Indefeasibility and Title Registration

Week 17

Find these slides online: https://webslides.baxterlab.ca/slides/property2025-26/17/
Category: Property 2025-26

Agenda

Priorities and Deed Systems
Curtain, Mirror, Net
Land Titles Clarification
Fraud and Indefeasibility
Aboriginal Title and Registration

Priorities and Deed Systems

A holds Greenacre in fee simple. B (a fraudster) grants Greenacre to C in fee simple for $500k, then disappears.

Who now holds the fee simple in Greenacre (and why)?

Nemo dat quod non habet

“One cannot confer on a transferee title that is greater than that held by the transferor.”

(First in time is first in right.)

Development of deed registration systems

Medieval era: “livery of seisen” as community witness
Early modern written deeds: document itself constitutes proof of title
18th century deed registration: public repositories for title documents

Torrens Land Title Registration System

Key shift: “registration of title” to “title by registration”

Three Principles of Title Registration

Curtain: indefeasible title backed by government guarantee
Mirror: accurate reflection of the state of title
Net: assurance mechanism for those who lose out

Curtain: registry draws a “curtain” between the registered interest and any prior interests, making the registered owner THE owner of title in the absence of fraud on that owner’s part.

“indefeasible” title (“not able to be lost, annulled, or overturned”)
title report: government “guarantees” ownership
extent to which registry fully reflects this ideal depends on whether system is one of DEFERRED or IMMEDIATE indefeasbility (explained in Lawrence v Wright)

Mirror: going forward after registration, system reflects all relevant property interests at the present moment… so do not need to look elsewhere or do title searches to find out accurate state of title.

e.g. a restrictive covenant is registered on title and reflected in the “mirror” (received priority)
if a covenant is unregistered and title is transferred, then registered by the new owner, covenant loses its priority over title

Net: if a property owner suffers loss because of an error on the record, compensation is provided by the government via an “assurance fund”

Registered interests

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.

Unregistered instruments ineffective

45 (1) Except as against the person making the instrument, no instrument, until registered or recorded pursuant to this Act, passes any estate or interest in a registered parcel or renders it liable as security for the payment of money.

(2) Subsection (1) does not apply to an instrument creating a leasehold interest not exceeding three years where there is actual occupation of all or part of the parcel under the instrument.

74 (1) Except as provided by Section 75, no person may obtain an interest in any parcel registered pursuant to this Act by adverse possession or prescription unless the required period of adverse possession or prescription was completed before the parcel was first registered.

(2) Any interest in a parcel acquired by adverse possession or prescription before the date the parcel is first registered pursuant to this Act is absolutely void against the registered owner of the parcel in which the interest is claimed ten years after the parcel is first registered pursuant to this Act, […]

Limit on land acquired

75 (1) The owner of an adjacent parcel may acquire an interest in part of a parcel by adverse possession or prescription after the parcel is first registered pursuant to this Act, if that part does not exceed twenty per cent of the area of the parcel in which the interest is acquired. […]

Land Titles Clarification Act, RSNS 1989 c 250

Long history of insecure title and economic injustice in African Nova Scotian Communities
LTCA introduced in 1964 as remedial legislation at height of human rights activism to address anti-Black racism
Simplified process for clarifying land titles
Series of smaller reforms culminating in Land Titles Initiative in 2021

LTCA process:

Legislation designates land title clarification areas where land is eligible for LTCA process
Person residing within a designated area can make an application for a “certificate of claim”, which includes land description, statement of relevant facts to ground ownership, identify others who have claims or interests in the land (e.g. mortgage)
Minister then determines whether “applicant is entitled to the lot of land” and if so issues a certificate of claim under s 5(1) (or refers this to the Commissioner to make a determination)
Once certificate of claim is registered, onus shifts to others who might make a claim to land – must take some action to declare or enforce their claim
If no claims within the statutory period, then applicant receives clear title

LTI: $3M compensation fund and two land titles commissioners to adjudicate disputes, along with other changes (no longer needed to be resident in NSs)

Downey v Nova Scotia, 2020 NSSC 201

What is the legal standard for “entitlement” under the LTCA at issue in Downey?

What does the Province’s approach to “entitlement” reveal about the purposes, aims and functioning of the LTCA regime?

Province has been requiring claimant to proof adverse possession for 20 year statutory limitations period

Court finds that the Minister has “fettered their discretion” by applying a standard that is not present in the LTCA; Minister can use 20 years possession as a factor, but not the sole basis for the determination.

Court observes that AP clearly serves a different legal purpose: adverse possessor by definition does not hold legal title; the LTCA is established to clarify title for those who have a pre-existing claim to ownership.

Notes that on the facts, where Downey had built a house on relative’s land, it would be impossible to claim AP – i.e. because wouldn’t be adverse to the interests of his relative (BUT: would it meet the IUT under Keefer? Think about the garage.)

What does the Province’s approach reveal?

Marsman: “interest convergence theory” = evidence that application of LTCA has not been driven primarily by regard for the interests of and harms done to African Nova Scotians

What in Marsman’s account were the driving factors behind the LTCA and subsequent developments in the regime?

Attempt to “offset” other incidents of land displacement driven by system racism (Africville)
Economic imperatives, e.g. around land development and expropriation (lessons from Africville – NB how land titling can make communities vulnerable to land loss)

What lessons can we learn about legal activism and law reform re property in general or land titling initiatives in particular from Marsman’s account?

Fraud and Indefeasible Title

Lawrence v Wright (OCA 2007)

What happens if a property interest that would otherwise be void is accepted for registration and subsequent purchasers rely on it in good faith and without notice of the defect?

Facts:

Susan Lawrence owns the title to a house in Toronto; registered in Ontario’s torrens system
Imposter posing as Lawrence retains lawyer to sell Lawrence’s home to Thomas Wright
Wright then goes to Maple Trust Co. and gets a mortgage to fund purchase of the property.
Fraudulent transfer of land in favour of Wright is registered in Ontario’s land Torrens registry and Maple Trust forwards the money to Wright; register’s its mortgage in the registry
Wright takes the money and runs

So, Maple Trust is claiming that it is entitled to rely on the registry in accordance with the mirror and curtain principles. Since it was innocent of the fraud it’s interest is valid.

Lawrence is claiming that she was also innocent, and should therefore retain title to the land/house, free from the Maple Trust’s mortgage

Lawrence v Wright (OCA 2007)

Why does the court reject Lawrence’s argument based on nemo dat?

What are the outcomes based on either “immediate indefeasibility” and “deferred indefeasibility”?

Nemo dat:

Lawrence says c/l rule applies: fraudster never had good title, so could not have passed anything to Wright, and Wright could not have passed anything to Maple Trust
Court’s position is illustration of CONCEPTUAL SHIFT in theory of title under Torrens system … it is the registry itself that grants/creates valid title by way of registration, so nemo dat cannot have any application (i.e. registry can in fact grant title where none existed before)

1 Immediate indefeasibility (Maple Trust’s argument)

one’s interest becomes indefeasible at the moment it is registered, so long as done without fraud
under this theory, Maple Trust, an innocent party, has an indefeasible interest as soon as they register their mortgage on title
note that even under this theory Wright, the fraudster, never gains title to the land

Deferred indefeasibility (Ontario’s argument)

one’s interest becomes indefeasible only if one is “one step removed” from fraud
here, Wright is fraudster and Maple Trust is the “intermediate owner” who takes interest from fraudster … does not get good title
Next person who takes from Maple Trust gets indefeasible title because “one step removed”
Based on the idea that, even though Maple Trust had no notice of the fraud, was still in a “special position” to discover the fraud because dealt directly with Wright, the fraudster

COURT:

Decides in favour of deferred indefeasibility:

equally plausible i nterpretations of Ontario’s legislation … but legislative history reveals that amendment supporting “immediate indefeasibility” theory was a minor one (so doesn’t support a major shift in this aspect of the system)
policy = (i) homeowner has “special attachment” to property, whereas Maple Trust is just a business … therefore MT better compensated by assurance fund (recall: “net”)
policy = (ii) homeowner has NO chance to avoid the fraud; MT has some chance, even though did due diligence

35(4) The court shall determine the rights of the parties according to law, subject to the following principles:

(a) the person aggrieved may have the registration corrected;

(b) any correction of the registration shall preserve the right to compensation of a person who obtained a registered interest from a registered owner who registered the interest objected to; and

35(6) In determining whether it is just and equitable to confirm the registration objected to, the court shall consider

(a) the nature of the ownership and the use of the parcel by the parties;

(b) the circumstances of the registration;

(d) the willingness of any of the parties to receive compensation in lieu of an interest in the parcel;

(e) the ease with which the amount of compensation for a loss may be determined; and

(f) any other circumstances that, in the opinion of the court, are relevant to its determination.

Aboriginal Title and Registration

Aboriginal Title is not a registerable interest (Skeetchestn)
Registration of indefeasible fee simple interests does not preclude a declaration of Aboriginal Title in the same land (Cowichan)

In Cowichan, Richmond and BC challenged the claim that a finding of Aboriginal Title would displace the fee simple in some municipal and federal lands (as opposed to other third-party fee simple interests).

Richmond and BC argued that the Land Titles Act in BC bars such a declaration of AT in these lands.

Why does Court not accept Richmond/BC’s arguments?

Uses Interpretation Act to ground argument: LTA should not be interpreted to derogate from the constitutional rights of Indigenous peoples; UNDRIP as core to interpreting provincial legislation
Aboriginal as “upstream” a Crown grant of fee simple. EXTENSION = if we interpret AT as a burden on underlying Crown title, then this structure becomes clear, i.e. AT isn’t a “registerable interest” in the same way that allodial title isn’t

Do you think there are any downsides to the Cowichan court’s finding that “Aboriginal title currently lies beyond the land title system in British Columbia”?

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