



COURT OF APPEAL FOR ONTARIO

CITATION:

719083 Ontario Limited v. 2174112
    Ontario Inc., 2013 ONCA 11

DATE: 20130114

DOCKET: C55785

MacPherson, Cronk and Lauwers JJ.A.

BETWEEN

719083 Ontario Limited

Applicant

(Respondent in Appeal)

and

2174112 Ontario Inc.

Respondent

(Appellant in Appeal)

Bernard B. Gasee, for the appellant

Jane E. Sirdevan, for the respondent

Heard: January 8, 2013

On appeal from the judgment of Justice P. Moore of the
    Superior Court of Justice, dated June 28, 2012.

By the Court:

I.        Background

[1]

This appeal concerns competing claims to ownership of a condominium unit
    in Scarborough.  The background facts are unusual.

[2]

On August 5, 2008, the appellant, 2174112 Ontario Inc. (217),
    purchased numerous condominium units in Scarborough from L. Chung Development
    Co. Ltd. (Chung Ltd.), a condominium developer, for a global purchase price
    of $12 million.  On closing, at 217s request, separate transfers of the relevant
    units were registered on title under the
Land Titles Act
, R.S.O. 1990,
    c.L.5 (the Act).  One of the registered transfers pertained to the unit in
    contention  Unit 95.

[3]

It later emerged that approximately 21 years earlier, in February 1987,
    a predecessor corporation in interest to the respondent, 719083 Ontario Limited
    (719)
[1]
,
    had entered into an agreement of purchase and sale with Chung Ltd. for the
    purchase of several condominium units in the same condominium complex,
    including Unit 95.  However, because the condominium units were then under
    construction and the condominium corporation had yet to be registered in
    accordance with the
Condominium Act
, R.S.O. 1980, c. 84, the sale
    agreement between 719 and Chung Ltd. provided for possession or occupancy of
    the relevant units by 719, effective June 1, 1987.

[4]

It is undisputed that 719 took occupancy of the relevant units,
    including Unit 95, in June 1987 for the purpose of operating a medical clinic
    on some of the premises, including Unit 95.  It has operated the clinic at that
    location to date.

[5]

The necessary declaration and condominium plan for the condominium
    development were not registered until December 1993.  The closing of the sale agreement
    between 719 and Chung Ltd. took place on May 16, 1994, after registration of
    the condominium plan.  However, through solicitor inadvertence or negligence,
    the conveyance registered on closing in favour of 719 failed to include Unit
    95.

[6]

The parties disagree as to when 719 first learned of the registration
    defect regarding Unit 95 and of 217s ownership claim regarding the unit.  719
    maintains that it was unaware of 217s ownership claim until November 2011,
    when 217 contacted it, alleging that it owned Unit 95 and seeking rent from 719
    for its use of the unit.

[7]

In contrast, 217 alleges that it sought rent from 719 for its use of
    Unit 95 several years earlier.  217 acknowledges that it took no steps at any
    time to enforce a rent claim against 719.  Thus, on 217s version of events, it
    allowed 719 to occupy and use Unit 95, rent free, for several years.

[8]

In January 2012, 719 applied to the Superior Court of Justice for title
    rectification under the Act concerning Unit 95.  The relief sought included a
    declaration that it is the legal and sole owner of Unit 95 and an order
    directing the necessary title adjustments to reflect its ownership interest.

[9]

By judgment dated June 28, 2012, the application judge granted the
    relief sought by 719, including a declaration that it is the legal and sole
    owner of Unit 95 and vesting title to Unit 95 in 719.

[10]

217
    appeals.  Its main ground of appeal is that the application judge erred in
    finding that 217 was not a
bona fide
purchaser for value without
    notice of Unit 95.  The legal result of this finding, if sustained, is that 217
    cannot rely on any priority of interest in Unit 95 acquired by the 2008
    registration of the transfer of Unit 95 from Chung Ltd. to 217.

[11]

For
    the following reasons, we conclude that the appeal must be dismissed.

II.       Discussion

[12]

The
    parties accept that indefeasibility of title is an essential feature of the
    land titles system established by the Act.  However, as the application judge
    recognized, the statutory protection of indefeasibility of title is available
    only to
bona fide
purchasers for value without notice: see for
    example,
Durrani v. Augier
(2000), 50 O.R. (3d) 353 (S.C.), at para.
    49.  The application judge put it this way, at para. 34:

[T]he rights of a
bona fide
purchaser trump those of
    an innocent party deprived of an interest in the property by registration in
    the land titles system where there is a meeting of the minds between buyer and
    seller and an agreement supporting the registration of title at issue.

[13]

And
    it is on this well-established principle that 217s appeal founders.  The
    application judge held, at para. 35, that there was no agreement between Chung
    Ltd. and 217 regarding the purchase and sale of Unit 95 and that there was no
    consideration for the conveyance of Unit 95 to 217.  He elaborated, at para.
    38:

There was no meeting of the minds to include the subject unit
    in [the sale agreement between Chung Ltd. and 217] or the 2008 sale, no
    intention on the part of Chung to sell the subject unit again (having already
    sold its interest in the unit to 719 in 1994), no written agreement, no
    consideration and therefore no sale transaction supporting the transfer of the
    subject unit recorded in land title records on 5 August 2008.

[14]

These
    key findings were open to the application judge on the evidentiary record. For example,
    there was evidence before the application judge that: (1) the 1987 sale
    agreement between 719 and Chung Ltd. specifically referenced the property that
    eventually became known as Unit 95; (2) in contrast, the 2008 sale agreement
    between Chung Ltd. and 217 made no mention of Unit 95 and contained no
    reference to it in those parts of the sale agreement that identified the units
    to be purchased by 217; and (3) although 217 paid a global purchase price of
    $12 million for the units it purchased, the sale agreement provided no
    allocation of the purchase price as among the units purchased.  We also note
    that there was no evidence before the application judge of any negotiations,
    discussions or agreements between 217 and the principals of Chung Ltd.
    regarding a sale of Unit 95 to 217.

[15]

We
    see no basis for appellate interference with the application judges findings,
    quoted above.  They provide ample support for his impugned holding that 217 was
    not a
bona fide
purchaser for value without notice of Unit 95.

[16]

217
    argues that the 2008 registration of a transfer to it of Unit 95 was neither
    accidental nor inadvertent.  It points out that Chung Ltd.s solicitors
    acknowledged that Unit 95 was in issue, prepared and registered a transfer in
    favour of 217 regarding Unit 95, and also registered a vendor-take-back
    mortgage on the property, which was later discharged.  These acts by Chung
    Ltd.s solicitors, 217 says, bind Chung Ltd. and evidence an intention by Chung
    Ltd. to convey Unit 95 to 217.

[17]

We
    reject this argument.  The acts of Chung Ltd.s solicitors relied on by 217 confirm
    only that these solicitors proceeded on the basis that Unit 95 was to be
    transferred to 217 under the sale agreement between Chung Ltd. and 217.  They
    are not determinative of whether Chung Ltd. agreed or intended to sell Unit 95
    to 217.  Nor do they establish that Chung Ltd. authorized its solicitors to transfer
    Unit 95 to 217.  We do not accept that Chung Ltd.s solicitors could bind Chung
    Ltd. to sell Unit 95 to 217 in the absence of any evidence that Chung Ltd.
    intended and agreed to do so.  In any event, the simple fact is that when Chung
    Ltd. concluded the 2008 sale agreement with 217, it had no proprietary interest
    in Unit 95 capable of being transferred to 217.  The sale of its interest in
    the property had been concluded by, at the latest, 1994, when it sold Unit 95
    to 719.

[18]

In
    all these circumstances, we see no reversible error in the application judges
    discretionary ruling to grant rectification of the title to Unit 95 in favour
    of 719.

[19]

It
    is appropriate to briefly address two additional matters raised by 217.

[20]

First,
    217 contends that it should not be deprived of the ownership of Unit 95 without
    compensation.  As 719 is the only other party to this litigation, that
    compensation, 217 says, should be paid by 719.  217 maintains that it paid both
    a purchase price and land transfer tax in respect of Unit 95 and it should be
    compensated by 719 at least for these expenditures.

[21]

We
    do not agree.  On the application judges findings, which we have concluded
    were firmly anchored in the evidentiary record, Chung Ltd. was not entitled to
    purport to convey Unit 95 to 217, having earlier sold its interest in the
    property to 719.  If 217 sustained losses as the result of the improper or
    negligent registration under the Act of a transfer of Unit 95 in its favour, it
    is free to pursue its remedies in damages against those responsible for its losses,
    if so advised.  The fact of those losses and 217s potential recourse against
    third parties provides no basis in law for recognizing in 217s favour a
    proprietary interest in Unit 95 to which it is not otherwise legally entitled.

[22]

Second,
    217 argues that since it was an innocent party without prior notice of 719s
    interest in Unit 95, the application judges award of costs against it was
    unjust and should be set aside.

[23]

Again,
    we disagree.  The application judge enjoyed a wide discretion under s. 24(2) of
    the Act to determine an appropriate costs disposition.  His award reflects no
    error in principle, nor is it plainly wrong.  We see no basis on which to
    interfere with his discretionary costs ruling.

III.      Disposition

[24]

For
    the reasons given, the appeal is dismissed.  719 is entitled to its costs of
    the appeal, fixed in the amount of $6,700, inclusive of disbursements and all
    applicable taxes.

Released:

JCM                                                J.C.
    MacPherson J.A.

JAN 14 2013                          E.A. Cronk J.A.

P.
    Lauwers J.A.





[1]
719 and its predecessor in interest are referred to in these reasons as 719.


