VALID TITLE UNDER THE ONTARIO REGISTRY SYSTEM
How the Forty Year Rule Works
John R. Wood
Borden & Elliot
APPENDIX A
Part III of the Registry Act
111. (1) In this Part,
Title search period
"claim" means a right, title, interest, claim, or
demand of any kind or nature whatsoever
affecting land set forth in, based upon or arising
out of a registered instrument, and, without
limiting the generality of the foregoing, includes
a mortgage, lien, easement, agreement, contract,
option, charge, annuity, lease, dower right, and
restriction as to the use of land or other
encumbrance affecting land;
112. (1) A person dealing with land shall not be
required to show that the person is lawfully
entitled to the land as owner thereof through a
good and sufficient chain of title during a period
greater than the forty years immediately
preceding the day of such dealing, except in
respect of a claim referred to in subsection
113(5).
"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,
being chapter 193 of the Revised Statutes of
Ontario, 1960, 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;
Deemed commencement of chain of title
(2) Where there has been no conveyance, other
than a mortgage, of the freehold estate registered
within the title search period, the chain of title
commences with the conveyance of the freehold
estate, other than a mortgage, most recently
registered before the commencement of the title
search period.
Instruments registered prior to title search
period not effective
"owner" means a person, other than a lessee or a
mortgagee, entitled to a freehold or other estate
or interest in land at law or in equity, in
possession, in futurity or in expectancy;
(3) A chain of title does not depend upon and is
not affected by any instrument registered before
the commencement of the title search period
except,
"title search period" means the period of forty
years described in subsection 112(1).
(a) an instrument that, under subsection (2),
commences the chain of title;
Claims under unregistered instruments
(b) an instrument in respect of a claim for
which a valid and subsisting notice of claim
was registered during the title search
period; and
(2) A claim referred to in clause 113 (5) (a) or
(b) is not confined to a claim under a registered
instrument.
(c) an instrument in relation to any claim
referred to in subsection 113 (5).
Appendix A - Part III
Expiry of claims
113. (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.
Notice of claim
(2) A person having a claim that is not barred
by this Part, or a person on that person's behalf,
may register a notice of claim in the prescribed
form,
(a) at any time within the notice period; or
(b) at any time after the expiration of the notice
period but before the registration of any
conflicting claim.
(iv) of a person to an unregistered right of
way or other easement or right that the
person is openly enjoying and using;
(b) a claim arising under any Act; or
(c) a claim of a corporation authorized to
construct or operate a railway, including a
street railway or incline railway, in respect
of lands acquired by the corporation after
the 1st day of July, 1930, and,
(i)
owned or used for the purposes of a
right of way for railway lines, or
(ii) abutting such right of way.
Freehold estates
(3) A notice of claim may be renewed from
time to time by the registration of a notice of
claim in accordance with subsection (2).
(6) Subsection (1) does not apply to a claim to
a freehold estate in land or an equity of
redemption in land by a person continuously
shown by the abstract index for the land as being
so entitled for more than forty years as long as
the person is so shown.
Effect of notice of claim
Claims not validated
(4) Subject to subsection (7), when a notice of
claim has been registered, the claim affects the
land for the notice period of the notice of claim.
(7) The registration of a notice of claim does
not validate or extend a claim that is invalid or
that has expired other than as a result of
subsection (1).
Renewal
Exceptions
(5) This Part does not apply to,
(a) a claim,
(i)
of the Crown reserved by letters
patent,
(ii) of the Crown in unpatented land or in
land for which letters patent have been
issued, but which has reverted to the
Crown by forfeiture or cancellation of
letters patent, or in land that has
otherwise reverted to the Crown,
(iii) of the Crown or a municipality in a
public highway or lane,
Definitions
114. (1) In this section,
"Ministry of Government Services" means Her
Majesty the Queen in right of Ontario as
represented by the Minister of Government
Services;
"municipality" means a municipality within the
meaning of the Municipal Act and includes a
regional, metropolitan or district municipality,
the County of Oxford and a local board within
the meaning of the Municipal Affairs Act;
"public utility easement" means an easement in
respect of a water works or water supply system,
Appendix A - Part III
sewage works, steam or hot water distribution
system, electrical power or energy generating,
transmission or distribution system, street
lighting system, natural or artificial gas works or
supply system, or a transportation system.
Continuation of public utility easements
(2) Despite sections 112 and 113, a public
utility easement of a municipality or an
easement of the Ministry of Government
Services that existed on the 31st day of July,
1981 continues until the 31st day of December,
1999.
Eligibility for compensation
(3) If, except for subsection (2), an easement
would not affect land, a person who has an
interest in the land acquired on or after the 1st
day of August, 1981 and before the 21st day of
June, 1990 is entitled to compensation for the
easement.
Idem
(4) Subsection (3) does not apply to a person if
the easement is specifically referred to in,
(a) the instrument by which the person
acquired the interest; or
(b) a registered instrument executed by the
person before the 21st day of June, 1990.
Time of calculation
(5) Compensation shall be calculated as though
the easement had been expropriated on the
earlier of,
(a) the day the person who has an interest in
the land gives the municipality or the
Ministry of Government Services notice
that the person claims compensation under
this section; or
(b) the day the municipality or the Ministry of
Government Services gives the person who
has an interest in the land notice of its
easement.
Calculation of compensation
(6) The Expropriations Act applies with
necessary modifications to claims for
compensation.
Abandonment of easement
(7) A municipality or the Ministry of
Government Services is relieved from paying
compensation for an easement if it,
(a) removes anything placed
authority of the easement;
under
the
(b) restores the land to the condition it was in
immediately before any removal; and
(c) abandons the easement.
Notices of claim
(8) A notice of claim in respect of a public
utility easement of a municipality or an
easement of the Ministry of Government
Services registered before the 31st day of
December, 1999 is as effective as if it had been
registered on the 31st day of July, 1981.
Conflict
115.(1) Where there is a conflict between any
provision of this Part and any provision of Part I
or Part II of this Act or of any provision of any
other Act or any rule of law, the provision of this
Part prevails.
Application
(2) This Part applies to every claim and notice
of claim, whether registered before or after the
1st day of August, 1981.
VALID TITLE UNDER THE ONTARIO REGISTRY SYSTEM
How the Forty Year Rule Works
John R. Wood
Borden & Elliot
APPENDIX B
Additional comments on the article
How Part III Applies to Interests Less Than
Ownership
The following is a more detailed discussion of
the rules for the chain of title to an interest less
than ownership.
The common law rules as to proof of title to
interests less than ownership may have been less
refined or settled. In general, a good chain of
title is a chain that a person reasonably skilled in
investigating title would accept as good, having
regard to the practice as interpreted by court
decisions and subject to any modifications made
by statute.
For this discussion, it is assumed that the
common law required a search over at least 40
years, even though it required a search over at
least 60 years when the legislation that became
Part III was first passed.
An interest less than ownership might be the
interest of the holder of, say, a mortgage, lease
or easement. There are three situations and
presumably the rules as to the chain of title
would be as set out below:
1.
The owner of land wishes to grant a
mortgage, lease or easement. Here the
question is whether the intending
mortgagee, tenant or easement-holder can
require the grantor to prove title by a
normal chain of title for the ownership. A
mortgagee would certainly do so. In
practice, a tenant or easement-holder might
not do so. In England a tenant must accept
the landlord's title without proof. It would
seem prudent for the tenant under a
valuable lease, such as a ground lease, to
require better proof.
2.
The holder of a mortgage, lease or
dominant land for an easement that was
granted less than 40 years ago wishes to sell
the interest. Here, the common law should
first have required the holder to prove a
good chain of title for any dealings with the
interest itself, such as a prior assignment of
the mortgage or lease or a prior conveyance
of the dominant land for the easement. The
question then arises as to what proof would
be required of the title of the owner who
granted the interest. The purchaser of a
mortgage would presumably have insisted
on a good 40 year chain before the
mortgage. The purchaser of a lease or
dominant land for an easement might have
been more flexible, particularly if the
practice prevented the original grantee of
the lease or easement from insisting on a
good 40 year chain. Of course, it would not
have been practical before the registry
system for the purchaser of a lease or
easement to have proved the owner's title
by a good 40 year chain up to the date that
the lease or dominant land for the easement
was being sold, because the holder would
have had no access to the deeds for the
owner's title after the interest was granted.
The holder of a mortgage would have been
in the same position except that the holder
of the first mortgage should usually have
obtained the title deeds and been able to
control, and get to know of, the owner's
dealings with the land after the mortgage.
Since the registry system started, the holder
could prove the owner's title by a current
chain of title and it should now be good
practice for a purchaser of a mortgage,
lease or dominant land for an easement to
accept a chain of title for the current owner.
Appendix B - Additional Comments
3.
The holder of a mortgage, lease or
easement that was granted more than 40
years ago sells the interest. Here the
common law would have allowed a good
chain to start with an assignment of the
mortgage or lease, or a conveyance of the
dominant land for an easement, that was at
least 40 years old. A purchaser of a
mortgage or lease would naturally need to
see the actual mortgage or lease to know
what its terms were, and a purchaser of the
dominant land might want to see the actual
easement. A purchaser of the mortgage
might have insisted on proof of the owner's
title by a chain going back at least 40 years
before the mortgage was granted.
A
purchaser of a lease or of the dominant land
under an easement might not have required
such a chain. As in section (b), a more
recent chain for the owner's interest might
not before the registry system have been
practical, but the registry system now
makes it practical. However, if the interest
was granted before the owner's chain
started, the current owner's chain would not
be relevant unless it was extended back to
when the interest was granted or showed in
some other way that the interest was valid.
Although a practice would enable the holder of a
mortgage, lease or easement, who was selling
the interest, to prove title to the interest itself, a
purchaser would also be concerned about how
the interest affected the title of the owners and
others who acquired interests from the owner.
Under the common law, this concern might be
largely relieved by knowing that, even if the
owner, or person who acquired an interest from
the owner, could show a good chain of title free
of the interest that was being sold, the chain
should not itself make title free of the interest.
For the holder of a lease or easement, some
additional comfort might be given by the fact
that the occupation under the lease or use of the
easement should be evident to anyone dealing
with the owner.
Examples
Assuming that Part III validates any interest
(other than those of a mortgagee or lessee) if
both of the chain of title and registration rules
are satisfied, the results in various situations
involving interests less than ownership are as set
out below.
The interest is called an
"encumbrance." The examples use an easement
as the encumbrance, because a mortgage or lease
is excepted from the definition of "owner";
although the article concludes that the exception
does nor mean that a mortgage or lease is treated
differently, using an easement as an example
avoids that issue in the examples. Because there
are special rules for an easement that is openly
enjoyed and for a public utility easement, it will
be assumed that the easement is not one of
those. There are also special issues as to the
effect of a reference in an instrument dealing
with one interest to another interest. For the
sake of clarity, the examples are based on there
being no such reference.
Example 1
Before the 40 year search period, an owner of
the land grants an easement. The present owner
of the land has a good chain of title to the
ownership starting within the 40 year period.
The holder of the easement also has a good
chain of title to the easement starting within the
40 year period, except for one possible problem.
This is that the instruments in the owner's chain
do not refer to the easement. Instruments
dealing with both interests are registered within
the 40 year period.
Part III validates the title to the interests of both
the owner and holder of the easement. But the
possible problem referred to above must first be
dealt with.
The possible problem with the chain of title to
the easement is that the instruments in the
owner's chain do not refer to the easement. It
might be argued that, since these instruments
purport to deal with the title free of the
easement, they show that there is no easement
Appendix B - Additional Comments
and this makes the chain of title for the easement
bad. Although owners would usually refer in
their dealings to an encumbrance, it is not
essential for them to do so. They often do not
do so and the holder of an encumbrance cannot
force them to do so. Thus, the instruments in the
owner's chain should not, merely because they
purport to deal with the title free of the
easement, make the chain for the easement bad.
Having dealt with the possible problem, it
remains to show how the normal rules apply.
Part III would validate the titles of each of the
owner and holder of the easement if they
satisfied both the chain of title and registration
rules (except that Part III would not validate the
title to the easement if Part III were to validate
the title to the ownership free of the easement).
Both satisfy the chain of title rule because both
have a good chain of title to their interests.
Apart from the easement, both satisfy the
registration rules because there are no
conflicting registrations for either interest within
the 40 year period. As regards the easement, the
owner does not satisfy the registration rule
because an instrument dealing with the easement
is registered against the land within the 40 year
period. This would be a transfer of the dominant
land, together with the easement, which was
registered against the servient owner's title.
Thus Part III validates the title to the easement
and validates the title and the owner subject to
the easement.
The holder of the easement may want to search
before the 40 year period to look at the terms of
the easement, but need not be concerned in any
other way with instruments outside the 40 year
period.
As a result, searches within the 40 year search
period enable one to determine that both
interests in the land are valid.
Example 2
Before the 40 year period, the owner of land
grants an easement. The owner of the land has
a good chain of title to the ownership starting
within the 40 year period. No dealing with the
easement is registered, and the easement is not
referred to in a registered instrument, within the
40 year period. If the chain of title of the holder
of the easement were taken back before the 40
year period, the holder of the easement would
have a good chain of title to the easement.
Part III would validate the titles of each of the
owner and holder of the easement if they
satisfied both the chain of title and registration
rules, except that Part III would not validate the
title to the easement if Part III were to validate
the title to the ownership free of the easement.
Both satisfy the chain of title rule because both
have good chains of title to their interests. And,
it could not be argued that the holder of the
easement did not satisfy the chain of title rule
because the instruments in the owner's chain of
title do not refer to the easement.
(The
discussion in Example 1 shows that the mere
fact that the instruments dealing with the
ownership do not refer to the easement does not
make the chain for the easement bad.)
The owner satisfies the registration rule as
regards the easement because the easement is
not registered within the 40 year period. (The
example assumes that the easement is not
covered by the exceptions for an unregistered
easement openly enjoyed or a public utility
easement).
The result is a conflict. Part III seems both to
validate the owner's title free of the easement
and to validate the title to the easement. The
conflict must be resolved in favour of the owner.
Part III validates the title of the owner free of the
easement and the easement has expired.
Appendix B - Additional Comments
Example 3
There are two competing owners, a senior and
junior owner. The senior owner grants an
easement before the 40 year period. No dealing
with the senior ownership is registered in the 40
year period, but a dealing with the easement is
registered in the 40 year period. The junior
owner has a good chain of title starting in the 40
year period and, since the senior claim was not
registered in the 40 year period, Part III
validates the title subject to any right of the
holder of the easement.
Part III would validate the titles of each of the
owner and holder of the easement if they
satisfied both the chain of title and registration
rules, except that Part III would not validate the
title to the easement if Part III were to validate
the title to the ownership free of the easement.
Since the easement was registered in the 40 year
search period, Part III would not validate the
junior owner's title free of the easement, if the
easement is valid.
The question is whether the easement, since it
was granted by an owner whose title has
expired, is also invalid.
The chain of title for the easement starts within
the 40 year period because a dealing with it was
registered in that period. (The searcher may
refer to the grant of easement itself, but only to
ascertain the terms of the easement, not to check
the title of the grantor of the easement). The
holder of the easement satisfies the chain of title
rule because the holder has a good chain of title
to the easement. And, it could not be argued
that the holder of the easement did not satisfy
the chain of title rule because the instruments in
the owner's chain of title do not refer to the
easement. (The discussion in Example 1 shows
that the mere fact that the instruments dealing
with the ownership do not refer to the easement
does not make the chain for the easement bad.)
Part III therefore validates the easement despite
the fact that it invalidates the senior ownership.
Since the easement is valid the junior owner's
title is subject to the easement even though the
easement was granted by a senior owner those
claim has expired. Once the easement has been
granted, it becomes a separate interest that can
be protected by Part III separately from the
senior ownership.
As a result, searches within the 40 year period
enable one to determine that both interests in the
land are valid.
Examples 1, 2 and 3 will cover most situations
in practice. The key factor in those examples is
whether the easement is registered within the 40
year period. Its being registered in Example 1
protected it, and its not being registered in
Example 2 destroyed it. In the usual cases, the
result under the registration rule alone will
determine whether the easement is valid.
However, in unusual cases, the failure to register
an easement within the 40 year period may not
invalidate it, as the following example shows.
Example 4
The following transactions are registered, in the
order given, before the 40 year period:
(a) An owner grants an easement.
(b) The land is transferred to a new owner and
the transfer does not refer to the easement.
(c) The dominant land is transferred with the
easement and the transfer is registered
against the servient land.
There are no transactions during the 40 year
period.
Part III would validate the titles of each of the
owner and holder of the easement if they
satisfied with the chain of title and registration
rules (except that Part III would not validate the
title to the easement if Part III were to validate
the title to the ownership free of the easement).
The holder of the easement satisfies the chain of
title rule because the holder has a good chain of
Appendix B - Additional Comments
title. This is based on the transfer of the
dominant land before the 40 year period; this
transfer is both the root of title for the easement
and the only instrument in the chain. (The
searcher may refer to the grant of easement
itself, but only to ascertain the terms of the
easement, not to check the title of the grantor of
the easement).
The title of the owner must now be examined to
find out whether it is subject to the easement.
Under the registration rule, the owner's title
seems to be free of the easement, because the
easement is not registered within the 40 year
period. The issue is whether, under the chain of
title rule, the owner's chain of title shows a title
free of the easement. Because no conveyance is
registered within the 40 year period, the owner's
chain of title starts with the last transfer before
the 40 year period. A search forward from that
transfer will reveal the last registration for the
easement. The owner's chain of title is subject
to the easement. As regards the easement, the
owner does not satisfy the chain of title rule.
Thus Part III validates the owner's title subject to
the easement and validates the easement. There
is no conflict between those results and the
easement is valid even though it was last
registered outside the 40 year period.
The Chain of Title Rule
Root of Title
The question arises as to how a passing of
property on death is dealt with under Part III as
far as the root of title is concerned.
At common law, a will could be a root, but only
if it both transferred the property and identified
it.
Originally, in England, a specific gift by will
could be a root because it both transferred the
property directly to the beneficiary and
identified the property. A general gift of
property by will could not be a root because it
did not identify the property. A transmission on
intestacy could not be a root because it was not a
document.
In England, the law was changed so that real
property vested in the personal representative
until the personal representative "assented" to
the gift taking effect. After the change, a
specific gift could still be a root, but only after it
had been completed by the assent. In England
the law was changed again so that the action of
the personal representative became an actual
transfer rather than being merely a confirmation
of the gift by the will (and even though it was
still called an "assent"). After that, a will
containing a specific gift could no longer be a
root, because it did not transfer the property.
When the same reasoning is applied in Ontario,
the result seems to be as follows. If a will gives
a specific real property directly to anyone, the
property can automatically vest in the donee
after three years. In that case, apart from Part
III, the will could be a root. Otherwise, it is only
the transfer by the personal representative that
can be a root, rather than the will. A general gift
by will cannot be a root because it does not
identify the property. A vesting on intestacy
cannot be a root because it is not done by a
document.
Part III requires the root to be a "conveyance."
Where the above reasoning would allow a will
to be a root, could the will and the vesting under
it be a conveyance for Part III? No case deals
with the question. Until it does, it would be best
to take the safer course. If there is another
conveyance in the 40 year period, the safer
course is to treat the earlier will as a
conveyance. If there is no other conveyance in
the 40 year period, the safer course is not to treat
the will as a conveyance and to look for a root
before the 40 year period.
Length of the Chain
The article says that, where Part III validates a
junior claim to ownership, the validation occurs
when the two tests under the chain of title and
registration rules are met. If the validation is
Appendix B - Additional Comments
governed by Part III as changed in 1981, this
period will usually be when the 40-year notice
period for the senior claim ends. This happens
because the first instrument that could be a good
root of title for the junior claim is usually
registered in the notice period and is a good root;
this is called Case 1 below. But, if no
instrument has been registered in the notice
period that is a good root of title for the junior
claim, the period on which validation is based
does not end at the end of the notice period. Part
III could not of course validate the junior claim
based on a good root before the notice period,
because the search back to that root would show
the last senior registration. The article deals
with one case where this might occur, called
Case 2 below, and this appendix deals with two
others.
The cases may be set out as follows:
The last senior transfer is registered. This
begins the 40-year notice period.
During the 40-year notice period:
1.
A junior transfer is registered during
the 40-year period, which may or may
not be a good root.
Case 1. The transfer is a good root.
Part III validates the junior claim at the
end of the notice period.
Case 3. The transfer is not a good
root. Part III does not validate the
junior claim at the end of the notice
period. It will not validate the junior
claim until the first instrument
registered in the 40 year search period
that could be a good root of title for
the junior claim is a good root. Thus,
it cannot validate the junior claim until
the evidence casting doubt on the
transfer is no longer shown in the 40year search period. As a result, Part
III may not validate the junior claim
until more than 40 years after the first
junior transfer was registered.
2.
A junior transfer is not registered in
the 40-year period. In this case, the
searcher must go back to an earlier
root. But Part III could not validate
the junior claim based on a good root
before the notice period, because the
search back to that root would show
the last senior registration. Thus, Part
III cannot validate the junior claim
until a junior transfer is registered after
the 40-year notice period for the senior
claim was registered. This validation
is discussed below.
After the 40-year notice period:
The first junior transfer is registered
after the 40- year period, which may or
may not be a good root.
Case 2. The junior transfer is a good
root. As set out in the article, Part III
validates the junior claim immediately
after the transfer is registered. This
seems wrong, but it is a result of Part
III not requiring the root to have a
certain age before it can be good.
Case 4. The junior transfer is not a
good root. Part III does not validate
the junior claim immediately after it is
registered. It will not validate the
junior claim until the first instrument
registered in the 40 year period that
could be a good root of title for the
junior claim is a good root. Thus, it
cannot validate the junior claim until
the evidence casting doubt on the
transfer is no longer shown in the 40year search period. As a result, Part
III may not validate the junior claim
until more than 80 years after the last
senior transfer was registered.
VALID TITLE UNDER THE ONTARIO REGISTRY SYSTEM
How the Forty Year Rule Works
John R. Wood
Borden & Elliot
APPENDIX C
Court of Appeal Cases
Introduction
There have been six Court of Appeal cases about
Part III of the Registry Act. The essential facts
of the cases and their results are set out in the
table below. In each of the six cases, there were
two competing owners. A "senior" owner based
its claim on earlier registrations and a "junior"
on later registrations. The date as of which the
validity of a title is determined is referred to
below as the "determination date."
In every case, the error in first junior transfer
was an error of both parties. In every case
except one, the error should have been found on
at least one subsequent sale. In most cases, the
facts surrounding the root suggest that the
transferor might have known less about the
property than most owners (such as an
expropriation, tax sale or sale by an executor or
beneficiary of an estate).
In every case,
possession (even if it is relevant under Part III)
would not have cured a title defect because the
case dealt with mining rights that were not used,
or raw land that was not occupied, or land
owned by a body that was free from the normal
rules as to adverse possession.
The main conclusion of the article is that Part III
validates title to ownership when two tests are
met. First, under the chain of title rule, the
holder of the claim must have a good chain of
title, usually based on a good root of title in a 40
year period. Second, under the registration rule,
no conflicting registered claim must have been
registered in the 40 year period.
In each of the six Court of Appeal cases, the
senior title would have expired under the
registration rule. The main issue is: what is the
effect of the chain of title rule. On this issue, the
first question is: does the chain of title rule
validate a title? The second question is: must
the junior claimant show a good chain before the
senior title can expire?
As to the second question, the cases fall into two
groups.
In the first group, the junior claimant had a
good chain and the question is: did the
court rely on both registration and chain of
title rules?
In the second group, the court found that
the junior claimant did not have a good
chain and the question is: did that prevent
the junior claim from succeeding even
though the senior title seemed to have
expired?
The discussion of each case will deal with the
matters or questions set out below. Where
applicable, the article's conclusion is also set out
below.
1. General notes
2. Does Part III validate a title if both of the
chain of title and the registration rules are
satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
Appendix C - Appeal Cases
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
3. Does the provision about a freehold title
continuously shown confirm that Part III
validates a title only if it meets the tests under
both the chain of title and registration rules?
The article concludes that the answer to the
above question is yes. The provision should be
read as saying "continuously shown through a
good and sufficient chain of title" and is not a
cross-reference merely to a case where no
conveyance is registered within the 40 year
period.
4. When does Part III validate a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
5. Under the registration rule, when is a
claim registered?
The article concludes that, under the registration
rule, a claim is registered when a dealing is
registered against the land (i) which purports to
create or transfer a claim out of which the claim
later arises; (ii) which purports to create or
transfer all of the claim; (iii) probably, which
purports to contain a dealing by the holder of the
claim with part of the claim, but not (iv) which
deals with another interest and merely refers to
the claim.
6. Can a notice of claim be registered for a
claim as long as the claim is valid?
The article concludes that the rules in Part III for
a notice of claim should allow the holder of a
claim to preserve the claim by registering the
prescribed notice of claim until the claim is
invalidated under the two basic tests, but the
effect of a notice of claim registered after the 40year period is not clear.
7. What does the chain of title rule allow one
to assume?
The article concludes that the chain of title rule
allows one to assume, if the chain of title is
good, that the title before the root is consistent
with what is shown by the search, and only that.
8. What are the rules as to the root of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
9. What period must the detailed search
under the chain of title rule cover?
The article contains the following conclusions.
Where the chain of title begins with a root less
than 40 years old, the title is also affected by
anything that is shown by a detailed search
Appendix C - Appeal Cases
under the chain of title rule covering the part of
the 40-year period before the root. Apart from
the provision referred to in the next question,
where the chain of title begins with a root more
than 40 years old, the title is affected by
anything that is shown by a detailed search
under the chain of title rule from the beginning
of the chain, including the part of period of the
chain that is after the root and before the 40-year
period.
10. Does a provision in Part III that says,
with some exceptions, that a chain of title is
not affected by any instrument registered
before the 40-year search period, mean that a
defect or encumbrance based on such an
instrument does not affect the title?
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
11. What is the standard to be used in
verifying that the search under the chain of
title rule shows nothing to cast doubt on the
assumption that a disposing party under the
root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
12. How long must the chain be to be
considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
13. Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
14. What is the effect of actual notice under
Part III?
The article concludes that Part III validates the
title to an interest when it meets the two tests,
even if a holder of the interest actually knows of
the conflicting claim to the interest, but, if the
holder knew of the conflicting claim when the
holder acquired the interest and Part III had not
then validated the title, the holder may not,
under general principles of law, be permitted to
take advantage of the validation.
15. What is the effect of possession?
The article contains the following conclusions.
As far as a right is legally created by adverse
possession or use, it does not expire under Part
III. If the right is also registered (as it often will
be), Part III probably validates it if the registered
title meets the tests. An easement or similar
right should not expire under Part III if the
holder is openly enjoying and using it, but any
other registered right, including ownership, can
expire, even if accompanied by possession.
16. What is the effect of fraud under Part
III?
The article concludes that Part III probably does
not validate a claim where the chain includes an
instrument that is void because of fraud.
Court of Appeal Cases
Table of Facts and Results
Before 1981 amendments
After 1981 amendments
Algoma
Calabogie
Tkach (trial
-first
determination date)
Tkach
(appeal second
determination date)
Last senior
transfer
(Presumably)
transfer of
both senior
and junior
titles
Transfer of
both senior
and junior
titles
Last senior
transfer
First junior
transfer
Senior
transfers
Last senior
transfer
Three junior
transfers
Camrich
National
Sewer
Fire
Last senior
transfer
Last senior
transfer
Last senior
transfer
First and
other junior
transfers
First and
other junior
transfers
First and
other junior
transfers
Junior
Senior
Junior
40 years before determination date
More junior
transfers
First and
other junior
transfers
First and
other junior
transfers
One junior
transfer
Winner
Junior
Senior
Senior
Junior
Appendix C - Algoma
Case Summaries and Comments
1.
Algoma . Algoma Ore Properties Ltd. v. Smith [1953] 3 D.L.R. 343.
1.1
Algoma: General notes
Algoma
1886
Gift by will of Holden of (1) surface rights to daughter, Braiden, and (2)
mining rights to four other children.
1900
Junior transfer (root) by Braiden (without excluding mining rights.
1917
Junior transfer to Smith.
1926
40 years after senior title last referred to in a registered instrument.
1940
40 years after root.
1940
Tests under both chain of title and registration rules met.
1952
Agreement for sale from Smith to Algoma. Buyer objected that mining
rights were not owned by seller and seller answered that they were.
1953
Vendors and purchasers motion, with beneficiaries of mining rights as
parties. Court of Appeal decided that seller's answer was good.
Winner
Junior claimant.
The claims were to the ownership of mining
rights. The first transfer in the junior claimant's
chain was a sale by a beneficiary under a will,
who had been given the surface rights only, but
mistakenly included the mining rights as well.
Neither claimant was in possession of the
mining rights.
The Algoma case must be read in conjunction
with the later Calabogie case because that case
was decided 28 days later and two of the judges
in Algoma who gave the same reasons were
among the three judges who gave the same
reasons in Calabogie. Because the reasons of
two of the three judges in Algoma are in the
second judgment, that of MacKay J.A., his
judgment is the more significant.
1.2
Algoma: Does Part III validate a title
if both of the chain of title and the
registration rules are satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
For Algoma, The first question is: does the chain
of title rule validate a title? The second question
is: did the court rely on both registration and
chain of title rules?
Appendix C - Algoma
In this case, the dispute was over mining rights.
The court decided that mining rights were not
merely an encumbrance on the title of the owner
of the land, but were owned in fee simple
separately from the surface rights. The case
therefore dealt with the mining and surface
rights as if they were two separate properties.
The reasons of the majority were given by
MacKay J.A.:
This Act operates as a bar to any claim they [the
senior claimants] might have had under the will
of Elias Holden because, during the 40-year
period and thereafter, Mrs. Braiden and her
successors in title [the junior claimants] and not
those who may have been entitled under the will
of Elias Holden, have been continuously shown
on the books from time to time as being the
owners of the mineral rights.
When the deeds from Braiden to Arnott in 1900
and from Arnott to Smith in 1917 were
registered, the owners of the mineral rights under
the will of Elias Holden were no longer shown
"continuously" on the books as being the owners
and unless they followed the procedure set out in
the Act and filed a notice of their claim as
provided by s.2(5), they lost their rights and the
deeds from Braiden to Arnott and from Arnott to
Smith became effective to convey the mineral
rights.
I am of the opinion that the Investigation of Titles
Act requires a search only to the first root of title
prior to the 40-year period. The purchaser is
entitled to rely on the form of the instruments
registered and is not bound to enquire into their
substance and if the instrument on which he relies
as the root of title prior to the 40-year period is
on its face sufficient to convey the fee, including
the mineral rights, he is entitled to rely upon it.
This reasoning has often been quoted. It
answers the questions set out above the table as
follows. First, under the chain of title rule, a
good chain gives a valid title; the purchaser is
"entitled to rely" on the chain. Second, the court
relied on both the chain of title and registration
rules. The court said that the "Act operates as a
bar", not just the registration rule.
The
reasoning is clearly based on the junior claimant
having satisfied both the registration and chain
of title rules. It confirms that Part III validates
title to an interest if both, under the chain of title
rule, the holder has a good chain of title and,
under the registration rule, no registered adverse
claim has been registered in the 40 year period.
The headnote to the case contains a penetrating
editorial comment. "The result of this case
involves a holding that the Registry system
operates to empower a person to confer a fee
simple title which he does not have. In this
respect, it approximates the Torrens system."
The fact that the court required both rules to be
satisfied is confirmed by the Calabogie case
because that case was decided 28 days later and
two of the judges in Algoma who gave the same
reasons were among the three judges who gave
the same reasons in Calabogie.
1.3
Algoma: Does the provision about a
freehold title continuously shown confirm
that Part III validates a title only if it meets
the tests under both the chain of title and
registration rules?
The article concludes that the answer to the
above question is yes. The provision should be
read as saying "continuously shown through a
good and sufficient chain of title" and is not a
cross-reference merely to a case where no
conveyance is registered within the 40 year
period.
In Algoma, the Court of Appeal said:
This Act operates as a bar to any claim they
might have had under the will of Elias Holden
because, during the 40-year period and thereafter,
Mrs. Braiden and her successors in title and not
those who may have been entitled under the will
of Elias Holden, have been continuously shown
on the books from time to time as being the
owners of the mineral rights.
When the deeds from Braiden to Arnott in 1900
and from Arnott to Smith in 1917 were
registered, the owners of the mineral rights under
the will of Elias Holden were no longer shown
"continuously" on the books as being the owners
and unless they followed the procedure set out in
the Act and filed a notice of their claim as
provided by s.2(5), they lost their rights and the
Appendix C - Algoma
deeds from Braiden to Arnott and from Arnott to
Smith became effective to convey the mineral
rights.
The first use of the words "continuously shown"
gave the words their correct meaning. The court
found that the junior claimants, who had a good
chain of title, were "continuously shown." The
second use of those words is incorrect in treating
the continuity of the senior claim as cut off by
the first junior transfer registered less than 40
years after the last senior registration.
1.4
Algoma: When does Part III validate
a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
If this had been applied in Algoma, Part III
would have validated the junior title in 1940, 12
years before the case arose in 1952. The test
under the registration rule had been met in 1926,
40 years after the senior title was last registered
in 1886. But the root for the junior title was not
registered until 1900, so that the test under the
chain of title rule was not met until 40 years
after that. Thus, the junior title was valid when
the case arose. There had been no dealing since
1919 until the sale that gave rise to the case.
In Algoma, the last junior transferee under a
registered transfer could not have been protected
if Part III applied only on a dealing, because the
transfer was registered less than 40 years after
the last senior transfer. The dispute arose
because an intending purchaser was objecting to
the vendor's title before the closing of the
purchase. The Court of Appeal decided that the
senior claim was barred. The court did not refer
to a need for a "dealing." If the court had, it
might have decided either that the agreement of
sale was a sufficient "dealing", or it might have
decided that the claim would be barred when the
sale closed. However, the court seems to have
decided that the junior title was good
irrespective of a dealing.
The suggestion that the court did not require a
"dealing" is inconsistent with the Calabogie
case. That case was decided 28 days later and
two of the judges in Algoma who gave the same
reasons were among the three judges who gave
the same reasons in Calabogie. In that case, the
court clearly suggested that Part III works only
in favour of "a person acquiring title from one
who" was shown to have a good chain.
Thus Algoma is inconclusive on when Part III
validates title.
1.5
Algoma: Under the registration rule,
when is a claim registered?
The case does not deal with this issue.
1.6
Algoma: Can a notice of claim be
registered for a claim as long as the claim is
valid?
The article concludes that the rules in Part III for
a notice of claim should allow the holder of a
claim to preserve the claim by registering the
prescribed notice of claim until the claim is
invalidated under the two basic tests, but the
effect of a notice of claim registered after the 40year period is not clear.
In Algoma, there is no suggestion that a notice of
claim could have been registered after the 40year period ended under the registration rule
ended in 1926, even though the tests under both
rules were not met until 1940.
Appendix C - Algoma
1.7
Algoma: What does the chain of title
rule allow one to assume?
The article concludes that the chain of title rule
allows one to assume, if the chain of title is
good, that the title before the root is consistent
with what is shown by the search, and only that.
In Algoma, the root of title was a conveyance by
a person who did not own the land. The judge
giving the reasons of two of the three judges
said:
The deeds . . were in the ordinary statutory form
and would have been effective to convey the
mineral rights if the respective grantors had, at
the time of giving the deeds, owned them. If the
respective grantors under these deeds were not in
fact the owners of the mineral rights the deeds
would convey only such rights as they owned ...
and the owners of the mineral rights could still
assert their claim if it were not for the
Investigation of Titles Act. This Act operates as
a bar to any claim they might have had . . because
. . Mrs. Braiden and her successors in title and
not those who may have been entitled .. have
been continuously shown on the books from time
to time as being the owners of the mineral rights.
The judge went on to explain further why the
Act operated as a bar and concluded his reasons
with words that, taken out of context, can be
misleading:
The purchaser is entitled to rely on the form of
the instruments registered and is not bound to
inquire into their substance and if the instrument
on which he relies as the root of the title prior to
the 40-year period is on its face sufficient to
convey the fee, including the mineral rights, he is
entitled to rely upon it.
These words seem at first to suggest that the
purchaser could take instruments at face value.
However, the earlier words show that the only
defect in the instruments was that the person
conveying under the root had no right to do so.
There was no other defect in the instruments; the
judge said that the deeds were "in ordinary
statutory form." The decision was based on the
fact that the deeds were in order.
Thus, when put in context, the words show that
the fact that the purchaser could assume was that
the person conveying under the root had the
right to do so. Being able to make that
assumption also cured the defect in the
subsequent conveyances. The reason for the
decision was really that the chain of title was not
defective merely because the person conveying
under the root of title did not in fact own the
land.
The reasoning of the court in Algoma, although
sometimes taken out of context, has been
approved in later cases.
1.8
Algoma: What are the rules as to the
root of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Algoma, the junior root was a transfer by the
beneficiary of an estate. The deceased had died
30 years before the root. He had left the surface
rights in the land to the transferor and the mining
rights to others. The root did not exclude the
mining rights and appeared to transfer the fee in
both the surface and mining rights.
The judge giving the reasons of the two of the
three judges said:
Appendix C - Algoma
The purchaser is entitled to rely on the form of
the instruments registered and is not bound to
inquire into their substance and if the instrument
on which he relies as the root of the title prior to
the 40-year period is on its face sufficient to
convey the fee, including the mineral rights, he is
entitled to rely upon it.
The case is the leading authority for the rule that
the root, before the 1981 amendments, had to be
at least 40 years old. On that point, it is no
longer relevant.
The words set out above seem at first to suggest
that the purchaser could take instruments at face
value. However, as explained in the section
dealing with what can be assumed, earlier words
show that the only defect in the instruments was
that the person conveying under the root had no
right to do so. There was no other defect in the
instruments; the judge said that the deeds were
"in ordinary statutory form." The decision was
based on the fact that the deeds were in order.
The case is the leading authority for the
requirement that the chain start with a good root
of title. But the court did not refer to a common
law definition of a good root. However, the root
would have met the common law tests. In
particular, the root did not depend for its validity
on another instrument. Even though an estate
was involved, the transferor purported to convey
as owner and was not like a personal
representative who conveys in the exercise of a
power.
Thus, Algoma does not contradict the view that
the root must meet tests as to its quality if it is to
be a good root of title and that the tests are
essentially those under the common law.
registered before the 40-year search period,
mean that a defect or encumbrance based on
such an instrument does not affect the title?
The case does not deal with this issue.
1.11
Algoma: What is the standard to be
used in verifying that the search under the
chain of title rule shows nothing to cast doubt
on the assumption that a disposing party
under the root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
There was nothing in the chain to show the
senior title; the deeds in the chain "were in the
ordinary statutory form and would have been
effective to convey the mining rights if the
respective grantors had, at the time of giving the
deeds, owned them." The court went on to say:
The purchaser is entitled to rely on the form of
the instruments registered and is not bound to
inquire into their substance and if the instrument
on which he relies as the root of the title prior to
the 40-year period is on its face sufficient to
convey the fee, including the mineral rights, he is
entitled to rely upon it.
These additional words suggest that the searcher
can take instruments in the chain at face value.
In fact, as explained above, the decision was that
the chain of title was not defective merely
because the person conveying under the root of
title did not in fact own the land.
Because there was nothing else wrong with the
chain, the decision gives no guidance on what
standard is to be used for the search.
1.9
Algoma: What period must the
detailed search under the chain of title rule
cover?
1.12
Algoma: How long must the chain be
to be considered a chain of title?
The case does not deal with this issue.
The article concludes that a chain of title does
not need more than one link.
1.10
Algoma: Does a provision in Part III
that says, with some exceptions, that a chain
of title is not affected by any instrument
As there was more than one link in the chain, the
case does not deal with this issue.
Appendix C - Algoma
1.13
Algoma: Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
In Algoma, Part III was found 22 years after the
legislation first came into force to have validated
the junior title. Originally Part III allowed
holders of existing interests one year to register
a notice of claim. The court did not consider
whether its decision meant that Part III applied
retroactively and presumably assumed that it did
apply retroactively.
1.14
Algoma: What is the effect of actual
notice under Part III?
The article concludes that Part III validates the
title to an interest when it meets the two tests,
even if a holder of the interest actually knows of
the conflicting claim to the interest, but, if the
holder knew of the conflicting claim when the
holder acquired the interest and Part III had not
then validated the title, the holder may not,
under general principles of law, be permitted to
take advantage of the validation.
As explained earlier, Part III should have
validated the title of the junior owner 12 years
before the case arose. There is no indication that
the junior claimant had actual notice when he
acquired the property or that the purchaser had
actual notice before entering into the sale
agreement. Obviously, both the junior claimant
and the purchaser received actual notice before
the case and before the transfer. But there is no
indication that the court felt that the notice had
no effect because it was received after the
parties entered into the first dealing, the sale
agreement.
1.15
Algoma:
possession?
What
is
the
effect
of
The case does not deal with this issue.
1.16
Algoma: What is the effect of fraud
under Part III?
The case does not deal with this issue.
1.17
Algoma: Other comments
The trial judge had decided that the requisition
had not been answered simply because the
senior title to the mining rights was a freehold
estate and was exempt from the requirement that
a notice of claim be registered. He seems to
have based this on the provision that a freehold
estate continuously shown in the register was not
affected by failure to register a notice of claim.
The Court of Appeal decided that Part III did
apply to a freehold estate because it was
included in the term "claim." The judge giving
the reasons of the majority added: "If the
judgment appealed from were correct the
Investigation of Titles Act would have no
application whatever to the estates or interests in
land referred to in s. 2(2), namely, a freehold or
leasehold estate or an equity of redemption, and
the Act would apply only to other interests in
land.
This would make it necessary,
notwithstanding the statute, to search all titles
back to the Crown in respect of all freehold or
leasehold estates or equities of redemption. I do
not think that can be the meaning of the
legislation."
Appendix C - Calabogie
2.
Calabogie . Re Headrick and Calabogie Mining Company Limited [1953] O.W.N. 761.
2.1
Calabogie: General notes
Calabogie
Before
1882
Presumably a good root for both surface and mining rights.
1882 and
1889
Senior transfers of mining rights to Calabogie.
1938
Junior transfer by municipality to Charles Headrick without
excluding mining rights.
1939
40 years after last registered dealing with senior title.
1940
Junior transfer from Charles Headrick to Nelson Headrick.
1953
Nelson Headrick applied to court for order that senior title
extinguished.
1953
Court of Appeal decided that senior title not extinguished.
1978
The junior title would not have met the test under the chain of title
rule until 1978, because it was accepted that a root at least 40 years
old was required before the 1981 amendments.
Winner
Senior claimant.
The claims were to the ownership of mining
rights. Presumably both of the senior and junior
titles could be traced back to a common transfer,
but the court did not describe this transfer. The
court only said that the surface and mining rights
"were severed" (implying that they were at one
time dealt with together). For the reasons given
below, this common transfer must have been the
root of title.
senior title could have expired before the next
junior transfer.
The first junior transfer was within the 40 year
period. It was a sale of the surface rights by a
municipality to pay arrears of taxes.
It
mistakenly included the mining rights as well.
At that time, less than 40 years had passed since
the last senior transfer was registered and so the
senior title could not then have expired. But the
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
Neither claimant was in possession of the
mining rights.
2.2
Calabogie: Does Part III validate a
title if both of the chain of title and the
registration rules are satisfied?
Appendix C - Calabogie
For Calabogie, the first question is: does the
chain of title rule validate a title? The second
question is: must the junior claimant show a
good chain before the senior title can expire?
In this case, the dispute was over mining rights.
The courts decided that mining rights were not
merely an encumbrance on the title of the owner
of the land, but were owned in fee simple
separately from the surface rights. The case
therefore dealt with the mining and surface
rights as if they were two separate properties.
The reasons for the court's decision were given
by Pickup C.J.O. as follows:
In my opinion s.2 of The Investigation of Titles
Act does not extinguish rights or interests in land
except in favour of a person who acquires title
from one who is shown to be the owner through a
good and sufficient chain of title during the 40year period referred to.
The reasoning answers the questions set out
above as follows. First, a good chain can give a
valid title; the junior claimant "acquires title"
through an owner with a good chain. Second,
the junior claimant must show a good chain
before the senior title can expire. Part III "does
not extinguish rights of interests in land except
in favour of" a claimant with a good chain.
2.3
Calabogie: Does the provision about a
freehold title continuously shown confirm
that Part III validates a title only if it meets
the tests under both the chain of title and
registration rules?
The case does not deal with this issue.
2.4
Calabogie:
validate a title?
When
does
Part
III
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Calabogie, the Court of Appeal thought that
Part III operated only on a dealing because it
decided that the senior title would be
extinguished only in favour of "a person
acquiring title from one who" was shown to
have a good chain. The court referred to the fact
that the trial judge reached the same conclusion
on the ground that the junior claimant did not
show a good chain for 40 years "immediately
preceding the date of the conveyance to the
appellant." The decision does not support the
conclusion of the article on the question.
2.5
Calabogie: Under the registration
rule, when is a claim registered?
The case does not deal with this issue.
2.6
Calabogie: Can a notice of claim be
registered for a claim as long as the claim is
valid?
The case does not deal with this issue.
2.7
Calabogie: What does the chain of
title rule allow one to assume?
The case does not deal with this issue.
2.8
Calabogie: What are the rules as to
the root of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
Appendix C - Calabogie
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
The judge giving the court's decision said:
In my opinion s.2 of The Investigation of Titles
Act does not extinguish rights or interests in land
except in favour of a person who acquires title
from one who is shown to be the owner through a
good and sufficient chain of title during the 40year period referred to. (Italics added.)
The court did not say why the junior claimant's
chain was bad. It is not even clear what transfer
the court regarded as the root. The last common
transfer of both the surface and mining rights
should have been a good root, but a chain
starting with that transfer would have been bad
because that chain showed that the mining rights
had been transferred to the senior claimant. The
court would not have regarded the first junior
transfer, the tax sale, as a good root because the
Algoma case decided that the root had to be at
least 40 years before the determination date.
The only possible root, the first junior transfer,
was not a good root simply because it was not
old enough. Thus the case confirms that the root
had to be at least 40 years old (on which point,
it is no longer relevant) but does not give any
guidance beyond that as to what is a good root.
2.9
Calabogie: What period must the
detailed search under the chain of title rule
cover?
The article contains the following conclusions.
Where the chain of title begins with a root less
than 40 years old, the title is also affected by
anything that is shown by a detailed search
under the chain of title rule covering the part of
the 40-year period before the root. Apart from
the provision referred to in the next question,
where the chain of title begins with a root more
than 40 years old, the title is affected by
anything that is shown by a detailed search
under the chain of title rule from the beginning
of the chain, including the part of period of the
chain that is after the root and before the 40-year
period.
In Calabogie, as explained in the answer to the
previous question, the junior root of title was
more than 40 years old and the junior title was
bad because a search from that root showed that
the mining rights had been transferred to the
senior claimant. The transfers of the mining
rights were registered before the 40 year period
began, showing that, if the chain of title starts
with a root more than 40 years old, the detailed
search of under the chain of title rule should
cover the period from the root to the beginning
of the 40 year period.
2.10
Calabogie: Does a provision in Part
III that says, with some exceptions, that a
chain of title is not affected by any instrument
registered before the 40-year search period,
mean that a defect or encumbrance based on
such an instrument does not affect the title?
The case does not deal with this issue.
2.11
Calabogie: What is the standard to be
used in verifying that the search under the
chain of title rule shows nothing to cast doubt
on the assumption that a disposing party
under the root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
A chain starting with the last common transfer
would have contained the registered transfer
which severed the mining rights. The transfer
severing the mining rights would have been an
obvious defect. Beyond that, the decision gives
little guidance on what kind of defect will
prevent the searcher from continuing to assume
that the transferor in the root had a good title.
Appendix C - Calabogie
2.12
Calabogie: How long must the chain
be to be considered a chain of title?
The case does not deal with this issue.
2.13
Calabogie: Is Part III retroactive?
The case does not deal with this issue.
2.14
Calabogie: What is the effect of actual
notice under Part III?
The case does not deal with this issue.
2.15
Calabogie: What is the effect of
possession?
The case does not deal with this issue.
2.16
Calabogie: What is the effect of fraud
under Part III?
The case does not deal with this issue.
2.17
Calabogie: Other comments
The case does not deal with any other issues
under Part III.
Appendix C - Tkach
3.
Tkach . Ontario Hydro v. Tkach (1992) 10 O.R. (3d) 257
3.1
Tkach: General notes
Tkach
1883
Transfer including land in dispute.
1906
Transfer of land in dispute to predecessor of senior claimant, Ontario
Hydro.
1926
Statute registered vesting land in the senior claimant, Ontario Hydro.
1933
40 years before most recent junior transfer (in 1973)
1934
First junior transfer, an executor's deed, which omitted to exclude the
land transferred in 1906.
1940 and
1942
Junior transfers
1946-52
40 years before dispute.
1966
40 years after senior title last referred to in a registered
instrument.
1973
Last junior transfer (to Tkach), less than 40 years after earliest junior
transfer. Transferee's lawyer had actual notice of 1906 transfer but
still certified title.
1974
Tests under both chain of title and registration rules met.
1981
Amendments to Part III.
1986
Junior claimant deposited declaration claiming title.
1987-92
Senior claimant claimed that junior claimant had no title. Court of
Appeal decided that claim failed.
Winner
Junior claimant.
Appendix C - Tkach
The claims were to the ownership of a strip of
land at the rear of the junior claimant's land.
The first junior transfer was a sale by an
executor. On the date that the junior claimant
purchased, this transfer had been registered for
less than 40 years. On the date that the dispute
arose, junior chain could have started with a
transfer registered for more than 40 years. The
trial judge decided that the purchase date was
the determination date. The Court of Appeal
decided that the dispute date was the
determination date. The junior claimant had
been in possession, but that did not affect the
senior claimant because it was Ontario Hydro.
3.2
Tkach: Does Part III validate a title if
both of the chain of title and the registration
rules are satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
For Tkach, the first question is: does the chain of
title rule validate a title? The second question is:
must the junior claimant show a good chain
before the senior title can expire?
The trial judge assumed that the determination
date for calculating the 40 year period was in
1973, when the junior claimant purchased. He
decided that the senior claimant had a good title
because the 1981 amendments did not apply and
because the junior claimant did not have a good
chain starting with a good root at least 40 years
before the determination date. His decision,
based on very brief reasons, was similar to that
in Calabogie confirming that a good chain gives
valid title and that the junior claimant must show
a good chain before the senior title can expire.
The Court of Appeal decided that the
determination date for calculating the 40 year
period was when the title came under attack.
Using that date, the 1981 amendments applied.
Under those amendments, the junior claimant
had a good title by reason of the 40 year limit on
the search of title, for which one did not need to
go back to a root beyond the 40 year period
unless there was no conveyance within the 40
year period.
The court seems to have referred to the
relationship between the chain of title and
registration rules. The judge giving the court's
reasons said:
There are two ways to approach the problem.
First, from the viewpoint of Hydro, the question
becomes: does Hydro have the right to the
declaratory relief it seeks; the second question is:
does Tkach have a defence to the action by virtue
of the Investigation of Titles Act, 1929 and its
successors? The two questions may involve
much the same inquiry but the consequences may
be different. I prefer to approach the problem by
attempting to answer the second question . . the
essential question in this action is whether the
appellant [Tkach] can claim good title by reason
of the 40 year limit on the search of title . . [He
then went on to decide that Tkach had a good title
based on a root less than 40 years old and
concluded his reasons saying:] I have reached
the conclusion that Hydro's claim against Tkach
must fail. It therefore becomes unnecessary to
consider whether Hydro's title is in any event
extinguished.
The judge did not make it clear exactly what
legal issue each of his two question raised. As
to his first question, Hydro had claimed a
declaration that Tkach had no title to the land.
The judge seems to have taken this as a claim
that Hydro had a good title to the land and as
raising the issue of whether Hydro's title had
expired under the registration rule. As to his
second question, the judge seems to have taken
this as a claim that Tkach had a good title to the
land and mainly as raising the issue of whether
Tkach had a good title under the chain of title
rule. The judge seems to have concluded that,
since Hydro's title had expired under the
registration rule and Tkach had a good title
under the chain of title rule, it was unnecessary
to decide whether Hydro's title would have
expired under the registration rule even if Tkach
had not had a good title under the chain of title
Appendix C - Tkach
rule. Presumably it was unnecessary to decide
whether Tkach would have had a good defence
merely by showing that Hydro had no title, and
presumably the consequences might have been
different because Tkach would not have not
shown that he had a good title.
Thus the court answered the questions raised in
the article as follows. First, the chain of title
rule validates a title; the court said that "the
essential question in this action is whether the
appellant can claim a good title by reason of the
40-year limit on the search of title." The court
left open the second question raised in the article
of whether the junior claimant must show a good
chain before the senior title can expire. In
saying "It therefore becomes unnecessary to
consider whether Hydro's title is in any event
extinguished", the court implied that, if the
junior claimant had not had a good chain under
the chain of title rule, the court might still have
decided that the senior title expired. The court
seems to have accepted that Part III validated the
junior title only because both, under the chain of
title rule, the holder had a good chain of title
and, under the registration rule, the senior claim
had been registered in the 40 year period, but the
implication was that the senior title might have
expired even if the junior title had not been
valid. The case is the only one of the six Court
of Appeal cases that questions whether the chain
of title and registration rules always work
together. It does confirm that the tests under
both rules must be met before the junior title
becomes valid and it does not disagree with the
conclusion of the article that the two tests
always work together; it merely leaves the issue
open.
3.3
Tkach: Does the provision about a
freehold title continuously shown confirm
that Part III validates a title only if it meets
the tests under both the chain of title and
registration rules?
The case does not deal with this issue.
3.4
title?
Tkach: When does Part III validate a
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Tkach, the junior claimant purchased before
the 1981 amendments were made to Part III, but
the dispute arose after that. After the dispute
arose, the junior claimant deposited a declaration
of possession, which presumably did not refer to
the senior claim. Thus the courts had to decide
whether to apply Part III as it was before or after
the 1981 amendments, but did not have to deal
with anything on the register after the dispute
that showed the senior claim.
The trial judge decided that the determination
date was the date of the junior claimant's
purchase. He applied Part III as it was before
the 1981 amendments. He decided that the
junior claimant's root of title was bad simply
because it was less than 40 years old on the
determination date.
The Court of Appeal, for the first time,
specifically addressed the issue of when Part III
validates title. The judge giving the court's
reasons said:
Presumably the trial judge considered that the
title was determined forever on the date of the
conveyance. In that, I think he was in error.
There is no doubt that the Act was passed to
facilitate the task of title searchers and solicitors
certifying title but I think one must view the
appellant's title as of the moment it comes under
attack. Whether this be the date of the issue of
Hydro's claim (February 1987) or the date of trial
(June 1989) is of no moment . . It is my view that
Appendix C - Tkach
the question is whether a hypothetical purchaser
from the appellant at that time could obtain good
title. Consequently, the relevant statute is the
Registry Act . . as amended in 1981 . .
The court's reasons did not say that the attack
should be regarded as a "dealing", but show that
Part III validates a title regardless of a dealing.
Because the declaration of possession was not
enough to show the conflict, the court did not
have to decide exactly when the title would have
had to be determined if the register had shown
the conflict. However, the court's saying that the
date of an "attack" would be the determination
date shows that the court did not feel that, after
Part III had validated a title, subsequent events
in the proceedings should invalidate it.
Thus Tkach confirms the conclusion of the
article as far it concludes that Part III does not
validate a title only when there is a dealing. It
also tends to confirm the practical result of Part
III validating a title when it meets the two tests,
namely that, if the search shows a conflict, the
tests are applied immediately before the conflict
is first shown in the current search.
3.5
Tkach: Under the registration rule,
when is a claim registered?
The article concludes that, under the registration
rule, a claim is registered when a dealing is
registered against the land (i) which purports to
create or transfer a claim out of which the claim
later arises; (ii) which purports to create or
transfer all of the claim; (iii) probably, which
purports to contain a dealing by the holder of the
claim with part of the claim, but not (iv) which
deals with another interest and merely refers to
the claim.
In Tkach, both possible registrations of the
senior title were outside the 40 year period and
the courts did not have to decide whether the last
possible registration was in fact a valid
registration of the senior title. It was a statute
confirming that, when Hydro took over the
assets of its predecessor, it did not take over the
liabilities of predecessor as well. It merely
referred to, and set out a copy of, the agreement
for the take-over of the assets, including the land
in dispute. The trial judge treated the statute as
confirming the transfer of the assets, but the
Court of Appeal did not comment on the effect
of the statute on the title. The case does not
therefore deal with the issue of what amounts to
a registration of a title.
3.6
Tkach: Can a notice of claim be
registered for a claim as long as the claim is
valid?
The article concludes that the rules in Part III for
a notice of claim should allow the holder of a
claim to preserve the claim by registering the
prescribed notice of claim until the claim is
invalidated under the two basic tests, but the
effect of a notice of claim registered after the 40year period is not clear.
Although the Court of Appeal commented that
the dangers created by its conclusion that a root
within the 40 year period would be reduced if
the senior owner had registered a notice of
claim, it did not suggest when the notice could
be registered and the case does not deal with the
issue.
3.7
Tkach: What does the chain of title
rule allow one to assume?
The case does not deal with this issue.
3.8
Tkach: What are the rules as to the
root of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
Appendix C - Tkach
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Tkach, the first junior transfer was a sale by
an executor. On the date that the junior claimant
purchased, the executor's transfer had been
registered for less than 40 years. On the date
that the dispute arose, junior chain could have
started with another transfer registered for more
than 40 years.
The trial judge decided that the purchase date
was the determination date (the date from which
the 40 year period was counted back). He also
decided that the law as it was on that date had to
be applied. The law on that date required the
root to be over 40 years old. The trial judge did
not deal with the question of whether, under the
chain of title rule after the 1981 amendments, a
root of title within the 40 year period can be
good. And he did not deal with the question of
whether, if the root depends for its validity on a
previous instrument, it is good only if it is
shown to be valid under that previous
instrument. In his decision, the first junior
transfer was not a good root simply because it
was not old enough.
The Court of Appeal decided that the
determination date was the date on which the
title came under attack. The court decided that
the law on that date did not require the root to be
over 40 years old. The judge giving the court's
reasons said:
As I read the Act now, it is clear that there is no
need to go beyond the 40-year period unless (s.
105(2)) there has been no conveyance within the
40-year period. Then, and only then, an earlier
root of title must be found; otherwise the title
searcher and solicitor searching title can safely
rely on the instruments within the 40-year period.
The only junior transfer in the 40 year period
was the transfer to the junior claimant himself.
The court did not specifically say that this was
the root. Since the reason for the court's
decision was that a root of title within the 40
year period can be good and since the transfer to
the junior claimant was the only transfer in the
40 year period, the court must have treated that
transfer as the root. And the court's comment
that its conclusion created some dangers tends to
confirm that the court saw the transfer to the
junior claimant himself as the root. The court
did say that the junior title "stems from an
executor's deed", but this meant only that the
title could historically be traced back to the
executor's deed and did not mean that the court
treated the executor's deed as the root. That is
confirmed by the court's saying "Hydro's claim
stems from the conveyance of 1906 and the
statute of 1924 registered in 1926." The court
did not have to decide that a root of title within
the 40 year period can be good because there
was a root outside the period. And, even if the
root had been outside the 40 year period, it
would not have been the executor's transfer. In
the result, one cannot be entirely comfortable in
relying on the court's decision that a root within
the 40 year period can be good and, since the
executor's deed could not in any event have been
the root, the reasons of the Court of Appeal did
not deal with the question of whether an
executor's transfer is a good root only if the
executor is shown to have a valid power to make
the transfer or whether the root has to meet any
tests as to its quality or what those tests are.
As a result, Tkach is some authority for the view
that, under the chain of title rule after the 1981
amendments, a root of title within the 40 year
period can be good. It does not deal with the
issue of whether the root must meet tests as to its
quality if it is to be a good root of title or what
the tests are.
3.9
Tkach: What period must the detailed
search under the chain of title rule cover?
The article contains the following conclusions.
Where the chain of title begins with a root less
than 40 years old, the title is also affected by
anything that is shown by a detailed search
Appendix C - Tkach
under the chain of title rule covering the part of
the 40-year period before the root. Apart from
the provision referred to in the next question,
where the chain of title begins with a root more
than 40 years old, the title is affected by
anything that is shown by a detailed search
under the chain of title rule from the beginning
of the chain, including the part of period of the
chain that is after the root and before the 40-year
period.
In Tkach, the trial judge decided that the chain
started with a root at least 40 years before the
determination date. This chain contained a
registered transfer for the senior title. The
transfer was registered before the 40 year period
began, showing that, if the chain of title starts
with a root more than 40 years old, the detailed
search of under the chain of title rule should
cover the period from the root to the beginning
of the 40 year period.
The judge giving the reasons of the Court of
Appeal said:
As I read the Act now, it is clear that there is no
need to go beyond the 40-year period unless (s.
105(2)) there has been no conveyance within the
40-year period. Then, and only then, an earlier
root of title must be found; otherwise the title
searcher and solicitor searching title can safely
rely on the instruments within the 40-year period.
While this does not specifically address the
issue, it seems consistent with the article's
conclusion that the detailed search of under the
chain of title rule should cover any part of the 40
year period before the root.
3.10
Tkach: Does a provision in Part III
that says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period,
mean that a defect or encumbrance based on
such an instrument does not affect the title?
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
The case does not
searches against
compliance with
provisions in the
revealed the senior
referred to.
deal with this issue. Any
abutting land to check
the subdivision control
Planning Act might have
title, but the issue was not
3.11
Tkach: What is the standard to be
used in verifying that the search under the
chain of title rule shows nothing to cast doubt
on the assumption that a disposing party
under the root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
The trial judge decided that the chain started
with a root at least 40 years before the
determination date. This chain contained a
registered transfer for the senior title. As this
would have been an obvious defect, the decision
gives little guidance on what kind of defect will
prevent the searcher from continuing to assume
that the transferor in the root had a good title.
As explained above, the Court of Appeal
appears to have decided that the chain started
with the first junior transfer. There was nothing
in either this chain or the 40 year period that
revealed the senior title in any way. The
decision gives no guidance on what kind of
defect will prevent the searcher from continuing
to assume that the transferor in the root had a
good title.
3.12
Tkach: How long must the chain be to
be considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
In Tkach, as explained in section 3.8 above, the
court decided that the only junior transfer in the
Appendix C - Tkach
40 year period, the transfer to the junior claimant
himself, was a good root of title. This confirms
the conclusion that a chain of title does not need
more than one link.
The article also refers to a situation, where, at
the end of the "notice period" for the senior
claim, no instrument for the junior claim has
been registered, and where the first instrument
for the junior claim registered after the notice
period is a good root of title for the junior claim.
Part III could not, of course, have validated the
junior claim at the end of the notice period,
because a search would not show any junior
registrations.
The article concludes that
logically Part III should validate the junior claim
immediately after the junior root is registered,
because Part III validates the title as soon as the
two tests are met and because Part III does not
require the root to have a certain age before it
can be good. In effect, the transferee would
magically validate the transferee's own title by
registering the transferee's own transfer.
Although this seems wrong, it is a result of Part
III not requiring the root to have a certain age
before it can be good. Tkach need not have dealt
with this issue because the first words italicized
above did not apply; junior transfers had been
registered in the notice period. Despite the fact
that court need not have dealt with the issue, the
court seems to have commented on it. After
deciding that there was no need to go beyond the
40-year period unless there had been no
conveyance within the 40-year period, the judge
giving the court's reasons said:
This conclusion creates some dangers. Remotely,
an owner, 41 years after obtaining title, might
lose it by an instrument registered by a stranger.
It is difficult to see how there could be such an
instrument without massive fraud on the part of
the person registering the document.
This comment seems to assume that, where there
has been no registration of a senior title for 40
years, a person could acquire title, and cause the
senior claimant to lose title, merely by
registering a fraudulent document.
The
comment is consistent with the conclusion of the
article.
3.13
Tkach: Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
In Tkach, the trial judge and the Court of
Appeal chose different dates for applying Part
III. The trial judge chose the date of registration
to the junior claimant and the Court of Appeal
chose the date that the title came "under attack."
In both cases, the court applied Part III as it was
on the date chosen by the court, so that, although
the case arose after the 1981 amendments, the
trial judge applied Part III as it was before those
amendments and, although the root of title was
before the 1981 amendments, the Court of
Appeal applied Part III as it was after those
amendments. Although the Court of Appeal
disagreed with the trial judge's choice of date, it
seems to have accepted that, if the choice had
been correct, Part III as it was on that date
should have been applied. The Court of Appeal
did not specifically say that the amendments
applied retroactively; all that the judge giving
the reasons said was:
It is my view that the question is whether a
hypothetical purchaser from the appellant at that
time could obtain good title. Consequently, the
relevant statute is the Registry Act . . as amended
in 1981 . . As I read the Act now, it is clear that
there is no need to go beyond the 40-year period
unless (s. 105(2)) there has been no conveyance
within the 40-year period.
Even though the Court of Appeal did not
specifically say that the amendments applied
retroactively, the court clearly accepted that they
did, and the decision is consistent with the
conclusion of the article that Part III applies as it
is on the relevant date.
Appendix C - Tkach
3.14
Tkach: What is the effect of actual
notice under Part III?
The article concludes that Part III validates the
title to an interest when it meets the two tests,
even if a holder of the interest actually knows of
the conflicting claim to the interest, but, if the
holder knew of the conflicting claim when the
holder acquired the interest and Part III had not
then validated the title, the holder may not,
under general principles of law, be permitted to
take advantage of the validation.
The decision therefore seems not only to
confirm the conclusion of the article that Part III
validates the title regardless of actual notice, but
also goes further in confirming that the junior
claimant can take advantage of the validation
despite the junior claimant (or at least the junior
claimant's solicitor's) having had actual notice of
the senior title at the time of purchase and before
the validation.
3.15
Tkach:
possession?
What
is
the
effect
of
In Tkach, the solicitor who acted for the junior
claimant in his purchase had recorded the two
instruments for the senior claim. The agreed
statement of facts said that solicitor obtained
"actual notice" of the first instrument but that,
despite the notice, he completed the purchase
and certified title to all the property including
the Hydro strip, relying on the junior root as a
good root of title. The purchase was completed
in 1973, before the 1981 amendments to Part III.
The article contains the following conclusions.
As far as a right is legally created by adverse
possession or use, it does not expire under Part
III. If the right is also registered (as it often will
be), Part III probably validates it if the registered
title meets the tests. An easement or similar
right should not expire under Part III if the
holder is openly enjoying and using it, but any
other registered right, including ownership, can
expire, even if accompanied by possession.
The trial judge decided that the senior claimant
had good title simply because the junior root
was not, under Part III as it was at the time of
the junior claimant's purchase, old enough.
In Tkach, a predecessor of the junior claimant
had removed a fence between the predecessor's
land and the senior claimant's land before the 40
year period. The junior owners' possession since
then did not affect the senior claimant because
of a special protection given to Ontario Hydro
by statute. Neither the trial court nor the Court
of Appeal dealt with any issue that might have
been raised by any possession of Ontario Hydro
before the fence was removed.
The Court of Appeal decided that the junior
clamant had good title because, at the time the
title came under attack, the junior claimant had a
good root of title. The court did not refer to the
actual notice, but did attach the agreed statement
of facts to its judgment and did say that the
essential facts were contained in it. The court
must be taken to have decided that the junior
claimant's title was good despite his solicitor's
having actual notice of the senior title.
Because the court determined the title when it
came under attack (in 1987 or 1989), the court
treated Part III as validating the title after the
junior claimant purchased.
The article
concludes that title would have been validated as
soon as the two tests were met, which would in
Tkach have been in 1974, a year after the
transfer to the junior claimant was registered.
The judge giving the reasons of the Court of
Appeal said:
As I read the Act now, it is clear that there is no
need to go beyond the 40-year period unless (s.
105(2)) there has been no conveyance within the
40-year period. Then, and only then, an earlier
root of title must be found; otherwise the title
searcher and solicitor searching title can safely
rely on the instruments within the 40-year period.
This conclusion creates some dangers. Remotely,
an owner, 41 years after obtaining title, might
lose it by an instrument registered by a stranger.
It is difficult to see how there could be such an
instrument without massive fraud on the part of
Appendix C - Tkach
the person registering the document and if the
owner had been in possession or had registered
notice he would not be affected in any event.
More important, however, in my view, is that the
conclusion is in accord with the manifest
intention of the legislation to limit the search,
subject to the exceptions set forth in s. 106(5), to
a 40-year period.
The comment assumes, contrary to the
conclusions of the article, that, if an owner is in
possession, the owner's claim does not expire
under Part III. One reason for the assumption
could have been that Part III does not apply to a
claim based on adverse possession, but that
reason may not be good because, while the
owner's title was valid, his possession would
seem not to be "adverse." Another reason may
have been the exception in Part III which says
that Part III "does not apply to . . a claim . . of a
person to an unregistered right of way or other
easement or right that the person is openly
enjoying and using." The court did not say that
it was referring to this exception as the reason
for its comment. If it was referring to the
provision, the court's comment suggests that the
provision applies to any right, not just rights like
easements, and that a right that is expiring under
Part III is to be treated as "unregistered." It
seems more likely that the latter was the true
reason, but the reason was still only a comment,
not a reason for the decision.
3.16
Tkach: What is the effect of fraud
under Part III?
The article concludes that Part III probably does
not validate a claim where the chain includes an
instrument that is void because of fraud.
In Tkach, the judge giving the reasons of the
Court of Appeal said:
As I read the Act now, it is clear that there is no
need to go beyond the 40-year period unless (s.
105(2)) there has been no conveyance within the
40-year period. Then, and only then, an earlier
root of title must be found; otherwise the title
searcher and solicitor searching title can safely
rely on the instruments within the 40-year period.
This conclusion creates some dangers. Remotely,
an owner, 41 years after obtaining title, might
lose it by an instrument registered by a stranger.
It is difficult to see how there could be such an
instrument without massive fraud on the part of
the person registering the document and if the
owner had been in possession or had registered
notice he would not be affected in any event.
More important, however, in my view, is that the
conclusion is in accord with the manifest
intention of the legislation to limit the search,
subject to the exceptions set forth in s. 106(5), to
a 40-year period.
The comment assumes that, even if there was
"massive fraud", Part III might validate the title,
and dismisses that as a factor in interpreting Part
III merely because it is unlikely to happen.
However, the comment should probably not be
taken as authority for saying that a title can be
valid even if an instrument in the chain is void
for fraud or that a person can take advantage of
validation even if that person was a party to the
fraud.
3.17
Tkach: Other comments
Part III "does not apply to . . a claim arising
under any Act." The last registration the
referred to Hydro's claim was a statute and
Hydro argued that Part III did not apply to the
claim because it arose under an Act. The Court
of Appeal decided that, despite the reference to
the senior title in the statute, Hydro's claim did
not arise from a statute, but from the 1906
conveyance.
The statute was "mere
housekeeping."
Hydro's statute said that adverse possession did
not affect Hydro unless Hydro failed to start an
action to recover possession within 10 years
after receiving actual notice in writing of the
adverse possession and that an easement could
not be acquired over Hydro land by adverse use.
This was why adverse possession by the junior
claimant could not affect Hydro's claim.
Hydro's statute also said that land continued to
be subject to a Hydro easement until the
easement expired or Hydro released it. The
courts decided that this did not apply to a
freehold.
Appendix C - Camrich
4.
Camrich. Re Camrich Developments Inc. et al. and Ontario Hydro (1993) 14 O.R. (3d) 410.
4.1
Camrich: General notes
Camrich
1906
Transfer by owner of large parcel of 30 foot wide strip to predecessor
of senior claimant, Ontario Hydro.
1934
Transfer of strip to senior claimant, Ontario Hydro.
1937
Transfer, to Crowland Township by tax deed, of original large parcel,
except land of Ontario Hydro, described as conveyed to Hydro's
predecessor.
1945-53
40 years before last transfers to junior claimants and Court of Appeal
decision.
1954
Bylaws of County of Welland expropriating large parcel, without
excepting or referring to 30 foot strip, and dedicating adjacent land as
public highway. Bylaws had plan attached showing land as Hydro
"right of way."
1956
Junior transfer of same land by County to Township.
1958-74
Junior transfers of part of larger parcel, including Hydro strip, by
Township and others.
1974
40 years after last senior transfer in 1934.
1974-81
(There may have been a junior transfer in this period, but the agreed
statement of facts says only that there was a series of junior transfers
between 1958 and 1985.)
1981
1981 amendments to Part III.
1981
Tests under both chain of title and registration rules met when
amendments came into force.
1985
Junior transfer.
1988
Last junior transfers of one part to transferor itself and other part to
another.
1990-3
Junior claimant claimed declaration that senior title had expired or been
expropriated. Trial judge granted declaration that senior title had
expired. Senior claimant appealed to Court of Appeal, but it dismissed
appeal.
Appendix C - Camrich
1994
40 years after bylaws containing sketch showing Hydro right of way.
Winner
Junior claimant
Ontario Hydro, as the senior claimant, claimed
to be the owner of a strip of land across the
junior claimant's land. The first junior transfer
of the strip was an expropriation by a
municipality. Neither the junior nor senior
claimant had been in possession. The senior title
might have been revealed by a plan showing the
senior claimant's land as Hydro "right of way."
This was attached to the expropriation (the first
junior transfer) and one other instrument
registered in the 40 year period.
There are three general matters that come up
often in the discussion of the decision of the
Court of Appeal in Camrich. First, a key issue
depended on whether Part III as it was before or
after the 1981 amendments applied; the trial
judge applied the later statute and the Court of
Appeal thought that the earlier applied. Second,
the decision of the Court of Appeal must be
interpreted in light of three other decisions,
those of the trial judge, of the Court of Appeal in
National Sewer and of the Court of Appeal in
Fire. Third, the decision at first appears to
determine an issue about the validity of an
expropriation, but in fact it does not. These
three general matters can conveniently be
discussed in this section.
The first general matter is that a key issue
depended on whether Part III as it was before or
after the 1981 amendments applied.
The registration rule in Part III originally
said an interest did not expire if it had been
"acknowledged or specifically referred to
or contained in an instrument registered"
against the land in the 40 year period.
These words are referred to below as the
"old reference words"). Since the 1981
amendments Part III has said in effect that
an interest does not expire until the end of a
period of 40 years "after the day of
registration of an instrument."
With regard to the removal of the old
reference words, it was argued that Part III
should not apply retroactively. The
argument was that a claim that was
protected by those words when the 1981
amendments came into force should
continue to be protected for 40 years after
the registration, before the 1981
amendments, of the last instrument that
satisfied the old reference words.
The trial judge decided that the 1981
amendments were retroactive. Thus he
decided that, even if the plan had been a
good reference to Hydro's claim, the claim
expired when the 1981 amendments came
into force.
The Court of Appeal decided that,
assuming that the old reference words still
applied, the plan showing Hydro's land as
Hydro "right of way" would not qualify as a
reference to Hydro's interest under the old
reference words.
It was therefore
unnecessary to decide whether the 1981
amendments were retroactive. However,
the majority of the court stated its strong
opinion that the 1981 amendments did not
retroactively abolish the old reference
words. The minority judge agreed with the
majority that the plan did not qualify as a
reference under the old reference words,
but disagreed with the majority on the issue
of retroactivity.
The second general matter is that the decision of
the Court of Appeal must be interpreted in light
of three other decisions, those of the trial judge,
the Court of Appeal in National Sewer and the
Court of Appeal in Fire.
The trial judge, Henry J., dealt with many
issues, but the Court of Appeal specifically
referred to only two issues. As the result of
Appendix C - Camrich
both the decisions was the same, the Court
of Appeal merely dismissed the appeal
without expressly commenting on the other
issues. The Court of Appeal must be taken
as having adopted those of the other
reasons of the trial judge that were needed
to arrive at the same decision.
The two issues that the Court of Appeal
specifically referred to were whether the
plans "referred to" Hydro's claim and
whether the 1981 amendments were
retroactive. One of the judges of the Court
of Appeal, Osborne J.A., disagreed with
comments of the other two on one issue
only, that of retroactivity. In Fire, the
Court of Appeal agreed with the reasons of
Henry J. and Osborne J.A. on the issue of
retroactivity. It also treated the reasons of
the Court of Appeal in Camrich as having
dealt with a third issue, what one can
assume from the chain of title. The Court
of Appeal should not be treated as having
agreed with the trial judge's decisions on
the following issues:
the issue of how the registration rule
applied, because the courts were
dealing with different versions of Part
III;
the issue of retroactivity, because the
courts disagreed on that issue (but the
Fire decision indicates that the
decision of the Court of Appeal on that
issue was wrong anyway); and
issues that depended on how the issue
of retroactivity was decided.
All of the judges of the Court of Appeal in
Camrich and National Sewer were the same
and the two decisions were released at the
same time. The reasons of the judges in
those two cases should therefore be
interpreted so as to be consistent.
The third general matter is that the decision at
first appears to determine an issue about the
validity of an expropriation, but in fact it does
not. The root of title was a bylaw that
expropriated the land. Hydro challenged the
power of the municipality to expropriate land
belonging to a Crown agency. This raised a
question whether the bylaw expropriated
Hydro's interest. Neither of the trial judge nor
the Court of Appeal decided that the
expropriation was in fact valid. Accordingly, it
might be suggested that they must have decided
that the chain of title was good even if the
expropriation was not valid; that Part III allowed
one to take the expropriation at face value and
assume that it was valid. This would be
inconsistent with the fact that both the trial judge
and Court of Appeal felt strongly that the chain
of title did not show that Hydro had any interest
in the property. And, on close examination, the
words used by the judges show that they did not
say that Part III allowed one to take the
expropriation at face value and assume that it
was valid.
The trial judge said the following about the
expropriating bylaw:
Indeed the first conveyance of the total estate in
the subject lands was by the expropriating Bylaw 1991 of the County of Welland in 1954. On
its face it transfers the freehold estate in the
subject lands, including the 30-foot strip, which
is neither excepted nor reserved nor even referred
to. Applicants can rely on that bylaw as
establishing their root of title within the title
search period and are not bound to inquire into it
further on the principle established in the Algoma
case.
Mr. Finn however challenges the authority of the
county to expropriate the Hydro lands. I do not
intend to determine that issue because, if he is
right, the next conveyance from the County of
Welland is sufficient.
Within the title search period, the 1954 deed from
the County of Welland to the Township of
Crowland purports on its face to convey the fee
simple in the whole parcel described to the
Township. That parcel includes the subject lands
and the 30-foot strip. Applicants are not obliged
to go behind that instrument and establish by
what authority the county could convey them,
even if prior thereto Hydro was the owner of the
Appendix C - Camrich
strip, which it clearly was, at least prior to the
expropriation immediately preceding.
It is not at first clear what the judge actually
decided about the expropriation. However, it is
probably fair to say that he did "not intend to
determine" whether a lack of authority to
expropriate affected the root, because he felt that
the next deed, which did not depend on an
authority to expropriate, was sufficient. Thus,
the trial judge did not in fact decide that, even of
the expropriating authority did not have a valid
power to expropriate, one could assume that the
expropriation was valid.
The Court of Appeal said the following about
the expropriating bylaw (in the words of the
judge giving the reasons of all three of the
judges of the Court of Appeal on this point):
The claim "has not been acknowledged or
specifically referred to or contained in an
instrument or notice." The plan relied on is an
"instrument", but it does not specifically define
the claim, much less acknowledge it. The curved
dotted line on the plan is described as a right of
way, not a fee simple interest. there are no
boundaries or limits prescribed.
It is not
acknowledged to be an interest that the
expropriation is subject to. In fact there is no
reference in the by-law or the plan to the
appellant having a continuing interest even in the
right of way.
Any person reading the
expropriation by-law would conclude that to the
extent that H.E.P.C. had an interest in the right of
way as indicated on the plan, it had been
expropriated by By-law 1991.
This last point poses another problem for the
appellant. To the extent that there is a valid
description of its interest in the strip of land, Bylaw 1991 purports to expropriate it.
The
appellant was forced to submit that the By-law
and the plan which it relied upon as the
instrument acknowledging its claim was ultra
vires the municipal corporation as an
expropriating instrument, otherwise its claim
would disappear as matter of expropriation law. I
do not have to deal with the validity of the
expropriation in view of my having held that the
By-law is ineffective to maintain the appellant's
claim to the 30-foot strip.
Again, it is not at first clear what the court
actually decided about the expropriation.
However, it is probably fair to say that it did
"not have to deal with the validity of the
expropriation", because it was satisfied that the
bylaw did not acknowledge the claim. Thus, the
Court of Appeal did not in fact decide that, even
of the expropriating authority did not have a
valid power to expropriate, one could assume
that the expropriation was valid.
Despite this, the Court of Appeal in Fire
commented on Camrich as follows:
The situation was somewhat similar in the
Camrich case. The distinguishing feature in that
case was that the instrument on which the
respondents relied was an expropriation by-law.
As stated in the reasons, anyone looking at the
abstract of title and at the by-law would assume
that the expropriating authority had good title to
the land. But surely that is the case when one
sees a conveyance or series of conveyances valid
on their face within the search period and no
conflicting instrument - one would assume that
the grantor under those conveyances had a good
title to the land. In fact, in the Camrich appeal
the court did not base its decision on the validity
of the expropriation, and specifically declined to
deal with that issue. The decision was based on
what was shown in the appropriate abstract index
-- an expropriation by-law valid on its face.
In these words, the Court of Appeal in Fire
suggested that the Court of Appeal in Camrich
had decided that, even if the expropriating
authority did not have a valid power to
expropriate, one could assume that the
expropriation was valid. As shown above, it
based its decision on the interest of Hydro not
being acknowledged and not on what might be
assumed about the expropriation. And, as
explained in the comments on the Fire decision,
the words set out above should be interpreted as
saying no more than that one could assume that
Hydro did not have an interest to be
expropriated. Thus it would not be proper to
rely on the explanation of Camrich in Fire as
authority for saying that the Court of Appeal
decided that, even of the expropriating authority
did not have a valid power to expropriate, one
could assume that the expropriation was valid.
Appendix C - Camrich
4.2
Camrich: Does Part III validate a title
if both of the chain of title and the
registration rules are satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
For Camrich, the first question is: does the chain
of title rule validate a title? The second question
is: did the court rely on both registration and
chain of title rules?
The trial judge professed not to deal with these
questions, but in fact he did decide them. And
the Court of Appeal did not expressly refer to
the questions, but must be taken to have decided
them.
The trial judge started by recording that the
junior claimants were only asking for a
declaration that Hydro had no interest in the
land; not whether the junior claimants had "a
good chain of title, which would require closer
scrutiny of the various instruments." At the end
of his initial analysis, he said: "Up to this point it
is my opinion that the new title search provision
in s. 105(3) of 1981 makes Ontario Hydro's
claim of no effect on the applicants' chain of
title; and, in any event, the limitation provision
in s. 106 now has effect to extinguish the claim
to the strip arising from the 1934 deed." He
ended by saying only that his decision was that
Hydro's interest had been extinguished. Despite
this, his reasons clearly implied, not only that
Hydro's claim would have been extinguished
under the registration rule, but also that the
junior claimant had a good title. He said: "There
is no dispute that [after 1956] the chain of title
leads to the applicants' present ownership,
subject, of course, to the issue as to Hydro's
interest, if any." He referred to the decision in
Algoma about the chain of title. He decided that
the 1981 amendments allowed the chain of title
to start within the 40 year period. He dealt in
detail with the effect of instruments in the junior
claimant's chain of title. He decided that an
instrument registered before the 40 year period
could not "affect" or "cloud" the junior
claimant's "chain of title." He dealt with the
whether there was a sufficient "root of title."
Having found that the junior chain of title was
good, he went on to deal with the registration
rule saying:
In addition to the title search provisions in Part
III of the Registry Act, prior to the 1981
amendments, the title search provisions provided
for the extinguishment of interests in land.
He commented on the trial decision in National
Sewer which was made after his decision but
before his reasons were released. He concluded
that the decision was not relevant in Camrich,
but he appeared to accept that, assuming that the
judge's finding of fact was correct, he correctly
decided that the junior claimants' title was
invalid "because of the fact, as he found, that
their root of title and the subsequent chain of
title were invalidated by the special
circumstance of a registered succession duty
release which revealed that the executor's deed
in 1965 could not convey a title that the testator
did not have." And finally his actual order not
only declared that the senior claimant had no
title, but also that "the applicants' ownership of
the lands" was not encumbered by any claim of
the senior claimant. His decision was therefore
probably based on the junior claimant having
succeeded under both the chain of title and
registration rules.
The Court of Appeal dismissed the appeal. The
Court of Appeal specifically referred to only two
issues, neither of which dealt with the question
in this section. Despite this, the Court of Appeal
must be taken to have adopted these parts of the
trial judge's decision for the following reasons:
(a) The panel of judges in the Camrich case
was the same as the panel in the National
Sewer case. In that case the majority
clearly decided that the junior claimant had
to have a good chain of title and used a high
standard of care for the search of title.
Appendix C - Camrich
And, although the minority judge did not
agree that the search showed the senior
claim, he accepted that the junior claimant
had to have a good chain of title. As the
chain of title was so important for the
National Sewer decision, the same judges
cannot be taken in Camrich to have allowed
the junior claimant to succeed if the court
had felt (to use the words of the majority in
National Sewer) that the junior claimant
was relying on "faulty title searches" or did
not have a root that was a "clean deed" or
that "it was clear from the appropriate
abstract of title" that Hydro owned the strip.
Thus the court must be treated as having
relied on the trial judge's decision both that
the junior claimant had a good chain of title
and also needed that chain in order to
succeed.
(b) In the Fire case, the Court of Appeal
commented that the Camrich case was
authority for accepting a document as valid
if it was valid on its face. This was part of
a discussion about the chain of title. It
shows that the Court of Appeal in Fire
treated the Court of Appeal in Camrich as
having decided that the junior claimant had
to have a good chain of title.
Thus the Camrich case answers the questions set
out above as follows. First, under the chain of
title rule, a good chain gives a valid title; the
trial judge approved the decision in Algoma that
a person is "entitled to rely" on the chain and the
order referred to "the applicants' ownership of
the lands". Second, the trial judge relied on both
the chain of title and registration rules. After
deciding that the junior claimant's chain of title
was good, the trial judge said that "In addition to
the title search provisions in Part III of the
Registry Act, prior to the 1981 amendments, the
title search provisions provided for the
extinguishment of interests in land". Although
the Court of Appeal did not specifically refer to
these decisions, it must be taken to have agreed
with them. The decision is therefore based on
the junior claimant having satisfied both the
registration and chain of title rules.
4.3
Camrich: Does the provision about a
freehold title continuously shown confirm
that Part III validates a title only if it meets
the tests under both the chain of title and
registration rules?
The article concludes that the answer to the
above question is yes. The provision should be
read as saying "continuously shown through a
good and sufficient chain of title" and is not a
cross-reference merely to a case where no
conveyance is registered within the 40 year
period.
In Camrich, the only material reference to this
issue is in the dissenting reasons of the minority
judge.
When commenting that the 1981
amendments to Part III had retrospective
application, he said that this was "softened
somewhat" by other provisions, including that
dealing with a freehold "continuously shown."
He said:
Section 106(2) permits the registration of a notice
of claim within the notice period or after it has
expired provided no conflicting claim has been
registered. If a notice of claim is registered after
the 40-year notice period the registration will
create a new claim, as opposed to continuing a
former claim (see s. 106(7)), unless the claim
relates to a freehold estate in land or an equity of
redemption, in which case the registration of a
notice of claim after the 40-year claim span
period will continue a claim to a freehold estate
or equity of redemption if the claimants' interest
to the freehold estate or equity of redemption has
been continuously shown on the abstract for more
than 40 years (s. 106(6)).
He went on to concede that he had "referred to
practical aspects of the application of the
provisions", that softened the effect, to show that
the legislature recognized that the 1981
amendments might make existing claims expire.
The comment on the effect of the provision
about a freehold "continuously shown" seems to
show that he did not regard the provision as an
illustration of a general principle that no interest
expires under Part III unless the competing
interest meets the tests under both the
registration and chain of title rules. However,
Appendix C - Camrich
the comment was obviously intended only as a
passing reference to the practical effect of Part
III. Thus, the only material statements in
Camrich on the issue do not confirm the
conclusion of the article, but can be ignored as
being only passing comments on the issue.
4.4
Camrich: When does Part III validate
a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Camrich, it made no difference to the
essential facts whether the determination date
was the date of the last dealing or the date on
which the conflict arose. Both of the last
dealings were after the 40 year period and after
the 1981 amendments. The courts did not have
to deal with the question of when Part III
validates title.
Despite this, the trial judge seems to have used
the date of trial as the determination date. As
the last dealings were in 1985 and 1988, the 40
year period would, if he had used the date of
dealing, have commenced in 1945 or 1948.
However, he decided that the 40 year period
commenced in 1950, that is, 40 years before his
judgment in 1990, although he referred to this as
the dealing. On the other hand, he commented
that the 40 year period in Algoma started in
1912, 40 years before "the agreement of
purchase and sale of the land in 1952." As there
is no evidence that the conflict was shown on
title, that date was not considered. Thus the trial
judge seems to have decided that, where there is
no intended dealing, the date of trial is the
relevant date.
Neither of the majority nor minority of the Court
of Appeal specifically dealt with the question of
when Part III validates title. Because the court
did not have to deal with the question, it should
probably not be treated as doing so. However,
for the reasons set out in section 4.1 above, they
might be taken to have accepted the trial judge's
reasons on the question. And, as explained later,
the majority judges accepted in National Sewer
that Part III applied when the title was brought
into question, rather than only on a dealing and
the minority judge decided that "the assessment
of the validity of a claim" was to be made "on
the date upon which the title to it has been
brought into issue", namely when the senior
transfer was re-registered in 1982, and he
concluded his reasons by saying that "when title
to the land was brought into issue, the appellants
could provide a good title to a hypothetical
purchaser." This was a basis for his decision on
the question of notice, with which the Court of
Appeal in Fire agreed. These factors show at
least that the Court of Appeal in Camrich would
have accepted that Part III does not validate title
only on a dealing.
In the result, the issue of whether Part III
validates a title whenever the tests are met, even
though there is no dealing then, did not have to
be decided in Camrich, but the comments of the
trial judge, not disputed by the Court of Appeal
are not inconsistent with the conclusion of the
article that Part III does.
4.5
Camrich: Under the registration rule,
when is a claim registered?
The article concludes that, under the registration
rule, a claim is registered when a dealing is
registered against the land (i) which purports to
create or transfer a claim out of which the claim
later arises; (ii) which purports to create or
transfer all of the claim; (iii) probably, which
purports to contain a dealing by the holder of the
claim with part of the claim, but not (iv) which
Appendix C - Camrich
deals with another interest and merely refers to
the claim.
In Camrich, two documents might have been
registrations of Hydro's interest. The first was a
1937 transfer of the original large parcel, except
the land in dispute, which was also described as
having been conveyed to Hydro's predecessor.
The second was the plan attached to an
expropriation bylaw and another bylaw in which
the land in dispute was shown as Hydro "right of
way."
The trial judge gave the following reasons for
deciding that Hydro's adverse interest had
expired:
(a) The 1981 amendments to Part III replaced
the rule that an interest did not expire if it
had been "acknowledged or specifically
referred to or contained in an instrument
registered" against the land in the 40 year
period.
This amendment applied
retroactively.
Claims that had been
preserved only by that rule were
extinguished on the coming into force of
the 1981 amendments.
(b) The claim would not have expired if it had
been "set forth in, based upon or arising out
of a registered instrument." In other words,
the period of 40 years "after the day of
registration of an instrument" referred to an
instrument that the claim was "set forth in,
based upon or arising out of."
(c) As to the test of whether an interest is "set
forth in, based upon or arising out of" the
instrument, the trial judge said:
The definition, in my opinion, refers to an
instrument that creates or asserts the interest; this
is to be contrasted with the language of the
original section imposing the limitation period on
claims over 40 years in existence where the claim
was preserved if it was "acknowledged or
specifically referred to or contained in an
instrument" registered within the 40-year period.
Accordingly, neither instrument amounted to a
registration of Hydro's interest because they did
not create or assert Hydro's interest. The trial
judge said that the new words "set forth in,
based upon or arising out of a registered
instrument" were not apt to describe the plan
showing the Hydro's land as "Hydro right of
way." Although he did not specifically refer to
the 1937 transfer, he must not have regarded it
as a registration of Hydro's claim either, because
he said "the claim has expired because the last
day of the notice period for a 1934 claim arrived
in 1974", rather than saying that the notice
period expired in 1937. He must have regarded
the 1937 transfer of land other than the land in
dispute as not being a valid registration of
Hydro's interest. This must have been so even
though it said that the land in dispute was
excluded and even though, in saying that the
land had been transferred to Hydro's
predecessor, it seemed clearly to "set forth"
Hydro's claim.
The first instrument that contained the plan
showing the "Hydro right of way" was an
expropriation. The trial judge said:
[This] purported on its face to expropriate the
lands by a metes and bounds description and on
its face affected a parcel within which was
included the subject lands as well as the Hydro
strip. On its face it extinguishes the Hydro claim
because it transfers it to the County of Welland . .
On its face it transfers the freehold estate in the
subject lands, including the 30-foot strip, which
is neither excepted nor reserved nor even referred
to.
The trial judge does not seem to have considered
whether this meant that the expropriation
amounted to a registration of Hydro's adverse
interest. Even if he did, he could have decided
that the expropriation did not amount to a
registration of Hydro's interest because, since
Hydro's interest was not shown, the
expropriation could not purport to expropriate it.
In any event, he did not determine the issue of
whether the expropriation affected Hydro's
interest. The municipality might not have had
the power to expropriate the interest of a Crown
agent like Ontario Hydro, but it was not
necessary for him to determine that issue and he
Appendix C - Camrich
said that "it ought not to be addressed in this
case, but should be left for another day."
The Court of Appeal did not deal with the issue
of when an adverse interest is registered. The
general notes above suggest that the that the
Court of Appeal should be treated as having
agreed with the trial judge's decisions on certain
issues. Since the majority of the Court of
Appeal commented, on the issue of retroactivity,
that the old registration rule applied, it cannot be
treated as having agreed with the trial judge on
how the new registration rule applied. The
majority of the Court of Appeal said "There is
an acknowledgment of [Hydro's] interest in the
tax deed to Crowland in 1937 . . The tax deed to
Crowland is out of time . ." But the Court of
Appeal was applying the test under the old
reference words rather than under the new
registration rule. Similarly, when the Court of
Appeal decided that the plan attached to the
expropriating bylaw did not start the 40 year
period running again, it decided that the plan did
not amount to a reference under the old
reference words.
The majority of the court of referred to the lower
court decision in Peoples that might be
interpreted as determining when an interest is
registered. But the majority treated the decision
as authority for its comments on retroactivity,
rather than as deciding when an interest is
registered under the new registration rule.
Thus the Court of Appeal decision does not deal
with the issue under this question and, because
the issue did not arise under the court's
interpretation, it may not be possible to take the
court to have agreed with the trial judge's
reasons on the issue. But, because the trial
judge's decisions on the issue are the only
decisions in the cases that went to the Court of
Appeal, they are important. And they support
the conclusions of the article on the issue.
4.6
Camrich: Can a notice of claim be
registered for a claim as long as the claim is
valid?
The article concludes that the rules in Part III for
a notice of claim should allow the holder of a
claim to preserve the claim by registering the
prescribed notice of claim until the claim is
invalidated under the two basic tests, but the
effect of a notice of claim registered after the 40year period is not clear.
In Camrich, no notice of claim was registered,
so that statements of the courts on the issue were
comments only.
The trial judge said:
The only way in which a claim arising in 1934
could have been successfully preserved for the
purposes of the present Part III was by
registration of a notice of claim under the
Investigation of Titles Act or the subsequent Part
III of the Registry Act which could have been
done at any time before the 1981 amendments by
virtue of former s. 107 in R.S.O. 1980. [This said
that a person could register a notice of claim for a
claim that was not barred until an "intermediate
dealing" was registered.]
As it is, by the new s. 106(1) of 1981, the claim
has expired because the last day of the notice
period for a 1934 claim arrived in 1974 and it has
now expired . .
. . as no notice had ever been registered, the 40year period which ran from the root dated 1934,
expired in 1974 and, accordingly, s. 106(7)
nullifies any attempt to register a notice now.
If a transfer had been registered after 1974 (40
years after the last senior transfer in 1934), the
judge's statement might have supported an
argument that a notice of claim can validly be
registered at any time until the claim expires,
even if the notice is registered after an
"intermediate dealing." (Since, as the Court of
Appeal decided, the senior claim was
acknowledged in a 1937 instrument, the 40 year
period actually started in 1937 and ended in
1977; Part III as it was before the 1981
amendments still applied at the end of the period
Appendix C - Camrich
and the question should be whether an
intermediate dealing was registered after 1977.)
4.7
Camrich: What does the chain of title
rule allow one to assume?
The only statement on the issue in the Court of
Appeal was by the minority judge. He said:
The article concludes that the chain of title rule
allows one to assume, if the chain of title is
good, that the title before the root is consistent
with what is shown by the search, and only that.
Section 106(2) permits the registration of a notice
of claim within the notice period or after it has
expired provided no conflicting claim has been
registered. If a notice of claim is registered after
the 40-year notice period the registration will
create a new claim, as opposed to continuing a
former claim (see s. 106(7)), unless the claim
relates to a freehold estate in land or an equity of
redemption, in which case the registration of a
notice of claim after the 40-year claim span
period will continue a claim to a freehold estate
or equity of redemption if the claimants' interest
to the freehold estate or equity of redemption has
been continuously shown on the abstract for more
than 40 years (s. 106(6)).
Again, the statement does not support an
argument that a notice of claim can validly be
registered at any time until the claim expires
because the italicized words deal only with a
case where a notice of claim is registered before
a conflicting claim. (The judge's interpretation
in those words seems to be an attempt to explain
the conflict between subsections 106(1) and
(2)(b). Subsection (1) says that a claim expires
at the end of the 40 year notice period, while
subsection (2)(b) allows a notice of claim to be
registered after the period and before a
conflicting claim is registered. Subsection (6)
specifically says that subsection (1) does not
apply to a freehold or equity of redemption
continuously shown. It would be better to
resolve the conflict by saying that subsection
(2)(b) must have been intended to modify
subsection (1). And the judge's explanation
seems to indicate that the rules about notices of
claim may be interpreted in a rather technical
way.)
Thus, Camrich tends only to confirm the
conclusion of the article that a notice of claim
registered after the notice period cannot be
safely relied on to protect the interest.
In Camrich, the first conveyance in the 40 year
period was an expropriation by a county. This
purported to expropriate the whole interest in the
entire land. That would have included the
interest in the part of the land owned by Ontario
Hydro.
Ontario Hydro argued that the
expropriation was not a good root of title
because the county had no power to expropriate
land of a Crown agency. As explained in
section 4.1, the courts' decisions on this issue do
not mean that Part III allowed one to take the
expropriation at face value and assume that it
was valid.
The trial judge might have decided that the
expropriation was a good root for the following
reasons. The plan was not sufficient to show
Hydro's interest. Since there was insufficient
indication that Ontario Hydro had any interest,
there was no interest shown that the county did
not have the power to expropriate. The power to
expropriate was therefore shown to be valid and
the expropriation transferred the ownership of
the whole of the land. The only assumption that
had to be made was as to the ownership of the
land before the expropriation. The Court of
Appeal decided that, since Hydro's claim was
not acknowledged, the issue of whether the
power to expropriate was valid did not arise.
This is also consistent with saying that the only
assumption that had to be made was as to the
ownership of the land before the expropriation.
And it is also consistent with the principles
accepted by the same judges in National Sewer.
Thus Camrich raised an interesting question of
what is the effect of assuming the prior title
when the root is an expropriation, and the result
in Camrich was right. But, despite statements
indicating that one can assume more, Camrich is
consistent with the conclusion of the article that
Appendix C - Camrich
the chain of title rule only allows one to assume,
if there is a good chain of title, that the title
before the root is consistent with the chain.
4.8
Camrich: What are the rules as to the
root of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Camrich, the root was less than 40 years old.
The root was also an expropriation which
purported to expropriate land owned by the
senior claimant, Ontario Hydro. Ontario Hydro
argued that the expropriation was invalid
because a municipality had no power to
expropriate land owned by a Crown agency.
This raised the question of whether an
expropriation is a good root only if a valid
power to expropriate is shown. It also raised the
broader question of whether any transfer under a
power is a good root only if the power is proved.
With regard to the age of the root, the reasons
were as follows.
The trial judge decided that the junior title
was valid even though the root was within
the 40 year period. He seems to have
decided that a root less than 40 years old
could have been good since the 1966
amendments to Part III because he said that
the principle under Algoma that the root
had to be at least 40 years old "changed in
1966, but apparently the conveyancing
practice did not."
Neither of the majority nor minority of the
Court of Appeal specifically dealt with the
question. However, since the effect of
dismissing the appeal was to confirm the
trial decision in favour of the junior
claimant and since the junior claimant's
root was less than 40 years old, the Court of
Appeal must be taken to have decided that
an instrument registered within the 40 year
period could be good. This is confirmed by
the fact that the same judges accepted in
National Sewer that an instrument
registered within the 40 year period could
be a good root of title.
The trial judge did suggest one doubtful
proposition about the age of the root. He
said:
Indeed the first conveyance of the total estate in
the subject lands was by the expropriating Bylaw 1991 of the County of Welland in 1954. On
its face it transfers the freehold estate in the
subject lands, including the 30-foot strip, which
is neither excepted nor reserved nor even referred
to. Applicants can rely on that bylaw as
establishing their root of title within the title
search period and are not bound to inquire into it
further on the principle established in the Algoma
case.
Mr. Finn however challenges the authority of the
county to expropriate the Hydro lands. I do not
intend to determine that issue because, if he is
right, the next conveyance from the County of
Welland is sufficient.
Within the title search period, the 1954 deed from
the County of Welland to the Township of
Crowland purports on its face to convey the fee
simple in the whole parcel described to the
Township. That parcel includes the subject lands
and the 30-foot strip. Applicants are not obliged
to go behind that instrument and establish by
what authority the county could convey them,
even if prior thereto Hydro was the owner of the
strip, which it clearly was, at least prior to the
expropriation immediately preceding.
Appendix C - Camrich
The article concludes that, if the first root
within the 40 year period is not good, one
must find a good root before the 40 year
period. In the above passage, the trial judge
suggested that one could simply move
forward to find a more recent root that was
good. As the judge would have been
justified in accepting the expropriation as a
good root for the reasons set out in section
4.7, there was no need for him to find an
alternative root. Although Part III does not
say exactly how one finds a good root
within the 40 year period, it is more
reasonable to move backward rather than
forward if the first root within the period is
not good. Although the Court of Appeal, in
simply dismissing the appeal, adopted the
trial judge's decision, it should not be
treated as having agreed with the trial
judge's reasoning on this issue because
there was no need to find the alternative
root.
With regard to the quality of the root, the
reasons of neither of the trial judge nor the Court
of Appeal is authority for saying that, even of
the expropriating authority did not have a valid
power to expropriate, one could assume that the
expropriation was valid. In fact, the trial judge's
search for an alternative root confirms that he
thought that a root within the 40 year period is
not good unless it meets tests as to its quality.
And, as explained below, the same judges
accepted in National Sewer that a root must
meet tests as to its quality if it is to be good.
The article concludes that a root can be good
even if it depends for its validity on a previous
instrument and it is not shown to be valid under
that instrument. This conclusion is based on the
words in Part III: "A chain of title does not
depend upon and is not affected by any
instrument registered before the commencement
of the title search period . ." This would not
apply to an expropriation because the power to
expropriate does not depend for its validity on a
previous instrument, but on a statute.
Thus, Camrich reflects the conclusions of the
article as follows. It confirms that, under the
chain of title rule after the 1981 changes, a root
of title within the 40 year period can be good.
Although statements about the effect of an
expropriation at first suggest that the root need
not meet tests as to its quality if it is to be a good
root of title, the reasons do not on close
examination support that suggestion.
4.9
Camrich: What period must the
detailed search under the chain of title rule
cover?
The article contains the following conclusions.
Where the chain of title begins with a root less
than 40 years old, the title is also affected by
anything that is shown by a detailed search
under the chain of title rule covering the part of
the 40-year period before the root. Apart from
the provision referred to in the next question,
where the chain of title begins with a root more
than 40 years old, the title is affected by
anything that is shown by a detailed search
under the chain of title rule from the beginning
of the chain, including the part of period of the
chain that is after the root and before the 40-year
period.
In Camrich, there was no defect before the root
and the courts' statements can only be regarded
as comments.
The trial judge, on the one hand, suggested that,
if the first root within the 40 year period was not
good, one could simply move forward to find a
more recent root that was good. This suggests
that the full search need not cover the period
before the root. As has been explained in
section 4.8, the suggestion is not reasonable and
the Court of Appeal should not be treated as
having agreed with it. On the other hand, he
accepted the reasoning of the trial judge in
National Sewer that a junior claim should not
succeed "because of the fact, as he found, that
their root of title and the subsequent chain of
title were invalidated by the special
circumstance of a registered succession duty
release which revealed that the executor's deed
Appendix C - Camrich
in 1965 could not convey a title that the testator
did not have." This release was deposited on
title before the root.
The Court of Appeal did not comment on the
issue but, as the same judges decided in National
Sewer that the search should cover the full 40
year period, the judges cannot be taken in
Camrich to have disagreed with that.
4.10
Camrich: Does a provision in Part III
that says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period,
mean that a defect or encumbrance based on
such an instrument does not affect the title?
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
In Camrich, the senior title might have been
revealed by instruments registered in the 40 year
period which contained a plan showing the
senior claimant's land as "Hydro right of way."
But because neither the trial judge nor the Court
of Appeal thought that the plan was sufficient to
reveal the claim, the issue of whether it would in
any event have "affected" the title did not have
to be decided.
The trial judge specifically referred to the
provision that the chain of title is generally not
affected by an instrument registered before the
commencement of the title search period. He
concluded: "it is my opinion that the new title
search provision in s. 105(3) of 1981 makes
Ontario Hydro's claim of no effect on the
applicants' chain of title . . The amendments
provide that a chain of title in circumstances that
exist in this application, that is several
conveyances since 1950, does not depend upon
and is not affected by any instrument registered
prior to the commencement of the title search
period (1950) . . It follows that no instrument
registered prior to 1950 can affect the applicants'
chain of title and, as Hydro's claim is derived
from the 1934 deed, that instrument cannot
cloud the applicants' title." The conclusion was
based on the fact that a notice had not been
registered for Hydro's claim as required by the
registration rule, because his reasons for it were
that the notice period had expired under the new
registration rule and that the old registration rule
no longer applied. He said: "there is no longer
the possibility of a claim being kept alive (as
there was previously) by its being acknowledged
or specifically referred to in an instrument - it
must be expressly contained in a notice
registered under s. 106(2) or the predecessor
statutes within the notice period . . The only way
in which a claim arising in 1934 could have been
successfully preserved for the purposes of the
present Part III was by registration of a notice of
claim under the Investigation of Titles Act or the
subsequent Part III of the Registry Act which
could have been done at any time before the
1981 amendments by virtue of former s. 107 in
R.S.O. 1980." Although his reasons show that
he recognized both the chain of title and
registration rules, this part of his reasons tends to
show that he was trying to interpret them as
saying the same thing. Despite this, other parts
of his reasons tend to show that he would have
allowed a defect or encumbrance shown by the
chain of title to affect the title even if it was
based only on an instrument registered outside
the 40-year period. His reasons applied to
"circumstances that exist in this application"
and, at the end of his reasons, he appears to have
accepted that the decision of the trial judge in
National Sewer was correct even though the
defect in that case was based only on an
instrument registered outside the 40-year period.
He did not follow it, but his reason for not doing
so was, not that he disagreed with it, but that it
was "not relevant", the judge in that case having
found that the "root of title and the subsequent
chain of title were invalidated by the special
circumstance of a registered succession duty
release which revealed that the executor's deed
in 1965 could not convey a title that the testator
Appendix C - Camrich
did not have." He did not suggest that the chain
could not be "affected" by the defect merely
because the claim was not registered or reregistered within the 40 year period. Thus, his
reasons, even if they had been approved by the
Court of Appeal, cannot be relied on to conclude
that a defect or encumbrance does not affect the
title, where the required search of title shows the
defect or encumbrance.
The majority of the Court of Appeal started by
saying that the position of the junior claimants
was straightforward; they submitted that, after
the 1981 amendments, a claim could be
preserved after the 40 year period only by a
notice of claim, and that a reference to or
acknowledgment of the claim no longer had any
effect. The majority decided that the senior
claim failed because there was no reference to or
acknowledgment of it, but went on to comment
that, if there had been, the senior claim would
have been preserved under the registration rule
because the 1981 amendments were not
retroactive. Although the majority did not refer
to the possibility that the claim might also have
been preserved by the chain of title rule, it
cannot be taken to have decided that what the
chain showed was irrelevant, because the same
judges decided in National Sewer that the junior
claim failed because the search under the chain
of title rule showed a defect. There is no reason
to think that the majority thought that a title was
not subject to a defect or encumbrance shown by
the search for the chain of title merely because
no instrument for the claim was registered or reregistered in the 40 year period.
The majority approved the decision of the trial
judge in the Peoples case, that a right of way
was valid even though it had been registered
before the 40-year period and had merely been
referred to in the chain of title. However, the
majority approved the decision because the
majority interpreted it as deciding that Part III
was not retroactive. Thus, even though the
Peoples decision can, as explained later, be
interpreted to support a principle that title can be
"affected" by an encumbrance even though it is
not registered or re-registered in the 40-year
period, the majority's approval of the decision
cannot be taken as an approval of that principle.
The minority judge, in justifying his decision
that Part III was retroactive, referred to several
ways in which the retroactive effect was
"softened somewhat" did not refer to the most
obvious way, namely that an acknowledgment or
reference might still preserve a claim under the
chain of title rule. This suggests that he did not
see that what the chain showed was relevant.
Again, however, that cannot be so, because he
accepted in National Sewer that the junior claim
could have failed if the search under the chain of
title rule had shown the defect.
Searches against
compliance with
provisions in the
revealed the senior
referred to.
abutting land to check
the subdivision control
Planning Act might have
title, but the issue was not
Thus, although the trial judge in Camrich made
statements suggesting otherwise, neither his
reasons nor the reasons of the judges of the
Court of Appeal confirm that title cannot be
affected by a defect or encumbrance, for which
no instrument has been registered or reregistered in the 40 year period, if it is shown by
the search for the chain of title. In fact, the case
is more consistent with the view that, if the
chain reveals the defect or encumbrance, it does
affect the title, at least if the defect or
encumbrance is revealed by an instrument
registered within the 40 year period.
4.11
Camrich: What is the standard to be
used in verifying that the search under the
chain of title rule shows nothing to cast doubt
on the assumption that a disposing party
under the root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
In Camrich, the senior title might have been
revealed by instruments registered in the 40 year
period which contained a plan showing the
Appendix C - Camrich
senior claimant's land as "Hydro right of way."
Much of the courts' reasoning dealt with whether
the plan meant that Hydro's claim was protected
by the registration rule.
As explained earlier, an indication in the trial
judge's reasoning that the expropriation to which
the plan was attached could be taken at face
value
without
inquiring
whether
the
expropriation was valid cannot be relied on.
But, as explained earlier, the trial judge probably
decided that the junior claimant could not
succeed unless it had a good chain of title and, in
doing so, he would have decided that the plan
did not detract from the chain of title. This
supports the conclusion of the article that the
standard to be used is that of a person reasonably
skilled in investigating title, not casually taking
instruments at face value but also not going
beyond a reasonable inquiry by following up on
every clue to the existence of a conflicting
claim.
The Court of Appeal decided that merely
showing the strip as a hydro right of way was
not an acknowledgment of or specific reference
to the senior claim. The court did not refer to
the issue of whether the plan showed the senior
claim under the chain of title rule. However, the
same judges in the National Sewer case decided
that the junior claimant had to have a good chain
of title and the majority imposed a high standard
of searching. In light of that, it is inconceivable
that they would in the Camrich case have
allowed the junior claimant to succeed if the
chain of title had shown the defect. Thus, they
must be taken to have accepted what was
probably the trial judge's reasoning that the plan
was not sufficient to show the senior title under
the chain of title rule.
Thus, the case tends to support the conclusion of
the article that the standard to be used in the
search under the chain of title rule is that of a
person reasonably skilled in investigating title.
4.12
Camrich: How long must the chain be
to be considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
When the title was validated, there had been
more than one link in the junior chain, and the
case does not therefore deal with this issue.
4.13
Camrich: Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
The 1981 amendments to Part III might seem to
have made three major changes that raise the
issue of retroactivity:
(a) The 1981 amendments changed a rule that
the root of title had to be at least 40 years
old. Thus they might have validated a
claim based on a root of title within the 40
year period even though the claim would
seem to have been invalid before the 1981
amendments.
(b) The 1981 amendments changed a rule that a
claim could not expire under the
registration rule until 40 years after it was
last acknowledged or referred to in a
registered instrument by requiring the 40
year period to start when the claim was last
registered. Thus a claim might seem to
expire even though the 40 year period for it
was still running when the 1981
amendments were made.
(c) The 1981 amendments might seem
provided that a defect in the chain of title
no longer saves a conflicting interest unless
the conflicting interest is registered or reregistered in the 40 year period. Thus a
Appendix C - Camrich
claim that would before the 1981
amendments have been shown by the
search under the chain of title rule might
seem not to be protected after the
amendments.
The Court of Appeal adopted the trial judge's
reasoning in Fire.
In Camrich, it made no difference to the
essential facts whether the determination date
was the date of the last dealing or the date on
which the conflict arose; both were after the
1981 amendments. The facts raised the first two
major issues of retroactivity but, as explained in
section 4.10, not the third issue (and, as also
explained, the courts' comments cannot be taken
to confirm that Part III made the third major
change anyway). As to the first major change,
the root for the junior title was less than 40 years
old. As to the second, it was argued that an
instrument registered in the 40 year period and
before the 1981 amendments contained an
acknowledgment of or reference to the senior
title. This was in a plan, attached to instruments
registered in the 40 year period, that showed the
senior claimant's land as "Hydro right of way."
Retroactivity was therefore a major focus of the
courts' reasons.
It dismissed the appeal, confirming the trial
judge's decision that the junior title was
valid even though the root was within the
40 year period.
It applied the 1981
amendments retroactively as far as they
allowed a more recent root of title to be
used.
The trial judge's reasons were as follows:
As to the first issue, he decided that the
junior title was valid even though the root
was within the 40 year period. As he
thought that the 1966 amendments made
this change to Part III, he did not address
the issue of whether the 1981 amendments
were retroactive on this issue.
As to the second issue, he decided that,
even if the senior title had been
acknowledged or referred to in the plan
referred to in the 1954 bylaws (so that the
40 year period under the old rules would
have ended in 1994), it would have been
"extinguished on the coming into force of
the 1981 amendment." Part III "makes it
clear that the new provisions apply
retrospectively."
The reasons of the Court of Appeal were as
follows:
The Court of Appeal decided that the plan
which merely showed the strip as a right of
way was not a sufficient acknowledgment
of or specific reference to the senior claim.
Thus, the issue of whether the plan started
the 40 year period running again did not
arise and it was unnecessary to deal with
the issue of retroactivity. Despite this, both
of the majority and minority judges
commented on retroactivity.
Although the majority said that a decision
on retroactivity was not necessary to find
for the junior claimant, it commented on the
issue because it was an important issue and
had also been raised in the National Sewer
case (which the same judges decided at the
same time). The majority did not agree
with the decision of the trial judge on
retroactivity, but said that, if a decision had
been necessary, it would have decided that
a valid acknowledgment of or reference to a
claim in an instrument registered before the
1981 amendments would keep the claim
alive until 40 years after the registration.
There was nothing in the 1981 amendments
to abolish such acknowledgments or
references retroactively.
Under the
principles of interpretation of statutes, if the
1981 amendments had been intended to
extinguish titles that were valid the day
before they came into force, the amending
Act should have said so in the clearest of
language. An Act of that kind had to be
interpreted strictly on the issue of
Appendix C - Camrich
retroactivity. The majority referred to
Peoples as authority for its reasoning on
retroactivity that a claim would be
preserved if instruments dealing with
another interest expressly referred to the
claim. (In that case, the claim was a right
of way, to which transfers in the 40-year
period were expressly made subject, and, as
explained later, the judge may have given
two other reasons for deciding that the right
of way was preserved.) Although the
majority's reasoning on retroactivity was
obiter dicta in Camrich, the majority
adopted the reasoning in National Sewer for
its decision on the third major issue of
retroactivity set out above. However, the
majority's reasoning on retroactivity should
not carry weight for the following reasons.
It is inconsistent with the majority's
decision that the root of title was
retroactively good even though it was
within the 40 year period. As set out
below, the Court of Appeal in Fire
disagreed with the statements. And, for the
reasons set out in the article, it does not
carry out the purpose of Part III.
The minority judge agreed with the
decision of the trial judge on retroactivity.
The 1981 amendments contained a section
which appears in the revised statutes as
follows: "This Part applies to every claim
and notice of claim, whether registered
before or after the 1st day of August,
1981." If these words were given their
"plain meaning", the amendments must be
retrospective. He gave examples of how
Part III "softened somewhat" this
retrospective effect (but he did not give
what the article concludes is the obvious
example, that a reference to a claim still
preserves it under the chain of title rule)
and said that these confirmed that the
legislature recognized that the amendments
would apply to existing claims (although
these examples were not new in 1981). He
found support for his conclusion in the
provisions enacted in 1990 which gave
bodies more time to register notices of
claim for public utility easements that
existed on the day before the 1981
amendments came into force. The Court of
Appeal adopted the minority judge's
reasoning in Fire.
In Fire, the Court of Appeal overruled the
reasoning of the majority in Camrich on the
issue of retroactivity. It decided that Part III was
retroactive and agreed with the reasoning of the
trial and minority judges in Camrich which, it
said, contained "All that can be said on the issue
of retroactivity."
Thus, despite the majority's comments on the
issue, Camrich is not good authority against the
conclusion of the article that, if the tests under
Part III are applied to the facts after the 1981
amendments,
the
current
rules
apply
retroactively. It does not deal with the issue of
whether, if the tests are applied to the facts
before the 1981 amendments, the rules as they
were then apply.
4.14
Camrich: What is the effect of actual
notice under Part III?
The article concludes that Part III validates the
title to an interest when it meets the two tests,
even if a holder of the interest actually knows of
the conflicting claim to the interest, but, if the
holder knew of the conflicting claim when the
holder acquired the interest and Part III had not
then validated the title, the holder may not,
under general principles of law, be permitted to
take advantage of the validation.
There was no evidence that any of the junior
claimants actually knew of the senior claim and
the case does not therefore deal with this issue.
4.15
Camrich: What is the effect of
possession?
The article contains the following conclusions.
As far as a right is legally created by adverse
possession or use, it does not expire under Part
III. If the right is also registered (as it often will
Appendix C - Camrich
be), Part III probably validates it if the registered
title meets the tests. An easement or similar
right should not expire under Part III if the
holder is openly enjoying and using it, but any
other registered right, including ownership, can
expire, even if accompanied by possession.
An exception in Part III says that Part III "does
not apply to . . a claim . . of a person to an
unregistered right of way or other easement or
right that the person is openly enjoying and
using." Hydro had used the strip for a wood
pole transmission line, but had removed the line
in the mid 1950's and there was no evidence of
this former use at the time of trial. Despite this,
Hydro argued that the exception applied. The
trial judge decided that the exception could not
apply because Hydro had ceased to use the strip.
He did not refer to two other possible reasons,
namely that Hydro's right was not "unregistered"
or was not a right like a "right of way or other
easement." Perhaps this implies that a right that
is expiring under Part III is to be treated as
"unregistered" and that the exception applies to
any right, not just rights like easements. As the
Court of Appeal merely dismissed the appeal
without commenting on this argument, it agreed
with the result, but it is difficult to read anything
into the decision as to its reasons.
4.16
Camrich: What is the effect of fraud
under Part III?
The article concludes that Part III probably does
not validate a claim where the chain includes an
instrument that is void because of fraud.
In Camrich, there was no evidence that the
expropriation which was the junior root of title
was affected by fraud and the case does
therefore not deal with this issue.
4.17
Camrich: Other comments
The last transfers of the junior title subdivided
the land by having the then owner transfer part
to another person and transfer the remainder to
itself. The fact that part of the land was the
subject of a transfer to self does not appear to
have been significant in any way.
Hydro's statute said that adverse possession did
not affect Hydro unless Hydro failed to start an
action to recover possession within 10 years
after receiving actual notice in writing of the
adverse possession and that an easement could
not be acquired over Hydro land by adverse use.
The trial judge decided that this did not apply
because the junior claims were not based on
adverse possession. Hydro's statute also said
that land continued to be subject to a Hydro
easement until the easement expired or Hydro
released it. The courts decided that this did not
apply to a freehold interest but only lesser
interests. In any event, if there had been a
conflict between the statutes, Part III would have
prevailed because it specifically so provided,
because it was last enacted later, because that
was the intent and because the specific
exceptions did not refer to it. The exception for
"a claim arising under any Act" did not apply
because the "language would embrace a right
created by, or otherwise derived from or
imposed by a statute", but not a right
"protective, not creative." As the Court of
Appeal merely dismissed the appeal without
commenting on these issues, it agreed with the
result, but it is difficult to read anything into the
decision as to its reasons.
Appendix C - National Sewer
5.
National Sewer. National Sewer Pipe Ltd. v. Azova Investments Ltd. (1993) 14 O.R. 385.
5.1
National Sewer: General notes
National Sewer
1885
4012, senior transfer, severing land in dispute from larger parcel.
1929
Senior transfer.
1934
13638, transfer of larger parcel, except land transferred by 4012.
1939-49
40 years before last junior transfers and Court of Appeal decision.
1951
Equitable mortgage, by agreement to deposit deeds, of land transferred
by 13638.
1953
Senior transfer, but containing error in description of land and
registered against wrong concession.
1960
Discharge of equitable mortgage of land transferred by 13638.
1965
Succession duty consent deposited for land as described in 13638.
1965
First junior transfer, executor's deed to beneficiary, of larger parcel
without excepting land in 4012.
1969-78
Junior transfers.
1979
Junior transfer of one part to Ontario Ministry of Government Services.
1980
Registry Act retroactively amended, 1965 succession duty consent
unnecessary.
1980
Junior transfer of other part to other junior claimant.
1981
1981 amendments to Part III.
1981
If the tests under both chain of title and registration rules had been ,
that would have been when amendments came into force.
1982
Senior claimant re-registers 1953 transfer against correct concession.
1983-93
Senior claimant claimed declaration that it was owner and junior
claimants claimed declaration that they were owners. Trial judge gave
declaration to senior claimant. Court of Appeal dismissed appeal from
trial judge's decision.
Appendix C - National Sewer
Winner
Senior claimant
The claims were to a piece of land that lay
between land belonging to the senior claimant
on one side and the junior claimant on the other.
The first junior transfer of this piece was a deed
from an executor of an estate to a beneficiary of
the estate. The Court of Appeal said that neither
junior nor senior claimant had been in
possession.
At one time, the piece of land in dispute had
been owned by a former owner of the junior
claimant's other land. It had been severed off by
Deed 4012 registered before the 40 year period.
The deed to the deceased, Deed 13638,
transferred all of the former owner's land except
that conveyed by Deed 4012. The executor's
deed, the junior claimant's root, transferred all of
the land without the exception.
The senior title might have been revealed by the
following instruments registered within the 40
year period
An equitable mortgage. This was created
by an agreement recording that the owner
had deposited title deeds with a bank. The
agreement was registered against the
property before the junior claimant's root of
title. It described the land by referring to
Deed 13638, which in turn excepted the
land severed off by Deed 4012. The entry
in the abstract index referred directly to
instrument 4012.
A discharge of the equitable mortgage, also
registered against the property before the
junior claimant's root of title. This also
described the land by referring to Deed
13638, which in turn excepted the land
severed off by Deed 4012.
The succession duty release for the junior
claimant's root, the executor's deed. This
was deposited on title just before that deed.
This also described the land by referring to
Deed 13638, which in turn excepted the
land severed off by Deed 4012.
With regard to the succession duty release, the
effect of the Registry Act, at the time the
executor's deed was registered, was that the deed
did not vest in the transferee the land that was
excepted from the release. The Act was later
amended to provide that the land would vest.
The amendment was passed and came into force
only after one junior claimant (the Ontario
government acting through the Ministry of
Government Services) purchased. It was in
force when the other junior claimant (a private
corporation) purchased. The amendment was in
force when the dispute arose.
An unusual feature of the case was that there had
been a senior transfer within the 40 year period.
Because of a small mistake in the legal
description, the transfer was not registered
against the land and the registration was invalid.
The mistake was discovered before the
proceedings. The transfer was then re-registered
against the land, but that was after the junior
claimants had completed their purchases.
The reasons for the decision must be interpreted
in light of other decisions:
(a) The majority of the Court of Appeal agreed
with the trial judge that the junior
claimant's claim failed because the junior
claimant did not have a good root of title.
Thus the Court of Appeal did not disagree
with the reasoning of the trial judge on this
issue.
(b) All of the judges of the Court of Appeal in
Camrich and National Sewer were the same
and the two decisions were released at the
same time. The reasons in the two cases
should therefore be interpreted so as to be
consistent.
Appendix C - National Sewer
(c) One of the judges of the Court of Appeal,
Osborne J.A., came to a different decision
from that of the other two. In his reasons,
he disagreed with the majority on some
issues and agreed with the majority on
other issues.
(d) In Fire, the Court of Appeal commented
that it agreed with "the full and compelling
dissenting reasons of Osborne J.A." on one
issue.
This was whether the junior
claimants had actual notice (within the
meaning of the notice provisions of Part I
of the Registry Act) of the lack of title of
the executor under the root of title.
The reasoning of the majority of the Court of
Appeal was as follows:
Part III . . as amended by the Registry
Amendment Act, 1981 . . is the statutory provision
that governs the ownership of the subject lands.
Part III deals with the investigation of titles and
prescribes the requirements to establish title . .
[The majority referred to the provision requiring
a good chain of title and to the Algoma case
requiring a root before the 40 year period and
continued] This case is also authority for the
proposition that a purchaser is entitled to rely on
the form of registered instruments, and can safely
rest on an instrument as his root of title which is .
. sufficient to convey the fee simple.
The appellants . . submit that the amendments
make it clear that the title search period shall not
exceed forty years in cases where a conveyance
upon which the searcher can rely is registered
within such period . . I have no difficulty with
this as a proposition of law . . The problem that
the appellants have in this case is that in the
conveyance they rely upon, the grantor had no
title to convey . . Additionally, the appellants had
notice of this want of title at the time of their first
dealing with subject lands by reason of the
registrations relating to the equitable mortgage
and the succession duty releases . .
The appellants take a technical position in this
matter. They submit that under the provisions of
s. 105(1) of the Registry Amendment Act, 1981 a
chain of title "does not depend upon and is not
affected by any instrument registered before the
commencement of the title search period." They
submit that under s. 105(1), they can rely on the
deed of the executrix to the Smith estate because
it is the only instrument registered within the 40year search period that purports on its face to
convey title to the subject lands. They are
entitled to rely upon the form of the conveyance
and are not concerned with its substance. They
dismiss the documents relating to the equitable
mortgage in 1951 and the succession duty
releases in 1965 as being something other than
instruments within the meaning of the Registry
Amendment Act, 1981.
As I understand the appellants' argument, the
effect of the new legislative regime in 1981 is to
replace retroactively any prior notice of defects in
title with a notice of claim . . As I pointed out in
[Camrich], I do not think the Registry
Amendment Act, 1981 is retroactive to validate
titles which were otherwise deficient prior to
August 1, 1981. Certainly it cannot have the
effect of creating an ownership where formerly
there was none.
. . arguments about subsequent changes in the
Registry Act having the effect of validating what
otherwise would have been faulty title searches
miss the point in issue. I agree with the trial
judge that for these arguments to apply in the
present case (assuming their validity) the
appellants must have been relying upon what
conveyancers refer to as a "clean deed" as their
root of title. These appellants purport to place the
respondent in the role of claimant to their land,
but in reality, the converse is true. The appellants
have the later root of title and they must establish
its validity before questioning that of the
respondent. In my opinion, they fail in that it is
clear from the appropriate abstract of title that . .
[at the root] the subject lands were recorded as
belonging to [the senior claimant] and not [the
junior claimant] . . The issue before the court is
whether [the mistake in registering a deed against
the wrong land] has extinguished the respondent's
title and permitted a new chain of title to be
created by a grantor who was without title . .
In my opinion the appellants were on notice
under the Registry Act that [the deceased] did not
own the subject lands. The instrument creating
the equitable mortgage, corroborated by the
succession duty releases, clearly excepted the
subject property, and put the appellants on notice
that he was not the owner.
Appendix C - National Sewer
5.2
National Sewer: Does Part III validate
a title if both of the chain of title and the
registration rules are satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
For National Sewer, the first question is: does
the chain of title rule validate a title? The
second question is: must the junior claimant
show a good chain before the senior title can
expire?
The trial judge decided that the senior claimant
was the owner of the land. It might have been
that an executor's deed registered within the 40
year period was a good root of title, either after
the 1981 amendments or even before them. But
it was not a good root in this case. It was not a
"clean deed" or "good deed." The junior
claimants should have made "a more thorough
search" of title in this case. A perusal of the
succession duty release "would have made it
abundantly clear" that the deceased did not own
the land. The successors in title "ought to have
known that the [executor's deed] was, at the very
least, questionable." Since the junior claimant
could not rely on the chain of title, the senior
claimant preserved its title by re-registering the
deed that had been registered against the wrong
land. The alternative would be to conclude that
neither party had a good title to the land, "an
illogical position."
The trial judge seems to have ignored the fact
that the succession duty provisions in the
Registry Act had been amended when the private
corporation purchased; in fact, he said that, "at
the time in question" the Registry Act provided
that the executor's deed did not vest title in the
purchaser.
Thus, the trial judge answered the questions as
follows. Yes, the chain of title rule does validate
a title. If the executor's deed had been a good
root, it could have been "relied upon . . as the
basis of a valid claim." And yes, the junior
claimant must show a good chain before the
senior title can expire. The executor's deed "was
not a good root of title and cannot be relied upon
by any would-be successors in title as the basis
of a valid claim." Accordingly it was open for
the senior claimant to preserve its claim when it
registered the deed against the correct land.
The majority of the Court of Appeal dismissed
the appeal, deciding that the land belonged to the
senior claimant and not the junior claimants.
The reasons of the majority are difficult to
interpret. The majority's conclusion is at the end
of the reasons. To make the reasoning clear, the
majority's words might be modified as follows,
incorporating the language of the article:
. . arguments about subsequent changes in the
Registry Act having the effect of validating what
otherwise, under the chain of title rule, would
have been a faulty chain of title searches miss the
point in issue. I agree with the trial judge that for
these arguments to apply in the present case
(assuming their validity) the appellants must have
been able, when the title was brought into
question, to relying on a good chain of title based
upon what conveyancers refer to as a "clean
deed" as their root of title. These appellants
purport to place the respondent in the role of
claimant to their land, but in reality, the converse
is true. The appellants have the later root of title
and they must establish its validity before
questioning that of the respondent. In other
words, they must not only satisfy the test under
the registration rule but also the test under the
chain of title rule. In my opinion, they fail in that
it is clear from the appropriate abstract of title
that . . [at the root] the subject lands were
recorded as belonging to [the senior claimant]
and not [the junior claimant] . . The issue before
the court is whether [the mistake in registering a
deed against the wrong land], which would have
has extinguished the respondent's title under the
registration rule, has and permitted a new title to
be validated in favour of one who is without a
good chain of title to be created by a grantor who
was without title . . In my opinion the appellants
were on notice chain of title showed when the
title was brought into question under the Registry
Act that [the deceased] did not own the subject
lands. The instrument creating the equitable
mortgage, corroborated by the succession duty
Appendix C - National Sewer
releases, clearly excepted the subject property,
and put the appellants on notice showed that he
was not the owner.
While the modifications may make the meaning
clearer, the original words used by the majority
strongly support the conclusion of the article.
Earlier parts of the reasoning are less clear, but,
if modified in light of the words set out above,
the meaning is clearer. The majority accepted
that Part III could validate a defective title if
there was a good chain of title:
Part III . . as amended by the Registry
Amendment Act, 1981 . . is the statutory provision
that governs the ownership of the subject lands.
Part III deals with the investigation of titles and
prescribes the requirements to establish title . .
[The majority referred to the provision requiring
a good chain of title and to the Algoma case
requiring a root before the 40 year period and
continued] This case is also authority for the
proposition that a purchaser is entitled to rely on
the form of registered instruments, and can safely
rest on an instrument as his root of title which is .
. sufficient to convey the fee simple.
The appellants . . submit that the amendments
make it clear that the title search period shall not
exceed forty years in cases where a conveyance
upon which the searcher can rely is registered
within such period . . I have no difficulty with
this as a proposition of law . . The problem that
the appellants have in this case is that not only, in
the conveyance they rely upon, had the grantor
had no title to convey . . but aAdditionally, the
appellants had notice of the search of title shows
this want of title at the time of their first dealing
with the title was brought into question for the
subject lands by reason of the registrations
relating to the equitable mortgage and the
succession duty releases . .
This part of the majority's decision in National
Sewer has been strongly criticised. The words
actually used by the majority put too much
emphasis on the fact that the executor in the root
"had no title to convey." The minority judge
picked up this emphasis saying that, if this fact
was determinative, the scheme established by
Part III could not work. It "emphasises the
common law of land ownership" and "reflects an
unwillingness to accept the basic policy set out
in Part III . . rather than a rational analysis." The
Court of Appeal in Fire also picked up the
emphasis, saying that, if a junior clamant was
not protected where the grantor under the root
had no title to convey, the only safe search
would be back to the Crown grant and "That is
not what the legislation says." Obviously, there
must be a problem of this kind before the
question arises whether Part III provides a cure.
The question was, not whether there was a
problem, but whether the junior claimant was
affected by it. When the entire judgment of the
majority as set out above is examined, a fair
interpretation of it confirms that the actual lack
of title was not itself the reason for denying the
junior claim. The reasons were both that the
defect existed and that the chain of title showed
the defect. A better way of dealing with the
majority's decision is to clarify the principle
rather than reject the decision. As will be
discussed below, the majority probably applied
the principle to the facts incorrectly in finding
that the abstract showed (or gave notice) that the
root was bad. This unsatisfactory part of the
majority's decision in National Sewer should not
however detract from the principles that all of
the judges of the Court of Appeal in National
Sewer and Fire accepted.
The minority judge (Osborne J.A.) decided that
the junior claimants were the owners of the land
and that the senior claimant had no interest in it.
His reasons are important because the Court of
Appeal Fire commented that it agreed with his
"full and compelling" reasons on the issue of
notice.
On the issue of notice, the minority judge
decided that neither the equitable mortgage nor
the succession duty release were sufficient to
show that the root of title was bad. His detailed
reasoning is discussed later. In dealing with the
issue of notice, the minority judge treated it as
relevant to decide whether there was a defect in
the junior chain of title. If he had regarded the
issue as irrelevant, he would surely in his
thorough analysis have said, before dealing with
the issue, that he did not think it was relevant
anyway. Although he did not say as strongly as
Appendix C - National Sewer
the majority that a good root (and therefore
chain) of title was required, his language
confirms that he accepted that:
In my opinion, subject to the issue of the validity
of the 1965 executrix's deed and the subsequent
transactions which led to the acquisition of the
land by the appellants, the 1929 claim of [the
senior claimant] expired . . In my opinion, subject
to the succession duty release issue which I will
consider shortly, the executrix's deed can be
relied upon as a root deed.
He considered whether the equitable mortgage
would "compromise" the junior title, thereby
accepting that it could do so. And he treated the
succession duty release as a "more difficult
problem", again accepting that it could be a
problem. In summarizing his decision, he said:
[the junior claimants] were not required to
undertake a search of title greater than 40 years
because of the registered deeds within the 40year period . . [they] could provide a good title to
a hypothetical purchaser.
Thus, although he disagreed with the majority
on the issue of whether the search in fact showed
the defect in title, his reasons should be
interpreted as agreeing with those of the
majority on the principle that the senior claim
would not expire unless the junior title was
good. Since the Court of Appeal in Fire agreed
with his reasons on the question of notice, the
Court of Appeal in Fire must also have agreed
with his acceptance of this principle.
The minority judge referred to the Brown and
Battison cases decided by lower courts. The
first of these dealt with the chain of title rule in a
way that probably supports the conclusions of
the article, but the second does not. However,
the judge referred to them only as examples of
instruments registered before the 40 year period
not being deemed to be actual notice under Part I
of the Registry Act.
Thus, the Court of Appeal answered the
questions as follows. Yes, the chain of title rule
does validate a title. The majority said that Part
III "is the statutory provision that governs the
ownership" of land; it "prescribes the
requirements to establish title." The minority
judge said that "the operation of Part III of the
Registry Act can result in the validation of titles
which would not occur at common law and the
loss of interests in land (claims) that would also
not occur at common law." He went on to adopt
a memorable sentence from an article by Brian
Bucknall saying "The registry system thus
becomes something much more complex than
just "a large deed box", it becomes itself a
significant factor in the definition of title." And
yes, the junior claimant must show a good chain
before the senior title can expire. The majority
said that "The appellants have the later root of
title and they must establish its validity before
questioning that of the respondent." Although
the minority judge did not specifically agree
with that, he accepted that the junior claimant
must show a good chain, and the Court of
Appeal in Fire must, in commenting that it
agreed with him on the issue of notice, must be
taken to have accepted that too. Thus, both the
majority and minority agreed on the these
principles, but differed on whether in fact the
junior chain of title was good. The reasoning
confirms that Part III validates title to an interest
if both, under the chain of title rule, the holder
has a good chain of title and, under the
registration rule, no registered adverse claim has
been registered in the 40 year period.
5.3
National Sewer: Does the provision
about a freehold title continuously shown
confirm that Part III validates a title only if it
meets the tests under both the chain of title
and registration rules?
The article concludes that the answer to the
above question is yes. The provision should be
read as saying "continuously shown through a
good and sufficient chain of title" and is not a
cross-reference merely to a case where no
conveyance is registered within the 40 year
period.
In National Sewer, the trial judge said that, as he
had found that the root for the junior title was
bad, "the only logical conclusion I can come to
Appendix C - National Sewer
is that the plaintiff, relying on a good root of title
in 1929, in effect preserves its title by the 1953
deed now registered against the subject lands; or
at least that it is open to the plaintiff to register
"a notice of claim in the prescribed form"." He
might have said that, since the junior chain was
bad, the senior title was continuously shown, but
he did not refer to that provision.
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
The majority of the Court of Appeal referred to
the provision in only one place. It said: "The
claim of National Sewer Pipe Company Limited
to a freehold estate in the subject lands was
continuously shown in the abstract index for a
40-year period that did not end until 1969." This
suggests that the continuity was not cut off by
the conflicting registration of the junior root in
1965. On the other hand, it also suggests that
the court the provision was not a cross-reference
to the chain of title rule at all, because (under the
conclusion in the article) the continuity of the
senior chain continued after 1969 and until the
title was brought into question in 1982.
In National Sewer, the question of when Part III
validates title arose for three reasons:
The minority judge specifically referred to the
question of whether the senior claim was saved
from expiry under the registration rule because it
was "continuously shown in the abstract index . .
for more than 40 years." He decided that, "once
the executor's deed was registered, [the senior
claimant] was no longer continuously shown as
owner of the land." It was the mere "conflicting
registrations" that cut off the continuity of the
senior title. Although the Court of Appeal in
Fire agreed with the minority judge's reasons on
notice, his reasons on continuity were not part of
those reasons.
Thus National Sewer does not deal satisfactorily
with the meaning of the provision.
5.4
National Sewer: When does Part III
validate a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
(a) The last senior transfer had been completed
within the 40 year period but had been
registered against the incorrect land. It was
re-registered against the correct land, but
only after the junior claimants purchased.
Was the title to determined before or after
the transfer was re-registered?
(b) The junior claimants had purchased before
the 1981 amendments. Was the title to be
determined applying Part III as it was
before or after the amendments?
(c) The requirement for a succession duty
release for the root of title was removed
after one junior claimant purchased, but
before the other purchased. Was the title
for the first junior claimant to be
determined before or after the requirement
was removed?
The trial judge's reasons on these questions was
inconclusive. Because he decided that the junior
root of title was bad, he did not have to consider
whether the re-registration of the senior transfer
invalidated the junior title. He did not decide
whether the 1981 amendments applied because
the root of title would be bad regardless of the
1981 amendments. And he did not decide
whether the removal of the requirement for a
succession duty release benefited the first junior
claimant because he mistakenly assumed that, at
"the time in question" the requirement was in
force for both junior claimants.
The judge giving the decision of the majority of
the Court of Appeal said: "The parties are in
Appendix C - National Sewer
agreement that the critical date for the analysis
is 1982, when the title to the lands was brought
into question." This not only adopted the
principle in Tkach that the validity of a title is
determined when the title comes under attack,
but also correctly explained when that time was,
namely when the search first showed a conflict.
Other statements in the reasons tend to confuse
this reasoning. Instead of dealing with what a
search would have shown at the "critical date",
the majority considered what it showed to the
junior claimants, presumably when they
purchased. And, although the majority decided
that the succession duty release only
corroborated the evidence of the defect in the
root of title that was given by the equitable
mortgage and discharge, the majority said that it
was "still a live issue for the Ministry, at least"
when the Ministry purchased.
The minority judge quoted and approved the
reasoning in Tkach and decided that "the
assessment of the validity of a claim" was to be
made "on the date upon which the title to it has
been brought into issue", namely when the
senior transfer was re-registered in 1982. The
minority judge treated the date on which the title
was brought into issue as a "date of dealing",
which was a fiction, and later referred to the date
as that of a "notional dealing." Although he
decided that "the appellants purchased the land,
without notice", he was referring to actual notice
and, as explained later, this would be relevant at
the time of purchase. He concluded his reasons
by saying that "when title to the land was
brought into issue, the appellants could provide
a good title to a hypothetical purchaser." This
was the basis of his decision on the question of
notice, with which the Court of Appeal in Fire
agreed.
The result in National Sewer highlights the
implications of the conclusion of the article.
The conflict was first shown on the register in
1982. For this property, the junior claim will be
shown by the chain until 2022. Since the junior
root in 1965 proved defective based on a search
back to 1942 (the mortgage that showed the
defect was registered in 1951), the search had to
go back to a 1929 root for the senior title. Thus,
until 2022 a search will have to go back to 1929,
a period of up to 93 years. If the search back to
1929 had showed a further conflict (which it did
not), the search until 2022 would have had to go
back even further. Of course, cases like this will
be very rare.
In the result, despite confusing statements by the
majority, the reasoning of all of the judges in
National Sewer, with whom on this issue the
Court of Appeal in Fire agreed, both supported
and clarified the decision in Tkach. This
confirms the conclusion of the article as far it
concludes that Part III does not validate a title
only when there is a dealing. It also tends to
confirm the practical result of Part III validating
a title when it meets the two tests, namely that, if
the search shows a conflict, the tests are applied
immediately before the conflict is first shown in
the current search.
5.5
National
Sewer:
Under
the
registration rule, when is a claim registered?
The article concludes that, under the registration
rule, a claim is registered when a dealing is
registered against the land (i) which purports to
create or transfer a claim out of which the claim
later arises; (ii) which purports to create or
transfer all of the claim; (iii) probably, which
purports to contain a dealing by the holder of the
claim with part of the claim, but not (iv) which
deals with another interest and merely refers to
the claim.
In National Sewer, an unusual feature was that
there had been a senior transfer within the 40
year period. Because of a small mistake in the
legal description, the transfer was not registered
against the land and the registration was invalid.
When the mistake was discovered, the transfer
was re-registered against the land, but that was
after the junior claimants had completed their
purchases.
The registration rule in Part III simply refers to
"the period ending on the day forty years after
Appendix C - National Sewer
the day of the registration of an instrument."
None of the judges regarded the first registration
of the transfer as a good registration for Part III.
This confirms the obvious conclusion that the
words mean the registration against the correct
land of an instrument.
Conversely, all of the judges accepted that, if the
transfer had been correctly registered, it would
have been a good registration of the senior
claim. The trial judge and majority of the Court
of Appeal decided that re-registration was a
good registration. These confirms the other
obvious conclusion that an interest is registered
when a transfer of it is registered.
5.6
National Sewer: Can a notice of claim
be registered for a claim as long as the claim
is valid?
claim came within the exception for a claim
"continuously shown." It seems more likely that
the former interpretation is correct, but, since the
interpretation was only a comment by the trial
judge, it would not be safe to rely on it. The
majority of the Court of Appeal merely said that
the junior claimant "lost the protection of the
Registry Act through a mistake in a deed which
has now been rectified." The majority had
earlier said it understood the junior claimant's
argument to be that the senior claim would be
protected only if it had registered an instrument
or notice of claim against the land "within the 40
years prior to the title searches made by the
appellants in 1978 . . and 1979", but it did not
say that it accepted that a notice of claim could
have been registered in that period even though
it was registered after the notice period that
ended in 1969.
The article concludes that the rules in Part III for
a notice of claim should allow the holder of a
claim to preserve the claim by registering the
prescribed notice of claim until the claim is
invalidated under the two basic tests, but the
effect of a notice of claim registered after the 40year period is not clear.
5.7
National Sewer: What does the chain
of title rule allow one to assume?
In National Sewer, the notice period expired in
1969, 40 years after the last registration of the
senior title. Both the trial judge and the majority
of the Court of Appeal decided that the senior
claim had not expired. If the senior claimant
had registered a notice of claim after the notice
period, the courts might have had to decide
whether a notice of claim was validly registered
after the notice period, but the senior claimant
had not in fact registered a notice of claim. The
trial judge said "the only logical conclusion I can
come to is that the plaintiff, relying on a good
root of title in 1929, in effect preserves its title
by the 1953 deed now registered against the
subject lands; or at least that it is open to the
plaintiff to register "a notice of claim in the
prescribed form"." This comment could be
interpreted as recognizing that a notice of claim
can be validly be registered at any time until a
claim expires, or as merely saying that the notice
could be registered because the senior claimant's
The reasons of the trial judge and majority of the
Court of Appeal in National Sewer have been
criticised on the ground that they say that one
cannot assume the title before the root.
The article concludes that the chain of title rule
allows one to assume, if the chain of title is
good, that the title before the root is consistent
with what is shown by the search, and only that.
In his reasons, the trial judge said:
If the Registry Act is to be interpreted as
contended for by the defendants, legitimate
ownership of real property can be defeated by
inadvertent errors in conveyancing or even by
fraudulent conveyancing. They further maintain
that any deed, seemingly "clean" on its face, can
defeat a bona fide owner simply on the basis that
such owner (individual or corporate) has not
registered a "claim", or notice thereof, on his or
its own title in the preceding forty years. My
instincts tell me that, on the facts of this case at
least, I should lean against such an interpretation.
The minority judge of the Court of Appeal said
that the trial judge was in error when he made
this comment. Taken out of context, it goes too
Appendix C - National Sewer
far. However, the trial judge in fact decided that
the root of title could not be relied on as the
basis of a valid claim because it was not a good
root. The rest of his judgment shows that, if the
root had clearly on its face been an effective
conveyance, it could have been relied on. It was
only on the peculiar facts of the case that he
decided that a perusal of the root would have
made it abundantly clear that the grantor under
the root did not own the land and that the root
was not a clean or good deed.
As the extracts from the reasons of the majority
of the Court of Appeal set out above show, the
words used by the majority put too much
emphasis on the fact that the executor in the root
"had no title to convey." The minority judge
picked up this emphasis saying that, if this fact
was determinative, in the scheme established by
Part III could not work. It "emphasises the
common law of land ownership" and "reflects an
unwillingness to accept the basic policy set out
in Part III . . rather than a rational analysis." The
Court of Appeal in Fire also picked up the
emphasis, saying that, if a junior clamant was
not protected where the grantor under the root
had no title to convey, the only safe search
would be back to the Crown grant and "That is
not what the legislation says." When the entire
judgment of the majority is examined as set out
above, a fair interpretation of it confirms that the
actual lack of title was not itself the reason for
denying the junior claim. The reasons were both
that the defect existed and that the junior
claimant was "on notice" of the defect. The
majority referred to the Algoma case and said
"This case is also authority for the proposition
that a purchaser is entitled to rely on the form of
registered instruments, and he can safely rest on
an instrument as his root of title which . . is on
its face sufficient to convey the fee simple." It is
true that the majority later rejected arguments
that the root purported on its face to convey the
land and that the junior claimants were entitled
to rely of the form of the conveyance and were
not concerned with the substance. But it is clear
that the majority rejected those arguments
because the register gave "notice" of the defect
in the root. While the majority had difficulty in
accepting a conclusion that was confiscatory of
property rights, it realized that "in a given case,
that can be the result."
The reasons of the minority judge are more
easily interpreted. He also referred to the
Algoma case as establishing that "a person can
rely on the form of registered instruments, and if
an instrument is, on its face, sufficient to convey
the interest in the land it purports to convey, it
can be relied upon as having that effect." He
said that "if one accepts the premise that a
grantor cannot convey land which the grantor
does not own (however attractive that
proposition may be), it must follow that
registered instruments must be examined, not
only in relation to their form, but also in relation
to their substance. This kind of examination
cannot co-exist with the provisions of [Part III] .
. Thus the fact that the [grantor in the root] did
not own the land, although critical at common
law, is not determinative in the scheme
established by Part III."
The focus of much of the reasoning in the case
on what can be assumed was whether one can
assume the title before the root. On the question
of what else one can assume, the reasoning in all
the judgments shows that one cannot take
instruments at face value in any other way. Both
the majority and minority dealt in detail with
whether the register showed the defect in the
root. As will be discussed below, the majority
probably imposed too high a standard of
searching to the facts in finding that the abstract
showed (or gave notice) that the root was bad.
The decisions are clearly authority for the view
that Part III does not allow one to make any
assumptions other than as to the title before the
root or allow a superficial investigation of title.
Thus the case, when properly interpreted,
strongly supports the conclusion of the article
that the chain of title rule allows one to assume,
if the chain of title is good, only that the title
before the root is consistent with what is shown
by the search.
Appendix C - National Sewer
5.8
National Sewer: What are the rules as
to the root of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In National Sewer, the junior root was a transfer
within the 40 year period by an executor to a
beneficiary. The deceased did not own part of
the land transferred by the executor's deed.
The trial judge dealt with the issues as follows:
The first issue was whether a root within
the 40 year period could be good. Because
the trial judge decided that the root was
bad, he left open the question of whether it
could have been good even though it was
within the 40 year period. However, he
tended to think that it could have been good
not only under the 1981 amendments (if
they came into play) but also before them.
He said: "the defendants argue that even on
the basis of the Act as it stood in 1979 and
1980 when they purported to acquire title,
the 1965 deed is a good root. If the 1965
deed was clearly on its face an effective
conveyance their position is quite likely
sound, despite a widespread belief among
senior members of the profession that one
finds a good root of title only in the last
apparently effective conveyance prior to or
beyond the 40 year period." Later he
referred to the proposition in the Algoma
case that Part III required a search to the
last root of title prior to the 40 year period
and said "It may be that in this respect the
1981 amendments to the Registry Act have
in effect repealed this aspect" of that case.
And even later he commented on a practice
of finding a root prior to the 40 year period
saying that he was not adjudicating on
considerations of prudent practice and that
"it may be that in an appropriate case one
can find a good root this side of the 40 year
period." Thus the trial judge favoured an
interpretation that a root of title within the
40 year period could be good, even before
the 1981 amendments, but he did not decide
the issue.
The second issue was whether a root has to
meet tests as to its quality. The trial judge
clearly decided that the root must meet
these tests. He said: "I am not persuaded
that the 1965 deed was . . a "clean deed", or
a "good deed" . . A perusal of the
instrument would make it abundantly clear
that the estate . . did not own the subject
lands. Thus the grantee in 1965 and any
successor in title would know or ought to
know that the 1965 conveyance was, at the
very least, questionable . . I have therefore
come to the conclusion that the 1965
instrument is not a good root of title . . and
cannot be relied upon by any would-be
successors in title as the basis of a valid
claim."
The third issue was whether one of the tests
of quality is that a transfer under a power
(here the power of the executor) is a good
root only if the power to make the transfer
is proved. The issue of whether the will
gave the executor the power to give the
deed was not mentioned in the reasons; the
only defect that the judge dealt with was
that the deceased did not own the land. The
reasons give no guidance on the issue of
whether a power must be shown.
Appendix C - National Sewer
The majority of the Court of Appeal dealt with
the issues as follows:
The first issue was whether a root within
the 40 year period could be good. As set
out above, parts of the reasons of the judge
who gave the reasons of the majority must
be interpreted in light of his conclusion. If
his reasons are modified to reflect that, his
reasons on the first issue are as follows:
The appellants . . submit that the amendments
make it clear that the title search period shall not
exceed forty years in cases where a conveyance
upon which the searcher can rely is registered
within such period . . I have no difficulty with
this as a proposition of law . . The problem that
the appellants have in this case is that not only, in
the conveyance they rely upon, had the grantor
had no title to convey . . but aAdditionally, the
appellants had notice of the search of title shows
this want of title at the time of their first dealing
with the title was brought into question for the
subject lands by reason of the registrations
relating to the equitable mortgage and the
succession duty releases . .
Thus, on the first issue, although the
majority of the Court of Appeal found the
root was in fact bad, that finding was based
on a reason other than its age and the
reasons for the majority's decision were
based on an acceptance that a root within
the 40 year period could be good.
The second issue was whether a root had to
meet tests as to its quality. The majority
decided that the junior title was bad
because the root failed tests as to its quality.
It clearly required the root to meet tests as
to its quality. The judge giving the reasons
said:
The appellants . .. submit that the amendments
make it clear that the title search period shall not
exceed forty years in cases where a conveyance
upon which the searcher can rely is registered
within such period . . I have no difficulty with
this as a proposition of law . . the appellants must
have been relying upon what conveyancers refer
to as a "clean deed" as their root of title . . they
must establish its validity . . In my opinion, they
fail in that it is clear from the appropriate abstract
of title that . . [at the root] the subject lands were
recorded as belonging to [the senior claimant]
and not [the junior claimant] . .
The italicized words do not appear in Part
III, but the majority took them as implicit.
The judge specifically dealt with an
argument that any conveyance within the
40 year period was sufficient for the
searcher to assume the prior title. He did so
in a difficult passage of his reasons which,
if modified in light of his conclusion and to
incorporate the language of the article,
would read as follows (with additions
shown in italics and deletions shown with
strike-outs):
The problem that the appellants have in this case
is that not only, in the conveyance they rely upon,
had the grantor had no title to convey . . but
aAdditionally, the appellants had notice of the
search of title showed this want of title at the time
of their first dealing with the title was brought
into question for the subject lands by reason of
the registrations relating to the equitable
mortgage and the succession duty releases . .
The appellants take a technical position in this
matter. They submit that the chain of title cannot
be affected by the senior title because the
instruments relating to it were registered outside
the 40 year title search period and, under the
provisions of s. 105(1) of the Registry
Amendment Act, 1981, a chain of title "does not
depend upon and is not affected by any
instrument registered before the commencement
of the title search period." They submit that
under s. 105(1), they can rely on the deed of the
executrix to the Smith estate because it is the
only instrument registered within the 40-year
search period that purports on its face to convey
title to the subject lands. They are entitled to rely
upon the form of the conveyance and are not
concerned with its substance. Their submission
ignores the fact that, although the instruments
relating to the senior title were registered before
the 40 year title search period, the defect is
shown by They dismiss the documents relating to
the equitable mortgage in 1951 and the transfer
to which the succession duty releases in 1965
applied, all of which were as being something
other than instruments registered within the title
search period for the purposes meaning of the
Registry Amendment Act, 1981.
Appendix C - National Sewer
As I understand the appellants' argument, the
effect of the new legislative regime in 1981 is to
replace retroactively the principle that any prior
claim notice of can be shown by defects in the
chain of title with a principle that a claim
registered before the 40 year period can be a
defect in the chain of title only if the claim is
shown by a notice of claim . . Even if I did not
reject this argument for the reason set out in the
previous paragraph, I would reject it because,
aAs I pointed out in [Camrich], I do not think the
Registry Amendment Act, 1981 is retroactive to
validate titles which were otherwise deficient
prior to August 1, 1981. Certainly it cannot have
the effect of creating an ownership where
formerly there was none.
In this passage, the judge rejected the
argument that any instrument purporting to
be a conveyance would be a good root of
title. He did so not just because he felt that
Part III was not retroactive; a later section
shows that the majority's reasoning on
retroactivity was probably wrong anyway.
He did so because the words saying that a
chain of title is not usually affected by an
instrument registered before the 40 year
title search period merely confirm that the
root need no longer be more than 40 years
old and do not alter the effect of anything
shown by the chain of title during the
period.
The third issue was whether one of the tests
of quality is that a transfer under a power
(here the power of the executor) is a good
root only if the power to make the transfer
is proved. The issue of whether the will
gave the executor the power to give the
deed was not mentioned in the reasons; the
only defect that the majority dealt with was
that the deceased did not own the land. The
reasons give no guidance on the issue of
whether a power must be shown.
The minority judge of the Court of Appeal dealt
with the issues as follows:
The first issue was whether a root within
the 40 year period could be good. The
judge decided that the junior title based on
a root within the 40 year period was good;
the junior claimants "were not required to
undertake a search of title greater than 40
years because of the registered deeds within
the 40-year period."
The second issue was whether a root had to
meet tests as to its quality. The minority
judge decided that neither the equitable
mortgage nor the succession duty release
were sufficient to show that the root of title
was bad. However, he treated it as relevant
to decide whether there was a defect in the
junior root. If he had regarded the issue as
irrelevant, he would surely in his thorough
analysis have said, before dealing with the
issue, that he did not think it was relevant
anyway. Although he did not say as
strongly as the majority that a good root
was required, his language confirms that he
accepted that:
In my opinion, subject to the issue of the validity
of the 1965 executrix's deed and the subsequent
transactions which led to the acquisition of the
land by the appellants, the 1929 claim of [the
senior claimant] expired ... In my opinion, subject
to the succession duty release issue which I will
consider shortly, the executrix's deed can be
relied upon as a root deed.
He considered whether the equitable
mortgage would "compromise" the junior
title, thereby accepting that it could do so.
And he treated the succession duty release
as a "more difficult problem", again
accepting that it could be a problem. Thus,
although the minority judge disagreed with
the majority on the issue of whether the
search in fact showed that the root was bad,
his reasons should be interpreted as
agreeing with those of the majority on the
principle that, for the root to be good, it
must meet tests as to its quality.
The third issue was whether one of the tests
of quality is that a transfer under a power
(here the power of the executor) is a good
root only if the power to make the transfer
is proved. The issue of whether the will
gave the executor the power to give the
Appendix C - National Sewer
deed was not mentioned in the reasons; the
only defect that the minority judge dealt
with was that the deceased did not own the
land. The reasons give no guidance on the
issue of whether a power must be shown.
Thus the reasons of all of the judges in National
Sewer support the conclusions of the article that
a root of title within the 40 year period can be
good and that the root must meet tests as to its
quality if it is to be a good root of title.
Although the root was a transfer under a power,
the reasons give no guidance on whether one of
those tests is that such a transfer is a good root
only if the power to make the transfer is proved.
5.9
National Sewer: What period must
the detailed search under the chain of title
rule cover?
The article contains the following conclusions.
Where the chain of title begins with a root less
than 40 years old, the title is also affected by
anything that is shown by a detailed search
under the chain of title rule covering the part of
the 40-year period before the root. Apart from
the provision referred to in the next question,
where the chain of title begins with a root more
than 40 years old, the title is affected by
anything that is shown by a detailed search
under the chain of title rule from the beginning
of the chain, including the part of period of the
chain that is after the root and before the 40-year
period.
In National Sewer, the junior root of title was
registered in 1965 and the senior title might have
been revealed by an equitable mortgage
registered in 1951, a discharge of the equitable
mortgage registered in 1953 and the succession
duty release for the junior claimant's root which
was an executor's deed. As explained above, all
of the judges of the Court of Appeal treated
these as relevant in evaluating the junior
claimants' chain of title and differed only in
whether they in fact showed the senior title. The
majority decided that the equitable mortgage,
corroborated by the succession duty releases,
showed the senior title. All of these appeared in
the chain before the root, although the
succession duty release (which merely
corroborated the equitable mortgage) really
related to the root itself. Thus the case confirms
the conclusion of the article that, although the
chain of title can start with a root less than 40
years old, the detailed search of under the chain
of title rule should cover any part of the 40 year
period before the root. This general approach
tends also to confirm that, if the chain of title
starts with a root more than 40 years old, the
detailed search of under the chain of title rule
should cover the period from the root to the
beginning of the 40 year period.
5.10
National Sewer: Does a provision in
Part III that says, with some exceptions, that
a chain of title is not affected by any
instrument registered before the 40-year
search period, mean that a defect or
encumbrance based on such an instrument
does not affect the title?
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
In National Sewer, the Court of Appeal had to
interpret the provision in order to deal with an
argument that a conflicting claim to ownership
registered before the title search period could not
affect the chain of title. The court's reasoning
should apply equally to an encumbrance.
The judge specifically dealt with this argument
in a difficult passage of his reasons which, if
modified in light of his conclusion and to
incorporate the language of the article, would
read as follows:
The problem that the appellants have in this case
is that not only, in the conveyance they rely upon,
had the grantor had no title to convey . . but
aAdditionally, the appellants had notice of the
search of title showed this want of title at the time
Appendix C - National Sewer
of their first dealing with the title was brought
into question for the subject lands by reason of
the registrations relating to the equitable
mortgage and the succession duty releases . .
The appellants take a technical position in this
matter. They submit that the chain of title cannot
be affected by the senior title because the
instruments relating to it were registered outside
the 40 year title search period and, under the
provisions of s. 105(1) of the Registry
Amendment Act, 1981, a chain of title "does not
depend upon and is not affected by any
instrument registered before the commencement
of the title search period." They submit that
under s. 105(1), they can rely on the deed of the
executrix to the Smith estate because it is the
only instrument registered within the 40-year
search period that purports on its face to convey
title to the subject lands. They are entitled to rely
upon the form of the conveyance and are not
concerned with its substance. Their submission
ignores the fact that, although the instruments
relating to the senior title were registered before
the 40 year title search period, the defect is
shown by They dismiss the documents relating to
the equitable mortgage in 1951 and the transfer
to which the succession duty releases in 1965
applied, all of which were as being something
other than instruments registered within the title
search period for the purposes meaning of the
Registry Amendment Act, 1981.
As I understand the appellants' argument, the
effect of the new legislative regime in 1981 is to
replace retroactively the principle that any prior
claim notice of can be shown by defects in the
chain of title with a principle that a claim
registered before the 40 year period can be a
defect in the chain of title only if the claim is
shown by a notice of claim . . Even if I did not
reject this argument for the reason set out in the
previous paragraph, I would reject it because,
aAs I pointed out in [Camrich], I do not think the
Registry Amendment Act, 1981 is retroactive to
validate titles which were otherwise deficient
prior to August 1, 1981. Certainly it cannot have
the effect of creating an ownership where
formerly there was none.
In this passage, the judge rejected the argument
about the provision saying, with some
exceptions, that a chain of title is not affected by
any instrument registered before the 40-year
search period for two reasons. First, he did so
because the words saying that a chain of title is
not usually affected by an instrument registered
before the 40 year title search period do not alter
the effect of anything shown by the chain of title
during the period. Secondly, he did so because
he felt that Part III was not retroactive. As to the
second reason, a later section shows that the
majority's reasoning on retroactivity was
probably wrong anyway. But that does not
detract from the first reason.
Thus, the case confirms the conclusion of the
article that the title is probably subject to any
defect or encumbrance shown by the search for
the chain of title, at least if it is shown by an
instrument registered within the 40-year period,
even if no instrument for the claim that is the
subject of the defect or encumbrance is
registered or re-registered in the 40 year period.
5.11
National Sewer: What is the standard
to be used in verifying that the search under
the chain of title rule shows nothing to cast
doubt on the assumption that a disposing
party under the root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
In National Sewer, neither the equitable
mortgage nor the succession duty release
amounted to a registration of the senior claim.
The question was whether those documents
showed that the assumption under the root of
title, that the deceased owned the land, could not
be made.
The trial judge decided that, at "the time in
question", the effect of Registry Act was that the
executor's deed did not vest in the transferee the
land that was excepted from the succession duty
release. Presumably that time was when the
junior claimants acquired their interests. The
Act was been amended to provide that the land
would vest. Although the amendment was
passed and came into force after one junior
claimant acquired but before the other did so, the
judge ignored that difference. Because the Act
might prevent vesting, a "thorough search"
would have required the junior claimants to
Appendix C - National Sewer
check the succession duty release and a perusal
of it would have made it "abundantly clear" that
the deceased did not own the land. This meant
that the root of title was not a "clean deed" or
"good deed." Although members of the bar,
experts in the field of law in the case, had given
opinion evidence, the judge said his decision
was his own, "based on the law." He also said,
when dealing with a suggestion that a prudent
practitioner would check that there was a deed
prior to the 40 year period, that he was "not
adjudicating upon considerations of prudent
practice in the field of conveyancing." The trial
judge was wrong in deciding that, at the time in
question, the Registry Act prevented vesting. If
he had been right in that decision, he would
probably have been right in deciding that the
succession duty release showed that the
deceased did not own the land. His suggestion
that the practice of conveyancers was irrelevant
should be ignored as being inconsistent with the
idea that the test was what a proper search would
have shown.
The majority of the Court of Appeal decided that
the junior claimants were "on notice" that the
deceased referred to in the executor's deed did
not own the land. The notice came from two
sources. First, the equitable mortgage and
discharge gave the junior claimants "actual
notice of the lack of title", because the Registry
Act provides that a registration is actual notice.
They showed that the deceased did not own the
disputed land, not because not mortgaging it
meant that he did not own it, but because an
"examination" of it would have led to Deed
4012, by which the land had been severed from
the rest of the junior claimant's land. Second,
the notice came from the succession duty
release. As this was only deposited and not
registered, the Registry Act did not give actual
notice of it. But the executor's deed placed a
searcher on notice that a succession duty release
was required and an "examination" of that would
reveal the lack of title under the root. This was
still a live issue when the one of the junior
claimants purchased.
The succession duty
release "corroborated" the notice given by the
equitable mortgage and discharge. It was "clear
from the appropriate abstract of title" that the
land belonged to the senior claimant The junior
claimants therefore relied on "faulty title
searches."
Although the majority emphasized that the
junior claimants had "actual notice" because the
mortgage was registered, it was not notice of the
mortgage but was "actual notice of the lack of
title." Conversely, even though the succession
duty release was only deposited and not
registered, an examination of it was required and
that examination "would reveal" the lack of title.
It was the fact that the junior claimants relied on
"faulty title searches" that determined the issue.
Although the majority did not refer to the
practice of conveyancers, the majority clearly
dealt with what a proper "examination" of title
would "reveal."
The minority judge's reasons are important
because the Court of Appeal Fire agreed with
his "full and compelling" reasons on the issue of
notice. On this issue of notice, his reasons were
as follows.
The equitable mortgage and
discharge were not notice for two reasons. First,
the mere fact that the mortgage did not include
the land did not mean that the mortgagor did not
own it. Nor did the reference to Deed 4012
mean that the mortgagor did not own the land
described in it. Second, since the Registry Act
provides that, where a mortgage has been
discharged for more than 10 years, the land is
not affected by the mortgage, the mortgage
could be ignored for the purposes of a title
search when the junior claimants purchased; it
was a "non-issue." The succession duty release
was not notice to the junior claimants because
the quality of title had to be assessed when the
title was brought into issue and the land had then
vested under the executor's deed due to the
retrospective exemption.
A hypothetical
purchaser at that time would obtain good title
because the vesting had then ceased to be a
problem.
The minority judge did not specifically consider
whether a good chain of title is one that a person
Appendix C - National Sewer
reasonably skilled in investigating title would
accept as good. He quoted from Tkach that Part
III "was passed to facilitate the task of title
searchers and solicitors certifying title." He said
that the equitable mortgage could "be ignored
for the purposes of a title search." And he
concluded in effect that a hypothetical purchaser
in 1982 would not be "required to undertake a
search of title greater than 40 years." The
repeated references to the process of searching
and certifying title seems to assume that the
practice of persons investigating title is relevant.
Thus, the reasons of all of the judges also tend to
confirm the conclusion of the article that the
standard to be used in determining what the
search of the chain of title shows is that of a
person reasonably skilled in investigating title.
5.12
National Sewer: How long must the
chain be to be considered a chain of title?
The case does not deal with this issue.
5.13
National
retroactive?
Sewer:
Is
Part
III
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
The 1981 amendments to Part III might seem to
have made three major changes that raise the
issue of retroactivity:
(a) The 1981 amendments changed a rule that
the root of title had to be at least 40 years
old. Thus they might have validated a
claim based on a root of title within the 40
year period even though the claim would
seem to have been invalid before the 1981
amendments.
(b) The 1981 amendments changed a rule that a
claim could not expire under the
registration rule until 40 years after it was
last acknowledged or referred to in a
registered instrument by requiring the 40
year period to start when the claim was last
registered. Thus a claim might seem to
expire even though the 40 year period for it
was still running when the 1981
amendments were made.
(c) The 1981 amendments might seem
provided that a defect in the chain of title
no longer saves a conflicting interest unless
the conflicting interest is registered or reregistered in the 40 year period. Thus a
claim that would before the 1981
amendments have been shown by the
search under the chain of title rule might
seem not to be protected after the
amendments.
In National Sewer, the junior title would have
been validated when the 1981 amendments came
into force, because, although the test under the
registration rule had been met long before then,
a root of title less than 40 years old did not
become acceptable under the chain of title rule
until then. The facts raised the first and third
major issues of retroactivity. As to the first, the
root for the junior title was less than 40 years
old. As to the third, it was argued that a defect
in the chain of title no longer saved a conflicting
interest unless the conflicting interest was
registered or re-registered in the 40 year period.
The trial judge's reasons on retroactivity were
inconclusive:
As to the first issue, he did not decide
whether a root of title within the 40 year
period could be good because the root of
title was bad regardless of the 1981
amendments.
As to the third issue, the argument does not
seem to have been raised.
Appendix C - National Sewer
The reasons of majority of the Court of Appeal
were as follows:
As to the first issue, the majority accepted
that the junior title was could have been
valid even though the root was within the
40 year period. The majority specifically
decided that an instrument registered within
the 40 year period could be a good root of
title. In this part of its reasons, it did not
specifically consider the issue of
retroactivity.
As to the third issue, if the reasoning of the
majority is modified in light of the
majority's conclusion and to use the
language of the article. it is as follows:
The problem that the appellants have in this case
is that not only, in the conveyance they rely upon,
had the grantor had no title to convey . . but
aAdditionally, the appellants had notice of the
search of title showed this want of title at the time
of their first dealing with the title was brought
into question for the subject lands by reason of
the registrations relating to the equitable
mortgage and the succession duty releases . .
The appellants take a technical position in this
matter. They submit that the chain of title cannot
be affected by the senior title because the
instruments relating to it were registered outside
the 40 year title search period and, under the
provisions of s. 105(1) of the Registry
Amendment Act, 1981, a chain of title "does not
depend upon and is not affected by any
instrument registered before the commencement
of the title search period." They submit that
under s. 105(1), they can rely on the deed of the
executrix to the Smith estate because it is the
only instrument registered within the 40-year
search period that purports on its face to convey
title to the subject lands. They are entitled to rely
upon the form of the conveyance and are not
concerned with its substance. Their submission
ignores the fact that, although the instruments
relating to the senior title were registered before
the 40 year title search period, the defect is
shown by They dismiss the documents relating to
the equitable mortgage in 1951 and the document
to which the succession duty releases in 1965
applied, all of which were as being something
other than instruments registered within the title
search period for the purposes meaning of the
Registry Amendment Act, 1981.
As I understand the appellants' argument, the
effect of the new legislative regime in 1981 is to
replace retroactively the principle that any prior
claim notice of can be shown by defects in the
chain of title with a principle that a claim
registered before the 40 year period can be a
defect in the chain of title only if the claim is
shown by a notice of claim . . Even if I did not
reject this argument for the reason set out in the
previous paragraph, I would reject it because,
aAs I pointed out in [Camrich], I do not think the
Registry Amendment Act, 1981 is retroactive to
validate titles which were otherwise deficient
prior to August 1, 1981. Certainly it cannot have
the effect of creating an ownership where
formerly there was none.
In this passage, the judge rejected the
argument that a defect in the chain of title
no longer saves a conflicting interest unless
the conflicting interest is registered or reregistered in the 40 year period. He did so
mainly because the words saying that a
chain of title is not usually affected by an
instrument registered before the 40 year
title search period merely confirm that the
root need no longer be more than 40 years
old and do not alter the effect of anything
shown by the chain of title during the
period. He also rejected the argument
because he felt that Part III was not
retroactive.
However, the majority's
decision on retroactivity should not be
followed for the following reasons. It is
inconsistent with the majority's decision
that the root of title was retroactively good
even though it was within the 40 year
period. It was only one of the reasons for
the decision that a defect in the chain of
title no longer saves a conflicting interest
unless the conflicting interest is registered
or re-registered in the 40 year period. As
set out in section 4.13, the Court of Appeal
in Fire disagreed with it. And, for the
reasons set out in the article, it does not
carry out the purpose of Part III.
Appendix C - National Sewer
The reasons of minority judge of the Court of
Appeal were as follows:
As to the first issue, he decided that the root
registered within the 40 year period was a
good root of title.
As to the third issue, he did not refer to the
argument.
He did not specifically consider the issue of
retroactivity at all. However his reasons on
that issue would presumably have been the
same as that in Camrich.
Thus, although the majority of the Court of
Appeal in National Sewer said that Part III was
not retroactive, the decision should not be
followed. The case does not deal with the issue
of whether, if the tests are applied to the facts
before the 1981 amendments, the rules as they
were then apply.
5.14
National Sewer: What is the effect of
actual notice under Part III?
The article concludes that Part III validates the
title to an interest when it meets the two tests,
even if a holder of the interest actually knows of
the conflicting claim to the interest, but, if the
holder knew of the conflicting claim when the
holder acquired the interest and Part III had not
then validated the title, the holder may not,
under general principles of law, be permitted to
take advantage of the validation.
In National Sewer, the judgments of both the
majority and minority often refer to "notice", but
not always in the sense used in this section.
The essential reason for majority's decision was:
arguments about subsequent changes in the
Registry Act having the effect of validating what
otherwise would have been faulty title searches
miss the point in issue . . it is clear from the
appropriate abstract of title that . . [at the root]
the subject lands were recorded as belonging to
[the senior claimant] and not [the junior claimant]
. . The instrument creating the equitable
mortgage, corroborated by the succession duty
releases, clearly excepted the subject property,
and put the appellants on notice that he was not
the owner.
These words show that, when the majority said
that the junior claimants had "notice", it meant
that the senior title would have been shown by a
proper search, not that the junior claimants had
actual notice of the senior title.
This is confirmed by other passages that referred
to "notice":
the appellants had notice of this want of title at
the time of their first dealing with subject lands
by reason of the registrations relating to the
equitable mortgage and the succession duty
releases . .
the appellants had actual notice of the lack of title
of the executrix in question within the meaning of
ss. 65 and 66 of the Registry Act by reason of the
aforementioned equitable mortgage documents . .
That executrix's deed . . places title searchers on
notice that succession duty releases were
required. An examination of the releases would
reveal . . the inability of the executrix to make the
grant . .
Thus, the references in the majority's reasons to
notice or actual notice are to what a proper
search would reveal, not what the junior
claimants actually knew. They do not give any
guidance on the effect of actual notice.
The minority judge used the words "actual
notice" more accurately. He said:
In Tkach, an executor's deed, which by mistake
included land which the deceased did not own, by
its form conveyed the land to Tkach's
predecessors in title. Tkach had actual notice of
registered instruments which clearly showed that
the relevant title did not proceed to the deceased.
However, the instruments which provided the
notice were registered outside the 40-year search
period.
He went on to refer to the judge's decision that
the question was whether a hypothetical
purchaser from the appellant at the moment the
title comes under attack could obtain good title.
Appendix C - National Sewer
The minority judge also said:
The respondent takes the succession duty consent
issue further. Mr. O'Donohue submits that the
missing succession duty consent provided notice
that the deceased did not own the land in issue.
Once again the province and Azova are in
somewhat different positions. When Azova
purchased its land, s. 48(8) was in force. Azova,
therefore, had no reason to be concerned about
succession duty consents at all, provided that it
was satisfied that the deceased died before
January 1, 1970.
With respect to the province, I do not think that
the absence of a succession duty consent or
certificate can be taken as notice that the
deceased did not own the land. There is no
evidence of what questions were asked generally,
or in the form of requisitions on title, at the time
of the appellants' purchases. The province may
well have been unconcerned because the Ministry
of Government Services would have known of
the then imminent passage of s. 48(8). I do not
think that any useful purpose is to be served by
speculating as to what caused either Azova or the
province to accept or ignore the absence of a
succession duty consent or certificate referable to
that part of the five acres each appellant
purchased. In my view, the evidence falls short
of establishing that either appellant had actual
notice of any claim which would affect the title it
relied upon.
To summarize then . . When the appellants
purchased their respective interests in the five
acres, they had no notice of the respondent's
interest . .
In Fire, the judge giving the reasons of the court
said:
Finlayson J.A. also based his decision in National
Sewer on his opinion that "the appellants had
actual notice of the lack of title of the executrix in
question . . within the meaning of ss, 65 and 66 of
the Act." I agree with the full and compelling
dissenting reasons of Osborne J.A. on this issue,
but since there are no facts in this instant appeal
requiring it, I would comment no further on this
point.
These words deal only with "actual notice" as
what a proper search would reveal, in the sense
used by the majority, rather than what the junior
claimants actually knew, in the sense used by the
minority judge. Thus the court's agreement in
Fire with the minority judge's reasons does not
extend to the minority judge's reasons on actual
notice.
The minority judge treated the junior claimant's
title as having been validated when it was
brought into question in 1982. For one junior
claimant, the Ontario government, the actual
notice (if it had existed) would have been before
the purchase. The article concludes that title
would have been validated as soon as the two
tests were met, which would for the Ontario
government in National Sewer have been when
the 1981 amendments came into force. Thus,
for the Ontario government, the actual notice (if
it had existed) would have been before the
purchase and before the title was validated.
The minority judge's reasoning on actual notice
seems inconsistent. On the one hand, he seems
to have agreed with Tkach that Part III validates
title despite actual notice. On the other hand, he
seems to have based his decision on the junior
claimants' not having had actual notice. Perhaps
the inconsistency can be explained by saying
that the minority judge either did not regard the
notice in Tkach through old instruments or to the
solicitor as actual notice or that he did not feel it
should prevent the junior claimant from taking
advantage of the validation.
Thus, National Sewer is inconclusive on the
effect of actual notice.
5.15
National Sewer: What is the effect of
possession?
The article contains the following conclusions.
As far as a right is legally created by adverse
possession or use, it does not expire under Part
III. If the right is also registered (as it often will
be), Part III probably validates it if the registered
title meets the tests. An easement or similar
right should not expire under Part III if the
holder is openly enjoying and using it, but any
other registered right, including ownership, can
expire, even if accompanied by possession.
Appendix C - National Sewer
In National Sewer, the Court of Appeal said that
none of the parties was able to establish any
possession over the land which had apparently
remained vacant for decades. The trial judge
found that the junior claimants had not exercised
possession in any way. He found that the senior
claimant had held a licence to quarry for clay in
the land for over 10 years and had probably done
some drilling on the land, but this did not
warrant a finding that the senior claimant had
been in possession. He also found that both the
senior and junior claimants had probably been
paying taxes on the land. However, none of
these factors was a basis for his decision.
5.16
National Sewer: What is the effect of
fraud under Part III?
The article concludes that Part III probably does
not validate a claim where the chain includes an
instrument that is void because of fraud.
In National Sewer, there was no evidence that
any junior claimant had been party to a fraud.
The mistake in the junior root was one that an
executor often makes. The majority of the Court
of Appeal noted that the executrix, the
deceased's widow, and the beneficiary, his son,
had "notice" that the deceased did not own the
land, but did not suggest that the mistake in the
deed was made dishonestly, and the minority
judge said that it was not suggested that the
inclusion of the land in the root of title "involved
fraudulent conduct." The case does therefore
not deal with this issue.
The trial judge said that, if Part III was to be
interpreted to dispense with the need for a good
chain of title, "legitimate ownership of real
property can be defeated by inadvertent errors in
conveyancing
or
even
by
fraudulent
conveyancing. However, he did not elaborate on
exactly how the chain of title rule protected
ownership from fraud. The minority judge in
the Court of Appeal, after saying that one could
rely on a good root of title, noted that this
"would not validate forgeries or other fraudulent
transactions."
5.17
National Sewer: Other comments
No other comments.
Appendix C - Fire
6.
Fire. Fire v. Longtin (1993) 70 O.A.C. 226 (C.A.).
6.1
Fire: General notes
Fire
1941
Senior transfer.
1943-53
40 years before last junior transfer and Court of Appeal decision.
1975-80
First and other junior transfers.
Before August
1, 1981
If the last senior registration was before August 1, 1941, the 40 year
notice period would end before the 1981 amendments came into force
on August 1, 1981, but the reports do not show the date in 1941 of the
last senior registration.
August 1,
1981
1981 amendments to Part III.
After July 31,
1981
If the last senior registration was before August 1, 1941, the tests under
both chain of title and registration rules would have been met when the
1981 amendments came into force on August 1, 1981. If the last senior
registration was after July 31, 1941, the tests would have been met
after the amendments came into force on August 1, 1981.
August 1983
Last junior transfer.
September
1983
Transfer by senior claimants of right of way only over disputed land.
1987
Correcting transfer by senior claimants of ownership of disputed land.
1987
Senior claimants claim that they are owners of land and that junior
claimants' septic system is wrongfully installed in the land.
Winner
Junior claimant.
The claims were to a strip of land used as part of
a private road for several cottages.
The
ownership of the strip was important because the
junior claimant had built a septic system in it
that was polluting the senior claimant's water
supply.
The first junior transfer included the strip
because of a surveyor's mistake. When the
notice period expired for the senior claim, the
junior claimants' root of title was only about 6
years old. When the junior claimants acquired
the land, their root of title was only about 8
years old. And, when the register first showed
the conflict, the root was only 12 years old.
Neither junior nor senior claimant had been in
possession, because they were using the strip
only for access.
Appendix C - Fire
Because earlier decisions of the Court of Appeal
had caused confusion, the court chose strong
judges for Fire, in case the matter was not
appealed to the Supreme Court of Canada.
However, the case has been appealed to the
Supreme Court of Canada. Leave to appeal was
granted on October 6, 1994 and the hearing
should be in the fall of 1995.
Algoma, Tkach and Camrich. The court said
that the proposition was "saying that a solicitor
searching title is saved from a negligence claim,
but that the grantee who relies on the
certification gets no title. That is not what the
legislation says." The proposition was saying in
effect that "the only safe search was one back to
the original grant from the Crown."
The main part of the reasoning in Fire was in the
following words of the judge giving the court's
reasons:
The Court of Appeal went on to comment on the
decision of the Court of Appeal Camrich, and to
suggest that the chain of title rule allows one to
assume more than only that the title before the
root is consistent with the search. It said:
. . [when one of the senior claimants conveyed to
the respondents in September 1983], he did not
convey the fee to [the land], but merely a right of
way over [the land].
Consequently the
respondents [never did obtain title to the land.
Title was retained by [the person conveying] . .
[The claim of the person conveying] expired in
accordance with the provisions of [the
registration rule] in 1981 . . .
When the appellants [the junior claimants] took
title in [August] 1983, the provisions of the Act
required only that the title be searched back forty
years -- to 1943. Within that period of time, the
only persons shown to have title were the
appellants and their predecessors.
In my view, the Act clearly has the effect of
validating the title of the appellants to the
property in issue.
In Fire, the senior claimant argued that the
junior claimant had no title because the
transferor in the junior claimant's root of title
had no title to convey. This argument purported
to be based on the reasons of the Court of
Appeal in National Sewer.
As has been
explained, the reasons of the majority of the
Court of Appeal in National Sewer do not stand
for the proposition that a chain cannot start with
a conveyance by a person who has no title to
convey. A fair way of dealing with them would
have been to explain them. However, the court
in Fire assumed that the court in National Sewer
had proposed that a chain could not start with a
conveyance by a person who had no title to
convey.
The court strongly criticised this
proposition, pointing out that a chain starting
with such a conveyance had been found good in
The situation was somewhat similar in the
Camrich case. The distinguishing feature in that
case was that the instrument on which the
respondents relied was an expropriation by-law.
as stated in the reasons, anyone looking at the
abstract of title and at the by-law would assume
that the expropriating authority had good title to
the land. But surely that is the case when one
sees a conveyance or series of conveyances valid
on their face within the search period and no
conflicting instrument - one would assume that
the grantor under those conveyances had a good
title to the land. In fact, in the Camrich appeal
the court did not base its decision on the validity
of the expropriation, and specifically declined to
deal with that issue. The decision was based on
what was shown in the appropriate abstract
index -- an expropriation by-law valid on its face.
As has been explained in section 4.1 dealing
with Camrich, the Court of Appeal in Camrich
did not give the italicised words as the reason for
its decision on the expropriation issue. In any
event, the statement of the Court of Appeal in
Fire was not a reason for its decision, but only a
comment. Thus Fire is not good authority for
saying that one can take instruments at face
value.
6.2
Fire: Does Part III validate a title if
both of the chain of title and the registration
rules are satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Appendix C - Fire
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
For Fire, the first question is: does the chain of
title rule validate a title? The second question is:
did the court rely on both the registration and
chain of title rules?
The court unanimously made a declaration that
the junior claimant had title to the property. The
judge giving the reasons said:
. . [when one of the senior claimants conveyed to
the respondents in September 1983], he did not
convey the fee to [the land], but merely a right of
way over [the land].
Consequently the
respondents [never did obtain title to the land.
Title was retained by [the person conveying] . .
[The claim of the person conveying] expired in
accordance with the provisions of [the
registration rule] in 1981 . . .
When the appellants [the junior claimants] took
title in [August] 1983, the provisions of the Act
required only that the title be searched back forty
years -- to 1943. Within that period of time, the
only persons shown to have title were the
appellants and their predecessors.
In my view, the Act clearly has the effect of
validating the title of the appellants to the
property in issue.
The court then went on to deal in detail with
various issues relating to the junior claimant's
chain of title, as set out on the general notes
above. The court did not have to decide what
might have been the effect of a defect in the
junior chain that revealed the senior title because
no such defect was considered in the Fire case.
However, the court commented that it agreed
with the reasons of the minority judge in
National Sewer on the issue of notice of the
defect in title in that case. As has been seen, the
reasoning of the minority judge in National
Sewer did not deny that such a defect would be
relevant. It only denied that there was such a
defect in the National Sewer case.
In the result, the court answered the questions as
follows. The chain of title rule validates a title;
the court said that "the Act clearly has the effect
of validating the title." Second, the junior
claimants succeeded because they satisfied the
tests under both the chain of title and registration
rules. The reasoning confirms that Part III
validates title to an interest if both, under the
chain of title rule, the holder has a good chain of
title and, under the registration rule, no
registered adverse claim has been registered in
the 40 year period.
6.3
Fire: Does the provision about a
freehold title continuously shown confirm
that Part III validates a title only if it meets
the tests under both the chain of title and
registration rules?
The article concludes that the answer to the
above question is yes. The provision should be
read as saying "continuously shown through a
good and sufficient chain of title" and is not a
cross-reference merely to a case where no
conveyance is registered within the 40 year
period.
In Fire, the nearest reference to this provision
was in the words: "When the appellants took
title in 1983, the provisions of the Act required
only that the title be searched back forty years -to 1943. Within that period of time, the only
persons shown to have title were the appellants
[the junior claimants] and their predecessors."
However, the court probably did not intend in
that passage to interpret the words "continuously
shown by the abstract index for the land as being
so entitled for more than forty years as long as
the person is so shown." Thus the case does not
deal with this issue.
6.4
title?
Fire: When does Part III validate a
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
Appendix C - Fire
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Fire there were two registrations for the
senior claim after the junior claimants acquired
the land. The first was a senior transfer based on
the same mistake as the junior transfers. The
second was a correcting transfer purporting to
convey the land to the senior claimant. It made
no difference to the material facts whether the
determination date was the date on which the
junior claimants acquired the land or on which
the correcting transfer was registered.
The Court of Appeal did not refer to the
correcting transfer at all. In the passage below,
the italicized words are numbered so that they
can be referred to below. The court said:
. . [when one of the senior claimants conveyed to
the respondents in September 1983], he did not
convey the fee to [the land], but merely a right of
way over [the land].
Consequently the
respondents [never did obtain title to the land.
Title was retained by [the person conveying] [1]
..
[The claim of the person conveying] expired [2]
in accordance with the provisions of [the
registration rule] in 1981 [3] . . .
claimant's title became valid in August 1983. In
fact, Part III could have validated the title in
1981, because the notice period for the senior
claim expired in that year and because the junior
claimant then had a good chain of title, albeit
based on a root only 6 years old. The reports do
not show the exact date on which the senior title
was registered in 1941 and so it is not known
whether the notice period expired before or after
the 1981 amendments came into force on August
1, 1981. But the court did not have to deal with
the issue of when Part III validated the title
because Part III could also have validated the
title when the first dealing after the notice period
was registered in 1983. Thus the reasons were
vague about when Part III operated and probably
give no guidance about when Part III validates
title.
Although the court quoted from Tkach, it did not
refer to the decision in that case that the title
must be viewed "as of the moment it comes
under attack." When referring to National
Sewer, the court said:
The parties were in agreement that the relevant
date for the determination of the rights of the
parties was in 1982, when the respondent had the
1953 conveyance re-registered in the correct
abstract index.
However, the court did not say whether it
regarded this agreement as correct.
When the appellants [the junior claimants] took
title in [August] 1983 [4], the provisions of the
Act required only that the title be searched back
forty years -- to 1943 [5]. Within that period of
time, the only persons shown to have title were
the appellants and their predecessors.
Thus Fire does not contain a consistent view of
when Part III validates title.
In my view, the Act clearly has the effect of
validating the title of the appellants to the
property in issue.
The article concludes that, under the registration
rule, a claim is registered when a dealing is
registered against the land (i) which purports to
create or transfer a claim out of which the claim
later arises; (ii) which purports to create or
transfer all of the claim; (iii) probably, which
purports to contain a dealing by the holder of the
claim with part of the claim, but not (iv) which
deals with another interest and merely refers to
the claim.
This passage does not show when Part III
validated the title. The first italicized phrase
indicates that the senior claimant still held title
in September 1983. The second and third
italicized phrases indicate that the senior
claimant lost title in 1981. The fourth and fifth
italicized phrases indicate that the junior
6.5
Fire: Under the registration rule,
when is a claim registered?
Appendix C - Fire
In Fire, nothing had been registered in the 40
year period that referred in any way to the senior
title. The reasons therefore contain little of
interest about the registration rule.
The trial judge decided that Part III did not
extinguish the senior title because, "to accept the
[junior claimants'] argument would require
owners of property to search their lots to find out
whether anyone has attempted to convey any
interest in their property to protect their title.
This would be a highly suspect result." This
reasoning ignored the registration rule, which
gives owners a way of protecting their interests
without searching their property. They should
be able to determine without a search when their
claims were last registered and must then be sure
to register a notice of claim within 40 years after
that.
The Court of Appeal had to decide whether the
1981 amendments to Part III were retroactive.
In its reasoning on that issue, it approved the
reasoning of the trial and minority Court of
Appeal judges in Camrich. Their decisions were
that, because the amendments were retroactive, a
claim expired when the amendments came into
force if it was then preserved only be an
acknowledgment or reference under Part III as it
was.
This approval confirms the general
conclusion of the article that it is now only a
registration of an interest that starts the 40 year
period running under the registration rule.
The Court of Appeal recognized that "the
application of Part III may result from time to
time in apparent injustices to persons with
claims to real property which are older than
forty years." But it pointed out that, although
the legislation favours more recent grantees, it
"still contains many safeguards of the rights of
those
claiming
under
more
ancient
conveyances." These would include the right to
register a notice of claim.
6.6
Fire: Can a notice of claim be
registered for a claim as long as the claim is
valid?
The article concludes that the rules in Part III for
a notice of claim should allow the holder of a
claim to preserve the claim by registering the
prescribed notice of claim until the claim is
invalidated under the two basic tests, but the
effect of a notice of claim registered after the 40year period is not clear.
In Fire, the Court of Appeal decided that "[the
claim of the senior claimant] expired in
accordance with the provisions of [the
registration rule] in 1981 . . When the appellants
took title in 1983, the provisions of the Act
required only that the title be searched back
forty years -- to 1943. Within that period of
time, the only persons shown to have title . .
were the appellants [the junior claimants] and
their predecessors."
The last registration of the senior title was in
1941, so that the 40 year notice period ended in
1981. The first registration of a conflicting
claim after the 40 year notice period was in
1983. The court did not even allow that the
senior claimant might have had until 1983 to
register a notice of claim. However, no notice of
claim was registered and the court did not refer
to a notice of claim for the senior claim. The
reasoning should not therefore be taken as
giving any guidance on the rules for a notice of
claim.
6.7
Fire: What does the chain of title rule
allow one to assume?
The article concludes that the chain of title rule
allows one to assume, if the chain of title is
good, that the title before the root is consistent
with what is shown by the search, and only that.
In Fire, the root of title was a transfer by a
person who did not own the land. The transfer
purported to be by the owner rather than a
person exercising a power. The senior claimant
argued that the junior claimant had no title
Appendix C - Fire
because the transferor in the junior claimant's
root of title had no title to convey. This
argument was based on the reasons of the Court
of Appeal in National Sewer.
The court in Fire strongly rejected the argument
that the junior claimant had no title because the
transferor in the junior claimant's root of title
had no title to convey . . The court based this on
the reasoning in Tkach and Algoma that "if the
title documents are valid on their face . . it is not
necessary to go behind those documents in order
to test the validity of the title transferred." The
court said that the suggestion in National Sewer
was "saying that a solicitor searching title is
saved from a negligence claim, but that the
grantee who relies on the certification gets no
title. That is not what the legislation says." The
suggestion was saying in effect that the only safe
search was one back to the original grant from
the Crown.
This confirms the conclusion of the article that
the chain of title rule allows one to assume, if
there is a good chain of title, that the title before
the root is consistent with what is shown by the
search.
In commenting on the argument that a root of
title cannot be good if the grantor has no title to
convey, the judge giving the court's reasons said:
"it is my view that when Part III of the Act was
passed in 1981 one of its purposes was to clear
up title problems of this sort, and support titles
on which successive grantees may have relied."
These words again confirm the conclusion of the
article. They also seem to suggest that Part III
should help to "clear up title problems", but the
italicized words show that Part III is not
intended to remedy title problems generally.
The Court of Appeal went on to comment on the
decision of the Court of Appeal Camrich, and to
suggest that the chain of title rule allows one to
assume more than only that the title before the
root is consistent with the search. It said:
The situation was somewhat similar in the
Camrich case. The distinguishing feature in that
case was that the instrument on which the
respondents relied was an expropriation by-law.
as stated in the reasons, anyone looking at the
abstract of title and at the by-law would assume
that the expropriating authority had good title to
the land. But surely that is the case when one
sees a conveyance or series of conveyances valid
on their face within the search period and no
conflicting instrument - one would assume that
the grantor under those conveyances had a good
title to the land. In fact, in the Camrich appeal
the court did not base its decision on the validity
of the expropriation, and specifically declined to
deal with that issue. The decision was based on
what was shown in the appropriate abstract
index -- an expropriation by-law valid on its face.
The words set out above could be interpreted in
two ways. First, they might say that a searcher
can take the root at face value without inquiring
about its quality. As has been explained in
section 4.1 dealing with Camrich, the Court of
Appeal in Camrich did not give this as the
reason for its decision on the expropriation
issue. And, if that interpretation were correct,
the words would be obiter dicta, because the
facts did not raise an issue of whether the root
validly exercised a power.
The second
interpretation is that the searcher could merely
assume that Hydro did not have an interest so
that the question of whether the expropriation
could validly take the interest of a Crown
agency was not raised. The comment was part
of the court's explanation of the principle that
the transferor in a good root could be assumed to
have title even if the transferor had no title to
convey. That explains the court's using the
awkward words "the expropriating authority had
good title to the land" whereas the authority only
acquired title through the expropriation. The
second interpretation seems the better one. Thus
Fire is not authority for saying that the chain of
title rule allows one to take instruments at face
value and confirms the conclusion of the article
that Part III allows one to assume only that the
title before the root is consistent with the search.
6.8
Fire: What are the rules as to the root
of title?
The article contains the following conclusions.
The chain of title for an interest must start with a
Appendix C - Fire
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Fire, the junior root was an ordinary transfer
that mistakenly included the land in dispute
because of a surveyor's error and was less than
40 years old. The case raised only the first issue
referred to in the first paragraph of this section,
whether a root within the 40 year period could
be good. However, the court commented on
Camrich where it dealt with a second issue of
whether a root has to meet tests as to its quality.
And this included a third issue of whether one of
those tests is that a transfer under a power (there
a power of expropriation) is a good root only if
the power to make the transfer is proved.
On the first issue of whether the root within the
40 year period was good, the court approved a
statement in Tkach that, unless there had been no
conveyance within the 40 year period, there was
no need to go beyond the period and instruments
within the period could be safely relied on. The
court contrasted this with the period when
Algoma was decided, which under the legislation
then in effect was a different period. Here the
only persons shown to have title within the
period were the junior claimants and the Act
clearly had the effect of validating their title.
On the second and third issues of whether a root
has to meet tests as to its quality and whether
one of those tests is that a transfer under a power
is a good root only if the power to make the
transfer is proved, the court commented as
follows. The senior claimant had argued that the
junior claimant had no title because the
transferor in the junior claimant's root of title
had no title to convey. This argument was based
on the reasons of the Court of Appeal in
National Sewer. The court in Fire strongly
rejected the argument that the junior claimant
had no title because the transferor in the junior
claimant's root of title had no title to convey.
The court based this on the reasoning in Tkach
and Algoma that "if the title documents are valid
on their face . . it is not necessary to go behind
those documents in order to test the validity of
the title transferred." Up to this point, the
reasoning of the court in Fire confirms that the
root of title must meet some tests as to its
quality, even if they are only that the root must
be valid on its face. However, the court went on
to comment on Camrich as set out in section 4.7
above. As has been explained in section 4.7, the
better interpretation of those words is not that a
root exercising a power can be taken at face
value. And even if it was, since the root in Fire
was not a transfer under a power, the court's
statement on the question was not a reason for
its decision, but only a comment. Thus, Fire is
not authority for an argument that a transfer
under a power is a good root even if the power
to make the transfer is not proved.
In the result, Fire strongly confirms the
conclusion of the article that, under the chain of
title rule after the 1981 amendments, a root of
title within the 40 year period can be good.
Comments in it tend to confirm the conclusion
that the root must meet tests as to its quality if it
is to be a good root of title. And, the comments
in it that seem to contradict this probably do not
deal with the issue.
6.9
Fire: What period must the detailed
search under the chain of title rule cover?
The article contains the following conclusions.
Where the chain of title begins with a root less
than 40 years old, the title is also affected by
anything that is shown by a detailed search
Appendix C - Fire
under the chain of title rule covering the part of
the 40-year period before the root. Apart from
the provision referred to in the next question,
where the chain of title begins with a root more
than 40 years old, the title is affected by
anything that is shown by a detailed search
under the chain of title rule from the beginning
of the chain, including the part of period of the
chain that is after the root and before the 40-year
period.
In Fire, there was nothing in the title in the part
of the 40 year period before the root that showed
the senior title and the case does not therefore
deal with the issue.
6.10
Fire: Does a provision in Part III that
says, with some exceptions, that a chain of
title is not affected by any instrument
registered before the 40-year search period,
mean that a defect or encumbrance based on
such an instrument does not affect the title?
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
In Fire, the courts did not consider any defect or
encumbrance that might raise the question of
whether the chain of title might have been
affected by any defect or encumbrance shown by
the search. The case does not therefore deal
with the issue.
While the facts in Fire are not altogether clear,
the case might have raised the issue. It seems
that searches should have been made of the
abutting land to check that the transfers of the
junior title, which were registered after June 15,
1967 (which in this case included the transfer
that was the junior root of title) and which were
registered within the 40-year period, complied
with the subdivision control provisions of the
Planning Act. It also seems that the rest of the
senior claimant's land abutted the land in dispute
and that a search of that land for Planning Act
purposes would have had to go back to the last
senior transfer outside the 40-year period. If so,
the facts would have raised the issue in a
particularly extreme form because the defect
would not have been shown in an instrument
within the 40-year period (but only indirectly by
searches made for instruments within that
period), because the defect would have been
shown by an instrument that was referred to only
for the purpose of checking compliance with the
Planning Act, and because the instrument was
not part of the chain of title for the land in
dispute. Because the instrument showing the
defect was not registered within the 40-year
period, the reasoning in National Sewer would
not apply. That reasoning was that the provision
saying, with some exceptions, that a chain of
title is not affected by any instrument registered
before the 40-year search period did not apply
because the words saying that a chain of title is
not usually affected by an instrument registered
before the 40 year title search period do not alter
the effect of anything shown by the chain of title
during the period.
If the facts were as suggested above, it is
arguable that a proper search would have
included the last senior transfer, that the
description in it should have been checked to
confirm that the land dealt with in it did indeed
abut the disputed land, and that this check would
have shown that it actually included the land in
dispute. If so, then, but for the words saying that
a chain of title is not "affected" by an instrument
registered outside the 40-year period, the junior
claimants would have failed one of the two tests
for validation of their title because the required
search under the chain of title rule showed the
defect. The facts would therefore have required
the court to decide what was the effect of those
words.
The article sets out arguments for and against a
conclusion that the words of the provision apply.
However, in determining the issue, a the court
might have considered another hypothetical but
analogous situation. If searches under the
Appendix C - Fire
Planning Act had needed to go back to a transfer
before the 40-year period for other abutting land
and a transfer of that other land had shown, not
the senior claim, but that the root of the junior
title was void, because it contravened the
subdivision control provisions of the Planning
Act, would the junior claimants still have
succeeded? Would the provision about title not
being "affected" by an instrument registered
before the 40-year period have operated to
forgive a contravention within the 40-year
period of the subdivision control provisions of
the Planning Act? If not, would that not show
that title can be "affected" by an instrument
registered outside the 40-year period?
It might be argued that, even where the Planning
Act does not require a search of abutting land, a
proper search of part of a lot should include at
least the last instrument for abutting land to
check that the descriptions of the land and
abutting land are consistent. But this would
depend on whether a person reasonably skilled
in investigating title would make the search, and
that would seem to impose too high a standard,
especially where the last instrument for the
abutting land is over 40 years old.
6.11
Fire: What is the standard to be used
in verifying that the search under the chain of
title rule shows nothing to cast doubt on the
assumption that a disposing party under the
root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
In Fire, although a surveyor gave evidence that
the strip of land in dispute belonged to the senior
claimant, it was quite natural to assume that the
strip of land in dispute belonged to the owners of
the adjacent Longtin property, rather than the
Fires who owned the property at the end of the
strip. The court did not consider the possible
defect referred to in the previous section. Thus,
there was no defect in the chain that would show
what standard should be applied and the case
does not therefore deal with the issue.
6.12
Fire: How long must the chain be to
be considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
When the title was validated, there had been
more than one link in the junior chain, and the
case does not therefore deal with this issue.
6.13
Fire: Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
The 1981 amendments to Part III might seem to
have made three major changes that raise the
issue of retroactivity:
(a) The 1981 amendments might seem to have
changed a rule that the root of title had to
be at least 40 years old. Thus they might
have validated a claim based on a root of
title within the 40 year period even though
the claim would seem to have been invalid
before the 1981 amendments.
(b) The 1981 amendments might seem to have
changed a rule that a claim could not expire
under the registration rule until 40 years
after it was last acknowledged or referred
to in a registered instrument by requiring
the 40 year period to start when the claim
was last registered. Thus a claim might
seem to expire even though the 40 year
period for it was still running when the
1981 amendments were made.
(c) The 1981 amendments might seem
provided that a defect in the chain of title
no longer saves a conflicting interest unless
the conflicting interest is registered or reregistered in the 40 year period. Thus a
Appendix C - Fire
claim that would before the 1981
amendments have been shown by the
search under the chain of title rule might
seem not to be protected after the
amendments.
before the 1981 amendments, the rules as they
were then apply.
In Fire, the root of title was registered within the
40 year period.
The Court of Appeal
unanimously decided that the root registered
within the 40 year period was good and that Part
III was retroactive. The judge giving the reasons
of the court said:
The article concludes that Part III validates the
title to an interest when it meets the two tests,
even if a holder of the interest actually knows of
the conflicting claim to the interest, but, if the
holder knew of the conflicting claim when the
holder acquired the interest and Part III had not
then validated the title, the holder may not,
under general principles of law, be permitted to
take advantage of the validation.
In the present appeal it was argued that the
amendments could not have retroactive effect and
that, as a consequence, in searching a title one
must still go back to a root of title beyond the
forty year period. It is only necessary to state this
proposition to illustrate the obvious result. The
clear intent of the amendments that titles must be
searched only for a forty year period would be
completely frustrated.
It is unnecessary to review the law respecting
retroactivity of statutes. All that can be said on
the issue with respect to the provisions involved
in this appeal has been said by Henry J. in his
reasons in Camrich and by Osborne J.A. in his
concurring reasons in the appeal from that
decision, in which he takes the opposite position
from the majority of the court on the issue of
retroactivity. I respectfully agree with Henry J.
and Osborne J.A. on that issue.
The date on which Part III would have validated
the Longtin title was when the 1981
amendments came into force or after then
(depending on whether the 40th anniversary of
the registration of the 1941 transfer of the Fire
title was before or after August 1, 1981. The
question did not arise of whether the law as it
was before the amendments would have applied
if the determination date had been before those
amendments.
Thus Fire settles the issue of retroactivity and
confirms the conclusion of the article that, if the
tests under Part III are applied to the facts after
the 1981 amendments, the current rules apply
retroactively. It does not deal with the issue of
whether, if the tests are applied to the facts
6.14
Fire: What is the effect of actual
notice under Part III?
In Fire, there was no evidence that a junior
claimant had actual notice of the senior claim; it
seems to have been accepted that all concerned
were misled by the surveyor's error. Any
statements by the court on the issue would be
comments only.
The court's view on actual notice can only be
found in general statements that emphasize that
Part III has effect according to its terms. The
fact that the land was conveyed as a result of a
surveyor's error was "irrelevant to the operation
of" Part III; the operation was based on what
was shown by the register. On the other hand,
when commenting on the policy of Part III, the
court referred to the fact that "one of its specific
purposes was to clear up problems of this sort,
and support titles on which successive grantees
may have relied." The legislature had weighed
"the apparent injustices" to holders of older
claims against "the expectations of persons more
recently dealing with the land." These words
seem to require the persons protected to be
innocent rather than have actual notice.
In Fire, the judge giving the reasons of the court
said:
Finlayson J.A. also based his decision in National
Sewer on his opinion that "the appellants had
actual notice of the lack of title of the executrix in
question . . within the meaning of ss, 65 and 66 of
the Act." I agree with the full and compelling
dissenting reasons of Osborne J.A. on this issue,
Appendix C - Fire
but since there are no facts in this instant appeal
requiring it, I would comment no further on this
point.
These words deal only with "actual notice" as
what a proper search would reveal, in the sense
used by the majority in National Sewer, rather
than what the junior claimants actually knew, in
the sense used by the minority judge. Thus the
court's agreement in Fire with the reasons of the
minority judge may not extend to the minority
judge's reasons on actual notice.
Thus the case did not have to deal with actual
notice and comments in it that might relate to the
issue are inconclusive.
6.15
Fire: What is the effect of possession?
The article contains the following conclusions.
As far as a right is legally created by adverse
possession or use, it does not expire under Part
III. If the right is also registered (as it often will
be), Part III probably validates it if the registered
title meets the tests. An easement or similar
right should not expire under Part III if the
holder is openly enjoying and using it, but any
other registered right, including ownership, can
expire, even if accompanied by possession.
Presumably the senior claimants had used the
land for access to their property. The Court of
Appeal commented that the junior claimants had
undertaken to convey a right of way over the
land to the senior claimants. This saved the
court from considering whether the senior
claimants' use of the land gave them a right of
way.
6.16
Fire: What is the effect of fraud under
Part III?
The case does not deal with this issue.
6.17
Fire: Other comments
No other comment.
VALID TITLE UNDER THE ONTARIO REGISTRY SYSTEM
How the Forty Year Rule Works
John R. Wood
Borden & Elliot
APPENDIX D
Lower Court Cases dealing with Encumbrances
The tables that follow set out the essential facts and results of the cases.
FIRST FOUR LOWER COURT CASES DEALING WITH ENCUMBRANCES
(All before the 1981 amendments)
Lakhani (1980)
Layton
(1950)
Jakmar
(1973)
Zygocki
(1975)
Transfer
(root of
title 1904)
Transfer
(root of
title before
1915)
Transfer to
railway
company
(root of title
- 1910)
Agreement between owners (Wright, Isaacs and Hawkins)
containing building restrictions (1926)
Mortgage
(1904)
Grant of
easement
(in
transferoff of
part of
property
- 1915)
Two
mortgages
by railway
company
(not
registered 1911 and
1916)
Transfer by
Wright
expressly
subject to
the
restrictions
(root of title
- 1929)
Parcel 1
(Lots 34 and
35, owned
by Wright)
Parcel 2 (south
half of Lot 33,
owned by Isaacs,
who acquired it
from Hawkins)
Transfer by
Isaacs expressly
subject to the
restrictions (root
of title - 1934)
Parcel 3 (north half of Lot
33, owned by Hawkins)
Transfer by Hawkins
expressly subject to
restrictions in substantially
the same terms as the
agreement (root of title before (1933)
40 years before determination date
Transfer
of
original
property
"except .
. the part
sold" in
the above
transferoff
(1941)
Transfer by
railway
company
(without
discharge of
mortgages 1952)
Transfers,
but none
referring to
restrictions
(but two
deposits
refer to
restrictions)
Transfer
expressly subject
to the restrictions
(1954)
Transfers expressly subject
to the restrictions set out in
the above transfer (the last
in 1944)
Appendix D - Cases on Encumbrances
40 years after encumbrance registered
Agreeme
nt to sell
by
original
transferee'
s estate
(1949)
Transfer
subject to
easement
(1956)
Transfer
(1973)
Agreeme
nt to sell
by last
transfere
e's estate
(1969)
Agreement
to sell by
last
transferee
(1973)
Transfer to
present
owner
(Shapiro)
not referring
to
restrictions
(1974)
Transfer to
present owner
(Lakhani) not
referring to
restrictions
(1977)
Transfer to present owner
(trustee for Lakhani) not
referring to restrictions
(1973)
Winner (owner or encumbrancer)
Owner
Owner
Owner
Owner
Encumbrancer
Encumbrancer
Appendix D - Cases on Encumbrances
FIFTH LOWER COURT CASE DEALING WITH ENCUMBRANCES
(After the 1981 amendments)
Peoples (1989)
Presumably, a grant of a right of way.
40 years before determination date.
Part of a series of transfers between 1954 and 1973, all expressly subject to the right of way.
40 years after grant of right of way registered.
The rest of the series of transfers between 1954 and 1973, all expressly subject to the right of way.
Winner
Encumbrancer
1.
Layton. Re Layton and Yankou [1950]
O.W.N. 337 (H.C.J., Wells, J.).
1.1
Layton : How does Part III apply to
interests less than ownership?
The article concludes, among other things, that
Part III validates a title free from an
encumbrance, and invalidates the encumbrance,
only if the holder of the title that will become
free of the encumbrance satisfies both tests as
regards the encumbrance. First, under the chain
of title rule, the holder of that title must have a
good chain of title free from the encumbrance.
Second, under the registration rule, the
encumbrance must not have been registered in a
40-year period.
The essential facts are set out in the first table
above. The vendors provided declarations on
behalf of the vendor and mortgagee, and a
receipt signed on behalf of the mortgagee,
showing that the mortgage had been repaid
before the limitation period started. The case
was decided before any of the court of appeal
cases; it is the first case on Part III.
The judge made two decisions without giving
reasons for either. First, he decided that the
mortgage had expired under Part III. Secondly,
he decided that the mortgagee's rights were
barred by limitation.
The arguments of counsel show that each of the
two decisions was independent of the other. The
argument for the encumbrancer was that the
encumbrance must be valid because it appeared
in the register after the owner's root of title, even
though it had been registered more than 40 years
before. The argument was in effect that the
owner's chain of title showed the mortgage and
prevented the owner from meeting the test under
the chain of title rule.
The judge's decision that the mortgage was
barred by limitation would have been an answer
to the argument for the encumbrancer, because
the bar under limitation would also cure the
defect in the chain. This made it unnecessary to
decide that the mortgage had expired under Part
III and shows that the judge viewed his decision
on Part III as independent of his decision on
limitation; he would have decided that the
mortgage expired even if it had not been barred
by limitation.
If the mortgage had not been barred by
limitation and the article's conclusion is correct,
the mortgage would not have expired under Part
III, because the owner's chain of title started
with a root registered before the mortgage and
showed the mortgage. This would have been so
even if the 1981 amendments had applied when
the case was decided, because, since no
conveyance had been registered within the 40
Appendix D - Cases on Encumbrances
year search period, the root would still have
been before the mortgage.
Layton is therefore inconsistent with the
conclusion of the article.
1.2
Layton: Does the case affect other
conclusions of the article or deal with other
issues under Part III?
The case does not deal with any of the other
conclusions of the article.
2.
Jakmar . Jakmar Developments Ltd.
v. Smith (1973) 1 O.R. (2d) 87 (H.C.J.,
Cromarty, J.).
2.1
Jakmar: How does Part III apply to
interests less than ownership?
The article concludes, among other things, that
Part III validates a title free from an
encumbrance, and invalidates the encumbrance,
only if the holder of the title that will become
free of the encumbrance satisfies both tests as
regards the encumbrance. First, under the chain
of title rule, the holder of that title must have a
good chain of title free from the encumbrance.
Second, under the registration rule, the
encumbrance must not have been registered in a
40-year period.
The essential facts are set out in the first table
above.
When the case was decided, Part III said that a
claim would not expire if it was "referred" to in
an instrument registered within 40 years after the
claim was last registered. The judge decided
that the exception in the transfer registered
within that period was not a good reference.
The judge decided that the reference in the
second transfer could have been good, but was
not, because the transfer was registered after the
40 years.
The judge did not consider whether the owner
also met the test under the chain of title rule.
The owner's chain of title started with a root
registered before the instrument creating the
easement and therefore showed the easement.
Thus the owner did not meet the test under the
chain of title rule as to the easement and, if the
conclusion of the article is correct, Part III
would not have invalidated the easement. The
decision is therefore inconsistent with the
conclusion of the article.
If the 1981 amendments had applied when the
case was decided, the result might have been
different. When the notice period for the
easement ended in 1955, the 1941 transfer
would have been the root of title. It might have
been argued that the exception in that transfer
was not sufficient to show the easement and
therefore that the owner met both tests in 1955,
before the 1956 transfer was registered raising a
question about the easement.
2.2
Jakmar: Does the case affect other
conclusions of the article or deal with other
issues under Part III?
The case dealt with the meaning of the words
"acknowledged or specifically referred to" in
Part III before the 1981 amendments. The only
instrument that the judge treated as relevant was
a transfer which said that the land was an
original parcel except a parcel described in
another transfer, which was a transfer-off of part
of the original parcel. The transfer-off had
transferred the part together with the easement.
The judge decided that this indirect reference to
the easement did not mean that the easement
was "acknowledged or specifically referred to"
in the transfer containing the exception.
3.
Zygocki. Zygocki v. Hillwood (1975)
12 O.R. (2d) 103 (H.C.J., Van Camp, J.).
3.1
Zygocki: How does Part III apply to
interests less than ownership?
The article concludes, among other things, that
Part III validates a title free from an
encumbrance, and invalidates the encumbrance,
only if the holder of the title that will become
free of the encumbrance satisfies both tests as
Appendix D - Cases on Encumbrances
regards the encumbrance. First, under the chain
of title rule, the holder of that title must have a
good chain of title free from the encumbrance.
Second, under the registration rule, the
encumbrance must not have been registered in a
40-year period.
The essential facts are set out in the first table
above.
The decision focused on three special problems.
The first was that an exception in Part III says
that it does not apply to a claim of a railway
company to land used for a railway line or to
land abutting land so used. The judge decided
that the exception did not apply. The second
was that Part III says that it does not apply to a
claim "imposed by a statutory enactment" (the
words are now "arising under any Act"). The
judge decided that the exception did not apply.
The third special problem was that the two
mortgages by the railway company were not
registered.
This was because the federal
Railway Act said that, when the mortgages had
been deposited in Ottawa and notified in the
Canada Gazette, registration of a mortgage by
the railway company was "unnecessary for any
purpose." The judge decided that this did not
prevail over Part III because it did not conflict
with Part III; the legislation of the two
governments could be read together. He also
said that, if that were not so, "the conveyancing
practice of this Province will be seriously
affected."
Since the judge decided that Part III would
prevail over the Railway Act and that none of the
exceptions in Part III applied, he had to decide
whether the mortgages had expired under Part
III. He decided that they had expired, saying
"that the claim of the mortgagees has been in
existence for longer than 40 years; that the claim
has not been referred to in any instrument
registered against the land within that period."
The judge did not consider whether the owner
also met the test under the chain of title rule.
The owner's chain of title probably showed the
mortgages. The transfer to the railway company
was the owner's root of title. The transfer by the
railway company was part of the owner's chain
of title and also occurred within the 40 year
search period. If the chain of title had been
properly checked, the searcher would have
checked that the railway company had not given
an unregistered mortgage, by making an enquiry
in Ottawa. Thus, the decision is inconsistent
with the explanation of the rules in the article.
It would have been different if the chain had not
shown that a railway company had owned the
land. Then the Railway Act could (as the judge
said) have "seriously affected" the Ontario
conveyancing practice.
It could have
undermined Part III and the judge would
probably have been right in deciding that Part III
and the Railway Act should be read together.
Even if the 1981 amendments had applied when
the case was decided, the judge should not have
decided that the mortgages had expired under
Part III, because the transfer by the railway
company would have been the root of title and
so the chain would still have showed that an
inquiry should be made in Ottawa.
3.2
Zygocki: Does the case affect other
conclusions of the article or deal with other
issues under Part III?
The case dealt with the registration rule in two
ways.
First, it dealt with the meaning of the words
"acknowledged or specifically referred to" in
Part III before the 1981 amendments. The
adverse interests were two mortgages by a
railway company. The mortgages were not
registered because the federal Railway Act said
that, when the mortgages had been deposited in
Ottawa and notified in the Canada Gazette,
registration of a mortgage by a railway company
was "unnecessary for any purpose." The only
possible reference to the mortgages in any
registered instrument registered in the last 40
years was in the transfer by the railway
company; and that reference was very indirect,
since it showed only that the land had been
Appendix D - Cases on Encumbrances
owned by a railway company which might have
given a valid unregistered mortgage. The judge
decided that "the claim of the mortgagees has
been in existence for longer than 40 years; that
the claim has not been referred to in any
instrument registered against the land within that
period."
Since the 1981 amendments, the words have
been "registration of an instrument" and the
article concludes that, under these words, a
claim is registered when a dealing is registered
against the land which, among other things,
purports to create or transfer all of the claim.
Obviously, the transfer by the railway company
did not purport to deal with the claim of the
mortgagees.
The second way in which the cases dealt with
the registration rule was in its implicit
acceptance of the proposition that the claim of
the mortgagees was a registered claim. Part III
does not apply to an unregistered interest,
because it applies only to a "claim", which
means a registered interest.
The article
concludes that, under the registration rule, an
interest is registered when a dealing is registered
against the land which, among other things,
purports to create or transfer an interest out of
the first interest later arises. Although the
railway mortgages were not registered and were
not even required to be registered}, they would
under the above definition have been registered
claims, because they were created out of a
registered interest, namely the interest of the
railway company. The judge did not refer to this
issue, but he must be taken to have decided that
the mortgages were registered claims because, if
they had not been, Part III would not have
applied to them.
The case also dealt with two exceptions to Part
III.
The first exception was the one for a claim
"imposed by a statutory enactment" (the words
are now "arising under any Act"). Although the
federal Railway Act exempted the mortgages
from the requirement of registration, the judge
decided that the mortgages were imposed by a
statutory enactment. Presumably the new words
would have the same result.
The second exception is for a claim of a railway
company to land used for a railway line or to
land abutting land so used. The judge simply
decided that the exception did not apply, without
giving a reason. Possible reasons might have
been that the claim of the railway company no
longer existed, that the land was no longer used
as a railway and no longer abutted land so used,
or that the claim was that of a mortgagee rather
than a railway company. The reason should
probably have been one of the first two possible
reasons, because, while the claim of the railway
company continued, the exemption should also
cover anyone deriving title under the railway
company. The case does not appear to shed
light on other possible questions about the
exception, such as whether, if there had been a
junior claim adverse to the senior claim of the
railway company, it could have become valid
immediately the exception ceased to apply, or
only 40 years after that.
The case also dealt with the validity of Part III in
light of federal legislation as set out above.
4.
Lakhani. Re Lakhani and Weinstein
(1980) 31 O.R. (2d) (H.C.J., Van Camp, J.).
4.1
Lakhani: How does Part III apply to
interests less than ownership?
The article concludes, among other things, that
Part III validates a title free from an
encumbrance, and invalidates the encumbrance,
only if the holder of the title that will become
free of the encumbrance satisfies both tests as
regards the encumbrance. First, under the chain
of title rule, the holder of that title must have a
good chain of title free from the encumbrance.
Second, under the registration rule, the
encumbrance must not have been registered in a
40-year period.
The essential facts are set out in the first table
above. Much of the reasoning deals with the
Appendix D - Cases on Encumbrances
issues of whether the restrictions created a
building scheme or were restrictive covenants.
When the case was decided, Part III said that a
claim would not expire if it was "acknowledged
or specifically referred to or contained in an
instrument registered" within 40 years after the
claim was last registered. The judge decided
that the reference in deposits for Parcel 1 was
not enough, because the Registry Act says that a
deposit of a document shall not be deemed a
registration of the document.
When
commenting on a case of Re Sinclair and
Milligan, she also said about the deposits "I hold
that they did not give notice to subsequent
purchasers" because of deficiencies in the
execution and parties to the deposited
documents. She decided that the reference in an
instrument for Parcel 2 preserved the
restrictions. She decided that the reference in an
instrument for Parcel 3 preserved the
restrictions, even though the reference was only
to a previous transfer that set out substantially
similar restrictions.
The judge based her
decision only on the registration rule, which she
set out in her reasons.
The judge did not consider whether the owners
also met the test under the chain of title rule.
She did say that the owners' "chain of title" went
back to the transferors who transferred in the
roots of title set out in the above table, but, even
though these transfers showed the restrictions,
she clearly did not regard that as relevant for any
of the three parcels. And, for Parcel 1, she
decided that the owner was free of the
restrictions even though the root of title was a
transfer subject to the restrictions. Thus the
successful owner did not have a chain of title
free of the restrictions and should not have
succeeded. For parcels 2 and 3, the judge
decided that, under the rules as they then were,
the unsuccessful owners did not meet the test
under the registration rule. But she could have
added that the owners did not meet the second
test under the chain of title rule either, because
the root of title and another transfer in the chain
showed the restrictions. As set out above, the
judge said about that documents deposited on
title for Parcel 1: "I hold that they did not give
notice to subsequent purchasers". This was
because of deficiencies in the execution and
parties to the deposited documents. This seems
to suggest that she accepted that, if there had
been no deficiencies in them and even though
they were not registered, they might have
affected her decision, if they gave "notice" of the
restrictions. The only way in which they could
have affected the decision would have been
because she thought that they created a defect in
the chain of title (which would conform to the
conclusions of the article) or because she
thought that a claim does not expire where the
owner has actual notice of a claim (which would
not conform to the conclusions of the article).
However, her holding on the point is probably
not significant.
Thus, the decision is
inconsistent with the conclusion of the article.
4.2
Lakhani: Does the case affect other
conclusions of the article or deal with other
issues under Part III?
The case dealt with adverse interests that were
restrictions on three parcels of land. The case
was decided before the 1981 amendments. Then
the question was whether the adverse interest
had been "acknowledged or specifically referred
to or contained in an instrument registered"
against the land in the 40 year period. For the
first parcel, the restrictions were referred to only
in documents that were deposits. The judge
decided that the references to restrictions in the
deposits was not good enough, because the
Registry Act says that a deposit of a document
shall not be deemed a registration of the
document.
For the second parcel, the
restrictions were referred to in a transfer subject
to the restrictions. It described the restrictions
by referring to the agreement containing them,
giving the date of the agreement, its parties and
its registration date and number. The judge
decided that this was a specific reference and
distinguished the reference from that in Jakmar.
For the third parcel the restrictions were set out
in a transfer in substantially the same terms as in
the agreement containing them, The judge
decided that this bound the present owner.
Appendix D - Cases on Encumbrances
instrument registered." In his reasoning, he
referred to the new registration rule and
indicated that the right of way was saved
because it was "referred to" in instruments
registered within the notice period. This
reason might be taken as saying that the
right of way was "set forth" in the
instruments. If so, it is inconsistent with
the conclusion of the article about the
registration rule, that a claim is not
registered when a dealing is registered
against the land which deals with another
interest and merely refers to the claim.
These decisions help to settle what was a good
reference under Part III as it was before the 1981
amendments. They may also be helpful in
applying Part III as it has been since the 1981
amendments, if they are regarded as examples of
when a court will consider a claim to be
sufficiently shown by the chain of title.
5.
Peoples.
723046 Ontario Ltd, v.
Peoples Jewellers Ltd.) (unreported dated
August 29, 1989, Desmarais J.). (The decision
is set out in the report on Camrich).
5.1
Peoples: How does Part III apply to
interests less than ownership?
2.
The reasoning might be taken to say that
the right of way was "acknowledged or
specifically referred to or contained in an
instrument registered." This would imply
that the judge regarded the old words as
still relevant. That was the interpretation
given by the majority of the Court of
Appeal in Camrich. The majority treated
Peoples as an example of a claim being
preserved after 1981 by the former rule
because the 1981 amendments could not
retroactively take away a right that would
still be preserved under the old rule. This
would be inconsistent with the conclusion
of the article that the 1981 amendments to
Part III were retroactive.
3.
The judge also indicated that the right of
way was preserved because it was
"continuously shown in instruments dealing
with the affected land." This reason seems
to refer to the words in Part III saying that
the registration rule "does not apply to a
claim to a freehold estate in land or an
equity of redemption in land by a person
continuously shown by the abstract index
for the land as being so entitled for more
than forty years as long as the person is so
shown."
But, although the judge
specifically referred to the other sections on
which he based his decision, but did not
refer to this section, and the section does
not apply to an easement. The article does
however conclude that the section confirms
that Part III validates a title only if both the
The article concludes, among other things, that
Part III validates a title free from an
encumbrance, and invalidates the encumbrance,
only if the holder of the title that will become
free of the encumbrance satisfies both tests as
regards the encumbrance. First, under the chain
of title rule, the holder of that title must have a
good chain of title free from the encumbrance.
Second, under the registration rule, the
encumbrance must not have been registered in a
40-year period.
The essential facts are set out in the second table
above. The case was decided after the 1981
amendments to Part III.
The only instruments registered in the 40 year
period that could have preserved the right of
way were a series of transfers of the servient
property expressly subject to the right of way.
The judge seems to have given three possible
reasons for deciding that they preserved the right
of way.
1.
The right of way could have been preserved
for the notice period of 40 years from the
"registration of an instrument", which,
under the definition of "claim", would have
included a registered instrument that the
right of way was "set forth in, based upon
or arising out of." These words replaced
the old words "acknowledged or
specifically referred to or contained in an
Appendix D - Cases on Encumbrances
chain of title and registration rules are
satisfied, should be read as saying
"continuously shown through a good and
sufficient chain of title" and should be read
as a cross-reference to the chain of title
rule. The judge might therefore be taken as
having decided that the right of way did not
expire because, since it was referred to in
the owner's chain of title, the owner did not
satisfy both tests. That would be consistent
with the conclusion of the article.
Thus the case could be taken as confirming the
conclusion of the article; if so, it would be the
only decision of the lower courts on
encumbrances which does so.
3.1
Peoples: Does the case affect other
conclusions of the article or deal with other
issues under Part III?
The other issues that may have been dealt with
in the decision are set out above.
VALID TITLE UNDER THE ONTARIO REGISTRY SYSTEM
How the Forty Year Rule Works
John R. Wood
Borden & Elliot
APPENDIX E
Lower Court Cases dealing with Ownership
The comments on these cases use the same numbering system as Appendix C, but do not set out a
question where the case does not deal with the issue.
E.1
Finnegan. Finnegan v. Dzus [1956]
O.R. 69 (Wells, J,).
E1.1
General notes
A person claimed possession of land from those
in possession. The judge decided that all the
claimant had to do was show a better title than
those in possession, not necessarily a title that a
purchaser had to accept. He decided she had not
shown a better title, and that, even if she had, it
would have been extinguished by limitation.
Although the judge concluded that he did not
need to decide whether the claimant had shown
a title that a purchaser had to accept under what
is now Part III, the judge commented on the
issue on pages 73 to 75 of the report.
Among other things, the judge said:
Prior to the passing of that Act it was the practice
of conveyancers to show a title going back 60
years . . . Thus the custom of conveyancers,
which, as Mr Armour points out, is part of our
common law, has been cut down from 60 to 40
years, and it may well be that the statute is
applicable to limit the proof of claim to the 40
year period if there is a good and sufficient chain
of title provable within that time. If a good and
sufficient chain of title is not proved within that
time, then obviously a longer chain of title must
be proved.
Before I came to this conclusion there was some
doubt in my mind whether the words "dealing in
land" were sufficient to cover a claim for
possession and declaration of title such as is
advanced here. The word "dealing" is one of
very wide and varied meaning. . . It . . is, I think,
sufficient to cover the general practice of
conveyancers when acting in respect of the
purchase of lands.
E1.2 Does Part III validate a title if both of
the chain of title and the registration rules are
satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
Although the judge's reasoning was only a
comment, he seems, in saying that "it may well
be that the statute is applicable to limit the proof
of claim to the 40 year period if there is a good
and sufficient chain of title provable within that
time", to have accepted that the statute validates
title based on the chain of title. He did not refer
to the registration rule.
E1.4
When does Part III validate a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
Appendix E - Lower Court Cases
In his comments, the judge seems to have
assumed that the statute validated title only on a
"dealing." But he took that word to have so
wide a meaning that it seems capable of
applying on almost any occasion. It included
making a claim for possession or title, and even
"the general practice of conveyancers when
acting in respect of the purchase of lands."
was first shown, and Part III as it was then
applies, again retroactively.
E1.8
title?
E.2
Cifelli. Cifelli Carpentry Ltd. v. ModAire Homes Limited (unreported, May 19, 1988,
J.E. Sheppard, J.).
What are the rules as to the root of
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
The judge's comments suggest that, even before
the 1981 amendments, he might have accepted a
root within the 40 year period, but in general he
regarded the statute as merely modifying the
common law based on the custom of
conveyancers.
E1.13 Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
The judge's comments show that he accepted
that the period under the common law had been
"cut down from 60 to 40 years." He did not try
to qualify this to avoid allowing the Act to have
retroactive effect.
E2.1
General notes
A vendor and purchaser asked the court to
decide whether a requisition on title had been
answered. The vendor's root was a 1987 transfer
less than one year old by a municipality to the
vendor. The only other transfer was nearly 100
years old and was to someone other than the
municipality.
The purchaser required
registration of a transfer to the municipality.
The vendor refused saying that, as there was a
root within the 40-year period, it was not
required to show a chain of title beyond that
period. The judge, without giving any reasons,
decided that this satisfactorily answered the
requisition.
The problem was probably only that there was
no evidence of how title passed to the
municipality. But the analysis of Part III must
assume that the problem was that municipality
had no title, and determine whether Part III
would cure that problem.
E2.2 Does Part III validate a title if both of
the chain of title and the registration rules are
satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
Appendix E - Lower Court Cases
Since the answer to the requisition was that the
vendor had a good chain of title based on the
recent transfer, the decision seems to confirm
that it is the chain of title that is relied on and
that it validates the title.
E2.4
When does Part III validate a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Cifelli, the 100-year old claim would have
expired under the registration rule about 60
years before the transfer to the municipality.
Thus, under the conclusions of the article, the
title of the vendor would have become valid
when the 1987 transfer to the municipality was
registered. This strange result is caused by Part
III not requiring the root to have a minimum
age. Even if the title had only become valid on a
"dealing", it would have become valid only
about one year later, a result almost as strange.
E2.8
title?
What are the rules as to the root of
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Cifelli, a root of title within the 40 year period
was found good, but the decision does not deal
with any other issues as to what is a good root.
E2.12 How long must the chain be to be
considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
In Cifelli, the answer to the requisition on title
was good, even though the chain contained only
one link.
E2.13 Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
In Cifelli, there is no suggestion that the root,
which was less than 40 years old, should not
have been relied on, because that would give the
1981 amendments retroactive effect.
E.3
Brown. Brown v. Coyle (unreported,
June 23, 1988, R.C. Honey, J.)
E3.1
General notes
A vendor and purchaser asked the court to
decide whether a requisition on title had been
answered. The vendor's root was a 1980 transfer
about 7 years old to the vendor, registered in
August 1981. The only other transfer was over
Appendix E - Lower Court Cases
100 years old, registered in 1879. It was to a
person who appeared to have died about 75
years previously leaving a will, but the will had
not been registered. The vendor's root was a
transfer by the vendor and 19 other people who
appeared to have acquired the property as a
result of the deaths of the original owner and his
descendants. Recitals in the transfer arguably
showed that other persons had beneficial
interests in the property. The purchaser objected
to the vendor's title, but the judge decided that
the vendor had answered the objection.
The judge quoted the section of Part III
containing the chain of title rule, but not to the
section containing the registration rule, and said:
The chain of title is commenced by the 1981
deed. It cannot be the 1879 deed [s. 105(3)(b)]
[now 112(3)(b)]. This conclusion is supported by
the inferential conclusion to be drawn from s.
105(2) and (3)(a) [now 112(2) and (3)(a)]. . .
[The purchaser's] concern must be based on the
definition of "claim" [s.104(1)(a)] [now part of
111(1)] . .
There has been no notice of claim registered.
. . The recitals, at most, give rise to a conclusion
that there may be outstanding interests based
upon or arising out of the 1879 deed. This cannot
be said to be a "notice of claim." [s.104(1)(b)]
[now part of 111(1)]
. . the vendor has shown a good title.
E3.2 Does Part III validate a title if both of
the chain of title and the registration rules are
satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
In Brown, the decision set out above is based on
the chain of title rule and is consistent with the
conclusion of the article.
E3.4
When does Part III validate a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Brown, the 100-year old claim would have
expired under the registration rule about 53
years before the root.
Thus, under the
conclusions of the article, the title of the vendor
would have become valid when the 1981
amendments came into force. The title of the
vendor would not have become valid when the
1980 transfer to the vendor was registered,
because that was before the 1981 amendments
and a root at least 40 years old was then
required.
E3.5 Under the registration rule, when is a
claim registered?
The article concludes that, under the registration
rule, a claim is registered when a dealing is
registered against the land (i) which purports to
create or transfer a claim out of which the claim
later arises; (ii) which purports to create or
transfer all of the claim; (iii) probably, which
purports to contain a dealing by the holder of the
claim with part of the claim, but not (iv) which
deals with another interest and merely refers to
the claim.
In Brown, the judge said: the interest of any
person claiming through the estate . . "is based
upon and arises out of the 1879 deed". He
decided that the last registration of any claim of
the beneficiaries of the estates would have been
the transfer to the original owner, because the
beneficiaries' interests were "based upon or
Appendix E - Lower Court Cases
arising out of" that transfer. This confirms two
of the conclusions of the article. First, it
confirms that the question of when a claim is
"registered" is based on those words in the
definition of "claim." Secondly, it confirms that
a claim is registered when a dealing is registered
against the land which purports to create or
transfer a claim out of which the claim later
arises. It also shows that a registered interest
includes an interest derived from a registered
interest.
defect or encumbrance based on such an
instrument does not affect the title?
E3.8
title?
In Brown, if the root had not dealt with the
interests of every person in the estate of the
original owner, the chain of title could be said to
be "affected" by two instruments. One was the
1981 transfer that contained recitals showing
that those interests existed. The other was the
1879 transfer on which the interests were based.
The reasoning of the judge set out above shows
that he was obviously considering the provision
saying that a chain of title is not affected by any
instrument registered before the 40-year search
period, unless it is an instrument for which a
notice of claim had been registered. But he
considered it only as it applied to the 1879
transfer, not as it might apply to the 1981
transfer. In effect, he said that, because the 1981
transfer did not amount to a registration of the
beneficiaries' interests, the transfer did not affect
the chain of title. In fact, the provision does not
deal with the effect of an instrument registered
within the 40-year period, or, if it does, implies
that such an instrument does "affect" the chain
of title. That was the conclusion of the majority
of the Court of Appeal in the National Sewer
case later in 1993. Thus, although the case is
inconsistent with the conclusion of the article, it
would not be safe to rely on it.
What are the rules as to the root of
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Brown, the judge found a root of title within
the 40 year period to be good. However, apart
from deciding that the root conformed to what
are now sections 112(2) and (3), the judge did
not consider whether it was a good root. He
found it to be good even though it contained
recitals which cast doubt on the title of the
transferors.
E3.10 Does a provision in Part III that says,
with some exceptions, that a chain of title is
not affected by any instrument registered
before the 40-year search period, mean that a
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
E3.11 What is the standard to be used in
verifying that the search under the chain of
title rule shows nothing to cast doubt on the
assumption that a disposing party under the
root had the right to do so?
The article concludes that the standard to be
used is that of a person reasonably skilled in
investigating title.
Appendix E - Lower Court Cases
In Brown, the judge did not deal with this issue,
because, as explained in section E3.10, he
decided that the reference in the root of title to
possible interests of other beneficiaries was not
relevant, because of the provision saying that a
chain of title is not affected by any instrument
registered before the 40-year search period,
unless it is an instrument for which a notice of
claim had been registered.
E3.12 How long must the chain be to be
considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
In Brown, the judge decided that a chain with
one link was long enough.
E3.13 Is Part III retroactive?
The article concludes that the tests under Part III
to validate title must first be applied to the
current facts and, when that is done, the current
rules apply retroactively. If, when that is done,
the search shows a conflicting claim, the tests
must be applied immediately before the conflict
was first shown, and Part III as it was then
applies, again retroactively.
In Brown, the judge accepted a root less than 40
years old, without referring to the possibility that
doing so gave the 1981 amendments to Part III
retroactive effect.
E.4
Battison.
Re Battison and Ferrell
(1990) 72 O.R. (2d) 655 (Fleury, D.C.J.).
E4.1
General notes.
A vendor and purchaser asked the court to
decide whether a requisition on title had been
answered. The vendor's root of title was a 1987
transfer, about 3 years old, to the vendor. The
only other transfer was about 66 years old to
someone other than the person who had
transferred to the vendor.
The purchaser
objected to the vendor's title, and the vendor
answered saying that, under Part III, the chain of
title did not depend upon and was not affected
by an instrument registered outside the 40-year
period. The judge decided that the vendor had
answered the purchaser's objection.
Because the 66-year old transfer had been to
Susan Thompson and the 3-year old transfer was
by George Thompson, the problem was probably
only that there was no evidence of how title
passed from Susan to George. But the analysis
of Part III must assume that the problem was
that George had no title, and determine whether
Part III would cure that problem.
In giving his reasons, the judge said:
I suspect that some of the confusion over the
provisions of s. 105 [now 112] stem from the
vocabulary used. The concept of "chain" and
"root" refer to old common law developments
which have very little application in the modern
science of conveyancing which has been so
heavily affected by legislation. Section 105 and
its predecessors in effect do away with the
concept of the "root" of title. These provisions
(ss. 104 to 107) [now 111 to 114] are limitation
provisions. They purport to extinguish claims.
They outline the consequences of failing to
register notice of one's interest during the 40-year
period.
. . The common law has been expressly abrogated
inasmuch as it comes into conflict with s. 105 of
the Act. The customs of conveyancers are no
longer applicable.
These statements deal with fundamental
principles of Part III, and raise the question of
how far they were necessary for the decisions
made in the case.
E4.2 Does Part III validate a title if both of
the chain of title and the registration rules are
satisfied?
The article concludes that Part III validates title
to a registered claim when it meets two tests.
First, under the chain of title rule, the holder of
the claim must have a good chain of title.
Second, under the registration rule, no
conflicting registered claim must have been
registered in the 40 year period.
Appendix E - Lower Court Cases
In Battison, the judge based his decision on the
chain of title rule and did not refer to the
registration rule. He concluded that it was no
longer necessary to go back to a root of title
beyond the 40-year period. He main reason for
that was a 1981 change in the words of the chain
of title rule. In saying that a good chain need
not be shown "save and except" during the 40year period, Part III formerly implied that there
had to be good chain for the entire 40-year
period.
After the 1981 change, the
corresponding words implied only that there had
to be a good chain for a period that was not
"greater than" than 40 years (and could be less
than 40 years). The judge also based his
decision on two other provisions. The first was
the provision that the chain of title starts with a
conveyance outside the 40-year period if there is
no conveyance inside the 40-year period,
implying that otherwise the chain starts with a
conveyance inside the 40-year period. The
second was the provision that the chain of title
did not depend upon and was not affected by an
instrument registered outside the 40-year period.
Because there was no defect in the recent root of
title or the chain starting with it, the judge did
not need to comment on further on the root or
chain. However, as the above quotation from
his reasons shows, he went on to say that the
1981 amendments had done away with the
common law concept of a "chain" of title and
that the provisions of Part III were limitation
provisions. The facts did not call for those
comments, they are inconsistent with the
decision being based on the chain of title, and
they ignore the continued reference in Part III to
a "good and sufficient chain of title".
E4.4
When does Part III validate a title?
The article concludes that Part III automatically
validates a title as soon as the two tests are met,
even though there is no dealing then. In
practice, the searcher will apply the tests when
the search is made. If that search shows
conflicting claims, the searcher will in practice
apply the tests immediately before the conflict
was first shown. But, if there was a conflicting
senior claim, a junior claim that is valid will
have been validated earlier than these dates, and
usually, if validation occurred after the 1981
changes, when the senior claim expired under
the registration rule.
In Battison, the judge did not say whether the
vendor's title was valid or refer to a need for a
"dealing". The 66-year old claim of Susan
Thompson would have expired under the
registration rule about 23 years before the
transfer by George Thompson. Thus, under the
conclusions of the article, the title of the vendor,
Battison, would have become valid when the
1987 transfer by George Thompson to Battison
was registered. This strange result is caused by
Part III not requiring the root to have a minimum
age. Even if the title had only become valid on a
"dealing", it would have become valid only
about 3 years later, a result almost as strange.
E4.8
title?
What are the rules as to the root of
The article contains the following conclusions.
The chain of title for an interest must start with a
"good root of title" for the interest.
A
transaction can be a good root of title for an
interest if it is a registered document, other than
a mortgage, that purports to create or transfer the
whole interest (or create or transfer another
interest out of which the whole interest was later
created), even if it does so subject to an
encumbrance on the interest and even if it
depends for its validity on a previous instrument.
If the search contains nothing to cast any doubt
on the title of any of the persons creating or
transferring the interest under the earliest
document registered within the 40-year period
that could be a good root of title, that document
is a good root for the title to the interest,
however recently it was registered. If not, the
root is the most recent such document registered
before the 40-year period that is free of doubt.
In Battison, a root of title within the 40 year
period was found to be good, which is consistent
with the conclusions of the article.
Appendix E - Lower Court Cases
However, as the quotation from the judgment set
out above indicates, the judge went on to suggest
that the 1981 amendments had done away with
the common law concept of a good "root" of title
and the "customs of conveyancers". As there
was no defect in the root, the judge did not need
to comment further on the root.
E4.10 Does a provision in Part III that says,
with some exceptions, that a chain of title is
not affected by any instrument registered
before the 40-year search period, mean that a
defect or encumbrance based on such an
instrument does not affect the title?
The article concludes that, despite the fact that
Part III says, with some exceptions, that a chain
of title is not affected by any instrument
registered before the 40-year search period, it is
not safe to rely on the provision to conclude that
a defect or encumbrance does not affect the title,
where the required search of title shows the
defect or encumbrance.
As explained in section E4.2 above, the judge in
Battison relied on the provision as a reason for
deciding that a root within the 40-year period
was acceptable. He went on to say:
In other words, the chain of title, which may or
may not cover 40 years, need not be attached to
any root outside the 40 years except where the
legislation expressly demands it.
What is
required is production of a history of title
containing no conflicting claims within the most
recent 40 years. Events beyond the 40 years are
only relevant if the legislation demands that they
be considered.
Some of these statements went beyond what the
case required. The first sentence contains the
decision that the case called for. The second
sentence goes beyond that, but appears,
consistently with the conclusions of the article,
to suggest that the chain of title within the 40year period must be free of defects (or
"conflicting claims").
The third sentence,
apparently inconsistent with the second,
suggests that events beyond the 40-year period
are relevant only if the legislation demands it
(even if the event is the subject of a "conflicting
claim" inside the 40-year period). As there was
no such event, the judge did not need to
comment on the issue.
E4.12 How long must the chain be to be
considered a chain of title?
The article concludes that a chain of title does
not need more than one link.
In Battison, the judge decided that a chain with
one link was long enough.
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