ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 13-40493
DATE: 2013-06-26

B E T W E E N:

Paul Johannes Dekort, Karen Marie Henderson, Heather Marie Moore, Deborah Tracy Patchett and Christopher William McWhirter

Stephen Peglar, for the Applicants

Applicants

• and -

Stephen Kilmer and Jennifer Kilmer

Sarah Draper, for the Respondents

Respondents

HEARD: in Hamilton June 18 and 20, 2013

The Honourable Mr. Justice T. R. Lofchik

REASONS FOR JUDGMENT

1This is an application for a declaration as to whether the applicants have any rights against the respondents as the result of each of the parties entering into a Private Road Maintenance Agreement with Van Hove Construction Limited, the developer of a private informal subdivision, and if so, that a mediator/arbitrator be appointed to mediate and arbitrate all issues arising in respect of maintaining a private road in accordance with a Private Road Agreement.

2The respondents (“the Kilmers”) are the owners of property municipally known as 1580 Centre Road, Carlisle, Ontario. They purchased their property from Van Hove Construction Limited (“Van Hove”) on July 27th, 2007.

3When they initially entered into an agreement of purchase and sale with Van Hove on May 5, 2006, Van Hove advised that it was not sure if it would be constructing separate access roads for additional properties to be developed on adjacent lands or if would be constructing one access road, as all of the applicants’ properties abut municipal roads.

4At some point in 2006 or 2007, Van Hove requested that the Kilmers grant a right of way and easement across a portion of their property, namely parts 3, 4, 6, 15 and 16 on Reference Plan 62R17626 (the “road”) in favour of the properties which are now owned by the applicants municipally known as 1582, 1584, and 1586 Centre Road, Carlisle, Ontario, to allow for easy access to those properties without the need of constructing private roadways for each. The Kilmers agreed to the right of way and easement as requested.

5In January 2010, the lawyers for Van Hove contacted the Kilmers and asked that they sign a new Private Road Agreement as the original agreement between them had been lost. The Kilmers signed a Private Home Agreement with Van Hove, which was registered on title to their property on August 27, 2010.

6Also in January 2010 the applicants each signed separate Private Road Agreements with Van Hove. The applicants’ Private Road Agreements are identical to the agreement signed by the Kilmers except that the parties to each agreement are different. The Kilmers are not a party to any of the applicant’s Private Road Agreements and none of the applicants are parties to the Kilmer-Van Hove Private Road Agreement.

7None of the applicants’ Private Road Agreements have been registered on title to the Kilmer property.

8Each Private Road Agreement is limited to only deal with the following scope of road maintenance:

(a) Snow plowing a minimum wide of 16 feet within 24 hours of every snow fall in excess of 6 inches;

(b) Regular grading to maintain the road surface in good condition;

(c) Adequate dust control; and

(d) Cutting back all trees, bush and shrubs to a distance of 10 feet on each side of the center line of the travelled portion of the road.

9Section 2 of each Private Road Agreement requires the owners of the road and the owners of the property accessed by the road to share the costs associated with maintenance.

10At Section 7, each Private Road Agreement states:

“The parties agreed to meet with each other when and as often as required for the purpose of discussing and resolving any issues arising in respect of maintaining the private road in accordance with Agreement. Any issues, which cannot be resolved in this manner, the parties agree to resolve by way of mediation or arbitration.”

11Disagreements have arisen between the parties in respect of issues of maintaining the private road in accordance with the Private Road Agreements and the applicants seek to have these issues resolved by mediation or arbitration pursuant to the terms of the Agreements.

12The respondents take the position that the applicants have no rights against them as there is no privity of contract between any of the applicants and the Kilmers.

13Counsel for the applicants argues that the individual agreements with each purchaser of a lot from Van Hove are in fact intended to make the applicants successors and assigns of Van Hove’s rights vis-à-vis Kilmer in the Private Road Agreement between Van Hove and Kilmer. The Kilmers refute this argument.

14The issue to be resolved is whether the applicants can require the respondents (Kilmers) to submit the issues between them with respect to the maintenance of the road upon which they cannot agree to mediation or arbitration.

15As a general rule a contract cannot confer rights or impose obligations under it on any person except the parties to it. (See London Drugs Ltd. v. Cuehne and Nagel International Ltd. [1992] 3 S.C.R. 299). However, relaxation of the rule of privity of contract is appropriate where its strict enforcement “does not respect allocations and assumptions of risk made by the parties to the contract”. (See Fraser River Pile & Dredge v. Can-Dive, [1999] 3 S.C.R. 108). In that case the Supreme Court of Canada at para. 38 set the test for third party beneficiary claims, namely, that in order for a third party to claim rights under a contract to which it is not a party there must be not only some discernable right to claim rights under a contract in which it is not a party, but they must be the very activity contemplated by the parties.

16This principle was applied by the Ontario Court of Appeal in Brown v. Belville (City) 2013 ONCA 148, 114 O.R. (3d) 561 where it was held that an enurement clause in an Agreement, essentially the same as clause 6 in the Private Road Agreement of the parties before the court, gave the assigns of the parties to the original Agreement the same rights as if they had been parties to the Agreement.

17Clause 6 in the all of the Private Road Agreements reads as follows:

“The Agreement shall be binding upon the parties hereto, their successors and assigns, and shall be registered against the title of parts 3, 4, 6, 15 and 16 on reference plan 62R17626 and shall run with the title of these lands.”

18The scheme set up by Van Hove, whereby it entered into Private Road Agreements with each of the parties with the enurement clause in it shows an intent that each of the parties should benefit from the Agreement with each of the other parties with respect to the very activity contemplated by the Agreements, namely a sharing of the cost of the maintenance of the road, a right to require a meeting of the parties for the purpose of discussing and resolving any issues arising in respect to maintaining the road in accordance with the Agreement and the right to have any issues which cannot be resolved submitted to mediation or arbitration.

19Counsel for the respondents argues that the provision in the applicants’ agreements that “owners” shall maintain the roads in good condition grants rights which Van Hove did not have because it did not own the road at the time of the agreement, however, this is just a statement of the common law obligation of owners of land benefited by the right of way to be responsible for its maintenance. (See Nuttal v. Jackson (1997), 1997 CarswellOnt 3948, 14 RPR (3d) 276 (Ont. Gen. Div.) leave to appeal refused [1998] O.J. [1908-10] ALL E.R. REP. 80, [1908] 1 Ch. 630 (Eng. Ch. Div.).

20The effect of the scheme set up by Van Hove in and entering into the Agreement with the Kilmers and at the same time entering into essentially an identical Agreement with each of the applicants is to make the applicants his assigns of rights flowing from the agreement with the Kilmers and allowing them to step into Van Hove’s shoes and have standing to enforce the Agreement with the Kilmers as if they were parties to the Agreement.

21In the alternative, an application of the principles annunciated in Fraser River Pile & Dredge v. Can-Dive would allow the applicants to benefit from the Agreement between the Kilmers and Van Hove as the situation here meets the test set out in that case.

22The affidavit of Peter Benjamin Van Hove filed in these proceedings states that although the owners of the property do not have a specific agreement amongst themselves, they understood that the Private Road Agreement would govern the terms and conditions amongst themselves with respect to the maintenance and care of the road in question. In the result a declaration to issue that the parties are bound by the provisions of the Private Road Agreement of which notice was registered on title to the Kilmer property as WE712336.

23It also ordered that a mediator/arbitration be appointed as agreed by the parties within 30 days to mediate and arbitrate all issues arising with respect to maintaining the road in question in accordance with the terms of the Private Road Agreements. If the parties cannot agree to a mediator or arbitrator, any one of them may apply to the court to have such mediator/arbitrator appointed by the court.

24The applicants shall have their costs on a partial indemnity basis. If the quantum of costs cannot be agreed upon the parties may make submissions in writing with the applicants delivering their submissions within 15 days of release of these reasons, the respondents their submissions within 10 days after that, and the applicants’ reply within 10 days after that.