Point Deroche sale did not violate lands act, allegations were irresponsible, minister says

P.E.I.'s Lands minister says the recent sale of two properties in Point Deroche did not violate the Lands Protection Act, but the province's Third Party disagrees with the legal opinion that was used.

The Greens called for an investigation into the sale last week after documents showed the owners of the smaller parcel of land — an Ontario family operating under a corporation called 251 Kelpie Lane Inc. — declared a mortgage interest in a larger adjacent property that also sold.

That means if the land's buyer, Tim Banks, didn't pay the agreed price of $2.3 million, the family could recover both pieces of land, including the larger parcel they never owned.

The Greens believed this gave the former owners a beneficial interest in the property, which should have been highlighted to cabinet. The party also argued it was a violation of the act due to the limits on how much property non-residents can own.

After the exchange in the legislature last week, Lands Minister Rob Lantz's department took the issue back to the Island Regulatory and Appeals Commission.

"IRAC informed my office that the Lands Protection Act has not been contravened in either of these cases," Lantz told the legislature on Tuesday.

"IRAC has indicated that they rely on precedent set from a P.E.I Court of Appeals decision circa 1987."

Minister of Housing, Land and Communities Rob Lantz says its his department and IRAC's legal opinion that the act was not contravened. (Nicola MacLeod/CBC)

The minister went on to explain that IRAC's policy, which comes from this 1987 ruling, is that private mortgagees like 251 Kelpie Lane Inc. have no rights to the use, possession or occupation of a property over while it holds a mortgage.

If that were to change and there was a situation where they wanted to seize the assets, like if the buyer does not pay up, then the mortgagee could take possession of the land.

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Lantz said that's when cabinet would need to approve the land transfer.

"There were accusations made in the House last week … It all caught me a little off guard, but I was fairly confident that was not the case," Lantz told CBC News after question period on Tuesday.

"A lot of Islanders care deeply about these land issues and to raise accusations like this with such certainty ... that there was a violation, I just felt was irresponsible.

"Having looked in to it, the facts just don't bare up."

MacFarlane's legal opinion remains unchanged

But Green MLA Matt MacFarlane, who is a lawyer himself and raised the questions last week, disagrees with Lantz and said he's not satisfied with the response.

"I was a little surprised the minister referenced a case that's about 37 years old from our Supreme Court, which was the result of a reference in the early days of the Lands Protection Act," he told CBC on Tuesday.

"The act has been changed a number of times since 1987 … [and] the definition of land holding has been changed extensively since that time. So, my opinion hasn't changed."

Green party MLA Matt MacFarlane is the only lawyer in the legislature. He says his legal opinion differs from that of IRAC and the department. (Rick Gibbs/CBC)

MacFarlane said he'd need to see a stronger argument to believe the act was not contravened, particularly because the concept of beneficial interest was not included in the definition of land holdings at the time.

"What needs to be determined is whether the person or company that holds the mortgage over a parcel of land holds a beneficial interest to the use, occupation or right to that land," he said.

"So that should be judicially determined, if the minister and the government are convinced in their interpretation, then that issue alone could be referenced to our Supreme Court for a legal interpretation. Alternatively, the option is available for IRAC to conduct an investigation."

On the point that raising the issue was irresponsible, MacFarlane also disagrees.

"The public interest needs to be represented in the legislative assembly. That's our job as opposition MLAs, to raise issues of concern on the floor of the legislature," he said. "I can't order investigations into alleged contraventions of the Lands Protection Act. The minister can."