Executive Summary: Key Legal and Evidentiary Issues

• Applicants sought rectification of the land title register to reflect a 2008 easement benefiting their property.

• The easement, although registered in 2008, was omitted from title records after land migration and subsequent sales.

• Respondents purchased the affected properties in early 2023 based on CROs that did not list the easement.

• Court examined whether rectification can be granted where properties were sold for value in good faith without notice of the easement.

• No evidence of fraud or bad faith by purchasers; omission was attributed to the original owner’s handling of the title migration.

• Rectification was denied due to statutory protections under the Land Titles Act, but indemnification may still be pursued.

Facts and outcome of the case

The factual background and procedural history

The applicants, Donald Francis Dempsey and Suzanne Lang, owned property in Bathurst, New Brunswick, which they purchased in 2008. As part of that purchase, they entered into a registered easement agreement with David Duncan Young, who owned adjoining lands. This easement, registered on September 9, 2008, granted them a right-of-way across neighboring lands for vehicular and utility access.

In 2022, David Duncan Young extended Anderson Point Lane—a public street—to abut the applicants’ property, then migrated several parcels of his land onto the Land Titles System. During that process, although a note referencing the easement appeared on a December 2022 plan (Plan 43400689), the easement itself was omitted from the Certificates of Registered Ownership (CROs) for three affected parcels: PIDs 20919197, 20919205, and 20916698.

Subsequently, Young sold two of these parcels to D.H. Auto Investments Ltd. and to Yannis and Nadine Mountrakis in January 2023. Both purchasers obtained CROs that did not reference the 2008 easement. In March 2023, a court decision (BM-43-2022) confirmed the 2008 easement remained valid and had not been extinguished by the public road extension. The third parcel was later sold after that ruling and did reflect the easement on its CRO.

When the Mountrakis respondents began home construction, which would obstruct the original right-of-way, the applicants filed a Notice of Application on May 19, 2023, seeking an injunction and rectification of the CROs. An interim consent order preserved the applicants’ temporary access. The court reserved the broader issues for future determination.

Legal issue before the court

The sole issue decided in this ruling was whether the title register should be rectified under sections 17(2), 17(3)(a), and 79(3) of the Land Titles Act to reflect the 2008 easement on the CROs of the three affected parcels.

Parties’ positions

The applicants argued the omission of the easement from the CROs was an obvious error that could and should be corrected, especially in light of Justice Robichaud’s prior decision affirming the easement’s continued validity. They asserted the easement’s omission prejudiced their access rights and should be rectified.

The respondents, D.H. Auto and the Mountrakis, countered that they purchased their properties in good faith, based on CROs that did not list the easement. They argued that the Land Titles Act protects bona fide purchasers for value from retrospective claims, and any remedy available to the applicants should be sought through indemnification, not rectification.

The Registrar General of Land Titles took no position on the rectification application but reserved the right to be heard on any indemnification issue.

Decision and legal analysis

Chief Justice DeWare denied the application for rectification. She found that the respondents qualified as innocent purchasers for value under the Land Titles Act, as their conveyances were completed and registered before any rectification application was filed and without fraud or bad faith. Under section 79(6) of the Act, rectification cannot be granted in such circumstances.

Although the easement was visible on Plan 43400689, referenced in the CROs, the purchasers’ solicitors relied on the CROs’ content and did not investigate the plan in detail. The court acknowledged that while lawyers continue to have duties under the Land Titles regime, the applicants’ loss stemmed from the actions of David Duncan Young, who migrated the properties and failed to include the easement in the title register.

The court cited precedent from CG Group Ltd. v. Girouard et al. and Arthurs v. Matthews, reaffirming that rectification is barred where there is no fraud and the property transfer occurred prior to a formal notice of application for rectification. The court emphasized the importance of the Land Titles System's principles, particularly the “mirror” and “curtain” principles, which allow parties to rely on the title register at face value.

Conclusion and next steps

The court dismissed the applicants’ request for rectification. However, it acknowledged that the applicants might be entitled to indemnification under sections 73(1), 74(1), and 74(2) of the Land Titles Act for the damage caused by the omission. A decision on indemnification was deferred pending further evidence and submissions from the parties.

The court invited the parties to return once they were ready to proceed with the remaining claims, including indemnity and costs. The case will continue with further hearings on those unresolved matters.