CITATION: Bellini Custom Cabinets v. Delight Textiles Limited, 2007 ONCA 413
DATE: 20070605
DOCKET: C44293
COURT OF APPEAL FOR ONTARIO
LASKIN, BORINS and FELDMAN JJ.A.
BETWEEN:
BELLINI CUSTOM CABINETS
Plaintiff (Respondent)
and
DELIGHT TEXTILES LIMITED AND 301094 ONTARIO LIMITED
Defendants (Appellants)
Nicholas C. Tibollo and Stephen Barbier for the plaintiff, respondent
Leonard F. Marsello and Matthew Sokolsky for the defendants, appellants
Heard: December 14, 2006
On appeal from the judgment of Justice Gloria R. Klowak of the Superior Court of Justice, dated August 22, 2005, with reasons reported at [2005] O.J. No. 3687.
FELDMAN J.A.:
[1] The parties are commercial neighbours in Toronto. Because of a difference in the elevations of their two properties, the appellants’ predecessor in title built a retaining wall between the properties. Unfortunately, the retaining wall encroached on the respondent’s adjacent property at the bottom and leaned over that property even farther at the top. As a result, in the early 1970s the respondent’s predecessor in title sued the appellants’ predecessor for an injunction to remove the encroachment and for damages. That action was settled by the 1973 settlement agreement, which allowed the encroachment to remain so long as there was no further encroachment, in which event the consent would be rescinded.
[2] The current action arose between the new owners because there was further encroachment by the appellants’ wall that impeded the respondent’s use of its property, and the parties were unable to resolve the problem. The respondent sued for trespass and nuisance seeking removal of the encroachment and damages. The appellant defended on the basis that any further encroachment was de minimus and was waived, and counterclaimed for an order declaring that it had acquired title to the encroachment by adverse possession.
[3] The trial judge found that the consent to the encroachment contained in the 1973 settlement agreement was rescinded under the terms of the agreement by the respondent because of the significant further encroachment by the appellant’s wall over the years. As a result, she held that the wall constituted a trespass. The trial judge granted a mandatory injunction requiring the removal of the wall. The counterclaim for adverse possession was dismissed.
[4] For the following reasons, I would dismiss the appeal.
Factual Background
[5] The parties own adjacent commercial properties in the City of Toronto. The appellants purchased their property in 1984. The respondent purchased its property in 1998. When the appellants purchased their property from the liquidator of Imperial General Properties Limited, the agreement of purchase and sale contained the following acknowledgement:
2(g) The purchaser acknowledges the title is subject to an agreement dated November 15, 1973 between Imperial General Properties Limited and Harg Developments Limited and registered in the Registry Division of Toronto Boroughs and York South (No. 64) as NY 656131. The purchaser agrees to assume the responsibility of the Vendor as set out in the agreement, a copy of which is hereto attached as Schedule “B”.
[6] The agreement, dated November 15, 1973, was a settlement agreement entered into between the predecessor in title of the appellants, Imperial, and the predecessor of the respondent, Harg. Because the elevation of the two adjacent properties was not the same, Imperial had constructed a retaining wall between them.[^1] The wall is about 260 feet long. When Harg had a survey done in 1971 and discovered that the wall encroached on its property, it sued Imperial for an injunction requiring Imperial to remove the encroachment. According to the 1971 survey, the wall encroached over the property line both at its foot and at its top, but to different degrees. Based on that survey, the trial judge found that in 1971, at the foot of the wall, the encroachment extended from 2 1/2 inches at one end to 4 1/2 inches at the other end, and at the top of the wall, the encroachment measured from 4 1/2 inches to 5 3/4 inches. Based on these findings, the trial judge concluded that the entire wall encroached on the respondent’s property.
[7] Imperial and Harg settled their action by entering into the 1973 agreement. That agreement contained the following eight clauses:
Harg consents to the said encroachment of the retaining wall upon the Harg Lands shown on the survey annexed hereto as Schedule “C” and agrees to permit the said encroachment to remain in its present position.
Imperial agrees to use its best efforts to grade and pave at its expense and in a good and workmanlike manner on or before December 15, 1973, and in any event no later than June 15, 1974, the area between Harg’s building and the retaining wall and the area extending immediately to the east along the retaining wall to the front of Harg’s Lands.
Imperial agrees that the pavement referred to in paragraph 2 hereof will be laid in such a manner that there will be natural drainage from the south-west corner of Harg’s building toward the street with the exception of the apparent drainage problem that exists at the rear of Harg’s Lands.
Harg and Imperial agree that in the event of any further encroachment, Harg’s consent as set out herein shall be rescinded.
Harg and Imperial further agree that if the retaining wall is replaced, Harg’s consent as set out herein shall not apply to any replacement wall.
Imperial agrees to construct on its property within 60 days a fence or barrier to prevent parked cars from over-hanging the retaining wall and interfering with Harg’s traffic flow.
Harg and Imperial agree that a survey shall be made of the retaining wall every three years and the costs of the survey shall be divided equally between Harg and Imperial.
Harg and Imperial consent to a dismissal without costs of the action commenced by Harg in the County Court of the Judicial District of York by Writ No. 3388/73.
[8] Although paragraph 7 called for a survey of the wall every three years, the original parties obtained only one survey. That survey, made in 1978, showed that the top of the wall had continued to move and at that point the increased encroachment varied from 2 1/2 inches to 1/8 inch.
[9] The appellants purchased the Imperial property in 1984. The respondent purchased the Harg property in 1998. As part of the closing documentation, the respondent obtained a sworn declaration from Harg which included a paragraph dealing with the status of the 1973 agreement, and which stated that the agreement was “still in full force and effect” and that all of its terms had been complied with, except for the requirement to obtain a survey every three years. Mr. Goldstein, on behalf of Harg, testified at the trial that when he swore the declaration, he believed that the wall had not moved since 1971, and that the encroachment was still valid. He also stated that the owner had never given up its interest in the land.
[10] Shortly after the respondent purchased its property, the principal of the company, Mr. Doria, advised the appellants that the retaining wall had moved and encroached further onto his property and, as a result, he was unable to access the back of his building except with small vehicles. As the respondent needed to use large vehicles for deliveries and shipments, Mr. Doria asked the appellants for access to the back of its building by a route over the appellants’ property. The appellants agreed to look into it, but then never responded.
[11] The appellants did, however, obtain another survey, which is dated April 1, 1998 and shows continuing movement of the wall. The trial judge found that the appellants did not disclose this survey to the respondent; instead, their representative, Mr. Sliwin, advised Mr. Doria in May 1998 that there was no evidence that the wall had moved. The respondent brought this action in February 1999. Prior to the trial in August 2004, each side had further surveys taken. The trial judge found that in the area between the wall and the respondent’s building, the encroachment had increased from the 1971 measurement of 4 inches at the west corner of the respondent’s building to 12 3/4 inches, and at the east corner from 5 3/4 inches to 8 1/2 inches. She concluded that in the area between the respondent’s building and the wall, the entire top of the wall, which was 8 inches in width, was “now probably situate entirely over the [respondent’s] property”.
[12] After the commencement of the action, the appellants erected a wooden fence along the top of the wall. Mr. Sliwin testified that he built the fence after receiving an anonymous phone call, complaining about rubbish being blown over the wall. He further testified that he informed the respondent before erecting the fence. The trial judge disbelieved Mr. Sliwin and accepted Mr. Doria’s evidence that he knew nothing about the fence until it was constructed.
[13] Both parties provided the court with expert engineering evidence regarding the structural integrity of the wall. The trial judge found that the appellants’ expert essentially confirmed the respondent’s expert’s concern regarding the integrity of the wall. The opinion of the respondent’s expert was that the wall was in very poor condition and required replacement. It failed to retain forces such as the lateral pressure of the earth, loads from parked vehicles above it on the appellants’ property, and most recently, pressure from the force of the wind against the newly-erected wooden fence.
[14] Both experts also agreed that the east end of the wall had been reinforced with steel tie rod anchors in order to stabilize its movement. The appellants’ expert said that the rear 60 feet of the wall had no significant structural defects, but he agreed that it was possible that 10 metres of the wall where it creates the laneway between it and the respondent’s building would have to be replaced. The trial judge observed that the main difference between the two experts was that Mr. Snowden, the appellants’ expert, said that in order to determine with absolute certainty whether the wall was failing, excavation on the appellants’ side was required. However, the trial judge found that the appellants had been uncooperative in allowing any such testing, and noted that the respondent was not required to prove its case categorically but only on a balance of probabilities.
[15] In its amended statement of claim the respondent sought: (1) a declaration that the appellants’ wall and the fence on top of it constituted an encroachment, a trespass or a nuisance; (2) a mandatory order requiring the appellants to remove and replace the wall on the boundary line between the properties and effect all necessary repairs to the respondent’s property; (3) damages; and (4) if necessary, relief from forfeiture because of the non-compliance with s. 7 of the 1973 agreement that required surveys of the wall every three years.
[16] The appellants pleaded in defence that the respondent was precluded from enforcing its rights under the 1973 agreement by reason of estoppel, acquiescence or because the agreement was non-binding, and that any damages the respondent claimed to have suffered were de minimus. The appellants also counterclaimed for a declaration that since 1973, they and their predecessor had obtained title to the encroached property by adverse possession.
[17] At the trial, the respondent argued its case based on trespass and abandoned the claim in nuisance at the beginning of its closing argument.
The Findings of the Trial Judge
[18] The trial judge made the following findings of fact and conclusions of law:
• The extent of the original encroachment was significant.
• The respondent established on a balance of probabilities, based on the surveys taken over the years, that there was a progressive leaning of the wall constituting a further substantial encroachment.
• If the 1973 agreement ran with the land, the consent of the true owner to the original encroachment was rescinded due to the further encroachment. If that agreement was merely personal, then the consent given by the respondent’s predecessor did not bind the respondent. In either case, the original encroachment now constituted a trespass.
• The counterclaim for adverse possession of the entire encroachment failed because there was no intention by the appellants and their predecessor to exclude the true owner. Rather, their possession of the original encroached area was with the express consent of the true owner under the 1973 agreement.
• In addition, the fact that the 1973 agreement provided that the possession of the encroached area was subject to rescission of the consent of the true owner in the event of further encroachment, was inconsistent with an intent to exclude the true owner from possession.
• A trespass is a direct, unjustifiable interference with possession. Both the original encroachment and the further encroachment constitute trespass.
• The wall as originally constructed encroached on the respondent’s property. The wall was negligently constructed so that it was not able to withstand normal forces. The wall was deliberately subjected to extra pressures by the appellants including the parking of cars on top of it and the construction of the wooden fence in 2003 at the edge of the wall that was subject to the pressure of the wind against it. These situations were intentionally created by the appellants and directly contributed to the movement of the wall.
• These actions caused direct injury to the respondent. The impact on the respondent’s land, by continuing to diminish its access to the rear of the property, is significant.
[19] The trial judge rejected the argument that the encroachment did not constitute a trespass but only a nuisance based on the theory that the encroachment was unintentional and that any interference with the respondent’s property rights was the indirect consequence of the effect of natural forces. She held that the proper remedy was a mandatory injunction to take down the wall because the encroachment is not trifling, and is permanent and continuing in nature.
Issues
[20] The following issues arise on this appeal:
(1) Did the trial judge err by finding a trespass rather than nuisance?
(2) If the trial judge was correct that the actions of the appellants amounted to trespass, did she then err by not finding adverse possession?
(3) Did the trial judge err by awarding the remedy of a mandatory injunction?
(4) Did the trial judge err by awarding costs in the amount of $225,000?
Analysis
(1) Did the trial judge err by finding trespass rather than nuisance?
[21] The appellants submit that the trial judge erred in law when she found that this case was not governed by the 1959 New Brunswick Court of Appeal decision in Mann v. Saulnier (1959), 19 D.L.R. (2d) 130. That court set out the law at pp. 132-133 as follows:
Trespass to land is the act of entering upon land, in the possession of another, or placing or throwing or erecting some material object thereon without the legal right to do so. In Salmond on Torts, 12the ed. Pp. 160-1, there is the following statement:
In such cases, in order to be actionable as a trespass, the injury must be direct, within the meaning of the distinction between direct and consequential injuries…It is a trespass, and therefore actionable per se, directly to place material objects upon another’s land; it is not a trespass, but at the most a nuisance or other wrong actionable only on proof of damage, to do an act which consequentially results in the entry of such objects. To throw stones upon one’s neighbour’s premises is the wrong of trespass; to allow stones from a ruinous chimney to fall upon those premises is the wrong of nuisance.
In Lemmon v. Webb, [1894] 3 Ch. 1, Kay L.J. said:
The encroachment of the boughs and roots over and within the land of the adjoining owner is not a trespass or occupation of that land which by lapse of time could become a right. It is a nuisance.
[22] In Mann, the defendant erected a fence adjacent to the dividing line between its property and that of the plaintiff. The fence was erected completely on the defendant’s property by competent workmen, and when completed, the evidence was that it was “straight as a die”. The complaint arose because three years later, the plaintiff’s land surveyor noted that the top of the fence was no longer straight or upright, but rather leaned over the plaintiff’s property to the extent of 1 3/4 inches to 3 3/4 inches. The change was caused by frost or snow that had fallen from nearby buildings. There was no evidence of any negligence in the construction of the fence.
[23] In that case, the court found that the leaning of the fence was not a direct but rather a consequential injury. It therefore did not constitute a trespass, but only a nuisance.
[24] The trial judge concluded that the further encroachment by the wall resulted in a trespass on two separate bases. First, the original encroachment was a wrongful trespass, which was allowed to continue on the terms included in the 1973 settlement agreement until the respondent identified the extended encroachment and brought this action. The further encroachment by the wall revived the original trespass under the terms of the agreement. Second, the further encroachment was itself a trespass caused by the actions of the appellants, and could not be said to be indirect or consequential as in the Mann case.
[25] The appellants submit in their factum that any movement of the wall “was not caused by the deliberate conduct of the appellants”. The trial judge found, based on the evidence of the two expert engineers, that unlike in the Mann case, the wall in this case was negligently constructed. The defence expert testified that he would only expect about a three inch movement of this wall to be natural or normal. In this case, the movement was between three and eight inches at the point where the wall forms a laneway with the respondent’s building. The trial judge concluded that if only about three inches is normal or natural, then “the defence can hardly argue inevitable accident.” The trial judge also relied on the evidence of both experts that the wall is subject to forces such as parking cars on the appellants’ parking lot on top of the wall, and the wind pressure against the fence that Mr. Sliwin erected on top of the wall in 2003. She found that both these situations were deliberately created by the appellants and that they directly contributed to the movement of the wall. In other words, the further encroachment was not an unintended or consequential result of building the wall, caused merely by natural forces. Nor was it like failing to repair a ruinous chimney with the consequence that stones fall from it onto the neighbour’s property. The encroachment or the conditions that allowed the encroachment were caused by the deliberate actions of the appellants and caused a direct injury within the meaning described in the quote from Salmond on Torts.
[26] To summarize on this issue, the trial judge found that the original encroachment constituted a trespass. The 1973 settlement agreement gave the appellants’ predecessors, and then the appellants, permission to encroach as long as there was no further encroachment. On the evidence, neither party believed there was any further encroachment until the respondent purchased the property and had trouble driving its trucks between its building and the retaining wall to obtain access to the rear of its building. The respondent withdrew permission to encroach, based on the increased encroachment of the wall, when the appellants would not accommodate its trucks.
[27] Once the consent to the encroachment was withdrawn, the original trespass became actionable in accordance with the 1973 agreement and the law. In Gross v. Wright, [1923] S.C.R. 214, the parties entered into an agreement for the construction of a party wall. The defendant breached the agreement by deliberately building his side of the wall thinner than the plaintiff’s side, causing the entire wall to shift and encroach further than agreed on the plaintiff’s side. The Supreme Court found that the defendant was liable not only for breach of contract, but for trespass. Duff J. stated at p. 224:
The moment [the defendant] began to reduce the thickness of the wall on his own side of the line while maintaining unreduced its thickness on the other side he became a trespasser. He became a trespasser because having authority to enter upon his neighbour’s property for a certain purpose he was using it for another purpose for which he was not authorized to enter.
[28] In this case, this finding of trespass by the original encroachment was sufficient to entitle the respondent to a mandatory injunction to remove the encroachment, again in accordance with the agreement as well as with the law.
[29] However, the trial judge found that the further encroachment also constituted trespass. It was not caused by natural forces, but by the actions of the appellants and their predecessors, who constructed the fence partially over the respondent’s property and in a negligent manner, and who put extra pressure on the defectively constructed wall by parking cars on top and building a fence which was subject to the pressure of the blowing wind. That extra encroachment therefore caused a direct as opposed to a consequential injury.
[30] On the appeal, the appellants challenged the finding that the extra encroachment constituted trespass and not nuisance. That second finding of trespass was unnecessary as the basis for the remedy imposed by the trial judge. It was sufficient for the trial judge to make the finding of trespass based on the rescission of the conditional consent contained in the 1973 agreement. As it is not necessary for this court to decide that legal issue for the purposes of this appeal, I would not do so.
(2) Did the trial judge err by not finding adverse possession?
[31] The appellants submit that if the encroachment does constitute a trespass, that trespass has existed since 1978 when the parties obtained a survey that showed some further encroachment. The appellants say that the further encroachment had the effect of rescinding the consent. Since then, the encroachment constituted a trespass that matured into prescriptive title.
[32] The trial judge rejected this argument. The test for possessory title has three necessary components:
• Actual possession throughout the statutory period;
• The intention to exclude the true owner from the possession or use to which it intended to put the land throughout the statutory period;
• Effective exclusion of the true owner throughout the statutory period.
See Keefer v. Arillotta (1977), 13 O.R. (2d) 680 (C.A.); Pflug and Pflug v. Collins, [1952] O.R. 519 (Sup. Ct.); Masidon Investments Limited v. Ham (1984), 45 O.R. (2d) 563 (C.A.); Tramonti v. Lombardi, [1992] O.J. No. 2784 (Gen. Div.).
[33] The trial judge found that the claim for adverse possession failed on the second ground: there was no intention on the part of the appellants or their predecessors to exclude the true owner. The original encroachment was allowed to remain with the consent of the true owner in accordance with the 1973 settlement agreement. The agreement provided that if there was further encroachment, the consent “shall be rescinded”. Although the 1978 survey showed some further encroachment, it was minimal. It was clear from the actions of the parties that neither considered the consent to be rescinded.
[34] When the appellants purchased the property from Imperial in 1984, they undertook to Imperial that they would be bound by the 1973 agreement, indicating that they understood that the encroachment by the wall was there with revocable consent. Furthermore, when confronted by Mr. Doria about the condition of the wall in 1998, Mr. Sliwin took the position that there was no further encroachment by the wall, not that there was and that he had obtained title to the encroached area by adverse possession.
[35] The trial judge referred to the following passage from A.H. Oosterhoff and W.B. Rayner, Anger and Honsberger Law of Real Property, 2d ed., vol. 2 (Aurora: Canada Law Book, 1985) at s. 3106.4:
Although adverse possession in the old sense was abolished by the statute [of limitations], the possession which gives a title under the statute must in some sense be adverse, or else the statute does not apply. In order for the person in possession to establish the quality of possession required by the statute, he must show not only exclusive possession but also animus possidendi, that is, an intention to exclude the true owner as well as others. Hence, if the person is in possession with the consent of the true owner, whether under a license or an agreement, the possession is in no way adverse.
[36] In this case, the appellants and their predecessors were in possession of the encroached area with the consent of the true owner until 1998, and understood that was the case. I agree with the trial judge that, in those circumstances, there could not be, nor was there, any intent to exclude the true owner.
[37] The appellants relied at trial and in this court on the case of Keefer v. Arillotta, supra, where possession was also pursuant to an agreement, in that case an easement. The grantee built a garage on part of the easement and parked cars on the rest. The Court of Appeal held that parking cars on the easement did not exclude the true owner from the limited use he wished to make of the area, but that building a garage did and that because the consent did not extend to building a garage, there was adverse possession of that area even though there was an agreement. In this case, however, the encroachment of the wall was exactly what was agreed to. Once the extent of the additional encroachment was known, the consent was rescinded. I agree with the trial judge that the Keefer case is distinguishable and not applicable to the facts of this case.
(3) The remedy of mandatory injunction
[38] In considering the appropriate remedy, the trial judge reiterated her finding that the encroachment constituted a direct interference with the respondent’s property rights, and a continuing trespass which was likely to worsen due to progressive movement. See Earle v. Martin, [1998] N.J. No. 353 (Newf. S.C).
[39] The trial judge acknowledged that a mandatory order to remove the wall is a drastic remedy that ought not to be awarded without considerable thought. See Mitchell v. Clarke (1992), 111 N.S.R. (2d) 342 (N.S. S.C.)
[40] Although the appellants submitted that an order requiring it to take down the wall would be oppressive because of the cost involved, the trial judge noted that the appellants led no evidence as to the cost, although the respondent’s expert suggested a figure of $220,000. There was also no evidence of their ability to pay, or whether the order would be oppressive in that context, especially considering the already poor state of the wall.
[41] Finally, the trial judge considered the test set out in Shelfer v. City of London Electric Lighting Co., [1985] 1 Ch. 287 (C.A.) at 322-3 for determining when damages and not an injunction is the proper remedy:
• If the injury to plaintiff’s legal rights is small;
• If it is capable of being estimated in money;
• If it is one which can be adequately compensated by a small money payment; and
• If the case is one in which it would be oppressive to the defendant to grant an injunction.
[42] Using that test, the trial judge found that the structural incursion onto the respondent’s property was not fleeting or transitory and that its impact of continuing to diminish his access to the rear of the property was significant. In particular, the respondent had testified that his business was affected by the restrictions on his use of the storage facility at the rear and the difficult access both by trucks and by employees in their cars.
[43] The plaintiff testified that he had not quantified the effect of these restrictions in terms of actual loss. The trial judge was satisfied based on the nature of the restrictions and the fact that they were ongoing and progressive, that a nominal damages payment would not adequately compensate the respondent. She therefore concluded that the appropriate remedy in all the circumstances is a mandatory injunction requiring the appellants to remove the wall forthwith.
[44] I see no error in the approach taken by the trial judge. She made no palpable or overriding error of fact, and she applied the relevant legal principles in exercising her discretion with respect to the appropriate remedy.
[45] In my view, additional support for the trial judge’s conclusion that a mandatory injunction is not oppressive to the appellants is provided by the fact that the 1973 agreement calls for that very remedy in the event of further encroachment of the wall, and as noted above, the appellants agreed with their vendor when they purchased the property that the property was subject to the agreement and that they would assume the vendor’s responsibility under that agreement.
(4) The costs of the trial
[46] Following the trial, the respondents sought substantial indemnity costs in the amount of $340,000 plus disbursements and G.S.T. In considering the issues of the scale and quantum of costs, the trial judge discussed the conduct of both parties.
[47] During the trial, the appellants had accused the respondent of extortion, fraud and bad faith, because in an attempt to resolve the problem without resorting to litigation, the respondent had suggested that he be allowed an alternate route to access his property, but stated that failing agreement, he would sue for removal of the wall. The trial judge explained that the respondent did not act improperly in taking this approach. The respondent believed that these unfounded allegations by the appellants entitled it to substantial indemnity costs, but the trial judge rejected this position. She observed that the “extortion” complaint did not take up a lot of time at the trial and did not automatically entitle the respondent to costs on the higher scale.
[48] Similarly, the trial judge was critical of the appellants’ conduct of the litigation, finding them to be “generally obstinate, unco-operative and evasive throughout the proceedings, unusually lengthening the proceedings by tactics such as resisting disclosure and production and by being evasive on examinations for discovery.” Nevertheless, she determined that their behaviour was not egregious enough to warrant the imposition of substantial indemnity costs to censure that misconduct.
[49] In arriving at the quantum of costs on the partial indemnity scale, the trial judge stated that she had reviewed the accounts and supporting material, and took into account the appellants’ submissions including “excess in quantum”, the fact that the appellants’ approach required the respondent to spend more time and the fact that the issues were complex requiring a detailed review of the documents and the law. She also found that junior counsel at the trial was necessary and justified. Based on her entire analysis, she fixed costs in the amount of $200,000 plus $25,000 disbursements, all inclusive of G.S.T.
[50] On this appeal, the appellants submit that the quantum of costs awarded is excessive and should be reduced. I agree that the amount awarded is high. However, the trial judge gave full consideration to all of the arguments and factors applicable to the exercise of fixing costs. I see no error in her approach, and no basis to interfere with her decision.
Result
[51] I would dismiss the appeal with costs fixed at $25,000 inclusive of disbursements and G.S.T.
Signed: “K. Feldman J.A.”
“I agree John I. Laskin J.A.”
“I agree S. Borins J.A.”
RELEASED: “JL” June 5, 2007
[^1]: The grade difference runs from three feet, six inches at the rear of the properties to six feet at the front.