QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2007 SKQB 111 Date: 2007 03 28 Docket: Q.B.G. No. 1835/2006 Judicial Centre: Regina BETWEEN: ROBERT G. BRICK and 618820 SASKATCHEWAN LTD. and MODUS RESOURCES LTD., SPECTRUM RESOURCE GROUP INC., TRIASSIC RESOURCES LTD., ZARGON OIL GAS LTD. and THE REGISTRAR OF LAND TITLES RESPONDENTS Counsel: David J. Bishop for the applicants G. Brett Ledingham for the Modus Resources Ltd., Spectrum Resource Group Inc. and Triassic Resources Ltd. J. Paul Harasen for Zargon Oil Gas Ltd. Jerome A. Tholl for the Registrar of Land Titles FIAT POPESCUL J. March 28, 2007 [1] caveat registered by Robert G. Brick (“Mr. Brick”) was removed as result of the notice to lapse procedure. The notice to lapse process was commenced under the old land titles system and completed after conversion to the new land titles system. Mr. Brick and related company now apply for declaration that the caveat was wrongfully removed by the Registrar of Titles (“Registrar”) and that the caveat be reinstated retroactively to the date of its removal. The companies that acquired an interest in the South West Quarter of Section Twenty-seven (27), in Township Two (2), in Range Four (4), West of the Second Meridian, in the Province of Saskatchewan, in the Dominion of Canada, as more particularly described and set forth in Certificate of Title No. 98SE24393 (“the subject land”) subsequent to the caveat being removed oppose the application, as does the Registrar. [2] Mr. Brick registered caveat against the mineral title of the subject land on November 3, 1972. The caveat purported to be based upon right to receive royalties from all gas, oil and carbon products produced from the land. The caveat was lapsed by the land owner in 1974. In 1975 the land owner consented to the re‑registration of the caveat. However, for reasons unknown, the caveat was not re‑registered at that time. [3] In 1984 Mr. Brick assigned his alleged royalty interest to his sons. In 1986 Mr. Brick discovered that the caveat he believed had been re-registered in 1975 had, in fact, not been re-registered. On January 13, 1986, Mr. Brick then registered another caveat against the property claiming that, on the date of that registration, he had current interest in the property. In 1997, Mr. Brick’s sons assigned the alleged royalty interest to 618820 Saskatchewan Ltd., (“618820”). [4] On November 15, 2001, Prairie Land Investment Services Ltd. requested that the Registrar register notice to lapse the January 13, 1986 caveat. notice to lapse caveat was registered on the subject land’s certificate of title and the prescribed notice was mailed by the Registrar pursuant to s. 159(2) of The Land Titles Act, R.S.S. 1978, c.L-5 to Mr. Brick on November 21, 2001. The notice was sent by registered mail to Mr. Brick’s address for service as set forth in the caveat as prescribed by the statute. The effect of notice to lapse is that the caveat automatically lapses at the expiration of 30 days from the mailing of the notice by the Registrar, unless the caveator files judge’s order continuing the caveat. Mr. Brick denies that he ever received the notice. [5] In 2001 the paper based land titles system was in the process of being converted to an automated system via the LAND project (Land Titles Automated Network Development project). The date of proclamation for the land registration district within which the subject land was situated was December 1, 2001. [6] Mr. Brick did not obtain court order providing for the caveat to continue beyond the 30 days. Therefore, at the expiry of the 30-day period on December 21, 2001, the Registrar endorsed the title to proclaim that the caveat had lapsed. [7] In 2003 Zargon Oil Gas Ltd. (“Zargon”) acquired mineral interest in the subject land and registered “caveats” (which are now described under the new land titles system as “Miscellaneous Interests”) on October 2, 2003 and August 16, 2005. In July 2005, the fee simple ownership of the subject land was transferred to Modus Resources Ltd. (“Modus”), Triassic Resources Ltd. (“Triassic”) and Spectrum Resources Group Inc. (“Spectrum”). At the time when Zargon registered its Miscellaneous Interest and at the time that Modus, Triassic and Spectrum acquired fee simple ownership in the subject land, the caveat of Mr. Brick was not registered. [8] Mr. Brick says that it was only in 2006 that he first became aware that the caveat that he registered on January 13, 1986 had lapsed on December 21, 2001. Mr. Brick complained to Information Services Corporation of Saskatchewan (“ISC”), which is the corporation that administers the new land titles system. ISC wrote to the respondents indicating that it had recently come to their attention that Mr. Brick’s caveat had been omitted from the title of the subject property in “error.” The letter sought the respondents’ consent to “correct this error.” [9] The respondents refused to provide their consent. ISC said that, absent the consent of the respondents, it was not prepared to take any action. Mr. Brick and 618820 then brought this application seeking a declaration that the caveat was wrongfully removed by the Registrar, an order that the caveat be reinstated retroactively and costs. THE POSITION OF THE APPLICANTS [10] The applicants contend that the royalty interest claimed by Mr. Brick is valid and subsisting interest in land capable of being protected by caveat. The fact that Mr. Brick had assigned his interest to his sons in 1984 but registered the caveat in 1986 does not matter because, they say, he still had the right to give notice by caveat of the interest either in his own right or as an agent of his sons. They further argue that when the new land titles system was implemented part way through the lapsing process, the process underway ought to have been aborted, and restarted under the new system. Therefore, they contend that the Registrar wrongfully removed valid caveat. They further submit that the letters from ISC in which there is discussion of an “error” is an admission of liability. In order to remedy the problem the applicants take the position that this Court ought to acknowledge that there was an error and reinstate the caveat retroactively. Alternatively, they argue that if retroactive reinstatement of the caveat is not found to be the appropriate remedy, the Court ought to declare that the caveat was wrongfully removed, a necessary first step in accessing the assurance fund. THE POSITION OF THE RESPONDENT COMPANIES [11] The respondent companies argue that Mr. Brick had no interest in land capable of supporting the caveat at the time it was registered on January 13, 1986. This is because this type of alleged royalty interest is not an interest capable of being protected by caveat and, even if it was, Mr. Brick had assigned his interest to his sons and therefore did not personally have an interest in land capable of supporting caveat. They also argue that Mr. Brick does not have an interest in the subject land at this time because the land is now owned by 618820. [12] The respondents also take the position that even if the caveat was valid, it was properly removed from the title as result of the notice to lapse procedure. While the legislation that introduced the new land titles system contains transitional provisions that stipulate that any process started under the old Act is to be completed under the new Act, as far as practicable to do so, they argue that in this case, it was not practicable to do so. [13] Finally, these respondents claim that even if the caveat was removed improperly, retroactive reinstatement of the caveat is not a permissible remedy due to the principle of indefeasibility of title. The applicants’ remedy, if any, they say is to the assurance fund. THE POSITION OF THE REGISTRAR [14] The Registrar contends that the caveat was not removed improperly. The Registrar had two feasible options in relation to how to address lapse procedures commenced under the old system but not yet completed as of the date of conversion. The first was to continue the process begun under the old system and automatically record the lapsing of the caveat upon the expiry of the 30 days from the mailing of the notice to lapse. The only step remaining was to endorse memorandum on title of the lapse of the caveat. The second option was to require the party seeking to lapse the caveat to take the second step under s. 46(2) of The Land Titles Regulations, 2001, R.R.S., c. L-5.1, Reg. 1, and apply to the Registrar to discharge the interest to be lapsed, with accompanying affidavit pursuant to s. 46(3) confirming that notice has been served on the interest holder and that no court order had been made extending the registration of the interest beyond the 30 day notice period. The Registrar determined that it made more sense to adopt the first option. As result, the Registrar denies that any error was made. [15] Insofar as the alleged admission contained in correspondence from ISC staff is concerned, the Registrar’s position is that the intention of the letters was to determine whether an alleged error could be corrected by consent. When consent was not forthcoming, the Registrar was not prepared to take any unilateral action. Furthermore, the Registrar argues that the alleged admission of culpability by staff member is not binding upon her. [16] Finally, the Registrar argues, even if an error was made, as result of the principle of indefeasibility of title, the retroactive reinstatement of the caveat is prohibited remedy. ISSUES 1. Should the caveat be reinstated retroactively by order of the Court? 2. Should this Court entertain an application for declaratory relief respecting the issue of whether or not the caveat was removed improperly? 1. Should the caveat be reinstated retroactively by order of the Court? [17] I agree with the position of the respondents that even if the caveat was removed improperly, this Court ought not retroactively reinstate the caveat because to do so would defeat the fundamental principle of indefeasibility of title that has been continued in The Land Titles Act, 2000, S.S. 2000, c. L-5.1. [18] At the time that Zargon, Modus, Spectrum and Triassic acquired their respective interests in the subject land, the searches at ISC would have revealed that the caveat of Mr. Brick was not registered. These parties were entitled to rely on their searches that disclosed no registered interest of Mr. Brick. [19] The integrity of the land titles system in Saskatchewan has long depended on the fundamental principle of indefeasibility of title. party intending to obtain an interest in land in Saskatchewan is entitled to rely on the certificate of title being correct and conclusively representing all interests in the land without having to look behind the title to determine if there are any unregistered interests. This principle has often been referred to as the “curtain” principle of the Torrens system. This principle is absolute and is subject only to statutory exceptions or the effects of fraudulent activities, none of which are relevant to the matter before the Court (see Hermanson v. Martin, 1986 CanLII 3241 (SK CA), [1987] W.W.R. 439 (Sask. C.A.)). [20] The principle of indefeasibility of title was not materially altered by the passage of The Land Titles Act, 2000. In fact, this principle appears to have been expressly incorporated into the new legislation in Part III entitled “Fundamental Principles.” For example see sections 13(1) and 14 which read as follows: 13(1) Where the Registrar issues title pursuant to this Act: (a) subject to section 14, the registered owner holds the title free from all interests, exceptions and reservations; and (b) subject to section 15: (i) the title is conclusive proof that the registered owner is entitled to the ownership share in the surface parcel, mineral commodity or condominium unit for which the title has issued; (ii) the title may not be altered or revoked or removed from the registered owner; and (iii) no action of ejectment from land or other action to recover or obtain land lies or shall be instituted against the registered owner. 14 Every title is subject to: (a) any interest that is registered against the title pursuant to this Act or any other Act or law; and (b) the exceptions, reservations and interests that are implied pursuant to sections 18 to 20, whether or not those exceptions, reservations and interests are registered against the title or mentioned on any title. [21] This Court, in at least two cases, has confirmed that the principle of indefeasibility of title has been retained by the new legislation (see CIBC Mortgages Inc. v. Saskatchewan (Registrar) of Land Titles, 2005 SKQB 470 (CanLII); [2006] W.W.R. 556; (2005), 273 Sask. R. 137 (Q.B.) and Jen-Sim Cattle Co. v. Agricultural Credit Corp. of Saskatchewan, 2006 SKQB 173 (CanLII); [2006] 11 W.W.R. 169; (2006) 277 Sask. R. 193 (Q.B.)). Therefore, have no difficulty in concluding that it would be inappropriate to reinstate the caveat because to do so would be in complete contravention of the principle of indefeasibility of title. 2. Should this Court entertain an application for declaratory relief respecting the issue of whether or not the caveat was removed improperly? [22] Counsel for the applicants argued that even if this Court was to conclude that the caveat ought not be retroactively reinstated, that it nonetheless should proceed to consider the declaratory relief aspect of the application because positive finding is necessary to access the assurance fund. [23] However, for the reasons that follow, have concluded that it would not be appropriate for this Court to embark upon an inquiry, in the context of the within application, as to whether or not the caveat was removed improperly. [24] In the event that the caveat was removed improperly, the applicants may have other avenues to pursue, including claim pursuant to Part XII of The Land Titles Act, 2000 against the assurance fund which was set up to provide compensation for losses caused by the actions of ISC. [25] Any person who sustains loss, damage or deprivation in number of specified circumstances, including errors or omissions of the Registrar, is entitled to make claim for compensation pursuant to Part XII of the Act. Any claim for compensation must first be made to the Registrar as required by subsection 89(1). If the Registrar denies compensation, the aggrieved party may bring an “action” against the Registrar (s. 91) which could result in judgment for compensation (s. 92). [26] The term “action” is not without significance. Section of The Queen’s Bench Act, 1998, S.S. 1998, c. Q-1.01, defines “action” as follows: 2(1) In this Act: “action” means: (a) civil proceeding commenced by statement of claim or in any other manner authorized or required by this Act or the rules of court; or (b) any other original proceeding between plaintiff and defendant. Therefore, if claim is going to be made, it ought to be made to the Registrar and, if denied, by commencing an action, which in this context would mean by the issuance of statement of claim. That would entitle the parties to the action to take advantage of the procedures available to actions commenced in this Court including production of documents, examinations for discovery, pre-trial conferences, and so on. [27] It would simply not be appropriate to permit the applicants to attempt to access the assurance fund through the mechanism of a chambers application requesting declaratory relief. The process, if the applicants choose to pursue it, would be an action under Part XII of The Land Titles Act, 2000. CONCLUSION [28] For the reasons hereinbefore stated the application is dismissed. [29] Counsel for the Registrar did not seek costs and as result, no costs will be awarded to her. However, the respondents are entitled to costs of defending this application. Zargon shall have costs fixed at $750.00. Modus, Spectrum and Triassic, who were all represented by one counsel, will also have one set of costs fixed at $750.00 (in total). J. M. D. Popescul
FIAT: A caveat registered to the applicant was removed as a result of the notice to lapse procedure. The caveat purported to be based upon a right to receive royalties from all gas, carbon and oil produced from the land. The applicant denied having ever received the notice to lapse. The applicant sought: 1) retroactive reinstatement of the caveat by order of the Court; and 2) an inquiry by the Court as to whether or not the caveat was removed improperly. The respondent companies that acquired an interest in the subject land subsequent to the caveat being removed opposed the application based, among other things, on the principle of indefeasibility of title, as did the Registrar of Land Titles. HELD: The application is dismissed with costs to the respondents. 1) Even if the caveat was removed improperly, the Court ought not to retroactively reinstate it, because to do so would defeat the fundamental principle of indefeasibility of title that has been continued in The Land Titles Act, 2000; and 2) it would not be appropriate to permit the applicants to attempt to access the assurance fund through the mechanism of a chambers application requesting declaratory relief. The process, if the applicants chose to pursue it, would be an action under Part XII of the Act.