Provincewide Holdings Ltd. v. D. Jockel Holdings Ltd., 2022 NSSC 99

SUPREME COURT OF Nova Scotia Citation: Provincewide Holdings Ltd. v. D. Jockel Holdings Ltd. , 2022 NSSC 99 Date: 20220405 Docket: 510201 and 512114 Registry: Halifax Between: Provincewide Holdings Limited Applicant v. D. Jockel Holdings Limited Respondent And: D. Jockel Holdings Limited Applicant v. Provincewide Holdings Limited Respondent Judge: The Honourable Justice Darlene Jamieson Heard: February 23, 2022, in Halifax, Nova Scotia Counsel: Andrew Christofi Respondent/Applicant: D. Jockel Holdings Limited Matthew Moir and Micaela Sheppard Applicant/Respondent: Provincewide Holdings Limited By the Court: Background

[ 1 ] These applications in chambers are, in part, to determine whether a specific textual qualification added to the parcel register in relation to the property in question represents a valid objection to title under an agreement of purchase and sale. [ 2 ] On October 27, 2021, Provincewide Holdings Limited (“Provincewide”) filed an Application in Chambers and on January 17, 2022, an Amended Application in Chambers.

Provincewide seeks special damages in the amount of $29,200 for breach of an agreement of purchase and sale between the parties, and seeks an order directing the deposit of $10,000 provided pursuant to the agreement of purchase and sale be released to it. It further seeks prejudgment interest and costs. A Notice of Contest was filed on January 21, 2022. [ 3 ] On January 25, 2022, D. Jockel Holdings Limited (“Jockel Holdings”) filed an Application in Chambers seeking return of the $10,000 deposit on the terminated transaction, prejudgment interest, and costs.

A Notice of Contest was filed on February 1, 2022. [ 4 ] The parties requested the court hear these matters together. Given the matters are factually connected and a result in one will essentially determine the result in the other, I agreed. [ 5 ] By way of contextual background, I note that on August 13, 2021, Jockel Holdings filed a Notice of Claim in the Small Claims Court of Nova Scotia, claiming the same relief as requested in the present application. On October 6, 2021, Provincewide filed a Notice of Defence and Counterclaim requesting the claim’s dismissal and counterclaiming for $29,113.44.

On October 19, 2021, the respondent filed an Amended Defence and Counterclaim seeking $39,200. On November 15, 2021, Adjudicator O’Hara heard, via videoconference, Provincewide’s motion to stay the proceeding. Jockel Holdings opposed the motion. On January 17, 2022, by written decision reported at 2022 NSSM 3 , Adjudicator O’Hara allowed the motion and stayed the proceeding. Facts [ 6 ] On June 11, 2021, Provincewide listed for sale on MLS the property at 89 Mossman Lake Road, Lunenburg County (PID 60281789) (“Property”). The asking price was $60,000.

On that same day, Jockel Holdings delivered an offer to purchase the property in the amount of $65,000. Then, on June 14, 2021, Jockel Holdings increased its offer to $121,200 and its real estate agent delivered an email to Provincewide’s real estate agent, stating that “[i]f there is anything that we can do to enhance our offer, please advise.” [ 7 ] Provincewide accepted this offer on June 14, 2021, and Jockel Holdings delivered a deposit of $10,000 to Provincewide’s real estate firm, ViewPoint Realty, in trust.

The purchase was scheduled to close on July 7, 2021. [ 8 ] In total, Provincewide received offers from thirteen different parties ranging from $50,000 to Jockel Holding’s offer of $121,200. [ 9 ] The Agreement of Purchase and Sale (“Agreement”) was in the standard form approved by the Nova Scotia Real Estate Commission and contains the following sections: 1.

Deposit 1.1 The Buyer submits Ten Thousand dollars ($10,000.00 CDN) on or before the 16 th day of June, 2021, payable to Viewpoint Realty in trust, as a deposit to be held pending completion or termination of this Agreement and to be credited towards the purchase price on completion. Balance of purchase price to be paid on closing or as otherwise stated in this Agreement.

If the deposit is not delivered as specified, the Seller shall be at liberty to declare this Agreement null and void. 1.2 It is understood and agreed that if the Buyer does not complete this Agreement in accordance with the terms thereof, the Buyer shall forfeit the deposit, in addition to any other claim which the Seller may have against the Buyer for the Buyer’s failure to complete. If the deposit is being returned to the Buyer, in accordance with the terms of this Agreement, it shall be done without interest or penalty (unless otherwise specified).

It is agreed by the Buyer and the Seller that the release of the deposit from the brokerage trust account is subject to the applicable NSREC Bylaws. … 10. Title investigation 10.1 This Agreement is subject to the Seller’s lawyer, at the Seller’s expense, providing the Buyer’s lawyer with the PID(

s) for the Property within ten (10) business days of acceptance of this offer. … 10.2 The Buyer, at the Buyer’s expense, shall be allowed five (5) business days to investigate title to the Property after receipt of the PID(s), or if the Property has not been migrated as of the date of this Agreement, five (5) business days after receiving notification that the migration is complete .

If within that time frame any valid objection to title is made, in writing, to the Seller and which the Seller is unable or unwilling to remove and which the Buyer shall not waive, this Agreement shall become null and void and the deposit shall be returned to the Buyer . [ 10 ] Title to the Property was migrated on June 24, 2021. Neither the Seller nor its solicitor notified the Buyer or its solicitor at any time of the migration. Although he had not received notification of the migration, on June 25 the Buyer’s solicitor, Mr.

John Di Costanzo, reviewed title to the migrated Property and noted the existence of a textual qualification. The textual qualification reads: A TAX DEED FOR THIS PARCEL WAS REGISTERED ON OCTOBER 27, 2020 AS INSTRUMENT NUMBER 117306937. PURSUANT TO SUBSECTION 6 (2) OF THE MARKETABLE TITLES ACT, THE PRESUMPTION OF REGULARITY FOR THE ASSESSMENT AND TAX SALE PROCESS WILL BE EFFECTIVE ON AND AFTER OCTOBER 27, 2026. THIS QUALIFICATION EXPIRES ON OCTOBER 27, 2026. [ 11 ] Mr. Di Costanzo searched Property Online for Document Number 117306937 and confirmed the document was a tax deed

from the Municipality of the District of Lunenburg to Provincewide. The tax deed is dated October 2, 2020. [ 12 ] On June 25 Mr. Di Costanzo sent an e-mail to the Seller’s solicitor, Mr. Bruce McLaughlin, referencing the textual qualification and also a question concerning a right-of-way. The right-of-way issue was ultimately resolved. The email states: I understand that the migration is complete and I have reviewed the property online information. I note the textual qualification and have reached out to our title insurance company to determine if it will be covered by title insurance.

I do have a question with respect to the right away [sic]. According to the property online mapping information the right-of-way appears to pass through the property known as PID number 60610581. This PID is not included as a benefit to the property; can you provide me with an explanation. Does this property in fact have a private right-of-way? [ 13 ] The same day of June 25, Mr. McLaughlin replied stating: That TQ is now required by the registrar any time the registered interest is by way of a tax deed.

There has been discussion on RELANS about this and if the title insurers are not prepared to accept this we have a big problem. I’m interested in what they say to you. It would seem that this is a perfect situation for title insurers to want to cover. I will go back and look at the right of way issue. I confess that I didn’t pay much attention to the servient tenement’s – Sue Aube did the search and I just checked out where the PIDs that she listed were.

I’ll take a closer look. [ 14 ] Later the same day Jockel Holdings’ law firm requested title insurance to cover the issue identified in the textual qualification. On July 2, coverage for that specific issue was denied by the title insurer, FCT Insurance Company Ltd. (“FCT”). The coverage FCT would provide to the buyer explicitly excluded coverage for the tax deed at

Schedule B to the proposed policy. Mr. Di Costanzo escalated the request to the Regional Manager for FCT, which was reviewed, and again coverage was denied. [ 15 ] On July 4, 2021, Jockel Holding’s agent, Mr. Mark Stein, emailed Provincewide’s agent, Mr. Matt Swain. He indicated that Jockel Holdings had learned of the textual qualification and stated: … yesterday, we have been alerted by our lawyer that there is not quite clear title to the property with the “qualification” that has been placed upon it. ...

The way I understand this, according to John Di Costanzo, is that this “qualification” is something new when it comes to tax sales. He went on to state: To be clear, we still want to buy the property, and we hope this issue can be resolved quickly, for everyone’s sake. The buyers feel the property value has diminished significantly since this information has been brought to light as a result of title migration. Personally, I feel that any other informed buyer would also feel the same way. [ 16 ] That same day, Mr. Swain emailed Mr.

McLaughlin, stating: Apparently there is no clear title until 2026 and the buyers now no longer want to continue with the accepted Agreement however would be willing to pay full asking price instead. [ 17 ] The asking price was $60,000. There was no counteroffer by Provincewide. [ 18 ] Mr. McLaughlin responded within a few moments stating in part: I think that the realtor may have overreacted just a bit to the information he received from John.

We spoke with him on Friday and although underwriting at FCT had declined to insure title with the new required TQ, he was pursuing it with the local representative and was going to speak with them on Monday. This would be an issue that would not be understood in Toronto – it only applies to Nova Scotia. Sometimes differences like this take a bit of discussion before they are reconciled. I do think that one of the three major title insurance companies will see this as an opportunity and step up to insure title based on a tax deed as they always have prior to the change in policy by the Registrar General.

This is a situation that seems ideally suited to title insurance. I certainly wouldn’t consider a significant reduction in the price of this property at this point. Let the situation get worked out and then we will know what we are dealing with. The Real Estate Bar is actively working on this now and the pressure for someone to give in on this (i.e. the Province/Registrar General or the title insurers) is significant. The outcome if they don’t is that all buyers at tax sales will have to hold their properties for 6 years from the date of the tax deed.

All to cover off the extremely rare instance of a defect in the tax sale process by the municipality. [ 19 ] On July 5, 2021, Mr. Di Costanzo e-mailed Mr. McLaughlin indicating the title insurer denied title insurance coverage for the tax deed, and also indicated the buyer was apprehensive about moving forward with the transaction. He states: … I found out late Friday afternoon that my clients title insurance policy will not provide limited coverage for the tax deed.

I also did some additional digging and located a plan of lot 2-A which appears to indicate that right-of-way does not pass through this particular lot (contrary to the property online mapping). My clients are apprehensive about purchasing with the TQ and I understand him [sic] reached out to your clients through the agent. [ 20 ] The following day, July 6, 2021, Mr. McLaughlin responded saying the title to the Property “was very clean,” and he would

“prepare for an application under the Vendors and Purchasers Act, if [his] client chooses to go that route.” He also stated he did not “see that issue as being a valid objection to title”. No application was made under the Vendors and Purchasers Act . The email states: I’m a bit surprised to hear that FCT won’t insure this and I think it is worth me following up with them to find out what they might do. As well, I will be checking with the other major insurers to see what position they might take. I am guessing that you didn’t talk to Chicago or Stewart?

Through the agents, your clients have proposed what is effectively a $60k reduction in the price – from the agreed price to the listing price. This isn’t anything that my client would consider. The title to this property was very clean, and there was no apparent deficiency in the tax sale process. I’m going to gather up the documentary evidence of sale (notice, etc.) and prepare for an application under the Vendors and Purchasers Act, if my client chooses to go that route. While it is inconvenient that title insurance might not be available, I don’t see that issue as being a valid objection to title.

If I’m wrong on that point, the logical conclusion is that no title can be conveyed until any and all tax deeds in that title have reached the 6 year period, at least until the title insurers come around on insuring tax deed conveyances. I don’t think that is the intention of the legislation. The closing date under the agreement is July 7 th . Let me know your position and whether your client is looking to terminate the agreement. [ 21 ] Mr.

Di Costanza replied shortly thereafter as follows: … I believe there were two lines of communication today, about the same time we were discussing the file the agent submitted a termination notice. I believe your clients got the impression that my clients were not being upfront as different information was being relayed to them. I have since spoken to my clients and they have decided that they are going to proceed with the termination. [ 22 ] By email on July 6 the real estate agent for the buyer sent a termination to the agent for the seller.

On July 7 Jockel Holdings signed a Termination of Agreement of Purchase and Sale document with the stated reason being “dissatisfaction with title”. Provincewide refused to sign the termination or return the $10,000 deposit stating there was no valid objection to title. [ 23 ] Provincewide decided to accept the next best unconditional offer with a purchase price of $92,000. Provincewide did not offer this reduced price to Jockel Holdings. [ 24 ] The $10,000 deposit continues to be held in trust by Provincewide’s real estate agent. Evidence on the Application [ 25 ] Provincewide filed the affidavit of Ms.

Angela MacLennan, officer, director and corporate representative of Provincewide, sworn on January 14, 2022. Jockel Holdings filed the affidavit of Mr. Tom Jockel, an owner of Jockel Holdings, sworn on January 21, 2022, and the affidavit of Mr. John Di Costanza, transaction counsel for Jockel Holdings, sworn on January 21, 2022. At counsel’s request, I allowed each of the affidavits to be filed for the purposes of both Applications. [ 26 ] Ms. MacLennan was cross examined. Issues [ 27 ] There are two Applications before me. There are a number of issues for the Court’s determination on these applications.

In order to determine whether Jockel Holdings breached the Agreement of Purchase and Sale with Provincewide, I must first determine whether it met the requirements set out in s. 10.2 of the agreement. The requirements of s. 10.2 involve the following queries: 1. Did Jockel Holdings make an objection to title in writing within the meaning of s. 10.2 of the Agreement? 2. If yes, was the Jockel Holdings objection a valid title objection? 3. If the answer to question 2 is yes, was Provincewide unable or unwilling to remove the objection?

Did Jockel Holdings at any time waive its objection to title? [ 28 ] There are additional issues, dependent on the above: If I find that Jockel Holdings breached the Agreement of Purchase and Sale, does the breach entitle Provincewide to the special damages claimed in addition to keeping the deposit? Was there a failure to mitigate damages on the part of Provincewide? Parties’ Positions Jockel Holdings [ 29 ] Jockel Holdings says that Mr. Di Costanzo’s e-mail of June 25, 2021, clearly lays out the basis of an objection to title. It says the subsequent correspondence from Mr.

McLaughlin indicates unequivocally that the Seller understood Mr. Di Costanzo was making an objection to title within the meaning of s. 10.2 of the Agreement. [ 30 ] It says the title objection is a valid one. It argues the MTA describes the estate conveyed by a tax deed as indefeasible only after six years have elapsed since its registration, and before that time the deed is liable to be attacked or impeached at law “by any person”.

It says the effect of this provision of the MTA is to place a “cloud on title” to the lands purchased at tax sale. [ 31 ] Jockel Holdings says when a lawyer includes a Textual Qualification (“TQ”) on a parcel, that lawyer is certifying that they are

of the opinion that the TQ is “the only means to provide a complete statement of all the interests affecting the parcel” ( s. 11 of the Land Registration Act , S.N.S. 2001, c. 6 (“ LRA ”)). It says when Mr. McLaughlin included the TQ on the parcel register, he was certifying that it was necessary to include the TQ in order to show all of the interests that in his opinion affected title to the parcel. [ 32 ] Jockel Holdings acknowledges it must show that the seller was either unable or unwilling to remove the title objection. It says it can show both.

It says the title objection was in relation to the effect of the law and only the legislature can amend the law. The seller was therefore unable to remove the title objection. It further says that despite indicating it would reach out to title insurers concerning coverage for the issue, there is no evidence it did so. Jockel Holdings says the seller did nothing to try and remove the title objection. By its conduct, the seller showed it was unwilling to remove the title objection. It further says it did not waive its objection as Mr.

Jockel signed a termination agreement explicitly referencing Jockel Holdings’ dissatisfaction with title. [ 33 ] In relation to the claim for damages by Provincewide for breach of contract, it says that Provincewide did not mitigate its damages at all. Provincewide [ 34 ] Provincewide says there was no objection to title ever made, and if the e-mails are found to be an objection made in writing, then it was too late.

They further say that if there was an objection to title made per s. 10.2, it was not a valid objection. [ 35 ] Provincewide says that in order for an objection to title to be valid, the issue identified must be serious enough to make the transaction fail to withstand an application under the Vendors and Purchasers Act, to force title on an unwilling buyer. Not just any “cloud on title” qualifies.

It says the common thread running through all recognized objections to title is that, as evident either from the documents at the land registry or accessible from some other public/governmental information repository, the seller is not capable of conveying all of the marketable title to the property. [ 36 ] Provincewide refers to ss. 148 - 171 of the Municipal Government Act, SNS 1998, c. 18 , and says regardless of the fact that courts have generally found that this language is not effective to convey clear title in cases where there is a defect in the tax sale process, this provision still clearly elevates the certainty of a tax deed over that of an ordinary deed. [ 37 ] Provincewide says that the textual qualification that the Registrar required in this matter stated that the “presumption of regularity” pursuant to this

section would not arise until after the six-year mark and this was a clear error in law on the part of the Registrar, as there is a presumption of regularity in any registered deed. It says there is a special legislative presumption of regularity arising from a tax deed when it is issued, followed by the strongest possible legislative endorsement after six years. [ 38 ] Provincewide says that s. 6(2) of the Marketable Titles Act, S.N.S. 1995-96, c. 9 , (“ MTA ”) is for clearing defects. In the absence of an identified defect, there was no valid objection to title to be made.

It says there is no evidence whatsoever in this case that the tax sale by which Provincewide purchased the Property in October 2020 was in any way irregular. There is no evidence that there are any defects in the chain of title for the Property. It says the only ground for the objection to title is that the Property was purchased by tax deed less than six years ago, and this is not enough for a valid objection to title. [ 39 ] Provincewide says no objection to title was made clear until July 6, 2021, at the earliest, when the Buyer’s realtor sent a Termination.

It says that prior e-mails do not contain language sufficient to represent an objection under s. 10.2. [ 40 ] It says that Jockel Holdings failed to complete the purchase per the terms of the Agreement, and is in breach of the contract. Provincewide says it is entitled to the difference between its accepted offer with Jockel Holdings and its accepted offer with the subsequent buyers, being a shortfall of $29,200.

It says the Agreement is clear that the seller is entitled to the deposit in addition to any other claim which it may have against the buyer if the buyer fails to properly complete the terms of the Agreement.

Law and Analysis [ 41 ] Pursuant to the standard Agreement of Purchase and Sale (s.10.2), before an agreement is null and void, the following are required: • the objection to title must be made in writing to the seller; • it must be communicated within five business days from the date the buyer received notification that the migration was complete; • it must be a valid objection to title; • the seller must be unable or unwilling to remove the issue; and • the buyer must not waive the objection to title. [ 42 ] I will first address whether Jockel Holdings met the requirement of providing a written objection to title. [ 43 ] There is no special wording required to advance an objection to title.

However, it must be in writing. Clearly there must be words sufficient for the seller’s counsel to understand the issue. Here, Mr. Di Costanza raised the issue of the textual qualification immediately upon his review of the parcel register after the migration (on June 25, 2021) along with a question concerning a right-of- way. With respect to the textual qualification, Mr. Di Costanzo advised Mr. McLaughlin that he had reached out to their title insurance company to determine if the issue would be covered by title insurance. [ 44 ] It would appear, even at this early stage, that Mr.

McLaughlin recognized this as an objection to title as he says in his June 25, 2021, email in response:

… There has been discussion on RELANS about this and if the title insurers are not prepared to accept this we have a big problem. [ 45 ] I note that previously on June 18, 2021, in communication with the buyer’s law firm, Mr. McLaughlin had advised “There is one complication with the migration that I have to put my mind to, which I can’t do today.” It is unclear from the evidence whether Mr. McLaughlin was referring to the tax deed issue. [ 46 ] On July 4, 2021, Mr. Mark Stein, agent for the buyer, wrote to Mr.

Matt Swain, agent for the seller, stating: As per my phone call, yesterday, we have been alerted by our lawyer that there is not quite clear title to the property with the “qualification” that is been placed upon it. I’ve attached the NS Property On-line information sheet and highlighted what I am referring to. The way I understand this, according to John DiCostanzo, is that this “qualification” is something new when it comes to tax sales. … To be clear, we still want to buy the property, and we hope this issue can be resolved quickly, for everyone’s sake.

The buyers feel the property value has diminished significantly since this information has been brought to light as a result of title migration. Personally, I feel that any other informed buyer would also feel the same way. [ 47 ] The agent for the seller wrote to Mr. McLaughlin the same day, stating: … Apparently there is no clear title until 2026 and the buyers now no longer want to continue with the accepted Agreement however would be willing to pay full asking price instead. Please see note from the Buyers Realtor below. … [ 48 ] On July 5, 2021, Mr. Di Costanzo again wrote to Mr.

McLaughlin advising that he had found out late Friday afternoon that the title insurance policy will not provide limited coverage for the tax deed. He states “My clients are apprehensive about purchasing with the TQ and I understand him [sic] reached out to your clients through the agent.” It would appear at the end of his email he was referencing communications between the agents wherein Jockel Holdings offered a reduced purchase price to Provincewide. [ 49 ] Mr. McLaughlin wrote back to Mr.

Di Costanzo on July 6 indicating that he was going to do a number of things, including reach out to title insurers concerning the issue and potentially make application under the Vendors and Purchasers Act . Mr. McLaughlin states “While it is inconvenient that title insurance might not be available, I don’t see that issue as being a valid objection to title.” At the end of the email, Mr. McLaughlin states “The closing date under the agreement is July 7 th . Let me know your position and whether your client is looking to terminate the agreement.” [ 50 ] On the evidence before me, I cannot conclude other than Mr.

McLaughlin understood that the correspondence from Mr. Di Costanzo represented an objection to title. Mr. McLaughlin himself referred to Mr.

Di Costanzo having relayed an objection to title, albeit one with which he did not agree, when saying in his correspondence of July 6, “I don’t see that issue as being a valid objection to title.” On the evidence before me I find there was an objection to title and it was in writing. [ 51 ] With respect to whether the written objection was relayed within five business days of receiving notification that the migration was complete, I find that if the five days runs from the date Mr.

Di Costanzo, on his own initiative, reviewed property online and identified the TQ (June 25, 2021), then certainly by the fifth business day, being July 5, 2021, the objection was made in writing. There is no requirement that a formal termination document be sent within the stated five days. The provisions of the Agreement say that on meeting the requirements in s. 10.2 “this Agreement shall become null and void and the deposit shall be returned to the Buyer” [ 52 ] In the present factual circumstances, contrary to the wording of s. 10(2), the buyer was never provided with notice of the migration by the seller.

The buyer’s solicitor initiated his own review of the parcel register via property online and then contacted the seller’s counsel. It could be argued that the buyer never received notice of the migration under the terms of the Agreement. I need not come to any conclusions in this regard, as Mr. Di Costanzo, after initiating review of the parcel register, made the objection within five days.

However, I would note that it is apparent the purpose of the provision of five business days to investigate title after notification that the migration is complete, is to ensure the parties are both precisely aware of when the five day period commences. Each can then calculate the date of expiration with certainty. Sellers should pay close attention to their obligation to provide notice of migration under the agreement. [ 53 ] I now turn to whether the objection to title was a valid one.

The burden is on the buyer, Jockel Holdings, to illustrate that it presented a valid objection to title. [ 54 ] What is meant by marketable title is not in dispute. Our Court of Appeal in Brill v.

Nova Scotia (Attorney General), 2010 NSCA 69 , quoted from DiCastri, The Law of Vendor and Purchaser , in relation to the common law principle of marketable title: 104 Di Castri, The Law of Vendor and Purchaser , ¶ 339, describes the common law principle of marketable title: Apart from the exceptional case, a vendor will be required to show a good title: This means a merchantable or a marketable title: one which at all times and under all circumstances can be forced upon an unwilling purchaser who is not compelled to take a title which would expose him to litigation or hazard; one which is free from litigation, palpable defects and grave doubts and couples a certainty of peaceful possession with a certainty that no flaw will appear to disturb its market value.

A purchaser is not required to accept or rely upon parol evidence of title, or information dehors the record, or upon the word of the vendor. Of course, the probability of litigation must be based on reasonable, not idle grounds. [Emphasis Added] [ 55 ] The MTA defines “marketable title” as follows:

Marketable title 4

(1) A person has a marketable title at common law or equity or otherwise to an interest in land if that person has a good and sufficient chain of title during a period greater than forty years immediately preceding the date the marketability is to be determined.

(2) A chain of title commences with the registered instrument, other than a will, that conveys or purports to convey that interest in the land and is dated most recently before the forty years immediately preceding the date the marketability is to be determined.

(3) A chain of title may commence before or after the coming into force of this Act.

(4) Nothing in this

Section extinguishes any interest in land. [ 56 ] The root of the issue here is a tax deed from the Municipality of the District of Lunenburg to Provincewide, dated October 2, 2020. The Municipal Government Act, SNS, 1998, c. 18 (“ MGA ”) sets out the process for tax sales and issuing tax deeds ( ss. 148 - 171 ). It is a rigorous process. The MGA states in part, in relation to the effect of tax deeds: … Deed to purchaser 155

(1) At the request of the purchaser at a tax sale and upon payment of the fee determined by the council, by resolution, the municipality shall deliver a deed to the land in Form E in

Schedule A, or to like effect, to the purchaser, or as directed by the purchaser, at any time after the (

a) sale if, at the time of the sale, taxes on the land were unpaid for more than six years before the sale; or (

b) expiration of six months from the sale, if the land has not been redeemed.

(2) The deed shall (

a) fully describe the land conveyed; (

b) be signed by the mayor or warden and the clerk; and (

c) be under the seal of the municipality. 1998, c. 18, s. 155 . Tax sale deed 156

(1) A deed to land sold for taxes is conclusive evidence that the provisions of this Act with reference to the sale of the land described in the deed have been fully complied with and each act and thing necessary for the legal perfection of the sale has been duly performed.

(2) The deed has the effect of vesting the land in the grantee in fee simple, free and discharged from all encumbrances. … [ 57 ] In relation to tax deeds, the MTA goes further than the MGA and provides that six years after registration, a tax deed conveys “an absolute and indefeasible title in fee simple to the land described in the tax deed.”: Tax deeds 6

(1) In this Section, “tax deed” means (

a) a certificate that has or purports to have the effect of vesting land that was to be sold for non-payment of taxes in a city, town, municipality of a county or district, regional municipality, village commissioners or service commission as defined by the Municipal Affairs Act ; or (

b) a deed from a city, town, municipality of a county or district, regional municipality, village commissioners or service commission as defined by the Municipal Affairs Act to land sold or purportedly sold for non-payment of taxes.

(2) A tax deed may not be set aside for any reason whatsoever except during the six years following registration of the tax deed, and thereafter the tax deed is binding and conclusive upon all persons and is not liable to be attacked or impeached at law by any person, and the tax deed conveys an absolute and indefeasible title in fee simple to the land described in the tax deed and is conclusive evidence, with respect to the purchaser and every person claiming through the purchaser, that every requirement for the proper assessment and sale of the land has been met.

(3) Notwithstanding subsection (2), a court may exclude from a tax deed all or part of the lands described in the tax deed that the court finds were assessed to a person, other than the person to whom the property was assessed when the lands were sold for arrears of taxes, who has an interest in the lands or part thereof and in respect of which taxes were not in arrears for more than one year at the time of the sale. (4) Subsection (2) does not apply where a court finds that the current owner of the land participated in a fraud or breach of trust with respect to the sale. (5) Subsection (2) applies whether the tax deed was registered before or after the coming into force of this Act.

(6) Subsection (2) does not deprive any person of any cause of action that person may have for damages for the wrongful sale of land for taxes. 1995-96, c. 9, s. 6 . [Emphasis Added] [ 58 ] The MTA states that part of its purpose is to remove uncertainties respecting the validity of past and future tax deeds: Purpose of Act 2 The purpose of this Act is to (

a) remove uncertainties respecting the determination of marketable titles to land in the interests of all present and future landowners and facilitate the development of the Province; and (

b) remove uncertainties respecting the validity of past and future tax deeds . 1995-96, c. 9, s. 2 . [Emphasis added] [ 59 ] I note that the Court of Appeal in Brill , s upra , referenced the MTA ’s purpose as stated in the then Minister’s introduction for second reading of the Bill that became the MTA as follows: ... Bill No. 53 is the Marketable Titles Act which, I think, is an extremely important piece of legislation for the Province of Nova Scotia. Bill No. 53 will help all Nova Scotians by increasing the certainty of title to land.

The essential purpose of this bill is to bring certainty to the law respecting marketable titles and tax deeds, where confusion and unpredictability exist now. The bill addresses two issues that have reduced certainty of title, delayed property transactions and compelled property owners to engage in expensive court proceedings to validate their titles. [Emphasis Added] [ 60 ] Provincewide referred to a 1994

article by Catherine Walker, Q.C., titled Tax Deeds, Title Searching and Marketable Title , in which the author describes what was then the current (pre 1996 MTA ) situation regarding tax deeds: … So in today’s climate, far from being a source of comfort when discovered in a chain of title, the pendulum has swung so far in the opposite direction as to consider your “find” in a chain to be somewhat on the same plane as carcinogens.

Some effort to bring the pendulum back to a more balanced position is essential if there is to be any reason brought back into the process. [ 61 ] As a result of s. 6 of the MTA coming into force in 1996, there is now statutory authority to conclude that tax deeds that are six years old provide a good root of title. There are certain specific exceptions listed in the section, including for example where a “current owner of the land participated in a fraud or breach of trust with respect to the sale.” [ 62 ] There are very few cases considering s. 6(2) of the MTA and none in the current context. In MacNeil v.

Nova Scotia (Attorney General), 2000 NSCA 31 , our Court of Appeal commented briefly on s. 6(2): 22 The appellant submits that the trial judge erred in his

interpretation of the Marketable Titles Act , S.N.S. 1995 - 96, c. 9 in that he failed to find that the appellant had paper title through the Donaldson Tax Deed. Section 6(2) of that Act states , essentially, that in the absence of challenge within 6 years of its registration, a tax deed "... conveys an absolute and indefeasible title in fee simple to the land described in the tax deed ..." (emphasis added). The trial judge, as noted, found that he was not satisfied that "... any portion of the property described in the tax deed encompasses any portion whatsoever of the land in dispute".

The statute only protects the title of land described in the deed. If, and as the trial judge found, the description does not include the subject lands, the statute does not assist the appellant. [Emphasis Added] [ 63 ] In Delport Realty Ltd. v. Nova Scotia (Registrar General of Service), 2012 NSSC 416 , the court said the following concerning s.6(2): 3 Sub- section 156(2) of the Municipal Government Act , S.N.S. 1998, c. 18 , provides that a tax deed vests the lands in fee simple to the grantee free of encumbrances.

It states: 156(2) The deed has the effect of vesting the land in the grantee in fee simple, free and discharged from all encumbrances. 4 Sub- section 6 (2) of the Marketable Titles Act , S.N.S. 1995-96, c. 9 provides that a tax deed conveys an absolute and indefeasible title in fee simple six years after the deed has been registered. That

section is as follows: 6(2) A tax deed may not be set aside for any reason whatsoever except during the six years following registration of the tax deed, and thereafter the tax deed is binding and conclusive upon all persons and is not liable to be attacked or impeached at law by any person, and the tax deed conveys an absolute and indefeasible title in fee simple to the land described in the tax deed and is conclusive evidence, with respect to the purchaser and every person claiming through the purchaser, that every requirement for the proper assessment and sale of the land has been met. [Emphasis Added]

[ 64 ] The effect of the tax sale provisions of the MGA is to deprive people of an interest in property for non-payment of taxes. In legislating the wording of s. 6(2) of the MTA , a middle ground, one that gives an opportunity for challenge but also gives certainty to a buyer after six years, was struck. However, providing a six year period to challenge the tax deed means there is uncertainty during that period. Essentially there remains the same uncertainty that existed prior to s. 6 of the MTA , but only for a period of six years. [ 65 ] I now turn to the TQ that Mr.

McLaughlin placed on title to the property in question at the time of migration. It states: A TAX DEED FOR THIS PARCEL WAS REGISTERED ON OCTOBER 27, 2020 AS INSTRUMENT NUMBER 117306937. PURSUANT TO SUBSECTION 6 (2) OF THE MARKETABLE TITLES ACT, THE PRESUMPTION OF REGULARITY FOR THE ASSESSMENT AND TAX SALE PROCESS WILL BE EFFECTIVE ON AND AFTER OCTOBER 27, 2026. THIS QUALIFICATION EXPIRES ON OCTOBER 26, 2026. [ 66 ] The Land Registration Act must be considered to give context to the TQ that was placed on the parcel register. The LRA came into force in 2002, with land gradually migrating to the new system.

The LRA does not require there to be pristine title for registration. As the Nova Scotia Court of Appeal stated in Brill , supra , where property has been migrated under the LRA , the parcel register illustrates ownership that is good against the world. In Brill , supra , the NSCA provided a helpful overview of the effect of the LRA : 72 The heart of the LRA is s. 20 [as replaced by S.N.S. 2008, c. 19, s. 11 ]: 20 A parcel register is a complete statement of all interests affecting the parcel, as are required to be shown in the qualified lawyer's opinion of title pursuant to

Section 37, subject to any subsequent qualifications, revisions of registrations, recordings or cancellation of recordings in accordance with this Act. This achieves the "certainty of ownership" in s. 2(a)'s statement of purposes. The parcel register is a root of title.

I discuss this later in more detail (¶ 161-166). 73 The Registrar General under the LRA , and the court, may correct errors in the parcel register: ss. 34-36, 91, 92, as amended by S.N.S. 2008, c. 19, ss. 15 , 33 . 74 The LRA provides that a person who suffers loss because of an error in the parcel register is entitled to compensation, under the statutory standards and procedures, payable by Nova Scotia's Minister of Finance or the Registrar General on the Minister's behalf: ss. 85-88, and also ss. 35, 36(2) and 50(2), as amended by: S.N.S. 2002, c. 19, ss. 13 - 14 , and S.N.S. 2008, c. 19, ss. 15 , 28 - 31 . 75

Section 20 refers to the "qualified lawyer's opinion of title". The parcel register's status as an indemnifiable "complete statement of all interests", is predicated on the lawyer's certificate. A document submitted for registration must be accompanied by a lawyer's "certificate of legal effect certifying the legal effect of the document", upon which the "registrar is entitled to rely". The lawyer is liable to the Registrar General if, as a result of the lawyer's negligence, the Registrar General has been required to pay compensation within ten years after the lawyer's certificate. See ss. 18, 24(5) and (6), 26, 32(3), 37(4)(

b) and(f), 37(11), 37(11A), 37(12), as amended by: S.N.S. 2002, c. 19, ss. 6 , 11 , 15 ; S.N.S. 2004, c. 38, ss. 11 and 26 ; S.N.S. 2006, c. 15, s. 9 ; S.N.S. 2008, c. 19, ss. 9 , 13 , 16 , 36 . 76 The legal standards that govern "the qualified lawyer's opinion of title" are the foundation of the parcel register. Those standards are stipulated by s. 37(9) (

b) of the LRA , as replaced by S.N.S. 2008, c. 19, ss. 16 and 36 : 37

(9) The qualified lawyer's opinion of title required by clause 4(

b) shall be prepared in accordance with the relevant Nova Scotia Barristers' Society practice standards in effect at the time of the opinion, and … (

b) shall be based upon a title search, as evidenced in an abstract of title, that shows a chain of title to the standard required to demonstrate a marketable title pursuant to the Marketable Titles Act or to the standard required pursuant to the Limitations of Actions Act or any other enactment or the common law, or to such lesser standard as the Registrar General may approve. 77 Section 37(9) incorporates the NSBS' practice standard.

The Nova Scotia Barristers Society's Professional Standards - Real Property Transactions in Nova Scotia, approved by the NSBS' Bar Council on November 22, 2002, states: Standard 1.3 Certified Opinion of Title and Certificate of Legal Effect A lawyer may certify title as marketable if, after examining the abstract of title, the lawyer is satisfied that title to the parcel is marketable in accordance with legislation, common law and equity. … 162 By s. 20, "a parcel register is a complete statement of all interests affecting the parcel".

This is subject to the exceptions expressly noted in the LRA , such as overriding interests and challenges to the contents of the parcel register that may be resolved by the Registrar General and the Court. By s. 6, the Crown is bound, as is everyone. Section 73(1)(

a) states that an actual reservation or exception in an actual initial Crown grant overrides, but says nothing about a dispute whether there was an initial Crown grant. 163 The LRA involves the mirror, curtain and insurance principles of land title systems. These mean, respectively, that the register should accurately reflect the title, the register is the only source of title information, and there is indemnity to those who suffer a loss because of a flaw in the land registration system. Anger & Honsberger , ¶ 30:40.30. MacIntosh, Nova Scotia Real Property Practice Manual , ¶ 16-2.

164 In Turta v. Canadian Pacific Railway, (SCC), [1954] S.C.R. 427 (S.C.C.), at p. 443, Justice Estey for the majorityadopted this passage from an earlier decision: The cardinal principle of the statute is that the register is everything and that, except in cases of actual fraud in the part of the persondealing with the registered proprietor, such person, upon registration of the title under which he takes from the registered proprietor, hasan indefeasible title against the world. Justice Estey continued (pp. 443-444): The foregoing

preamble and quotations, as well as others to similar effect, emphasize that the Torrens system is intended "to givecertainty to the title" as it appears in the land titles office. [Emphasis Added] [67]

Section 20 of the LRA, described as the heart of the legislation, indicates that the parcel register is a complete statement of allinterests affecting the parcel.

Section 23 spells out the contents of a parcel register stating what it must contain including “(

k) any textualqualification added under s. 11.” Section 37(9)(

a) of the LRA references setting out “qualifications and other interests affecting title” andrequires adherence to the Nova Scotia Barristers Society practice standards, as indicated in the above quote from Brill, supra. [68] Leaving aside any question of root of title for this property, I note that The Professional Standards for Real Estate Transactionsin Nova Scotia includes Standard 3.7, which specifically references tax deeds: STANDARD A lawyer may certify title which has a tax deed as the root of title, after referencing the applicable legislation and common law. [Emphasis Added] The footnote to the word ‘legislation’ in the above standard specifically refers to s. 6 of the MTA and states: “1.

Marketable Titles Act,S.N.S. 1995-96, c. 9, s. 6, Land Registration Act, S.N.S. 2001, c. 6, s. 31.” [69] A TQ is a vehicle to note or summarize an issue counsel has identified with the parcel and has determined is necessary to noteat the time of registration. The LRA Regulations specifically reference textual qualifications.

Section 11 states: Textual qualifications 11

(1) An authorized lawyer submitting an opinion on title in an AFR or a certificate of legal effect may include a textual qualificationif the lawyer is of the opinion that the textual qualification is the only means to provide a complete statement of all the interests affectingthe parcel.

(2) A textual qualification must meet all of the following criteria: (

a) it must include a clear statement of the certifying lawyer’s opinion about its effect; (

b) it must form part of the authorized lawyer’s certificate of legal effect or opinion of title; (

c) it must not limit, contradict or make ambiguous any other information in the parcel register, including the legal description. [Emphasis Added] [70] In the definition

section of the Regulations textual qualification is defined as: “textual qualification” or “TQ” means a statement in the textual qualification

section of the parcel register which provides (

i) a qualification of the lawyer’s certification of title, (ii) an explanatory note, (iii) a reference to title information or documentation, or (iv) a reference to an interest enabled by statute or common law; [71] As noted above, Mr. McLaughlin did not give evidence in this matter, so it is not clear which (i-iv) was the reason for hisplacement of the TQ. Review of the TQ wording would indicate it is “a qualification of the lawyer’s certification of title.” Clearly not allTQ’s will represent a valid objection to title under s. 10.2 of the standard Agreement of Purchase and Sale.

Considerable discretion isafforded to the authorized lawyer in making a TQ. TQ’s can be simply necessary explanatory notes or, as here, an indication that underthe MTA the presumption of regularity for the assessment and tax sale process would not be effective until October 27, 2026. [72] A textual qualification, by its very description of being a qualification, obviously qualifies. It is a vehicle to note or summarizean issue affecting the parcel. Here the seller’s counsel discovered a tax deed dated in October of 2020. The six-year timeframe set out inthe MTA had not passed. In fact less than a year had passed.

Mr. McLaughlin included this TQ on the parcel register in relation to thisproperty. Mr. McLaughlin, in his email correspondence of June 25, 2021, states that the TQ is now required by the Registrar any timethe registered interest is by way of a tax deed. I have no further information regarding any requirements of the Registrar, as Mr.McLaughlin did not give evidence in this matter. Regardless, Mr. McLaughlin, as the certifying lawyer, placed the TQ on the parcelregister.

[ 73 ] The TQ advised anyone reviewing the property online registration that this property had been purchased by way of a tax deed. It further alerted the reader to the impact of s. 6 of the MTA , being that “the presumption of regularity for the assessment and tax sale process will be effective on and after October 27, 2026.” In other words, that there would not be an absolute and indefeasible title in fee simple to the land described in the tax deed until that date. [ 74 ]

Section 6 of the MTA provides that, in the absence of a challenge within six years of registration of a tax deed, the title to the land that is set out in the deed is in essence ratified. Section 6(2) specifically contemplates ownership issues could arise within six years of the deed. In the intervening six years, the tax deed is subject to challenge similar to the situation that existed prior to the enactment of the MTA .

The certainty referenced in the MTA ’s purpose only comes at six years (subject only to the exceptions set out in s. 6). [ 75 ] Provincewide argues that s. 6(2) of the MTA is for clearing defects and in the absence of an identified defect, there can be no valid objection to title. It says there is no evidence whatsoever in this case that the tax sale by which Provincewide purchased the Property in October 2020 was in any way irregular or that there are any defects in the chain of title for the Property.

However, under the LRA , there is no obligation for a buyer’s lawyer to look behind the parcel register and research the root of title or assess whether the tax assessment or tax sale processes were appropriate. As the LRA states in s. 20, the parcel register is a complete statement of all interests affecting the parcel “as are required to be shown in the qualified lawyer's opinion of title pursuant to

Section 37 , subject to any subsequent qualifications.” Mr. DiConstanzo was entitled to rely on the parcel register and the TQ recorded by Mr. McLaughlin. [ 76 ]

Section 10.2 of the standard Agreement of Purchase and Sale uses the words “any valid objection to title”. If the objection is in writing and timely, then the question becomes whether the objection is a valid objection. In other words, is it sufficiently material to justify the buyer refusing to close the transaction and terminate the contract? I find that Jockel Holdings’ objection has sufficient merit that it would not be compelled to take title in these circumstances. [ 77 ] The evidence indicates the issue of a tax deed being within the six year waiting period was of concern to both counsel. Mr.

Di Costanzo made the objection as solicitor for his client, the buyer, and Mr. McLaughlin referred to the issue as a “big problem” if the title insurers were not prepared to accept it. Ultimately, the title insurer, FCT, for the buyer refused to ensure against the specific issue raised by the TQ. [ 78 ] I am of the view that the TQ on the parcel register referencing the six year waiting period for a tax deed to convey “an absolute and indefeasible title in fee simple to the land described in the tax deed” represents a valid objection to title, in the absence of title insurance being available.

A buyer should not be compelled to complete the purchase of property where, as in the MTA , legislation contemplates challenges to the tax deed for a period of six years from the date of the deed. Completing this purchase could potentially expose the buyer to future legal proceedings. A buyer may choose to assume the risk or assume the risk after, for example, an abatement.

But in the absence of the provision of appropriate title insurance to the buyer, should not be compelled to assume the risk. [ 79 ] The common law principle set out above from Brill, supra, specifically notes marketable title is title that does not expose the buyer to litigation. While dealing with different title objections, situations where a buyer could be subject to future legal proceedings have been held to be valid objections to title (see Brown v.

Laffradi, [1961] OWN 263 , and Stieglitz and Prestolite Battery Division, [1980] O.J. 3885 ). [ 80 ] I find that the objection to title advanced by Jockel Holdings is a valid objection. [ 81 ] I now turn to the issue of whether Provincewide was “unable or unwilling to remove” the valid objection to title? [ 82 ] Mr. McLaughlin in his July 6, 2021, email spoke about a potential Vendors and Purchasers Act application and also about speaking to title insurance companies. There is no indication on the evidence that Mr. McLaughlin pursued either prior to the closing date.

In addition, there was no request by the Seller for an extension to address them. In short, the Seller did nothing to try to remove the title objection prior to closing. It is clear Provincewide could do nothing to remove the six year waiting period in the MTA . [ 83 ] The evidence illustrates that only two things would make the risk associated with the tax deed palatable for this buyer – title insurance or a reduction in the purchase price to account for the risk. Neither was forthcoming. As a result the Buyer chose not to waive the objection but to forward a signed Termination of Agreement document.

As there was no waiver of the objection, I find that all of the requirements of s. 10.2 of the Agreement of Purchase and Sale have been met by Jockel Holdings and that it was entitled under the Agreement to terminate. In light of the above, I find there was no breach of contract by Jockel Holdings. Conclusion [ 84 ] The Application by Provincewide seeking special damages and release of the deposit to it for breach of contract is dismissed. The Application by Jockel Holdings for return of the deposit is granted. I would ask Mr.

Christofi to prepare the order that will incorporate both Applications and both styles of cause. If counsel are unable to agree on interest and costs, I will entertain brief written submissions within ten days of this decision. Jamieson, J.