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In This Volume

  • 12 There is not any merger, by operation of law only, of an estate the beneficial interest in which would not be deemed to be merged or extinguished in equity.

1979-224-13.

CASE LAW

No Merger Without Intent

The petitioner held a first and second mortgage on land. The respondent held a third mortgage. The petitioner foreclosed on the first mortgage and the respondent foreclosed on the third mortgage. Following an order nisi on the petitioner’s first mortgage, the respondent took an assignment of the petitioner’s interest in that mortgage and tendered for registration the master’s order that assigned the petitioner’s first mortgage and foreclosure to the respondent. The respondent had previously obtained an order absolute on its third mortgage foreclosure, and an application to register the lands in the respondent’s name under that order absolute was pending in the land title office at the time that the respondent made application to register the order assigning the first mortgage. While the application to register the assignment of the first mortgage did not request it, the registrar merged the first mortgage as assigned to the respondent with its title which was granted under the order absolute on the third mortgage. In the result, the petitioner’s second mortgage became the first charge against title to the land. By stated case, the court held that it is not correct for the registrar to remove a first mortgage from title in the absence of evidence of intention to merge. The merger prejudiced the respondent’s title by converting the petitioner’s second mortgage to a first mortgage and by preventing the respondent from relying on its rights as an assignee of the first mortgage to apply for an order absolute foreclosing off the second mortgage (Standard Trust Company v. Panstar Developments Inc., 1993 CanLII 1391 (BC SC)).