CITATION: Lohse v. Fleming, 2008 ONCA 307
DATE: 20080423
DOCKET: C45912
COURT OF APPEAL FOR ONTARIO
WEILER, MOLDAVER and JURIANSZ JJ.A.
BETWEEN:
JOHN TITUS LOHSE and KAREN ELIZABETH LOHSE
Plaintiffs/Applicants (Appellants)
and
ROBERT FLEMING and JACQUELINE PORTER a.k.a. JACQUELINE PORTER-FLEMING
Defendants/Respondents (Respondents)
Philip B. Cornish and Jonathan F. Lancaster for the appellants
Quinn M. Ross for the respondents
Heard: March 20, 2008
On appeal from the judgment of Justice Edward R. Browne of the Superior Court of Justice dated August 1, 2006, with reasons reported at 54 R.P.R. (4th) 187.
BY THE COURT:
[1] The appellants appeal from the judgment of Browne J. dismissing their application for a declaration that they had obtained an easement or covenant which entitled them to the supply of domestic water from a well located on the respondents’ property. The appellants also seek leave to appeal from the costs award made against them at trial.
[2] The water to which the appellants lay claim comes from a well located on the respondents’ property. The well is serviced by an electric submersible pump and a pressure tank at the surface. The surface facilities are housed in a small shed on the respondents’ property. The water is supplied to the appellants’ property through underground pipes.
[3] Initially, the well water was piped to a number of properties owned by various people who had purchased lots from the original owners. The original owners had subdivided the property and installed the well and the piping leading to the various subdivided lots. By the time the appellants commenced their lawsuit against the respondents, the other lot owners had drilled their own wells and no longer required a supply of water from the respondents’ property.
[4] The appellants took title to their lot not from the original owners, but from a third party. The respondents also purchased their lot (the well property) from a third party. The original owners have long since ceased to have any interest in the well property or the other properties.
[5] Over the years, the deeds conveying the well lot and the other lots have included the following habendum clause:
SUBJECT to building and other restrictions and conditions set out in Schedule “A” attached hereto. It is agreed that these restrictions and covenants shall run with the land hereby conveyed and shall bind and also enure to the benefit of the heirs and assigns of the various parties to whom any part of the lands so made subject to the above restrictions and covenants shall at any time become or belong to. All covenants and agreements herein and rights hereby granted to the said parties shall extend to and be binding on their heirs and executors.
[6] Schedule “A” referred to in the habendum clause contained six conditions and a preamble which stated that the conditions were to form part of any offer to purchase, agreement for sale, conveyance or transfer of land for residential or summer cottage purposes. It further provided that “[t]hese restrictions shall run with the land.”
[7] The fifth condition contained in Schedule “A” is pertinent to the case at hand. It reads as follows:
The vendor covenants to supply water from a central water system for domestic purposes only at an annual rate to be paid on or before May lst in each year. This covenant will not be applicable if the water system is taken over by either a municipal or any provincial agency.
[8] As is apparent, the “water supply” covenant contemplates that the recipients of the water will pay a fee. The evidence at trial established that over the years, the well users paid a fee intended to cover the operating costs of the well, including maintenance and repairs. At the time the respondents purchased the well property in March 2003, five properties were still being serviced by the well and the well users were making semi-annual payments to cover the operating costs of the well.
[9] On March 28, 2003, the day after the respondents had purchased the well property, they wrote to the appellants offering to “continue to provide domestic water to [them] using the same rates and billing schedule as was established by the [former owner].” The letter continued by noting that “[t]he next 6 month billing cycle will occur on September 1st, 2003” and that the “costs of ongoing maintenance and repairs of the water line will continue to be shared by everyone on the line.”
[10] The appellants did not respond to that letter, but they continued to receive water from the respondents’ well and they did not demand a return of the monies they had prepaid for the current billing cycle.
[11] Several months later, in July 2003, the respondents wrote to the appellants and gave notice that as of May 3l, 2004, “the supply of water from [their] well will be terminated.” In the same letter, the respondents referred to the provisions of the agreement of purchase and sale they had entered into when they purchased the well property, which stipulated that they “would supply water to [the remaining five property owners] on terms no longer than 6 months.” They also noted that since they had purchased the property in March 2003, the other three users had drilled or would be drilling their own wells, leaving the appellants as the only household apart from their own receiving water from their well.
[12] Subsequent correspondence between the appellants and the respondents was exchanged, but no resolution could be achieved. The appellants commenced their lawsuit in February 2005.
(1) Did the appellants acquire an easement entitling them to the supply of water from the well property?
[13] In his reasons, the trial judge considered and rejected the submission that the appellants had obtained an easement which entitled them to a supply of domestic water from the well property. At para. 35, he stated:
This is not an easement case. Water rights and the subject of easements can be applicable in a negative way where the movement or supply of water requires no positive step but a refraining from taking negative action which might otherwise impede water movement or supply. This is not a case, which might be applicable with a dug well, where a party asserts a right of entry upon property for the purpose of drawing from an openly exposed dug well. In such a fact situation an easement to permit access might be found to exist.
[14] The trial judge then considered the covenant relating to water supply in Schedule “A” with a view to determining its nature and whether it did or did not “run with the land either at law or in equity.” He concluded that the covenant in issue constituted a positive covenant, and as such, it did not run with the land. His reasons in this regard are found at paras. 36-38 as follows:
Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002) Carswell Ont. 850 (C.A.) and Parkinson v. Reid, 1966 CanLII 4 (SCC), [1966] S.C.R. 162 (S.C.C.) refer to covenants that require spending money or the doing of some act concluding that such covenants do not run with the land either at law or in equity. Simply put the supplying of water from a drilled well serviced by motor and pressure system into a trunk piping supply conduit system and maintenance thereof requires the doing of many acts and the expenditure of money. These are positive acts. There is the further issue of liability for unsafe water. The insurance costs which may be attracted, have been touched upon in the evidence but without particulars. In addition, the cost of necessary steps to supply water safe in the context of acceptable, community safety standards are referenced in the evidence but without particulars.
Rights flowing from any of the oral water rate supply agreements have ended by the passage of time.
I apply my conclusion that this case involves a positive covenant to the law and conclude the covenant respecting well water as in Schedule A applicable to this case does not run with the land.
[15] In rejecting the appellants’ claim to an easement and assessing the nature of the water supply covenant as a positive covenant, the trial judge found as a fact that the “supplying of water from a drilled well serviced by motor and pressure system into a trunk piping supply conduit system and maintenance thereof requires the doing of many acts and the expenditure of money.” To succeed on this issue, the appellants must satisfy us that that finding was not open to the trial judge and that in making it, the trial judge committed a palpable and overriding error. We have not been so persuaded.
[16] In our view, having regard to the nature of the water system and the steps required to ensure the flow of water to the neighbouring properties, it was open to the trial judge to find that the supply of water entailed positive acts on the part of the respondents.
[17] Having made that finding, the trial judge was on solid ground in concluding that the positive nature of this obligation prevented the appellants from obtaining an easement, and that absent privity of contract, this positive covenant could not run with the land: see Nordin v. Faridi, 1996 CanLII 3321 (BC CA), [1996] 5 W.W.R. 242 at para. 45 (B.C.C.A.); Parkinson v. Reid, 1966 CanLII 4 (SCC), [1966] S.C.R. 162 at 167; and Amberwood Investments Ltd. v. Durham Condominium Corp. No. 123 (2002), 2002 CanLII 44913 (ON CA), 58 O.R. (3d) 481 (C.A.).
(2) Did the respondents contract with the appellants to supply them with water?
[18] The appellants submit that after the respondents purchased the well property, they offered to supply the appellants with water and the appellants accepted their offer.
[19] In support of this submission, the appellants point to the letter from the respondents dated March 28, 2003, in which the respondents stated:
We will continue to provide domestic water to you using the same rates and billing schedule as was established by the [former owner]. The next 6 month billing cycle will occur on September lst, 2003.
[20] The appellants submit that this constituted a contract, which the respondents reneged on in July 2003 when they wrote to the appellants advising them that the supply of water would be terminated on May 3l, 2004. The appellants submit that they did not agree to that termination and they seek to have the contract enforced.
[21] The trial judge did not address this issue in his reasons. Whether it was raised before him is unclear. Regardless, we would not give effect to it.
[22] Assuming that the parties did enter into a contract for the continued supply of water on March 28, 2003, we are not persuaded that this agreement was meant to last in perpetuity. Rather, the respondents’ letter makes it clear that this agreement was periodic in nature, as it was renewable on a semi-annual basis. The appellants had paid their proportionate share of the expenses to September l, 2003. Absent evidence to the contrary, we are of the view that even if there was a contract, it would have been open to the respondents to terminate it as of September 1, 2003, when the next semi-annual period would have commenced.
[23] Although the respondents were entitled to terminate the contract as of September 1, 2003, the fact that they chose to extend it to May 31, 2004 to enable the appellants to drill their own well speaks to their generosity, not to any legal obligation on their part.
[24] Accordingly, we would reject this ground of appeal.
(3) Could any easement or covenant be discharged under section 61 of the Conveyancing and Law of Property Act?
[25] Section 61(1) of the Conveyancing and Law of Property Act, R.S.O. 1990, c. C.34, reads as follows:
61.(1) Where there is annexed to land a condition or covenant that the land or a specified part of it is not to be built on or is to be or not to be used in a particular manner, or any other condition or covenant running with or capable of being legally annexed to land, any such condition or covenant may be modified or discharged by order of the Superior Court of Justice.
[26] At the instance of the respondents, the trial judge considered s. 61(1) of the Act and held in the alternative that had the appellants established that an easement or covenant existed which entitled them to the supply of water, he would have exercised his discretion and applied s. 61(1) to discharge it. The trial judge gave cogent reasons for this conclusion at para. 44 of his reasons.
[27] Given our conclusions on the other issues raised by the appellants, we need not finally decide whether a court can terminate an easement under s. 61(1) of the Act. Suffice it to say that if such a discretionary power exists, we are satisfied that the trial judge exercised his discretion appropriately in this case.
(4) Leave to appeal costs
[28] Given our conclusion that the appeal must be dismissed, we reject the appellants’ submission that this is an appropriate case in which to grant leave to review the costs award made by the trial judge. The fact that a trial was ordered despite the appellants’ attempt to proceed expeditiously by way of application carries little weight. Clearly, this was a case that required the trial of an issue and to the extent that the appellants may have thought otherwise, they were mistaken. Nor, in our view, is there anything untoward or unreasonable in the costs award made by the trial judge. Accordingly, we deny leave to appeal costs.
[29] In the result, the appeal is dismissed.
(5) Costs
[30] We have reviewed the cost submissions filed by the parties. In the circumstances, we are of the view that the respondents are entitled to their costs of the appeal in the amount of $15,000, inclusive of G.S.T. and disbursements.
Signed: “Karen M. Weiler J.A.”
“M. J. Moldaver J.A.”
“R. G. Juriansz J.A.
RELEASED: “MJM” April 23, 2008