The Ontario Divisional Court has upheld a decision of the Director of Land Titles to place a freeze on the land records for a piece of property in Bruce County. Krystal Summer Williams had sought to register a "self-to-self" transfer of the property, which was still administered under the Registry Act system of land registration. Under the registry system, a person dealing with the property only has to trace the chain of title back for forty years. The property in this case had not been dealt with since 1936 and Ms. Williams applied to become the registered owner of the land.
Ms. Williams admitted that she did not own or have any interest in the property prior to registration, and the Director alleged that she was involved in a scheme to convey title to property that she does not own.
The Divisional Court agreed and ruled that the Director had authority to impose the freeze in order to determine the propriety of the self-to-self transfer. In the Court's view, this was "merely a scheme to create an interest in land where none exists."
Read the decision at: Williams v. Ontario.
Storm
Wednesday, January 23, 2013
Friday, January 11, 2013
Can a right of first refusal bind non-parties?
That general question was at the heart of a recent Ontario Court of Appeal ruling on an estate matter. Parents owned a property; they wanted to sell it to one of their three children, but the other two kids opposed the sale; in order to appease everyone, the parents proposed an agreement that would allow the property to go to the one child, but with a right of first refusal on the part of the other two kids in case the property-owner child ever decided to sell. The other two kids wanted to keep the property in the family.
The agreement was executed by the three children, including the right of first refusal and a provision stating that notice of the agreement could be registered on title to the property. Later, the property was transferred from the one child to her and her husband as joint tenants, with the husband having agreed to be bound by the previous agreement (including the right of first refusal). The agreement was subsequently registered on title to the property, with the undertaking of the husband appended.
The whole situation ended up in Court because of disagreement between the siblings and their children over what could happen with the property on the death of the property-owner sibling (and her husband). Was the agreement binding on the heirs of the property-owner? Those heirs raised the issue of privity of contract, which was described by the Court of Appeal as follows:
The doctrine of privity of contract stands for the proposition that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it. This doctrine has two very distinct components or aspects. On the one hand, it precludes parties to a contract from imposing liabilities or obligations on third parties. On the other hand, it prevents third parties from obtaining rights or benefits under a contract. See London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), [1992] 3 S.C.R. 299, at para. 200.
The Court noted that, at first blush, it might seems as if privity of contract applies in this case and that the heirs of the property-owner sibling are not bound by the right of first refusal. However, death does not terminate a contract unless the contract is "based on personal considerations, skill or confidence (a personal contract)." The estate of the owner would be in the position of the owner, bound by the agreement.
What if the property is then conveyed by the estate to the heirs? The Court found that the heirs, too, would be bound by the right of first refusal. The estate would pass title to the property to the heirs subject to the requirements in the agreement. Not only do those heirs have actual notice of the agreement (in this case), but they "are volunteers in the sense that they give no consideration for title to the Property". The heirs cannot stand in a better position than did the estate.
The Court of Appeal also ruled that the Agreement containing the right of first refusal was properly registrable against title to the property under the Land Titles Act. The Court says the following with respect to the nature of the interest held by a holder of a right of first refusal:
What did the holder have before crystallization? The holder had an interest in the unregistered equity that arose at the point of crystallization. To be sure, the holder is not entitled to the equity, as that entitlement arises on crystallization. But the holder has an interest in it, in the sense that the holder has something more than a mere spes or hope. The holder, prior to crystallization, has the recognised legal interest that will swell into an equitable right on crystallization. In the language of s. 71(1), the holder is a person “… interested in [an] unregistered … [equity] in registered land…”. Accordingly, rights of first refusal over land can be protected by registration under s. 71(1).
Read the decision at: Benzie v. Hania.
The agreement was executed by the three children, including the right of first refusal and a provision stating that notice of the agreement could be registered on title to the property. Later, the property was transferred from the one child to her and her husband as joint tenants, with the husband having agreed to be bound by the previous agreement (including the right of first refusal). The agreement was subsequently registered on title to the property, with the undertaking of the husband appended.
The whole situation ended up in Court because of disagreement between the siblings and their children over what could happen with the property on the death of the property-owner sibling (and her husband). Was the agreement binding on the heirs of the property-owner? Those heirs raised the issue of privity of contract, which was described by the Court of Appeal as follows:
The doctrine of privity of contract stands for the proposition that a contract cannot, as a general rule, confer rights or impose obligations arising under it on any person except the parties to it. This doctrine has two very distinct components or aspects. On the one hand, it precludes parties to a contract from imposing liabilities or obligations on third parties. On the other hand, it prevents third parties from obtaining rights or benefits under a contract. See London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), [1992] 3 S.C.R. 299, at para. 200.
There are established exceptions to the second aspect of the doctrine. In certain situations, the courts will permit strangers to enforce the contract and take the benefit of its provisions. The established exceptions are agency, trust, assignment or assumption, exceptions established by statute, and restrictive covenants. See Greenwood Shopping Plaza Ltd. v. Beattie et al.,1980 CanLII 202 (SCC), [1980] 2 S.C.R. 228, at para. 11.
The Court noted that, at first blush, it might seems as if privity of contract applies in this case and that the heirs of the property-owner sibling are not bound by the right of first refusal. However, death does not terminate a contract unless the contract is "based on personal considerations, skill or confidence (a personal contract)." The estate of the owner would be in the position of the owner, bound by the agreement.
What if the property is then conveyed by the estate to the heirs? The Court found that the heirs, too, would be bound by the right of first refusal. The estate would pass title to the property to the heirs subject to the requirements in the agreement. Not only do those heirs have actual notice of the agreement (in this case), but they "are volunteers in the sense that they give no consideration for title to the Property". The heirs cannot stand in a better position than did the estate.
The Court of Appeal also ruled that the Agreement containing the right of first refusal was properly registrable against title to the property under the Land Titles Act. The Court says the following with respect to the nature of the interest held by a holder of a right of first refusal:
What did the holder have before crystallization? The holder had an interest in the unregistered equity that arose at the point of crystallization. To be sure, the holder is not entitled to the equity, as that entitlement arises on crystallization. But the holder has an interest in it, in the sense that the holder has something more than a mere spes or hope. The holder, prior to crystallization, has the recognised legal interest that will swell into an equitable right on crystallization. In the language of s. 71(1), the holder is a person “… interested in [an] unregistered … [equity] in registered land…”. Accordingly, rights of first refusal over land can be protected by registration under s. 71(1).
Read the decision at: Benzie v. Hania.
Thursday, January 10, 2013
Court of Appeal sends family farm dispute back for a second trial
An "unfortunate dispute" between a brother and a sister over the family farm of their late parents has been sent back for a second trial. The Ontario Court of Appeal found that the first trial judge "applied incorrect legal principles to the evidence and made numerous unreasonable findings of fact." These "cumulative errors" rose "to the level of a substantial wrong". A new trial was ordered because the transcript from the first trial did not allow the Court of Appeal to decide the factual issues for itself.
The farm had been in the family since 1830, and the son had worked on the farm as a full-time occupation for 24 years. The son contended that he had an oral agreement with his parents that if he stayed on the farm and farmed with them, and if farming was his main occupation, he would receive the farm land and the farm assets when his parents stopped farming. The sister, the only sibling, worked off the farm and was not involved in running the farm operation.
The mother and the father had identical wills: if one died, everything went to the survivor; when the survivor died, everything was shared equally between the son and the daughter. After both parents died, the son commenced an action seeking a declaration that he was benefically entitled to the farm property and the farm business. The sister contested the claim and filed a counterclaim asking for an accounting by the brother for his use of the farm property and the business since the father's death in 2001. The son's claim was commenced in 2004.
The trial judge found that the son had not proven the alleged contract with his parents and dismissed his claim. On the counterclaim, the trial judge ordered both son and daughter to account for their management of the estate property and assets since the father's death. The trial judge awarded costs to the daughter on a substantial indemnity basis fixed at $275,000 inclusive, payable by the son and not by the estate of the parents.
The Court of Appeal allowed the appeal of the dismissal of the son's claim and also reversed the costs award. The reasons for decision of the appellate court address the following three errors in the trial judge's consideration of the son's claim for part performance of an oral contract (i.e. for the transfer of the farm and farm business):
The son was awarded $40,000 as costs of the appeal.
Read the decision at: Mountain v. TD Canada Trust Company.
The farm had been in the family since 1830, and the son had worked on the farm as a full-time occupation for 24 years. The son contended that he had an oral agreement with his parents that if he stayed on the farm and farmed with them, and if farming was his main occupation, he would receive the farm land and the farm assets when his parents stopped farming. The sister, the only sibling, worked off the farm and was not involved in running the farm operation.
The mother and the father had identical wills: if one died, everything went to the survivor; when the survivor died, everything was shared equally between the son and the daughter. After both parents died, the son commenced an action seeking a declaration that he was benefically entitled to the farm property and the farm business. The sister contested the claim and filed a counterclaim asking for an accounting by the brother for his use of the farm property and the business since the father's death in 2001. The son's claim was commenced in 2004.
The trial judge found that the son had not proven the alleged contract with his parents and dismissed his claim. On the counterclaim, the trial judge ordered both son and daughter to account for their management of the estate property and assets since the father's death. The trial judge awarded costs to the daughter on a substantial indemnity basis fixed at $275,000 inclusive, payable by the son and not by the estate of the parents.
The Court of Appeal allowed the appeal of the dismissal of the son's claim and also reversed the costs award. The reasons for decision of the appellate court address the following three errors in the trial judge's consideration of the son's claim for part performance of an oral contract (i.e. for the transfer of the farm and farm business):
(i) he erred in concluding that because there were no signed documents, there was no oral agreement;
(ii) he erred in his application of the doctrine of part performance; and
(iii) he made various findings of fact that disclose palpable and overriding error.
The son was awarded $40,000 as costs of the appeal.
Read the decision at: Mountain v. TD Canada Trust Company.
Thursday, January 3, 2013
Depth of Cover Monitoring Requirements Absurd? So says the Ontario Divisional Court
Enbridge Gas Distribution Inc. has won an appeal from the dismissal of its small claims court action against a contractor over damage caused to a gas main in Holland Landing, Ontario. Enbridge claimed that the contractor damaged the pipe when using a mechanical digging device to uncover a leaking septic tank. Enbridge had asserted at trial that the entire incident could have been avoided if the contractor had called for a locate; the contractor was negligent. On appeal, the Divisional Court agreed and awarded damages to Enbridge.
At trial and in the appeal, the issue of depth of cover over the pipe came into play. The trial judge had found that the pipe was not buried at the minimum required depth (2 feet) and that Enbridge should have ensured proper depth. However, the Divisional Court noted that there is no requirement in the applicable legislation or regulations (or the TSSA Guideline or the CSA Standard) that a gas main must remain installed at the minimum depth.
The Court reasoned:
There is no requirement that Enbridge must continually measure the depths of all of its buried pipelines. Such a finding would lead to the absurd result that utility companies would be required to constantly recheck their lines in the ground. It is a well-established principle of statutory interpretation that the Legislature does not intend to produce absurd consequences. If the Legislature intended this result, the Act, the Regulation, the TSSA Guideline or CSA Standard would have stated that utility companies must ensure that the pipes “remain” buried at a minimum depth.
Unlike the case of Sun-Canadian Pipeline v. Lockwood, where the Court found that the company had actual knowledge that the pipeline had insufficient cover on the property, there is no evidence that Enbridge had knowledge that its Gas Main was at less than the required depth at the property until after the incident occurred.
Although these comments must be read in light of the facts of this particular case, it will no doubt be of concern to pipeline landowners to find an appellate court in Canada suggesting that pipeline companies have no obligation to monitor the depth of cover over their pipelines. In fact, the Divisional Court suggested that such a requirement would be absurd.
Read the decision at: Enbridge Gas Distribution Inc. v. Froese.
At trial and in the appeal, the issue of depth of cover over the pipe came into play. The trial judge had found that the pipe was not buried at the minimum required depth (2 feet) and that Enbridge should have ensured proper depth. However, the Divisional Court noted that there is no requirement in the applicable legislation or regulations (or the TSSA Guideline or the CSA Standard) that a gas main must remain installed at the minimum depth.
The Court reasoned:
There is no requirement that Enbridge must continually measure the depths of all of its buried pipelines. Such a finding would lead to the absurd result that utility companies would be required to constantly recheck their lines in the ground. It is a well-established principle of statutory interpretation that the Legislature does not intend to produce absurd consequences. If the Legislature intended this result, the Act, the Regulation, the TSSA Guideline or CSA Standard would have stated that utility companies must ensure that the pipes “remain” buried at a minimum depth.
Unlike the case of Sun-Canadian Pipeline v. Lockwood, where the Court found that the company had actual knowledge that the pipeline had insufficient cover on the property, there is no evidence that Enbridge had knowledge that its Gas Main was at less than the required depth at the property until after the incident occurred.
Although these comments must be read in light of the facts of this particular case, it will no doubt be of concern to pipeline landowners to find an appellate court in Canada suggesting that pipeline companies have no obligation to monitor the depth of cover over their pipelines. In fact, the Divisional Court suggested that such a requirement would be absurd.
Read the decision at: Enbridge Gas Distribution Inc. v. Froese.
Wednesday, January 2, 2013
Have a healthy and productive 2013!
To my readers: please accept my belated wishes of a Merry Christmas and have a very Happy New Year!
Wednesday, December 19, 2012
Pipeline Landowner Forum available at Pipeline Observer
An online forum for pipeline landowners has been set up at PipelineObserver.ca, along with blogs and news updates. The website "tracks pipeline news, industry, events and facilitates pipeline discussion". The forum can be accessed at: Pipeline Forum.
When can a stream create a natural severance of a property?
A case is before the Ontario Superior Court in London to determine whether a local watercourse effectively severs a property into two parts. An application has been commenced by the Municipality of Middlesex Centre for a declaration that a stream (the Bear Creek Drain) is not a navigable waterway such that a particular property through which it flows would be severed in two. The predecessors in title of the affected landowners had previously applied to sever their property, but the application was denied. The current landowners then obtained an opinion that the stream created a "natural severance"; a surveyor agreed and registered a reference plan showing the lands north and south of the stream as two separate parts and denoting the stream itself as "Unpatented Crown Land".
This was done without the knowledge of the municipality; the circumstances were discovered when the landowners made an application for a building permit that would have constituted a second dwelling on the same 10-acre parcel; this would not have been permitted without a rezoning unless there was a "natural severance".
Justice Heeney has ruled that it will not be necessary for the municipality to serve its application on other landowners along the Bear Creek Drain as the issue to be determined at trial will relate solely to the specific property in question: "was the stream a naviagble waterway at the time of the original Crown grant to the current owners' predecessors in title in 1831? If the answer is yes, then the stream bed is deemed to have been excluded from the original grant, and title to it remains vested in the Crown, irrespective of the current status of the waterway. If the answer is no, the stream bed was included in the deed to the parcel over which it flowed, and title to it vested in the private landowner who obtained the deed from the Crown, and in his successors in title, up to and including" the current landowners.
As the onus of proof will be on the landowners, Justice Heeney also ruled that they will present their case first at trial, to be followed by the municipality and then the Province of Ontario.
Read the decision at: Middlesex Centre v. MacMillan et al.
This was done without the knowledge of the municipality; the circumstances were discovered when the landowners made an application for a building permit that would have constituted a second dwelling on the same 10-acre parcel; this would not have been permitted without a rezoning unless there was a "natural severance".
Justice Heeney has ruled that it will not be necessary for the municipality to serve its application on other landowners along the Bear Creek Drain as the issue to be determined at trial will relate solely to the specific property in question: "was the stream a naviagble waterway at the time of the original Crown grant to the current owners' predecessors in title in 1831? If the answer is yes, then the stream bed is deemed to have been excluded from the original grant, and title to it remains vested in the Crown, irrespective of the current status of the waterway. If the answer is no, the stream bed was included in the deed to the parcel over which it flowed, and title to it vested in the private landowner who obtained the deed from the Crown, and in his successors in title, up to and including" the current landowners.
As the onus of proof will be on the landowners, Justice Heeney also ruled that they will present their case first at trial, to be followed by the municipality and then the Province of Ontario.
Read the decision at: Middlesex Centre v. MacMillan et al.
Thursday, December 13, 2012
OPA to begin accepting Small FIT applications on December 14, 2012
From the OPA:
This is to advise you that the Ontario Power Authority (OPA) will begin accepting Small FIT applications on December 14, 2012, for renewable energy projects with a proposed capacity of 10 to 500 kilowatts. The OPA will award up to 200 megawatts worth of contracts as a result of applications received during this upcoming Small FIT application window.
Please note that the FIT Rules, FIT Contract and other program documents are being revised as a result of the November 23, 2012, and December 11, 2012, directives. Before submitting your application, please carefully review the latest versions of the program documents (version 2.1) to ensure you understand how the FIT Program has changed. The program documents will be available on the FIT website on December 14, 2012.
Applications are welcome from both new and pre-existing applicants. Pre-existing FIT applicants with Small FIT projects (formerly CAE applicants) who wish to be considered under the updated FIT Program can maintain their original time stamp if they submit an eligible revised application. More information will be available at fit.powerauthority.on.ca on December 14, 2012. The OPA will also be hosting a web-enabled teleconference on Tuesday, December 18, 2012, to review the revised FIT Program and answer questions from interested stakeholders. Details on how to participate will be posted on the FIT website.
This is to advise you that the Ontario Power Authority (OPA) will begin accepting Small FIT applications on December 14, 2012, for renewable energy projects with a proposed capacity of 10 to 500 kilowatts. The OPA will award up to 200 megawatts worth of contracts as a result of applications received during this upcoming Small FIT application window.Please note that the FIT Rules, FIT Contract and other program documents are being revised as a result of the November 23, 2012, and December 11, 2012, directives. Before submitting your application, please carefully review the latest versions of the program documents (version 2.1) to ensure you understand how the FIT Program has changed. The program documents will be available on the FIT website on December 14, 2012.
Applications are welcome from both new and pre-existing applicants. Pre-existing FIT applicants with Small FIT projects (formerly CAE applicants) who wish to be considered under the updated FIT Program can maintain their original time stamp if they submit an eligible revised application. More information will be available at fit.powerauthority.on.ca on December 14, 2012. The OPA will also be hosting a web-enabled teleconference on Tuesday, December 18, 2012, to review the revised FIT Program and answer questions from interested stakeholders. Details on how to participate will be posted on the FIT website.
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