THE POSNER PAGE

Previous Issues of The Posner Page

In This Issue of the Posner Page

ELECTRONIC REGISTRATION- PROS AND CONS

ROAD ACCESS RUMBLINGS

TESTAMENTARY TRUSTS- HERE IS WHY

A CHANGE IN LOCATION

ELECTRONIC REGISTRATION- PROS AND CONS

It is now about a full two months that electronic registration has been in mandatory use in the District of Kenora. I had used it prior to February 23, 2006, the date when the system became mandatory in other parts of Ontario where the process was already in force. I now have had a chance to use it and I think I can comment on the plusses and minuses of this new approach to Ontario property registrations.

My first thought is one of overwhelming awe at this powerful vehicle. That I can sit in my office in Winnipeg, and do a full search of a property anywhere in the Province of Ontario and be able to have that information at my fingertips almost immediately is just beyond my comprehension. That is for me a huge plus. In addition, I now can register almost with the same speed. That is another huge asset in the closing of a transaction. There are no more exchanges of funds for documents at the Land Titles Office. Instead, the funds are paid to the solicitor for the vendor and held by him until he messages the papers electronically to the purchaser's solicitor and the papers are then messaged and recorded at the Land Titles Office. It happens faster than the time spent reading this article. I love that speed and efficiency.

On the other hand, there is a large learning curve to get accustomed to this new technology. Moreover, I had a problem not long ago with a registration which was submitted at 5:01 PM. That attempt at registration was rejected as I was one minute late. The system closes down at 5 PM and there is no allowance for anything past that time. That was a bit of a negative. On the whole however, I am very pleased with the new system and it is a vast improvement. One area where I have to be alert is to make sure my clients have an opportunity to see the papers that will be tendered for registration since there is no longer a requirement for a signature on the papers. That is a major change. In short, the new system is a positive and will be of great help to people who are using the system for searches and registrations.

ROAD ACCESS RUMBLINGS

I recently read a case from Ontario relating to road access and since that was an area which has touched my law practice a number of times, I thought I might explore the issue as it emerges from this case. The particular case dealt with the closure of an access road used by a group of cottagers through a privately owned rural property. In this instance the land owner took the view that there was a possible alternate road access that could be used and hence on his own closed the road that was then in use.

The facts disclosed that the Plaintiff Corporation owned lot 18 since 2003. The property had been used before that time for cattle pasturing. The land was rural, with many trees on it and there was on it a gravel road which curled through it from the end of the public road from the east to the road in lot 19 to the west. Lot 19 was held by the Crown as a reserve occupied by the Mnjikaning First Nation. There were some band members who lived on some of the property in lot 19. The fact was that the cottagers and the band members used the gravel road over lot 18 to drive to their cottages located on Lake St. John and had done so since the early 1990's. The road had a gate on it and to use it, one had to have a key. Up until the closure the cottagers and the band members obtained the key by way of a payment of a fee on an annual basis. The fee had been raised to $ 500.00 per year although there some receipts from the previous owner that showed the receipt to cover the May to October period. On October 15 2003, the Plaintiff corporation advised the cottagers by letter that the road could no longer be used unless they signed a road access agreement and also paid $ 2, 000.00 for the use of the road for May though October only. When there was no response to this letter, the representatives of the Plaintiff Corporation closed the road on November1, 2003. The way to get to the property after that time in the winter was by skidoo. The plaintiff corporation then sued one of the cottagers for trespass and an injunction preventing future use of the road and the cottager family, by the name of Kirkpatrick countersued and even added the Crown as a party to the suit alleging a breach of covenant in the lease.

Thus the battle lines were drawn. The cottagers argued that the Road Access Act allowed them to use the road for vehicle access as they had for many years. This statute, passed in 1978 is a short act. The key clause is s.2(i). It says:

No one shall place or maintain a barrier or other obstacle across an access road that prevents all road access to one or more parcels of land, except in the limited circumstances mentioned in the Act.

These circumstances would be a closure of the road by way of a court order or by way of written agreement or for temporary repair or maintenance work for no more than 24 hours once a year. Of course, the question then is what is an access road? It is defined in the act as " a road located on land not owned by a municipality and not dedicated and accepted as, or otherwise deemed at law to be a public highway, that serves as a motor access route to a parcel of land " .

Therefore the issue confronting the court was just this. Here was a gravel road over lot 18 which the cottagers claimed was an access road to reach their property on lot 19. The argument was that this Act should apply and the Plaintiff could not and should not have closed the road. They also raised an alternative argument in case the Road Access Act did not apply but for the purposes of this article I will ignore that argument. They wanted an injunction to allow them to continue to use the road and also made a claim against the Crown saying that their lease with the Crown of their cottages included the right of access. The argument advanced by the Plaintiff corporation was that it was a corporation owned by the Mnjikaning First Nation and that the band had bought this parcel so that they would have the two pieces, 18 & 19 adjoining one another and thereby prevent their property being landlocked and to make for better access for the members of the band. The Plaintiff took the steps for an injunction preventing the cottagers from using the road except with the consent of the band. The Plaintiff asserted that the cottagers did not meet the onus of proof needed to establish that there was no other access to their land. The Plaintiff took the position that the Road Access Act was inapplicable here where there was an alternate access by development of a road on an unopened road allowance.

Then the Attorney General weighed in saying that there as no breach of contract and in any event if there was a breach, it was barred by the expiry of the limitation period. The cottagers never had any guarantee of access to their cottages except on lot 19 which was where the cottages were located. The court was faced with a very difficult decision and I can tell you that the judgment was over 30 pages long and went into much depth outlining the previous cases relating to the statute. It was not clear until the end which way the case would go and the judge, Mr. Justice Howden made the following observations in the course of his judgment.

He noted that the purpose of the Act was" to prevent the arbitrary closing of private roads especially in cottage country where owners or tenants are totally dependent on these roads for access to their property". He also pointed out that in cases like this one; the onus of proof was on the access claimant to show by a preponderance of evidence that the "access road" contains the 4 key elements as set out in the Act. If these 4 elements are there and that the access has continued for a significant period of time then the last hurdle to be met is whether or not the closure prevents all motor vehicle access to the land. In this case, the point being made in opposition to the access was that there was another way to get access. But, the judge found that the cottagers had satisfied the onus that this other way was not a feasible option as it meant that they would have to construct a road if they actually received approval to the construction- not a sure thing. As the trial judge said "I do not accept the Plaintiff's submission that alternate road access is present simply because an unopened road allowance exists in a location that it could, if it were developed provide alternate access". In this case, that alternate access indicated a design and construction cost of over $ 450, 000.00 plus on going annual maintenance. Thus, the judge concluded that there was no real alternate access although it did take him (as I said) 30 pages or more to make that decision. He granted the injunction sought by the cottagers and the reduced rate of $ 500.00 per year. He also dealt with the issue re the lease but it did not adversely change the outcome.

Therefore, one might ask what you can take from this case which I have given to you in a much abbreviated way. It is clear to me that when issues of this kind reach the point where there has been a court action commenced; there are some obviously difficult issues to resolve where there are likely uncompromising parties. It may well be that in a case like this one, there was no other solution but to go to court as if there was no access given by the court, the cottagers were out of luck in a practical way. As statutes go, this one, that is the Road Access Act, is one of the very shortest and yet it packs a wallop. If you are the person wanting to close the road, I suggest that before you get inflamed about problems of whatever kind you might be having with the person or persons traveling on the road, you give careful thought to the consequences of closing the road. This kind of action has serious consequences to the other party and potentially to you if you should get to court and lose. Now, while it is true that I have not seen these kinds of applications very often in my years of law practice, I can also say that I have been consulted a number of times about this exact kind of case.

TESTAMENTARY TRUSTS- HERE IS WHY

Although there are some downsides to a testamentary trust, there certainly are some valid reasons to consider setting one up. If you have some assets that might yield income on your death, you might want to think about using the vehicle of a trust in your will rather than an outright gift to the beneficiary. I say this because a testamentary trust, that is one in a will, is a terrific way to split income. On your death, your assets or a portion of them would be transferred to a trust, which in law is a separate entity. Thus, any investment income earned in the trust would be taxed in the hands of the trust rather than your beneficiary. If your beneficiary had income of his or her own, adding your investment income to the other income would put a tax burden on the recipient you could avoid just by using the simple application of a trust.

Thus, for example, if you suppose that in the asset pool of a couple Henry and Roberta, Henry had on his own assets that would generate income of $50,000.00 on his death, and this income would go to Roberta who had an income of her own of $50,000.00 per year, then the repercussions would be that she would have taxable income of over $100,000.00. If instead Henry created a trust in his will with the assets to be rolled into a trust, then the income of $50,000.00 earned on Henry's investment assets would go into the trust. The only income of the trust would be $50,000.00 and the tax attracted by that amount would be considerably less than if the income were in the hands of Roberta.

This is a crude example but the principle certainly is there for you to consider if it fits your situation.

A CHANGE IN LOCATION

My office is moving - down the hall. I will be in the same building, on the same floor, have the same office number, just a different location. The University of Winnipeg has taken over a large chunk of space in the building on the 7th floor and needed my space, hence the move. It will be taking place around the middle of May.