|
Real Property - Registry Act. Melville v. McLaren [restrictive covenants]
In Melville v. McLaren (Div Court, 2024) the Ontario Divisional Court dismissed an appeal, here relating to a restrictive covenant on a property which converted from the Registry Act system to the Land Titles system during the running of the covenant's currency:[4] Under the Registry Act, a restrictive covenant with no fixed expiry date was effective for 40 years. If, however, a Notice of Claim was registered, the restrictive covenant could be extended for another 40 years: Registry Act, R.S.O. 1990, c. R.20, ss. 111, 113.
[5] Ms. McLaren registered a Notice of Claim on the property in July 1998.[1]
[6] The parties agree that if the property had remained under the Registry Act system, the restrictive covenant would remain in force until 2038. However, the property was converted from the Registry system to the Land Titles system on September 20, 2003 and is now governed by the Land Titles Act, R.S.O. 1990, c. L.5.
[7] Under the Land Titles Act, a “condition, restriction or covenant” with no fixed expiry date is deemed to expire forty years after it was registered: Land Titles Act, s. 119(9). Unlike the Registry Act, the Land Titles Act has no provision for renewing or extending a covenant (by filing a Notice of Claim or otherwise) before it is deemed to expire.
....
[13] The question on this appeal is whether converting a property into the Land Titles system extinguishes rights and interests that existed under the Registry system by virtue of a Notice of Claim having been registered. Put slightly differently, the question is whether the provisions of the Land Titles Act that mandate the expiration of a restrictive covenant apply retrospectively to terminate a restrictive covenant that had been extended under the Registry Act. The answer to that question turns on the interpretation of several provisions of the Land Titles Act, and the interplay between the Land Titles Act and the Registry Act.
[14] Statutory interpretation is a question of law, and the standard of review is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8.
[15] In my view, Justice Walters was correct that the rights conferred by the Notice of Claim registered under the Registry system were not extinguished when Ms. Melville’s property was converted to the Land Titles system. Therefore, the restrictive covenant on Ms. Melville’s property will not expire until 2038.
[16] When engaging in an exercise of statutory construction, this Court must read the words of the act “in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament”: Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27, at para. 21. The modern rule of statutory interpretation requires me to consider the plain language of the provision(s), the broader context of the legislation, the objective of the legislation and the Legislature’s intention.
[17] If the provision in question is in an Act that is part of a larger statutory scheme, the court should favour an interpretation that promotes “harmony, coherence and consistency” between statutes dealing with the same subject matter: Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559; R. v. Ulybel Enterprises Ltd., 2001 SCC 56, [2001] 2 S.C.R. 867; Stoddard v. Watson, 1993 CanLII 59 (SCC), [1993] 2 S.C.R. 1069.
[18] While a strict reading of only s. 119(9) of Land Titles Act may support Ms. Melville’s position that the restrictive covenant should be deemed to have expired in 1998, a more holistic reading of the provisions in the context of both the Land Titles Act and the Registry Act shows that Justice Walters was correct to find that the Notice of Claim survived the transfer into the Land Titles system and the restrictive covenant has not expired.
[19] Starting with the language of the Land Titles Act, s. 119(9) states as follows:Where a condition, restriction or covenant has been registered as annexed to or running with the land and no period or date was fixed for its expiry, the condition, restriction or covenant is deemed to have expired forty years after the condition, restriction or covenant was registered, and may be deleted from the register by the land registrar. [20] On a strict reading of s. 119(9) alone, one might conclude that the relevant date for determining when the restrictive covenant is deemed to have expired under s. 119(9) of the Land Titles Act is the date on which the covenant was first registered (which, in this case, was 1958) because the list of instruments in s. 119(9) does not include a Notice of Claim. However, it is not enough to simply consider the language of s. 119 of the Land Titles Act. I must also consider s. 119 in the context of the Land Titles Act as a whole and the interplay between the Registry Act, which expressly permits the extension of a covenant through a Notice of Claim, and the Land Titles Act, which does not. Based on a contextual reading of s. 119(9) of the Land Titles Act together with the relevant Registry Act provisions, I am satisfied that the Legislature did not intend to extinguish the rights conferred by a Notice of Claim registered under the Registry Act regime when a property is converted to the Land Titles system.
[21] First, under the Registry Act, the registration of a Notice of Claim was intended to be treated as the registration of the original instrument. Section 74(3) of the Registry Act states that registration of a notice under s. 113 of that Act “constitutes registration of the instrument referred to in the notice or statement.” In other words, the registration of the Notice of Claim in 1998 on the property was treated as a registration of the restrictive covenant under s. 74(3) of the Registry Act.
[22] Second, the purpose of a Notice of Claim under the Registry Act was to encumber the property until it expires or is renewed. Section 113(4) of the Registry Act says that once a Notice of Claim is registered, the “claim” will affect the land for the specified Notice period. “Notice period” is defined as 40 years after the later of the date on which the instrument was first registered or the date a notice of a claim was registered. The Notice of Claim, therefore, extended Ms. McLaren’s right to enforce the terms of the restrictive covenant on the property until 2038. That claim was valid and in existence when the property was transferred to the Land Titles system.
[23] Third, rights or interests that existed when the property was transferred from the Registry System to the Land Titles system carried forward. Section 46 of the Land Titles Act states that the registration of property for the first time in the Land Titles system “does not affect or prejudice the enforcement of any estate, right or interest” that exists in respect of the property. When the property was transferred to the Land Titles system in 2003, Ms. McLaren had a valid, registered “claim” under the Registry Act that conferred on her the right to enforce the terms of the restrictive covenant until 2038. Under s. 46 of the Land Titles Act, her rights and interests were not affected by the conversion.
[24] Fourth, the interpretation advanced by Ms. Melville is inconsistent with the presumption against interference with vested rights. Legislation should not be interpreted in a way that impairs existing substantive rights unless there is express language to that effect in the legislation or that result is a necessary implication of the legislation: Proctor & Gamble Inc. v. Ontario (Minister of Finance), 2010 ONCA 149, 99 O.R. (3d) 321, at para. 54, leave to appeal to S.C.C. refused, [2010] S.C.C.A. 149; Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, 1975 CanLII 4 (SCC), [1977] 1 S.C.R. 271, at pp. 282‑83, Hoggarth v. MGM Farms and Fingers Limited, 2015 ONSC 2494 at para. 91. In other words, we should not interpret s. 119(9) of the Land Titles Act in a way that impairs existing rights unless there is express language in the Act or unless impairing existing rights cannot be avoided without doing violence to the meaning and purpose of s. 119(9).
[25] The Land Titles Act does not contain a provision that expressly extinguishes rights and interests that existed under the Registry Act when the property was transferred. The question, therefore, is whether preserving the rights Ms. McLaren had before the property was transferred to the Land Titles system to enforce the restrictive covenant would do violence to the purpose of s. 119(9) of the Land Titles Act.
[26] There has been a consistent trend towards eliminating restrictive covenants with no fixed expiry date to streamline the title search process and to afford finality: Gold v. Chronas, 2015 ONCA 900, 128 O.R. (3d) 428 at paras. 48-49. The enactment of s. 119(9) of the Land Titles Act in its current form is the most recent step in that progression, which the court summarized in Andrews v. Rago, 2019 ONSC 800, 146 O.R. (3d) 53 at paras. 41-42, as follows:[A]s long ago as 1952 the legislation provided for the removal of a restrictive covenant from the register when it expired by its terms. In 1962, the legislature took the next step of permitting a party to apply for the removal of a restrictive covenant 40 years after its registration, if the covenant contained no period or date fixed for its expiry. The 1979 amendment went even further, such that a restrictive covenant is now deemed to have expired 40 years after its registration where it contains no period or date for its expiry.
...
The most recent amendments make the expiry of such a covenant automatic, with the only formality being the removal of registration of the spent covenant upon request. [27] I accept that s. 119(9) of the Land Titles Act is intended to increase certainty and finality by mandating the expiration of restrictive covenants after 40 years. However, preserving substantive rights that existed before property is transferred into the Land Titles system does not undermine the principles of certainty or finality. Interpreting s. 119(9) in a way that protects rights that existed under the Registry system cannot extend a condition, restriction or covenant beyond the statutory maximum of 40 years, thus assuring finality no more than 40 years after the property is converted. And preserving rights that existed under the Registry system does not create uncertainty. It simply changes the date on which the 40-year period starts to run. In this case, the right in question has a fixed date on which it is deemed to expire – 2038 – and it cannot be extended beyond that date.
[28] Finally, the interpretation proposed by Ms. Melville is inconsistent with the presumption against retrospective application of law. If we were to interpret s. 119(9) of the Land Titles Act to mean that it effectively terminates rights afforded by a valid Notice of Claim registered under the Registry Act, that would be a retrospective application of the law. Such an interpretation would attach a new consequence in the future to an event that took place before the land was subject to the Land Titles Act and would change the law from what it otherwise would have been if the land was not transferred: Elmer A. Drieger, “Statutes: Retroactive Retrospective Reflections” (1978) 56:2 Can Bar Rev 264, at 268-269.
[29] Courts should presume that legislation affecting existing substantive rights only operates prospectively (i.e. to future transactions) unless it is possible to “discern a clear legislative intent that it is to apply retrospectively”: R. v. Dineley, 2012 SCC 58, [2012] 3 S.C.R. 272, at para. 10. As I have already found, there is no express language to suggest that s. 119(9) was intended to apply retrospectively in a way that would interfere with existing rights or interests. And other provisions of the Land Titles Act, particularly s. 46, expressly provide that the rights and interests were not affected by the conversion. Because the intent was to preserve rights and interests that existed under the Registry Act when land was converted to the Land Titles system, I find that s. 119(9) must be interpreted as applying prospectively.
[30] I find that Justice Walters was correct that s. 119(9) does not extinguish Ms. McLaren’s right to enforce the restrictive covenant for 40 years after the Notice of Claim was filed in 1998. Applying s. 119(9) prospectively, Justice Walters was also correct that the restrictive covenant cannot be extended beyond 2038 and will be deemed to expire 40 years after the Notice of Claim was registered. . Gold v Chronas
In Gold v Chronas (Ont CA, 2018) the Court of Appeal explores a partial history of the Registry Act:[12] Section 113(5)(a)(iv) is included in Part III of the Registry Act. Part III contains the investigation of titles provisions. The appellants rely on the investigation of titles provisions to assert that the respondents’ claim to the right of way has expired. According to the appellants, that is because the respondents did not register a notice of claim against the title to 7 Cunningham Avenue within 40 years after the right of way was created – which they say was required under the investigation of titles provisions contained in Part III.
[13] Section 113(5) of the Registry Act sets out certain exceptions to the application of Part III. Section 113(5)(a)(iv), on which the trial judge relied, stipulates that Part III does not apply to a claim “of a person to an unregistered right of way … that the person is openly enjoying and using”. The application judge found that the respondents are openly using the laneway and that the appellants were aware of that use when they purchased their property.
....
F. Legislative history of Part iii of the Registry Act
[48] As I will explain, the 40-year title search period and the 40-year expiry period provisions of Part III have been amended on several occasions. The legislative history of these provisions is important because they are the provisions to which s. 113(5) provides exceptions. The amendments demonstrate a consistent intention on the part of the Legislature, from at least 1981 onward, to attempt to confine, as far as is reasonably possible, the 40-year search period to 40 years, and to attempt to limit the manner in which a claim can be renewed to the registration of a notice of claim.
[49] Unlike the 40-year title search period and the 40-year expiry period provisions, the language of the exception now contained in s. 113(5)(a)(iv) has remained relatively unchanged. Notably, however, the opening words of the exception provision have been amended so that the exceptions it contains, which originally applied only to the 40-year expiry period, now apply to Part III of the Registry Act. Section 113(5)(a)(iv) is therefore an exception, not only to the 40-year expiry period, but also to the 40-year title search period. Where s. 113(5)(a)(iv) applies, a right will not expire after 40 years. And an instrument registered outside the 40-year title search period will continue to affect the chain of title.[7]
[50] In 1387881 Ontario Inc. v. Ramsay (2005), 2005 CanLII 23211 (ON CA), 77 O.R. (3d) 666, Lang J.A. reviewed the legislative and jurisprudential history of Part III of the Registry Act that was relevant to that case up to 2005.
[51] Like this case, Ramsay presented an issue concerning how rights of way can be preserved under Part III of the Registry Act. Unlike this case, in Ramsay, after the right of way was created, each conveyance of the servient tenement stated that the new owner of the servient tenement took title subject to a right of way in favour of the owners of the dominant tenements. After the 40-year expiry period ended, the then-owner of the servient tenement sought a declaration that the dominant tenement owners’ claims to a right of way had expired.
[52] In Ramsay, Lang J.A. observed that the Investigation of Titles Act, 1929, S.O. 1929, c. 41 (the “1929 Act”), was enacted to codify[8] the common law on title searches. In addition, she noted that the 1929 Act became Part III of the Registry Act by virtue of the Registry Amendment Act, 1966, S.O. 1966, c. 136 (the “1966 Act”). Further, she said Part III remained relatively unchanged until the Registry Amendment Act, 1981, S.O. 1981, c. 17 (the “1981 Amendments”).
[53] The 1981 Amendments addressed both the 40-year title search period and the 40-year expiry period.
[54] Concerning the title search period, Lang J.A. observed that, although both the 1929 Act and the 1966 Act purported to confine that period to 40 years, cautious practitioners continued to search for a root of title before that period: Ramsay, at para. 16, citing Ontario Hydro v. Tkach (1992), 1992 CanLII 7733 (ON CA), 10 O.R. (3d) 257 (C.A.). Lang J.A. concluded that by using very specific language to replace the former s. 105 of the 1980 Act,[9] the 1981 Amendments established that it was unnecessary to search for an earlier root of title:[10] Ramsay, at para. 16.
[55] Notably, the 1981 Amendments also introduced a new provision to address the 40-year expiry rule.
[56] The pre-1981 Amendments 40-year expiry rule was found in s. 106(1) of the 1980 Act. Section 106(1) of the 1980 Act provided that a claim that had been in existence for longer than 40 years would expire unless acknowledged, referred to, or contained in an instrument or notice of claim within 40 years from its creation:106. (1) A claim that has been in existence for longer than forty years does not affect land to which this Act applies unless the claim has been acknowledged or specifically referred to or contained in an instrument or a notice under this Part or under The Investigation of Titles Act, being chapter 193 of the Revised Statutes of Ontario, 1960, or any predecessor thereof, registered against the land within the forty-year period. [Emphasis added.] [57] Following the 1981 Amendments, the amended provision (which is now s. 113(1)) referred only to a notice of claim, and no longer referred to the claim being acknowledged, referred to or contained in an instrument:106.(1) A claim that is still in existence on the last day of the notice period expires at the end of that day unless a notice of claim has been registered. [58] As part of the 1981 Amendments, “notice of claim” and “notice period” were defined in s. 104 (now s.111):“notice of claim” means a notice of claim registered under subsection 113(2) and includes a notice registered under a predecessor of this Part or under The Investigation of Titles Act [citation omitted], or a predecessor thereof;
“notice period” means the period ending on the day forty years after the day of the registration of an instrument or a notice of claim, as the case may be. [Emphasis added.] [59] Ramsay was significant because this court held that, following the 1981 Amendments, a registered easement could still be preserved not only by registering on the servient tenement a notice of claim in the prescribed form but also by registering a deed referencing the right of way. This was largely because the definition of notice period referred to a period 40 years after the registration of an instrument or notice of claim. In the light of this conclusion, the court found it unnecessary to address the argument made in that case by the owner of the servient tenement that s. 113(5)(a)(iv) of the Registry Act would preserve an easement that was openly enjoyed and used.
[60] Concerning the latter issue, at para. 40, the court commented on the intent of s. 113(5)(a)(iv) and its requirements. The court also expressed concern whether the section could adequately alleviate the unfairness that would result from interpreting the 1981 Amendments to mean that a right of way would not be preserved even though it was referred to in deeds registered on the servient tenement:The intent of [s. 113(5)(a)(iv)], however, is not clear. It appears that, first, to be excepted, the claim must be a right of way or other right. Second, if that requirement is satisfied, the claimant will be required to establish current usage. This combination of traditional easement law with current usage raises complex considerations. As a result, it is not obvious that this provision would alleviate potential unfairness. [Emphasis added.] [61] Following the decision in Ramsay, the Ministry of Government Services Consumer Protection and Service Modernization Act, 2006, S.O. 2006, c. 34 (the “2006 Amendments”) amended the definitions of “notice of claim” and “notice period” in the Registry Act to read as they now do. The amended definitions confine a “notice of claim” to a notice of claim “in the prescribed form”. In addition, they confine the reference to an instrument in the definition of “notice period” to “an instrument that first creates a claim”.
[62] The interpretation and application[11] of the 2006 Amendments is not directly at issue on this appeal. Nonetheless, I observe that, on their face, the amended definitions I have referred to appear to be aimed at reversing the holding in Ramsay that a registered right of way could be preserved through the registration on the servient tenement of a deed referring to the right of way. That said, nothing in these reasons should be taken as determining the interpretation or application of the 2006 Amendments.
[63] Turning to s. 113(5), this exception provision was first introduced in the 1966 Act. However, the exceptions were to the 40-year expiry period rather than to Part III.[12] As part of the 1981 amendments, the opening language of the section was broadened so that the section creates exceptions to Part III rather than simply to the 40-year expiry period. Apart from that change, the wording of the actual exception in s. 113(5)(a)(iv) has remained essentially the same since 1966.[13]
|
