ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

ELAINE GOLD, LISSA BROWN, ROBERT FAIRLEY and PETER FAIRLEY

Applicants

• and -

DIANNA CHRONAS and MARK KANE

Respondents

Michael W. Carlson,
for the Applicants

James C. Morton,
for the Respondent s

HEARD: November 18 , 2014

F.L. Myers J.

REASONS FOR decision

Background

1The applicants seek an injunction restraining the respondents from interfering with their access to the laneway at the rear of their properties. For the reasons that follow, the relief as sought is granted.

The Facts

2Lissa Brown is the owner of 78 Brock Ave. in Toronto. Elaine Gold is the owner of 80 Brock Ave. Robert and Peter Fairley own 84 Brock Ave. Robert Fairley is the owner of 86 Brock Ave. All of the houses are contiguous neighbours. There is no property with the address 82 Brock Ave.

3There is no access from the front of the applicants’ houses to Brock Ave. The street is many feet below the front boundary of the properties. There is a fence and retaining wall preventing access to the applicants’ properties from Brock Ave.

4The only vehicular access to the properties at 78, 80, and 84 Brock Ave. is via the laneway at the back of the properties. 84 Brock Ave. is a landlocked townhouse. The door of the basement rental unit is at the back of the property facing the laneway. It can only be accessed from the laneway. Mr. Fairley’s other property, 86 Brock Ave., is at the corner of Brock Ave. and Cunningham Ave. and does not rely upon the laneway as its driveway or for access.

5The laneway is part of 7 Cunningham Ave., Toronto. The laneway is owned by the respondents who own 7 Cunningham Ave.

6From 1948 until 1960, there was a deeded right-of-way under which the owners of the applicants’ properties were entitled to use the laneway and the owner of the respondents’ property was similarly burdened by the right-of-way and suffered the use of the laneway accordingly.

7In 1960, 7 Cunningham Ave. was sold. The deed makes no reference to the servient right-of-way obligation. The deeds of the applicants and their predecessors in title have continued to show their dominant tenements to date. Moreover, a survey for 7 Cunningham Ave. prepared in 1990 and a survey for 80 Brock Ave. prepared in 1986 clearly show the right-of-way.

8There is no evidence as to why the servient tenement disappeared from title to 7 Cunningham Ave. in 1960. Absent evidence that there was a valid basis to delete the servient tenement, it appears that the maxim nemo dat quod non habet would apply to prevent the former owner from enlarging the title of the new owner in 1960. He did not have the right to sell the fee free of the easement. One cannot enhance one’s purchase by a false description. Woodrow v. Connor, [1922] O.J. No. 186,52 O.L.R. 631 (C.A.)

9The respondents argue that since a search of title to 7 Cunningham Ave. for the past 40 years (or to the 1960 deed being the last deed registered before the 40-year period) would not reveal the servient tenement and since none of the applicants or their predecessors in title registered a notice of claim on title to 7 Cunningham Ave. in the 40 years since the last reference to the right-of-way in a registered instrument, subsection 113(1) of the Registry Act, R.S.O. 1990, c.R.20 extinguished the right-of-way.

10The applicants argue that their rights survive either based upon the doctrine of proprietary estoppel or by reason of subclause 113(5)(a)(iv) of the Registry Act.

11The respondents have owned 7 Cunningham Ave. since September, 2006. Mr. Kane testifies that when they bought their home, “…there was no suggestion that any of the applicants had a right to use our property”. He must not have realized that the laneway was part of the property that he was buying since it is perfectly obvious that it serves as the driveway for the applicants’ homes. The respondents had knowledge of the laneway and its use by the occupants of the applicants’ homes. The respondents do not deny the evidence of each of the applicants that each of them has used the laneway for access to their properties and, significantly, in all but one case, for tenants to obtain access to leased premises in the properties throughout their ownership (Gold from 2009, Brown from 2003, and Fairley from 2001).

12There are statutory declarations registered on title that purport to show continuous usage of the rights-of-way as far back as their creation in 1948. Mr. Kane recites, by way of information and belief, some evidence to the contrary. I note that the evidence from Ms. Krakocki is not inconsistent with the evidence of long-term use by the applicants. The evidence of the respondents’ next door neighbour is double hearsay and inadmissible as the neighbour is not identified. The evidence concerning Hung and Thu is wholly unparticularized.

13While I would not accept this evidence as disproving the applicants’ evidence, I do not need to make a historical finding in this case. The applicants do assert prescriptive easements. They do not have sufficient evidence to meet the test prior to 2003 when 7 Cunningham Ave. was registered under qualified land titles. As is dealt with below, subclause 113 (5)(a)(iv) of the Registry Act, does require a finding that the applicants are openly enjoying and using the right-of-way. As noted above however, the respondents do not deny the applicants’ evidence concerning their present use of the laneway.

Analysis

Proprietary Estoppel

14The doctrine of proprietary estoppel was subject to very recent review by the Court of Appeal. In Clarke v. Johnson, 2014 ONCA 237, Pepall J.A., writing for the court, set out the test for the application of proprietary estoppel in Ontario as follows:

52A summary of the principles governing proprietary estoppel based on the modern approach include the following:

• proprietary estoppel may form the basis of a cause of action;

• it is not essential that the five probanda be satisfied;

• rather, three elements must be established:

(i) the owner of the land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over the property;

(ii) in reliance upon his belief, the claimant acts to his detriment to the knowledge of the owner; and

(iii) the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive;

• detriment includes expenditures but countervailing benefits may also be considered;

• reliance may be express or inferred;

• if an equity arises, the court has a broad discretion to fashion an appropriate remedy.

53That said, one must be reminded of Oliver J.’s observation in Taylor Fashions at p. 913:

I am not at all convinced that it is desirable or possible to lay down hard and fast rules which seek to dictate, in every combination of circumstances, the considerations which will persuade the court that a departure by the acquiescing party from the previously supposed state of law or fact is so unconscionable that a court of equity will interfere. Nor, in my judgment, do the authorities support so inflexible an approach.

15In this case, I have no hesitation concluding that the respondents have allowed the applicants to enjoy some right or benefit of their property. The respondents have also acted to their detriment in leasing the premises including access to parking. Moreover, their properties without the rights-of-way will be worth significantly less. Finally, in my view, the respondents are unconscionably taking advantage of the applicants by seeking to deny them their use of the laneway.

16There is no evidence that the respondents need the laneway for any other use. There is evidence that one of the respondents said that they were blocking the laneway in order to make a claim against their title insurance [in the event that they are unsuccessful in this application presumably]. In Clarke, supra, the Court of Appeal cited the decision of Scarman L.J. in Crabb v. Arun District Council, [1975] 3 All E.R. 865 (C.A.) for the proposition that proprietary estoppel will lie where the plaintiff establishes as a fact that the defendant, by asserting its rights, is taking advantage of the plaintiff in a way which is “unconscionable, inequitable or unjust”. The sudden assertion of a claim by the respondents in 2012 and their unilateral erection of a pole blocking the laneway in 2013 readily meets this threshold. The tenants of the landlocked 84 Brock Ave. basement unit cannot access their home any other way than the laneway even by foot. The applicants and their tenants were left without vehicular access to their properties that they had enjoyed for their tenures pursuant, they believed, to rights-of-way disclosed in their respective deeds. There was nothing fair about the manner in which the respondents acted. They were unilateral and capricious in the sense that they had no heed to the applicants’ rights, needs, interests or concerns. In my view, their acts were unconscionable, inequitable and unjust.

17Mr. Morton submits that the only way that a proprietary interest in real estate in Ontario can be created in 2014 is by deed or prescription. Proprietary estoppel, he submits, is an in personam remedy that is personal to the applicants and the respondents. Equity, he argues, acts on the conscience of the respondents and prevents them from exercising their legal rights. As such, a result based on proprietary estoppel will not bind or run with the land. It will not be transferable by the applicants or their tenants and will not bind subsequent purchasers of the respondents’ property. Whether this is so or whether proprietary estoppel may be supported by a proprietary remedy (such as the imposition of a constructive trust) is for another day. It is not obvious to me that Mr. Morton’s submission in this regard is correct.

Registry Act

18Subclause 113(5)(a)(iv) of the Registry Act provides an exception to the 40-year search rule that otherwise results in the expiry of claims as set out in subsection 113(1). Subsection 113(5) provides in part as follows:

(5) This Part does not apply to,

(a) a claim,

(iv) of a person to an unregistered right-of-way, easement or other right that the person is openly enjoying and using;

19There is no case law providing an interpretation of this provision. Mr. Morton submits that for an “unregistered right-of-way, easement or other right” to be enforceable, it must be a right that has arisen by prescription. In his submissions, the section merely codifies the historic exclusion of prescriptive easements from the 40-year search rule.

20However, the definition of “claim” for the purpose of the 40-year search rule is set out in subsection 111(1) and includes only interests “based upon or arising out of a registered instrument”. That is, claims that are not based upon registered interests, such as prescriptive easements, are not “claims” at all and therefore they are already outside the 40-year search rule. Subclause 113(5)(a)(iv) would be unnecessary if it referred only to rights obtained by prescription. Therefore, the applicants argue, subclause 113(5)(a)(iv) must apply to something less than full prescriptive title. They argue that the key to the section is that the rights relied upon are rights which they are “openly enjoying and using”. They argue that the Legislature has chosen to protect the myriad of permutations and combinations of historic factors, transaction types, title errors, and other circumstances that have led people to claim all manner of unregistered rights which they continue to use and which would be unfair and inappropriate to eliminate by an arbitrary 40-year search rule. As I noted above, Mr. Kane’s evidence that there was “no suggestion that any of the applicants had a right to use our property” flew in the face of a simple site visit. If, however, what he meant (as the remainder of paragraph 4 of his affidavit seems to suggest) was only that at the time of his purchase there was no hint of the servient tenement in title documents within the past 40 years, then one can readily understand the Legislature choosing to prefer openly used rights over such a technical approach.

21An interpretive question arises as to whether the applicants are claiming an “unregistered right-of-way”. The rights-of-way upon which they rely, their dominant tenements, are registered in their deeds. If they had their druthers, no doubt, they would rectify the 1960 deed and all subsequent deeds to 7 Cunningham Ave. to re-register the servient tenement. But the current state is that there is no registered right-of-way over 7 Cunningham Ave. In an annotation in 2004 at 2004 66338 (ON SC), 24 R.P.R. (4TH) 37, Jeffrey W. Lem provides persuasive reasons for the application of subclause 113 (5)(a)(iv) in cases such as this. At page five of his annotation, he notes:

Secondly, trying to shoehorn Section 113(5)(a)(iv) of the Registry Act into the role of protecting only prescriptive easements runs contrary to the actual scope of the forty-year rule. The forty-year rule only ever dealt with the expiration of registered interests in the first place and never interfered with possessory title or prescriptive easements. By its operation, the forty-year rule provides that “claims” expire 40 years after their registration. In turn, a claim is an interest in land “set forth in, based upon or arising out of a registered instrument”. In other words, Parliament cannot have intended Section 113(5)(a)(iv) of the Registry Act to merely protect prescriptive easements (which, by definition, need not be registered) since the forty-year rule could not, in any event, have caused such unregistered interests in land to expire - a prescriptive easement is never cut-out by the forty-year rule because it is never registered in the first place. As such, the easements referred to in Section 113(5)(a)(iv) of the Registry Act could only be easements that had been registered at one time and which were then openly enjoyed and used at the relevant time of dispute. That was exactly the fact situation before the court in Ramsay.¹ [emphasis added]

22In essence, Mr. Lem, views subclause 113(5)(a)(iv) as applying to easements or rights-of-way that were once registered but then expired. If they had matured into prescriptive easements already, the subclause would not have been required. The subclause precisely fits the case where as easement or right-of-way existed once in a registered deed and is still used although it may not exist any longer. That is the choice of the Legislature. While one may argue that it undermines the absolute certainty of the register, that is not unusual in Ontario. The existence of prescriptive title and the doctrine of actual notice² both do so as well. Certainty is provided by the open enjoyment and use of the right. People can see and understand the use to which the property is put. In the real world, a purchaser is much more likely to see an open use than to understand an arcanely drafted point buried in a metes and bounds description registered on title. In my view, subclause 113(5)(a)(iv) promotes both fairness and certainty.

23The combined effect of this section with the nemo dat principle protects the applicants’ rights to their rights-of-way despite the fact that it is currently unregistered on the servient tenement.

Result

24Accordingly, the application is granted. An order will go prohibiting the respondents from interfering with the use of the rights-of-way over the laneway as described in the applicants’ deeds.

25Mr. Carlson advises that there is debris that blocks one of his clients from using the right-of-way. The relief granted herein ought to resolve the issue.

26The fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

27The applicants seek costs on a substantial indemnity basis of $25,734.07 or, alternatively, on a partial indemnity basis of $20,000 all-in. It is difficult to justify the unilateral actions of the respondents in blocking access to the laneway. One may readily surmise that it was done tactically in order to precipitate this lawsuit and possibly to thereby perfect an insurance claim as the evidence cited above suggests. This belief is bolstered by the fact that the respondents’ counsel claimed to have incurred costs on a full indemnity basis of approximately $5,000. Assuming that counsel does not give charity to commercial clients, it appears that this claim was defended on a shoestring budget as if the outcome did not matter. A simple search of Ontario database shows that the same two counsel have now had three reported cases involving neighbours with rights-of-way disputes. I raised this seeming coincidence at the hearing and wondered aloud whether something more was at play beyond the confines of the courtroom. Nevertheless, in light of Boucher, supra, based on the issues and parties that were before the court, it is fair, reasonable and proportionate for the applicants to be entitled to costs of this 90 minute application in which no cross-examinations were conducted, on a partial indemnity basis in the amount of $7,500.

F.L. Myers, J.

Footnotes

1. 1The facts of that case (reported at 2005 23211 (ON CA), [2005] O.J. No. 2727 (C.A.)) are not the same as in this case. Notwithstanding, Mr. Lem’s analysis, the Court of Appeal chose to resolve the Ramsay case on other grounds and referred to subclause 113(5)(a)(iv) only briefly in obiter.
2. 2United Trust v. Dominion Stores et al., [1977] 2 SCR 915, 1976 33 (SCC)