2018 NBCA 59, 2018 NBCA 59

COURT OF APPEAL OF COUR D'APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 51-17-CA CG GROUP LTD. APPELLANT CG GROUP LTD.

APPELANTE - and - - et - JOSEPH MARC GIROUARD and MARIE GERMAINE GIROUARD RESPONDENTS - and - THE LAW SOCIETY OF NEW BRUNSWICK INTERVENOR - and - SERVICE NEW BRUNSWICK and the PROVINCE OF NEW BRUNSWICK (as represented by the REGISTRAR GENERAL OF LAND TITLES) INTERVENORS JOSEPH MARC GIROUARD et MARIE GERMAINE GIROUARD INTIMÉS - et - LE BARREAU DU NOUVEAU-BRUNSWICK INTERVENANT - et - SERVICES NOUVEAU-BRUNSWICK et la PROVINCE DU NOUVEAU-BRUNSWICK (représentée par le REGISTRATEUR GÉNÉRAL DES TITRES DE BIENS-FONDS) INTERVENANTS CG Group Ltd. v.

Girouard et al., 2018 NBCA 59 CORAM: The Honourable Justice Larlee The Honourable Justice Richard The Honourable Justice Quigg CG Group Ltd. c. Girouard et autres, 2018 NBCA 59 CORAM : l’honorable juge Larlee l’honorable juge Richard l’honorable juge Quigg Appeal from a decision of the Court of Queen’s Bench: May 1, 2017 Appel d’une décision de la Cour du Banc de la Reine : le 1 er mai 2017

History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : inédite Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o. Appeal heard: April 24, 2018 Appel entendu : le 24 avril 2018 Judgment rendered: September 27, 2018 Jugement rendu : le 27 septembre 2018 Reasons for judgment: The Honourable Justice Quigg Concurred in by: The Honourable Justice Larlee The Honourable Justice Richard Counsel at hearing: For the appellant: Edwin G. Ehrhardt, Q.C. For the respondents : Thomas Maillet, Q.C.

For the intervenor the Law Society of New Brunswick: Christian E. Michaud, Q.C. For the intervenors Service New Brunswick and the Province of New Brunswick (as represented by the Registrar General of Land Titles): Brian Andrew Barnett Motifs de jugement : l’honorable juge Quigg Souscrivent aux motifs : l’honorable juge Larlee l’honorable juge Richard Avocats à l'audience : Pour l’appelante : Edwin G. Ehrhardt, c.r. Pour les intimés : Thomas Maillet, c.r. Pour l’intervenant le Barreau du Nouveau- Brunswick : Christian E. Michaud, c.r.

Pour les intervenants Services Nouveau-Brunswick et la Province du Nouveau-Brunswick (représentée par le registrateur général des titres de biens-fonds) : Brian Andrew Barnett

THE COURT The appeal is allowed. The decision of the motion judge refusing

summary judgment is set aside and

summary judgment is ordered dismissing the action and revoking the Certificate of Pending Litigation. Costs are awarded to CG Group in the amount of $1,000 for the proceeding in the Court of Queen’s Bench and $2,500 on appeal. LA COUR L’appel est accueilli. La décision du juge saisi de la motion dans laquelle il a refusé de rendre un jugement

sommaire est annulée et une ordonnance de jugement

sommaire portant rejet de l’action et révocation du certificat d’affaire en instance est rendue. Des dépens de 1 000 $ sont accordés à CG Group au

titre de l’instance devant la Cour du Banc de la Reine et de 2 500 $ au

titre de l’appel. The judgment of the Court was delivered by QUIGG, J.A. I. Introduction [ 1 ] In this case, the respondents (the “Girouards”) claimed against the appellant (“CG Group”) seeking a rectification of a Certificate of Registered Ownership (“CRO”) with respect to a property having PID 875237 (the “property”). The Girouards also had a Certificate of Pending Litigation issued and registered against the property. CG Group brought a motion for

summary judgment requesting the claim against it be dismissed and the Certificate of Pending Litigation be revoked. On May 1, 2017, a judge of the Court of Queen’s Bench dismissed the motion. It is from that decision and the resulting order, dated May 3, 2017, CG Group appeals. In particular, CG Group submits the motion judge erred in law by failing to apply the appropriate provisions of the Land Titles Act , S.N.B. 1981 c. L-1.1 (the “ Act ”) and he further erred in failing to grant

summary judgment where there was no genuine issue requiring a trial. II. Facts [ 2 ] In order to set out the background against which this appeal must be decided, I borrow liberally from the written submissions of the parties. It should be noted the parties agree on the facts. [ 3 ] On August 15, 2016, CG Group purchased the property from Seagull Motel and Restaurant Ltd. Prior to that, in late July or early August 2016, Philip Couture, the president of CG Group, spoke with Joseph Marc Girouard with respect to the use of a street which runs between the property and the land owned by Mr. Girouard. Mr.

Girouard informed Mr. Couture he was not certain if CG Group could build on the property. He told Mr. Couture there were height restrictions and his lawyer was looking into it. Mr. Couture then attended his lawyer’s office and advised him of the nature of the conversation he had with Mr. Girouard. [ 4 ] On August 10, 2016, CG Group’s lawyer obtained a CRO. This CRO indicates Seagull was the owner, and the only encumbrances listed were easements to the New Brunswick Electric Power Commission and the New Brunswick Telephone Company, as well as a debenture and mortgage to the Bank of Nova Scotia.

It showed no encumbrances in favour of the Girouards, or anyone else, in the nature of restrictive covenants or rights-of-way. [ 5 ] On August 15, 2016, CG Group proceeded to purchase the property and a new CRO was issued by the Registrar of Land Titles. This CRO showed CG Group as owner, again with easements in favour of the New Brunswick Electric Power Commission, the New Brunswick Telephone Company and a debenture and mortgage to the Bank of Nova Scotia. It also indicated a collateral mortgage was in the process of being registered.

Subsequently, on August 15, 2016, CG Group registered a collateral mortgage in favour of the Royal Bank of Canada as mortgagee and CG Group as mortgagor. [ 6 ] On August 26, 2016, after both the closing and the registration of the Royal Bank mortgage, Mr. Girouard registered a Caveat under the Act . It referred to a deed registered in 1964 that stated the property contained a restrictive covenant and a right-of-way. The caveat stated those encumbrances followed the title in 1988 when the property was conveyed to Seagull.

[ 7 ] Later, it was discovered an adjudicator under the Act had made a determination with regard to the alleged right-of-way and restrictive covenant. On July 8, 2011, the adjudicator stated “it is my determination that the description of the lands to be used in the application for PID approval or thereafter does not need to include any reference to the easement or restrictive covenant”. [ 8 ] Subsequently, CG Group’s solicitor wrote to the Girouards’ lawyer requesting the Caveat be removed. The request was delivered to the Registrar of Land Titles, and the Caveat was deemed to be withdrawn 30 days thereafter.

A CRO was issued on November 30, 2016.

It indicated CG Group was the owner; that encumbrances included the power and telephone companies’ easements, as well as the Royal Bank mortgage, but further that the Girouards had registered a Lis Pendens . [ 9 ] On November 16, 2016, the Girouards filed a Notice of Action with Statement of Claim Attached claiming, among other things: […] the said “property” was subject to a perpetual right of way to and from the shore over the said land to the benefit of the grantors, their heirs, administrators and assigns as well as a restrictive covenant, that the grantee, his heirs, administrators and assigns may not and will not build thereon any buildings, edifices or other construction higher than 11 feet from the ground, in order to prevent obstruction of the view of the grantors, their heirs, administrators and assigns FOREVER”. [para. 7] [ 10 ] The Girouards claimed the right-of-way and restrictive covenant followed title to the Seagull Motel, and when the property was migrated to the Land Titles System, the lawyer who did so neglected to ensure the description was subject to the right- of-way and restrictive covenant. [ 11 ] On December 19, 2016, CG Group filed its Statement of Defence saying it was entitled to rely upon the CRO which indicated the property was not subject to the encumbrances as alleged by the Girouards.

CG Group relied on ss. 1 , 4 and 16 of the Act . [ 12 ] On March 2, 2017, the Girouards filed an Amended Notice of Action with Statement of Claim Attached, adding the Province of New Brunswick as a defendant and elaborating upon the manner in which all defendants were negligent. [ 13 ] CG Group’s lawyer wrote to the Girouards’ solicitor setting out CG Group’s position, and advised if a Notice of Discontinuance of the action and a Revocation of Certificate of Pending Litigation were not provided, a motion for

summary judgment would be brought. When the Girouards failed to comply, a motion for

summary judgment was filed. [ 14 ] There is no dispute with respect to the above-mentioned facts. A review of the record reveals Mr. Girouard confirmed Mr. Couture’s evidence that they had a conversation to the effect Mr. Girouard was going to speak to his lawyer about the existence of a restriction concerning the height of buildings that could be built on the property. [ 15 ] On February 6, 2017, CG Group filed a Notice of Motion requesting an Order for

Summary Judgment under Rule 22.01(3) against the Girouards. CG Group asked that the claim against it be dismissed as there was no merit to the action. CG Group further requested the Certificate of Pending Litigation be revoked and costs on a solicitor-client basis. [ 16 ] On May 1, 2017, the motion judge dismissed the motion. He said, in his oral decision, the matter should be allowed to proceed and the motion was premature.

He also said the lawyer representing CG Group should have checked or searched the title to the property prior to the issuance of the CRO: So, is this case whether CG Group or their lawyers should have gone to the conventional search in spite of there being a CRO[W] available, in spite of that property having been migrated?[...]

[ 17 ] The motion judge dismissed the request for

summary judgment and did not grant an Order revoking the Certificate of Pending Litigation. He awarded costs against CG Group in the amount of $2,500. III.

Grounds of Appeal [ 18 ] CG Group appeals to this Court on the basis the motion judge erred in law by: 1) failing to hold CG Group, as the purchaser of PID 875237, was entitled to have the action and claims as against it dismissed, and the Certificate of Pending Litigation in favour of the Girouards as against PID 875237 revoked; 2) holding CG Group was in any way bound to inquire into, or ascertain the circumstances of, any previous owner of the land, or that it was somehow effected by notice of any unregistered instrument, or interest or claim affecting the land.

Accordingly, CG Group was not entitled to have the action and claims as against it dismissed, and the Certificate of Pending Litigation in favour of the respondents against PID 875237 ordered revoked; 3) holding that in the circumstances, the Girouards were entitled, or may be entitled, to rectification of the CRO in respect to PID 875237, or that, in the circumstances, s. 71 (

c) of the Act would be available to defeat the registered interest of CG Group, a purchaser from a registered owner, and further erred in law in by failing to apply the provisions of s. 79(6) of the Act , and in the result, failed to dismiss the action of the Girouards as against the CG Group, and failed to order the Certificate of Pending Litigation in favour of the Girouards as against PID 875237 revoked; 4) holding if the Girouards were entitled to an interest in registered land, or aggrieved by an omission of an entry from the title register, they could be entitled to rectification, as opposed to indemnification, under the provisions of the Act ; and 5) failing to grant

Summary Judgment under the provisions of Rule 22.04(1)(a), and in particular in circumstances where there is no genuine issue requiring a trial with respect to the Girouards’ claim, and thus failed to dismiss the claim of the Girouards against CG Group and failed to order the Certificate of Pending Litigation in favour of the Girouards as against PID 875237 revoked. [ 19 ] The Law Society of New Brunswick (“LSNB”), Service New Brunswick (“SNB”) and the Province of New Brunswick (as represented by the Registrar General of Land Titles) made submissions before this Court as intervenors.

According to the intervenors, the decision under appeal runs counter to the Standards for the Practice of Real Property Law adopted by the LSNB and those relating to the Land Titles System as a whole. The decision places an onus on lawyers who practice real property law to search real property titles prior to a CRO being issued pursuant to the Land Titles System, thereby establishing a practice and a precedent that are contrary to the Land Titles System. IV. Standard of Review [ 20 ] The applicable standard is correctness, because the appeal raises a pure question of law pertaining to the

interpretation of the Act as well as the standards established by the Law Society of New Brunswick, which can have ramifications on New Brunswick’s Land Titles system as a whole by determining the legal effects and validity of a CRO ( see Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235 ). V. Analysis [ 21 ] In 2001, a new provincial Land Titles System was officially launched by SNB. This new system was implemented on a county-by-county basis, commencing with Albert County.

[ 22 ] There were two main purposes behind the implementation of the Land Titles System: 1) to improve the information systems available to the public, which included a modernization of land information systems, the land registry, and the parcel index, as well as a long-range plan to introduce a system of land titles; and 2) to bring the surveying and land registry systems into a modern context to permit land transactions to proceed without the necessity (and the resulting cost) of lengthy title searches (see generally Donald Hayward Aiton, “ Land Titles: The New Brunswick Initiative ”, Stewart McKelvey Stirling Scales, Saint John, N.B. in Property law: profession and business - staying in the game (CLESNS, February 2001) ).

Essentially, the historical method of a paper- based registry has been replaced with a province-wide computerized system of registration that is easy, quick and secure.

Although the Registry system still exists and remains a valid registry for transfers of land without value and for no consideration (i.e. inter-family transfers), the Land Titles System is what governs the majority of real property transactions within this province. [ 23 ] The introduction of the Land Titles System in New Brunswick provided, among other things, for the security of guaranteed title, eliminated time- and money-consuming title searches, and resulted in efficient and economical transfer of real property.

The main difference from the old Registry system is the registered owner of a parcel has an indefeasible title. Individuals acting in good faith can rely on the information registered within the register as to the rights, interest and ownership limitations of a particular property title, and act on the basis of that information. With the new system, each time a lawyer undertakes a land transaction he or she requests a CRO for the relevant parcel of land. SNB issues a CRO for that property, thereby guaranteeing the quality of such title.

No further searches for that parcel are therefore necessary from that point forward. [ 24 ] Essentially, the New Brunswick Land Titles System is comprised of the four following components: the Consolidated Master Agreement; the Master Agreement; the Act and its Regulations; and the Standards for the Practice of Real Property Law. A. The Consolidated Master Agreement and the Master Agreement [ 25 ] The LSNB was involved in the fundamental change to the real property practice within this province.

In the early 1980s, as a result of suggestions from property lawyers, the LSNB formed a committee to attempt to codify the requirements for title searches, as there were no objective standards to determine marketability of title. [ 26 ] In 1996, SNB approached the LSNB to advise it of the significant changes it was proposing to the Land Registry System. In 1999, after a period of negotiation and discussion, and pursuant to the provisions of the Act , the LSNB established standards relating to the practice of real property in New Brunswick (submitted to SNB for their approval).

On November 9, 1999, the LSNB entered into an agreement with SNB, including a Consolidated Master Agreement to facilitate a province-wide conversion to a Land Titles System and to govern claims against members of the LSNB.

The ultimate objective was to establish a fully automated, integrated land information management system, which eventually included a paperless registry office providing electronic registration with provision for assurance as to title of the lands and premises located within the province. [ 27 ] In December 2007, the LSNB and SNB executed an amended version of the agreement, namely the Master Agreement, in order to deal with electronic submissions within a paperless land registry system. Accordingly, the agreements and the Standards were amended to provide for such electronic conversions.

It was at this time New Brunswick’s land registry effectively converted to a mainly paperless/electronic system. B. The Standards for the Practice of Real Property [ 28 ] As stated above, the Consolidated Master Agreement had the goal of ensuring a rapid conversion of title from the previous grantor/grantee land registry to the Land Titles system.

The Agreement governs the applications, procedures and issuances of certificates relating to land transfers. [ 29 ] Since SNB had agreed it would rely upon Certificates of Title issued by real property lawyers without independent verification, SNB required assurances lawyers would conduct their searches in accordance with the Standards. This resulted in a Subscription Agreement, which is

Schedule A to the Master Agreement. Accordingly, any lawyer who wants to participate in the conversion of property titles from the old Registry system to the new Land Titles System is required to enter into a subscription agreement with SNB. Only eligible members of the LSNB who sign the Subscription Agreement pursuant to the Consolidated Master Agreement with SNB are entitled to:

(

i) register instruments electronically within the Land Titles System (with the exception of the Crown in right of the Province of New Brunswick and land surveyors in good standing); (ii) participate in the adjudication of issues arising on the conversion of property from the previous registry system to the Land Titles System; and (iii) issue certificates of title to eventually allow for the issuance of a Certificate of Registered Ownership (CRO) under the Land Titles Act , S.N.B. 1981, c.

L-1.1 (the “ LTA ”). [ 30 ] In fact, the Act was amended in order to ensure all applications for conversion to the Land Titles System would be accompanied by the required certificate of title in the prescribed form, issued only by a member in good standing of the LSNB who is a subscriber pursuant to the Subscription Agreement. This Agreement is a contract between the lawyer and SNB whereby the member confirms he or she will conduct searches and submit Certificates of Title to SNB in accordance with the Standards.

This promotes the maintenance of the integrity of the system as a whole. [ 31 ] The Standards are the cornerstone of any real property lawyer’s practice. Along with the implementation of the Land Titles System, the Standards incorporate new elements that are now required under the Act for any lawyers practising real property law. The Standards are intended to be an accepted common approach for title searching by a competent practitioner in order to ensure the minimization of risk incidental thereto. Their significance cannot be overstated.

Lawyers are required to place the utmost reliance on CROs issued in any given transaction. [ 32 ] The entire Land Titles System in New Brunswick works on the premise that the Master Agreement and the Subscriber Agreements involve lawyers who comply with and respect the Standards. This allows the system to work effectively through the conversion process and subsequent issuing of Certificates of Legal Effect, under s. 11 of the Act . As stated in

Part III of the Standards, aside from the Government itself, lawyers and the LSNB have become the custodians of the maintenance and integrity of the Land Titles System. In exchange, in the Master Agreement, SNB agreed to certain limits of liability respecting lawyers such that no claim can be made by SNB where the member certified title in accordance with the Standards and was not negligent: Master Agreement at 3.1(a)(ii). [ 33 ] The LSNB and the subscribing members who participate in, and contribute to, the Land Titles System have vested interests in protecting the integrity of the system and the Standards.

This includes reliance on the legal effect and validity of CROs and that their legal effect and validity be protected and recognized by courts when such real property practices and the Standards are referenced within the province. In the decision under appeal, there is no reference to the Standards that are applicable to the issue before us. This could result in lawyers who comply with the Standards being faced with potential litigation and, more importantly, the impossibility of relying upon the Land Titles System and the CRO issued therefrom.

The intervenors submit this not only poses a risk for real estate practitioners and lawyers throughout the province as a whole, but also causes significant grounds for concern for the members of the general public who would apparently no longer be able to rely on the legal effect and the validity of CROs, should the motion judge’s

interpretation of the Act and the Standards stand unchallenged. C. The Land Titles Act [ 34 ] In New Brunswick, as confirmed in McKinney v. Tobias , 2 006 NBQB 290 , 306 N.B.R. (2d) 282 , the Land Titles System operates on three basic principles, namely: the mirror principle, the curtain principle and the insurance principle. These basic principles are known to be the doctrine of indefeasibility of title, and constitute the main pillars of the Land Titles System embodied by the Act .

This was specifically addressed by Glennie J. in McKinney : Land Titles legislation operates on three basic principles, namely: the mirror, curtain, and insurance principles . The mirror principle requires that the registrar of title reflect accurately and completely all facts material to the title. The curtain principle means that the register is the sole source of information and purchasers need not concern themselves with trust and other equities which lie behind this curtain .

The insurance principle requires that if the application of the legislation, through some error or flaw, causes loss to a person, that person be compensated from an insurance fund created under the legislation. The curtain principle is given legislative expression in

Section 61 of the Land Titles Act which tracks similar provisions contained in Alberta, Saskatchewan and British Columbia land titles legislation.

[para. 41] [Emphasis added.] [ 35 ] Glennie J. further articulated the following tenets of the Land Titles System: As noted per Sigurdson J. in Vancouver City Savings Credit Union v. Hu (2005), 31 R.P.R. (4th) 309 (B .C.S.C.) at para. 32 : The classic statement of the purpose of our land title system appears in Gibbs v. Messer (at 254): The main object of the Act , and the legislative scheme for the attainment of that object, appear to be equally plain.

The object is to save persons dealing with registered proprietors from the trouble and expense of going behind the register, in order to investigate the history of their author’s title, and to satisfy themselves of its validity . That end is accomplished by providing that every one who purchases, in bona fide and for value, from a registered proprietor, and enters his deed or transfer of mortgage on the register, shall thereby acquire an indefeasible right, notwithstanding the infirmity of his author's title. See Citifinancial Canada East Corp. v. Morrow Estate (Trustee of) , [2006] N.B.J.

No. 171 , 2006 CarswellNB 439 at paragraphs 33 , 34, 36 and 37. [para. 45] [Emphasis added.] [ 36 ] The doctrine of indefeasibility of title is emphasized in s. 1 of the Act as follows: Purpose of the Act 1 The intent and purpose of this Act is to provide a system for the registration of the title to land in the Province and instruments related thereto and to provide statutory authority for guaranteed land title . [Emphasis added.] Objet de la loi 1 La présente loi vise à doter la province d’un système d’enregistrement des titres de biens- fonds et des instruments afférents ainsi qu ’à consacrer législativement la garantie que confère un tel

titre . [C’est moi qui souligne.] [ 37 ] The most significant feature of the Act is that, once title is certified by a lawyer to the Province (SNB) during the conversion process, through the issuance of a Certificate of Title, SNB in turn certifies this title to the public by the issuance of a CRO. Again, from that point on, SNB guarantees the quality of the title and it never has to be searched again. This is the impact of both the mirror principle and the curtain principle.

The system of examining and opining on titles has become simplified and more exact, in accordance with one of the main purposes of the Act : to promote commercial certainty and to simplify the task of title searching for a lawyer to render an opinion on title. Unfortunately, it appears that the motion judge was unaware of these principles, based on the comments and iterations of his views contained in the decision under appeal. D.

Sections 16 and 61 of the Act : Paramountcy [ 38 ] Several provisions of the Act contemplate providing some form of indefeasibility of title, or title assurance, to those who register land, affecting charges and/or instruments in the Land Titles System. For example, s. 16 of the Act sets out one of the most significant impacts of registration in the Land Titles System, namely its reliability.

Section 16 deals with the status of a registered owner’s title in the Land Titles System. It embodies the mirror principle, referring to the idea that the registry mirrors all rights in relation to a particular parcel of land and accurately reflects the title, subject only to fraud or certain statutory exceptions. Thus, an individual could examine an abstract of title for a specific parcel of land and see listed all of the interests that pertain to that parcel, and rely on it (see Stoney Tribal Council v. Canada , 2016 ABQB 193 , [2016] A.J. No. 349 (QL) , at paras. 268-270 ).

Section 16 reads as follows:

Status of registered owner 16 Notwithstanding anything in any otherenactment, the owner who is shown by thetitle register to be the owner of a parcel ofland described therein holds the land in feesimple subject, in addition to the overridingincidents implied by this Act, to suchencumbrances, liens, estates or interests as areshown by the title register to have beenregistered against or in respect of that landand free from all other encumbrances, liens,estates or interests whatever, except in case offraud wherein he has participated or colluded.

Statut du propriétaire enregistré 16 Nonobstant tout autre texte législatif, lapersonne que le registre des titres indique êtrele propriétaire d’un bien-fonds qui y est décritdétient ce bien-fonds en fief simple avec lesréserves dérogatoires de la présente loi, d’unepart, et des charges, privilèges, droits depropriété et droits que le registre des titresindiquent comme étant enregistrés contre ouconcernant ce bien-fonds, d’autre part, etlibre de toute autre charge, privilège, droit depropriété ou droit quelqu’ils soient sauf dansle cas de fraude à laquelle cette personne apris part ou dont elle a été complice. [39] Furthermore, s. 61 clearly states a lawyer dealing with a post-conversion transfer of a land has no obligation toinquire or ascertain the validity of the previous owner’s title.

This

section embodies the aforesaid curtain principle. This means once thetitle is migrated to the Land Titles System, there is no obligation to perform a traditional historical title search.

The title search is onlydone once, during the application for first registration pursuant to s. 11 of the Act, when the title is being converted to the Land TitlesSystem. [40] During the conversion process, once the title is certified by a member in good standing who entered into aSubscription Agreement as mentioned above, SNB will in turn certify the title to the public by issuing a CRO pursuant to s. 63 of the Act.From that moment on, the quality of such title is guaranteed by the Government. This is essential in that the CRO contains all therelevant information about the title.

The purchaser, and by extension his or her lawyer acting on the purchasers behalf, does not need toinvestigate the history of past dealings with the land and “search behind the title” as depicted on the register anymore (see Durrani v.Augier, (ON SC), [2000] O.J. No. 2960 (QL), at paras. 40-42). In other words, the Land Titles System eliminatesduplicative title searching (another concept that seemed absent from the motion judge’s understanding when he gave his reasons for hisoral decision under appeal); title to the land now depends on the registry and not on the validity of prior conveyances.

This is confirmedin s. 61 which reads as follows:

Unregistered instrument or interest 61(1) Notwithstanding any rule of law orequity to the contrary, a person contracting ordealing with or taking or proposing to take atransfer of or interest in registered land fromthe owner thereof is not, except in the case offraud by such person, (

a) bound to inquire into or ascertain thecircumstances in or the consideration forwhich the owner or any previous owner of theland is or was registered or to see to theapplication of the purchase money or of anypart thereof; or (

b) affected by notice direct, implied orconstructive, of any unregistered instrumentor interest or claim affecting the land. 61(2) Knowledge on the part of any suchperson that any unregistered instrument orinterest or claim is in existence shall not ofitself be imputed as fraud. Instrument ou un droit non enregistré 61(1) Nonobstant toute règle contraire dedroit ou d’equity, toute personne qui reçoit untransfert de bien-fonds enregistré ou un droitdans ce bien-fonds du propriétaire du bien-fonds, propose de le faire ou l’entreprendrepar voie de contrat ou de négociation, n’estpas, sauf en cas de fraude commise par cettepersonne,

a) tenue de s’enquérir des circonstances danslesquelles ou compte tenu desquelles lepropriétaire ou ceux qui l’ont précédé commepropriétaires ont été enregistrés à ce titre, nide la façon dont a été utilisé tout ou

partie del’argent qui a servi à l’achat; ni

b) liée par une notification expresse, impliciteou établie par interprétation, portant sur uninstrument, un droit ou une réclamation nonenregistrée relativement à ce bien-fonds. 61(2) La connaissance de la part de cettepersonne de l’existence d’un instrument oud’un droit ou d’une réclamation nonenregistrée ne constitue pas par elle-même dela fraude. [41] Similar principles are found in Alberta, British Columbia and Saskatchewan, where comparable Land TitlesSystems and Land Titles legislation are in place.

In Alberta and Saskatchewan, there are almost identical provisions to those found in s.61 of the Act. [42] Recently, in SaskEnergy Inc. v. ADAG Corp. Canada Ltd., 2015 SKQB 143, [2015] S.J. No. 261 (QL), whileexamining the issue of indefeasibility of title, the Saskatchewan Court of Queen’s Bench stated: […] Specifically, the entity identified as the registered owner on the title, ipso facto, has authority to deal with the title, and there is noobligation to look beyond or behind that registered owner. […] The principle of indefeasibility is of long standing under our land titles system.

As noted in the Manitoba Court of Appeal case ofCartlidge v. Granville Savings and Mortgage Corp. (1987), (MB CA), 34 DLR (4th) 161 (WL) (Man CA): 40 Indefeasibility is the heart of a Torrens system. The register is everything; an owner’s title is conclusive and persons dealing withregistered owners are not required to go behind the register.

[…] More recently the issue of indefeasibility was addressed by Popescul J., as he then was, in Brick v Modus Resources Ltd., 2007 SKQB111, 294 Sask R 21, where the court confirmed that the title acts as a “mirror and blind” reflecting all interests and behind which you donot have to look. Justice Popescul noted at para. 19: 19 The integrity of the land titles system in Saskatchewan has long depended on the fundamental principle of indefeasibility of title.

Aparty intending to obtain an interest in land in Saskatchewan is entitled to rely on the certificate of title being correct and conclusivelyrepresenting all interests in the land without having to look behind the title to determine if there are any unregistered interests. Thisprinciple has often been referred to as the “curtain” principle of the Torrens system. This principle is absolute and is subject only tostatutory exceptions or the effects of fraudulent activities, none of which are relevant to the matter before the Court (see Hermanson v.Martin, (SK CA), [1987] 1 W.W.R. 439 (Sask.

C.A.)). [paras. 102-105] [Emphasis added.] [43] In Wharton v. Smerychynski, 2000 ABQB 217, [2000] A.J. No. 375 (QL), the Alberta Court of Queen’s Benchemphasized the principle according to which any person who consulted the register is entitled to rely on the state of the title as disclosedin the register (or “registry”, as the case may be) to determine the existing interests in land (see paras. 67 and 73). [44] Similarly, in Farm Credit Canada v. Gherasim, 2016 SKQB 182, [2016] S.J. No. 283 (QL), the SaskatchewanCourt of Queen’s Bench emphasized the paramountcy of a CRO (i.e.

Certificate of Title in Saskatchewan) in the following terms: The manner in which the court may exercise its discretion under s. 109 of the Act is not unfettered: its orders must remain consistent withthe fundamental principles of the Act as a whole. Those principles were summarized by G.R.

Jackson, then Master of Titles (nowJackson J.A. of the Saskatchewan Court of Appeal) in Land Titles in Saskatchewan, Vol 1 (Regina, Saskatchewan Justice, 1988): First, a certificate of title is, subject to certain specified exceptions, conclusive of evidence of ownership, so that it can be relied upon inall transactions concerning that land. This principle is often called the principle of indefeasibility. Second, the scheme of the Actpromotes facility of transfer. Relying on the principle of indefeasibility, prospective purchasers can freely deal with anyone purporting tobe the registered owner of land.

Third, registration of documents is compulsory which means that in order to take priority or have anyeffect over persons who are not parties to the transaction, the transaction or notice of the transaction must be registered or filed in theappropriate land titles office. Fourth, an assurance fund is created to compensate any person who suffers loss or damage through an errorin the operation of the Land Titles System or through deprivation in circumstances where the principle of indefeasibility overridesprevious common law rights of ownership.

These principles are illustrated by ss. 23 and 24 of the Act, which declare that a current or prospective holder of a registered interest isentitled to rely on the state of the Register and is not affected by any other unregistered interest.

This means registration is conclusiveproof of any interests, exceptions or reservations that may affect ownership or an interest in land. [paras. 14-15] [45] Again, unlike the old Registry system, anyone wishing to deal with real property within the province mayrequest a CRO for the relevant parcel, which can be relied upon due to the government and statutory guarantees. [46] It should be noted the main purpose of a CRO is to answer three basic questions: (1) where is the parcellocated; (2) who owns it; and (3) what the charges against it are.

It is delivered for each registered parcel every time a change in the titleoccurs, so that the title register always shows its current state, again, without the necessity for any further traditional title search, whichis now done only once during the conversion process at the application for first registration. Thus, the CRO is the key evidence of title.This is confirmed by s. 63 of the Act:

Certificate of registered ownership 63

(1) Any person may upon payment of the prescribed fee require the registrar to issue a certificate of registered ownership, in the prescribed form, in respect of any parcel of registered land. 63

(2) Every certificate of registered ownership under this Act shall contain a statement of the registered owner’s interest in the land referred to therein and is subject to the exceptions and reservations stated therein, overriding incidents and the provisions of this Act and the regulations. 63

(3) Every certificate of registered ownership under this Act shall be evidence in all courts and in every proceeding of the particulars contained therein as of the date and at the time the certificate was issued. Certificat de propriété enregistrée 63

(1) Sur paiement du droit prescrit, toute personne peut demander au registrateur de délivrer un certificat de propriété enregistrée, dans la forme prescrite, relativement à toute parcelle de bien-fonds enregistré. 63

(2) Tous les certificats de propriété enregistrée délivrés en application de la présente loi énoncent le droit du propriétaire enregistré dans le bien-fonds, sous réserve des exceptions et réserves qui y sont contenues, des réserves dérogatoires et des dispositions de la présente loi et de ses règlements. 63

(3) Tous les certificats de propriété enregistrée en vertu de la présente loi font foi, dans toutes les cours et dans chaque procédure, de leur contenu à la date et à l’heure de la délivrance du certificat. [ 47 ] The LSNB established the Standards in accordance with the aforementioned principles stemming from the Act and the Land Titles System. Thus, the Standards incorporate the doctrine of indefeasibility of title in various sections. For example, Standard 56 contemplates the reliability and the primacy of the CRO, by explicitly setting out the obligations of a lawyer on a post- conversion transaction.

Standard 56 clearly states that, once a parcel has been converted to the Land Titles System, no full title search (i.e. a full historical or conventional title search) is required. Indeed, on a post-conversion transaction, the role and obligations of a lawyer are different from those of the lawyer during the first registration of a title and its conversion process. [ 48 ] This does not mean lawyers have no role or duties under the new system. As stated in the preface to the Standards, common sense and professional judgment should always be exercised in real property practice.

Furthermore, Standard 56 dictates what a lawyer must examine and consider on a post-conversion transaction, namely: the current CRO, the content and the accuracy of all encumbrances and or interests revealed on the CRO, as well as the plan (if the parcel is described by plan on the CRO), along with all instruments identified on such plan which can contain information not otherwise available. Indeed, a CRO is not conclusive as to the boundaries or the extent of the land and does not provide copies of plans and/or documents revealed on it, which are necessary to complete a standard search.

A search by PID (Parcel Identification Number) and a search of pending registrations (commonly referred to as a “subsearch”) must also be conducted. Standard 56 reads as follows:

56. Title Search After Conversion 56.1 Once a parcel has been converted to Land Titles it will no longer be necessary to complete a full title search at the Registry Office, however in addition to off-title investigations prescribed by these Standards, the lawyer must examine and retain to the file: (

a) a copy of the current (CRO) for each applicable PID; (

b) Repealed (February 22, 2008); (

c) copies of all encumbrances (except those to be retired on closing) revealed on the CRO; (

d) if the parcel is described by reference to a plan, the plan must be examined; and (

e) a search by PID number and a search of pending registrations must be conducted to verify that no subsequent registrations have been made prior to tendering any documents for registration. 56. Recherche de

titre après la conversion 56.1 Une fois que le

titre d’une parcelle a été converti au régime des titres fonciers, il ne sera plus nécessaire d’effectuer une recherche de

titre complète au bureau d’enregistrement. Toutefois, outre les recherches ne se rapportant pas au

titre prévues par les présentes normes, l’avocat doit :

a) examiner la copie du CPE en cours de validité pour chaque NID applicable;

b) Abrogé (le 22 février 2008);

c) examiner les copies de toutes les charges (à l’exception de celles qui doivent être quittancées au moment de la clôture) mentionnées dans le CPE;

d) si la parcelle est décrite par renvoi à un plan, examiner le plan;

e) avant de remettre des documents pour enregistrement, effectuer une recherche d’après le NID et une recherche des enregistrements en cours de traitement pour s’assurer qu’aucun enregistrement ultérieur n’a été fait. [ 49 ] In addition to the plan and the instruments revealed on the CRO pursuant to s. 16 of the Act , each parcel is subject to the overriding incidents as per s. 17(4) . This also needs to be reviewed by the lawyer. In short, on a post-conversion transaction, the lawyer must still review the plan, if any, conduct the appropriate off-title investigations (examples of off-title searches, which are listed at

part II of the Standards, include surveyor’s real property reports, sheriff’s certificates, real property taxes, water and sewer charges, etc.), and review the overriding incidents implied by the Act and all of the documents that relate to the interest shown in the land register. However, the difference is that the CRO issued by SNB is now paramount in that it creates a status quo by placing a curtain over previous title.

This is why a traditional historical search is no longer required for any parcel that has been migrated to the Land Titles System. [ 50 ] Under the previous Registry System, the lawyer was required to conduct a historical title search of at least forty (40) years from an acceptable root and provide his or her client with an opinion as to the state and marketability of title setting out the nature and quality of the land ownership as well as any liens, restrictions or encumbrances that affect the title.

Of course, before the lawyer could formulate an opinion on the specific title and issue a Certificate of Title, he or she had to first complete a series of title/ownership inquiries and searches on behalf of the purchaser to identify all rights, interests, responsibilities and restrictions that affect the use and enjoyment of a particular property, such as deeds, mortgages, easements, liens, restrictive covenants and so on. Under the old Land Registry system, this was done for every single real property transaction. For any subsequent sale, a new lawyer would have to do the same historic search again.

[ 51 ] In the Land Titles System, the above-described title search is only done once, during the conversion process and through the application for first registration. It is the lawyer converting the property into the new system who is responsible for the conventional title search, along with the conversion and opinion of such property title in accordance with

Part III of the Standards and the relevant provisions under the Act . This option forms the basis for SNB guaranteeing title and is the last historic search that will be done for the specific property. Any subsequent lawyer is entitled to rely on the guarantee of title issued by SNB by way of the CRO without the need to conduct any title search. [ 52 ] Even in the new system, the lawyer’s appropriate exercise of professional judgment and his/her continuing obligations remain once a parcel is converted. However, as stated above, the obligations are somewhat different.

Pursuant to the Standards, investigation of title post-conversion is still required, but there is no need to repeat the time- and money-consuming work done by the lawyer acting at the time of the first registration during the conversion process. This is precisely because the registered title is now guaranteed by SNB and reliance can therefore be placed on the issuance of each and every CRO.

Prior defects in title are cleared when the land is converted from the Registry system to the Land Titles System. [ 53 ] As detailed above, these are the applicable Standards governing the actions of any lawyer practicing real property law in New Brunswick.

With respect, the motion judge failed to show his awareness of the existence and application of the Standards to the case under appeal; rather, he proposed a standard that has long since been abolished with the advent of the Land Titles System. [ 54 ] The responsibility imparted on lawyers in placing reliance on CROs issued under the Act , as well as the adherence to the aforementioned Standards, are essential to protect the integrity and efficiency of the Land Titles System as a whole.

If reliance cannot be placed on CROs – the cornerstone of the Land Titles infrastructure – then the system fails and, accordingly, the public interest would not be well-served. It is, in fact, in the best interest of all members of the public to have a Land Titles System that operates with basic tenets, including that of the legal value and effect of CROs not requiring a repeat of the conventional historic title searches, which were otherwise time-consuming and costly, and the replication of which would bring about uncertainty to the whole system. E.

Compensation and Rectification Scheme under the Act [ 55 ] It should not be forgotten that, in case of human error, and because SNB guarantees the quality of the title, the Land Titles System includes a compensation and rectification scheme for appropriate cases. The Act contemplates there could be the need to compensate or to rectify errors that had been made during the conversion process. For example, s. 17(3) of the Act provides that a court may order the title register be rectified to show the existence of a right-of-way or determine the appropriate compensation, if any, that should be paid to any person.

Sections 70 and 71 further provide that the court may make an order to rectify the registry in appropriate cases, such as an omission of any entry from the title register or where it considers it would be unjust not to rectify it. Pursuant to s. 68, the title register may also be rectified in the case of error and/or omission with consent of the interested parties. Finally, s. 73 confirms compensation is available to any person who suffers loss or damage through an error in the operation of the Land Titles system. F.

Implications for the Legal Practice if the Decision under Appeal Stands [ 56 ] In light of the above, there would be various implications for the legal practice should the decision under appeal stand. The decision of the motion judge nullifies the Act and is contrary to the essential purpose of the Land Titles System as a whole: to permit members of the general public to benefit from certainty, effectiveness, cost savings and facility of transfers (see Stolt Sea Farm Inc. v.

Silver Harvest Ltd. , 2006 NBQB 187 , 298 N.B.R. (2d) 218 , at para. 54 ). [ 57 ] For more than 16 years, the public has been well-served by the current system of conveyancing land throughout the province. It provides effective and efficient services that can be relied upon, as well as access to a province-wide paperless electronic Land Titles System. The integrity and reliability of the Land Titles System has been maintained and, at the same time, property rights enjoyed by various members of the public have been protected.

This was achieved by the interaction between the LSNB and SNB and the Land Titles System’s four fundamental legal sources, namely the Consolidated Master Agreement, the Master Agreement, the Act and its Regulations and the Standards, all of which are founded on promoting and protecting the public interest. [ 58 ] Because the Land Titles System eliminates the time-consuming historical title search required in the old Registry system, land transfers are now efficient and more economical. Reliability of various certificates issued under the Land Titles

System not only affords stability and assurance for members of the LSNB who practice real estate law and participate in the Land Titles System, but it also provides for greater access and cost-effective means for members of the public to take

part in real property transactions. Members of the general public in New Brunswick and the business community rely on the proper and efficient operation of the Land Titles System in order to protect their real property rights and interests. Lawyers represent individuals and businesses in the acquisition, disposition and financing of real property in our province and in this capacity are one of, if not the most, significant users of the Land Titles System in New Brunswick.

Lawyers must be able to rely on the certainty of the Land Titles System and must especially be able to rely on CROs when effecting property transactions so that they may fulfill their roles and duties owed to the clients and laypersons in a more efficient and cost-effective manner. [ 59 ] It should not be forgotten that the guarantee of title is the hallmark of the Land Titles System.

It promotes the protection of the interest of land owners throughout New Brunswick, all while promoting its economic stability and well-being. [ 60 ] The special role afforded to lawyers in real estate transactions is now embodied by the Land Titles System through the Standards and the Subscription Agreements. As the public continues to expect and rely on statutory guarantee of title from the government, it is also essential that reliance on CROs can be placed by lawyers in accordance with the Act and to the Standards (i.e.

Standard 56), as stated above. [ 61 ] The purported standard referred to by the motion judge in the decision under appeal, if left unchallenged, could result in all migrated and converted titles potentially having to be searched again. Moreover, the costs of completing a transaction would in turn be increased with no appreciable increase in protection of the public interest, but rather a decreasing certainty and efficiency of the Land Titles System.

If the standard referred to by the motion judge were to stand, no purchaser would have certainty of title based on a CRO, thereby subverting the ultimate goal of the legislation. This also brings into question the rationale of the cooperation between the LSNB and SNB, which is at the heart of the Land Titles System in New Brunswick. [ 62 ] In addition to creating uncertainty as to the status of titles under the Land Titles System, the decision under appeal also nullifies the Standards, creating considerable uncertainty about their authority.

This is a profound shift, which has a significant impact on the practice of real property lawyers. Indeed, the supposed standard referred to by the motion judge potentially imposes liability on lawyers who have diligently followed the Standards for the last 16 years. G. The present matter [ 63 ] In the case before us, the registration of the property under the Act made no reference to the Girouards’ alleged interest. By transfer number 36222322, dated August 15, 2016, the property was conveyed from Seagull to CG Group.

At the time, the solicitor acting for CG Group obtained a CRO for the Property, which showed the only encumbrances on title being the power and telephone easements, and mortgages in favour of the Bank of Nova Scotia. The CRO made no mention of any restrictive covenant or a right-of-way in favour of the Girouards or anyone else. [ 64 ] In July 2011, Seagull was the owner of the property.

It decided to convert the property into the Land Titles system and applied for PID approval at that time. [ 65 ] It appears from the record that the lawyer representing Seagull encountered an issue with respect to the title of the property and applied for an adjudication. The adjudicator framed the issue as follows in his July 8, 2011 decision: “The issue in question is whether or not an easement and restrictive covenant that was contained in Deed Number 257649, dated 2 nd June, 1964 made between, Elphege Poirier and Lucille Girouard to Laurie A.

Theriault is effective.” [ 66 ] He goes on to state: After having reviewed the correspondence from the Applicant’s solicitor, his search notes, the survey plans of the property, the relevant descriptions contained in the various deeds, the Limitation of Actions Acts , L-8 and L-8.5 of the Statutes of New Brunswick, the affidavit of Joseph Stephen Gallant, the President of Seagull Motel & Restaurant Ltd., the letter of objections to title by Honoré Bourque and the Order of the Court of Queen’s Bench of New Brunswick in the matter of an Application under Rule 66 of the Rules of Court issued as a

result of said letter, and the Rules and Guidelines for Adjudications, I made the following determination: The objections to title included objections to the descriptions of both the easement and the restrictive covenant. The Order of the Court stated in part “the errors of description… is hereby declared to have been satisfied.” As a result of that Order a new deed was drafted containing a certified copy of the Order in which the description to the lands was changed and there was no longer any reference to the easement or restrictive covenant.

As a result of that Order (which unfortunately had very little detail) and the new deed, it would appear that neither the easement nor the restrictive covenant are of any force or effect.

After reviewing both Statutes of Limitation and noting that no claim has been made by anyone for the benefit of either the easement or the restrictive covenant (pursuant to the affidavit of Joseph Stephen Gallant) and further noting that more than 20 years have elapsed since the abovementioned deed containing the revised description and no mention of either the easement or restrictive covenant, was registered, it would appear that no one would be in a position to make a claim for benefit of either the easement or the restrictive covenant.

It is my determination that the description of the lands to be used on the Application for PID Approval or thereafter does not need to include any reference to the easement or the restrictive covenant. [ 67 ] As a result, the description utilized for the PID Application did not include any reference to an easement or restrictive covenant. The conversion of the property was completed and the CRO for the property did not indicate any easements or restrictive covenants. [ 68 ] The CRO issued on August 10, 2016, had the effect of certifying the owner as Seagull.

CG Group was entitled under the provisions of the Act to rely upon the certificate, proceed to purchase the land, and obtain good title from Seagull. Further, the CRO obtained indicated the title in fee simple subject to the specified encumbrances. Nowhere was any restrictive covenant or right-of- way specified. [ 69 ] The CRO issued under the Act by the Registrar of Land Titles shows CG Group as the owner of the property, subject only to the easements in favour of the Power Commission and Telephone Company, and the mortgage.

As such, CG Group owns the property in fee simple subject to those encumbrances, and free from all other encumbrances, liens, estates or interests whatsoever, including those claimed by the Girouards. [ 70 ] As an aside, it appears the motion judge based his decision (at least partially) on the fact that there had not been disclosure of the Adjudicator’s file. Disclosure was not necessary as the CRO reflected the status of the title at all applicable times. H.

CG Group was neither bound to inquire into or ascertain the circumstances of the previous owner of land nor affected by notice of any unregistered instrument [ 71 ] The motion judge erred in failing to apply the provisions of the Act . For example, in the decision he states: […] the initiative to go back to check how solid was this CROW, Certificate of Registered Ownership for the property that CG Group was about to – it goes contrary to the – the – the basic fundamentals of the land registry system, but it’s not as if it’s something that is very unusual.

Title searches are still done on a daily basis by lawyers that – a great part of the lawyers only do that, real property transactions, and still in 2017, they do title searches every day and every day, properties are migrated in the new land registry system. So it’s not that unusual. It’s not as if you’d send a lawyer to Africa to – on some kind of safari. You – you ask a lawyer to do what they do on a daily basis. So, is that a case where the CG Group or their lawyers should have gone to a conventional search in spite of there being a CROW available, in spite of the property having been migrated? [p. 6]

[ 72 ] As stated earlier, the integrity of the Land Titles System is based on the principle of indefeasibility of title, which is created by observing three principles: the mirror, the curtain and the insurance principles. This concept was addressed by Glennie J. in McKinney . [ 73 ] This would be even more so in the case at bar as the property had previously been converted to land titles, and CG Group had not participated in that migration. Even if CG Group’s lawyer, Mr. Brun, had gone “behind” the CRO, he would have found the Determination by the Adjudicator dated July 8, 2011.

In effect, CG Group was not only presented with a “clean” CRO, but also a decision of an adjudicator in support of that. [ 74 ] In Black v. Norris and Registrar General of Land Titles , 2012 NBQB 346 , 399 N.B.R. (2d) 1 , Glennie J. addressed the question of title rectification with regard to disputed portions of lands. In that case, a certain portion of property was seemingly acquired by Mr. Norris in the conversion process. This was based on a survey plan prepared at the direction of Mr. Norris. Mr.

Black had acquired possessory rights to the disputed portions and was entitled to have his title to those properties reflected in the title register ( Black v. Norris , 2013 NBCA 62 , 410 N.B.R. (2d) 337 , appeal allowed only on the order compelling a third-party to prepare a new property plan). [ 75 ] In that case, there was no purchaser for consideration. Glennie J. said the following in allowing rectification: The Land Titles Act grants a broad judicial power to courts to rectify the title register: see sections 70 and 71. In Chowood, Limited v.

Lyall (No. 2), [1930] 2 Ch 156 (C.A.) , the Court of Appeal of England upheld a decision to rectify the register where a party's predecessors in title had acquired possessory title to strips of land prior to the first registration of a neighbouring parcel. The rectification provisions upon which Chowood was based (namely s. 82 of the United Kingdom's Land Registration Act, 1925) are substantially similar (and in some cases identical) to the analogous provisions contained in sections 70 and 71 of the New Brunswick Land Titles Act. Notwithstanding these points, I am of the opinion that the recognition of Mr.

Black’s possessory title in this case would be consonant with the curtain principle of the Land Titles Act . Again, as this Court noted in McKinney v. Tobias , the policy behind the curtain principle is to protect everyone who purchases ‘in bona fide and for value, from a registered proprietor.’ Mr. Norris does not meet this description . In this case, the consideration between Mr. Norris and his mother flowed well before the Norris Lot had been converted to the Land Titles system. In my opinion Mr.

Norris never did (and could not) rely on a registered description of Lot 10-1 during the property transaction with his mother: he was the very agent whose actions led to the creation of the Brenda T. Norris Subdivision Plan. This was not an arms-length transaction. In this respect, the circumstances of this case are distinguishable from the facts of McKinney v. Tobias , where the defendants were arms- length purchasers for value who purchased their property after it had been registered under the Land Titles system and in reliance upon the description in the title register.

They did not operate together (as in the present case) in a 'hand in glove' fashion to migrate title of their property onto the Land Titles system . McKinney v. Tobias is also distinguishable because there was no evidence that the Form 2 deponent in that case ‘knew about possible encroachments on her property’ (para. 25). In this case, Mrs. Norris admitted that she knew of Mr. Black’s occupation of the Disputed Area before she deposed to the Form 2 affidavit. Her deposition is an obvious mistake. As well, a major difference with respect to the facts in the present case from those in McKinney v.

Tobias is that a New Brunswick land surveyor is a key player in the present case and that surveyor, Mr. Welch, created the Brenda T. Norris Subdivision Plan. In doing so, Mr. Welch clearly owed a duty of care to Mr. Black as the adjoining land owner, including a duty to give him notice of the draft Brenda T. Norris Subdivision Plan and the Application for First Registration. In the result, as mentioned, a declaration shall issue that Mr.

Black is the owner in fee simple of the Disputed Area as a result of his and his predecessors in title matured adverse possession of the Disputed Area. [paras. 374-379] [Emphasis added.] [ 76 ] The Black case is distinguishable from the present case. In the case at bar, CG Group acquired the property through a bona fide purchase after the property had already been converted to land titles by Seagull. CG Group was not involved in the

conversion. The evidence is clear that Mr. Couture, after a discussion with Mr. Girouard about whether or not there were any restrictions on the property, attended at Mr. Brun’s office. Mr. Brun was dealing with property that was owned by a party (Seagull) that had already put the property on Land Titles, and obtained a CRO. That CRO did not indicate any restrictions. There is no evidence that CG Group or its lawyer acted in any way fraudulently or in bad faith. CG Group and Mr.

Brun did exactly what they were entitled to do – rely on the land titles system and the CRO generated by it. [ 77 ] This takes me to the next part of the Act , entitled Rectification of the Title Register.

This Part provides that the Registrar, and in some circumstances a court, has the power to correct errors and determine what damages, if any, may be paid to any person claiming to have been injuriously affected by the correction. [ 78 ] Sections 61(1) and 61(2) of the Act clearly indicate that, notwithstanding any rule of law or equity to the contrary, a person obtaining a transfer of registered land from the owner is not, except in the case of fraud by him or her, bound to inquire into, or ascertain, the circumstances by which the previous owner obtained registration.

Nor is the transferee affected by any notice direct or implied or constructive of any unregistered instrument. Section 61(2) further emphasizes this specifically stating knowledge, on the part of any person taking title, of the existence of any unregistered instrument or interest or claim shall not be imputed to be fraud. [ 79 ] It is important to note there is, in the present case, no dispute on the facts. There is no evidence in this matter that there was any fraud on behalf of CG Group. The history of the title is clear.

Thus, the motion judge erred in deciding CG Group, as the entity receiving a transfer of the interest of Seagull in the property (being registered land), was in any way bound to inquire into, or ascertain, the circumstances of any previous owner of the land. Further, CG Group could not in any way be affected by any notice – direct, implied or constructive – of any unregistered instrument or claim affecting the land, notwithstanding any rule of law or equity to the contrary. [ 80 ] In his reasons for decision, the motion judge indicates he would be inclined to grant rectification of the CRO.

He further states that, even assuming all parties are innocent, it would appear unjust not to rectify.

However, he seems to state there is some fault on the part of, or that responsibility lies with, CG Group, stating of the lawyer, Stephane Brun, “…who’s reaction apparently is just to get a [CRO], Certificate of Registered Ownership, and sit behind the three principles of the Land Registry Act …” and “… essentially like, you wash your hand and say well, we have the [CRO] we’re ok , but it was not…” (Decision, pp. 5-6, emphasis added). [ 81 ] The motion judge is stating that purchasers for value cannot rely on CRO, and in effect, cannot rely on the Land Titles System. [ 82 ] While Mr. Girouard informed Mr.

Couture there may have been some restrictions with respect to the property, CG Group and their lawyer did exactly what was required of them under the system of land ownership now in effect in the province of New Brunswick – they obtained a CRO issued by the Province of New Brunswick. They were entitled to rely on that.

The motion judge’s statement they were not entitled to rely on the CRO is plainly wrong. [ 83 ] In effect, the decision states that, despite making inquiries under the current Land Titles System, the CG Group or its lawyers, “should have gone to a conventional search in spite of there being a CRO[W] available, in spite of the property having been migrated…” (Decision, p. 6). This too is plainly wrong. CG Group was a purchaser for value. It did not do the migration.

It was not involved in the adjudication. [ 84 ] According to the judge’s ruling, no bona fide purchaser of a property from a registered owner (i.e. a property already being registered on Land Titles) can ever be certain that they are obtaining good title. This defeats the entire object and purpose of the Land Titles System. [ 85 ] The motion judge refers to the lawyer having to go back to “check how solid was this [CRO] Certificate of Registered Ownership for the property that CG Group was about to – it goes contrary to – the basic fundamentals to the Land Registry System” (Decision, p. 6).

This is, with respect, completely contrary to the basic fundamental purpose of a Land Titles System. [ 86 ] The effect of this decision is that no one who has obtained registered land from a registered owner could rely on the CRO. No person in the province of New Brunswick who wished to advance funds on the basis of obtaining security in the form of a mortgage on land of a registered owner who had themselves obtained that land from a registered owner could rely on a CRO. No

lawyer in New Brunswick could certify title based on a CRO. [ 87 ] In my view, the motion judge erred at law in holding that CG Group was in any way bound to inquire into or ascertain the circumstances of any previous owner of the land or that it was in any way affected by notice of any unregistered instrument or interest or claim affecting the land.

Accordingly, unless the rectification provisions apply, CG Group is entitled to have the action and claims as against it dismissed and the Certificate of Pending Litigation as against the property ordered revoked. [ 88 ] In my view, this is not a case for rectification. I. Rectification [ 89 ] It appears the motion judge based his decision on a misapprehension of: (1) the effect of registration in the Land Titles System; (2) the rights of a bona fide purchaser who has acquired a property which has already migrated to the Land Titles System; and (3) the effect of s. 71 (

c) of the Act . He seems to be stating rectification is a distinct possibility, if not a probability, in the circumstances of the case at bar. [ 90 ] Rectification of the Title Register under the Land Titles System is dealt with at ss. 68 to 72 and s. 79 of the Act . [ 91 ] Sections 79(3) and 79(6) are particularly relevant to the case before us: Application for rectification 79

(3) Any person who desires rectification of the title register under

section 70 or who is dissatisfied with a decision of the Registrar General or a registrar may make an application to the court stating the reason for the desired rectification or the grounds of dissatisfaction with the decision and the relief or remedy sought. No effect on prior registration 79

(6) An application to the court under this

section shall not affect a disposition for valuable consideration made in good faith and registered before receipt of notice of the application by the registrar under subsection (5). Demande de rectification 79

(3) Quiconque veut faire rectifier le registre des titres en vertu de l’article 70 ou est insatisfait de la décision du registrateur général ou d’un registrateur, peut présenter une demande à la cour énonçant les raisons de sa demande de rectification, les motifs de son insatisfaction et le redressement recherché. Demande ne porte pas atteinte à un enregistrement antérieur 79

(6) Une demande présentée à la cour en vertu du présent

article ne porte pas atteinte à la disposition faite de bonne foi, pour contrepartie valable, et enregistrée avant que le registrateur n’ait reçu l’avis de demande prévu au paragraphe (5). [ 92 ] CG Group acquired the property on a bona fide sale after it was converted to Land Titles and before notice of any proceeding by the Girouards. [ 93 ] Sections 61 , 70 , 71 and 79(6) of the Act , work together to provide that, in the absence of fraud or bad faith, a bona fide purchaser for value will obtain indefeasible title to a property once registered and the court will not be able to interfere with

that title. [ 94 ] The motion judge seems to focus on s. 71 (

c) of the Act , according to which a judge is afforded discretion to order rectification (see Decision, p. 5): (

c) for any other reason, in any particular case it is considered that it would be unjust not to rectify the register against him.

c) pour quelque autre raison dans tout cas particulier où il serait injuste de ne pas rectifier le registre à son désavantage. [ 95 ] As set out above, s. 70 provides that, subject to s. 71 , the court may make an order directing the Registrar to rectify the title register in certain cases. Section 70(2) says the application to a court shall be in the manner prescribed in s. 79. [ 96 ]

Section 71 also says the title register may not be rectified unless the owner had knowledge of the omission, fraud or mistake in consequence of which the rectification was sought; caused the omission, fraud or mistake or substantially contributed to it; the immediate disposition to him was void; or for any other reason it is considered to be unjust not to rectify the title register. [ 97 ] All of this however is subject to the provisions of s. 79 , which provides that any person who desires rectification of the title Registrar under s. 70 may make application to the court.

However, s. 79(6) expressly states that any such application to the court shall not affect a disposition for valuable consideration made in good faith and registered before receipt of the Notice of Application by the Registrar under 79(5).

Section 79(5) provides that, upon receipt of the notice referred to in 79(4), the Registrar is to make a notation of the notice in the title register. [ 98 ] Simply put, unless there is a notice in accordance with the Act on the title register, no application to court for rectification shall affect a disposition for valuable consideration made in good faith and registered before that Notice of Application is given to the Registrar. [ 99 ] This is precisely the case at bar. CG Group purchased the property in good faith from Seagull for valuable consideration.

Its interest in the property was registered and a CRO issued with respect to it. [ 100 ] Accordingly, ss. 16, 61(l), 70, 71 and 79 of the Act create a system under which an aggrieved land owner may apply for rectification, but subject to the rights of innocent parties who purchased for valuable consideration and whose conveyance was registered prior to the application for rectification. [ 101 ] Again, in this particular case, there is no dispute on the facts – there is no evidence in this matter of any fraud on behalf of CG Group. The history of the title is clear. For example, in Durrani , there was a fraud.

However, in New Brunswick, in the absence of fraud, the innocent party does not have rights to rectification. [ 102 ] Section 61(1) of the Act clearly indicates that, notwithstanding any rule of law or equity to the contrary, a person taking a transfer of registered land from the owner is not, except in the case of fraud by him or her, bound to inquire into, or ascertain, the circumstances by which the previous owner obtained registration.

Nor is the transferee affected by any notice direct or implied or constructive of any unregistered instrument. [ 103 ] Section 61(2) further emphasizes this, specifically stating that knowledge on the part of any person so taking title that any unregistered instrument or interest or claim is in existence shall not be imputed to be fraud.

Section 79(6) confirms there can be no rectification in respect of a bona fide transfer for consideration. [ 104 ] For all of these reasons, the motion judge’s decision that CG Group, as an entity receiving a transfer of the interest of Seagull in the property (being registered land), could ever have obtained the property so as to be subject to any restrictive covenant or right of way as claimed by the Girouards, or their title could be subject to “rectification,” is incorrect. By failing to uphold and apply the clear provisions of the Act , in particular s. 79(6), the motion judge erred.

In the result, the motion judge failed to dismiss the action of the Girouards as against CG Group, and failed to order the Certificate of Pending Litigation as against the property be

revoked. J. Indemnification available to the Girouards [ 105 ]

Section 73 of the Act provides that any person who suffers damage, either by reason of rectification or an error or omission in the title register which was not rectified, or any error or omission in a CRO, is entitled to be indemnified except in certain cases, including where the claimant claims to have been deprived of an interest in the registered land and the claimant is not barred by the Act from bringing an action for recovery (see s. 73(1) (c)). [ 106 ] It is the Girouards who claim there is an error or omission in a CRO.

As set out above, the Girouards, through the operation of the Act , cannot obtain rectification. Accordingly, it is the Girouards who may be entitled to indemnification. [ 107 ] As previously stated, the system of Land Titles, as outlined in McKinney and Durrani above, is based on the observation of three principles – mirror, curtain and insurance. The insurance principle basically provides that, if there is some error or flaw, and if the application of the Act causes loss to a person, that person is compensated by the insurance fund created under the legislation.

In this particular case, it is the Girouards who could potentially be entitled to compensation. It is not CG Group who is entitled to be compensated, as its title is protected under the Act as set forth above. [ 108 ] At p. 2 of the decision, the motion judge states: I find would be unreasonable, unless I feel that I have my hands tied by the law, if I see no way other than to – if I saw no other way than to dismiss Mr.

Girouard’s action, I’d be inclined to grant the correction in the – the Certificate of Registered Ownership about CG Group, knowing that it is at – at the – at the disadvantage of CG Group, okay, but it’s a matter here to determined who’s gonna take the hit among what appears to be innocent parties. Is it the CG Group or all the neighbors around? [ 109 ] With respect, by reason of the general principles of a Land Titles System, and the pertinent provisions of the Act , there is no discretion with respect to who is going to “take the hit”. [ 110 ] CG Group was issued a CRO showing it to be the registered owner.

As such, CG Group is the owner in fee simple, subject only to encumbrances shown by the title register to be registered against the property and free from all other encumbrances whatsoever. In all of these circumstances, it is not a question of who is going to “take the hit” – the Girouards are not entitled to rectification. If the Girouards can show that they have been aggrieved, they would be the party entitled to indemnification, not CG Group. As such, the motion judge erred in law by holding that if the Girouards were somehow aggrieved (or “innocent”), that they would be entitled to rectification.

They may be entitled to indemnification, but not rectification even if they are “innocent”. K.

Summary Judgment [ 111 ] It is important to note there are no questions of fact to be determined that are in any way relevant to any issue as between the Girouards and CG Group. The issues to be determined involve only the applicability of the provisions of the Act to known facts. Notwithstanding this, the motion judge stated he felt the motion was premature (Decision, p. 2, para. 21) and that “there was no need for this motion” (Decision, p. 15, para. 34). With respect, here again the motion judge erred. [ 112 ] Rule 22.04(1)(

a) of the Rules of Court now states:

22.04 Disposition of Motion

(1) The court shall grant

summary judgment if (

a) the court is satisfied

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