Elliott et al. v. Woodstock Agricultural Society

Woodstock Agricultural Society v. Elliott et al.

[Indexed as: Elliott v. Woodstock Agricultural Society]

92 O.R. (3d) 711

Court of Appeal for Ontario,

Armstrong, Juriansz and LaForme JJ.A.

September 26, 2008

Real property -- Adverse possession -- Inconsistent use -- Application judge erring in holding that legal owner could not rely upon its holding of disputed lands for future development as current use during statutory period.

The applicants' predecessor in title owned property adjacent to the disputed lands. They treated the disputed lands as "abandoned property", worked openly to improve the lands in 1987 and 1988, and installed a wooden fence with a locked gate. The applicants continued to work on and improve the disputed lands. In 2003, the respondent (the legal owner of the disputed lands) wrote to the applicants asserting ownership of the lands. The applicants brought an application for a declaration that they owned the land by adverse possession. The application was granted. The respondent appealed. [page712]

Held, the appeal should be allowed.

The application judge appreciated that the applicants had to establish not only actual possession of the land, but also that the respondents were in fact effectively excluded from its possession. To do this, the applicants had to show that their use of the lands was inconsistent with the use the respondent intended to make of the land. The application judge failed to properly apply the "inconsistent use" test when he refused to consider the respondent's intention of holding the disputed lands for future development as the current use during the statutory period.

APPEAL from the judgment of McDermid J., [2007] O.J. No. 3064, 60 R.P.R. (4th) 55 (S.C.J.) granting a declaration that the applicants were lawful owners of land by adverse possession.

Cases referred to

Masidon Investments Ltd. v. Ham (1984), 1984 CanLII 1877 (ON CA), 45 O.R. (2d) 563, [1984] O.J. No. 3139, 2 O.A.C. 147, 31 R.P.R. 200, 25 A.C.W.S. (2d) 38 (C.A.); Teis v. Ancaster (Town) (1997), 1997 CanLII 1688 (ON CA), 35 O.R. (3d) 216, [1997] O.J. No. 3512, 152 D.L.R. (4th) 304, 103 O.A.C. 4, 41 M.P.L.R. (2d) 53, 13 R.P.R. (3d) 55, 73 A.C.W.S. (3d) 678 (C.A.), consd

Statutes referred to

Real Property Limitations Act, R.S.O. 1990, c. L.15, ss. 4 [as am.], 15 [as am.]

Authorities referred to

Baker, P.V., ed., A Manual of the Law of Real Property, 4th ed. (London: Stevens, 1969)

John K. Downing, for appellant. Richard J.T. Shaheen and Rebecca L. Pepper, for respondents.

The judgment of the court was delivered by

1JURIANSZ J.A.: -- The Woodstock Agricultural Society appeals from the trial judgment the declaration that the respondents Robert Innes Elliott and Patricia Lee Elliott are the lawful owners of certain real property registered in the name of the Society. The Elliotts' claim was based on adverse possession. The Society brought a counter application for a declaration that the Elliotts are trespassing on its lands and have no claim by adverse possession or otherwise.

Facts

2The Society has owned and operated the Woodstock Fairground since 1831. The grounds encompass a racetrack, horse barns, rental halls, an arena and various other buildings associated with the operation of a fairground. The lands in dispute, designated as Part 1 and 2 on Plan 41R-7864 (the "Disputed Lands"), lie to the north of the Society's racetrack and to the west [page713] of its poultry barn. The Society had installed a high wood and aluminum privacy fence along the northern boundary of the racetrack and the southern boundary of the Disputed Lands. The Society had also erected other fencing along most of the other boundaries of the Disputed Lands.

3On November 15, 1982, Janet Sinclair purchased lands consisting of lot 12, Plan 41M-75 with the intention of building a home on it. Their land adjoined the Disputed Lands on its western boundary. Both Ms. Sinclair and her husband were aware at the time that the Disputed Lands were owned by the Woodstock Agricultural Society.

4The Sinclairs viewed the Disputed Lands as "abandoned property" and worked to improve the lands by cleaning up dead trees, planting grass and installing a sprinkler system, with the objective of possessing the lands for their own use. The Sinclairs did nothing to hide their intention to possess the lands. By 1987, they completed installation of a wooden fence with a locked gate at the northwest corner of the Disputed Lands. The installation of this fence and gate had the result that the Disputed Lands were completely fenced in and access to them could be obtained only by entering through the locked gate or through the Sinclair home. The Sinclairs kept the gate locked at almost all times.

5The Sinclairs sold Lot 12 to the Elliots on June 3, 1999. At the time of the purchase, the Sinclairs advised the Elliotts of their claim for adverse possession of the Disputed Lands. It does not seem, however, that a description of the Disputed Lands was included in the Sinclairs' deed to the Elliotts. The Elliots in turn continued to work on and improve the Disputed Lands, which continued to be totally enclosed by fences.

6In 2003, surveyors advised the Society that the Disputed Lands could potentially be taken over by "squatters' rights". This led to the Society writing to the Eliotts on July 18, 2003, asserting ownership of the Disputed Lands. Mrs. Elliott's reply dated August 7, 2003 stated that ". . . the lot in question has been enclosed with 850 Berkshire Drive, and has been maintained by the owners of said address for 23 years. The piece of property in question is landlocked without access to a road, therefore unable to be developed." Mrs. Elliott made an offer to purchase the property for $1,500 and to pay "all costs to make this transaction possible".

7On September 25, 2003, the Society again wrote to Elliotts requesting them to produce documentation showing proof of ownership of the Disputed Lands. The Elliotts' lawyer replied by letter dated October 3, 2003, stating that the Elliotts had possessory [page714] title to the Disputed Lands. Their lawyer suggested that the offer made by the Elliots to purchase the land was reasonable and confirmed that it was still open for acceptance. This offer was not accepted by the Society.

8The Elliotts then brought their application for a declaration that they owned the land by adverse possession. The Society responded with its counter application.

The Application Judge's Reasoning

9The application judge set out the applicable legal principles. He stated that the foundation for the claim is statutory, resting upon ss. 4 and 15 of the Real Property Limitations Act, R.S.O. 1990, c. L.15, as amended. A person claiming a possessory title must establish the following matters: (a) actual possession for the statutory period of ten years by himself or herself and those through whom he or she claims; and (b) such possession was with the intention of excluding from possession the owner or persons entitled to possession; and (c) discontinuance of possession for the statutory period by the owner and all others, if any, entitled to possession.

[10] The application judge made clear findings of fact and summarized them in a convenient list: (a) Although Mr. and Mrs. Sinclair did not surround the Disputed Lands with fencing, most of which was already in place when they purchased the property in November 1982, by installing the wooden fence and gate at the northwest corner of the Disputed Lands, they effectively enclosed them. (b) By 1987, they had made improvements to Part 1 [of the Disputed Lands] of such a nature that it would appear to any observer to be part of their rear yard and they used it as such. (c) By 1988, they had cleaned up Part 2 [of the Disputed Lands] and made use of it in a variety of ways. . . . (d) During all of this time and until they sold the property, they intended to exclude the true owners, knowing that they were in effect trespassing on the Society's lands. (e) There is absolutely no evidence that the Society in any way entered upon or used the Disputed Lands during the time Mrs. Sinclair owned Lot 12 and made use of Parts 1 and 2, notwithstanding the fact that Mr. and Mrs. Sinclair did nothing to hide what they were doing. [page715] (f) After they purchased the property in June 1999, Mr. and Mrs. Elliott continued to use Part 1 as part of their rear yard and made some further improvements to it. They also made use of Part 2 . . . (g) Mr. and Mrs. Elliott were also aware that the Society was the registered owner of the Disputed Lands and took care "not to allow any person representing the Woodstock Fair Board to enter Parts 1 and 2." (h) During the entire period that Mrs. Sinclair and Mr. and Mrs. Elliott owned Lot 12, up to July 2003 when Mr. Wilson wrote to them, the Society failed to take any steps whatsoever to assert its rights to the Disputed Lands. (i) During this same period, there is no evidence that the Society ever inspected or viewed the Disputed Lands. (j) Although the fence along the southerly border of the Disputed Lands would prevent a representative of the Society from viewing them from the main lands owned by the Society located to the south, this was not the only point from which the Disputed Lands could be viewed. In fact, Mr. Burill admitted he had seen the board fence at the northwest corner of the Disputed Lands "many times."

11The application judge accepted the Elliots' submission that the statutory period had already expired when they offered, in 2003, to buy the property. Therefore, the offer did not constitute an acknowledgment of the Society's title or compromise their claim to possessory title.

12The application judge rejected the Society's argument that the Sinclairs' and the Elliotts' possession of Disputed Lands was not "open" because the Disputed Lands were not visible from the Society's property due to the high fence along the southerly border of the disputed property. He reasoned that the Society "ought not to be able to hide behind the fence it erected along the southern boundary of the property so as to claim that the obvious and unhidden uses made of the property by [the Sinclairs and the Elliotts] were not 'open'".

13The application judge appreciated that the second and third criteria of the test for adverse possession are not met unless the claimants establish, not only actual possession of the land, but also that the legal owners were in fact effectively excluded from its possession. To do this, the claimants must show that their use of the lands was inconsistent with the use the legal owner intended to make of the lands. The application judge recognized that the test of inconsistent use focuses on the intention of the legal owners and not the intention of the claimants.

14The application judge considered the inconsistent use test in relation to the two uses of the Disputed Lands that the Society claim to have. [page716]

15First, the Society claimed to be using the lands as a "buffer". The application judge characterized the Society's evidence as "rather vague" and found that the evidence fell short of establishing that the Society required or used the Disputed Lands as a "buffer zone". In any event, he went on to find that the claimants' uses of the Disputed Lands were inconsistent with the use of the lands as a "buffer zone".

16Second, the Society claimed it was holding the Disputed Lands for future development. The application judge found that the Society could not rely upon retaining the lands for future development to assist its position. He accepted the argument of counsel for the Eliotts that the Society's position was untenable. Counsel had relied upon the observation quoted and approved by this court in Masidon Investments Ltd. v. Ham (1984), 1984 CanLII 1877 (ON CA), 45 O.R. (2d) 563, [1984] O.J. No. 3139 (C.A.), at para. 26; and Teis v. Ancaster (Town) (1997), 1997 CanLII 1688 (ON CA), 35 O.R. (3d) 216, [1997] O.J. No. 3512 (C.A.) that "[I]t is the use being made of the land during the running of the limitation period that is significant, not some independent future use, if one exists, that is different."

17The application judge recognized that as a matter of public policy, courts ought generally to protect the interests of the true owners of property and not to assist trespassers. He observed that the Eliotts and their predecessors in title were trespassers who set out to obtain title to the Disputed Lands knowing full well that the Society held title to them. Nevertheless, he found that the Society did not act reasonably and with due regard to its own interests. He commented, "what happened here is that the Society in effect abandoned the Disputed Lands. It failed to post any signs on the property to dissuade trespassers. It failed to inspect the property at all, although it was open to it to do so quite easily." In conclusion, he found that: (a) The Elliots and their predecessors in title had exercised "open, notorious, peaceful, adverse, exclusive, actual, and continuous" possession of the Disputed Lands from November 1989 to the time of trial; (b) throughout, their possession had been with the intention of excluding the Society from possession of the Disputed Lands; and (c) during the entire period, the Society had discontinued its possession of the Disputed Lands. [page717]

18Accordingly, he declared that the Elliots were the lawful owners of Parts 1 and 2 by virtue of ss. 4 and 15 of the Real Property Limitations Act as amended by 2002, c. 24, Sch. B, s. 26.

Issues

19The Society raised a number of issues, of which I propose to discuss only one. Many of the Society's arguments sought to undermine the application judge's findings of fact. His comment that "[t]here is absolutely no evidence that the Society in any way entered upon [the lands]" and "there is no evidence that the Society ever inspected or reviewed the Disputed Lands" may be overstatement. The president of the Society at the time deposed he went back to the area and all around the grounds. That said, the judge's essential findings were amply supported by the evidence.

20There is no merit in the Society's submission that the application judge erred in law by concluding that the Elliots' offer to purchase did not affect their right to adverse possession because, as he pointed out, it was made after the expiry of the statutory period.

21Nor do I find merit in the Society's contention that the application judge erred in failing to accept the evidence it intended to use the lands as a buffer zone. Whether the Society intended to use the lands as a buffer zone was a question of fact within his purview as the trier of fact. However, I do accept that the application judge erred in law by failing to properly apply the "inconsistent use" test referred to above by refusing to consider the Society's intention of holding the Disputed Lands for future development as the current use during the statutory period.

The Inconsistent Use Test and Lands Held for Future Development

22The application judge held that the Society could not rely upon retaining the Disputed Lands for future development to assist its position. As noted above, he relied on the proposition that it is the intended use of the land during the running of the limitation period that is significant, not some independent future use. A review of the two cases cited in the application judge's decision, Masidon Investments Ltd. v. Ham, supra, and Teis v. Ancaster (Town of), supra, makes clear that the Society could indeed rely on holding the lands for future development.

23In Masidon, the claimant operated an airport consisting of two grass runways on the disputed property. Their construction [page718] required extensive ditching, grading and the addition of dozens of large truckloads of fill. The claimant maintained the runways. He also constructed a small building used as a hangar and parking lots for airplanes and automobiles. The claimant and his family used the balance of the property for recreational and other purposes. He built a dam and driveway capable of supporting heavy trucks. He deposited fill elsewhere on the land, installed some fencing for horses and used wood from the land.

24Nevertheless, this court upheld the decision of the trial judge that the use made of the Disputed Lands by the claimant was not inconsistent with the legal owner's purpose of holding them for future sale. In reaching that conclusion, the court observed, at para. 26:

In this case Carruthers J. had to decide whether he should take into account not only the respondents' use of the property as owners during the period of Ham's possession but also any future use. This could be a question of significance where land is held for development and where, conceivably, acts of the trespasser which did not interfere with the owner's use while the land lay idle might none the less interfere with its future development. He held at p. 547 that "it is the use being made of the land during the running of the limitation period that is significant, not some intended future use, if one exists, that is different".

25In understanding this passage, it is important to remember that the result of the case is premised on the recognition that holding lands for future development is a current use. What this means is that it does not matter that the claimant's use of the lands may be inconsistent with the future development that might eventually take place; the claimant's use of the land must be inconsistent with the legal owner's use during the running of the limitation period. Simply put -- the holding of lands for future development qualifies as a current use during the running of the limitation period.

26Thus, Blair J.A. found that "Carruthers J. was right in limiting his consideration to the use made by the owner during the period of the trespasser's possession and excluding any consideration of future use." He went on to comment on the confusion that was possible, at para. 29:

The source of confusion of use during the trespass with future use is easily explained. Where, as here, the owner makes no active use of the land at all, his user can best be described not in terms of things actually done on the land but rather in terms of the purpose for which he holds it. In many of the cases and in some of the extracts from judgments quoted above the purpose of holding land is described as its "intended use". The words "intended use" in these cases leads to confusion with future use as opposed to actual use during the limitation period. The difficulty is not one of legal doctrine but [page719] rather one of expression. In my opinion, it would be more appropriate in these cases to speak always of the use which the owner made or intended to make of the land in dispute when the trespasser occupied it.

27The result, Blair J.A. observed [at para. 30], has been stated in A Manual of the Law of Real Property, 4th ed. (London: Stevens, 1969), edited by P.V. Baker, at p. 529:

If the owner has little present use for the land, much may be done on it by others without demonstrating a possession inconsistent with the owner's title . . .

It may be wondered why the more limited the use made of land by its owner, the greater is the apparent protection from claims for possessory title. The reason is plain. Whether possession is adverse depends in every case on the circumstances and particularly on the use being made of the land by the owner. As Ormrod L.J. said in the Wallis case, supra, at p. 590:

The same act or acts of trespass may be highly significant to the owner of a house and garden, yet utterly trivial to a property developer or an industrialist who has no immediate use for the land affected.

Blair J.A. added [at para. 30] there is good sense in Baker's conclusion on the same page that:

This seems reasonable since the interests of justice are not served by encouraging litigation to restrain harmless activities merely to preserve legal rights, the enjoyment of which is, for good reason, being deferred.

28Blair J.A. approved of the comment of the trial judge in Masidon that it may very well be the case that this means that possessory title virtually cannot be obtained against "development land" which is in the holding stage. Blair J.A. added, at para. 33:

This result, however, is not surprising because there is no policy reason for concern about the rights of the appellant in this case or, indeed, any trespasser seeking to acquire possessory title to land held for development. The appellant deliberately embarked on a course of conduct which ultimately led to an intention to dispossess the respondents of their property. In my opinion, Justice Carruthers was correct in concluding that the purpose of the Limitations Act was not "to promote the obtaining of possessory title" by a person in the position of the appellant. The policy underlying the Limitations Act was stated by Burton J.A. in Harris v. Mudie (1882), 7 O.A.R. 414, as follows at p. 421:

The rule, as I understand it, has always been to construe the Statutes of Limitations in the very strictest manner where it is shewn that the person invoking their aid is a mere trespasser . . . and such a construction commends itself to one's sense of right. They were never in fact intended as a means of acquiring title, or as an encouragement to dishonest people to enter on the land of others with a view to deprive them of it. [page720]

29In Teis, this court found that the test of inconsistent use does not apply in a case of mutual mistake about title. Laskin J.A. observed that the test of inconsistent use furthered the policy of strengthening the hand of the legal owner in the face of an adverse possession claim by a knowing trespasser. Laskin J.A. noted, however, that that there was little purpose in applying it to claims by persons who honestly, though mistakenly, use land that is not their own. Teis, of course, has no application to this case.

30The respondents' factum included an alternative argument that the "inconsistent use test" ought to be discarded altogether. However, counsel did not press the argument in oral submissions. As the argument was not a live issue in the appeal, I would not request the Chief Justice to order the appeal be reheard by a five-judge panel to consider it.

31In conclusion, I would allow the appeal because the application judge erred in concluding that the Society could not rely on its position that it was holding the lands for future development as a current use during the statutory period. There was some evidence to support that position and I note that the Society sold off the lands purchased by the Sinclairs. I would set aside the judgment of the application judge and the declaration he issued and substitute the declaration the Society sought in its application, namely, that the respondents are trespassing on the lands, that the respondents do not have a claim to the lands by virtue of adverse possession and that the Society may remove the possessions of the respondents on the lands at the cost of the respondents.

32I would fix the appellant's costs on the appeal on a partial indemnity scale in the amount of $15,000 including disbursements and GST, and award it the costs of the application as assessed, if counsel cannot agree.