTomaso concluded that the respondents should have been aware of the existence of the rights in common either by a closer examination of the parcel register or by investigating what was to be seen physically on the ground. In paragraph 91, he concluded that property rights should not be taken away lightly, and that the legislation should be read to protect the rights of the applicants.

[51] In the case at bar, the right of way is noted on the register of the dominant property and ought to have been noted on the register of the servient property. Subject to the possibility of abandonment or other extinguishment of the right of way, the register should be rectified.

E. CONCLUSION

[52] For the above reasons, I grant the Application, and I direct the register to be rectified accordingly.

[53] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Applicant’s submissions within 20 days after the release of these Reasons for Decision followed by the Respondent’s submissions within a further 20 days.

Perell, J.

Released: May 27, 2015

CITATION: 923424 Ontario Limited v. 1695850 Ontario Inc., 2015 ONSC 3343

COURT FILE NO.: CV-13-495392

DATE: 20150527

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

923424 ONTARIO LIMITED

Applicant

– and –

1695850 ONTARIO INC.

Respondent

REASONS FOR DECISION

PERELL J.

Released: May 27, 2015