2015 ONSC 340

NEWMARKET COURT FILE NO.: CV-13-116390-00

DATE: 20150116

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: First Capital Holdings (Ontario) Corporation, Applicant

AND:

The Norfinch Group Inc., Respondent

BEFORE: THE HON. MR. JUSTICE G.M. MULLIGAN

COUNSEL: A.J. Stephens, Counsel for the Applicant

J.E. Streisfield, Counsel for the Respondent

HEARD: December 18, 2014

ENDORSEMENT

[1] First Capital Holdings (Ontario) Corporation (“First Capital”) and The Norfinch Group Inc. (“Norfinch”) are neighbours owning commercial property on Yonge Street in the City of Markham. First Capital owns the larger of the two portions, having acquired its property in September of 2013. Norfinch acquired its parcel in 1987.

[2] In this application, First Capital seeks a declaration that it is the owner of certain lands which can be described as the disputed area. Further, it seeks a declaration that it has the right to move a chain link fence approximately 20 meters in length from its current location along the disputed area, to what it describes as its own property line, along with collateral relief. Norfinch opposes the relief sought on the basis that this application is an abuse of process as certain property issues having been previously litigated by the property owners. Alternatively, Norfinch submits that First Capital’s right to recover land is statute barred pursuant to the Real Property Limitations Act, R.S.O. 1990, c.L.15.

The Disputed Area

[3] The disputed area can be described as a strip of land approximately 4.5 meters wide and 10 meters long, adjacent to the southwest boundary of the Norfinch lands and the northeast boundary of the First Capital lands. A chain link fence runs the entire east limit of the disputed area.

[4] It should be noted that both First Capital’s parcel and Norfinch’s parcel have been converted to Land Titles Qualified in 1999.

The Surveys

[5] The disputed area has been well-surveyed over the years. As part of its application, First Capital attached a survey prepared by Dan Dzaldov, OLS dated June 26, 2013. A previous survey by John McMillan, OLS in August of 2001, was produced on a cross-examination prior to this application being heard. The surveys illustrated the boundary, including the chain link fence previously described. In addition, prior to the application being commenced, there was an exchange of correspondence between counsel. Counsel for the respondent sent a copy of a portion of a survey dated December 2, 1999, showing the location of the fence as being outside or to the east of Norfinch’s lands.

First Capital as Owner

[6] As noted, First Capital acquired this property on September 16, 2013. First Capital had the Dzaldov survey in its possession, so it was well aware of the disputed land. The record indicates that First Capital made an adjustment to the purchase price and obtained a Statutory Declaration from a principal of the previous owner as to the history of the disputed area and the chain link fence.

[7] After closing, First Capital engaged in correspondence with Norfinch to request a removal of the fence. Correspondence between counsel and the exchange of surveys produced no result. As such, First Capital commenced this application.

The Fence History

[8] On closing, First Capital received a statutory declaration from Peter Dai, one of the principals of the previous owner, which provided in part:

5. On or about May 25, 1994, the owners [the predecessors of First Capital] installed concrete blocks (the concrete blocks) in order to prevent Norfinch, its tenants, customers and invitees from passing over the property for ingress and egress, along the southerly and easterly limits of the Norfinch lands to and from Yonge Street.

6. The concrete blocks were installed without the benefit of a legal survey and without verifying the legal limits of the northerly and westerly boundaries of the property abutting the Norfinch lands.

[9] The statutory declaration continues at para. 14:

Between the year 1997 and 2001, the owners replaced the concrete blocks with a chain link fence (the fence) along what the owners thought were the northerly and westerly limits of the property, along the boundary with the Norfinch lands. A fence was installed without the benefit of a legal survey and without verifying the legal limits of the property.

[10] The installation of the concrete blocks and later the fence became the subject of litigation between Norfinch and the previous owners of the First Capital Holdings. I will discuss that more fully in the context of this decision, after consideration of the Real Property Limitations Act.

The Real Property Limitations Act

[11] The First Capital property was converted to Land Titles Qualified on August 23, 1999. Significantly, ten years had not passed since the erection of the concrete blocks and subsequent fencing. The record indicates that blocks were first placed in 1994, on a line well within the parcel abutting the Norfinch lands. The predecessors of First Capital had made a mistake in the location of the concrete blocks, set down for a specific purpose: to prevent Norfinch and its customers from crossing this neighbouring property. Ten years had not passed from the time of the erection of the blocks in 1994 until the conversion to land titles qualified in 1999.

[12] The Land Titles Act, R.S.O. 1990, c.L.5, s. 51 (1) provides:

Despite any provision of this Act, the Real Property Limitations Act, or any other act, no title to and no right or interest in land registered under this Act that is adverse to or in derogation of the title of the registered owner, shall be acquired hereafter or be deemed to have been acquired heretofore by any length of possession or by prescription.

[13] It is clear that property subject to an adverse possession claim will be protected when the property is converted to Land Titles, provided that ten years have elapsed. As Kozak J. stated in Cringle v. Strapko, [1994] O.J. No. 2119 at para. 10:

Section 51 of the Act provides that all land registered under Land Titles is subject to subsisting easements. Therefore, if a right of way has been established by adverse possession before land is entered under Land Titles, the title of the Land is subject to the right of way, not only at the time of the first registration, but also on all following transfers. However, no adverse interest can be acquired in the period during which the land has been under Land Titles. [Citations omitted.]

[14] I am satisfied that Norfinch has not made out the necessary ten-year period of adverse possession before conversion needed to defeat the declaration sought by First Capital: that it is the owner of the disputed lands, free and clear of any interest or claim by Norfinch.

Abuse of Process

[15] Certain aspects of the disputed land were subject to litigation between Norfinch and the First Capital’s predecessor in title. The action arose as a result of the former owner placing cement blocks in the location previously described. The parties were unable to resolve their differences. Norfinch issued a Statement of Claim and the prior owners issued a Statement of Defence and Counter-Claim. However, the parties arrived at a settlement and nothing changed with respect to the location of the chain link fence, which had replaced the previous cement blocks.

[16] The respondent states that this application is an abuse of process because it seeks to re-litigate the same issues previously dealt with between the property owners.

[17] The applicant states that there is no abuse of process here. The issues here in dispute are different than the issue in contention in the previous action.

[18] I have already made reference to the statutory declaration of Peter Dai, who was one of the principals of the previous owner. He provided this declaration in connection with the closing and sale to First Capital.

[19] It is also useful to review the Statement of Claim issued by Norfinch in 1996. The claim states, in part:

1. The plaintiff claims against the defendants,

a) a declaration that it is entitled to a right of way or easement, allowing it egress and ingress to its lands located at 10051 Yonge Street, Markham, over lands owned by the defendants.

c) an interim and permanent injunction restraining the defendants from impeding or hindering the plaintiff, its tenants at 8051 Yonge Street, Markham, its tenants customers or any members of the public from using the right of way or easements over lands owned by the defendants …

[20] Para. 10 of the Statement of Claim states:

In or about May 1994, the defendants placed concrete barriers on the boundary between the Norfinch lands and the Mandarin lands [predecessors to First Capital], thereby blocking Norfinch’s use of the right of way or easement, giving ingress and egress to Yonge Street.

[21] In their Statement of Defence at para. 7 the defendants stated, “The property over which the easement is claimed was blocked by cement blocks installed on May 25, 1994.”

[22] As can be seen from the above quoted sections of the Statement of Claim and Defence, the issue between the parties seems to have been one of egress and ingress by Norfinch, which had been prevented by the erection of concrete blocks. The context for the erection of these concrete blocks is made clear in the statutory declaration of Peter Dai, as previously noted.

Minutes of Settlement

[23] That matter was settled by Minutes of Settlement and a mutual release. The chain link fence remained in place. There was no recognition that the disputed lands were to be conveyed to Norfinch. No transfer took place. No orders were registered on title. If the disputed lands were at issue, then at the very least, Norfinch could have sought a transfer or some other form of acknowledgement, which would bind the owners and their successors in title. No such documents were forthcoming.

[24] I am satisfied under all the circumstances that the previous litigation addressed the issue of the easement only, and not the ownership of the disputed lands. It is clear that the previous owner, through its representative, Peter Dai, was not aware at the time that the cement blocks were located on its own property and not the boundary between the properties. Insufficient time having passed, the mistake made by the previous owners did not ripen into an adverse possession claim for Norfinch because of the Land Titles conversion a few years later. Because the disputed lands were not in issue in the previous litigation, I cannot view this present application as an abuse of process. The ownership issue was not litigated. I am satisfied that First Capital is the rightful owner of the disputed lands. The lands fall within 10030260974 (LT) and no adverse possession claim exists to the benefit of Norfinch.

Conclusion

[25] The applicant is entitled to the relief sought at para. 1(a) of the Application Record. The applicant also seeks a declaration entitling it to move the fence and a mandatory injunction, as expressed in paras. 1(b) and (c). I am satisfied that the applicant is entitled to this relief sixty days after the release of this endorsement.

Costs

[26] First Capital was the successful party in this application and is presumptively entitled to costs. The parties are encouraged to reach an agreement on costs, failing which, the applicant may make written submissions on costs not exceeding three pages, within thirty days after the release of this endorsement. Thereafter, the respondent will have fifteen days to respond to costs submissions, which can be sent in care of my judicial assistant in Barrie.

MULLIGAN J.

Date: January 16, 2015