COURT OF APPEAL FOR ONTARIO

CITATION: Paleshi Motors Limited v. Woolwich (Township), 2020 ONCA 625

DATE: 20201005

DOCKET: C67333

Doherty, Hoy and Jamal JJ.A.

BETWEEN

Paleshi Motors Limited

Appellant

and

The Corporation of the Township of Woolwich

Respondent

Shane Rayman, Conner Harris and Sarah Spitz, for the appellant

Peter A. Hertz, for the respondents

Heard: In writing

On appeal from the judgments of Justice G.E. Taylor of the Superior Court of Justice, dated July 22, 2019, with reasons reported at 2019 ONSC 4388.

REASONS FOR DECISION

I

[1] In late 1979, or early 1980, the respondent, the Corporation of the Township of Woolwich (“Woolwich”), installed a watermain on property subsequently acquired by the appellant, Paleshi Motors Limited (“the Paleshi property”). The watermain has remained in place and in use since then.

[2] In 2019, the present owners of Paleshi Motors brought an application seeking a declaration the watermain was illegally on their property and an order directing the removal of the watermain. At the same time, Woolwich brought an application seeking a declaration it had a prescriptive easement over the Paleshi property for the purposes of operating, maintaining, repairing and replacing the watermain.

[3] The application judge dismissed Paleshi Motors’ application, and granted the prescriptive easement sought by Woolwich. Paleshi Motors appeals. The appeal proceeded in writing on consent. We dismiss the appeal and affirm the judgment below.

II

[4] The Paleshi property consists of two adjacent lots known collectively as 39 Arthur Street North, Elmira. The lots are designated as Lots 20 and 21 on Plan 1301.

[5] Lot 20 is accessed from Arthur Street North. Paleshi Motors acquired Lot 20 in July 1975 and operates an auto salvage yard on that property. Lot 21 lies immediately to the east of Lot 20. It is undeveloped and zoned open space. Paleshi Motors acquired Lot 21 in July 1981.

[6] In late 1979 or early 1980, Woolwich installed a watermain just inside the eastern boundary of Lot 21. That watermain ran for some 200 feet along Lot 21. It was put in place to “loop” that part of Woolwich’s water services. Looping improves the water quality for nearby residents using the water services, and provides a stronger and more reliable water flow to the fire department in the event of a fire in that area.

[7] It is common ground the watermain was installed by Woolwich on property it did not own. Woolwich did not seek or obtain the permission of the owner of Lot 21, and did not attempt to enter into any easement agreement with the owner. The application judge found Woolwich was aware part of the watermain was being built on property not owned by Woolwich (para. 26).

[8] Paleshi Motors was acquired by new owners in 2015. None of the owners of the Paleshi property objected to either the installation or maintenance of the watermain until Paleshi Motors, under its new owners, objected in 2017.

[9] The Paleshi property was converted to the Land Titles Registry system on September 16, 2002. To establish a prescriptive easement, Woolwich had to show it met the required criteria for the 20 years between September 16, 1982 and September 16, 2002. There was no evidence from anyone who owned the Paleshi property during the 20-year period, or from anyone associated with any owner, as to the owner’s knowledge of the existence of the watermain, or any arrangement that existed between the owners and Woolwich with respect to the watermain. The application judge was left to draw inferences from the circumstantial evidence and the documents filed on title to Lot 21 and documents referred to in those documents.

III

[10] The application judge correctly identified the prerequisites to the existence of a prescriptive easement (see paras. 19, 20). He also correctly self-instructed as to the policy considerations at play when considering prescriptive easement claims (para. 24).

[11] There was no doubt Woolwich’s use and enjoyment of the Paleshi property for the purposes of the watermain was continuous, uninterrupted and peaceful during the relevant 20-year period. Paleshi Motors claimed, however, Woolwich did not establish its use was “open”, in the sense that the owners of the Paleshi property knew, or could reasonably be expected to have known, of the existence of the watermain on their property during the 20-year period. Not surprisingly, the application judge focused on this issue in his reasons.

[12] The application judge ultimately concluded the owners of the Paleshi property during the relevant 20 years had acquiesced in the use of their property for the watermain (para. 33). In reaching that conclusion, the application judge drew inferences based on the public nature of the construction in 1970-80, the regular maintenance of the watermain after it was installed, and Paleshi Motors’ ownership of the immediately adjacent lot (Lot 20) when construction occurred and maintenance was carried out.

[13] The application judge also referred to Paleshi Motors’ purchase of Lot 21 in 1981, a little more than a year after the installation of the watermain. In considering whether the owners of Paleshi Motors were aware of the watermain on their property when they purchased Lot 21, the application judge was entitled to conclude the owners exercised reasonable diligence as purchasers when buying Lot 21.

[14] The application judge also pointed to a document prepared at Paleshi Motors’ request in respect of its proposed development of Lot 21 in 1986. That document contained a sketch showing the watermain running along the Paleshi property on Lot 21. We take this to be a finding Paleshi Motors had actual knowledge of the existence of the watermain on their property no later than 1986. There was no evidence the owners of Paleshi Motors took any action in 1986, leading to the reasonable inference the sketch showing the watermain on Lot 21 simply confirmed what the owners of Paleshi Motors already knew – the watermain was located on Lot 21.

[15] In concluding the owners of the Paleshi property acquiesced in the use of their property for the watermain, the application judge was not required to find the owners had actual knowledge of the existence of the watermain on their property throughout the relevant period. Actual knowledge, which the application judge found existed after 1986, or imputed knowledge will suffice. Knowledge of the existence of the watermain could be imputed to the owners of the Paleshi property if an ordinary landowner, diligent in the protection of her interests, would have had a reasonable opportunity of becoming aware of the watermain: Garfinkel v. Kleinberg and Kleinberg, 1955 CanLII 112 (ON CA), [1955] O.R. 388 (C.A.).

[16] In our view, there is nothing unreasonable, either in the inferences drawn by the application judge, or in his ultimate conclusion that the owners of the Paleshi property had knowledge, actual or imputed, of the existence of the watermain by 1982 and acquiesced in Woolwich’s use of their property for that purpose over the next 20 years.

[17] A finding that the owners acquiesced in the use of the property by Woolwich goes to the openness of that use. It does not necessarily determine whether the use was “as of right”, in the sense the owners had not permitted the use. The application judge found Paleshi Motors had failed to “prove” it had permitted Woolwich to use the property for the purposes of the watermain (para. 33). Paleshi Motors argues the application judge wrongly reversed the burden of proof. It submits Woolwich had to prove the absence of any permission by the owners of the Paleshi property. Woolwich counters with the submission the application judge did not reverse the burden of proof but, having found acquiescence by the Paleshi property owners, looked to the owners to point to evidence indicating that acquiescence was explained by permission having been given for the use of the property by Woolwich.

[18] The application judge’s language tracks closely the language of this court in Condos Castles Realty Inc. v. Janeve Corp., 2015 ONCA 466, at paras. 19-20, although the application judge’s reference to Paleshi Motors being required to “prove” the use was by way of permission could be read as going beyond the evidentiary burden referred to in Condos Castles Realty Inc. Paleshi Motors also submits Condos Castles Realty Inc. is distinguishable on its facts.

[19] It is unnecessary to parse the language of the application judge and decide whether he was speaking of a persuasive or evidentiary burden in the impugned passage. Unlike many prescriptive easement cases, this case did not turn on the distinction between acquiescence and permission. There was no evidence from either Paleshi Motors or Woolwich that the owners of the Paleshi property had ever given Woolwich permission to install or maintain the watermain. The application judge found Woolwich acted unilaterally when it installed the watermain. On the application, Paleshi Motors adamantly denied any permission had ever been given. On the evidence adduced, it would have been speculation to conclude any owner of the Paleshi property may have permitted Woolwich to use the property for the purposes of the watermain. Even if the application judge misplaced the ultimate burden of proof, it had no possible effect on his finding Woolwich did not have permission to use the property.

[20] Paleshi Motors also raises a novel legal argument. It submits the requirement the easement accommodate the dominant tenement must be given a special meaning when the dominant tenement is a public authority. Paleshi Motors argues that if a public authority, like Woolwich, is claiming the easement, Woolwich must demonstrate that the easement is necessary, in the sense there is no other way to acquire the interest in the land other than by way of an prescriptive easement. Given the land acquisition powers of most public authorities, this submission would bring an end to prescriptive easements in favour of entities like Woolwich. Paleshi Motors acknowledges as much in its supplementary factum, at para. 21:

Such an easement should never be necessary in the case of a public body with the power to compulsorily acquire the necessary easement while protecting private property rights.

[21] Setting aside for the moment the argument based on Woolwich’s status as a public body, Woolwich established the requirement that the easement accommodate the dominant tenement. The installation of the loop in the watermain improved water services for affected properties along the adjoining street. In doing so, it enhanced the enjoyment of that property by the owners and Woolwich: Mihaylov v. 1165996 Ontario Inc., 2017 ONCA 116, at para. 81. There is an obvious and direct connection between the improved water services and the enhanced enjoyment of the properties benefitting from those improvements.

[22] We must also reject the submission that, because Woolwich is a public authority and could have expropriated the property, it should not be able, as a matter of law, to claim a prescriptive easement. Nothing in the case law offers any support for this proposition. The lay of the statutory land is also against Paleshi Motors. As counsel for Woolwich observed, to the extent the Municipal Act speaks to the issue, it offers support for the power of a municipality to acquire prescriptive easements in the same way as other legal entities: see Municipal Act, 2001 S.O. 2001, ss. 6, 8, 9. Furthermore, the legislature can, and has, when it deems it appropriate, expressly foreclosed or limited the acquisition of property rights by prescription: see Land Titles Act, R.S.O. 1990, c. L.5, s. 51(2). The legislature has not acted to prevent entities like Woolwich from acquiring property rights by way of prescriptive easements.

[23] Lastly, we do not accept Paleshi Motors’ argument that policy considerations all favour denying public bodies like Woolwich the ability to acquire prescriptive easements. There are policy reasons for distinguishing between public authorities and private landowners insofar as the acquisition of easements by prescription is concerned. However, the fundamental policy underlying the common law’s recognition of prescriptive easements applies to all property owners. Prescriptive easements rest on a policy which holds, after the passage of a significant period of time, during which one owner has acquiesced in the use of its property by another owner, that other owner becomes entitled to rely on that acquiescence and conduct itself accordingly. Whether that policy should apply to all, some, or no public authorities, is a question for the legislature.

[24] The appeal is dismissed.

[25] Woolwich, as the successful party, will provide costs submissions in writing within 14 days. Those submissions should not exceed five pages. Paleshi Motors will provide its submissions in response within 14 days of receiving the respondent’s costs submissions. Those submissions shall not exceed five pages.

“Doherty J.A.”

“Alexandra Hoy J.A.”

“M. Jamal J.A.”