Court File and Parties

COURT FILE NO.: CV-21-40-0 DATE: 2022/01/10

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Catherine Corkery, Michael Corkery, Sylvia McNamee and Wayne McNamee Applicants

AND

Ronald Moffitt and Karen Moffitt Respondents

BEFORE: Justice A. Doyle

COUNSEL: David Heeley, Counsel for the Plaintiffs Alex Ferguson, Counsel for the Defendants

HEARD: December 7, 2021 in Perth via teleconference

Ruling on an Application

Overview

[1] The applicants, Sylvia and Wayne McNamee, were previous owners of the property currently owned by Catherine and Michael Corkery (“Corkery property”) and the adjacent property owned by Ronald and Karen Moffitt (“Moffitt property”).

[2] As owners, the McNamees built a garage on the Corkery property and unbeknownst to them, the garage encroached on the Moffitt property.

[3] On July 28, 2006, the McNamees sold property to the Moffitts and on August 28, 2006, they sold the adjoining lot to the Corkerys.

[4] Prior to the sales, the parties learned about the encroachment of the garage on the Moffitts’ property. It was agreed that the McNamees would rectify the situation by tearing down that part of the garage that encroached on the Moffitt property. The parties relied on a stake which divided the two lots as the lot line.

[5] The McNamees, the Corkerys and the Moffitts all believed that the garage was no longer encroaching on the Moffitt property.

[6] In 2015, the Corkerys decided to sell their property and a survey showed that the garage still encroached on the Moffitt property. For it to be torn down, it would cost $117,802.50. This would include the demolition of the current garage and rebuilding of another garage on the Corkery property.

[7] The parties agree that the Corkerys are unable to establish an unfettered uninterrupted period of ten years of adverse possession before their property which was held in the Land Registry System was converted into the Land Titles System in 2002. Therefore, the required ten years for adverse possession has not been made out as there are only two years.

[8] The Corkerys submit that the court has jurisdiction under s. 37(1) of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C. 34, (“CLPA”) to declare a lien in favour of the Corkerys on the Moffitt property and/or that the encroached land can be transferred to the Corkerys upon payment of a fair price.

[9] For the reasons that follow, the Corkerys will be entitled to the land that encroaches on the Moffitts’ property upon the Corkerys providing the Moffitts the sum of $18,500.00.

Applicants' Position

[10] Until recently, the parties were unaware that the Corkerys’ garage was encroaching on the Moffitts’ property. All the parties believed that this had been resolved in 2006 when the McNamees sold the two properties.

[11] The Corkerys request an order pursuant to s. 37(2) of the CLPA which would grant them the property owned by Moffitts to the extent that is occupied by their garage that currently encroaches on their land.

[12] The Corkerys estimate that the strip of land in which the garage encroached on which is 1339 square feet ½ of 1% of the 29,600 square feet of the property and indicate is represents ½ of 1% of the total Moffitt property. (However, it is actually 4.5 %.) They estimate the value is $9,000.

Respondents’ Position

[13] The Moffitts request a summary judgment dismissing the application as there is no genuine issue requiring a trial.

[14] The Corkerys are unable to establish adverse possession of the encroached land before the property was transferred to the land titles system.

[15] They submit that since the properties were converted to the Land Titles system, that s. 51 of the Land Titles Act, R.S.O. 1990, c.L.5 prevents the operation of s. 37 of the CLPA.

[16] In addition, s. 37 stipulates that the improvement must increase the value of the encroached property, and this is not the case here. Rather, the encroachment prevents the Moffitts from selling or mortgaging the land or utilizing the boat launch and thereby decreases its value.

Analysis

Summary Judgment

[17] The Court finds that there is no genuine issue requiring trial and that, based on the evidence filed, the Court can make findings by weighing the evidence. Credibility is not an issue as the parties agree on the facts in this case. They disagree on whether the Corkerys have a remedy. The court can on the record, also determine the amount required to transfer the encroached property.

[18] By this summary judgement process, the court can fairly and justly adjudicate the dispute which is timely, affordable and proportionate. A trial of an issue is not necessary.

No finding of Adverse Possession

[19] The Court confirms that the Corkerys are unable to establish adverse possession as its encroachment would have had to have been in existence for at least ten years in the registry system prior to the conversion of the property into the Land Titles system. See: Wigle v. Vanderkruk, 2005 ONSC 25104.

[20] A claim for adverse possession must meet the following criteria: actual possession of the property in issue, they must be an intention to exclude the true owner from possession of his property; and they must effectively exclude the true owner from possession of the property.

[21] In Jamnisek v. The Estate of Gordan A. Wyant, 2021 ONSC 66, the court referred to s. 51 of the Land Titles Act, R.S.O. 1990, c. L.5, which prevents the creation of any new possessory titles through adverse possession on land that has been placed under the Land Titles system but preserves any rights to adverse possession acquired prior to the placement of the land under the Land Titles system. The court referred to McKay v. Vautour, 2020 ONCA 16. In essence, the Land Titles regime does not permit the creation of a possessory title or prescriptive right and creates a statutory bar.

[22] Here the garage on the Corkerys’ property was built in 2000 and the lands were transferred to the Land Titles system in 2002 so that they are unable to establish an “open, notorious, constant, continuous, peaceful and exclusive of the right of the true owner”, for any ten-year period.

Section 37 of the Conveyancing Law of Property Act

Introduction

[23] Section 37(1) of the CLPA reads:

37 (1) Where a person makes lasting improvements on land under the belief that it is the person’s own, the person or the person’s assigns are entitled to a lien upon it to the extent of the amount by which its value is enhanced by the improvements, or are entitled or may be required to retain the land if the Superior Court of Justice is of opinion or requires that this should be done, according as may under all circumstances of the case be most just, making compensation for the land, if retained, as the court directs. R.S.O. 1990, c. C.34, s. 37 (1) ; 2006, c. 19 , Sched. C, s. 1 (1).

[24] First, the party claiming relief must genuinely believe that they owned the land. Second, the improvements must be of a lasting nature. Third, the court must “weigh the equities between the owner and the person making the improvement” to determine whether granting a lien or transfer is appropriate (Ryan In Trust v. Kaukab, 2011 ONSC 6826; McGuire v. Warren, 46 R.P.R. (4th) 113). That is, the claimant bears the burden of showing that the balance of convenience is in their favour or that the “equities preponderate” in their favour within the framework of the statute (Gay v. Wierzbicki, 2 O.R. 211; Noel v. Page (1995) 47 R.P.R. (2d) 116).

Discussion

[25] Section 37(1) requires that the party had an honest belief that the land was their own (Cartwright v. Cartwright, [1922] 63 S.C.R. 401, Noel). There needs to a reasonable basis for this belief and asks whether or not the claimant exercised due diligence (Oro-Medonte (Township) v. Warkentin, 2013 ONSC 1416; Byron v. Hilton Beach (Village), 2000 CarswellOnt 43; Halton Hills (Town) v. Row Estate, 1993 CarswellOnt 3499). The court in Wigle v. Vanderkruk, 2005 ONSC 25104 offers a different opinion on reasonableness. The court notes that the belief does not need to be reasonable but reasonableness is nonetheless considered in the analysis. The court in Noel conducted its analysis on reasonableness within the particular circumstances of the case, noting that while it was reckless for the owner to purchase the property without obtaining a survey, it was also a common practice within the area.

[26] The court has two options under s. 37: it can either provide the claimant a lien or it can order a transfer of property if it is just to do so and compensation will be paid (Palkowski v. Ivancic, 2015 ONSC 7080; Noel).

[27] In both cases, the party seeking either a lien or to retain the property must show that they made lasting improvements on the land at the time they honestly believed they owned the land. The claim to retain is independent of a claim of lien and does not require proof of enhancement of the value of the land (Gay). The claim to a lien, on the other hand, requires showing an enhancement of value (Geldhof v. Bakai (1982)).

[28] A lasting improvement requires an addition that amounts to “more than mere repair or placement of waste.” ‘Lasting’ requires permanence “in the sense of not being easily removable, as is the case with some fixtures” (Gay). As such, additions such as a deck, gravel walk, and fence were found to not qualify as they were deemed to fail the test of being not easily removable (McGuire v. Warren, 46 R.P.R. (4th) 113).

[29] The court considers various factors in addressing whether a claimant is entitled to a lien or to retain property, including:

1. A lack of money spent by the other party on maintenance (Palkowski)
2. The added value that the addition brings to the landowner’s property (Palkowski)
3. The inability of the claimant to simply buy another house that has all their personalized decorations/improvements (Palkowski)
4. The cost incurred and time spent by the claimant to make the improvements while under the belief that the land was theirs (Palkowski; Ryan)
5. The particular identity of the claimant (McGuire; Halton Hills).
6. A lack of taking steps to locate the property line when clear indicators of the property line (ex: surveyor’s iron bars) were present on the property (Meconi v. Crichton (2000), 35 R.P.R. (3d) 12)
7. The claimant’s inaction (ex: inaction when the neighbour sold their property and the new owners erected a fence) (Meconi).
8. The fact that the owners of the neighbouring land maintained their property up to, and not past, the junction that the claimant believed to be the property line (Noel).
9. The significant cost and near impossibility of moving the encroaching structure (Noel).

Case Law

[30] In Cartwright v. Cartwright, [1940] SCR 659 the Supreme Court stated that “[a] person who mistakenly believes that he had concluded an agreement to purchase the land and who acts bona fide is ‘under the belief that the land is his own’.”

[31] In Montreuil v. Ontario Asphalt Co., [1922] 63 S.C.R. 401, the Supreme Court found that because the defendants only had a lease with an option to purchase, they had neither legal nor equitable ownership. Until they gave actual notice of their intention to exercise the option, they merely had a right of election. It is thus impossible to say that they could have believed that the land was their own (at page. 427).

[32] In Zegil v. Opie (1997), 100 O.A.C. 197, the Ontario Court of Appeal stated that it is settled law that a part owner of a property cannot claim the benefit of s.37 (at para. 6).

[33] In Canada Life Assurance Co. v. Kennedy (1978), 21 O.R. (2d) 83, the Ontario Court of Appeal noted that the owner or part owner of a property cannot claim the benefit of s.38 (now section 37) see Hislop v. Joss et al. (1901), 3 O.L.R. 281 at p. 283 but that the statute applies to a person making improvements "under belief that the land is his own" and not to the owner or part-owner of the land. The court quotes from Beaty v. Shaw, [1888] 14 O.A.R. at p. 612-3, where the court asked whether the section applied to the case where the party seeking the remedy owned the land but the land was subject to a mortgage or prior charge of some kind which, from accident or neglect, the party failed to discover before they purchased the land. The court in Beaty found that the section only applies to cases where the party has no interest in the land except that which arises from the fact of their having made improvements on it (at para. 12).

[34] In Palkowski v. Ivancic, 2015 ONSC 7080: the court noted that they have two options under s.37. They can either provide the plaintiffs with a lien for the improvements or order a transfer of the property if it is just to do so subject to compensation being paid (at para. 112). The court considered the fact that the defendant spent no money on maintenance and the fact that but for the expenditures by the plaintiff, the property would be worth much less today (at para. 112). The court also recognized that money spent in expenditures does not translate into a dollar for dollar increase in value (at para. 114). The court found that it was equitable to use its discretion to grant title to the plaintiffs. The court noted that the plaintiffs could not “pick up a house that they have decorated and improved to their own personal style and taste” and also emphasized that they incurred substantial costs (including a great deal of labour which cannot be recovered by a simple economic analysis) (at para. 115). The court found that the fairest answer is to provide for a transfer subject to compensation (at para. 116).

[35] In Oro-Medonte (Township) v. Warkentin, 2013 ONSC 1416, the court noted that an honest or genuine belief “involves not only subjective belief but most importantly it involves proof of some reasonable basis for the belief and whether or not due diligence was exercised by the claimant” (at para. 159).

[36] In Ryan (In Trust) v. Kaukab, 2011 ONSC 6826 the court divided the analysis of s.37 into three parts. First, the party claiming relief must have genuinely believed that he or she owned that land. Second, the improvements must be of a lasting nature. Third, the court must “weigh the equities between the owner and the person making the improvement to determine whether it is appropriate to grant a lien for the value of the improvements or to transfer the land to the person making the improvements” (at para. 217). The court emphasized that only $20,000 worth of work was done before the plaintiffs were served with the motion to set aside the default judgement (at para. 219).

[37] In McGuire v. Warren, 2006, 46 R.P.R. (4th) 113, the court explained the three-part test that must be applied before granting relief under s.37 (at para. 7). Also:

• The court found that the respondent had failed to meet this test as the description on the transfers described the property on a plan and the respondent acknowledged receiving a copy of this reference plan (at para. 8). The plan was an up to date survey which set out the boundaries and depicts structures located on the land (at para. 9).
• The court considered the fact that the respondent owned and managed rental properties in Toronto and was thus familiar with the ownership of property (at para. 10).
• The court noted that while natural objects were used to delineate boundaries in the past, surveys and registered plans are now the norm (at paras. 12-13).
• The court found that the respondent’s failure to obtain a building permit was a deliberate act because they knew that they would not be able to legally construct the improvements (at para. 15); and
• The court found that the improvements of a deck, a gravel walk, and a lattice fence did not qualify as being “long lasting” as they did not meet the test of being permanent structures which are not easily removable (at para. 17).

[38] In Wigle v. Vanderkruk, 2005 ONSC 25104, the court held that the provision of s.37(1) is a shield and not a sword (at para. 87). The party seeking relief must have an honest and bona fide belief that the land is their own. The court states that the belief need not necessarily be reasonable but reasonableness is considered in the analysis (at para. 87). The existence of the belief is a question of fact (at para. 87).

[39] In Byron v. Hilton Beach (Village), 2000 CarswellOnt 43, the court noted that the “belief” in s.37 involves an honest mistake. This requires the court to consider whether or not due diligence was exercised by the purchasers (at para. 6). The court notes that the remedy of forced sale is drastic and should be “only resorted to in the clearest of cases” (at para 7).

[40] In Metzger Estate v. Gardiner (2000), 34 R.P.R. (3d) 79, the court considered the fact that the tenants never raised the issue of their possessory claim until 1991 to conclude that they never believed that the land was their own (at para. 47).

[41] In Meconi v. Crichton (2000), 35 R.P.R. (3d) 12, the court found that the plaintiff did not take any steps to locate the property line. The use of a string between two stakes was used to plant trees in a straight line and had nothing to do with the lot line (at para. 23). An honest belief must be based on fact or logic. The court noted that there was a surveyor’s iron bar near the plaintiff’s house and a stake or iron bar at the rear of the property. As such, the plaintiff could have located the lot line had they made the effort (at para. 24). The court also considered the plaintiff’s inaction when their neighbour sold the lot and when the new owners erected a fence (at para. 27).

[42] In Noel v. Page (1996), 57 A.C.W.S. (3d) 234, the parties owned adjacent cottage property fronting on Lake Nipissing.

[43] The Pages had added a bedroom and a dining room to their cottage; rebuilt the garage to their property and a well not realizing that they were encroaching on their neighbour’s property. The plaintiff, Noel, commenced an action for a mandatory injunction compelling the defendants Pages to remove the portion of the cottage that encroached on their property. The defendants counterclaimed for a declaration that they were entitled to a conveyance of the portion of the plaintiff’s land that they had improved in exchange for proper compensation.

[44] The court held that s. 37(1) of the CLPA allowed the court to hold that where a person made lasting improvements to land under an honest or bona fide belief that the land was his/her own. The court found that the defendants did not know that they were encroaching on the neighbor’s property as they were relying on an old survey that was mistaken in its lot lines. The court held that the plaintiff were entitled to compensation and awarded them compensation for the encroached upon land, damages for reduction in value of his land (15% of the balance of the value of the land) and costs.

[45] The court noted that s.37(1) provides two distinct remedies: a lien to which the encroaching party is entitled when the value of the land has been enhanced, and a right to retain the land (at para. 32). The court found that the defendant was reckless in purchasing the property without obtaining a survey but also notes that several owners in the area also purchased their properties without obtaining a survey (at para 38). The court found that the defendant had an honest belief that the eastern boundary was marked by the tree line. The court notes that the plaintiff maintained their property up to, and not past, the tree line (at para. 39).

[46] In that case, the court noted that it would be expensive and nearly impossible to move the encroaching part without tearing it down (at para. 41) and the balance of convenience was in favour of the defendants (at para. 41). In determining the compensation owed to the plaintiff, the court considered the injurious effect to the value of the land retained (at paras. 46-49).

[47] In Smith v. Municipal Savings & Loan Corp, 1994 CarswellOnt 7048, the court found that the lien rights “are limited to those rights only, and do not give the court the power to order payment or sale” (at para. 2).

[48] In Halton Hills (Town) v. Row Estate, 1993 CarswellOnt 3499, the court noted that according to Gay v. Wierzbicki, the word “belief” has been construed to be an “honest” belief. The court added that “honest” belief “must be construed as not merely being a belief held in good faith but also on a reasonable bases”. The court emphasized that there needs to be an element of objectivity in the grounds for the claimant’s belief (at para. 44).

[49] The court concluded that a lien claimant should only succeed if their belief, while in good faith, is regarded by a reasonable person having regard to the particular circumstances as being irrational (at para. 45). The court concludes that the claimant should not succeed. The court found that the claimant, being a municipal corporation, acted unreasonably by not conducting a title search (at para. 46).

[50] In Geldhof v. Bakai (1982), 139 D.L.R. (3d) 527, the court noted that where the claimant seeks a lien, they bear the onus of establishing by way of satisfactory evidence: (1) lasting improvements; (2) belief that the land is their own; and (3) an amount by which the value of the land is enhanced (at para. 7). The plaintiff acknowledged that they did not believe that they owned the property until the transaction was closed. The court noted that a belief in eventual ownership is insufficient. (at para. 8).

[51] In Marchand v. Wilson, 1989 CarswellOnt 3276, the court found that clearing a site and building a cottage constitutes lasting improvements (at para. 21). The court noted that in “giving effect to the equitable nature of the remedy by Sec. 37(1) of CLPA, the court is obliged to act fairly toward the parties and identify the lands to be conveyed on a basis as consistent as possible with reasonableness, logic, and practicality” (at para. 25).

[52] In Montreuil v. The Ontario Asphalt Co. (1922), 2 (S.C.C.), where the court held that s. 37 was not available to the lessee of the land. However, the lessee could obtain compensation for his improvements to the extent that they enhanced the value of the land by building a dock. His mistake that he believed the lessor owned the land was a mistake that could invoke the equitable doctrine.

[53] The Supreme Court referred to Ramsden v. Dyson, [1866] L.R.I.H.L. 129, and Pimmer v Mayor, [1884] 9 App. Cas. 699, where the courts of Equity acted to protect parties making improvements under the belief they have an interest in the property. CLPA s.37 was development as from the courts of equity. It referred to Gummerson v. Banting this was enacted to avoid and avert possible injustice to these individuals.

[54] The premise of equity principles is set out in Pimmer v. Mayor where equity arises due to an expenditure of land even though there is no interest in the land. “The general aim of a court applying principles of equity is to look at the circumstances in each case to decide in what way the equity can be satisfied”.

[55] In Bright v. Boyd, Case No. 1876, Circuit Court held:

A bona fide purchaser, for a valuable consideration, without notice of any defect in his title, who makes improvements and meliorations upon the estate, has a lien or charge upon the estate for the increased value, which is thereby given to the estate beyond its value without them, and a court of equity will enforce the lien or charge against the true owner, who recovers the estate in a suit at law against the purchaser.

[56] In Gay v. Wierzbicki, 1967 CarswellOnt 99 (C.A.), the Ontario Court of Appeal dealt with the interpretation of s. 37(1). The Court of Appeal found that the provision for permitting or requiring retention of the land is independent rather than derivative and does not require establishment of the basis for a lien.

[57] That is, while it must be shown that the person has made lasting improvements under a bona fide mistake as to title, it need not be shown that the value of the land has been enhanced.

[58] In Gay v. Wierzbicki, the plaintiff had built a barn straddling the line between his own and defendant's property. The Court of Appeal in allowing the appeal, found that the barn was a lasting improvement and even if it lead to a detraction rather than an enhancement of the value of defendant's land, a "forced sale" under the section can be ordered.

[59] Laskin J.A. analysis of the section is reproduced below:

There is no doubt that whether a lien be claimed or it is sought to retain the land mistakenly improved, the claimant must show that he has made "lasting improvements" on land which at the time he honestly believed was his own. The difficult question is whether the claim to retain (as a species of private expropriation) has independent status or is merely derivative, requiring proof of the elements (which include enhancement of value) that would found a claim of lien. The trial Judge, in taking the derivative view, purported to follow the judgment of this Court in Bilecki v. Weber, [1942] O.R. 161, at p. 164, [1942] 2 D.L.R. 210, at p. 213, where McTague, J.A., for the Court said that: "What is bestowed by the second part of the section is simply an ancillary power in the Court to deal in a certain way with the statutory lien given by the first part, and not an absolute right to this plaintiff." I may note that the same view, although not elaborated, appears to have been taken of an identical provision in Manitoba in Mohl v. Senft, (1957), 6 D.L.R. (2d) 32 at p. 42, 63 Man. R. 492, 19 W.W.R. 481. Since the plaintiff in Belecki v. Weber had deliberately gone ahead with construction despite notice that she was encroaching on the defendant's land, her claim failed, and it was unnecessary for the court to deal with the question that now faces the present court squarely.

I hold the view that the second part of s. 38(1) provides a discretionary alternative which is independent of the claim of lien, and hence does not require proof of enhancement of value of the land mistakenly built upon. (italics added) Certainly, in most cases, a claimant's "lasting improvements" would enhance value; but the fact that in a particular case there may be no enhancement of value but rather a detriment (as was said to be the case in Derro v. Dube and Boulet, [1948] O.W.N. 287, [1948] 2 D.L.R. 296), would be a factor to be considered by the Court in deciding whether to apply the second part of s. 38(1). The court's discretion arises upon proof only that lasting improvements were made in the honest but mistaken belief already referred to. It seems to me that both history and grammar support the construction I would put upon s. 38(1). As to case law, I cannot put much emphasis on the general observation of Osler, J.A., in Beaty v. Shaw (1888), 14 O.A.R. 600 at p. 612, referring to "the relief afforded by the Act, namely, giving such person a lien upon the land, or entitling or requiring him to retain it, making compensation as the court may direct". More cogent is the judgment of the Ontario Divisional Court in Ward v. Sanderson (1912), 3 O.W.N. 802, 1 D.L.R. 356, where relief was granted under the second part of what is now s. 38(1). Middleton, J., for the Court read the statute there as I would read it here, using the following words [p. 803 O.W.N., p. 357 D.L.R.].

The statute provides that, "where a person makes lasting improvements on land under the belief that the land is his own," the court may direct the person to retain the land, making compensation therefor, if, in the opinion of the court, this is just.

The derivative or dependent reading contended for by the defendant would require the introduction into the enactment of words which are not there. I refer, for example, to such words as "in addition to or in substitution for", found in s. 18 of the Judicature Act, R.S.O. 1960, c. 197, dealing with the power of the Court to award damages where an application is made for an injunction or for specific performance; there, clearly, the right to damages is derivative.

The discretion of the Court to allow the honestly mistaken person to retain the land on paying compensation is not one that is to be lightly exercised. I would hold that the claimant must show that the balance of convenience is decidedly in his favour before he is permitted to retain another's land, or, that the equities preponderate in his favour within the framework of the statute.

Application of s. 37 to this case

[60] For the reasons that follow, I exercise my discretion in entitling the Corkerys to retain the land where the encroaching garage sits on because I find that:

1. The Corkerys were under a bona fide belief that the garage was on their own property and in fact, the parties had arranged for the McNamees to rectify the encroachment before the transfers to the properties to the Corkerys and Moffitts;
2. The garage is a “lasting improvement” as it is of some permanence and not easily removable as demonstrated by the cost quoted for its removal; and

[61] The Moffitts have not refuted the evidence filed by the Corkerys that their access for boat launch will be impeded by the existence of the garage. The Moffitts submit that if the land encroached on is transferred they would lose their ability to launch their boats but based on the record before me, I find that this is not the case.

[62] The evidence does not indicate that encroaching garage denies the Moffitts access to the waterfront for a boat launch. From 2006 to 2015 when the issue was raised, they have been owners of the property and the evidence indicates that they have been launching their boat at another site.

[63] Also, the court has had the benefit of photos filed by the Corkerys on the motion and notes the following:

1. Photo filed show an overhead shot of the two properties and encroachment and the photographs of the access to the property. The photo shows a trailer, a white truck and two black trailers next to the encroaching garage. The land beside the garage is used for storage These items it is alleged have been sitting there for years. The McNamees have a cottage down the same road as the Moffitts launch their boat annually at the public dock which is less than 200 feet from the Moffitt property.
2. If the Moffitts move the trailers, and truck there would be room for them to launch their boat.

[64] Also, they have not proffered evidence that they are precluded from obtaining a mortgage due to this encroaching garage.

[65] As stated in Gay v. Wierzbicki, the court’s discretion to allow the Corkerys to retain the land on paying compensation is not one that is to be lightly exercised.

[66] In conclusion, I find that the Corkerys have shown that the balance of convenience is in their favour or that the equities preponderate in their favour within the framework of the statute.

[67] As stated by Laskin J.A. in Gay, the court has the discretion to allow the honestly mistaken person to retain the land on paying compensation but this is not to be lightly exercised.

[68] I find that the Corkerys have shown that the balance of convenience is in their favour to permit the encroached land to be retained by them and that the equities preponderate in the favour within the framework of the CLPA because:

• This garage has been encroaching on the property since 2000;
• The Moffitts bought the property in 2006 thinking that it was not encroaching and were utilizing their property without objection until 2015 when a new survey was conducted as the Corkerys were selling their property;
• The Moffitts will have access to the waterfront if they remove the trailers;
• They have been using the public dock which is less than 200 feet from their house;
• This is a case of mistake as to title and no one is at fault as the parties relied on the stake which divided the 2 lots on the lot line;
• That space surrounding the encroached property is being used for storage; and
• There is no prejudice shown by the Moffitts as there was no evidence filed that shows that their property will be devalued if the land is transferred to the Corkerys.

What is the Value of the Encroached Land?

[69] Regarding the value of the strip of encroached land, the Court has the following evidence and submissions:

1. Paul A. Martin, a qualified market value appraiser, rendered an opinion letter that the encroachment is valued at $5000 and he states: “Certainly this is unique property to value, in respect to the size (approx. 1200 square feet). Personal inspection of the site also leads me to believe that there are no life style, visual or potential access or entry implications to either property”.
2. The Corkerys submit calculations as follows: 29,620 square fee and the encroachment is 1339 square feet, which represents less than ½ of 1% of the property (it is actually 4.5%). Exhibit G to the affidavit of the McNamees dated April 27, 2021 is the Rivington appraisal which used three comparables to value the encroachment: $2.40 square foot, 5.07 per square foot and $13.85 per square foot. Extrapolating the amount of 1339 square feet equals: $2.40 = $3213 $5.07 = $6788 and $13.85 = $18,500. The average of the three comparable is $9355.

[70] The Moffitts submit that the property is valued at $18,500 based on their appraisal (“Rivington appraisal”).

[71] I accept the Rivington valuation prepared by Colleen Hall-Clark as opposed to the “opinion of value” of Paul Martin of Caldwell Bank dated January 18, 2019 as the latter is not a full narrative appraisal.

[72] The Rivington appraisal is detailed, descriptive, comprehensive and is an opinion of the value of the encroached land. The purpose of the report is set out on page 1 of the report dated November 9, 2018 is “to estimate the current market value of a lot addition”.

[73] The intended use is to “relied upon for selling purpose only of the lot addition: The value is as of October 29, 2018.

[74] Neither party filed an updated report regarding today’s value and hence the court is relying on the reports as filed.

[75] The Rivington appraisal completed extensive research and analysis to prepare the report in accordance with the standards as set out by the Canadian Uniform Standards of Professional Practice of the Appraisal Institute of Canada. The report included extraordinary assumptions and limiting conditions, narrative, photographs, maps and scope of the work. It also included an attendance and inspection at the property by the appraiser and a discussion with the owner. (see page 1 of the addendum) Also market data was used from the file collected in the office, local real estate offices, other appraisers (within their office) MPAC and GeoWarehouse or persons knowledgeable of the subject property market place. A title search was not performed.

[76] The Rivington appraisal meets the opinion evidence requirements as set out in White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 SCR 182. There, the court set out a comprehensive framework for the admissibility of expert evidence.

[77] I find that the Rivington appraisal meets the threshold requirements of admissibility with respect to relevance, necessity and there is an absence of an exclusionary rule. The report was completed by a properly qualified expert. There is a benefit of admitting the evidence that overcome any risks.

[78] The Rivington report page two indicated that the existing use is a single family residential and that the “highest and best use is that use which at the time of the appraisal is most likely to produce the greatest net return in terms of money or amenities over a given period of time. Estimated value is based upon utilizing the appropriate land valuation methodology or procedure for the property type.”

[79] Comparables included properties in Perth and Rideau Lakes Twp.

[80] The Rivington appraisal indicates that: “the listed comparable are the most recent and similar sales of vacant waterfront lots located on Lower and Big Rideau Lakes. No adjustments were applied for time as the market has stabilized for the time frame involved. Sale #1 is located on Big Rideau Lake and has a larger overall lot near the Hamlet of Rideau Ferry. Sale #2 is also located near the Hamlet of Rideau Ferry and has a much larger lot on Big Rideau Lake. Sale #3 is located on the Village of Portland and has a small, although larger than the subject lot improved with a wet boat house and a 2 car detached garage.”

[81] Page 1 states that the purpose of the report is “to estimate market value as if severed with 1339.04 Sq. Ft. (124.4 Sq.M.)” for selling purposes.

[82] Comments at the bottom of page one include the following:

The subject currently forms part of the property located at 219 Rideau street which is a .68 acre (29620.80 sq. ft) waterfront lot with a reported 170’ of frontage along Lower Rideau Lake. For the purposes of this report the subject lot will be a lot addition what will be 1339.04 Sq. Ft. (1244 Sq. M) in size which will be triangular in shape and will be severed from the existing lot. The proposed site is currently improved with an encroachment from the neighboring garage. For the purposes of this report the site is not serviced although each of the neighboring residences are serviced with hydro, a well and septic system.

[83] At page three regarding “reconciliation and final estimate of value” the report indicates the following:

….Therefore a market value in the upper portion of the range is considered reasonable at $13.85 Sq. Ft. which when applied to the subject’s overall site size of 1339.04 Sq. Ft. equates to a Market Value of $18,545.70 as of the date of inspection rounded to $18,500.

[84] It is noted that the request from the Moffitts is ‘the market value stated herein is based on hypothetical lot size 1339.04 Sq. Ft. which is the proposed lot addition. This is considered to be a hypothetical value estimate as the lot has not yet been surveyed or severed. This is an extraordinary assumption and a limiting condition of this appraisal.

[85] The Caldwell letter does not meet the criteria of an expert report. It does not have the hallmarks set out in White Burgess.

[86] In conclusion, I calculate that the encroached property represents 4.52% of the Moffitts property and as of October 29, 2018 the value is estimated at $18,500.

Conclusion

[87] Accordingly, the Court grants the encroached land to the Corkerys upon payment of the amount of $18,500 to the Moffitts.

[88] If there are issues dealing with the registration of the encroached land or any other issues including description, the parties may return before me by setting a date through the trial coordinator.

[89] The parties are encouraged to resolve the issue of costs. If they cannot agree, then the Moffitts may file their two page costs submissions, along with any offers to settle and bill of costs on or before January 24, 2022. The Applicants may file their two page costs submissions along with any offers to settle and bill of costs on or before February 7, 2022. The Moffitts may file a one-page reply by February 15, 2022.

Justice A. Doyle Date: January 10, 2022

COURT FILE NO.: CV-21-40-0 DATE: 2022/01/10 ONTARIO SUPERIOR COURT OF JUSTICE RE: Catherine Corkery, Michael Corkery, Sylvia McNamee and Wayne McNamee Applicants AND Ronald Moffitt and Karen Moffitt Respondents Ruling on an Application Doyle J. Released: January 10, 2022