The Toronto-Dominion Bank v. Wise et al.

[Indexed as: Toronto-Dominion Bank v. Wise]

Ontario Reports

Court of Appeal for Ontario,

Weiler, Hourigan and Huscroft JJ.A.

August 16, 2016

133 O.R. (3d) 195 | 2016 ONCA 629

Case Summary

Real property — Easements — Strict necessity rather than practical necessity test applying to easement of necessity — Water access to property defeating claim of necessity even if water access is inconvenient — Public policy not providing independent basis for recognition of easement of necessity regardless of parties' intentions.

W severed lakefront property into two lots and gifted one lot to L. Unlike the L lot, the W lot did not have road access (although it was accessible by water), and W did not reserve an easement over the L lot when the gift was completed. The respondent, which held a mortgage over the W lot, brought an application for an order declaring that an easement existed for the benefit of the W property. The application judge found that water access to the W lot was impractical and that an easement of necessity existed. L appealed.

Held, the appeal should be allowed.

The test for an easement of necessity is strict necessity, not practical necessity. An easement of necessity will be found only if it was necessary in order for the grantor to be able to use his or her property at the time of the grant. Water access to property defeats a claim of necessity, regardless of whether it is practical or convenient. The application judge also erred in finding that easements of necessity are creatures of public policy and that public policy provides an independent basis for a court to recognize an easement of necessity regardless of the parties' intentions.

Bailey v. Barbour, [2016] O.J. No. 3261, 2016 ONCA 98, 66 R.P.R. (5th) 173, 345 O.A.C. 311, 267 A.C.W.S. (3d) 463; Dobson v. Tulloch (1997), 1997 14542 (ON CA), 33 O.R. (3d) 800, [1997] O.J. No. 2854, 72 A.C.W.S. (3d) 1129 (C.A.), affg (1994), 1994 7239 (ON SC), 17 O.R. (3d) 533, [1994] O.J. No. 531, 38 R.P.R. (2d) 16, 46 A.C.W.S. (3d) 552 (Gen. Div.); McClatchie v. Rideau Lakes (Township), [2015] O.J. No. 1737, 2015 ONCA 233, consd

Other cases referred to

Adealon International Proprietary Ltd. v. Merton London Borough Council, [2007] E.W.C.A. Civ. 362, [2007] 1 W.L.R. 1898 (C.A. (Civ. Div.)); Depew v. Wilkes (2002), 2002 41823 (ON CA), 60 O.R. (3d) 499, [2002] O.J. No. 2987, 216 D.L.R. (4th) 487, 162 O.A.C. 23, 2 R.P.R. (4th) 45, 116 A.C.W.S. (3d) 289 (C.A.); Fitchett v. Mellow (1897), 29 O.R. 6, [1897] O.J. No. 78 (H.C.J.); [page196] Hardy v. Herr, 1965 225 (ON CA), [1965] 2 O.R. 801, [1965] O.J. No. 1055, 52 D.L.R. (2d) 193 (C.A.), affg 1964 157 (ON SC), [1965] 1 O.R. 102, [1964] O.J. No. 809, 47 D.L.R. (2d) 13 (H.C.J.); Hirtle v. Ernst, 1991 4297 (NS SC), [1991] N.S.J. No. 531, 110 N.S.R. (2d) 216, 21 R.P.R. (2d) 95, 299 A.P.R. 216, 30 A.C.W.S. (3d) 1081 (S.C. (T.D.)); Manjang v. Drammeh (1990), 61 P. & C.R. 194 (P.C.); Nickerson v. Barraclough, [1981] Ch. 426, [1981] 2 All E.R. 699, [1981] 2 W.L.R. 773, 41 P. & C.R. 225 (C.A. (Civ. Div.)); North Sydney Printing Pty Ltd. v. Sabemo Investment Corp. Pty Ltd., [1971] 2 N.S.W.L.R. 150; Russell v. Pennings, [2001] W.A.S.C.A. 115

Statutes referred to

Land Titles Act,R.S.O. 1990, c. L.5, s. 118 [as am.]

Authorities referred to

Gaunt, Jonathan, Q.C., and Paul Morgan, Q.C., Gale on Easements, 19th ed. (London: Sweet & Maxwell, 2012)

APPEAL from the order of P.A. Douglas J., [2015] O.J. No. 4262, 2015 ONSC 5014 (S.C.J.) allowing an application for order declaring the existence of an easement.

Michael Simaan and Jaclyn McNamara, for appellants Jordanna Lipson and Earl Lipson.

Daniel Dooley, for respondent.

The judgment of the court was delivered by

[1] HUSCROFT J.A.: — Ben and Sheila Wise (the "Wises") owned lakefront property. They wanted to sever the land into two lots and gift one of the lots to their daughter and son-in-law, Jordanna and Earl Lipson (the "Lipsons"). The severance was eventually completed following the death of Ben Wise in 2002. The lot gifted to the Lipsons connected with a local road, but the lot the Wises retained for themselves did not have road access. The Wises did not reserve an easement over the Lipsons' lot when the gift was completed.

[2] The respondent bank, which holds a mortgage over the parcel of the land retained by the Wises (and now owned by Sheila Wise), brought an application for an order declaring that an easement exists for the benefit of the Wise property. Although there is access to the Wise property from the lake, the application judge found that water access was "impractical" and, as a result, recognized the bank's claim for an easement of necessity over the Lipson property. He directed a trial to determine the location of the easement in the event the parties were unable to agree.

[3] The Lipsons appeal.

[4] In my view, the application judge erred in concluding that there was an easement of necessity. I would allow the appeal, for the reasons that follow. [page197]

Background

[5] The properties in question are lakefront properties on Lake Manitouwabing. The Wises owned a large parcel of land (the "combined parcel"). The combined parcel was adjacent to the inn and tennis resort lands, which were owned by Ben Wise's company, MB Investments Limited, until 2011.

[6] The combined parcel was severed in 2003. This resulted in two lots, part 1 and part 2. Sheila Wise retained part 2, where she has a cottage. Part 1 was gifted to the Lipsons.

[7] The gift was the culmination of a long process begun by Ben Wise some years earlier. Permission to sever the combined parcel was denied by planning officials because part 2 would have become a water-access only lot. Although there were water-access only lots on the lake, no additional such lots were being approved.

[8] The combined parcel had access to a road, but the road connected to the proposed part 1 rather than part 2. However, part 2 was accessible through the inn and tennis resort lands. Ben Wise considered adding part 2 to the inn and tennis resort lands in order to take advantage of the road access they had. He chose not to pursue that plan because of adverse tax consequences. Instead, he decided to enter a restriction under s. 118 of the Land Titles Act, R.S.O. 1990, c. L.5 on part 2, which would have prevented it from being sold separately from the inn and tennis resort lands.

[9] That restriction was never registered. Following the death of Ben Wise, part 1 was conveyed to the Lipsons and no easement was reserved in favour of part 2. Part 2 had no legal entitlement to road access across the inn and tennis resort lands and so became a water-access only lot, despite the absence of prior approval. However, Sheila Wise continued to obtain access to her home through the inn and tennis resort lands. These lands were purchased by 2276552 Ontario Inc. ("227") in 2011 through power of sale.

[10] Sheila Wise is in default on two mortgages on part 2. The respondent bank holds a first mortgage on the property and 1432975 Ontario Limited holds a second mortgage. Both mortgagors wish to sell the property.

[11] The respondent bank brought an application for an order declaring that an easement of necessity exists over any of the adjacent properties in favour of part 2.

The Application Judge's Decision

[12] The application judge determined that an easement of necessity is available to both grantors and grantees of land if [page198] either the land retained or the land granted is rendered inaccessible by severance and sale. He stated [at para. 49]: "The ultimate objective is that land should be able to be used." The application judge considered [at para. 79] that it was unnecessary to direct a trial on the question of the Wises' intentions at the time of the severance and gift of part 1, because easements are "creatures of public policy" and "[p]ublic policy must trump the intentions of individual landowners".

[13] The application judge considered that mere inconvenience was insufficient to allow the grant of an easement of necessity, but found that the common law requirement of absolute or strict necessity had developed into a rule of "practical necessity", citing Hirtle v. Ernst, 1991 4297 (NS SC), [1991] N.S.J. No. 531, 110 N.S.R. (2d) 216 (S.C. (T.D.)).

[14] The application judge concluded that water access to part 2 did not preclude an easement of necessity. The test, he said, citing Dobson v. Tulloch (1994), 1994 7239 (ON SC), 17 O.R. (3d) 533, [1994] O.J. No. 531 (Gen. Div.), affd (1997), 1997 14542 (ON CA), 33 O.R. (3d) 800, [1997] O.J. No. 2854 (C.A.), is "whether water access is sufficient to make unnecessary an easement of necessity that is otherwise necessary for the reasonable enjoyment of the property" (para. 55).

[15] The application judge found no evidence that part 2 had ever been accessed by water and accepted the uncontradicted evidence of the respondent's surveyor, Paul Forth, that water access to part 2 was "impractical". He found, specifically, that water access "does not offer a viable, or practical, means of access to and egress from Part 2" (para. 62). He concluded that an easement of necessity over part 1 arose in April 2003, when part 2 became landlocked and the owners had no legal entitlement to cross any adjoining lands to get to their property.

[16] The application judge ordered a trial to determine the most efficacious and least intrusive location of the easement in the event the parties were unable to agree.

Issue on Appeal

[17] Sheila Wise, a respondent on the application, did not participate in the appeal. Nor did 227, owner of the inn and tennis resort lands.

[18] The appellants contend that the application judge erred in three ways:

(1) by considering the access to the residence on the property rather than access to the property itself and by applying the wrong test;

(2) by admitting the evidence of the surveyor on the ultimate issue the application judge was required to determine; and [page199]

(3) by determining that easements of necessity are based on public policy considerations rather than the intention of the parties.

[19] I begin with a brief review of the principles governing easements of necessity, before applying the relevant principles to the facts of this case.

The Principles Governing Easements of Necessity

[20] The basic requirements of an easement of necessity were described by this court in McClatchie v. Rideau Lake (Township), [2015] O.J. No. 1737, 2015 ONCA 233. As Rouleau J.A. explained, easements of necessity are "presumed to have been granted when the land that is sold is inaccessible except by passing over adjoining land retained by the grantor. The concept arises from the premise that the easement is an implied grant allowing the purchaser to access the purchased lot" (para. 48).

[21] It is well established that the necessity of an easement of necessity is determined at the time of the grant (para. 49). Moreover, an easement of necessity "must be necessary to use or access the property; if access without it is merely inconvenient, the easement will not be implied" (para. 53).

[22] As the application judge noted, McClatchie addresses the implication of easements of necessity only from the perspective of a grantee of land -- the person who obtains the land in favour of which an easement is required. It is well established, however, that an easement of necessity is also available to a grantor of land -- the original owner who retains part of the land: see Gale on Easements, 19th ed. (London: Sweet & Maxwell, 2012), at p. 178; Depew v. Wilkes (2002), 2002 41823 (ON CA), 60 O.R. (3d) 499, [2002] O.J. No. 2987 (C.A.), at para. 21.

[23] Although English authority holds that the test for an easement of necessity is more difficult to meet when the easement is sought by the grantor rather than the grantee (see Gale on Easements, p. 179), it is not necessary to consider the matter for the purposes of this case. This case involves a grantor and there is no doubt that the test involving grantors is strict necessity.

[24] The strong test of strict necessity ensures that grantors are not permitted to derogate from the terms of their grant of land. If they want to reserve an easement, they should do so explicitly at the time they make the grant. An easement of necessity will be found only if it was necessary in order for the grantor to be able to use his or her property at the time of the grant. Water access to property defeats a claim of necessity, regardless of convenience. [page200]

[25] This court's decision in Bailey v. Barbour, [2016] O.J. No. 3261, 2016 ONCA 98 illustrates these points, albeit in the context of a claim by a grantee rather than a grantor. The court held that an easement of necessity was not available because the property for which the easement was sought -- an island sometimes joined to the beach isthmus during periods of low water levels -- was not inaccessible and hence unusable. Access to the island was certainly not convenient: previous owners of the island had used a rowboat, either by rowing it to the island or pulling as they waded across the water, or they had walked along the shoreline. Nevertheless, water access was possible, and that was enough to defeat an easement of necessity. The applicant's preference for a quicker and more convenient means of access by way of an easement was irrelevant.

[26] See, also, Fitchett v. Mellow (1897), 29 O.R. 6, [1897] O.J. No. 78 (H.C.J.); Hardy v. Herr, 1964 157 (ON SC), [1965] 1 O.R. 102, [1964] O.J. No. 809 (H.C.J.), affd 1965 225 (ON CA), [1965] 2 O.R. 801, [1965] O.J. No. 1055 (C.A.); and Manjang v. Drammeh (1990), 61 P. & C.R. 194 (P.C.), at p. 4. Although the trial judge in Dobson considered that water access could defeat an easement of necessity, the case was decided on its own facts -- in particular, a finding that the river in question was not navigable at the time of the grant.

Applying the Governing Principles

[27] At the time of the grant, in 2003, there was no legal entitlement to access to Part 2 across the Inn and Tennis Resort lands, and the Wises did not reserve an easement through Part 1, which was gifted to the Lipsons.

[28] Sheila Wise's evidence suggests that she expected to continue to enjoy access to part 2 across the inn and tennis resort lands. Evidence from Ms. Wise and Earl Lipson also suggests that it was Ben Wise's intention to make part 2 a water-access only property. The matter is not free from doubt, however, and the application judge made no decision concerning the parties' intentions.

[29] Be that as it may, there is no dispute that there was water access to part 2 at the time of the grant, and this is sufficient to defeat the respondent's application for an easement of necessity. The fact that part 2 had never been accessed by water is irrelevant. So too is the fact that water access was, and probably remains, inconvenient or impractical. Water access was available, so part 2 was not rendered unusable when the grant to the Lipsons was made.

[30] The application judge erred in holding that water access had to be sufficient for reasonable enjoyment of the property in [page201] order to render an easement of necessity unnecessary. Although Barbour was not available for the application judge to consider, it is now the authority on this question in Ontario. It was enough that water access to part 2 existed.

[31] There was no evidence that water access was not possible at the time of the grant. At its highest, the evidence established that water access [at para. 62] "does not offer a viable, or practical, means of access to and egress from Part 2", as the application judge put it, and this is not sufficient to establish an easement of necessity.

[32] The application judge's error flows from his conclusion that the necessity test had moved from strict necessity to "practical necessity". This is not correct. The necessity test has not been reduced to a requirement of "practical necessity", as the Nova Scotia Supreme Court held in Hirtle. The recent decisions of this court in McClatchie and Barbour reaffirm that the test for easements of necessity in Ontario is "strict necessity".

[33] In my view, Hirtle is not sound authority for the proposition that easements of necessity are creatures of public policy. Although there is no doubt that easements of necessity have the salutary effect of allowing land to be used, rather than rendered useless, easements of necessity flow from the intentions of the parties to a grant, not from public policy. Put another way, public policy does not provide an independent basis for a court to recognize an easement of necessity regardless of the parties' intentions in particular circumstances.

[34] This is reflected in McClatchie, which describes easements of necessity as arising as a matter of presumption and as an implied aspect of the grant. As the English Court of Appeal explained in Nickerson v. Barraclough, [1981] Ch. 426, [1981] 2 All E.R. 699 (C.A. (Civ. Div.)), at p. 447 Ch.:

[T]he law relating to ways of necessity rests not upon a basis of public policy but upon the implication to be drawn from the fact that unless some way is implied, a parcel of land will be inaccessible. From that fact the implication arises that the parties must have intended that some way giving access to the land should have been granted. . . . Public policy may inhibit the parties from carrying their intention into effect, but I cannot see how public policy can have a bearing upon what their intention was. In my judgment, that must be ascertained in accordance with the ordinary principles of construction, the language used and relevant admissible evidence of surrounding circumstances.

See, also, Adealon International Proprietary Ltd. v. Merton London Borough Council, [2007] E.W.C.A. Civ. 362, [2007] 1 W.L.R. 1898 (C.A. (Civ. Div.)), at para. 11; North Sydney Printing Pty Ltd. v. Sabemo Investment Corporation Pty Ltd., [1971] 2 N.S.W.L.R. 150; and Russell v. Pennings, [2001] W.A.S.C.A. 115. [page202]

[35] In summary, the application judge erred by failing to apply the test of strict necessity. Even assuming that the evidence of the surveyor was admissible, it did not satisfy that test. The availability of water access means that the test of necessity at the time of the grant is not met. Finally, the application judge also erred in law in holding that easements of necessity are creatures of public policy. Accordingly, an easement of necessity cannot be implied for the benefit of part 2.

Disposition

[36] I would allow the appeal.

[37] The appellants are entitled to their costs below, in the agreed amount of $11,000, and to costs on the appeal in the agreed amount of $13,000, both amounts inclusive of taxes and disbursements.

Appeal allowed.

End of Document