Problems With Land Titles Just Got Clearer

A decision of the
Ontario Court of Appeal in February may have settled the thorny question
of whether or not courts have the authority to correct erroneous
descriptions of properties in the land registration system.

The origin of the
dispute dates back to 1985, when Veikko Kivikangas subdivided a parcel
of waterfront land he owned in the Sudbury area into three lots.

Kivikangas instructed
his surveyor to prepare a reference plan of survey showing the
registered right of way to be in the same location as an existing gravel
road which ran from the main highway across the first parcel, then the
second, and into the third.

On the ground, the
path takes a detour around a large rock outcrop. Unfortunately, the
surveyor prepared and registered the reference plan showing the gravel
drive going directly through the outcrop rather than around it.

Effectively, it was impossible to access the two inner lots using the registered right of way.

For many years, the
owners of the three lots peacefully used the actual roadway on the
assumption that it was located as described on the reference plan.

In 2005, Kimberly
MacIsaac, one of the current owners, became aware that the registered
road went through the rock rather than around it. The other neighbours
discovered the discrepancy two years later.

Peggy and Gordon Salo
had spent considerable funds improving the roadway with ditches,
culverts and concrete. After their neighbours allegedly began to use the
roadway with commercial trucks and construction equipment, the Salos
barricaded the road and a series of altercations took place.

With the road blocked,
the owners of the two inner lots, MacIsaac and Kristina and Karsten
Johansen, had no way to access their properties except over (or through)
the rock outcrop.

Eventually, MacIsaac
and the Johansens sued the Salos claiming rectification of the land
registry because of the surveyor’s error.

In January last year,
Justice Dan Cornell decided that the court did not have the power to
rectify the reference plan and title abstract, and that MacIsaac and the
Johansens were stuck with a roadway they couldn’t use.

The real estate bar
was, to say the least, unhappy with the decision. Toronto real estate
lawyer Craig Carter said at the time that the court decision is “a
fundamental attack on the system of title recording in Ontario” since
erroneous land descriptions could not be rectified.

The case came before the Ontario Court of Appeal last September, and the court’s decision was released in February.

In a highly unusual
decision, Chief Justice Warren Winkler, writing for a three-judge panel,
rejected the arguments of the plaintiff, the defendant and the Canadian
Bar Association, acting as intervener.

The court based its
opinion on the Land Titles Act, which says that the title system only
guarantees the quality of title and not the quantity. As a result, the
court said that it had the authority to rectify the location of the
easement by relocating it around the rock outcropping.

The Court of Appeal
decision highlights the risks of relying on the descriptions of property
parcels in Land Titles since there is no guarantee of boundaries.
Registered owners clearly own something, but what they own is not
guaranteed unless the size or extent of title is determined by
established and accepted legal descriptions, by survey of the property,
by court order or by other means. Only then will the land titles system
effectively guarantee the size and extent of the land as well.

The appeal court’s
decision affects a purchaser’s ability to rely on the land titles system
since boundaries are subject to rectification whenever a court believes
justice requires it. This exposes land owners to unpredictable loss of
the extent and quality of their ownership unless an actual boundary has
been settled.

The courts can settle
the actual boundary by determining the parties’ intention and, once the
actual boundary is determined, the courts can rectify the boundary but
require a legal basis to do so.

The case may yet wind up in the Supreme Court of Canada.