J. QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2005 SKQB 272 Date: 20050609 Docket: Q.B.G. No. 158/2005 Judicial Centre: Battleford BETWEEN: LANDSWEST SCHOOL DIVISION NO. 123 Counsel: L. K. Neil for the applicant H. J. Neufeld for the respondent FIAT WILKINSON J. June 9, 2005 [1] The applicant, Landswest School Division No. 123, asks for a vesting order regarding a presently unsubdivided parcel of land (proposed Parcel G) located within the SW 15-37-28 W3M owned by the respondent, Neil Klein. As part and parcel of its request for vesting order, the School Division seeks an order directing the Registrar of Titles to register the Plan of Proposed Subdivision with respect to Parcel and to issue Transform Approval Certificate. The requested relief cannot be provided unless the Court has authority to order that a subdivision of land be effected outside the requirements of The Planning and Development Act, 1983, R.S.S. 1983-84, c. P-13.1. [2] The issue arises in rather complex fact situation. In 1994, the School Division’s predecessor (the Kerrobert School Division #44) sold 7.5 acre parcel of land to purchasers (the Flads), in the belief it was selling an existing parcel of land commonly known as “the old St. Mary’s School site”. The property that the School Division believed it was selling to the Flads never legally existed as separate parcel, and was in fact located within quarter section owned by one Ronald Erker [SW 15-37-28 W3M]. [3] The parcel actually conveyed by the School Division to the Flads (Parcel F) is cemetery formerly owned by the Episcopal Corporation of Saskatoon. The Episcopal Corporation had previously transferred their cemetery, Parcel F, to the School Division operating under the same mistaken belief, namely that Parcel was the old St. Mary’s School site. [4] There is some evidence indicating that predecessor in title to Mr. Erker had donated part of the St. Mary’s School site (4 acres) to the School Division’s predecessor (Kerrobert School Division #44) in 1946, and subsequently sold them the balance (3.5 acres) in 1961 but the school site was never properly subdivided or transferred. As the school was built directly adjacent to church (Parcel D) and cemetery (Parcel F) owned by the Episcopal Corporation, the confusion was shared by the church. [5] The Flads have been in occupation of proposed Parcel G, using the property as residence and constructing corrals for use in their livestock operation. In addition to their lack of title, they failed to obtain development permit before making improvements to the site. As such, some of their subsequent difficulties were of their own making, and not solely ascribable to the mistakes of title. The property they paid $12,500 for is now, according to the Flads, worth $90,000 or more. [6] When the error first came to light in 1995, the School Division arranged to purchase proposed Parcel from Ronald Erker, the registered owner, for $5,600. This agreement was concluded in 1996, conditional on subdivision approval, which the School Division agreed to obtain at its own cost. The agreement was further conditional upon the Flads transferring title to Parcel back to the School Division. This agreement was executed by Mr. Erker and the Kerrobert School Division #44. Neither the Flads, nor the Episcopal Corporation were involved as parties to the agreement, although presumably the School Division intended to effect reconveyance of Parcel to the rightful owner. No caveat was registered regarding this agreement. [7] The School Division proceeded to obtain Proposed Plan of Subdivision with respect to Parcel G. The Planning and Development Act, 1983 and the Subdivision Regulations, R.R.S., c. P-13.1, Reg. governed the subdivision of land in Saskatchewan, as they continue to do to the present time. Pursuant to s. 140(1) of the Act, proposed subdivision must comply with any local zoning bylaw, in addition to the Act and Regulations. [8] Section 15 of the Subdivision Regulations prohibited approval of the proposed Parcel G, as it was being used for an intensive livestock operation and livestock facilities were located within 300 metres of land used for residential purposes (Parcel D, the former church, now owned by Pius Baier). Mr. Flad’s corrals were approximately 125 metres from the Baier residence. Therefore, before subdivision approval could be granted, the Flads were required to obtain permit for their livestock facilities under The Pollution (by Livestock) Control Act, 1984, S.S. 1983-84, c. P-16.1 (repealed by 1995, c. A-12.1) either by securing the consent of Mr. Baier to the use as an intensive livestock operation, or, alternatively, by relocating their corrals away from his property. [9] Further, under the Zoning Bylaw for the RM of Eye Hill No. 382, the Flads’ intended use of the site was “discretionary use” which could only be permitted by special council resolution. Council consented to the proposed subdivision conditional, among other things, upon Mr. Flad obtaining such an agreement from Mr. Baier. Mr. Baier refused to consent. [10] Mr. Flad then took the view the School Division should purchase additional lands from Mr. Erker to permit Mr. Flad’s corrals to be relocated away from Parcel D, rather than being removed entirely. Effectively, he wanted 21-acre parcel, rather than the 7.5 acre parcel originally purchased, and apparently intended to enlarge the size of his relocated corrals in the process. [11] In an effort to resolve the impasse, the Municipal Development Branch made an alternate suggestion that would see corrals relocated further south, but stay roughly the same size. This would involve the creation of 15.5 acre parcel through metes and bounds description and would extend the south boundary of proposed Parcel by 1,411 feet. The Municipal Development Corporation was of the view that might pass muster if Council agreed to classify the use of the site as farmstead or non-residential parcel and Mr. Flad was advised he could apply to the R.M. to discuss his options. [12] It appears Mr. Flad’s last position was to insist on the transfer of proposed Parcel G, saying the corrals were totally separate issue and he would deal with the R.M. Council once the 7.5 acre parcel constituting proposed Parcel was transferred to him. Obviously that could not be done, as proposed Parcel was in contravention of the Act, the regulations and the Zoning bylaw. [13] The Municipal Development Branch then attempted to have all the interested parties negotiate an agreement in order to avoid the expense and delay of legal proceedings. Unfortunately, before that process got underway, Mr. Erker sold his lands to Neil Klein of Provost, Alberta. The offer to purchase of April 5, 1997, contained the following oblique terminology in the paragraph dealing with what the purchase price included. It said: ...not included yard subdivision on SE quarter and land of parcels on SW quarter as known by buyer. [14] Despite possible indication to the contrary (depending on the eventual interpretation to be placed on the foregoing wording), Mr. Klein maintains he is bona fide purchaser with no notice of the Flads’ interest in the land. Mr. and Mrs. Flad proceeded to register caveat on May 29, 1997, claiming an interest in proposed Parcel G. Mr Klein initiated complaints about the Flads’ livestock operations and the damages it was causing to his land. He was not prepared to consent to the proposed subdivision and Municipal Development Branch closed its file. [15] Proceedings were taken by Mr. Klein to lapse the Flads’ caveat. According to the title, judge’s order was obtained on December 18, 1997, continuing the caveat until further order of the Court. The School Division decided to await the outcome of “third party actions”. No other information is provided regarding the nature of those other proceedings, whether there were other parties added, or what the pleadings involve. The School Division advises that in seven years nothing has been resolved, prompting them to make this application. Mr. Klein opposes the application saying he is bona fide purchaser without notice of the Flads’ interest and relying on the indefeasibility of his title. [16] In 597383 Saskatchewan Ltd. (c.o.b. Peter's Sewer Service) (Trustee of) v. 614630 Saskatchewan Ltd. (c.o.b. Peter's Sewer Service), 2003 SKQB 69 (CanLII), (2003), 230 Sask. R. 213 (Q.B.), Zarzeczny J. set out the Court’s jurisdiction to deal with vesting orders, saying: Although the court tentatively concluded that s. 109 of the new Land Titles Act, 2000 combined with ss. 12 and 65 of The Queen's Bench Act, 1998, S.S. 1998, c. Q-1.01 are not sufficient authority to support the granting of vesting order in the circumstances before the court, nevertheless the court is now satisfied that Regulation 6.5 of The Land Titles Conversion Facilitation Regulation to the new Land Titles Act, 2000 does so. In substance, the Regulation parallels the nature, extent, purpose and intent served by the vesting order provisions contained in the former s. 87. The only question remaining is whether or not the discretion to grant vesting orders should appropriately be applied in the circumstances of this case. Because of the conclusions that have reached based upon the materials filed as previously referred to respecting the absence of adverse interests nor any interest in the registered owner or any subsequent encumbrancer or other creditor with respect to the equity of redemption conclude that this is an appropriate case to grant the relief requested (see Clarkson Co. Ltd. v. Credit Foncier Franco Canadien (1984), 1984 CanLII 2444 (SK QB), 37 Sask. R. 295 (Sask. Q.B.), Clarkson Co. Ltd. v. Credit Foncier Franco Canadien (1985), 1985 CanLII 2651 (SK CA), 44 Sask. R. 151 (Sask. C.A.). [17] In Arndt Estate v. First Galesburg National Bank and Trust Co., 2001 SKQB 234 (CanLII), (2001), 206 Sask. R. 261 (Q.B.), Hunter J. reviewed the governing criteria for the exercise of the court’s authority to make vesting order. They are: (i) that the facts are not in dispute; (ii) that there is no question of the right of the applicant; (iii) that there is no other available or reasonably convenient remedy or procedure; and (iv) (where exceptional circumstances exist) that complying with regular and recognized procedures would result in an injustice. Hunter J. did grant vesting order on the facts of that case, but after full hearing at trial as opposed the summary fashion in which the order is requested in the present case. Here, it is evident that there are facts in dispute, and adverse interests that can only be resolved at trial, particularly with respect to the position of the current registered owner, Mr. Klein, and whether he is bona fide purchaser without notice of the interest claimed by the Flads. [18] Even if this was proper case for the making of vesting order, there is further difficulty presented by the fact that the applicant, the School Division, is asking the Court to order that subdivision of Parcel be effected, as precondition to the vesting order. That is relief which the Court may be constrained from awarding on the application as framed. The reason is explained in the decision of the Supreme Court of Canada in City of Vancouver v. Derek G. Simpson, 1976 CanLII 148 (SCC), [1977] S.C.R. 71 which sets out the underlying rationale for the regulation and control of land use. The following passages from the decision of Martland J. on behalf of the Court (at pages 77 and 79) are applicable: The majority judgment states that the refusal of the right to subdivide is in derogation of common law rights. The point is, however, that it was the Land Registry Act which curtailed common law rights. The enactment of that statute took away free right to subdivide. The landowner has no right to subdivide save subject to the approval of the approving officer, who is required by the Act to determine if the contemplated development would be against the public interest. The very exercise of the power given to the approving officer by the Act must necessarily curtail the landowner's right to subdivide. To contend that he cannot be said to exercise that power reasonably if such curtailment of rights results is to contend that the approving officer cannot perform the duty imposed upon him by the Act. ... The Land Registry Act has imposed disadvantage on subdivision unless the consent of the approving officer is obtained and in s. 96 has empowered that officer to refuse approval to subdivision if, in his opinion, it would be against public interest.... [19] In Saskatchewan, it is the provisions of The Planning and Development Act, 1983 that have taken away the free right to subdivide. The following are the relevant provisions: 2. In this Act: (aa) “subdivision” means division of land, and includes division of quarter section into legal subdivisions as described in the regulations made pursuant to The Land Surveys Act, 2000. 133 Every: (a) subdivision; and (b) other instrument; described in section 134 is to be made in accordance with: (c) this Act and the subdivision regulations; and (d) the plans and specifications submitted to and approved by the approving authority. 134 (1.1) No person shall apply to the Registrar of Titles to register transfer of title or to obtain title to new parcel of land where registration of that application would have the effect of subdividing land unless: (a) the Controller of Surveys has approved plan respecting the subdivision; and (b) the appropriate approving authority has issued certificate of approval respecting the subdivision. [20] The proposed plan of subdivision was prepared under the old Land Titles scheme. Under the current LAND System, there is two-step process involved in completing subdivision, wherein the plan is submitted to the Controller of Surveys for approval prior to submission to the Land Registry. In addition s. 134 of The Planning and Development Act, 1983 requires certificate of approval from the approving authority respecting the subdivision. [21] Whether under the former legislation or the present, the Court is not free to subvert the statutory requirements in the exercise of its authority to make vesting orders. In Redmond v. Logel (1985), 1985 CanLII 2383 (SK CA), 37 Sask. R. 270 (C.A.), the Saskatchewan Court of Appeal considered the effect of failure to obtain subdivision approval. As set out in the headnote, the Redmond case involved an appeal by the Logels from judgment after trial ordering rectification of the description of land transferred to them by way of sale from Mohl who had purchased the said land from the respondent Redmond. The original agreement of purchase and sale between Redmond and Mohl purported to except from the sale the farm home and yard, which Redmond was to retain. The transfer was registered, however the reservation of the farm site could not be registered because it purported to effect an unauthorized subdivision of the land. Redmond filed caveat to protect his interest. The land was then sold to the Logels who had notice of Redmond's interest, although, again, the transfer was registered without any reservation of Redmond's rights. Redmond remained on the farm property and brought an action seeking rectification of the title, which was successful in the court below. The original purchaser, Mohl, had been added as party to the action. The trial judge ordered rectification of the agreements and directed the Logels to apply for subdivision approval. The issue on appeal was whether the trial judge erred in holding that Redmond retained legal interest in the farm site which could form the basis of registrable transfer under The Land Titles Act. [22] The appeal was allowed. The Appeal Court held that at the time of the purported reservation of title in favour of Redmond, no subdivision of agricultural land was permitted in respect of an area less than five acres. Redmond sought to reserve two acres only. subdivision would therefore not have been permitted, if applied for. The original transaction appeared to have been concluded in an effort to avoid compliance with, and the effect of, the applicable subdivision regulation. The application in question was tantamount to judicially ordered partition of land to avoid the effect of legislation. The Court was obliged to prevent such wholesale frustration of the legislature's objects. [23] As noted by Tallis, J.A. in para. 12, the purpose of these and other provisions in The Planning and Development Act is: ‘the prevention of the unrestricted subdivision of land’: see Re Forfar and Township of East Gwillimbury 1971 CanLII 543 (ON CA), 20 D.L.R. (3d) 377 and Re Redmond v. Rothschild 1970 CanLII 317 (ON CA), 15 D.L.R. (3d) 538 aff'd (1972) 1972 CanLII 1231 (SCC), 28 D.L.R. (3d) 512. The chief object in controlling subdivisions and passing zoning bylaws is to control land development.... Accordingly, the trial judge was in error in granting rectification of the agreement and ordering the Logels to apply for subdivision approval. [24] Here, it might be argued there are some distinguishing features. The original transaction between the School Division and the Flads was not concluded in an effort to avoid compliance with subdivision regulations, rather it was made in the mistaken belief that an already subdivided parcel was being transferred. The subdivision approval was seemingly obtainable (at least before the land was transferred to Mr. Klein), but conditional upon the Flads relocating corrals (constructed without development permit) in order to comply with existing subdivision regulations and the zoning bylaw. [25] While the Court is precluded from directing the Registrar to effect subdivision that is prohibited by the legislation, resolution of the matter could be achieved if, for example, after adjudicating on all the rights and obligations in issue, the Court could was prepared to direct that the preconditions to subdivision approval be met by party or parties to the proceedings. Once the proposed subdivision meets the required standards and is approved, then vesting order can be made in the appropriate circumstances under the provisions of s. 6.5 of The Land Titles Conversion Facilitation Regulations, R.R.S., c. L-5.1, Reg or, as an alternative possibility and if all interested parties are before the Court, under The Improvements Under Mistake of Title Act, S.S. 1978, c. I-1. [26] As examples, refer to Munro v. French and Leniuk, [1979] S.J. No 276 (Q.B.) (QL) where the plaintiff sued for specific performance of an agreement for sale of land, and vesting order. He had purchased 50-acre parcel from the defendant’s husband, who had since passed away. The plaintiff made improvements for cattle operation and registered caveat to protect his interest. Title passed to the defendant, French, upon the death of her husband. She had some discussions with the plaintiff about transfer but it was never effected. At the time, the transfer could have been effected without the need for subdivision approval, as it would have been the first subdivision out of the quarter section. However, the defendant subsequently transferred 40-acre parcel to her granddaughter. After dispute arose over who should pay the cost of obtaining subdivision approval, French then sold the remaining 110 acres (including the plaintiff’s 50 acres) to the defendant, Leniuk, subject to the plaintiff’s caveat. Leniuk then took proceedings to lapse the plaintiff’s caveat. The plaintiff commenced proceedings. Hughes J. relied on the authority of the Supreme Court of Canada’s decision in Dynamic Transport Ltd. v. O.K. Detailing Ltd., 1978 CanLII 215 (SCC), [1978] SCR 1072 and ordered the defendants to apply for subdivision approval and, if it could not be obtained, the matter was to be referred back to him for further determination and assessment of damages. [27] refer to Jackson Estate v. Anderson Estate (1992), 1992 CanLII 7992 (SK QB), 106 Sask. R. 183 (Q.B.) where Kyle J., relying on constructive trust principles, held that mutual mistake resulting in the transfer of mines and minerals could be rectified, and the mines and minerals could be vested in the rightful owner. He stated it was not in every case that the provisions of an agreement must, of necessity, be considered merged in conveyance. This decision was overturned on appeal at (1993), 1993 CanLII 6620 (SK CA), 113 Sask. R. 264 (C.A.), but on the grounds that case of mutual mistake had not been made out, and that the doctrine of laches barred the claim. The person claiming to be the rightful owner of the interest had done nothing for 20 years, both parties to the transaction had died, and the action was between the executors of their respective estates. [28] refer lastly to Hanson v. Cook (1989),1989 CanLII 4800 (SK CA), 75 Sask. R. 66 (C.A.), where there was an appeal from vesting order made under s. of The Improvements Under the Mistake of Title Act. Adjoining cottage owners had all built on lots one removed from the lot to which they had title. The vesting order was made on notice of motion as the facts were not in issue. One owner wanted to retain rights to his original lot and objected to the order. The Court of Appeal held that lasting improvements had been made on the lots in the mistaken belief as to title, and judge was empowered under s. to make vesting orders rather than awarding monetary compensation. [29] Without commenting on the propriety of making any of the orders made in the foregoing cases (which can only be determined on full examination of the evidence and not in summary fashion), am of the view that where the appropriate remedies are sought and where all the interested parties have participated and their rights have been adjudicated upon, there are other means of achieving the desired ends. However, it is not within the Court’s power to order the Registrar to effect subdivision contrary to the provisions of The Planning and Development Act, 1983 where such is precondition to the making of vesting order sought by an applicant. [30] The applicant requested that make an order for cross-examination of the respondent on his affidavit, if declined to grant the order requested. do not believe that will go far toward resolving the complicated issues that present in this matter. am prepared to direct the trial of an issue, however, the parties should have an opportunity to make submissions as to the framing of the issues, who will bear the burden of proof in the issues as framed, and what procedures should be followed. There will undoubtedly have to be some future consideration given to bringing all the interested parties together in consolidated or joined proceedings in the interests of effective adjudication. The Flads were not served with notice of the present application. have no information about the nature and status of the proceedings taken by the Flads in connection with their caveat. am therefore requesting, on the matter of directing trial of an issue, that further written submissions by the parties be filed within 30 days. J. Y. G. K. Wilkinson J.
FIAT: The applicant school division asks for a vesting order regarding an un-subdivided parcel of land. The requested relief cannot be granted unless the court has authority to order that a subdivision of land be effected outside the requirements of The Planning and Development Act. HELD: 1) Even if this was a proper case for the making of a vesting order, there is a further difficulty presented by the fact that the applicant school division is asking the court to order that a subdivision be effected, as a pre-condition to the vesting order. Whether under the former legislation or the present, the court is not free to subvert the statutory requirements in the exercise of its authority to make vesting orders. The court reviewed the relevant caselaw. 2) While the court is precluded from directing the Registrar to effect a subdivision that is prohibited by the legislation, a resolution of the matter could be achieved if, for example, after adjudicating on all the rights and obligations at issue, the Court was prepared to direct that the pre-conditions to subdivision approval be met by a party to the proceedings. Once the proposed subdivision meets the required standards and is approved, then a vesting order can be made in the appropriate circumstances under the provisions of s. 6.5 of The Land Titles Conversion Facilitation Regulations, or under The Improvements Under Mistake of Title Act. The court reviewed the applicable caselaw. 3) The court requested that further written submissions be provided by the parties on the matter of directing a trial of the issues.