THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2008 SKCA 28 Date: 20080204 Between: Docket: 1420 Kelly Foster and MFD Warehouse Restorations Ltd. Coram: Klebuc C.J.S., Richards and Wilkinson JJ.A. Counsel: Aaron M. Tetu for the Appellant Robert G. Kennedy, Q.C. for the Respondent Appeal: From: QBG 1738/2006, J.C. of Saskatoon Heard: February 4, 2008 Disposition: Appeal Dismissed (Orally) Written Reasons: February 29, 2008 By: The Honourable Madam Justice Wilkinson In Concurrence: The Honourable Chief Justice Klebuc The Honourable Mr. Justice Richards Wilkinson J.A. [1] On the hearing of this appeal, we dismissed the appeal with costs, with full reasons to follow. These are the reasons. [2] The appellant agreed to purchase two-storey condominium unit (Units and 6) from the respondent, developer. It was the only planned unit of its kind in downtown warehouse the developer proposed to convert to 26 unit condominium complex. Building permits had not been obtained, nor had condominium titles been raised, at the time the sale agreement was entered into. Schematics or drawings of the project were shown to the appellant at the time of sale. [3] In the course of construction, the respondent learned the two-storey design for the appellant’s unit would require significant and costly alterations to other areas of the building, particularly the lobby and stair-well, in order to make the project acceptable to the City of Saskatoon. The respondent opted not to proceed with the two-story unit, revising it instead to single story unit (Unit 5) which was then offered to the appellant at proportionately reduced price. The appellant did not accept the offer, and registered miscellaneous interest against the title to the entire parcel of land on which the subject warehouse stands. At the time of registration of the appellant’s interest, the condominium plan had not yet been approved. The respondent later sold Unit to third party. [4] The appellant sued for specific performance of the agreement and, in the alternative, damages. The developer succeeded in obtaining court order discharging the miscellaneous interest. [5] The Chambers judge framed the issues in this manner: The vendor is now arguing that the Court should discharge the interest the Purchaser had registered in the Land Titles Registry against its entire project for many reasons, however, primarily it argued that the Purchaser does not have an interest in the property he purchased pursuant to the Land Titles Act because he will never be successful in obtaining from this Court the remedy of specific performance. What the Purchaser purchased was two-storey unit which is not in existence now and never will be. As well, the one-storey unit which the Vendor offered to sell to the Purchaser instead of the two-storey unit has now been sold to someone else and thus not even that unit could be the subject of specific performance. The Court agrees. [6] The Chambers judge agreed with the argument advanced by the respondent that the appellant’s ultimate remedy should lie in damages, as opposed to specific performance, and urged the respondent to file its statement of defence and proceed to resolution without further delay. The order was immediately registered in January 2007, and the appellant’s miscellaneous interest was discharged from title. The appellant appealed. The condominium plan was registered in or around August 2007. Title to Unit was transferred to the third party purchaser on October 9, 2007. [7] Two grounds of appeal are raised: (1) That the Chambers judge erred in deciding specific performance could not be obtained by the appellant in the circumstances of this case. (2) That the Chambers judge erred in holding the agreement for the sale of the condominium unit was frustrated. [8] At the outset, counsel for the appellant confirmed that he was not seeking to restore the miscellaneous interest to the register. In light of subsequent developments and the transfer of Unit to another individual, he recognizes that is not an available remedy. At best, his objective in this appeal is to obtain ruling that the order discharging the miscellaneous interest was improperly granted, and if this Court agrees with his position, he intends to amend his claim to seek additional damages from the respondent, whether aggravated or punitive. [9] The respondent’s position is the same as it was in the proceedings below: that the appellant’s inchoate interest stands on different footing than an interest in pre-existing building or structure. The respondent argues that the nature of a proposed condominium unit prior to actual registration of the condominium plan is simply that of a chose-in- action, or a “design concept”, and cannot therefore constitute an “interest in land” capable of supporting the registration of a miscellaneous interest under The Land Titles Act, 2000. [1] The respondent says that as the right does not relate to tangible real property, or any notion of property over which possession could be exerted, it is right that can only be enforced by action, with the ultimate remedy sounding in damages, as the remedy of specific performance does not avail for non-existent thing. The respondent says specific performance is moot issue and the question is academic, however the appeal does raise an important issue which appears to be one of first impression in this Court. [10] The appellant replied that he was justified in registering his interest against all that the respondent owned, not merely the property which the parties anticipated the respondent would create in the future. He says he also possesses tangible interest in the common areas of the entire condominium complex, including the mezzanine area on top of the warehouse an area that, in the original design, was intended for conversion to the second story of the appellant’s condominium unit. Standard of Review [11] The Court’s jurisdiction to hear the appeal is found in s. 111 of The Land Titles Act, 2000: Appeal to Court of Appeal 111 The Registrar or any interested party may appeal decision or order of the court to the Court of Appeal, on question of law, within 30 days after the date of the decision or order. [12] The standard of review on appeal for questions of law is that of correctness: H.L. v. Canada (Attorney General).[2] The Appeal [13] Despite the manner in which the issues have been framed by the appellant, the preliminary question is whether the appellant possessed an “interest in land”. [14] The registration of miscellaneous interest is analogous to the registration of caveat protecting an interest under the former Land Titles Act.[3] Under that Act, the case law was well settled that an applicant seeking an order continuing caveat was required to establish that he or she had an interest in the land against which the caveat was registered. See: Meadow Lake Credit Union Ltd. v. Korejbo.[4] [15] developer of condominium has sometimes been compared to promoter of corporation. When units are sold in the conceptual stages of the project, the developer has the ability to describe the proposed residential condominium building and to pre-sell and pre-rent the proposed units prior to actual construction in some cases, even before obtaining the land itself. The purchaser pays deposit and condominium developer can generate revenues long before title is passed. condominium purchaser is often committed to the completion of the transaction at premature stage in the construction, without the ability to examine the building, when no certainty exists whether the transaction will be effectively completed. Where developer elects to market proposed units during the conceptual or design stage of project, purchaser often has no alternative but to place faith and confidence in the developer to carry out what it has undertaken to do, and to provide complete and accurate disclosure of all information about the project. The transaction of purchase and sale may never be completed. [16] These enumerable risks are all outlined in the decision of Winkler J. (as he then was) in Ceolaro v. York Humber Ltd.[5] Although the purchaser is at significant disadvantage, Justice Winkler observed at para. 192 of his decision that the condominium legislation establishes comprehensive scheme, and it is to the legislation that one must look for the clarification of foundational rights and remedies. The identification of an appropriate remedy in the context of dispute over yet to be constructed condominiums can prove difficult. See: Salna v. Lotfi-Noushad.[6] [17] As the Ontario Court of Appeal noted in Goetz, et al. v. Whitehall Development Corp. Ltd.[7] at p. 247: It is obvious that not every contemplated or projected condominium will achieve legal status by compliance with the Condominium Act and the Planning Act. Failure may be the result of any one of variety of external causes, e.g., disapproval by the appropriate governmental authorities; lack of sales resulting in the withdrawal of consent to registration by the mortgagee. The frustration of the sale of units in projected condominium is obviously real and foreseeable event. [18] The condominium is creature of statute. Under this province’s legislation, namely The Condominium Property Act, 1993,[8] the definition of “purchase agreement” differentiates between the purchase of “unit” and the purchase of “proposed unit”: 2(1) In this Act: (u) “purchase agreement” means an agreement with developer by which person purchases unit or proposed unit or acquires right to purchase unit or proposed unit; [19] The definitions of “condominium” and “condominium plan” are found in s. 2(1) of the Act: (i) “condominium” means the land included in condominium plan together with the buildings and units and the common property and common facilities belonging to them; (j) “condominium plan” means plan that: (i) is described in the heading of the plan as condominium plan; (ii) shows the whole or any part of the buildings and land included in the plan as being divided into two or more units; and (iii) meets the requirements of section 9; (bb) “unit” means: (i) in the case of building, space that is situated within the building and described as unit in condominium plan by reference to floors, walls or ceilings or other monuments as defined in The Land Surveys Act, 2000 within the building; and (ii) in any other case, land that is situated within parcel and described as unit in condominium plan by reference to boundaries governed by monuments placed pursuant to the provisions of The Land Surveys Act, 2000 and the regulations made pursuant to that Act respecting subdivision surveys; (cc) “unit factor” means the unit factor for unit as specified in the unit factor schedule described in clause 9(1)(e) or apportioned in accordance with subsection 25(3), as the case may be. (2) Except as otherwise provided in this Act or the regulations, the terms used in this Act have the meanings given to them in The Land Titles Act, 2000. [20] The Land Titles Act, 2000, by s. 2(1)(d) and (f), adopts the definition of “condominium plan” and “condominium unit” as defined in The Condominium Property Act, 1993. In addition, s. 2(1)(e) provides: (e) “condominium title”, with respect to the condominium unit for which the title has issued, means the right to: (i) an ownership share in the condominium unit; and (ii) share in the common property; [21] The relevant provisions of The Land Titles Act, 2000, with respect to the registration of an interest, are these: 2(1) In this Act: (s) “interest” means any right, interest or estate, whether legal or equitable, in, over or under land recognized at law that is less than title; (t) “interest holder” means person who is registered in the land titles registry as holder of an interest; (u) “land” means: (i) the surface; (ii) mines and minerals; and (iii) unless the context requires otherwise, the condominium units and common property included in condominium plan; Registrable interests 50(1) An application for registration of an interest may be submitted only if the interest, at the time of registration, is: (a) recognized at law as an interest in land; (b) registrable pursuant to any other Act or any Act of the Parliament of Canada; or (c) designated as registrable interest in the regulations. [Emphasis added] Effect of interest registration (4) No registration of an interest is effective if: (a) the application for registration of the interest was not eligible for submission pursuant to section 50; or (b) the instrument on which the interest is based was not executed before the interest was registered. [22] The definition of “land” in s. 2(1)(u)(iii) of The Land Titles Act, 2000 precludes purchaser of proposed condominium unit from possessing an “interest in land” until condominium plan, within the definition of The Condominium Property Act, 1993, comes into existence. [23] Section 50 of The Land Titles Act, 2000 recognizes three grounds for asserting an “interest”. The third ground has no application here as the interest in issue is not designated as registrable interest in the regulations. It remains only to consider whether the purchaser has an interest in the “surface” pursuant to The Condominium Property Act, 1993 for the purposes of s. 50(1)(b), since condominium is not an interest “at law”, but statutory creation. [24] The Condominium Property Act, 1993 is specific as to remedy and selective as to the nature and kind of “interests” capable of registration. With respect to “purchase agreements” as defined by the Act, the only prescribed remedies available to purchaser of “proposed unit” who has not achieved the status of registered owner is: (1) to obtain rescission of the purchase agreement pursuant to s. 26(2) of the Act within the prescribed period of ten days from signing, and the right to have all monies paid thereunder returned; or (2) in certain circumstances, to assert claim against any security the developer is required to post with the Minister in compliance with ss. 5.2 and 16 of the Act, and Part of The Condominium Property Regulations, 2001,[9] as condition of securing approval of the condominium plan. [25] The Act does contain number of provisions concerning interests that are considered to be registrable interests. One example can be found in s. 63 whereby the condominium corporation can maintain registered interest for arrears of owner’s contributions; another, in s. 71.1 which provides that lease of all or part of common property is registrable interest. And, of course, once title to condominium unit issues pursuant to the Act, the title may devolve or be transferred, leased, mortgaged or otherwise dealt with in the same manner as any title held pursuant to The Land Titles Act, 2000, as prescribed in s. 5(3) of the Act. However, before condominium plan as defined in The Condominium Property Act, 1993 comes into being, there is nothing in the Act which directly or inferentially entertains the prospect that purchase of “proposed unit” can constitute an interest in land, or registrable interest for the purposes of s. 50 of The Land Titles Act, 2000. [26] The Act expressly prohibits the registration of any charge against the common property. The appellant is not entitled to rest his claim to a registrable interest in the surface parcel on the basis of a notional claim to rights in “common property”. Common property, by definition, does not come into existence until the condominium plan comes into effect. In The Condominium Property Act, 1993, these provisions are material: 2(1)(h) “common property” means the part of the land and buildings included in condominium plan that is not included in any unit shown in the condominium plan; Common property 6(1) The common property included in condominium plan pursuant to which titles have issued is held by the owners of all the units as tenants in common in shares proportional to the unit factors for their respective units. (2) share in the common property mentioned in subsection (1) shall be shown on any title issued, in accordance with subsection 12(6) of The Land Titles Act, 2000. (3) Except as provided in this Act, share in the common property shall not be disposed of or become subject to any charge except as belonging to the unit of an owner, and any disposition of or charge on unit operates to dispose of or charge that share in the common property without express reference to it. [Emphasis added] [27] For the purposes of s. 50 of The Land Titles Act, 2000, then, the appellant had no basis in law, or under The Condominium Property Act, 1993, for asserting an interest against the surface parcel owned by the respondent. [28] It is our conclusion that the Chambers judge did not err in the result as the appellant at no time possessed registrable interest in the surface parcel. It was unnecessary to address the issue whether specific performance was remedy available to the appellant. It should be noted that the respondent had not filed statement of defence at the time it made the application, and the issues lacked refinement. The determination of appropriate remedies was premature at that stage of the proceedings. [29] As to the second ground of appeal, we find nothing in the reasons of the Chambers judge which indicate that she in any way touched upon the substantive issue, namely the issue whether the purchase agreement was frustrated by supervening events. There is nothing in her order or her reasons, and nothing flowing from her decision that either expressly, or by necessary implication, disposes of that question. Without statement of defence, the issue of frustration was not before the Court in any event. The Chambers judge’s finding that the remedy of specific performance was not available did not constitute an adverse finding against the appellant on the issue of frustration. [30] For these reasons, the appeal is dismissed with costs. [1] S.S. 2000, c. L-5.1. [2] 2005 SCC 25 (CanLII), [2005] S.C.R. 401. [3] R.S.S. 1978, c. L-5. [4] (1988), 1988 CanLII 5194 (SK CA), 66 Sask. R. 191 (C.A.). [1994] O.J. No. 604 (Q.L.). [2006] O.J. No. 864; 2006 CarswellOnt. 1307 (Ont. Div. Ct.) varied at [2007] O.J. No. 1856, 2007 CarswellOnt 3007 (Ont. Div. Ct.). [7] (1978), 1978 CanLII 1466 (ON CA), 84 D.L.R. (3d) 243. [8] S.S. 1993, c. C-26.1. [9] R.R.S., c. C-26.1, Reg. (effective June 25, 2001).
The appellant agreed to buy a two-story condominium unit from the respondent developer. The building permit had not been obtained, nor had condominium titles been raised at the time the sale agreement was entered into. In the course of construction the respondent opted not to proceed with the two-story unit, revising it to a single story unit which was offered to the appellant. The appellant did not accept the offer, and registered a miscellaneous interest against the title to the entire parcel of land. The appellant sues for specific performance of the agreement and in the alternative, damages. The developer succeeded in obtaining a court order discharging the miscellaneous interest. The Court's jurisdiction to hear the appeal is found in s. 111 of The Land Titles Act, 2000. The issue is whether the appellant possessed an interest in land so as to support the registration of a miscellaneous interest. HELD: Appeal dismissed.  1) Before a condominium plan as defined in The Condominium Property Act, 1993 comes into being, there is nothing in the Act which directly or inferentially entertains the prospect that a purchase of a 'proposed unit' can constitute an interest in land, or a registrable interest for the purposes of s. 50 of The Land Titles Act, 2000. 2) The Act expressly prohibits the registration of any charge against the common property. The appellant is not entitled to rest his claim to a registrable interest in the surface parcel on the basis of a notional claim to rights in 'common property'. Common property, by definition, does not come into existence until the condominium plan comes into effect. 3) For the purposes of s. 50 of The Land Titles Act, 2000, the appellant had no basis in law, or under The Condominium Property Act, 1993 for asserting an interest against the surface parcel owned by the respondent.