Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69

Arthur Hill and Angus Hill Appellants

v.

The Attorney General of Nova Scotia Respondent

Indexed as: Hill v. Nova Scotia (Attorney General)

File No.: 24782.

1996: November 27; 1997: January 30.

Present: L’Heureux‑Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

on appeal from the court of appeal for nova scotia

Contracts ‑‑ Writing requirement ‑‑ Crown expropriating land and agreeing to right to cross highway as part of compensation package ‑‑ Statute requiring Minister to issue written permit ‑‑ Crown performing work required to effect and maintain highway crossing ‑‑ Crown denying grant of interest in land because writing requirement not met ‑‑ Whether Crown can rely on absence of written permit to deny creation of interest to cross the highway ‑‑ Public Highways Act, R.S.N.S. 1954, c. 235, s. 21.

Expropriation ‑‑ Crown expropriating land and agreeing to right to cross highway as part of compensation package ‑‑Statute requiring Minister to issue written permit ‑‑ Crown performing work required to effect and maintain highway crossing ‑‑ Crown denying grant of interest in land because writing requirement not met ‑‑ Whether Crown can rely on absence of written permit to deny creation of interest to cross the highway ‑‑ Public Highways Act, R.S.N.S. 1954, c. 235, s. 21.

Nova Scotia expropriated land for construction of a controlled access highway which bisected the Hill farm. Those representing the Department of Transport at the time, by their words and actions, represented that the landowner would receive an interest in the highway lands which would permit him to move people, equipment and cattle back and forth across the highway. The Department of Transport, in compliance with these representations, constructed necessary fences, gates and ramps and maintained them for over 27 years. The Crown now denies the creation of an interest in the land and alleges that the arrangement contravened s. 21 of the Public Highways Act which provided that no person should construct a private road, entrance way or gate connecting with or opening on a controlled access highway without a written permit from the Minister. At issue here was whether, as part of the consideration for the expropriated lands, the province granted an equitable interest in those lands permitting the movement of cattle and equipment across the highway.

Held: The appeal should be allowed.

The province complied with its promise to provide access across the highway by building fences, gates and ramps and maintaining them for over 27 years. The appellants accordingly acquired an “equitable permission” (or interest) to enter upon and cross the highway. The requirement in s. 21(1)(a) of the Public Highways Act that this permission should be in writing may well be satisfied here, and even assuming that it was not, was merely a reflection of the Statute of Frauds. Where the terms of an agreement have already been carried out, the danger of fraud is reduced or averted. Here, strict adherence to the literal terms of the writing requirement would not serve the purpose of averting a fraud. Fraud would not be prevented; rather the appellants would be defrauded. Neither s. 21(1) nor s. 25 of the Expropriation Act applied. Even if they were applicable, the doctrine of part performance would prevent the Crown from relying on them.

An estoppel cannot be raised against the Crown in the face of a contrary statutory requirement. Yet, a writing requirement cannot circumvent the application of the doctrine of part performance; its purpose is to avoid the inequitable operation of the Statute of Frauds. (It does not matter that one of the parties is the Crown. The writing requirement is no more pressing with respect to the Crown than with private persons.) This reasoning cannot be extended to permit estoppel in the face of statutes other than the Statute of Frauds. The writing requirement must give way in the face of part performance or estoppel by conduct because the part performance or conduct fulfils the very purpose of a written document. Other statutory provisions may so differ in their aim and purpose that their requirements for the execution of written forms or documents will generally be mandatory.

The landowner, in 1967, acquired an equitable permission or right to enter upon and cross the highway which differs from the kind contemplated by s. 21(1)(a) of the Public Highways Act only to the extent that it is not in writing. An equitable permission is a compensable interest in land within the broad meaning of that term found in s. 1(c) of the Expropriation Act.

The release, made on reaching agreement as to compensation and executed pursuant to that agreement, cannot constitute a bar to payment of compensation for the taking of appellants’ equitable interest in the land which was an integral part of the consideration. The release did not contemplate or effect the equitable interest in land.

Cases Cited

Not followed: Howell v. Falmouth Boat Construction Co., [1951] A.C. 837; referred to: Steadman v. Steadman, [1976] A.C. 536; Daigle v. Clair (Village of) (1986), 1986 CanLII 5468 (NB QB), 70 N.B.R. (2d) 129; Crabb v. Arun District Council, [1975] 3 All E.R. 865; White v. Central Trust Co. (1984), 1984 CanLII 3002 (NB CA), 54 N.B.R. (2d) 293.

Statutes and Regulations Cited

Expropriation Act, R.S.N.S. 1954, c. 91, ss. 1(c), 21(1), 25.

Public Highways Act, R.S.N.S. 1954, c. 235, s. 21(1)(a).

APPEAL from a judgment of the Nova Scotia Court of Appeal (1995), 1995 NSCA 73, 140 N.S.R. (2d) 116, 399 A.P.R. 116, 56 L.C.R. 252, 45 R.P.R. (2d) 169, [1995] N.S.J. No. 153, allowing an appeal and dismissing a cross‑appeal from a judgment of Scanlan J. (1994), 1994 CanLII 18992 (NS SC), 132 N.S.R. (2d) 265, 376 A.P.R. 265, 54 L.C.R. 96, [1994] N.S.J. No. 303, declaring an equitable easement. Appeal allowed.

Douglas A. Caldwell, Q.C., and Lloyd I. Berliner, for the appellants.

Alexander M. Cameron and Margaret MacInnis, for the respondent.

\Cory J.\

The judgment of the Court was delivered by

1 Cory J. -- In order to build a controlled access highway, the province of Nova Scotia expropriated land which bisected the Hill farm. The issue to be resolved is whether, as part of the consideration for the expropriated lands, the province granted Hill an equitable interest in those lands permitting him to move cattle and equipment back and forth across the highway.

1 On an application brought before him, Scanlan J. (1994), 1994 CanLII 18992 (NS SC), 132 N.S.R. (2d) 265, found that during the expropriation of the Hill property in 1966, the Province had granted an equitable easement across the highway to Ross Hill. The majority of the Court of Appeal, (1995), 1995 NSCA 73, 140 N.S.R. (2d) 116, Freeman J.A. dissenting, found that no compensable interest in land existed and set aside the order of Scanlan J. For reasons which differ somewhat from those of Freeman J.A., I would allow the appeal and restore the order of Scanlan J.

1 The appellants are the sons of Ross Hill and the successors in title to his farmlands. In 1966 and 1967 the respondent was acquiring land for the construction of the Trans-Canada Highway in Nova Scotia. During that time, discussions were held with Ross Hill relating to the expropriation of his land and the compensation to be paid. The proposed highway bisected the Hill farm dividing the northern portion from the southern.

1 The actions and words both oral and written of those representing the Department of Transport clearly demonstrate that a representation was made that Hill, as part of the compensation, would receive an interest in the highway lands which would permit the moving of people, equipment and cattle back and forth across the highway.

1 In compliance with their representations the Department of Transport constructed fences, gates and ramps which would permit and facilitate the movement of people, equipment and cattle between the two segments of the Hill farm. For over 27 years the Department of Transport maintained and on occasion improved the ramps. During this period they were used by Hill and his sons in the course of their farming operations. These actions serve to confirm and entrench the representation that Hill was to have an interest in land which would permit him to move equipment and cattle across the highway between the bisected portions of his farm. The actions of the province speak louder than any written document.

1 The representation that he had an interest in land, which closely resembles an easement, was relied upon by Ross Hill. It can and should be inferred that the interest in land formed a part of the consideration ultimately accepted by Ross Hill for the expropriation of his property. Thus it is apparent that he relied to his detriment upon the representation made to him by the Department of Transport. Without the representation the consideration for the taking would have been higher to compensate Hill for the injurious affection suffered as a result of the highway’s dividing his property. The Department of Transport by its actions in constructing fences, gates and ramps and maintaining them over 27 years and recognized and confirmed its representation that Hill had an interest in land that enabled him to move cattle and equipment across the highway.

1 The representation as to the interest in land formed an integral and essential part of the overall agreement between the parties most particularly as to the consideration to be paid for the expropriated land. The Department of Transport through the actions of its authorized agents confirmed their representation to Hill that he would have a permanent right of way over the highway.

1 The province promised Mr. Hill access to the highway. It complied with and carried out that promise by building and maintaining for 27 years ramps giving access to the highway from Mr. Hill’s land. Accordingly, Mr. Hill acquired what could be called an “equitable permission” (or interest) to enter upon and cross the highway. It is true that s. 21(1)(a) of the Public Highways Act, R.S.N.S. 1954, c. 235, requires that such permission be in writing and it may well be that this requirement was satisfied in this case. However assuming it was not, the writing requirement is merely a reflection of the Statute of Frauds, whose purpose is to prevent “many fraudulent practices, which are commonly endeavoured to be upheld by perjury and subornation of perjury”. See Steadman v. Steadman, [1976] A.C. 536 (H.L.), at p. 558, quoting the preamble to the Statute of Frauds, 1677 (Eng.).

1 Where the terms of an agreement have already been carried out, the danger of fraud is averted or at least greatly reduced. To borrow a phrase from the law of tort, the thing speaks for itself. In the present case, for example, it does not matter so much what was said. What is critical is what was done; and what was done was the construction and maintenance of access ramps. There is no mistaking the purpose for which those ramps were constructed: it was to allow Mr. Hill a way of reaching and crossing the highway. Accordingly, in this instance strict adherence to the literal terms of the writing requirement would not serve the purpose for which it was devised. Fraud would not be prevented; rather, the appellants would be defrauded.

1 It is for this reason that equity evolved the doctrine of part performance:

[This doctrine] was evoked when, almost from the moment of passing of the Statute of Frauds, it was appreciated that it was being used for a variant of unconscionable dealing, which the statute itself was designed to remedy. A party to an oral contract for the disposition of an interest in land could, despite performance of the reciprocal terms by the other party, by virtue of the statute disclaim liability for his own performance on the ground that the contract had not been in writing. Common Law was helpless. But Equity, with its purpose of vindicating good faith and with its remedies of injunction and specific performance, could deal with the situation. The Statute of Frauds did not make such contracts void but merely unenforceable; and, if the statute was to be relied on as a defence, it had to be specifically pleaded. Where, therefore, a party to a contract unenforceable under the Statute of Frauds stood by while the other party acted to his detriment in performance of his own contractual obligations, the first party would be precluded by the Court of Chancery from claiming exoneration, on the ground that the contract was unenforceable, from performance of his reciprocal obligations; and the court would, if required, decree specific performance of the contract. Equity would not, as it was put, allow the Statute of Frauds “to be used as an engine of fraud.” This became known as the doctrine of part performance -- the “part” performance being that of the party who had, to the knowledge of the other party, acted to his detriment in carrying out irremediably his own obligations (or some significant part of them) under the otherwise unenforceable contract. [Steadman v. Steadman, supra, at p. 558.]

1 Quite simply equity recognizes as done that which ought to have been done. A verbal agreement which has been partly performed will be enforced. See Daigle v. Clair (Village of) (1986), 1986 CanLII 5468 (NB QB), 70 N.B.R. (2d) 129 (Q.B.), and Crabb v. Arun District Council, [1975] 3 All E.R. 865 (C.A.), per Lord Denning, at p. 872. That should be the result in this case.

1 This doctrine of part performance operates in this case to prevent the Crown from relying on the writing requirement in s. 21(1)(a) of the Public Highways Act. That section provides:

21 (1) Where a highway or portion thereof has been designated as a controlled access highway, no person shall, without a written permit from the Minister,

(a) construct, use or allow the use of, any private road, entrance way or gate which or part of which is connected with or opens upon the controlled access highway; . . .

1 I do not believe either s. 21(1) or s. 25 of the Expropriation Act, R.S.N.S. 1954, c. 91 (later R.S.N.S. 1967, c. 96, ss. 22(1), 26), are applicable to the facts of this case. They provide:

21 (1) Where at any time before the compensation has been actually ascertained or determined, land taken or expropriated under the provisions of this Act, or any part of such land, is found to be unnecessary for the purpose for which the same was taken or expropriated, or if it is found that a more limited estate or interest therein only is required, the Minister may by writing under his hand, registered in the proper registry office, declare that the land or such part thereof is not required and is abandoned by the Crown, or that it is intended to retain only such limited estate or interest as is mentioned in such writing. . . .

25 If the injury to any land or property alleged to be injuriously affected by the exercise of any of the powers conferred by this Act may be removed wholly or in part by any alteration in, or addition to, any public work, or by the construction of any additional work, or by the abandonment of any part of the land taken from the claimant, or by the grant to him of any land or easement, and if the Crown, before an award is made, undertakes to make such alteration or addition, or to construct such additional work, or to abandon such portion of the land taken or to grant such land or easement, the damages shall be determined in view of such undertaking and the judge shall declare that, in addition to any damages awarded, the claimant is entitled to have such alteration or addition made, or such additional work constructed or such part of land abandoned or such grant made to him. [Emphasis added.]

Even if they were applicable, the doctrine of part performance would prevent the Crown from relying upon them. Quite simply the written and spoken words of the Crown and its actions demonstrate that Hill was to have an equitable interest in the expropriated lands as an integral and essential part of the compensation paid for those lands.

The result is that Mr. Hill acquired in 1967 an equitable permission or right to enter upon and cross the highway -- a permission that differs from the kind that s. 21(1)(a) contemplates only to the extent that it is not in writing. An equitable permission is a compensable interest in land within the broad meaning of that term found in s. 1(c) of the Expropriation Act. That section provides that “‘land’ includes any estate, term, easement, right or interest to, over, or affecting land”. It follows that as a general rule compensation should be paid for the expropriation of such an interest.

To the extent that the decision of the House of Lords in Howell v. Falmouth Boat Construction Co., [1951] A.C. 837, is to the contrary, I would not follow it. It is true that an estoppel cannot be raised against the Crown in the face of a contrary statutory requirement. Yet, a writing requirement cannot circumvent the application of the doctrine of part performance. As the decision of the House of Lords in Steadman, supra, makes clear, the very purpose of the doctrine of part performance is to avoid the inequitable operation of the Statute of Frauds. Nor does it matter that in this case one of the parties is the Crown. The requirement of writing is not more pressing with respect to the Crown than it is with respect to private persons. However, it must be said that this reasoning cannot be extended to permit estoppel in the face of statutes other than the Statute of Frauds (and its equivalents). The writing requirement is specifically required to give way in the face of part performance or estoppel by conduct, because the part performance or conduct fulfils the very purpose of a written document. Yet other statutory provisions may so differ in their aim and purpose that their requirements for the execution of written forms or document will generally be mandatory.

How very unfair it would be to permit the Crown, 27 years after obtaining the benefit of a lower price for the land expropriated to allege that the very arrangement it made and carried out was prohibited by the provisions of s. 21 of the Public Highways Act. For the reasons set out earlier that position is untenable. Indeed, to accept it would make a mockery of equitable fairness and to permit, indeed encourage, governmental misrepresentation.

In summary, there was then a representation made by authorized representatives of the Crown that Hill would have an interest orally and by letters in land permitting him to cross the highway with cattle and equipment. There was the compliance by the Crown with its representations by means of both construction and maintenance. It was contemplated that Hill would, as he did, rely upon them. He did so to his detriment. The words and actions of the Crown created an equitable interest in the land in the form of a right of way over the highway. The Crown intended it to be used and it was for over 27 years. It would be unjust not to recognize the representations and actions of the Crown which created the equitable interest in land when they were relied upon by Hill. That equitable interest in the land comes within the definition of land in the Expropriation Act and damages arising from its taking should as a general rule be compensable. It remains only to determine if the release signed by Ross Hill stands as a bar to recovery.

In my opinion the release cannot and should not constitute a bar. The release specifically indicates that the parties have reached an agreement regarding compensation under the Expropriation Act and that the release is executed pursuant to this agreement. It goes on to provide that the consideration was $1.00 and “other good and valuable consideration”.

In White v. Central Trust Co. (1984), 1984 CanLII 3002 (NB CA), 54 N.B.R. (2d) 293 (C.A.), La Forest J.A., as he then was, sagely observed at pp. 310-11:

As Lord Westbury stated in the House of Lord’s case of London and South Western Railway Co. v. Blackmore (1870), L.R. 4 H.L. 610, at p. 263: “the general words in a release are limited always to that thing or those things which were specially in the contemplation of the parties at the time when the release was given”.

What the statement quoted means is that in determining what was contemplated by the parties, the words used in a document need not be looked at in a vacuum. The specific context in which a document was executed may well assist in understanding the words used. It is perfectly proper, and indeed may be necessary, to look at the surrounding circumstances in order to ascertain what the parties were really contracting about. [Emphasis added.]

Considering this release in the context of the expropriations proceedings it becomes clear that an essential and integral element of the consideration was the equitable interest in land which provided the right of way over the highway. The release did not contemplate or affect the equitable interest in land. It follows that the release cannot constitute a bar to payment to the appellants of compensation for the taking of their equitable interest in the land.

In the result I would allow the appeal, set aside the order of the Court of Appeal and restore the order of Scanlan J. The appellants should have their costs of these proceedings throughout. If the parties are not in agreement as to the appropriate scale of costs the issue can be raised with this Court.

Appeal allowed with costs.

Solicitors for the appellants: Patterson, Palmer, Hunt, Murphy, Truro.

Solicitor for the respondent: The Attorney General of Nova Scotia, Halifax.