Errors and mistakes do occur in land purchasing agreements.
Here are some cases that we have seen:
- When the purchase and sale of multiple parcels of land are involved and the transaction is complex.
- When purchasing a presale strata property whose construction has not yet started or completed with closing dates in the future.
- In complex transactions when the land purchasers and vendors cannot agree to what exactly the contract’s essential terms were: who pays for certain taxes, whether there is an uncertain condition precedent that needs to happen before the contract becomes firm, whether certain renovations need to take place and who pays for them, etc.
In the following scenarios, the courts resolved disputes over errors and mistakes in land purchase and sale using different aspects of the law:
#1. Construction Completion Date Uncertain
In Litt v. Gill, 2016 BCCA 288, the vendor agreed to demolish her home, subdivide her land into two lots, and sell one lot to two purchasers. The third purchaser would act as general contractor in the construction of the vendor’s new home.
The sale did not complete due to a dispute over the purchase price of the land.
The Court of Appeal confirmed the trial judge’s finding that while the contractual purchasing price was in fact ascertainable, the timing to complete the vendor’s new house is uncertain (at paragraph 16), which caused the contract of purchase and sale to be unenforceable.
#2. New Owner’s Erroneous Understanding of a Dated Caveat on Lands
In Arbutus Bay Estates Ltd. v. Canada (Attorney General), 2017 BCCA 374, a previous owner of the property in Victoria granted an easement in 1960 over lands leading to a public wharf.
After purchasing the property, the new owner subdivided the lands and intended to sell the parcels, and the vendor disputed over the public access easement, one of the reasons was the understanding of the dated easement instrument.
The Court of Appeal confirmed the trial judge’s interpretation and “rectification” (the law on “rectifying” an error is discussed below) of the 1960 easement.
#3. Different Understandings of What Strata Amenities Were Included in the Land Purchase
In Hui v. The Owners, Strata Plan BCS3702, 2024 BCCA 262 released in May/2024, the owner of a penthouse in Vancouver disputes the discrepancies between the strata disclosure and what the owner received over a lobby access: the property owner understood at the time of purchase that there is a penthouse-owners’ private lobby, but in fact the lobby was accessible to all the strata owners.
The agreement of purchase and sale did not provide a mechanism to resolve this dispute.
Mutual or Unilateral Mistakes in Understanding the Terms of a Contract
The common thread in the 3 cited cases is one party, sometimes both or all parties to an agreement of purchase and sale had a different understanding of the same written contract. The law looks into the reasons why the same contractual terms were disputed in order to find a solution.
In Litt v. Gill, 2016 BCCA 288 the parties disagreed on when the construction of the new home is to complete. There were also disputes over the price of purchase and sale (paragraphs 10-12 in the trial evidence in Litt v. Gill, 2015 BCSC 491).
Because the contract was drafted by the parties, the construction completion date not written into it (see paragraph 6, 16-17 in Litt v. Gill, 2016 BCCA 288). Due to an error of this nature where the parties did not agree to a date of completion, an essential term for the land subdivision and sale, the courts did not apply the remedy in equity to “rectify”, or to correct it, as there are no facts to support that the parties had agreed to a completion date.
Instead, the trial judge, Justice Fenlon, found in the evidence, as an alternative, that the contract was partly written and partly oral which made its essential elements valid (see paragraph 13 in Litt v. Gill, 2016 BCCA 288); the trial judge also found that the contract was then repudiated and therefore a awarded of damages was ordered.
What is “rectification” of an agreement?
In a different approach, the courts used the equitable remedy of “rectification” to confirm that the 1960 easement in Arbutus Bay Estates Ltd. v. Canada (Attorney General), 2017 BCCA 374 remained binding on the new property owners as the easement bore on the lands.
In Canada (Attorney General) v. Fairmont Hotels Ltd., 2016 SCC 56, the Supreme Court of Canada set out the following principles of the equitable doctrine of rectification:
[12] If by mistake a legal instrument does not accord with the true agreement it was intended to record — because a term has been omitted, an unwanted term included, or a term incorrectly expresses the parties’ agreement — a court may exercise its equitable jurisdiction to rectify the instrument so as to make it accord with the parties’ true agreement. Alternatively put, rectification allows a court to achieve correspondence between the parties’ agreement and the substance of a legal instrument intended to record that agreement, when there is a discrepancy between the two. Its purpose is to give effect to the parties’ true intentions, rather than to an erroneous transcription of those true intentions …
[13] … It must, as this Court has repeatedly stated … be used “with great caution”, since a “relaxed approach to rectification as a substitute for due diligence at the time a document is signed would undermine the confidence of the commercial world in written contracts”… It bears reiterating that rectification is limited solely to cases where a written instrument has incorrectly recorded the parties’ antecedent agreement … It is not concerned with mistakes merely in the making of that antecedent agreement … In short, rectification is unavailable where the basis for seeking it is that one or both of the parties wish to amend not the instrument recording their agreement, but the agreement itself …
In Arbutus Bay Estates Ltd. v. Canada (Attorney General), 2017 BCCA 374 (see paragraphs 8-11), the easement was not accurately recorded in 1960, a fact which the new owner relied on the due diligence at the time of purchase more than 50 years after the easement was granted, to challenge its ambiguity.
The courts found in the evidence that the owner at the time, in 1959, “unequivocally” agreed to grant this easement.
In this sense, when the courts rectified, or corrected, the instrument granting the easement, it was correcting the unilateral mistake made by the previous owner: although he did not record all the terms of the easement, he did intend to grant the easement.
How to resolve ambiguities and errors in land transactions?
The sources of law to resolve disputes arising out of different understandings of a contract and errors can be grouped into 3, which are:
- The common law (case law precedents, or judgements rendered in the past that provided important principles) which are applicable to the fact pattern in dispute. The trial judge’s finding in Litt v. Gill that a contract existed, being in part written, in part oral, provided the common law solution to repudiating (when a party decides not to carry out the terms of) a contract.
- Certain narrow and technical errors can be corrected by the Land Title Office whose power was conferred by legislations. The Court of Appeal cited in Hui v. The Owners, Strata Plan BCS3702, 2024 BCCA 262 the following example:
[28] In my view, it is necessary to begin by recognizing that the jurisdiction of the Registrar is determined by the mandate conferred by statute. In this case, the Registrar’s jurisdiction flows from s. 14.12 of the Strata Property Regulation, B.C. Reg. 43/2000 which provides:
Correction of errors
14.12 (1) In this section:
“error” means any erroneous measurement or error, defect or omission in a registered strata plan;
“registered strata plan” includes any document, deposited in the land title office, that
(a) is referred to in section 245 (a) or (b) of the Act,
(b) forms part of a strata plan under the Condominium Act, R.S.B.C. 1996, c. 64 or a former Act, or
(c) amends or replaces a document referred to in paragraph (a) or (b).
(2) If it appears to the registrar that there is an error in any registered strata plan, the registrar may give notice or direct that notice be given to any person, in the manner and within the time determined by the registrar, and the registrar, after considering submissions, if any, and examining the evidence, may correct the error.
[29] I observe that the definition of “error” is somewhat narrow in its scope. It is readily apparent that the definition captures the kinds of errors that may arise from mismeasurement, failure to record details on the plan, omission of information through inadvertence, drafting errors, and so on. The meaning of the word “error” takes its bearings from that context. One can imagine many circumstances in which slips, errors of description, typographical errors, and other kinds of mistakes are reflected on a strata plan and require correction. In my view, these mistakes are the kind of “error” intended to be captured by this section of the Regulation. It may well be that often mistakes of that kind are clear to all and there is no contest about them, even though the Registrar may require evidence and argument to identify and correct the defect in a strata plan.
[30] I observe that the Registrar, after referring to para. 22 of Chow, described the type of errors that previously had been found to fall within the statutory mandate. Those types of errors are consistent with the narrow scope of the mandate I have described above. The Registrar said:
Section 14.12 contains the definition of “error”: it means “any erroneous measurement or error, defect or omission in a registered strata plan”. In the past, I have found errors to exist in registered strata plans where it has been clearly demonstrated that the calculations for determination of unit entitlement are incorrect, or where strata lots have been incorrectly or inconsistently numbered, or not numbered or designated, or where a misdescription of common property as limited common property has occurred. There is no defect in the Strata Plan, as it was examined and found to be registrable as deposited, nor was there an omission. No registration error has occurred with respect to the Strata Plan.
This power to correct errors such as measurements in a strata plan illustrates that the Land Title Office’s mandate is limited, and the solution in contract law in the first example and in equity, discussed in the following example, are reserved for the courts as they involve interpreting the law.
The principles in Canada (Attorney General) v. Fairmont Hotels Ltd., 2016 SCC 56 on the remedy of correcting or “rectifying” contracultural terms, is for the judge to determine whether the evidence supports a clear common intention of the contracting parties to an agreed term, but that term was not included in the contract due to an error.
In fact, this remedy is consistent with contract law which fundamentally protects the contracting parties’ agreement as long as the contract does not suffer from other defects (duress, misrepresentations, lack of consideration, contrary to public policy…).
Equitable remedies are to be used with great caution, as warned by the Supreme Court of Canada in Canada (Attorney General) v. Fairmont Hotels Ltd., 2016 SCC 56:
[15] In Performance Industries (at para. 31) and again in Shafron (at para. 53), this Court affirmed that rectification is also available where the claimed mistake is unilateral — either because the instrument formalizes a unilateral act (such as the creation of a trust), or where (as in Performance Industries and Shafron) the instrument was intended to record an agreement between parties, but one party says that the instrument does not accurately do so, while the other party says it does. In Performance Industries (at para. 31), “certain demanding preconditions” were added to rectify a putative unilateral mistake: specifically, that the party resisting rectification knew or ought to have known about the mistake; and that permitting that party to take advantage of the mistake would amount to “fraud or the equivalent of fraud” (para. 38).
In summary, parties to a land purchase and sale should consult counsel who are experienced in resolving disputes over errors and mistakes that cause ambiguity. This is especially advisable when the transaction contains complexities and uncertainties.
Contact Roland Luo in Vancouver for Knowledgeable Advice on Land Purchase Disputes
At Roland Law, we have experience assisting clients in resolving disputes arising from residential to commercial rezoning, land subdivision, new developments, owner’s disputes with strata corporations over discrepancies… If you face any of these potential problems, give us a call at (604) 800-4628 or send us an email: we are here to help.