For the purpose of interpreting a Civil Code of Quebec rule on a seller’s obligations when they sell a property, an “accessory” is a piece of property that is both “destined” to serve the primary sold property and necessary for using the latter, the Supreme Court of Canada ruled in an 8-1 decision on Friday.
Based on this finding, the high court dismissed a Quebec developer’s claim to a strip of land at Lac Masson in the Laurentians that has been underwater since the 19th century, when the construction of a dam raised the lake level. From the late 1950s to the early 1970s, Zardev Inc., the property developer that owned the land, divided the land bordering the lake into several hundred lots and sold them to various buyers. Zardev did not tell the buyers about the submerged piece of land.
When the buyers learned about the submerged land decades later, they challenged Zardev’s ongoing claim to the land in court.
Under the Civil Code of Quebec, a seller is obligated to deliver sold property “in the condition it is in at the time of the sale, with all its accessories.” While the lot owners argued the submerged land qualifies as an accessory that should have been delivered to them when they purchased their lots, Zardev disagreed.
The SCC majority sided with the lot owners in Zardev Inc. v. Dydzak.
“The submerged lands — which are not mentioned in the deeds of sale — are accessories to the riparian lots, in that they ensure that the destination of the property sold, as established by the parties, can be fulfilled,” Justice Nicholas Kasirer wrote for the majority. “They are for the use of the principal thing and, without them, this use contemplated by the parties would not be possible.”
Kasirer outlined numerous ways in which the submerged land allows lot owners to make full use of their properties: It provides direct and exclusive access to the lakeshore, supports the undisturbed use of the lots, and protects the lot owners’ privacy. Kasirer noted that because the submerged land is “unbuildable and enclosed,” they have no other purpose than to serve the riparian lots.
Justice Suzanne Côté dissented, arguing that the submerged land is not an accessory to the sold lots. Even if the land was an accessory, she posited, the parties had explicitly excluded the transfer of the submerged land when the lots were sold.
The lot owners learned that the submerged land existed in 2016, when an official map of the area was published and indicated that Zardev still owned the strip. The lot owners filed an application with the Superior Court of Quebec, arguing that the strip had been sold to them with their respective riparian lots. Their argument relied on the civil law maxim accessorium sequitur principale (the accessory follows the principal), which is partially codified in Quebec’s general law of sale. The maxim requires a seller to deliver to the buyer not only the principal property, but all the accessories associated with it.
The court dismissed the lot owners’ application upon interpreting the deeds of sale, which do not mention the submerged land. However, the Quebec Court of Appeal disagreed, ruling that the submerged land is an accessory to the riparian lots. The appellate court declared that the lot owners officially owned the underwater strip of land.
In his analysis, Kasirer said the Superior Court of Quebec correctly interpreted the deeds of sale. However, the justice noted that the “obligational content of a contract is not limited to its express provisions, but also includes ‘what is incident to it according to its nature and in conformity with usage, equity or law.’”
In the context of Quebec’s law of sale, which is laid out in the Civil Code of Quebec, an accessory is “property that is destined to serve the principal property sold and that, by reason of this destination, is necessary for the agreed use of the latter,” Kasirer wrote.
He added that in every case, “the characterization of property as an accessory is a contextual exercise that must yield a conclusion consistent with the legitimate expectations of the parties.”
The justice said that given these criteria, it is clear that the submerged lands are accessories to the riparian lots – the principal property in this case.
“The sold lots ‘bounded by Lake’ are destined to serve as waterfront sites for vacation homes, giving the buyers direct access to the lake and exclusive access to the shore,” the justice wrote.
“The tranquility of the location was reinforced, for the benefit of all, by the destination of the property sold in accordance with the will of the parties, as revealed by the deeds of sale. This tranquility — relative, of course, given that the lake is navigable — is the reason why the respondents purchased riparian lots at the prices asked,” Kasirer added. “Thus, direct and exclusive access to the lakeshore for recreational purposes is an essential component of the value and destination of the riparian lots.”
The justice noted that it is unusual in Quebec for a strip of submerged land to be privately owned. This reinforces the conclusion that it should be considered an accessory to the riparian lots, “so as not to undermine the buyers’ reasonable expectations.”
In her dissent, Côté argued that “no legal rule provides that these submerged lots can constitute accessories to their adjacent riparian lots.”
The justice stated that “by its nature, land is meant to serve as a principal rather than an accessory, because its function can always be modified.” She added that access to the submerged strip is not necessary for the lot owners to use the riparian lots.
She concluded that the owner of the submerged land is Zardev.
In a statement on Friday, Jessica Michelin, one of the lawyers at IMK sencrl/LLP who represented the lot owners, said she and her colleagues are pleased with the decision and its outcome for their clients.
“This is an important case affirming the rights of waterfront property owners,” Michelin said.
Counsel for Zardev did not immediately respond to a request for comment.
