Court File and Parties

Citation: Nhem v. Simpson, 2024 ONSC 841 Divisional Court File No.: DC-23-1364 Date: 2024-02-09

Superior Court of Justice – Ontario Divisional Court

Re: Christna Nhem, Applicant (Respondent on Appeal) And: Brett Simpson and Krysti Simpson, Respondents (Appellants)

Before: D.L. Corbett, McGee, Ryan Bell JJ.

Counsel: Aziza Hirsi, for the Respondent in Appeal Mark Vernon and Jonathan Friedman, for the Appellants

Heard at Oshawa: January 24, 2024

Endorsement

Ryan Bell J.

[1] This appeal arises from a terminated agreement of purchase and sale for a residential property in Penetanguishene. Ms. Nhem terminated the purchase agreement when a title search of the property disclosed the existence of an easement in favour of Consumer’s Gas permitting the construction and maintenance of a natural gas pipeline across the rear yard of the property, and the Simpsons failed to remove the easement from title. Ms. Nhem commenced an application seeking the return of the deposit. The Simpsons sought damages for breach of contract.

[2] In his order dated February 7, 2023, Bale J. granted Ms. Nhem’s application and dismissed the Simpsons’ application.

[3] The principal issue on the appeal is whether the application judge committed a palpable and overriding error in finding that the purchase agreement did not provide sufficient notice of the easement. In my view, the application judge erred in so finding and I would allow the appeal.

[4] The parties used the standard OREA agreement of purchase and sale, which provided, at para. 10:

Provided that title to the property is good and free from all registered restrictions, charges, liens, and encumbrances except as otherwise specifically provided in this Agreement and save and except for… (c) any minor easements for the supply of domestic utility or telephone services to the property or adjacent properties….

[5] In the purchase agreement, the legal description of the property included an express reference to the registered easement: “S/T R0638366” (subject to instrument no. R0638366). On the standard form, immediately below the property’s legal description, are the words, “Legal description of land including easements not described elsewhere.” (emphasis added)

[6] The same legal description for the property, including the reference to the easement, was used on the MLS listing. Ms. Nhem was represented throughout by an experienced realtor.

[7] Paragraph 10 of the purchase agreement provides that the title to the property is good and free from all registered restrictions, charges, liens, and encumbrances “except as otherwise specifically provided in this agreement” and other specified exceptions. That the property was subject to a registered easement was specifically and clearly disclosed in the purchase agreement. Further, the respondent in appeal did not establish that para. 10(c) did not apply, that is, that the pipeline did not fit within the category of “minor easements for the supply of domestic utility services to the property.” The home on the property included several gas appliances, so on the inspections undertaken by the respondent in appeal, it would have been evident that the property was serviced with gas. With respect, it was a palpable and overriding error for the application judge to conclude that the respondent in appeal did not have notice of the easement in the purchase agreement.

[8] Given my conclusion on this issue, it is not necessary for me to address the other issues raised on the appeal.

[9] For these reasons, I would allow the appeal. The matter will be returned to the application judge to determine the issue of damages. In accordance with the parties’ agreement, Ms. Nhem shall pay the Simpsons costs of the appeal in the amount of $5,000 all inclusive.

“Ryan Bell J.”

I agree: “D.L. Corbett J.”

I agree: “McGee J.”

Date of Release: February 9, 2024