Court of Appeal clarifies the law on prescriptive rights
There was an interesting recent Ontario Court of Appeal decision (Kaminskas v. Storm (2009), 95 O.R. (3d) 387) for those lawyers, like the writer, who developed his practice approaches at a time when most of the properties in
The Real Property Limitations Act says in Section 31 that a right to an easement may be acquired by prescription if actually used for twenty years without interruption and is deemed to be “absolute and indefeasible” after forty years unless it was enjoyed by some consent “expressly given or made…in writing”.
Kaminskas purchased a house in
October 8, 2009 | Permalink | Comments (1)
Lang Michener LLP lawyers remain the leading experts on title insurance in Canada
Bruce McKenna, with significant assistance from Matthew German and Bob Fraser, has completely redrafted the title insurance sections of the CCH Ontario Real Estate Law Guide published by CCH Canada. These are the title insurance sections under the Divisions of the Guide relating to Professional Duties and Liabilities, Mortgages and Title Conveyancing. Bruce originally drafted them in 1997 and has updated them from time to time since then.
September 22, 2009 | Permalink | Comments (1)
The Declining Importance of Tender in Transaction Disputes
Canadian courts continue to erode the traditional common law requirement that a non-defaulting party demonstrate its absolute willingness and ability to close a real estate transaction when responding to the default of the other party. As illustrated by the British Columbia Supreme Court in Tatla v. Lui, [2009] B.C.J. No. 485, the process of “tendering” all closing documents and funds on the defaulting party is increasingly being rejected as a “meaningless ritual” and should no longer be seen as a determinative element influencing how real estate transaction disputes are resolved.
The dispute in Tatla arose when a purchaser breached a purchase and sale agreement and later sought the return of her deposit from trust on the grounds that the vendor failed to properly issue tender. While the purchaser acknowledged that she was responsible for the initial breach, she took the position that the vendor’s failure to demonstrate his capacity and intention to close the transaction by attending the Land Title Office on the closing date mandated the return of her deposit. In brief, she reasoned that both parties were in default of their obligations and consequently the deposit should be released back to her.
June 29, 2009 in Purchases and Sales | Permalink | Comments (1)
Landlord's Termination Right in Lieu of Granting Consent to Sublease, Etc.
Almost all commercial leases will restrict a tenant from assigning, subleasing or otherwise dealing with its lease without the consent of the landlord, with the landlord generally agreeing to not unreasonably withhold such consent. It is also very common in a commercial lease to provide the landlord with a right, in lieu of granting such consent, to terminate the lease and take back the space. This is an additional right bargained for by the landlord so it can regain control of the space (rather than let it go to another occupant) if it so desires.
From time to time it seems that the landlord’s exercise of this right following a request for consent comes as a surprise to a tenant. The tenant may be trying to protect a sale of a business, a lower lease rate or some other interest. In those circumstances a tenant may take the position that the landlord’s termination right is not an independent right but must be read in conjunction with its obligation to act reasonably in considering consents.
May 25, 2009 in Leasing | Permalink | Comments (0)
The Purchaser's Right to Rescind: Easements Materially Affecting Use
Typical language in an agreement of purchase and sale provides that the purchaser agrees to accept title “subject to any easements for sewers, drainage, public utilities, phone or cable lines or other services that do not materially affect the present use of the property.” Language such as this is usually found in either a preprinted form that may be used by the parties or in specifically negotiated “Permitted Encumbrances” in larger deals.
In Ontario, the test for whether an easement materially affects the use of a property is set out by Justice Moldaver in Stefanovska v. Kok (1990), 73 O.R. (2d) 368 (Ont. H.C.):
… the test to be applied is whether the vendor can convey substantially what the purchaser contracted to get. In this regard, all of the surrounding circumstances must be considered to determine if the alleged impediment to title would, in any significant way, affect the purchaser’s use or enjoyment of the property.
Justice Forestell, in Ridgely v. Nielson, [2007] O.J. No. 1699 (Ont. S.C.J.), outlined four factors to be considered in determining whether an easement is material: the location of it; the size of the easement; the point of access; and the owner’s enjoyment of the property.
The point at which an easement “materially affects” a purchaser’s use of a property was recently considered by the Ontario Superior Court of Justice in Macdonald v. Robson (2008), 76 R.P.R. (4th) 156.
May 3, 2009 in Leasing | Permalink | Comments (0)
Principal's Liability for Acts of Agents
There are some special rules governing the liability of a principal who has an agent acting on their behalf to sign contracts. The rules are different depending upon whether the party dealing with the agent knows there is a principal behind that agent. Where the principal is not known (an undisclosed principal) there are again differences in the rules depending upon whether the contract is one made under seal or deemed to be under seal by legislation. The recent case of Vicdom Sand & Gravel (Ontario) Limited v. Oak Harbor I Management Limited et al [2008] O.J. No. 5357 (Ont. S.C.J.) is an example of the application of the sealed contract rule to an undisclosed principal.
March 6, 2009 in Leasing | Permalink | Comments (0)
Title Insurers' Duty to Defend An Important Aid With Property Litigation Costs
A recently reported case Hanis v. Teevan, 92 O.R. (3rd) 594 is an October 2008 Court of Appeal decision that examined the "duty to defend" obligations under two general liability insurance policies.
Dr. Hanis was hired in 1972 by the University of Western Ontario, fired in 1986 and charged with a criminal offence in 1987. He sued Western and most of the Hanis claims, such as the one on which Hanis obtained judgment, wrongful dismissal, were not covered by the insurance policies. Hanis alleged conflict of interest, infringment of copyright interests, unfair treatment as an employee, wrongful dismissal, misappropriation of property, interference with ongoing contractual relationships and malicious prosecution. Hanis lost on all claims but the one for wrongful dismissal.
January 31, 2009 in Title Insurance | Permalink | Comments (0)
Notices of Renewal and the Doctrine of Waiver: Case Comment on 1651788 Ontario Inc. v. 1628093 Ontario Inc.
Under the legal doctrine of waiver, a landlord’s failure to insist upon a tenant’s compliance with certain conditions of the lease may lead to the landlord being precluded from asserting that such original conditions are still operative and binding. An argument of waiver arose in the recent case of 1651788 Ontario Inc. v. 1628093 Ontario Inc. (2008 CanLII 45395 ON S.C.), where the Subtenant alleged that the Sublandlord’s oral agreement to renew the sublease was sufficient to waive the requirement in the sublease for renewal by written notice.
January 25, 2009 in Leasing | Permalink | Comments (0)
Assignability of rights of first refusal granted under a lease
A right of first refusal under a lease is a contractual right that gives the tenant the right to match any third party offer if the landlord chooses to sell the property. A right of first refusal is different from an option to purchase: while an option to purchase immediately creates an interest in land, a right of first refusal is merely a contractual right that becomes an interest in land only when the right is triggered (Canadian Long Island Petroleums Ltd. et al. v. Irving Industries Ltd., 1974 CanLII 190 (S.C.C.); Harris v. McNeely (2000), 47 O.R. (3d) 161 (Ont. C.A.)). Even though a right of first refusal is granted in a lease document, it is seen as an independent agreement separate from the lease legally valid without any additional consideration (Budget Car Rentals Toronto Ltd. v. Petro Canada Inc. (1989), 69 O.R. (2d) 289 (C.A)).
While a right of first refusal is a independent contact, and, generally, under contract law a benefit of a contract could be assigned (unless the contract itself restricts such assignment), case law has established that, in Ontario, a right of first refusal granted in a lease is a personal right of the contracting parties and, therefore, not capable of being assigned without the landlord’s specific consent (Zouvgais v. Chang (1986), 39 R.P.R. 221 (Ont. H.C.)).
December 3, 2008 in Leasing | Permalink | Comments (0)
Judicial Interpretation of "completely carefree net lease"
The intent of a "net" lease is to shift responsibility for the payment of expenses under the lease to the tenant. However, the case law has fairly consistently required landlords to specify particular expenses in their leases in order to be able to recover such expenses from tenants. This is seen again in 1645111 Ontario Ltd. v. 1169136 Ontario Inc., 2008 CarswellOnt 4002.
In this case, the Tenant leased the basement, main floor, patio space and a portion of the second floor of the building for the purpose of operating a bar and restaurant. The Landlord undertook major repairs of the roof and sought to charge the Tenant its proportionate share of the expense, an amount which totaled approximately $32,000.00.
November 24, 2008 in Leasing | Permalink | Comments (1)
