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Real Property - Land Titles (3). Sanasie v. Chateramdas
In Sanasie v. Chateramdas (Ont Div Ct, 2026) the Ontario Divisional Court dismissed two appeals related to title and mortgage fraud, here brought against orders "granting partial summary judgement, setting aside both the transfer of the home and registration of the mortgage, and ordered punitive damages to be paid by the adult child".
Here the court considers issues of title fraud [under Land Titles Act s.78] and deferred indefeasibility:Analysis:
[70] On November 23, 2022, RiverRock offered a first mortgage to Melissa in the sum of $760,000 by a conditional mortgage commitment. The Property had already been transferred into her name. RiverRock submits that they were not made aware that the transfer of Property to Melissa was being challenged until they received a letter from the Chateramdas’ lawyer, dated February 2, 2024.
[71] The essence of RiverRock’s submission is that it is the intention of the LTA to provide certainty through registration. It should be entitled to rely on the registration of ownership, and therefore the mortgage was valid and unaffected by the fraud. RiverRock further submits that the doctrine of deferred indefeasibility was superseded by the 2006 amendments to the LTA.
[72] Section 78(4) of the LTA provides as follows:(4) When registered, an instrument shall be deemed to be embodied in the register and to be effective according to its nature and intent, and to create, transfer, charge or discharge, as the case requires, the land or estate or interest therein mentioned in the register. [73] The LTA was amended in 2006 to provide limited exceptions to the absolute nature of s.78(4), as follows:(4.1) Subsection (4) does not apply to a fraudulent instrument that is registered on or after October 19, 2006.
(4.2) Nothing in subsection (4.1) invalidates the effect of a registered instrument that is not a fraudulent instrument described in that subsection, including instruments registered subsequent to such a fraudulent instrument. [74] The key to an application under s. 78(4.1) is the definition of a “fraudulent instrument”. “Fraudulent instrument” is defined under s.1 of the LTA to include an instrument "under which a fraudulent person purports to receive or transfer an estate or interest in land". Pursuant to s. 155 of the LTA, an instrument that is fraudulent and void remains so despite having been registered. Section 155 states:155. Subject to this Act, a fraudulent instrument that, if unregistered, would be fraudulent and void is, despite registration, fraudulent and void in like manner. [75] RiverRock does not dispute that the transfer of the Property to Melissa is a fraudulent instrument. However, they submit the motion judge erred in finding that the charge was also a fraudulent instrument. Whether the charge was a “fraudulent instrument” turns on whether Melissa was a “fraudulent person” in relation to the charge. This is the crux of the appeal. Therefore, to determine if this case comes within s.78(4.1), it is important to determine whether Melissa was a “fraudulent person”.
[76] The question of whether Melissa falls within the definition of “fraudulent person”, is a question of mixed fact and law. It is therefore reviewable for palpable and overriding error, absent an extricable error of law.
[77] A "fraudulent person" is defined in s. 1, as a person who executes or purports to execute an instrument if:a. the person forged the instrument,
b. the person is a fictitious person, or
c. the person holds oneself out in the instrument to be, but knows that the person is not, the registered owner of the estate or interest in land affected by the instrument. [78] The motion judge found that Melissa was a person who holds herself out in the instrument to be, but knows that she is not, the registered owner of the estate or interest in land affected by the instrument: Decision para.89.
[79] RiverRock submits that the motion judge erred by adding in the word “true” before the word “registered” owner and that the definition of fraudulent person does not apply if the person in the instrument is the registered owner.
[80] RiverRock submits that there were two separate transactions, first the transfer and registration of title on November 21, 2023, and then the financing of the mortgage on November 23, 2022, with registration of the charge taking place on December 8, 2022.
[81] RiverRock submits that the doctrine of deferred indefeasibility does not apply because it was superseded or incorporated into the 2006 amendments to the Act. It submits that s.78(4.2) was included to ensure that if an instrument is registered subsequent to a fraudulent instrument, it is nonetheless valid. For the following reasons, I do not accept these arguments. The doctrine of deferred indefeasibility means that a party dealing with a fraudster (an intermediate owner) may not be able to uphold its own instrument given for valid consideration, but any party obtaining title thereafter (a deferred owner) takes title despite the earlier fraud.
[82] The motion judge correctly considered the modern approach to statutory interpretation which requires the words of an act “to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of [the legislator]”: Bell ExpressVu Limited Partnership v. R., 2002 SCC 42, [2002] 2 SCR 559 at para. 26. The court must consider the text, context, and purpose of the legislation: Froom v. Lafontaine, 2023 ONCA 519 (“Froom”) at para. 20; Decision, para.59.
[83] The motion judge then went on to review the leading case law that applies the former and current relevant provisions of the LTA that sheds important light on the words, object, context, and intention of the legislation.
[84] The motion judge considered the predecessor provisions to those at issue in this case which were considered by the Court of Appeal in Household Realty Corporation Ltd. v. Liu, 2005 CanLII 43402 (ONCA) (“Household Realty”)where the Court found: 1) the legislation protected the mortgagee’s interest; 2) the mortgages had been given for valuable consideration without notice of the fraud; and 3) once they were registered, the mortgages were effective: Decision, para.61.
[85] The legislature then amended the LTA to add ss. 78(4.1) and (4.2), as set out above.
[86] The motion judge next considered the case of Lawrence v. Wright, 2006 CanLII 24129; Lawrence v. Maple Trust Company, 2007 ONCA 74 (“Lawrence”). Although the appeal was decided after the LTA amendments came into force, it was determined under the previous provisions, which were in effect at the time of the transaction at issue. The Court of Appeal determined that Household Realty had been incorrectly decided.
[87] The motion judge noted that Lawrence, like the case now before the court, involved a fraudulent transfer by Wright and subsequent mortgage to a third party, Maple Trust. The Court of Appeal found that Wright never took valid title to the property because he obtained it by fraud and was therefore not a registered owner. In accordance with s. 68(1) of the LTA, only a registered owner may give valid charges on land. Maple Trust was the intermediate owner of an interest in the property. It had an opportunity to avoid the fraud. It did not take from a registered owner. Therefore, despite registering its charge, Maple Trust lost in a contest with the true registered owner, Ms. Lawrence. Accordingly, the charge against the property in favour of Maple Trust was set aside.
[88] The motion judge then went on to review the subsequent case law which considered the amended LTA provisions. She correctly notes that the amendments were not aimed at, and do not have the effect of dealing with fraud at large (Decision, para.73) and that it is not the theories of the LTA that determine what is and what is not valid, it is the LTA itself (Decision at para.74). She properly distinguished the decisions relied upon by RiverRock (CIBC Mortgages Inc. v. Computershare Trust Company of Canada, 2016 ONSC 7094 (Div. Ct.) (“Computershare”); 1168760 Ontario Inc. v. 6706037 Canada Inc., 2019 ONSC 4702, 7 R.P.R. (6th) 48 (Div. Ct.), Froom, supra, and Hillmount Capital Mortgages Inc. v. Onsori-Saisa, 2024 ONSC 4481.
[89] The Court of Appeal recently commented on the issue of the amendments to the LTA at para. 26 of Froom:The 2006 amendments to the LTA were passed in the wake of this court's decision in Household Realty and before the court overruled that decision in Lawrence. The amendments were aimed at ensuring that fraudulent instruments would not be given effect in the title register. The legislative debates evidence a concern about real estate fraud and the attendant risk that a property owner might lose their property or become responsible for a fraudulent mortgage .... [90] The Court of Appeal was clear: “Ownership of a person's home is fraudulently transferred. The property is then mortgaged. In a contest between the two innocent parties -- the homeowner and the lender of mortgage moneys -- who wins? This appeal answers that question in favour of the homeowner.”: Lawrence, at para. 1.
[91] In view of the legislative history of the LTA, and subsequent case law, there is little doubt that the LTA incorporates the doctrine of deferred indefeasibility and should be interpreted accordingly. The LTA operates to put the obligation on the party acquiring the interest in land to ensure that it acquires that interest from the true owner: Froom, at para. 70.
[92] On the theory of deferred indefeasibility, registration of a void instrument does not cure its defect, thus neither the instrument nor its registration gives good title. As set out by the Court in Froom, starting at paragraph 40:[40] ... Under this doctrine, the risk of fraud is borne by the immediate parties to the fraudulent transaction. Subsequent parties may rely upon the Register. Thus, the indefeasibility of the registered title is postponed and is applied only on a subsequent conveyance to a bona fide purchaser for value. [page 46]
[41] This approach places the risk of fraud on the party who, by due diligence, has an opportunity to uncover it and possibly prevent it. The result requires a mortgage lender to protect itself to ensure that it is receiving a genuine mortgage before advancing the funds. [93] The law is aimed to protect innocent parties who do not have the opportunity to investigate the fraud themselves. Here RiverRock had the opportunity to investigate the fraud whereas the Chateramdas are purely innocent.
[94] In the case of Computershare, relied upon by RiverRock, the property owners committed fraud by fraudulently discharging a first mortgage. They then proceeded to obtain another mortgage on the same property. This case is easily distinguishable. The fraud in that case was the concealment of the first mortgage and cannot be found in the instrument itself – whereas here the fraud was in the ownership – which is found in the document itself.
[95] Section 66 of the LTA provides:66 Every transfer or charge signed by a registered owner, or others claiming by transfer through or under a registered owner, purporting to transfer or charge freehold or leasehold land, or an interest therein, capable of being registered, or purporting to transfer a charge, shall, until cut out by a conflicting registration, confer upon the person intended to take under the transfer or charge a right to be registered as the owner of the land or charge and, where a person applies to be registered under this section, the land registrar may, either forthwith or after requiring such notices to be given as the land registrar considers expedient, register the applicant as owner, subject to such encumbrances, if any, as the condition of the title requires, although the transfer or charge has been executed or bears date prior to the entry of the transferor or chargor as the owner of the land or charge.[Emphasis added] [96] In this case, it is uncontested that the Transfer was never signed by the Chateramdas who had the authority under s. 87 to transfer the Property. By operation of these provisions, the Chateramdas therefore remained the "registered owners" of the Property.
[97] The Director submits that in the Charge, Melissa falsely and knowingly held herself out to be the registered owner of the Property because she purported to exercise powers granted exclusively to the registered owner with knowledge that she was not entitled to do so. This brought Melissa within the scope of paragraph (c) of the LTA's definition of a "fraudulent person". As s. 93(1) of the LTA makes clear, only a "registered owner" - in this case, the Chateramdas - may charge land securing the payment of money.
[98] “Registered” is defined in the LTA as “registered under this Act”. Melissa may have registered the charge, but it was not registered under and in accordance with the LTA.
[99] As the Court of Appeal explained, "the mere registration of an instrument that is void because of fraud does not cure the defect for the party who immediately acquires the property by means of that fraudulent instrument, but the next person dealing with the property may rely on the fraudulent document and its registration and takes good title.": Froom, at para. 66.
[100] The motion judge made the express finding that RiverRock had an opportunity to discover Melissa's fraud. As the motion judge noted, "[i]f a lender commits to a maximum four-hour turnaround time, it is undoubtedly exposing itself to some risk as an intermediate owner”: Decision, para.85. Further, on the mortgage application, Melissa stated that her address was Betony Drive but subsequently stated that she resides at 152 Fawcett Trail.
[101] By codifying the doctrine of deferred indefeasibility, the Legislature fully intended the result in this case. Namely, the interests of intermediate owners like RiverRock must yield to those of innocent homeowners like the Chateramdas.
[102] As summarized by the motion judge:[89] The case now before the court is markedly different from Computershare, 1168760 Ontario Inc., Froom, and Hillmount. Here, the fraud goes to the very issue of title, and the issue of whether Melissa was the "true" owner and therefore legally able to convey an interest in land. I note that in both Computershare and Froom, the Divisional Court and Court of Appeal respectively used the language of "true owner" in their analyses of the LTA provisions (Computershare para. 53, Froom para. 70). Melissa's actions in this case are exactly the kind of fraud the amendments were meant to protect against. The definition of fraudulent person is intended to, and does, capture this very situation. Melissa knew she had no legal interest in the Property. She held herself out to be, but knew she was not, the true registered owner of the land. She purported to take title by fraud and then convey an interest she knew she did not have. She meets the definition of fraudulent person as defined in clause (c) of the LTA definition vis-à-vis the charge.
[90] Given that Melissa is a fraudulent person, the mortgage is a fraudulent instrument and void against the Property and the plaintiffs. The register must be rectified to delete it from title. [103] I therefore find no palpable or overriding error in the motion judge’s findings of facts and no error in the law as set out by the motion judge. The appeal by RiverRock is also dismissed. . Peedham v. 1000516033 Ontario Ltd.
In Peedham v. 1000516033 Ontario Ltd. (Ont CA, 2025) the Ontario Court of Appeal allowed an appeal (remitting the case back down again), here from "an order granting the respondents the right to exercise an option to purchase a commercial unit under terms set out in a lease agreement and to continue occupying the unit until the purchase is completed".
The court considers whether an option to purchase (here contained in a lease) can to 'run with the land' (though this doctrine is not discussed), under the Land Titles system without notice being given to a subsequent purchaser by it being registered on title:[1] The appellant, 1000516033 Ontario Ltd. (“100”), appeals an order granting the respondents the right to exercise an option to purchase a commercial unit under terms set out in a lease agreement and to continue occupying the unit until the purchase is completed.
[2] As set out below, I would allow the appeal. The appellant was a subsequent purchaser. The option to purchase was not registered on title. There was no evidence regarding whether the appellant was aware of the option to purchase at the time it bought the property, or whether its purchase of the property was an arm’s length transaction. In the absence of evidence on these issues, there was an insufficient evidentiary record for enforcing the option to purchase against a subsequent purchaser. I would remit the matter back to the court below to be decided on a proper evidentiary record.
....
Issue 2: The motion judge erred in finding that the option to purchase was enforceable on the record before the court
[31] The appellant submits that it would be inequitable to require it to sell Unit #9 to the respondents for $350,000 since it purchased the unit for $750,000. The appellant further submits that the motion judge erred in finding that the option to purchase could be enforced against it, given that the option to purchase was not registered on title pursuant to the Land Titles Act, R.S.O. 1990, c. L.5. I agree that the motion judge erred in his analysis of this issue. Specifically, he erred in failing to consider whether the respondents were entitled to exercise the option to purchase given that the appellant was a subsequent purchaser and the option to purchase was not registered on title.
[32] In fairness to the motion judge, it appears that this argument was not explicitly raised before him. However, the issue of the parties’ respective property interests in Unit #9 was squarely at the centre of their dispute. The motion judge even made a finding, as referred to above, that the option to purchase was an equitable interest in the land. It was therefore evident that the parties had competing property interests in a property that the appellant had acquired through power of sale proceedings, and it was therefore necessary to ascertain, based on the applicable statutory provisions in the Land Titles Act and the Mortgages Act, R.S.O. 1990, c. M.40, and the common law, which of the parties’ interest in the land took precedence.
[33] The fundamental question in this case was whether the option to purchase should be enforced against a subsequent purchaser of the property. The respondents’ position is that they bargained for the option to purchase in the lease and were not given notice of the sale to the appellant; they should therefore be allowed to exercise the purchase option regardless of the transfer to the appellant. The appellant’s position is that the option to purchase was not registered on title and therefore cannot be exercised to invalidate the appellant’s registered ownership interest, which benefits from the protection of the Land Titles Act and the Mortgages Act.
[34] Below, I start with the legal principles that apply to the enforceability of an option to purchase against a subsequent purchaser, followed by an analysis of how those principles apply in this case.
Applicable legal principles
[35] The land titles system creates a distinction between interests in property that are registered on title or arise out of instruments registered on title and unregistered interests. As Epstein J. (as she then was) explained in Durrani v. Augier (2000), 2000 CanLII 22410 (ON SC), 50 O.R. (3d) 353, at para. 42, the land titles system is meant to promote the indefeasibility of title:The philosophy of a land titles system embodies three principles, namely, the mirror principle, where the register is a perfect mirror of the state of title; the curtain principle, which holds that a purchaser need not investigate the history of past dealings with the land, or search behind the title as depicted on the register; and the insurance principle, where the state guarantees the accuracy of the register and compensates any person who suffers loss as the result of an inaccuracy. These principles form the doctrine of indefeasibility of title and [are] the essence of the land titles system [Reference omitted.] [36] Pursuant to s. 71 of the Land Titles Act, “any person ‘entitled to’ or ‘interested in’, among other things, any unregistered equity in registered land can be protected by registration” (s. 71(1)), and registration of an instrument “serves to fix with notice anyone acquiring title from the registered owner” (s. 71(2)): Benzie v. Kunin, 2012 ONCA 766, 112 O.R. (3d) 481, at paras. 76, 79.
[37] An option to purchase is an interest in property and can be registered on title pursuant to s. 71 of the Land Titles Act: see e.g., Pelham (Town) v. Fonthill Gardens Inc., 2019 ONSC 567, 99 R.P.R. (5th) 281, at para. 22.
[38] In contrast with the effect of registering an interest in property under s. 71 of the Land Titles Act, s. 72(1) provides that only the parties to an unregistered instrument are deemed to have notice of it:72 (1) No person, other than the parties thereto, shall be deemed to have any notice of the contents of any instruments, other than those mentioned in the existing register of title of the parcel of land or that have been duly entered in the records of the office kept for the entry of instruments received or are in course of entry. [39] This gives effect to the primary purpose of the land titles system, “which is intended to provide ‘certainty of title’ by ensuring that notice of all interests that may impact on ownership of property are registered on title”: Benzie, at para. 82, citing Turta v. Canadian Pacific Railway, 1954 CanLII 58 (SCC), [1954] S.C.R. 427, at p. 443.
[40] The land titles system also protects subsequent purchasers from the effects of interests in the land that were not registered at the time of purchase. Absent fraud, s. 78(4) of the Land Titles Act guarantees the effectiveness of registered instruments in the land titles system by protecting subsequent purchasers who are bona fide purchasers for value, meaning those “who take title without notice of an interest or claim that differs from what is shown on the register”: Sapusak v. 9706151 Canada Ltd., 2024 ONCA 774, at para. 17, citing Martin v. 11037315 Canada Inc., 2022 ONCA 322, 469 D.L.R. (4th) 123 (“Martin (ONCA)”), at para. 66. That section reads as follows:78(4) When registered, an instrument shall be deemed to be embodied in the register and to be effective according to its nature and intent, and to create, transfer, charge or discharge, as the case requires, the land or estate or interest therein mentioned in the register. [41] Actual notice of an unregistered interest in land may compromise a subsequent purchaser’s registered interest in the land. In United Trust Co. v. Dominion Stores Ltd., 1976 CanLII 33 (SCC), [1977] 2 S.C.R. 915, a majority of the Supreme Court held that the doctrine of actual notice applied to unregistered interests in land governed by the version of the Land Titles Act then in force.
[42] Two notes of caution apply to this exception. First, “actual notice” means that a subsequent purchaser actually knew about the unregistered interest; “it is not sufficient that the party has become aware of facts that suggest it should make inquiries”: Stanbarr Services Limited v. Metropolis Properties Inc., 2018 ONCA 244, 141 O.R. (3d) 102, at para. 26.
[43] Second, this court has stated that this exception may no longer be applicable following the 2006 amendments to the Land Titles Act, suggesting that the explicit reference to fraud in ss. 78(4.1) and (4.2) may mean that other exceptions, such as the actual notice exception recognized by the Supreme Court in United Trust, may no longer apply: Stanbarr, at paras. 22-24; Martin (ONCA), at paras. 64-65; Airport Business Park Inc. v. Huszti Holdings Inc., 2023 ONCA 391, 481 D.L.R. (4th) 696, at para. 46, leave to appeal refused, [2023] S.C.C.A. No. 347. However, this court has not resolved the issue and courts below have proceeded on the basis that the exception still applies: see e.g., Martin v. 2670082 Ontario Corp, 2024 ONSC 3982, 61 R.P.R. (6th) 96, at para. 47, appeal as of right to Ont. C.A. filed, COA-24-CV-0864; FirstOntario Credit Union Limited v. Nagra et al., 2024 ONSC 3398, 60 R.P.R. (6th) 115, at para. 37; Parkland Corporation v. 16408117 Canada Inc. et al., 2025 ONSC 201, at para. 44.
[44] In the circumstances of this case, provisions of the Mortgages Act may also be relevant, as they “provide complementary methods of protecting bona fide purchasers for value without notice of a defect in a power of sale proceeding”: Stanbarr, at para. 47. Pursuant to ss. 99(1) and (1.1) of the Land Titles Act, and ss. 35 and 36 of the Mortgages Act, a bona fide purchaser for value has a valid charge against pre-sale encumbrancers despite a defect in the power of sale proceedings so long as the purchaser did not have actual notice of the defect: Stanbarr, at paras. 26-27. Section 36 further provides that when the transfer is valid, those who should have been but were not served with proper notice retain a claim in damages against the party who exercised the power of sale: Glassworkers Social Club v. Forestgate Leasing Inc. (1998), 1998 CanLII 5452 (ON CA), 40 O.R. (3d) 606 (C.A.), at p. 610.
[45] These principles raise two issues relevant in this case. First, absent fraud, subsequent purchasers for value take land free and clear of unregistered claims that they did not know about. Second, assuming the doctrine of actual notice continues to apply following the 2006 amendments to the Land Titles Act, actual notice of an unregistered option to purchase could make a subsequent purchaser’s registered interest bound by that option to purchase.
Discussion
[46] In his analysis, the motion judge erred in failing to consider that the appellant was a subsequent purchaser. He treated the appellant as though it was in the same position as the party who negotiated the option to purchase with the respondents. In considering the equities in this case, the motion judge focused on the respondents’ interests. He found that it would be unfair to the respondents not to allow them to exercise their option to purchase. However, he gave no consideration to the appellant’s position, or to the statutory protections that presumptively apply to subsequent purchasers for value under the Land Titles Act and the Mortgages Act. At most, he stated that it would be open to the appellant to bring a claim against the seller, 110.
[47] Before finding that the option to purchase could be enforced against the appellant, and that the necessary findings could be made from the record as filed, it was incumbent on the motion judge to identify the determinative legal and factual issues. A court order entitling the respondents to exercise their option to purchase Unit #9 could only be effective if the appellant did not benefit from the statutory protections guaranteeing security of title: see Martin (ONCA), at para. 59; Durrani, at paras. 49-51. As a prerequisite to granting such an order, it was therefore necessary for the motion judge to determine whether the appellant’s title was guaranteed under the Land Titles Act.
[48] The motion judge did not make the legal determinations and findings required to resolve these issues. Instead, he simply stated that “the [appellant] may not have been aware of the option to purchase due to a lack of proper disclosure in the power of sale proceedings”. In fact, there is no evidence in the record of what the appellant did or did not know about the option (or the lease). A connected question is whether the sale from 110 to 100 was an arm’s length transaction; in other words, even if 110 did not inform the appellant about the option to purchase, is this information that the appellant had or had access to through a common ownership or interest: see Belende v. Patel, 2009 CanLII 74 (Ont. S.C.), at para. 17. Going further in the inquiry, if this was not an arm’s length transfer, was it meant to defeat the option to purchase? There was no evidence on these issues in the record, and the motion judge proceeded on the basis that such inquiries were irrelevant when in fact they were crucial to determining the rights of the parties in this case.
[49] Given the absence of evidence in the record on these key issues, it is not possible for the court to decide the matter. In the absence of submissions from the parties on the issue, it would also not be appropriate for this court to finally determine the issue raised in Stanbarr of whether the actual notice exception recognized in United Trust still applies.
[50] I would therefore set aside the order declaring the respondents to have legally exercised their option to purchase Unit #9 and directing the appellant to cause the property to be sold to the respondents for $350,000. I would also remit this matter back to the motion judge or another judge for a trial of the issue of whether the appellant was a bona fide purchaser for value without notice that Unit #9 was subject to a lease that included an option to purchase the property for $350,000, and, if so, whether the appellant is entitled to the protection of s. 78(4) of the Land Titles Act or other provisions of that Act or the Mortgages Act, such that the respondents are precluded from exercising their option to purchase the property. . Canadian Imperial Bank of Commerce v. Lightfoot ['Land Titles Conversion Qualified']
In Canadian Imperial Bank of Commerce v. Lightfoot (Ont CA, 2025) the Ontario Court of Appeal considered the effect of land being 'Land Titles Conversion Qualified', particularly under s.44(1) ['Liability of registered land to easements and certain other rights'] of the LTA:[1] The appellant, David Lightfoot, and his ex-spouse, Marcy Lightfoot (together the “Lightfoots”), jointly owned two abutting parcels of land that were not registered on a plan of subdivision, known municipally as 8408 and 8410 Highway 3 West, Dunnville, Ontario. They acquired both parcels under one instrument on August 11, 2015. Registrations relating to both parcels are subject to the Land Titles Act, R.S.O. 1990, c. L.5.
[2] On December 15, 2016, the Lightfoots executed and registered a charge on 8408 in favour of The Canadian Imperial Bank of Commerce (the “CIBC”). At the time, the CIBC was unaware that the Lightfoots also jointly owned 8410.
[3] On March 22, 2019, the Lightfoots transferred 8410 to Mr. Lightfoot alone, and on February 12, 2020, he subsequently transferred ownership to himself and his mother, Evelyn Lightfoot. These transfers were undertaken without a severance.
[4] Taking the view that the two abutting parcels of land had been merged pursuant to the Planning Act, R.S.O. 100, c. P.13, at the time their charge was obtained, and that the Planning Act invalidated the subsequent transfers, the CIBC brought applications to have the land transfers declared null and void and to obtain a Certificate of Pending Litigation to protect their security, pending further litigation relating to the charge. Mr. Lightfoot opposed the applications but was unsuccessful and the requested orders were made on May 30, 2024.
[5] The application judge’s reasons for making the requested orders depend upon his conclusion that ss. 50 and 50.1 of the Planning Act apply to the two abutting parcels. Mr. Lightfoot argues, on appeal, that this proposition is mistaken because, in his view, the provisions of the Land Titles Act, most significantly s. 44(1), coupled with notations on the “register”, insulate these transactions from the operation of these sections of the Planning Act. He argues that the application judge therefore erred in law in making the orders that he did. We do not agree.
[6] Section 44(1) provides, in material part: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:
...
11. Sections 50 and 50.1 of the Planning Act.
... [7] When the parcels were first registered under the Land Titles Act, the register noted on each of them, “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 “notations”). Paragraph 11 of s. 44(1), of course, lists ss. 50 and 50.1 of the Planning Act. Mr. Lightfoot argues based upon this that the Planning Act does not apply to these parcels because “the contrary is expressed on the register”.
[8] Mr. Lightfoot is incorrect. When the Government of Ontario administratively converted land from the Registry system to the Land Titles system, it performed basic searches authorized under the Land Titles Act, s. 32, and based upon those searches, registered the titles as “Land Titles Conversion Qualified” (“LTCQ titles”): Marguerite E. Moore, Title Searching and Conveyancing in Ontario, 7th ed., (Toronto: LexisNexis Canada Inc., 2017), at pp. 395–396, and see Gold v. Chronas, 2015 ONCA 900, 128 O.R. (3d) 428, at paras. 33–35. As part of the administrative conversion process, a Planning Act search was completed for each parcel and LTCQ titles were guaranteed against Planning Act contraventions up to the date of the conversion. First registration under the Land Titles system therefore “creates a new starting point for a Planning Act compliance search”, which is what is noted on title: Moore, at p. 398. The notation on title that Mr. Lightfoot relies upon is a LTCQ title notification relating to the title of the property at the time of first registration. It does not, as Mr. Lightfoot argues, oust the operation of the Planning Act for all time. The transactions at issue in this case occurred after the parcels were registered as “fee simple in conversion qualified”. The charge and the transfers were therefore subject to the Planning Act, ss. 50 and 50.1.
[9] In support of his appeal, Mr. Lightfoot also placed reliance upon the clause in the Land Titles Act, s. 44(1) stating that the liabilities, rights and interests that s. 44(1) lists “shall not be deemed to be encumbrances within the meaning of this Act”. This clause does not assist Mr. Lightfoot, either, since properly interpreted, it does not prevent the Planning Act, ss. 50 and 50.1 from operating. Indeed, s. 44(1) provides explicitly that “[a]ll registered land... is subject to such of the following liabilities, rights and interests as for the time being may be subsisting in reference thereto” (emphasis added). Section 44(1) therefore operates to preserve the liabilities, rights and interests it lists, notwithstanding that they are not registered on title: Kosicki v. Toronto (City), 2023 ONCA 450, 167 O.R. (3d) 401, at para. 73; Lake v. Cambridge (City), 2023 ONSC 5200, 168 O.R. (3d) 503, at para. 57. Moreover, under the Land Titles Act, ss. 45 and 87 provide, in relevant part, that first and subsequent registrations respectively are “subject to” “[t]he liabilities, rights and interests … declared for the purposes of this Act not to be encumbrances …” Quite simply, the clause in s. 44(1) that Mr. Lightfoot relies upon does not assist him.
[10] Mr. Lightfoot invoked additional provisions in the Land Titles Act that describe the effect of registration in support of his appeal, but those provisions are subject to s. 44(1), which, as indicated, preserves unregistered liabilities, rights and interests. There is therefore no point in addressing these additional provisions and we refrain from doing so.
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