Executive Summary: Key Legal and Evidentiary Issues

• The Supreme Court of Canada considered whether submerged lots beneath a raised navigable lake were transferred to riparian buyers as accessories to their principal lots.
   
• Zardev Inc., the original property developer, argued it had retained ownership of the submerged strip of land bordering Lac Masson, Lac du Nord, and Lac Dupuis.
   
• Respondents, the riparian lot owners, discovered the existence of the submerged lots only in 2016, when a new provincial cadastre revealed Zardev as the registered owner.
   
• Central to the dispute was the interpretation of article 1718 of the Civil Code of Québec, which requires a seller to deliver "all accessories" along with the principal property sold.
   
• Both the trial judge and the Court of Appeal reached different conclusions on whether the accessory rule applied to the submerged lots, prompting Supreme Court review.
   
• Justice Côté dissented, finding that submerged land cannot, by its nature, be an accessory to other land.
   

Facts of the case

Zardev Inc., a property development company operating on the Esterel vacation site in the Laurentians, traces its title to an 1864 Crown grant to Edouard Masson. In 1881, a dam built at the outlet of Lac Masson raised that lake's water level by about 1.5 metres, joining it with Lac du Nord and Lac Dupuis into a single expanse of water and submerging a strip of land around the lakes; this submerged strip remained in the private domain rather than reverting to the state. Between 1959 and 1971, Zardev (then Simco Enterprises) subdivided its landholding into lots and sold roughly 50 of them to the respondents or their predecessors in title through notarial deeds describing each lot as "bounded in front... by Lake." The deeds did not mention the submerged lands, and Zardev did not disclose their existence to buyers until it began doing so in writing starting in 2008. The respondents learned of the submerged strip's existence in 2016, during a public cadastral renewal process, when they discovered Zardev remained registered as the owner of a long submerged strip between their properties and the lake. After unsuccessful administrative challenges to the proposed cadastre, the respondents filed an application in the Superior Court in 2017 for a declaratory judgment that their riparian purchases included the submerged lots, along with cancellation of Zardev's registrations in the land register.

Policy and legislative provisions at issue

The case turned on article 1718 of the Civil Code of Québec, the codified expression of the maxim accessorium sequitur principale (the accessory follows the principal), which obliges a seller to deliver "all its accessories" along with the principal property sold unless the parties indicate otherwise. The Court also considered article 1434 C.C.Q., under which a contract's obligational content includes not only its express terms but also what is incident to it "according to its nature and in conformity with usage, equity or law," and article 1425 C.C.Q. on seeking the common intention of the parties where contractual language is ambiguous. Articles 981 and 920 C.C.Q., concerning riparian owners' rights of access to and recreational use of adjoining bodies of water and the general right to travel on a lake, featured prominently in the dissent's reasoning about what buyers could legitimately expect from their purchases.

Reasoning and analysis

Writing for the majority, Justice Kasirer held that the trial judge had erred in law by applying an overly narrow test for what constitutes an "accessory." The majority articulated a test asking whether property is destined to serve the principal property sold and, by reason of that destination, necessary for the buyer's agreed use of it. Applying that test, the majority found that the riparian lots were destined to serve as vacation properties offering direct and exclusive lakeshore access, an expectation reinforced by servitudes requiring single-family dwellings and prohibiting third-party rights of way. Because the submerged lots were unbuildable, enclosed, and necessary to secure that lakeshore access and privacy, the majority classified them as accessories under article 1718. The majority further concluded that the phrase "bounded by Lake" in the deeds was merely descriptive of the principal property rather than an unequivocal exclusion of the accessory, particularly since the buyers were unaware the submerged lots existed and could not be found to have knowingly renounced them. In dissent, Justice Côté found no legal rule or "nature of things" relationship making submerged land under a navigable lake an accessory to adjoining riparian land, reasoning that land is inherently suited to serve as a principal rather than an accessory, and that riparian owners' rights under articles 981 and 920 C.C.Q. already secured the lake access the buyers legitimately expected. Justice Côté would additionally have found that the precise metes, bounds, and immatriculation numbers in the deeds unambiguously excluded the submerged lots even if they were accessories.

Ruling and overall outcome

The Supreme Court of Canada dismissed Zardev's appeal by a majority, with Justice Côté dissenting, and upheld the Court of Appeal's declaration that the respondent riparian owners are the owners of the submerged portions of land adjacent to their respective lots. The Court ordered the appeal dismissed with costs; Justice Côté, in dissent, would have allowed the appeal, restored the trial judgment in Zardev's favour, and awarded costs throughout in Zardev's favour. The judgment does not specify a monetary quantum for the costs award.