Case information

Property — Real property — Municipal law — Taxation — Contracts – Commercial contracts — Interpretation — Insurance — Title insurance — Applicant company purchasing land subject to local improvement charge — Title insurance companies refusing coverage based on wording of policy — Whether title insurance covers local improvement charges imposed by Canadian municipality — When are local improvement charges “due or payable, but unpaid” within the meaning of standard-form title insurance? — Whether coverage for municipal taxes should be deemed an unrealistic result in Canada — Municipal Government Act, R.S.A. 2000, c. M-26, s. 348.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

In September 2015, the applicant purchased a parcel of land in the City of Spruce Grove, Alberta. The transaction for the sale of the property closed on December 2, 2015. Prior to the closing, the applicant purchased title insurance from the respondent insurance companies. The applicant did not know the property was subject to a “local improvement charge” until May 2016, when it received a letter from the City indicating a first installment, in the amount of $114,375.72, due by June 30, 2016. The applicant made a claim for coverage under the title insurance policy it had purchased. The respondent insurance companies denied coverage, on the basis that the local improvement tax did not become “due or payable” (under the wording of the policy) until after the policy’s effective date, and was therefore excluded from coverage under the policy.

The chambers judge at the Court of Queen’s Bench found in favour of the applicant, concluding that it was entitled to coverage. A majority at the Court of Appeal allowed the respondents’ appeal; it overturned the first decision, denied coverage, and dismissed the claim against the respondents. A dissenting judge would have dismissed the appeal and upheld the first order.