J. Q.B. A.D. 1997 No. 1685 J.C.R. IN THE QUEEN'S BENCH JUDICIAL CENTRE OF REGINA BETWEEN: HOME OIL COMPANY LIMITED and HERITAGE FREEHOLD SPECIALISTS LTD. RESPONDENT D.G. Gerecke for the applicant L.J. Nystuen for the respondent FIAT GEATROS J. July 7, 1997 The applicant Home Oil Company Limited seeks anorder pursuant to s. 159(3) of The Land Titles Act, R.S.S.1978, c. L-5, as amended, that the caveats set out in itsoriginating notice shall continue until further order of theCourt, or until withdrawn. The respondent Heritage Freehold Specialists Ltd. is seeking to lapse the caveats and has served notices to lapse on Home Oil in respect to all of the caveats. Each of the caveats is based on an agreement taken by Freeholders Oil Company Limited from the registered owner of the minerals. Heritage fairly concedes that it is not seeking summary dismissal of the application to continue the caveats. The order it urges the court to make is one directing that thecaveats be continued on the condition that Home Oil commencean action within a reasonable time, to determine the validityof its caveats, failing which the caveats will lapse. Home Oil, on the other hand, contends that it is entitled to an order continuing the caveats until further order, or until withdrawn, and if Heritage desires to pursue the matter further it must commence an action to declare the leases void. In that regard, Cameron, J.A. in Amoco Canada Resources Ltd. v. Potash Corp. of Saskatchewan Inc. (1992), 1991 CanLII 7951 (SK CA), 93 Sask. R. 300 (C.A.), for the Court, had this to say, at pp. 304 and 305: summary proceedings of this nature have long been regarded as inappropriate to final determinations of complex issues of fact or law touching upon the rights of caveators and land owners: Garr Scott Company v. Guigere, (1909), Sask. L.R. 374. Matters such as those are best left to be tried in the usual course. Aside from that, where it is clear on the face of things that the caveator does not have an interest, the application to continue will be dismissed, with the caveat being allowed in consequence to lapse. Where it appears on the face of things that he does have an interest, the caveat will be ordered continued until further order of the court or until withdrawn by the caveator. In other, less clear, instances the caveat will be ordered continued on condition an action be commenced within specified time. If the condition is not met, the caveat will lapse in consequence. If met, the caveat will continue, in accordance with the order, pending the final determination of the action. When making an order of this last sort the judge will determine, in all of the circumstances, which of the parties is to commence the action. The question here is whether it is the caveator orthe challenger that should be required to initiate an action. Heritage argues that the materials presented by Home Oil on its application do not make out clear or prima facie case such to allow the caveats to be continued on the basis as to require it, Heritage, to commence proceedings. Home Oil refers to Freeholders Oil Company Limited v. Runge (1963), 1963 CanLII 329 (SK QB), 41 W.W.R. 433 (Sask. Q.B.) involving 99- year Freeholders lease that Home Oil points out was in the same form as those that underlie the present caveats. Bence, C.J.Q.B., upon review of the affidavit evidence before him, having found in effect that prima facie there were agreements in existence, ordered that the caveats be continued until further order of the court, or until they were withdrawn in due course. The "burden" was placed on the challenger. Heritage counters by alluding to Clover Leaf Heights Ltd. v. Hanson, 1978 CanLII 1746 (SK QB), [1979] W.W.R. 58 (Sask. Q.B.). It is appropriate, in my view, to refer to the judgment of Halvorson, J. at some length, at pp. 59 and 60, where similar application as the instant one was before him: The question for me to decide is, which of the parties is to bear the burden of proof in this proceeding? The respondents contend that, because the applicant is challenging the caveat, the onus is upon it to establish right to have the caveat removed. In support of this position is cited the case of Re Land Titles Act; Re Prudential Trust Co. Ltd., Sask. Q.B. No. 210, 21st October 1978 (not yet reported), which relied upon the decision of Freeholders Oil Co. Ltd. v. Runge (No. 1) (1963), 1963 CanLII 329 (SK QB), 41 W.W.R. 433 (Sask.), which in turn relied upon Re Land Titles Act; Re Lot 10, Block 666, Lakeview, Regina, Plan No. P1652, [1945] W.W.R. 416 (Sask.). It is noteworthy that these three decisions were all in respect of applications to continue caveats pursuant to s. 159 [am. 1966, c. 96, s. 8; 1976-77, c. 81, s. 2; 1978, c. 30, s. 10] of the Land Titles Act, and in each case the existence of an agreement was not in dispute. In my opinion, all the judge was saying in the Prudential Trust Co. case was that, because there was document in writing upon which the caveat was based, the onus was upon the party challenging the validity of the document and thereby the caveat, to prove its position. This is clear when one reviews the aforesaid Freeholders Oil Co. case and the Re Lot 10 case. For example, in the Re Lot 10 decision the judge concluded that, while usually the caveator is required to commence the action to establish his position, there was no such onus in that particular case because there was in existence an agreement for sale. The implication was that the onus fell to the party disputing the agreement to launch proceedings. In following the Re Lot 10 decision the judge in the Freeholders Oil Co. case concluded, likewise, that there was an agreement in existence and, therefore, the burden lay upon the party attacking the agreement to establish that it was not in force. The principle of law which gather from these three decisions is set forth in the headnote of the Freeholders Oil Co. case to the following effect: "Where there is an agreement in existence upon which caveat is based the burden is on the person seeking to remove the caveat of establishing by action that the agreement is not in force." This is not the same thing as principle that whenever caveat is challenged the person challenging same must accept the burden of proof, and the decision in the Prudential Trust Co. case was never meant to set such wide principle. In my opinion, there may be any number of circumstances in applications under s. 159 where established agreements are not in issue, whereby the onus of commencing proceedings may fall upon the party which filed the caveat rather than the party challenging same. Had the applicant in this case chosen to attempt to lapse the caveat in accordance with the provisions of s. 159, would have concluded that the burden of establishing the agreement for sale would fall upon the caveators, the respondents herein, and not upon the applicant, which is challenging the caveat. The reason for this is that it is not conceded in this case that there is an agreement for sale in existence and the reasoning in the three decisions which have referred to is not applicable. It would be inappropriate to require the applicant herein to establish the agreement for sale when it is the applicant's position that there is no agreement, and it would be most difficult for the applicant to establish negative. In any event, the application before me is under s. 158 of the Act, which reads: "158. The owner or other person claiming an interest in such land may by summons call upon the caveator to attend before judge to show cause why the caveat should not be withdrawn; and the judge may, upon proof that the caveator has been summoned and upon such evidence as he may require, make such order in the premises as to him seems meet." (The italics are mine.) Under this section the initial onus is upon the respondents, the caveators, to establish the alleged agreement for sale. This is consistent with the judgments in Zwick v. Parkdale, 1933 CanLII 190 (SK QB), [1934] W.W.R. 17 (Sask.), and McAvoy v. Royal Bank of Can., 1933 CanLII 256 (SK CA), [1933] W.W.R. 433 (Sask. C.A.). am also of the view that, had the respondents herein been able to establish without doubt on the return of the motion that there was an existing agreement for sale granting them the right to purchase the lands which are the subject of this caveat, then the onus would have shifted to the applicant, which is challenging the caveat, to establish that the agreement was for some reason not in force, that is, the rationale in the decisions under s. 159 relative to existing agreements for sale is also applicable to existing agreements for sale challenged under s. 158. In Meadow Lake Credit Union Ltd. v. Korejbo (1988), 1988 CanLII 5194 (SK CA), 66 Sask. R. 191 (C.A.), Sherstobitoff, J.A. for the court, said, at p. 193: the chambers judge, in continuing the caveat until further order, acted in accord with the practice established by the Court of Queen's Bench in line of cases including: In Re Lot 10, Block 666, Lakeview, Regina, Plan P16, 52, [1945] W.W.R. 41; Freeholders Oil Company Limited v. Runge (1963), 1963 CanLII 329 (SK QB), 41 W.W.R. (N.S.) 433, and Young v. Foale, 1980 CanLII 2364 (SK QB), [1981] W.W.R. 653; 10 Sask. R. 28. These cases hold, in effect, that where there is an agreement in existence upon which caveat is based, the burden is on the person seeking to remove the caveat of establishing by action that the agreement is not in force. This practice is subject to the discretion of the judge who may make exceptions in cases where, on the basis of the facts of the particular case, he deems it appropriate to place the burden on the other party. In such cases, the customary order is to continue the caveat for fixed period of time during which the caveator must commence action to establish his claim. Examples of such exceptions are Toronto Dominion Bank v. J.A. Poppleton and Sons Farm Ltd., [1982] W.W.R. 477, and Nelson v. Strong (1984), 1983 CanLII 2200 (SK QB), 28 Sask. R. 196, wherein Walker, J., found that, although documents existed to support the caveat, the case of the caveator was so weak that it was appropriate to place the onus on the caveator to establish the validity of his document by action. (The part in italics is added as Heritage places emphasis upon it.). Heritage contends that this is not clear enough case to allow Home Oil's caveats to continue unconditionally. It submits that an "agreement in existance" has not been shown. am not persuaded that that is so. D.F. Kelly, Home Oil's Vice-President of Land, deposed in his affidavit, inter alia, that the leases are still in existence, and that Home Oil is the successor in interest to the subject agreements, exhibiting at the same time all of the certificates of title, the caveats, and all of the leases underlying the caveats. There has been no termination of any of the agreements byrescission or cancellation, or the like, so each of theagreements are, I find, prima facie still in existence, andHome Oil is the valid successor of the interest ofFreeholders. Heritage argues that complete agreement has not been produced. Missing, as an example, are drilling lease forms that comprise part of Home Oil's assignment and lease. In short, Heritage says, Home Oil has failed to produce all necessary documents. For present purposes, find, Home Oil has put forward what it needs to in support of the relief it seeks. Further documentation suggested by Heritage will berequired by a trial judge in determining the issue of thevalidity of Home Oil's interest in the leases involved,including the matter of whether Home Oil's lease violates therule against perpetuities. find that this is not case where the order continuing the caveats should include direction that the caveator must commence an action to establish its claim. The facts presented do not, in my judgment, allow for such determination. The principle in the Freeholders Oil Co. case applies here given that there is prima facie an "agreement" in existence so that the burden is on Heritage in seeking to remove the caveats to commence the requisite action. The onus is on Heritage to prove its position. In the result it is ordered that the caveats becontinued until a further order of the Court is filed in theLand Titles Office or until such time as they are withdrawn indue form as provided for under the provisions of The LandTitles Act. Should Heritage wish to pursue the matter further it is at liberty, of course, to commence an action for relief such as having the leases declared void. Home Oil will have its costs of the application.
FIAT. The applicant sought an order pursuant to s. 159(3) of the Land Titles Act to continue caveats until further court order or until withdrawn. The respondent had served notice to lapse all of the caveats which were based on an agreement taken by Freeholders Oil from the registered owner of the minerals. The respondent sought an order directing the caveats be continued on the condition Home Oil commence an action within a reasonable time to determine their validity. At issue was whether the caveator or the challenger should be required to initiate an action. HELD: The caveats were to be continued until a further court order was filed in the Land Titles Office or until they were withdrawn. 1) Each of the agreements was prima facie still in existence as there had been no cancellation or rescission of the agreements and Home Oil was the valid successor of the interest of Freeholders. 2) Further documentation would be required by a trial judge to determine the issue of the validity of Home Oil's interest in the leases including whether Home Oil's lease violated the rule against perpetuities.  3) Home Oil was given its costs of the application.