sacchetti v. lockheimer, [1988] 1 S.C.R. 1049
Gunter Lockheimer and Irwin Volk Appellants
v.
Ilio Sacchetti Respondent
and
Registrar of Registry Office, Papineau Division Mis en cause
indexed as: sacchetti v. lockheimer
File No.: 18444.
1988: February 29; 1988: May 26.
Present: Beetz, Estey*, Lamer, Le Dain and La Forest JJ.
on appeal from the court of appeal for quebec
Registration ‑‑ Subdivision ‑‑ Original lots subdivided ‑‑ Subdivision effective from deposit in Registry Office of plan and book of reference approved by Minister ‑‑ Subdivision valid notwithstanding registrar's failure to enter subdivisions on index of original lots ‑‑ Subdivided lots unaffected by registrations made against original lots after subdivision took effect ‑‑ Civil Code, arts. 2168, 2175 ‑‑ Cadastre Act, R.S.Q. 1977, c. C‑1, ss. 14, 15.
Registration ‑‑ Subdivision ‑‑ Subdivision not being a real right, subject to no registration requirement ‑‑ General rules of registration under arts. 2082, 2083 and 2085 C.C. inapplicable ‑‑ Civil Code, arts. 2082, 2083, 2085, 2175 ‑‑ Cadastre Act, R.S.Q. 1977, c. C‑1, s. 14.
Appeal ‑‑ Cross‑appeal ‑‑ Motion made at hearing ‑‑ Motion dismissed as tardy.
Montclair Investment Corporation was the owner of lots 5 and 6 of the north range of the Township of Amherst. Between 1959 and 1961 the company subdivided these two lots. The registrar prepared an index of immovables for each subdivided lot; however, he failed to note on the index of the original lots that these lots had been subdivided, as required by s. 14 of the Cadastre Act. This notation was not made until March 16, 1978. Between 1960 and 1971, appellants purchased eleven of these subdivided lots and duly registered their titles on the index of the lots. In 1977, respondent, who was both creditor of Montclair Investment Corporation and owner of half its shares, had lots 5 and 6 seized prior to judgment. In a judgment by default, respondent was declared owner of an undivided half of these lots. He registered this judgment against lots 5 and 6 and then caused the other undivided half of these lots to be seized and sold by the court. He purchased the other half and registered the sale against the original lots. In June 1980, respondent brought an action to be declared the absolute owner of lots 5 and 6, to have the subdivisions entered on the index of immovables struck out and to force appellants to vacate their immovables. Alternatively, respondent further asked that if his rights could not be enforced the registrar be ordered to compensate him.
The Superior Court dismissed the action and the claim against the registrar. The Court of Appeal allowed the appeal, declared respondent the sole owner of lots 5 and 6 and ordered appellants to relinquish possession of the disputed subdivisions. Applying articles 2082, 2083 and 2085 C.C., the Court of Appeal held that the subdivision could not be set up against respondent and that he had priority over purchasers of the subdivided lots because respondent had registered his rights before the subdivision was noted on the index of the original lots.
Held: The appeal should be allowed.
Subdivision is simply a cadastral operation by which the owner parcels all or part of a lot and gives each new parcel a separate number made up in part of the number of the original lot. Subdivision is not a real right and is not subject to registration. Thus the rules as to priority set out in arts. 2082 et seq. of the Civil Code cannot be applied to determine the rights of the parties.
Respondent's submission that a subdivision must be registered under art. 2175 C.C. or s. 14 of the Cadastre Act cannot be upheld. The "deposit" of the plan of subdivision in the Minister's office and the "deposit" of this plan, as approved by the Minister, in the Registry Office are not synonymous with registration by deposit, but rather mean filing, handing over or forwarding.
A subdivided lot is effective for registration purposes on the date the plan of subdivision is deposited in the Registry Office. The registrar's failure to make a notation on the index of the original lot after the plan has been deposited, as required by s. 14 of the Cadastre Act, does not invalidate the subdivision since it has already taken effect. The registrar will however be liable if this failure causes loss to anyone. Under article 2168 C.C., in any act registered after the subdivision the lots are to be designated by the number assigned to them in the plan of subdivision. The effect of this article is that any title registered without the official designation of a lot does not affect the immovable and confers no right which can be set up against third parties. As the original lot ceased to exist when the subdivided lots became effective, the registrations containing the designation of the original lot are invalid and do not affect that lot. In the present case, respondent cannot claim any right in appellants' lots, since none of the acts registered by him affects those lots. The registrations carried out by respondent on original lots 5 and 6 are invalid against appellants. Only the acts registered by appellants and containing the number and designation of the subdivided lots can be set up against third parties claiming rights to those lots.
At the hearing, respondent made a motion to file a cross‑appeal regarding liability of the registrar. In view of the tardiness of this motion, it should be dismissed. In addition, the trial judge concluded that there was no proof of damage caused by the registrar's failure and there is no reason to alter that conclusion.
Cases Cited
Referred to: St‑Gelais v. Banque de Montréal, [1968] S.C.R. 183; Economic Realty Ltd. v. Benoît, [1946] C.S. 81.
Statutes and Regulations Cited
Cadastre Act, R.S.Q. 1977, c. C‑1, ss. 14, 15.
Civil Code, arts. 1646, 2082, 2083, 2085, 2129a, 2132 et seq., 2161, 2168, 2171, 2175.
Authors Cited
Bélanger, Albert. "La description légale d'un emplacement" (1981), 83 R. du N. 517.
Bélanger, Albert. "Le régistrateur québécois" (1982), 84 R. du N. 499.
Charron, Camille. "Plans et cadastres: leur mise en vigueur et leurs effets sur les titres" (1974), 76 R. du N. 345.
Comtois, Roger. "Jurisprudence: Opérations cadastrales‑‑Subdivision et redivision‑‑"Ajouté"" (1973), 75 R. du N. 546.
Giroux, G. M. "La publicité foncière" (1936), 38 R. du N. 447.
Lamontagne, Denys‑Claude. "Questions d'enregistrement" (1982), 84 R. du N. 407.
Marler, William deMontmollin. The Law of Real Property. Completed and arranged by George C. Marler. Toronto: Burroughs & Co., 1932.
APPEAL from a judgment of the Quebec Court of Appeal, [1984] C.A. 18, setting aside a judgment of the Superior Court1. Appeal allowed.
Sup. Ct., No. 500‑05‑003419‑809, May 26, 1981.
Jack Bobrove, for the appellants.
Léo Di Battista and Sergio Tucci, for the respondent.
Jean‑Yves Bernard, for the mis en cause.
English version of the judgment of the Court delivered by
1. Lamer J.‑‑Montclair Investment Corporation, which is not a party to this action, was the owner of lots 5 and 6 of the north range of the Township of Amherst, Papineau registration division. By four successive operations between 1959 and 1961, Montclair had these entire lots subdivided. In accordance with arts. 2161 and 2171 of the Civil Code, the registrar prepared an index of immovables for each subdivided lot; however, he failed to note on the index of the original lots that these lots had been subdivided, as required by s. 14 of the Cadastre Act, R.S.Q. 1977, c. C‑1. This notation was not made until March 16, 1978. Between 1960 and 1971, appellants purchased eleven of these subdivided lots and duly registered their titles on the index thereof.
2. On May 14, 1974, by an agreement signed in Italy, respondent bought half the capital stock of Montclair and granted a one‑year loan to that company. Three years later, as he had received neither the shares nor repayment of the loan, respondent made a seizure before judgment of lots 5 and 6. On October 28, 1977, in a judgment by default, respondent was declared owner of an undivided half of these lots and also obtained damages against Montclair. Respondent registered this judgment against lots 5 and 6, and then caused the other undivided half of these lots to be seized and sold by the court. He purchased this other half and registered the sale in December 1979, still against the original lots.
3. On June 2, 1980, respondent brought an action to be declared the absolute owner of lots 5 and 6, to have the subdivisions entered on the index of immovables struck out and to force appellants to vacate their immovables. Alternatively, respondent further asked that if his rights could not be enforced the mis en cause registrar be ordered to compensate him, with interest and costs.
4. The Superior Court judge dismissed the action and concluded that respondent could not succeed in his claim against the mis en cause. The Court of Appeal allowed the appeal, declared respondent the sole owner of lots 5 and 6 and ordered appellants to relinquish possession of the disputed subdivisions: [1984] C.A. 18.
5. In this Court, appellants' primary argument was that all the formalities required for the validity of the subdivisions were carried out in accordance with art. 2175 C.C., which reads as follows:
2175. Whenever the owner of a property designated upon the plan or book of reference, subdivides the same into town or village lots, he must deposit in the office of the Ministre de l'énergie et des ressources a plan and book of reference certified by himself, with particular numbers and designations, so as to distinguish them from the original lots; and if the Ministre de l'énergie et des ressources finds that such particular plan and book of reference are correct, he transmits a copy certified by himself to the registrar of the division and to the clerk or the secretary‑treasurer of the municipality within the limits of which is situated the subdivided property.
6. In appellants' submission the registrations made by respondent against the original lots are therefore invalid, because in view of the subdivisions made those lots no longer existed. They further argued that, as subdivision is not a real right it does not have to be registered, and art. 2083 C.C. cannot be applied to set the order of priority in the parties' rights.
7. Respondent in turn argued that a subdivision must be registered under art. 2175 C.C. and s. 14 of the Cadastre Act; as the registrar did not make the required notation, respondent's rights have priority over those of appellants because they were registered earlier. Alternatively, if he must bear the loss of the disputed immovables, respondent asked that the registrar be ordered to compensate him. The mis en cause supported appellants' arguments and denied his liability to respondent.
8. There is no question that the registrar was at fault in failing to note the subdivision on the index of the original lots, since he had a legal duty to do so. In my opinion, the case at bar turns on the effect of this failure on the rights of the parties who each registered their title, one against the original lots and the other against the subdivided lots. However, in view of the arguments made in this Court and the judgment rendered by the Court of Appeal in the present case, we must first determine whether, as respondent suggests, the subdivision must in fact be registered. If not, the articles relied on by the Court of Appeal are inapplicable and the matter must be resolved in accordance with other principles.
9. In order to determine the rights of the parties at bar, the Court of Appeal applied arts. 2082, 2083 and 2085 C.C., which deal with the effects of registration:
2082. Registration gives effect to real rights and establishes their order of priority according to the provisions contained in this title.
2083. All real rights subject to be registered take effect from the moment of their registration against creditors whose rights have been registered subsequently or not at all. If however a delay be allowed for the registration of a title and it be registered within such delay, such title takes effect even against subsequent creditors who have obtained priority of registration.
2085. The notice received or knowledge acquired of an unregistered right belonging to a third party and subject to registration, cannot prejudice the rights of a subsequent purchaser for valuable consideration whose title is duly registered, except when such title is derived from an insolvent trader.
10. In the view of the Court of Appeal, although subdivision is neither an ownership title nor a real right it affects the registration of both; in the absence of specific provisions, the Court applied the general rules of registration. Thus, as respondent registered his rights before the subdivision was noted on the index of the original lot, the Court of Appeal considered that the subdivision could not be set up against him and he therefore had priority over purchasers of the subdivided lots.
11. The provisions applied by the Court of Appeal are contained in Title Eighteenth, "Of Registration of Real Rights". These provisions do not prescribe the rights subject to registration but the effect of registration on real rights, in other words how those rights will rank among themselves. Articles 2082 et seq. will only apply if the rights are real rights, otherwise their priority will not be governed by those articles. For example, art. 1646 C.C. provides that a lease for more than twelve months must be registered in order to protect the tenant in the event of a change of owner; as a lease is a personal right, the effect of this registration is not governed by Title Eighteenth but by art. 1646 itself. The nature of a subdivision must therefore first be determined to establish whether it is a real right.
12. Subdivision is broadly defined as a cadastral operation. In Quebec the cadastre is used for the identification of plots of land and the registration of acts affecting them. It is a graphic representation of the division of land into units of ownership. Naturally, this division is not static, since the purpose of preparing the cadastre was not to halt economic activity and real estate development. For the cadastre to accurately reflect reality a mechanism was needed to record the parcelling of land which is constantly occurring. This mechanism is called subdivision. Subdivision is a simple cadastral operation by which the owner parcels all or part of a lot and gives each new parcel a separate number made up in part of the number of the original lot. (Giroux, "La publicité foncière" (1936), 38 R. du N. 447, at p. 449; Comtois, "Jurisprudence: Opérations cadastrales‑‑Subdivision et redivision‑‑"Ajouté"" (1973), 75 R. du N. 546, at p. 548; Bélanger, "La description légale d'un emplacement" (1981), 83 R. du N. 517, at p. 573.)
13. As the cadastre must be updated for registration purposes, subdivision also helps to reduce the risk of confusion in this area. When it becomes effective, a separate index of immovables is prepared for each subdivided lot to record acts affecting it. If subdivision did not exist, acts relating to all the parcels created from the same original lot would be entered on the index for that lot. Determining exactly what rights affect each parcel would then be a very onerous operation, in view of the large number of entries that might be made on a subdivided lot. The purpose of subdivision is therefore also to facilitate keeping the real estate register.
14. A real right is a legal relationship between a person and a thing: it gives its holder a direct and immediate legal power over the thing, a power which he exercises without intermediary. If principal (the right of ownership and its components), it relates to the physical aspect of the thing; if accessory (such as an hypothec, pledge or privilege), it concerns the monetary value of the thing as a guarantee of the performance of a principal obligation. The attributes of the real right are the right of pursuit and the right of preference, as well as possession and the right of abandonment.
15. A cadastral operation is obviously not a real right: it creates no legal relationship between a person and a thing and confers on its originator no right of preference or right of pursuit. Subdivision as such does not in any way alter the rights of the owner of the original lot: he is quite free to subdivide his lot without giving up his right of ownership. Subdivision only substitutes several lots on the cadastre where previously there was only one. No real right is thus created, altered or extinguished. It is only when the owner transfers one of the subdivided lots that a real right will arise.
16. As subdivision is not a real right arts. 2082 et seq. cannot in my view be applied to determine priority between the rights of the parties. Respondent still maintained that art. 2083 governs the matter because subdivision is "subject to be registered" under art. 2175 C.C. In his submission this article provides that registration must be made by deposit in accordance with arts. 2132 et seq. This argument cannot be upheld, as I see nothing in art. 2175 providing for registration. When registration of an act is required, it is done in clear and express terms, as can be seen from the many articles of the Civil Code dealing with this matter. The "deposit" of a certified plan is not synonymous with registration by deposit, but rather means filing, handing over, forwarding. Additionally, this "deposit" is done in the Minister's office, and the Minister in turn forwards a copy certified by him to the registrar. Registration cannot take place by deposit in the Minister's office, and the legislator certainly did not intend to make the Minister responsible for registration on behalf of the owner.
17. Respondent further relied on the wording of s. 14 of the Cadastre Act as a basis for arguing that the subdivision must be registered:
14. As soon as any subdivision or redivision plan, accompanied by a book of reference, has been deposited in his office, the registrar shall note in the index to immoveables, under the number of the original lot or of the subdivision or redivision, the fact that such lot has been subdivided or redivided, in whole or in part, as the case may be.
18. The plan which is "deposited" in the registrar's office is not deposited as the result of a registration by deposit, as respondent appeared to think, but as the result of the forwarding of a certified copy of the plan by the Minister. At the risk of repeating myself, such a deposit is not a registration. Section 14 further imposes on the registrar a duty to make a notation on the index of the original lot to inform persons concerned of the fact of the subdivision. It cannot be inferred from this duty imposed on the registrar that the owner also has a duty to register the cadastral operation he has undertaken. Moreover, paragraph 3 of art. 2129a C.C. expressly provides that the depositing of a subdivision plan does not constitute registration.
2129a. The deposit of a plan in the registry office in virtue of an act requiring it is considered as a registration of such plan and treated as such.
The plan must be accompanied with a notice showing the description of the immoveable contemplated therein in accordance with the prescriptions of article 2168.
This provision does not include deposits of plans contemplated in articles 2166 to 2176c and in the Cadastre Act (Revised Statutes, 1941, chapter 320).
19. In short, since subdivision is not a "real right subject to be registered", there is no reason to apply the rules of preference stated in arts. 2082 et seq. of the Civil Code to determine the rights of the parties at bar. Such a determination must be made in light of the rules governing subdivision.
20. A subdivision takes place in accordance with art. 2175 C.C. and the provisions of Division III of the Cadastre Act. Under article 2175 an owner must prepare a certified subdivision plan which he submits for approval by the Minister of Energy and Resources. If the Minister approves it, he then forwards a copy of this plan to the registrar and to the clerk or secretary‑treasurer of the municipality. In the opinion of commentators a subdivided lot is effective for registration purposes on the date this plan is deposited in the registry office (Marler, The Law of Real Property (1932), at p. 576; Charron, "Plans et cadastres: leur mise en vigueur et leurs effets sur les titres" (1974), 76 R. du N. 345, at p. 356; Bélanger, "Le régistrateur québécois" (1982), 84 R. du N. 499, at p. 537).
21. When the plan has been deposited, and hence after the subdivided lot has become effective, s. 14 of the Cadastre Act imposes on the registrar a duty to make a notation on the index of the original lot. The registrar is no doubt required to carry out this administrative formality so as to inform interested third parties, and he will be liable if his failure to do so causes prejudice to anyone. However, this formality is not essential to the validity of the subdivision, as respondent maintained, since the subdivision already became effective when the plans were received in the registry office. The subdivision is therefore complete as soon as the registrar receives the plans approved by the Minister, with all the consequences that result therefrom.
22. In particular, s. 15 of the Cadastre Act provides that once a subdivision has been made the designation given to the subdivided lots will be a true description of those lots:
15. Whenever a subdivision or a redivision has been made, the particular number and designation given to each lot, upon the plan and in the book of reference of such division or redivision, shall be the true description of such subdivided lots respectively, and shall be sufficient as such in any document; and the provisions of article 2168 of the Civil Code shall apply to the lots of such subdivision or redivision.
23. As article 2168 C.C. applies to subdivided lots, any act registered after the subdivision must include the number and designation given to those lots by the owner:
2168. ...
As soon as such plans and books of reference have been deposited and notice thereof has been given, notaries passing acts concerning immoveables indicated on such plan are bound to designate such immoveables by the number given to them upon such plan and in the book of reference, in the manner above prescribed; in default of such designation the registration does not affect the lot in question, unless there is filed for registration a notice indicating the number on the plan and book of reference as being that of the lot intended to be affected by such registration.
...
24. The effect of this article is that the title registered without the official designation of a lot does not affect the immovable and confers no right which can be set up against third parties. This is the rule recognized by this Court in St‑Gelais v. Banque de Montréal, [1968] S.C.R. 183. Mr. Bélanger is of the same opinion in "Le régistrateur québécois", loc. cit., at p. 509:
[TRADUCTION] 552. To ensure that cadastral documents will be used, the legislator provided that a registered document affects an immovable only if that document indicates the cadastral number or contains a legal description of the immovable which is to be affected by the registration.
553. In strictly legal terms, a document not containing a legal description of the immovable which a party purports to affect does not affect that immovable even when it is entered on the index of immovables.
(See to the same effect Marler, op. cit., at p. 576, and Lamontagne, "Questions d'enregistrement" (1982), 84 R. du N. 407, at pp. 414‑15.) Accordingly, as the original lot ceased to exist when the subdivided lots became effective, the registrations containing the designation of the original lot are invalid and do not affect that lot: Economic Realty Ltd. v. Benoît, [1946] C.S. 81.
25. In the case at bar the subdivision has been in effect since the plans were deposited in the registry office. Thus, the registrations made by respondent on original lots 5 and 6 are invalid so far as appellants are concerned: as the acts registered by respondent do not contain the official designation of the subdivided lots, those registrations do not affect them. Only the acts registered by appellants and containing the number and designation of the subdivided lots can be set up against third parties claiming rights to those lots. As far as appellants are concerned, it is the official number of the lot which must prevail against a number which no longer exists. Respondent clearly cannot claim any right in appellants' lots, since none of the acts he registered affects those lots. In my view, the appeal must therefore be allowed and the trial judgment restored.
26. At the hearing, respondent made a motion to file a cross‑appeal regarding liability of the mis en cause registrar. Since the Court of Appeal upheld respondent's primary argument, it did not rule on this alternative conclusion. In view of the tardiness of this motion, I feel it should be dismissed. The trial judge further concluded that there was no evidence of the damages caused by the registrar's failure: I do not think there is any reason to alter that conclusion.
27. For all these reasons, I would allow the appeal with costs throughout.
Appeal allowed with costs.
Solicitor for the appellants: Jack Bobrove, Montréal.
Solicitor for the respondent: Sergio Tucci, Montréal.
Solicitors for the mis en cause: Bernard, Roy & Associés, Montréal.