Encumbrance (Land)

TD Bank v. Phillips et al, 2013 ONSC 7016 (CanLII)

[27] In Outaouais Synergest Inc. v. Keenan (2013), 2013 ONCA 526 (CanLII), 116 O.R. (3d) 742 (C.A), the Court of Appeal at paragraphs 57-72 discussed the concept of an encumbrance. At para. 58, Blair J.A., for the Court, quoted the often-cited passage from the reasons of Estey J. in Wotherspoon v. Canadian Pacific Ltd., 1987 CanLII 2807 (SCC), [1987] 1 S.C.R. 952, at p. 1021:

The term “incumbrance” is a general term of law without any classical meaning. The word should be accorded its plain meaning that is consistent with the context of the statute. As is discussed by the Nova Scotia Supreme Court in Clark v. Raynor (1992), 65 D.L.R. 425 (C.A.), at p.439: “The word ‘encumbrance’ has no technical meaning. It is not one of the ‘terms of the law’ and no definition of it will be found in the older books.” By generally accepted definition “it comprehends ‘every right to or interest in the land which may subsist in a third person to the diminution of the value of land, but consistent with the passing of the fee by the conveyance’...It is apparent, of course, that the word is to be interpreted according to the context in which it is found” (p.439). (See also Evans v. Evans (1853), 22 L.J. Ch. 785 (C.A.), at p.90.) [Emphasis added]

[28] In paragraph 58 itself, Blair J.A. stated: “An encumbrance is an obligation that creates a right to or interest in the land subsisting in a third person.”

[29] As an example of something that is not an encumbrance, at para. 61 Blair J.A. referred to a Mareva injunction. While a Mareva injunction freezes assets (including land) and prevents their sale or disposition pending the outcome of litigation, it is not something that creates a right to or an interest in land. Rather, it is an instrument that provides a mechanism for protecting the personal rights of those who benefit from it.

[30] By contrast, in my view, a writ of execution that has been filed with the Sheriff does create a right to or an interest in land. In my view, this is the clear effect of the provisions of the Execution Act, and indeed is recognized by the provisions of the Mortgages Act itself.