Court File and Parties
Citation: Temple Kol Ami v. Elm Thornhill Woods Inc., 2008 ONCA 460 Date: 2008-06-11 Docket: C47846 Court of Appeal for Ontario
Before: Doherty, Borins and MacFarland JJ.A.
Between:
Temple Kol Ami Applicant (Respondent in Appeal)
And
Elm Thornhill Woods Inc. Respondent (Appellant)
And Between:
Elm Thornhill Woods Inc. Counter Applicant (Respondent by cross-appeal)
And
Temple Kol Ami and BAF Management Ltd. Respondents to Counter Application (Cross-appellant)
Counsel: Chris G. Paliare and Francis Roy for the appellant and respondent by cross-appeal Bryan Finlay, Q.C. and Harry Perlis for the respondent and cross-appellant Temple Kol Ami
Heard: January 9, 2008
On appeal from the judgment of Justice Beth Anna Allen of the Superior Court of Justice dated September 18, 2007, with reasons reported at [2007] O.J. No. 3532.
Reasons for Decision
MACFARLAND J.A.:
[1] This is an appeal from the judgment of Allen J. dated September 18, 2007 wherein she granted certain declaratory relief in favour of the respondent Temple Kol Ami. The respondent cross-appeals in the event the appeal is successful.
THE FACTS
[2] The respondent Temple Kol Ami (TKA) owned two abutting parcels of land in the City of Vaughan (please see Diagram 1). On October 27, 2003, it entered into an agreement of purchase and sale to sell the southerly parcel to BAF Management Ltd. (BAF). By way of that agreement and its later amendments, TKA was to reserve an easement over the southerly parcel. This easement was to run north/south and its purpose was to give the northerly parcel access to Summeridge Drive – the road which extends along the south limit of the southerly parcel. The northerly parcel required road access to Summeridge Drive because its only other road access – to Dufferin Street – was right in-right out only. This reserved easement is referenced as the “Part 7 Easement”.
Diagram 1:
[3] On May 6, 2005, the City’s Committee of Adjustment approved the severance of the southerly parcel and all required easements related thereto.
[4] In July 2004, unknown to TKA, BAF agreed to sell the southerly parcel to the appellant, Elm Thornhill Woods Inc. (Elm). TKA knew nothing of BAF’s agreements with Elm until just before its own sale to BAF was scheduled to close in March 2006.
[5] There is no issue that at the time of its sale to BAF, TKA intended to build a synagogue on the northerly parcel. That intention is referenced in many documents including the agreement of purchase and sale between TKA and BAF, site plan applications to the City, planning decisions and zoning by-laws issued by the City, as well as a letter of intent between TKA and Elm Developments Corp. (a company related to Elm) in relation to the proposed construction of a synagogue.
[6] The agreement of purchase and sale between TKA and BAF provided:
B.16. …The Purchaser [BAF] acknowledges that the Vendor [TKA] intends to build a synagogue on the land to the north hereof and accordingly, the Purchaser agrees to co-ordinate the building architecture of the retail plaza with the Vendor’s architect.
[7] The consent application sent to the Committee of Adjustment for approval of the transaction noted the “proposed use” of the lands retained by TKA to be a “synagogue”. The decision of the Committee of Adjustment in relation to that application also noted:
The purpose of this application is to request the consent of the Committee of Adjustment to convey a parcel of land marked “A” on the attached sketch for the purpose of creating a new lot, for residential townhouses, together with all required easements and right-of-ways, if required, and retain the lands marked “B” on the attached sketch for an existing dwelling and a proposed synagogue. [Emphasis added.]
[8] The letter of intent dated February 23rd, 2006 provided:
The parties are in the process of signing a Contract for the construction of a synagogue to be located at 8777 Dufferin Street, Thornhill, Ontario at a fixed price of $3,126,656.00 plus GST between TEMPLE KOL AMI as Owner and ELM DEVELOPMENTS CORP. as Contractor.
[9] After the agreement of purchase and sale had been entered into between TKA and BAF, and after the consent application to the Committee of Adjustment for approval of the sale was made, it was discovered that TKA did not own a small portion of land located between the southern boundary of the southerly parcel and the northern boundary of Summeridge Road. This small portion of land is referenced as “Block 392”. Unless TKA was able to obtain an easement over Block 392 – in addition to its existing Part 7 Easement – cars would be unable to travel from the southerly parcel onto Summeridge Road.
[10] TKA arranged to acquire Block 392 so that it could be transferred to BAF with and at the time of the transfer of the southerly parcel.
[11] However, the City of Vaughan required a new application for approval to be submitted in respect of this parcel. To avoid an anticipated delay waiting for the City’s approval, TKA and BAF agreed to close the sale transaction and thereafter jointly pursue the City’s approval for the transfer and required easement over Block 392. BAF directed TKA to endorse the transfer it was to receive on the sale directly to its own purchaser, Elm, thereby by-passing a registration to BAF. Elm executed an undertaking to TKA promising to obtain the Committee of Adjustment’s permission for and then registration of the Block 392 access easement.
[12] The undertaking is addressed to both TKA and BAF and references the “Transfer of Easement to Temple Kol Ami”. It reads:
IN CONSIDERATION of the closing of the above noted transaction, the undersigned hereby undertakes to execute a transfer of easement over Part of Block 392, Plan 65M-3757 being Part 13, 65R-28438 as soon as Temple Kol Ami obtains the consent of the Committee of Adjustment of the City of Vaughan to this transfer of easement and will further execute any further applications necessary for submission to the City of Vaughan for consenting to this transfer of easement and also appoints Temple Kol Ami as our agent for obtaining the consent of the Committee of Adjustments to this transfer of easement. All costs relating to the Committee of Adjustments’ application are to be at the sole cost and expense of the Temple and without any liability to ourselves.
[13] On March 24, 2006, title to both Block 392 and the southerly parcel (with the Part 7 Easement reserved on title) were electronically transferred to Elm. Thereafter Elm proceeded with its plans for the site and developed the lands into freehold condominium townhouses which included the construction of the access easement. All of Elm’s buyers agreed to the existence of the access easement and took title subject to it and without any form of condition in their agreements of purchase and sale with Elm.
[14] Sometime after the transfer from TKA to Elm (on the direction of BAF) TKA decided to sell the northerly parcel to BAF, who intends to also build a residential townhouse development.
[15] To the date of the within application Elm has refused to honour its undertaking to execute a transfer of easement over Block 392 or to in any way assist TKA in its efforts to obtain the necessary consent of the City of Vaughan. Elm now claims that the undertaking was given to TKA and BAF pursuant to its agreement with BAF for the purchase of the property and on the understanding and agreement that it was for the sole purpose and condition of accessing, using, and enjoying a synagogue to be built on the adjacent TKA lands.
ANALYSIS
[16] The appellant raises five grounds of appeal.
1. Did the application judge err in law in failing to address Elm’s counter-application with respect to the Part 7 Easement and provide reasons for the dismissal of same?
[17] Elm argues that the application judge did not, in her reasons, address the facts raised by Elm in its counter-application in regard to the Part 7 Easement. It argues:
Where a judge fails to provide reasons for a decision, does not demonstrate that they assessed the evidence in a comprehensive manner, or does not consider the evidence as a whole in reaching a conclusion, such failure constitutes an error of law that must be addressed and decided upon by an appeal court.
[18] The relief sought by Elm in relation to the Part 7 Easement is for judgment to be granted:
(6) declaring that the undertaking and the Part 7 Easement are conditional upon the construction of a synagogue on the TKA lands;
(8) ordering the deletion of the Part 7 Easement from the title to the property; [and]
(9) in the alternative to (8) above, declaring that the Part 7 Easement is only enforceable at such time as the respondents Temple Kol Ami and/or BAF Management Ltd., or any subsequent owner of the TKA lands, build a synagogue on the TKA lands.
[19] In this court the argument advanced by the appellant was that the Part 7 Easement should be extinguished because the reason for which it was given – to accommodate a proposed synagogue – no longer exists.
[20] It is important to recall that both the northerly and southerly parcels were originally owned by TKA. When TKA sold the southerly parcel it did so in such a way that it retained for itself an easement over the southerly parcel (which became known as the Part 7 Easement). This easement was never conveyed away to BAF, Elm, or anyone else. TKA retained the right to itself in perpetuity. Elm’s deed to the southerly parcel shows the easement reserved as follows: “ … reserving to the transferor [TKA] an easement in perpetuity over part of lot 12, Concession 2, City of Vaughan, described as Part 7 on Plan 65A-28438 for the purpose of ingress and egress”.
[21] Therefore, Elm never had an ownership interest in the entire fee simple; it only ever got, on closing, the fee subject to TKA’s expressly reserved easement. The consent of the Committee of Adjustment of the City of Vaughan, given May 6, 2005, was to the conveyance of the southerly parcel “together with and subject to all required easements and rights-of-way”.
[22] In short, Elm’s argument that it granted TKA the Part 7 Easement must necessarily fail for at no time did it ever own the property free of that easement. Elm did not buy the property rights that form the easement, and therefore Elm could not “grant” those property rights back to TKA.
[23] While the application judge did not specifically deal with this argument in her reasons, I am satisfied that the record does not support the appellant’s claim in any event. I would give no effect to this ground of appeal.
2. Did the application judge err in law in failing to consider evidence as to the context and circumstances that existed at the time the undertaking and Part 7 Easement were provided by Elm?
[24] Firstly, for the reasons set out above I am of the view that Elm never “provided” the Part 7 Easement.
[25] Secondly, there is no indication – in either the undertaking, the agreement of purchase and sale, or the record – that Elm gave the undertaking conditionally on TKA agreeing to build a synagogue.
[26] It is accepted by the parties that until the summer of 2006, TKA intended to build a synagogue on the northerly parcel. In the summer of 2006, however, TKA advised the City that it intended to develop this land for residential purposes. At about this time TKA requested that Elm comply with its undertaking in relation to the Block 392 Easement. Elm refused, taking the position that the undertaking was conditional on TKA constructing a synagogue on the northerly parcel.
[27] The appellant argues that the application judge erred “in determining that there are only certain situations that permit a consideration of the context and circumstances that existed at the time an agreement was made”. The appellant further argues that her conclusion in this regard is contrary to this court’s decision in Dumbrell v. The Regional Group of Companies Inc. (2007), 2007 ONCA 59, 85 O.R. (3d) 616. The appellant submits that in determining the use of an easement or right of way, an analysis of the circumstances existing at the time of the grant must be conducted for the purpose of ascertaining the objectives and intentions of the parties as to the dominant tenement, and for the purposes of construing the conveyance as to the nature and extent of the rights conveyed. The appellant argues the application judge erred in failing to undertake such an analysis.
[28] In my view, however, Dumbrell is distinguishable. Dumbrell was a case about the interpretation of an employment contract. Mr. Dumbrell was a real estate expert who was employed by Regional to investigate and bring profitable large-scale development projects to Regional. During his short tenure with Regional[^1] Dumbrell had put considerable effort and much of his time into a commercial property known as the Queen Street property. He had amassed considerable information about the property – some of which was of a confidential nature. Gordon, the principle of Regional, used Dumbrell’s information in discussions he had with certain developers, and this ultimately resulted in the sale of the property in January 2000. Gordon held a 25% interest in the syndicate which held the property. When Gordon’s syndicate interest was sold in May 2002, Gordon profited by a little over one million dollars. Dumbrell claimed to be entitled to an interest in that profit realized more than two years after his contract with Regional had ended. Regional took the position that Dumbrell’s potential remuneration was limited to projects that were completed and closed at the time his employment contract was terminated.
[29] Doherty J.A., writing for the court, concisely summarized the issue in question at para. 46:
[T]he question of whether Dumbrell was entitled to commission on the profits earned on the Queen Street project depends on an interpretation of the language used in the contract. If he is entitled to commission on the profits from the Queen Street property, that entitlement must be found in the language of the agreement he entered into with Regional.
[30] In addressing this question this court thoroughly reviewed the law in relation to contractual interpretation beginning with Consolidated–Bathurst Export Ltd. v. Mutual Boiler and Machinery Insurance Co., 1979 CanLII 10 (SCC), [1980] 1 S.C.R. 888, as later refined and explained in Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, and drew a number of conclusions. Doherty J.A. observed at paras. 51-53:
[51] Eli Lilly, supra, instructs that the words of the contract drawn between the parties must be the focal point of the interpretative exercise. The inquiry must be into the meaning of the words and not the subjective intentions of the parties. In this sense my approach is textualist. However, the meaning of the written agreement must be distinguished from the dictionary and syntactical meaning of the words used in the agreement. Lord Hoffman observed in Investors Compensation Scheme Ltd., supra, at p. 115 All E.R.:
The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean.
[52] No doubt, the dictionary and grammatical meaning of the words (sometimes called the “plain meaning”) used by the parties will be important and often decisive in determining the meaning of the document. However, the former cannot be equated with the latter. The meaning of a document is derived not just from the words used, but from the context or the circumstances in which the words were used. Professor John Swan puts it well in Canadian Contract Law (Markham, Ont.:
Butterworths, 2006) at 493:
There are a number of inherent features of language that need to be noted. Few, if any, words can be understood apart from their context and no contractual language can be understood without some knowledge of its context and the purpose of the contract. Words, taken individually, have an inherent vagueness that will often require courts to determine their meaning by looking at their context and the expectations that the parties may have had.
[53] The text of the written agreement must be read as a whole and in the context of the circumstances as they existed when the agreement was created. The circumstances include facts that were known or reasonably capable of being known by the parties when they entered into the written agreement.
[31] In essence the appellant argues that the Dumbrell approach requires that the context and circumstances existing at the time of the undertaking was given included the understanding on the part of all parties that TKA would in the future build a synagogue on the northerly parcel. It was in this context that Elm gave the undertaking it did, and accordingly the undertaking must be interpreted as being conditional on TKA using the property for a synagogue and for no other purpose.
[32] In my view, this argument cannot succeed. The contract in Dumbrell did not specifically contemplate the situation which arose in that case and the court was required to interpret the contract by looking to the language used by the parties as well as the context and circumstances which existed at the time. While the contract provided that Dumbrell was to be paid a percentage of “profits” the court was required to consider the meaning of that term in light of the language used in the entire document as well as the nature of the business in which the parties were engaged and the terms of the agreement. The court concluded there was nothing in the language of the document that limited Dumbrell’s potential remuneration to projects completed and closed as of the date of termination of his employment contract. Importantly at para. 65 the court stated:
Reasonable people in the position of Dumbrell and Gordon would have appreciated that Regional’s involvement in the kind of complex large scale commercial projects that it was anticipated Dumbrell would bring to it may well not be completed within the relatively short time span contemplated by the employment contract.
[33] By contrast, the undertaking given by Elm to BAF and TKA is a very brief and simple document (as set out in full in para. 12 above). There is no question that in the spring of 2006 when the transactions were taking place, the parties believed that TKA would – at some future date – build a synagogue on the northerly parcel. However, by summer of that same year TKA had changed its mind and instead determined to use the property for residential development. The question for this court, as I see it, is whether the undertaking given by the appellant can be interpreted as having been given on the condition that only a synagogue would be built on the northerly parcel.
[34] In my view the answer to that question must clearly be “no”. There is nothing in the language used in that document which could be considered to convey a meaning that the undertaking was in anyway conditional. There is no language of restriction. It was no secret at the time the undertaking was given that TKA’s intention to build a synagogue was just that: an intention only. No contract had been signed, no ground broken. BAF and Elm were sophisticated commercial business persons represented by skilled and experienced solicitors.
[35] There is also nothing in the agreement of purchase and sale between BAF and Elm to indicate that the undertaking was conditional. That agreement contains a number of provisions which reference the future intended synagogue use. Those provisions as stated in the agreement provide:
B7. The Purchaser acknowledges that a synagogue is to be built on the land to the north hereof and the Purchaser agrees not to object to the re-zoning and/or site plan approval applications of the land on which the synagogue is to be built and will further cooperate with the synagogue in all matters relating to the re-zoning and site plan applications of the synagogue lands. This clause shall not merge on the closing of this transaction but shall survive same and shall be binding on the parties their successors and assigns.
B8. The Purchaser further acknowledges that the synagogue to be erected to the north thereof will require access for entry or for fire route purposes over a portion of the road to be constructed by the Purchaser stretching from Summeridge Drive to the southerly limit of the lands owned by Temple Kol Ami after the severance referred to in clause B9 has been completed and further will require all municipal services as required pursuant to any subdivision, development or site plan agreement between the Purchaser and the Municipality and/or Region of York will be constructed to the southerly lot line of the lands owned by Temple Kol Ami after the severance referred to in clause B9 has been completed.
The Purchaser agrees to construct such portion of the road and such municipal services to be constructed to the southerly lot line of the lands owned by Temple Kol Ami after closing, at its own cost, and will provide such easements as are required by the City of Vaughan to Temple Kol Ami without charge within six (6) months (weather permitting) of being notified in writing by the Vendor and/or Temple Kol Ami that they require such road to be constructed. This clause shall not merge on the closing of this transaction but shall survive same and shall be binding on the parties their successors and assigns.
[36] The agreement of purchase and sale by which Elm acquired the southerly lot was between Elm as purchaser and BAF as vendor. TKA was not a party to that agreement and the record discloses that TKA was not aware BAF had sold its interest in the property to TKA until only a few days before its sale to BAF was to be completed. During the course of the sale from BAF to Elm, there were no direct dealings between Elm and TKA.
[37] In my view there is nothing in the language of the agreement of purchase and sale that could be construed as an agreement, undertaking, or condition on the part of TKA to build a synagogue, to the exclusion of all else, on the subject property. At most the clauses acknowledge the future intention of TKA to build a synagogue on the site but there is nothing in the language that requires it to do so. Further, there is nothing in the record that demonstrates that TKA bound itself to construct a synagogue on the lands to the exclusion of all else. Therefore, neither the agreement of purchase and sale nor the undertaking contained any language which could on any reasonable interpretation be read as a condition which required TKA to build a synagogue.
[38] In my view there is a vast difference between acknowledging a future intention to do something and binding oneself to do that very something. Elm is a sophisticated corporate developer who was represented by competent, experienced counsel throughout; if it considered TKA to be legally bound to construct a synagogue, it ought to have required this condition to be reduced to writing and included in the documentation. Failure to do so suggests that there is not and never was any such condition.
[39] As for the context and circumstances at the time, there is substantial parol evidence to indicate there never was an intention to include a condition in the undertaking or agreement. It will be recalled that Elm did not negotiate with TKA, but with BAF. TKA was not aware, until a few days before the closing of its sale to BAF, that BAF had agreed to sell its interest to Elm. In the circumstances, the extent to which TKA could have led Elm to believe it was binding itself to build a synagogue is unclear.
[40] Also, BAF, who did have direct negotiations with TKA, was never under the impression that TKA was binding itself to build a synagogue. In his affidavit, BAF’s solicitor Bernard Feintuch states that Elm never requested orally or in writing that the easement be conditional on the northerly property being developed as a synagogue. Further, he states that it was he who prepared the agreement of purchase and sale between BAF and Elm. He explains that the purpose of the references to the synagogue was for disclosure only:
I then prepared a Vendor’s form of offer to purchase the property from BAF, which was forwarded to ELM for review. In preparation of the offer, my client wanted to make full disclosure of what was expected to be built on the north portion of 8777 Dufferin Street so that no future complaints would be made by ELM in case they did not want an institutional use next to the development of residential townhouses. There are homebuyers who might object to the use of the adjoining property as an institutional building. Clauses B8 and B9 of Exhibit “B” of the Agreement of Purchase and Sale were put into the Agreement of Purchase and Sale by BAF in order to protect BAF from such a future claim. ELM had no part in inserting or requesting these clauses in the Agreement of Purchase and Sale …
Clause B9 of Exhibit “B” of the Agreement of Purchase and Sale was inserted into the Agreement of Purchase and Sale by myself for disclosure purposes. The requirement to provide future easements if required was not made conditional on the property being used for construction of a synagogue.
The letter from Tony Kuri [Elm’s solicitor] contained many objections to the tentative Agreement of Purchase and Sale. However, no mention or request was ever made to change clauses B7 and B8 of Exhibit “B” of the Agreement of Purchase and Sale.
[41] Given that BAF did not believe that TKA was granting its easement conditionally, it is difficult to see how Elm got that impression.
[42] I would give no effect to this ground of appeal.
3. Did the application judge err in law in finding that the undertaking is enforceable given that no consideration was given from TKA to Elm?
[43] The appellant argues that it never entered into a contractual agreement of any kind with TKA and that TKA can therefore not enforce the undertaking against it. It states:
Any and all of their respective obligations were only reciprocal in regard to BAF, who itself had entered into agreements for, on the one hand, the purchase of the Property from TKA, and on the other hand, the sale of the Property to Elm.
[44] In my view this argument is without merit. The obvious consideration for the undertaking was the delivery of the deed to this valuable piece of property by TKA to Elm. Absent this undertaking by Elm directed both to TKA and BAF, there would have been no closing. TKA required the undertaking from BAF in order for BAF to acquire the right to purchase the property. Unless Elm provided the same undertaking, BAF would have had no right to direct TKA to put the deed in Elm’s name. I would give no effect to this ground of appeal.
4. Did the application judge err in law in failing to consider the effect that the change in use of the TKA lands would have on the Part 7 Easement and the proposed easement over Block 392?
[45] The appellant argues that the application judge erred in failing to consider the effect that the change of use of the TKA lands would have on the Part 7 Easement as well as the proposed easement over Block 392 flowing from the undertaking. Specifically Elm argues that the use a synagogue may make of the easements is substantially and significantly different from the use residential townhouses may make of them.
[46] TKA argues in response that there has been no change in use to this point in time and that Elm’s claim is utterly speculative.
[47] This argument requires the court to determine the scope of an easement which has been created through express reservation (the Part 7 Easement) and through an express undertaking to provide an easement (the Block 392 Easement).
[48] Both Bruce Ziff in Principles of Property Law, 4th ed. (Toronto: Thomson Carswell, 2006) and Anne Warner La Forest in Anger & Honsberger Law of Real Property, 3rd ed. looseleaf (Aurora, Ont.: Canada Law Book, 2006) state that determining the scope of an express reservation is a matter of intention. La Forest at 17-17 to 17-18 states:
The use of a right-of-way must be within the terms of the grant or of accustomed use (in the case of a right acquired by implied grant, implied reservation or prescription), and it must be reasonable. As a general rule, the use of a right-of-way depends on the nature of the servient land and the purposes for which the right-of-way is intended to be used. If the grant of a right-of-way is not limited to any particular purpose, or if a way has been used for several purposes, a general right-of-way may be inferred. However, this will not be the case where the evidence shows intended use for particular purposes only.
There are certain general limitations on the use of a right-of-way:
a. a right-of-way to one property does not include a right-of-way to a place beyond that property;
b. the owner of the dominant tenement is restricted to the legitimate use of the right; and
c. the burden on the owner of the servient tenement cannot, without their consent, be increased beyond the terms of the grant or, where the right-of-way is based on implied or prescriptive rights, beyond accustomed use.
[Emphasis added. Citations omitted]
[49] On the scope of easements Ziff states at p. 366:
A prime consideration in construing the breadth of an easement is the purpose for which the grant was initially made.
Can the initial grant be read to contemplate the possibility of a change in the nature of the use of the easement, or are the rights frozen at the time of the grant? Naturally, the grantee is not entitled to increase the burden on the servient lands beyond rights initially conveyed, but it may have been contemplated or taken as implied that the easement’s use would change over time. If so, an apparent increase in the burden can be a valid use of the initial right. For example, in Laurie v. Winch, 1952 CanLII 10 (SCC), [1953] 1 S.C.R. 49, farmland (the dominant tenement) was subdivided into residential lots. The easement, which was granted as a perpetual right of way over a slender lot near the farm, was split into a larger number of easements, one of these being attached to each new lot. The Supreme Court of Canada treated this diffusion as valid. There was nothing to suggest that it was contemplated that the lands would always be used for agricultural purposes, or that changes in the use of the dominant lands would affect the continued existence of the easement. [Citations omitted.]
[50] The question then becomes: (1) whether the original reservation was limited to a particular purpose; and (2) whether the change in the use of the land has increased the burden on the servient tenement.
[51] Evidence of the intended purpose of the easement is revealed in the amending agreement between TKA and BAF dated March 3, 2006. This agreement was drafted and agreed to before TKA became aware that it did not own Block 392. It provided:
WHEREAS:
BAF has entered into an Agreement of Purchase and Sale to purchase the southerly portion of the property municipally known as 8777 Dufferin Street and being described as Parts 2, 3, 4, 7, 8, 9, 12, 13, 14 and 15 on Plan 65R 28438;
AND WHEREAS Part 7 and 13 on Plan 65R – 28438 will be paved as a roadway providing access to the land to be acquired by BAF and the land owned by the Temple being described as Parts 1, 5, 6, 10 and 11 on Plan 65R-28438;
AND WHEREAS the Temple and BAF have agreed to provide an easement in perpetuity over Part 7 and 13 on 65R 28438 to the Temple which easement will be reserved by the Temple in the transfer of Parts 2, 3, 4, 7, 8, 9, 12, 13, 14 and 15 on Plan 65R 28438 to BAF;
AND WHEREAS the Temple and BAF wish to set out their mutual responsibilities with regard to the easement to be created.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration (the receipt and sufficiency whereof is acknowledged by each of the parties), the parties hereto agree as follows:
- The Temple will reserve an easement in perpetuity in the transfer of Parts 2, 3, 4, 7, 8, 9, 12, 13, 14, and 15, Plan 65R 28438 to BAF over Part 7 and 13 on Plan 65R 28438 for the purpose of ingress and egress only to the Temple’s property…
[Emphasis added.]
[52] The express terms of the agreement state that the purpose of the easement is for “ingress and egress only to the Temple’s property”. Had BAF wished to further restrict the purpose of the easement to only those persons who wish to ingress or egress to and from the synagogue for religious and ancillary purposes it could have done so by using additional express language to that effect – assuming TKA was in agreement to such further restrictions. That such express synagogue-specific language was not used suggests that the easement was not intended to be used exclusively for religious and ancillary purposes but rather that broader use was contemplated.
[53] The second issue to be addressed is whether the land’s change of use will affect the burden on the servient tenement; essentially, whether the contemplated residential townhouses put a greater burden on the servient tenement than a contemplated synagogue. I say “contemplated” because there is no actual usage with which to compare the usage that will result from the change. As there never was a synagogue, any comparison in usage must be entirely speculative. At the same time it must be noted that the synagogue use contemplated was more than simply a synagogue – the plans included the construction of a social hall and a school as well. Elm has failed to produce any evidence to demonstrate that the burden on the servient tenement will be substantially altered by the contemplated change in use.
[54] Moreover, in my view the cases cited by the appellant are of no assistance to it:
(i) Bell v. Marsh, 1951 CanLII 338 (ON CA), [1951] 3 D.L.R. 486 (Ont. Co. Ct.), aff’d [1951] 3 D.L.R. 486 (Ont. C.A.) is concerned with the scope of a prescriptive easement, not one created by express grant, and does not deal with the issue of speculative use;
(ii) Bost Properties Inc. v. Highland West Developments Inc. (2002), 48 R.P.R. (3d) 83 (Ont. S.C.J.) concerns the extinguishment of an easement for farming purposes where the easement had fallen into disuse and was no longer necessary because of a street extension;
(iii) McLean v. St. Thomas (City) (1892), 23 O.R. 114 (Ont. C.A.) involved an express grant of right-of-way but one that was explicitly restricted to certain usages; and
(iv) Gordon v. Regan (1985), 1985 CanLII 2230 (ON SC), 49 O.R. (2d) 521 (H.C.J.), aff’d (1989), 1989 CanLII 4193 (ON CA), 71 O.R. (2d) 736 (C.A.) did not involve a change of use situation.
[55] I would give no effect to this ground of appeal.
5. Did the application judge err in failing to delete the easement from the title of the southerly portion and rectify the undertaking?
[56] The appellant argues that the right of access created by the Part 7 Easement has been extinguished given the change in contemplated use of the TKA lands and that the undertaking can only be given effect if a synagogue is to be built on the TKA lands. For the reasons set out above this ground of appeal must fail. Rectification is not available to the parties in the circumstances of this case. There is no evidence that the parties made a mistake in omitting from their agreement a term that the contemplated easements were granted only on condition that a synagogue be built on the TKA lands.
[57] I would give no effect to this ground of appeal and would dismiss the appeal.
THE CROSS-APPEAL
[58] TKA argues that it will be prejudiced if the Certificate of Pending Litigation in relation to Block 392 is discharged and vacated before TKA has registered the easement over Block 392 on title.
[59] The application judge ordered Elm to comply with its undertaking to proceed to obtain the City’s permission to register the easement over Block 392 and ordered that the Certificate of Pending Litigation in relation to Block 392 be vacated and discharged. TKA argues that if its Certificate is discharged before the easement is registered, Elm will be able to close its sale of townhouses to its purchasers without notice of TKA’s interest. TKA argues that the harm to it will be irreparable because, as third party purchasers without notice, TKA’s easement will be unenforceable against the townhouse owners.
[60] I would order that para. 5 of the judgment of the application judge dated September 18, 2007 be stayed until the balance of the judgment has been executed.
[61] The cross-appeal is allowed and the judgment below varied accordingly.
[62] At the completion of argument the issue of costs was reserved pending release of the court's decision. If counsel are unable to agree on costs, brief written submissions, not to exceed three pages in length, may be filed by the respondent and cross-appellant within seven days of the release of this decision and by the appellant and respondent by cross-appeal within seven days thereafter.
RELEASED: June 11, 2008 “D.D.”
“J. MacFarland J.A.”
“I agree D. Doherty J.A.”
“I agree S. Borins J.A.”
[^1]: Dumbrell’s initial contract was for a period of six months with a right of renewal for a further six months. Although no formal contract was signed for the second six month period, the parties were agreed that the contract was renewed and in force when Dumbrell resigned effective November 22, 1999.