COURT FILE NO.: 12-CV-452656

Heard: November 3, 2016

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Access Self-Storage Inc. v. 1321645 Ontario Ltd. et al.

BEFORE: Master Joan Haberman

COUNSEL: Chang, C. for the moving party

Limberis, G: for the responding party

REASONS

Master Haberman:

[1] The defendant, 1828700 Ontario Inc. (“182”) moves to discharge the certificate of pending litigation (“CPL”) obtained by Access against their land, by order dated December 4, 2012. That order was obtained by Access by way of an ex parte motion. Despite having obtained the order they sought, Access never bothered to have a CPL issued and registered against title – instead they registered the order on title. There was, therefore, no actual CPL on title at the time this motion was heard. No explanation has been provided by Access for having approached the issue in this way.

[2] 182 advances multiple grounds for the motion. They allege that Access does not have a reasonable claim to an interest in the land and state that, as statements of defence had already been delivered on behalf of all defendants, the motion ought to have been brought on notice. They allege further that the plaintiff failed to prosecute the claim with reasonable diligence after having obtained this order and they state that the alternative claim for $6 million is adequate recompense in the event that Access succeeds at trial as there is nothing about the land that has been shown to be unique.

[3] In addition to the above, 182 maintains that Access failed to make full and fair disclosure before the ex parte master, as they failed to disclose material information. They therefore ask for the CPL order to be set aside pursuant to Rule 39.01(6).

[4] For the reasons that follow, I have decided to set aside the order granting the CPL. I direct the registrar to remove it from title and, in the event that a CPL has been registered on title since the hearing date, I order that it shall be discharged.

BACKGROUND

What the case is about?

[5] By way of overview, 132 owned land. In 1999, Access approached 1321645 Ontario Ltd. (“132”) with a view to purchasing a part of it, while 132 would retain the remainder. All parties were aware that part of what Access sought to purchase was located within a flood plain and that, as a result, that portion of land fell under the control of the Toronto Conservation Authority (TRCA). This feature of the land meant that there would be restrictions on how it could be developed. While certain work could be undertaken to address some of the TRCA’s general concerns about building in a flood plain, it was not a given that Access would ultimately be able to convince the Authority that they should issue the necessary permits and approvals to enable Access to do so.

[6] As a result there was an element of risk to the purchase. Access tried to reduce that risk – the purchase price was adjusted down by $40,000 after their first offer to purchase expired. The parties also agreed to enter into a Storm Water Pond agreement (SWPA), which sets out various steps Access could take in pursuit of the approvals. The SWPA included what I consider to be a “last resort” step, this one to be implemented by 132 rather than Access, but only in the event that all of the other steps identified in the SWPA to be undertaken by Access have failed to result in their obtaining approval to build. 132 agreed that, should that occur, they would construct a storm water pond at their expense on their own property to address water flow issues.

The pleadings

[7] On May 2, 2012, Access issued their statement of claim against 182 and prior owners of 182’s lands. The claim names 182 as a defendant, along with the two previous owners of 182’s land and the principal of one of them.

[8] The story as set out in the claim begins in March 1999, when Access first approached the defendant, 1321645 Ontario Ltd. (“132”), seeking to purchase part of their property, with the alleged intention of developing it in separate phases. Despite being advised that part of the land being purchased was located within a flood plain, Access went ahead with the project and negotiations ensued. An agreement was reached, amended, expired and then revived. The initial price of $1.175 million was reduced to $1.135 million. Access actually acquired two separate pieces of land for that sum, one located at 100 Canadian and the other at Zero Ellesmere. It appears the problem is now with respect to the Ellesmere property.

[9] These above numbers are important in the context of the alternate claim of $6 million for damages. They are also important when read in conjunction with paragraph 20 of the statement of claim, where the plaintiff asserts that there was no juristic reason for them to have paid full value for their land if it could not be fully developed and their submission that, without the storm water pond, their land has no value.

[10] There is no evidence before the court to indicate that what was paid was, in fact, “full value”, or if what was paid was in recognition of the fact that the land was located within a flood plain. At the end of the day, whether or not the land could be fully developed is not something either party could have known in advance. Access would have first had to go through the application process, perhaps after trying to address concerns with remedial measures. Even then, there was no certainty that the permits and approvals would issue. It is clear that what was paid was $40,000 less than the figure initially agreed upon. Both figures seem low, even by 1999 standards, for bare land at that location, so the fact that there may have been a serious impediment to development appears to have been recognized. But I leave this for another day.

[11] Ultimately, Access and 132 entered into the SWPA on December 15, 1999. It set out a number of steps Access could take when they were ready to develop the property to address the flood plain issue. The SWPA also provided a back-up plan should Access’s efforts fail to result in the desired planning approval. This would have allowed them to then turn to 132 to require them to build a storm water pond on their own land, which Access could then use. I will return to this in more detail below.

[12] The SWPA agreement was registered on title on December 16, 1999 and it is alleged in the claim that the SWPA created an easement. Although it is alleged that Access would not have entered into an agreement to purchase the property but for the SWPA agreement, the only evidence on this motion to support that allegation is in the form of hearsay. It therefore carries little weight. Access also claims an easement based on the doctrine of proprietary estoppel. This was not developed on the motion.

[13] Finally, though Access asserts on this motion that they also have rights to the land by virtue of breach of trust, those allegations have been pleaded against the co-defendants, but not against the moving defendant, so they have no place here.

[14] The statement of claim relates what transpired after the property was acquired and the SWPA was signed. On March 29, 2001, what is now 182’s land was transferred by power of sale to 1452432 Ontario Limited (“145”), an entity related to the defendant, Uli Bierl. Then, on August 17, 2007, 145 sold the land to a company which later changed its name to 182, the moving defendant.

[15] It is alleged that 182 did not begin to develop the property immediately but by September 2010, almost ten years after Access acquired their land, 182 apparently began to build a medical facility on their own property. It is alleged in paragraph 26 of the claim that 182 intended to use the portion of the Ponds Lands (182’s lands) that had been set aside for the Storm Water Pond as a paved parking lot to the medical facility. It therefore appears that, as far back as 2012 when the claim was issued, Access had in mind a general location of where the alleged easement was located.

[16] The statement of claim seeks declaratory relief, to the effect that 182 holds a portion of their lands in trust for the full benefit of the Access, as well as leave to register a CPL on what is now 182’s land. Again, the plaintiff asserts that only a portion of their land is affected by this agreement but has not clarified where on 182’s land or how much of it is affected.

[17] Further or in the alternative, Access also seeks the following:

• An order declaring that they have an easement on 182’s land, pursuant to a Storm Water Pond Agreement (SWPA) entered into with the defendant, 1321645 Ontario Limited on December 15, 1999;

• That the covenants in the SWPA run concurrently with what is now 182’s land;

• Damages of $6 million.

[18] The pleading then takes a turn, and Access relies on various torts for the relief they claim. They begin by asserting that all defendants have been negligent. Though the focus is on 132 and Uli, they extend that assertion to all successors in title, but again point to 132 and Uli as the main culprits.

[19] Access then claims that Uli, 132 and 145 breached their fiduciary duties and are responsible for negligent misrepresentations. Neither of these torts is set out with the specificity required by the Rules and case law and neither of them applies to 182 in any event. Access also claims that 145, 132 and Uli have been unjustly enriched but again, 182 is not included in this assertion. Punitive damages are sought from all defendants, despite the fact that only negligence is alleged against 182. When Access’s witness, Iqbal Khan, was cross-examined in May 2016, his counsel indicated he might amend his pleading to extend the application of these torts to 182 but he has not done so. I therefore take the pleading as I find it.

[20] One critical feature of the claim is that it introduces Access’s position that the easement on 182’s land applies only to a part of it. This, in my view, constitutes an admission, one relied on by Access again in the affidavit evidence they submitted to the ex parte master and before this court. It was also their position when Iqbal Kahn was cross-examined and their position in their factum.

[21] The claim was defended by all parties, with statements of defence filed by 182 in September 2012 and by the remaining defendants in October 2012. Thus, by that time counsel were on record for all defendants and pleadings closed before the ex parte CPL motion.

[22] All defendants rely on an arbitration clause in the agreement but there is no evidence before the court explaining why the matter is still before the court in the form of a civil action. Aside from that, the crux of 182’s defence is found in paragraph 10 thereof:

1828700 states that the Storm Water Agreement does not provide any particular part of the lands now owned by (them) are set aside for the storm water pond, contrary to paragraph 26 of the statement of claim.

[23] No Reply was delivered in response so this was not refuted.

What does the SWPA provide

[24] This action and the CPL turn largely on the SWPA. A closer look at it is therefore required.

[25] The basis of Access’s complaint against 132 is apparent within the first three paragraphs of the SWPA. It seems 132 sold off part of its land to Access, but they retained a portion, which ultimately was acquired by 182. As a result, when the agreement was first entered into, it was 132 who benefited from the sale of the land, and they were also going to be responsible for building the pond if certain conditions were met.

[26] Section 1 of the SWPA provides that 132 and Access shall jointly continue and proceed with a site plan control application to the City of Toronto, to allow Access to construct buildings and facilities on their land. The agreement provides that Access will construct its buildings on a phased basis until they have developed the land to the maximum. It also acknowledged that a site plan application and SPC approval may be needed in advance of each stage. 132 agreed to render any assistance Access may request with respect to the process, including execution of consents, applications and other documents. There is no evidence before the court to suggest that Access has, at any time, asked 132 to assist by executing consents, application or other documents, or that they have asked for any other form of assistance.

[27] The alleged easement relied on by Access is found at section 2. On a clear reading of that provision, 132 was not bound to construct a pond on its land unless a series of steps first undertaken by Access had failed to produce the desired approvals. The wording of the section is as follows:

Access will, at its sole cost and expense, improve the water capacity of the adjoining water channel to the east of Access Lands and possibly reduce the existing setback lines along the easterly borders of the Access lands by deepening or widening the existing channel. If following completion of this work and water storage/ retention relief on the south side on the south side of Ellesmere Road it should still be a condition of any SPC agreement that a storm water retention pond be constructed, 132 shall , at its cost and expense forthwith construct the …Pond upon the 132 Lands to the satisfaction of the City. 132 and its successors in title shall thereafter, at their sole expense, repair, maintain and replace the Storm water Pond in accordance with the requirements of the City or Access.

[28] There are three critical features of this provision that appear to have escaped Access’s notice:

1. The way this provision is drafted, construction of a storm water pond is a last resort and only required after Access has first taken the prescribed steps set out in the SWPA and only if the TRCA still requires the pond thereafter. Before Access can ask 132 to build on its own land, Access must first, at its sole cost and expense;

a. Improve the water capacity of the adjoining water channel to the east of the Access’s lands;

b. Reduce the existing setback lines along the easterly border of their lands by deepening or widening the existing channel; and

c. create water storage/retention relief on the south side of Ellesmere Road; and

2. Even then, whether or not Access can ask 132 to construct a storm water pond will depend on whether it becomes a condition of any SPC agreement. Thus, if, after all of that has been completed, it is still a condition of a SPC Agreement that a storm water pond be constructed, then and only then, 132 must build one on its own land at its expense. There are therefore a series of conditions precedent that Access must complete and the pond must be required by an SPC agreement before Access can, pursuant to the SWPA, require 132 to construct this pond; and

3. Under this agreement, 132 and 132, only is obliged to construct the pond, in any event. The only obligations on their successors in title involve repair, maintenance and replacement of such a pond, after it has been built by 132. If 132 has never built the pond, these obligations cannot arise as there is no pond to be repaired, maintained or replaced. Nowhere in the SWPA is it suggested that anyone other than 132 must construct the pond. There is no contractual provision which binds successors in title to go to these lengths.

[29] This reading of section 2 is confirmed by section 3, which grants Access and its successors in title a right of way in perpetuity to enter 132 lands to a) use and receive the benefits of the pond; or b) to complete remedial work, improvements or installations. Again, the right of way that is granted and binding on successors in title to 132– and only a right of way – pertains to the use or remediation of an existing pond. The agreement gives Access no rights against a purchaser down the line to require them to actually construct the pond, nor does it allow them to ask anyone, including 132 when they owned the land, to do anything unless and until they had undertaken a series of remedial measures designed to satisfy the approval process as prescribed by an SPC agreement first. The pond was clearly the last resort if all else failed.

Khan’s evidence regarding what 132 did and did not do in the context of the SWPA

[30] As a starting point, it is critical to examine the extent to which Access took the steps set out in the SWPA before seeking a CPL to enforce their alleged easement against 182, a successor in title. This was pursued on cross examination of their deponent, Iqbal Khan, the vice president and CFO of Access.

[31] Khan acknowledged, when cross-examined in May 2016, that Access has never completed a site plan control application (SPC approval as per the SWPA) though they acquired the land 17 years ago. He claimed that they were at that time in the process of making application, something he said they began in 2011. No indication was given as to where they stand in the process despite the lengthy period of time that has passed.

[32] He also agreed that Access has done nothing to improve the water capacity of the adjoining water channel to the east of their land. They have also failed to reduce the existing setback lines along the easterly border of their land and they have neither deepened nor widened the existing channel. He conceded that there has also been nothing done since they acquired the property regarding water storage or retention relief on the south side of Ellesmere Road.

[33] Counsel for Access interjected repeatedly at the outset of this part of the cross-examination, to ensure that his client provided no information as to what he believed the agreement meant, or if he was of the view that certain aspects of it had been complied with by Access. He clearly did not want his client to indicate anything on the record what could be taken as his view of the intention behind or the meaning of the agreement. He allowed his client to answers only questions that that were strictly factual in nature, so 182’s counsel reworded his questions. Though not permitted to ask about compliance with various pre-conditions, 182 counsel was permitted to ask whether the activities themselves referred to in the agreement were completed by Access, hence the above exchange.

What part of 182 lands are allegedly affected by the SWPA?

[34] Access admitted in their pleadings that the alleged easement they acquired from 132 was for a part or portion of 132’s land, now owned by the defendant, 182. They use this language in paragraph 26 of their statement of claim, where they claim that 182 used a portion of the lands set aside for the storm water pond as a paved parking lot to a medical facility. They use it again, when seeking a declaration, to the effect that 182 holds a portion of their lands in trust.

[35] Yet, when the SWPA was registered on title, there was no survey accompanying it to identity clearly to any successor in title what portion of the land they were acquiring was subject to Access’s alleged rights. Nor was a survey apparently provided to the ex parte master to ensure that the CPL he granted identified which part of the land was affected.

[36] It seems this deficiency has never been cured, yet Access’s conduct and their evidence on this motion and the motion before the ex parte master has been consistent throughout with this admission in their pleading – the alleged easement apparently pertains only to a portion of what is now 182’s land.

[37] In fact, as far back as Iqbal Khan’s letter of December 2, 2010, telling 132 to effectively “cease and desist” their construction, Khan refers to his having observed that building has commenced on 182 land, including the part thereof comprising of servient lands.

[38] James Marelli, the deponent on the ex parte motion, states in his affidavit that 182 ignored this letter to cease building a parking lot on the portion of the property that was designated for the storm water pond. What he fails to say is when this designation was made and where it can be found. He says nothing in his evidence as to the precise location and dimensions of the portion of the land purportedly set aside.

[39] Khan’s evidence does not depart from this position, which is again confirmed in Access’s factum. Throughout the pre-litigation phase and this litigation, a period of four years, Access has consistently maintained that there was a particular part of the land designated for the pond, which they at times suggested was near the parking lot being built by 182 for their medical facility. Yet, though the SWPA was entered into in 1999, the alleged servient land has never been surveyed and no drawings accompanied it when it were ever registered on title. There is no indication at all what Marelli was referring to when indicated that the portion of the land in issue was near/under the parking lot. Where did he glean this information?

[40] Knowing the location and dimensions of this alleged easement is therefore critical. 182 was told to halt construction because of an easement on their land in Access’s favour, but they were given no real indication as to the part of their land affected. Simply setting it out in a letter without supporting documentation is of little value in this context.

[41] During cross-examinations, however, Access counsel refused to allow his client to provide any particulars of the easement- location, length, width, dimensions.

[42] When was this designation made? What portion of the land was actually designated for the pond? Who made the designation? Where is it recorded? None of these questions are answered in the evidence so it is not clear how Access could have registered a CPL against the entire piece of property when they are unable to demonstrate the location and dimensions of the piece over which they allege to have some kind of rights.

[43] Khan was asked about this at question 206 of the transcript. The exchange between him and 182 counsel follows:

Q: What, if anything, from 1999 December onwards did Access do in relation to mapping, creating, conceptualizing, locating, a means by which to go onto legally…lawfully, not legally….lawfully onto these lands?

Access Counsel: do you know the answer to that questions?

A: No. Like in terms of what do you mean?

Q: Anything. Anything. Did you contact a surveyor…

A: No.

Q:…to implement any of this stuff?

Access Counsel: we’ll take that questions under advisement.

Q. and that you are aware of…sir, you are aware of, that Access would be aware of, nothing else registered on title to my client’s lands, whether it was …when it was owned by 132 or sold to my client, in relation to the storm water arrangement scenario, other than this agreement.

A; correct.

Q: Okay. So there’s nothing else.

A: Correct.

Access counsel: other than the CPL.

[44] It therefore came as somewhat of a surprise when, during the course of my questions about this issue, Access counsel suddenly had a completely new and very different theory of his client’s case. What he claimed was that the easement that Access had been granted was a “gross easement” (sic - the correct legal term would be an easement in gross) so that the entire piece of 182’s land was subject to it.

[45] Access counsel provided no case law or authoritative writing discussing this concept and gave no indication as to how, in his view, this even applied to the case at hand, in the context of the SWPA. Despite this, he maintained, for the first time, that this meant the entirety of 182’s land was at Access’s disposal for this purpose.

[46] The language used by Access up until this point is critical. It clearly suggests that a portion of what had been 132’s land and was now 182s land had been set aside to accommodate the storm water pond. This has always been Access’ position – that there was an identifiable part of 182’s land over which they had an easement for their pond.

[47] This is how the matter was presented to the ex parte master. The term “gross easement”, or more correctly, “easement in gross”, is not found in any of the written materials submitted to the court on either motion, nor is it consistent with what has been filed thus far.

THE EX PARTE ORDER

What was submitted to the ex parte master?

[48] I have carefully reviewed what was placed before the ex parte master. It appears there was nothing in the record to indicate that the matter was urgent or that suggested any fraudulent conduct on the part of this defendant. It is the rare case where a master would grant such an order on an ex parte basis in the context of a defended action unless one of these two factors was present. There is no endorsement from the ex parte master so his thinking on the matter is not apparent

[49] It appears this motion was submitted in first instance to a judge, though well within a master’s jurisdiction. It was therefore put before the master.

[50] It also appears that the motion was submitted in writing, rather than walked into an ex parte court. I glean this from the preamble to this order which refers to what the master read but says nothing about his having heard the submissions of counsel. It refers only to the fact that a motion record was read – there is no reference to a factum or brief of authorities having been filed, though that is what the court generally would expect on a motion of this kind.

[51] The index to the record was also extremely unhelpful. Instead of describing each exhibit by date, author and description as the Rules require (see Rule 37.01(6)), the exhibits are simply listed as “A” though “G”, with the tab they can be found at. Should the master have wished to review a particular document, he would either have had to review the entire record or locate the reference to it in the affidavit. When a master is making his way through a basket of in writing motions or a busy court, this is not a user-friendly way to present evidence.

[52] Assuming the motion was made in writing, there was no counsel before the master to guide him through the material and draw his attention to particular aspects of what was pleaded and what the agreement provided for.

[53] The supporting affidavit for the motion was sworn by James Marrelli, Access’s lawyer with respect to negotiating the purchase of the land in issue as well as the SWPA. Marrelli begins his evidence by stating that interest in the land claimed by Access is not limited to an easement as per the SWPA, but he says nothing further to expand on what he means. He goes on to say the lands were purchased by Access to be developed in the future, though a reading of the SWPA suggests the plans to get started were underway, as there is reference to the parties continuing.

[54] Marrelli maintains that 182 ignored the SWPA when they acquired the lands. He states:

182….ignored the registered SWPA, and the Plaintiff’s letter to cease building a parking lot on the portion of the Property that was designated for the storm water pond.

[55] Marrelli than ventures into hearsay. His basis for saying that 132 and Uli knew it was imperative to have land that could be developed is based on what Access’s realtor, John Mader, apparently told him. There is nothing in that paragraph which explains how Mader knew this – whether he was expressly told; if so by whom and when; or if he assumed that was the case.

[56] Marrelli strays into hearsay evidence again when he says that he was advised by Mader that Access and 132 were working together to ensure that Access lands could be developed. What exactly they did together is not set out anywhere in the evidence – it is evident from Kahn’s evidence filed for the current motion that whatever they did do, it did not involve any of the steps that Access was bound to take pursuant to sections 1 or 2 of the SWPA before they could ask 132 to build a pond.

[57] Mader is quoted again by Marelli in paragraph 13, where Marrelli again says he was told by Mader that Access would not have bought the property but for the SWPA.

[58] It is unclear why Mader or someone within Access who was involved with these negotiations did not swear this affidavit. Instead we have Mader telling Marelli, with no indication of how Mader knew what he passed along. It is particularly troubling that this CPL order was signed on an ex parte basis, in the context of hearsay evidence on critical issues.

[59] Marelli attached a copy of the “cease and desist letter” from Access to 182 dated December 2, 2012 but he did not include the response from 182. Instead, he summarized it. In the Access letter, Khan states that Access completed phase 1 of the development of their lands in 2007, so more than 5 years earlier, and that they were “presently reviewing” their plans to develop the balance of the land. There is nothing at all in the evidence that was before the ex parte master to explain what phase 1 consisted of. Nor does the letter, or Marelli, explain how phase 1 was completed without SCP approval. Khan simply states that it was not necessary for that work.

[60] What is important in the letter, is that Access again refers to their rights over only a portion of 182’s lands. Khan states as follows:

We have observed the construction of a building and other improvements has commenced on the Galati Development Lands (182) including the part thereof comprising of Servient Lands.

[61] The letter then goes on to misrepresent the terms of the SWPA, suggesting that there is an obligation on 182 to actually construct this pond. It is a very heavy handed document, which ignores the steps in the agreement that Access must first take before turning to the owner of 182 lands for construction of a storm water pond.

[62] There also appears to be an assumption that having access to such a pond would cure all ills and automatically result in the necessary approvals being granted to Access. There is no evidence before the court to the effect that this would be the case. It seems to me the SWPA contemplated possible approaches that could be taken to enhance Access’s chances of obtaining the necessary approvals but that it was not a certainty that any or all of them would succeed. The governing legislation and regulatory scheme appears to give the TRCA a good deal of latitude and discretion when deciding applications of this type, but always within the context of addressing their purpose of keeping persons and property located within a flood plain safe.

[63] Nothing in Marelli’s evidence explains why it took so long to get from purchase to phase 1 and from phase 1 to phase 2.

[64] When Khan was cross-examined, it became apparent that what had been built thus far was on one part of the land acquired from 132 - at 100 Canadian. The other part of the property, which is within flood plain, is Zero Ellesmere. The acreage of each; their relative size or anything else about them remains a mystery as none of it is touched on in Access’s evidence submitted for either motion.

The ex parte CPL order

[65] The motion was heard by the master on December 4, 2012, at which time he granted leave to register a CPL against 182’s land. To this day, despite having the order in hand, Access has done nothing about getting the CPL issued and registered on title. Instead, they simply registered the master’s order on title.

[66] In the absence of any explanation from Access as to why they did this, I infer that this approach was taken as a means to avoid the application of s. 103(4) of the Courts of Justice Act, which renders a party liable in damages if they register a CPL without a reasonable claim to an interest in land liable. I query, however, whether registering the order, instead, which could have the same effect in terms of deterring potential buyers or lenders, would allow Access to avoid the ramifications of that rule.

[67] Access takes the position that the issue of whether or not there is a reasonable claim to an interest in land is now res judicata and cannot be reviewed by this court. In that regard, they are clearly wrong. Rule 37.14(1)(a) provides the court with the power to set aside any orders obtained without notice. Where the order was made by a master, it can be varied by a master (see Rule 37.14(5)). Where there has been a failure to make full and fair disclosure on a motion brought without notice that, alone, constitutes sufficient ground for setting the ex parte order aside (see Sepanary v. Sepanary et al. 2011 ONSC 3155).

[68] Although failure to make full and fair disclosure is one ground for review, if the court hearing the motion to set aside the ex parte order finds that disclosure was inadequate, that can obviously have impact on whether or not the moving party in first interest appears to have a reasonable interest to a claim to an interest in land. As a result, that court can approach that issue de novo, armed with a full and complete record. This is trite law, and one of several clear examples of Access taking a completely untenable position on this motion.

What was not before the ex parte master?

1. Access’s shifting theory of the case:

[69] The case presented to the ex parte master was premised on Access having a claim to an interest in 182’s land by virtue of two mechanisms: an easement over a portion of the land and a trust.

Where is this easement located and what are its dimensions?

[70] In terms of the breadth of the easement, though Access took the position that the easement only extended over a portion of 182’s land, and perhaps the part now under a paved parking lot,

• in their “cease and desist” letter to 182 in 2012;

• in their statement of claim; and

• in their sworn evidence before the ex parte master,

[71] Access’s theory of the case shifted in a completely different direction during their oral submissions before this court. For the first time, Access took the position that the reason there was no survey or defined portion of the land clearly designated for the easement was because Access had a “gross easement” (sic), encompassing the entirety of 182’s land.

[72] Their counsel maintained that all of 182’s property was at their disposal for this potential storm water pond, such that the parties had to work together. He did not explain how this was possible so many years after the SWPA was entered into, during which time Access apparently did nothing to develop their property or engage 182 or its predecessors in discussions about how to go about doing so. He did not comment on why 132 would have agreed to this arrangement, which would have precluded them from doing anything on any part of their own land until Access decided what to do about theirs and after they went through the lengthy application process.

[73] Access filed no law to explain this, and it was not referred to in their evidence or their factum before this court. In fact, it was inconsistent not only with the position taken before the ex parte master, but with everything filed by Access for the current motion.

[74] In the end, it seemed to me that this was something that Access tossed out without support or substance. However, this is now their position, presumably to circumvent their inability to show what portion of the land was actually subject to this alleged easement and their appreciation that this is an impediment.

[75] The problem Access has is that, by shifting to a position that deviates from what they pleaded (see paragraph 27 of the claim, and the reference to 182 building a paved parking lot on the portion of the Pond Lands that had been set aside for the Storm Water Pond), Access is affectively withdrawing an admission, something they can only do by court order.

[76] Had the ex parte master been aware that Access’s position was that the easement actually affected all of 182’s property, rather than what was pleaded, he may well have arrived at a very different conclusion as the current position is completely unreasonable.

Is there a claim based on trust asserted against 182?

[77] 182 is a stranger to the SWPA. They did not negotiate it or sign it. They acquired the land several years after it was arrived at. Although paragraph 1(a) of the statement of claim suggests that 182 holds a portion of their land in trust for their benefit, there is nothing else in the pleading to flesh out how that could be the case or what portion is involved. An easement and a trust are two different mechanisms. The fact that a portion of one party’s land is subject to an easement does not mean they hold it in trust for the dominant land owner.

[78] The allegations in the pleading that deal with negligent misrepresentation, breach of fiduciary duty and unjust enrichment are directed solely at the other defendants –none of them refer to 182 at all. In view of the fact that Access counsel argues the case before this court as if they did apply, one wonders how this was presented to the ex parte master if, indeed, there was a hearing. Left to his own devices, that master could have easily missed this distinction.

The Proposal to the TRCA

[79] It appears that in April 2011, Access sent a Concept Development Application to the Toronto Region Conservation Authority (“TRCA”). In TRCA,’s response dated June 22, 2011, TRCA references what Access provided to them to review in conjunction with that application:

• The existing site plan drawing SP-1, prepared by an “unknown author” dated, November 5, 2010;

• A surveyor’s Real Property Report, Part 1 Plan of Lot 2 plan, 9867 and Block E, Plan 4811, City of Toronto, prepared by KRCMAR, dated March 11, 2008;

• Proposed Site Plan, Drawing SP-1, prepared by Rick Brown and Associates Inc. dated November 2015, 2010.

[80] The TRCA’s response provides some insight into the state of the property at the time of this application, as well as the TRCA’s views about how what was proposed ties into their regulations and policy.

[81] They begin by noting that at that time, the property was mostly undeveloped with the exception of a 2 storey self- storage building located at the south westerly portion of the property. The proposal being advanced was to sever the property to create additional parcels, ultimately to be developed with three new commercial buildings and associated surface parking areas.

[82] TRCA points out that a branch of the West Highland Creek is located adjacent to the property’s northeast boundary. Part of the property is located within TRCA regulated area. As a result, a permit is needed before any work can be undertaken that would impact in any way on the existing channel of the creek, stream or watercourse or interfere with a wetland or if the TRCA believes that any development could affect their ability to control flooding, erosion, pollution or more.

[83] TRCA also regulates the Valley and Stream Corridor Management Program (“VSCMO”). As the property in issue falls within a stream corridor, that program applies. The overall objective of the program is to prevent new development that could introduce risk to life and property associated with erosion and slope stability or that is incompatible with the property’s natural state.

[84] In their response, TRCA advised that Section 4.2.2(A) of the VSCMP did not permit new multi-lot or large lot development within a stream corridor. As it was the view of TRCA staff that what was proposed constituted a large lot development, all aspects of the new development (building and parking areas) would have to be set back 10 meters from the Regularity Flood plain.

[85] The plan as submitted was problematic as it contemplated a significant amount of fill material, including structures, being placed within the flood plain. This would reduce the amount of flood storage available within the stream corridor system and could result in an increase in the magnitude of flow in the downstream system.

[86] As a result, TRCA staff indicated that they could not support the concept development plan.

[87] What TRCA is effectively saying is that the more you build, the more you reduce the amount of existing surface that can hold or absorb water. This is particularly problematic when development is proposed on land located within a floor plain, as the more you reduce the surface area that can absorb water, the higher the risk of flood and soil erosion. Soil erosion can lead to slope instability.

[88] Though this was a response to a concept development application, it was clear from the language used that the TRCA would not have been inclined to permit any form of large lot development. What was proposed was rejected out of hand – there was no indication that the construction of a storm water pond or any other remedial measures, for that matter, could lead to a more favourable response.

[89] Neither this TRCA response nor any of the material provided by Access to them in the context of their application was part of the record before the ex parte master. This is critical as, in the absence of that letter, a discussion that should have taken place before the ex parte master could not have occurred.

[90] This letter raises serious questions about whether Access could have ever developed their land, even if a storm water pond had been built, and as such, whether they would have ever required 182 or even 132 to construct such a pond on their own land. This is a critical piece of information for the ex parte master to have had, as it raised the question of whether Access appeared to have a reasonable claim to an interest in this land. Unless and until such a pond is built, they have no rights under the TWPA against successors in title to 132. This was something the master ought to have been given to allow him to appreciate what 182’s argument would have been had they been served. Its omission, is in my view, material.

[91] Access also failed to produce the enclosures they sent the TRCA in their motion record before this court. It is therefore not possible for the court to view what Access actually chose to tell the TRCA about their purported rights against 182’s land or their plans to bring this project to fruition in the context of the SWPA. Was the TRCA even advised about the SWPA? It does not appear from the recitation of what was received by the TRCA that a copy of the SWPA was appended. Were they told what Access was prepared to do to facilitate the project in light of the location of the land? Did Access indicate they were prepared to improve the water capacity of the adjoining water channel to the east of their property? Did they say they were prepared to reduce the existing setback lines along their easterly border by deepening or widening the existing channel? Did they explain that if none of these measures were effective, their back up plan was to have 182 construct a pond on their property? Access has chosen not to share that information, even now.

[92] At the end of the day, whether they did or not, TRCA does not appear to have provided Access with steps they could take to bring the project in-line with their regulations.

[93] Instead of making full and fair disclosure before either the ex parte master or this court, Access has attempted to minimise the significance of TRCA’s response. In that regard, they filed, in the context of this motion, an affidavit from John B. Corbett, president of Corbett Land Use Strategies, dated April 5, 2016. While Corbett’s desire to be involved with some form of construction on Access’s property going forward is evident, his credentials to comment on the role of the TRCA are not.

[94] Instead of attaching a resume or curriculum vitae, to allow the court to review and assess his qualifications to comment about these issues, he devoted a single paragraph to the subject of his qualifications and experience, stating that he is a professional urban planner with over thirty-five years of experience, most recently as Commissioner of Planning, and then Chief Administrative Officer for the Corporation of the City of Brampton. At the time he swore the affidavit, Corbett was in private practice on Oakville.

[95] Though Corbett claims to have extensive experience in the matters herein deposed, he fails to explain how he has acquired that experience. Although he provides no time frames for the various positions he has held, neither appears to involve Toronto – he has worked in Brampton and now works in Oakville. There is nothing in his affidavit to suggest that he has ever worked in Toronto; that he has ever worked on a project that involved the TRCA or any other conservation authority; or that he has any direct knowledge whatsoever of their policies and regulations or how they operate. He does not even say that Brampton and/or Oakville have analogous agencies with identical or even similar regulations so that he is generally familiar with regulation of this kind.

[96] This is only one problem with Corbett’s affidavit – there are others. His operating premise appears to have been that there was a storm water pond already in existence on the neighbouring land and that Access was granted an easement to ensure that they could continue to use it. In paragraph 3, Corbett clearly states what he was told by Iqbal Kahn, to the effect that when Access purchased the land, an easement was placed on title to control storm water flows to the neighbouring storm water management pond to ensure that they could fully develop their land. This is not factually correct. There was no such pond on 132’s land at that time to give rise to an easement that binds successors in title. There is still no such pond. Corbett does not say he was given a copy of the SWPA or even told about it.

[97] Khan was, of course, well aware of this. When he was cross-examined in May of this year, only about 5 weeks after Corbett swore his affidavit, Kahn agreed that no pond was ever built on 132’s land, even though Access had the right to go onto their land and build it themselves, at 132’s expense. Khan stated that to my knowledge, the pond has not been…it has not been constructed…and he agreed that it never existed.

[98] Corbett then discusses what Access submitted to TRCA, claiming that it was submitted to secure guidance on the appropriate development of the Access lands, such that it was not a formal development application. As already noted, no guidance was provided – Access was simply told that they could not do what they hoped to do and why that was the case. They were not told there were steps they could take to address these concerns, nor were they advised there was another route they could go in terms of how to develop their land.

[99] Corbett also claims it was a concept development plan in paragraph 5 of his affidavit, which is, again, not the case – it is clearly titled Concept Development Application.

[100] Corbett then turned to the role and status of the TRCA, claiming that they are not a land use planning approval authority under the Planning Act of Ontario, but rather, their status is only that of a commenting agency for construction in Toronto. His evidence is that, as a result, their response should not be viewed as a refusal of development opportunity or permission.

[101] Corbett states that TRCA’s response is focused on the technical particulars of this preliminary concept development plan and they do not nullify any future submissions and/or approvals and that technical matters relating to storm water and flood plain matters will be managed through the site pal approval and building permit approval process. He adds that earth filling on the adjacent lands (182’s) may exacerbate the need for the Access lands to secure access to the subject storm management pond to effectively manage flood storage and flows, and ultimately, to facilitate their development potential. There is, however, no such pond in existence at this time, nor has there ever been. Corbett was not fully or properly briefed by Khan.

[102] Despite what Corbett has to say about not taking the TRCA response as definitive, that is precisely what it appears to be what Access did – they have done nothing further to pursue this issue in all this time. No further application or even plans have been submitted, at least, as far as Access has shared with this court.

[103] The difficulties with Corbett’s evidence are, in part, as a result of his credentials to provide it being vague and the fact that he was actively misled by Khan who apparently told him that there already was a storm water plan in place.

[104] These difficulties are exacerbated by his apparent misunderstanding of the TRCA’s role and status. The Conservation Act RSO, 1990, C- 27 makes it clear that a conservation authority has the power to make regulations applicable to land within its jurisdiction, to the point of being able to prohibit, regulate or require that their permission be acquired before a land owner develops its land if, in the opinion of the authority the control of flooding, erosion,...of the conservation land may be affected by the development.

[105] Based on TRCA’s response to Access, they have enacted such regulations so that they can prohibit a development in appropriate cases. In their view, what was proposed by Access is such a case. On that basis, it is not accurate for Corbett to say they are simply a commenting agency, when they clearly have the right to impede a construction project.

THE LAW, ANALYSIS and CONCLUSION

Access’s failure to make full and fair disclosure

[106] Rule 39.01(6) requires that where a party brings a motion without notice, there is an onus on them to make full and fair disclosure of all material facts. Failure to comply is, on its own, sufficient ground to setting aside the order obtained.

[107] As explained in Mazza v. Gucciardi, 2013 ONSC 4882, the rationale for this approach arises from the fact that a master hearing a matter ex parte is at the mercy of the moving party – they know only what they are told by that party. The normal checks and balances of the adversarial process are not present to ensure that arguments for both sides are advanced, and there is no one to challenge the veracity or completeness of the evidence put forward or the interpretation of the legal position advanced.

[108] As a result, a party who moves without notice must put himself in his adversary’s shoes and try to anticipate what they would have included in their responding record had they been serve with the motion. This is never an easy thing to do. The Rules recognise that there is a real risk that the moving party will get it wrong. If they do, they will be required to pay damages if the court hearing the motion to set aside the order ultimately finds that there is no reasonable claim to an interest in land.

[109] Although the Rules give the court discretion to issue a CPL on motion without notice, the general rule is in favour of requiring such notice. This is particularly so when all of the defendants already have counsel and have delivered statements of defence.

[110] The court will deviate from this approach where there is some urgency to having the issue determined – e.g. a “for sale” sign on the front lawn of the property – or where there are allegations of fraud in the pleadings.

[111] As Brown J. states in Sprott Resources Lending Corp (Re), 2013 ONSC 4350¸citing Robert Half Canada Inc. v. Jeewan (2004), 2004 1532:

As the jurisprudence of this Court consistently has held, proceeding with an application (or a motion) on an ex parte basis is an extraordinary way of proceeding and should only occur (i) where there is good reason to believe that the responding party, if given notice, will act to frustrate the process of justice before the motion can be decided or (ii) where there is simply not the time and/or means to provide notice.

[112] There was no appearance of urgency in this case and there are no allegations made in the pleadings or evidence adduced before either court that suggests that 182 would have done anything to frustrate the process if they had been given notice – whatever they were building in 2012 has already been built. In such circumstances, it is difficult to understand why Access chose to proceed in this way. The granting of this order in these circumstances, where defence counsel for 182 is known and has already pleaded, without reasons from the master to explain why he did this is a rarity.

[113] In this case, I have already alluded to what facts were kept from the ex parte master. As no factum was filed, there was nothing to draw the master’s attention to the inconsistencies between what was asserted in the Marelli affidavit and what the agreement actually said. There is nothing in the agreement that required anyone other than 132, the vendor of the land, to build a storm water pond, and even then, only after Access had taken a series of remedial steps.

[114] More problematic, in terms of failure to disclose, is that the position taken by Access before the ex parte master was consistent with their pleadings – that the SWPA gave them an easement over a portion of 182’s land, but that is not their position now. The ex parte master was not aware that Access was planning to take the position that their easement rights extend to the entirety of 182’s property, and that 182 was essentially unable to develop any of it unless and until it was determined how they could best assist Access. I feel quite certain that had the ex parte master heard this theory, he would have examined the SWPA in considerably more detail and would likely not have made this order.

[115] Finally, Access failed to reveal to the ex parte master that they had already made a Concept Development Application to the TRCA; that it had been turned down in June 2011 and that in the 5 plus years since that time, they have taken their development plans no further. They did none of the work and made none of the requests for assistance outlined in sections 1 and 2 of the SWAP that they are required to do before they were in a position to ask 132 – and not 182- to construct a storm water pond on what was 132’s land.

[116] I attribute little weight to Corbett’s evidence He has said little about his qualifications and experience, and nothing about either in the context of having worked with the TRCA. He was given false information by Khan, to the effect that the storm water pond was already in existence when that is not the case. He either misunderstands or misrepresented the significance of TRCA in the approval chain.

[117] I therefore find that the failure to provide this information regarding what we are now told was their only effort to secure an approval from TRCA to the ex parte master was a material omission.

Reasonable claim to an interest in land

a) Who was obliged to build the storm water pond and when

[118] On a clear reading of the SWPA, this action is both out of time and premature. It is out of time as only 132 bound itself to construct a pond. 132 did not, and could not, bind its successors in title to do so. 132 only bound its successors in title to honour a right of way - to allow Access to come onto their lands to use and look after the pond. There is nothing in the agreement that requires a successor in title to actually construct the pond. Access therefore waited too long before initiating their project – the land had already been transferred out of 132’s hands by the time they decided to submit their first conceptual application in 2011, 12 years after they acquired the property. Put another way, the SWPA failed to anticipate what would occur if 132 sold or lost the adjoining land before the pond was built. As 132 no longer owns the land, and the burden to construct the pond has not been passed on, Access is now too late.

[119] On the other hand, the action is premature. Even if 132 still owned the land and they were the only defendant in the action, none of the steps that Access was required to take before asking 132 to construct a pond on its lands at its cost have been completed. They have not even begun. Unless and until Access does everything listed in section 2 of the SWPA, they have no basis to require anyone to build that pond. The pond was a last resort, if all else failed, in order to comply with the approval process.

b) Does Access even have an easement over any or all of 182s land – do they have a reasonable claim to an interest in land?

[120] Access has thrown the term “easement” around with little regard for its meaning. At first and up until the hearing of this motion, they maintained that their easement extended to only a portion of 182’s land. In a few instances, they narrowed that down to the general area where 182 was paving a parking lot to serve the medical facility they had already erected on their land. The purpose of the easement at this stage, according to Access, was to require 182 to build a storm water pond on its land and at its expense. There is no survey or drawing of any kind or even a verbal description of how to locate the area in question and what its dimensions are.

[121] More recently, Access has adopted the position that the easement covers the entirety of 182’s land. At the hearing of this motion, they claimed that 182 must refrain from undertaking any development on their own land that could interfere with this vast yet amorphous right they assert. They refer to this as a “gross easement” and claim that 182 has to “work with them.”

[122] Access uses the term easement to cover the construction of a storm water pond for their benefit by 132 and their successors on their own land at their own expense. They also use it to refer to their ability to enter the land to maintain and use the pond vis a vis 132’s successors in title after the pond has been built.

[123] How much of this can actually be said to be an easement and to the extent that any of it is not, what if any rights does Access have in what is now 182’s land?

[124] Access provided little assistance here.

[125] The term “gross easement” does not exist in law. I have come across the term “easement in gross” by googling it - it does not appear in standard texts dealing with the subject. In Real Estate & Property Law Easements: Justia, (www.justia,com\real-estate/docs/easements.html) an easement in gross is described as an easement that benefits a person or entity, rather than a parcel of land. That definition is of no assistance to Access, as the thrust of their argument is that the storm water pond is needed to facilitate development of their land – the focus is entirely on the ability to develop land located in a flood plain. The purpose of the contemplated pond is therefor to serve Access’s land, not a person or entity.

[126] From a second site, (www.invetinganswers.com/financial-dictionary/real-estate/easement-gross-5483) I learned that an easement in gross is a legal right to use another person’s land as long as the owner owns that land or the holder of the easement dies. This, too, is of no assistance to Access, as it appears that an easement in gross expires when the owner of the servient land no longer owns it, as it the case here. It is also clear from this definition that the easement extends only to the use of land, and does not impose a positive duty on a successor in title to build on their own land at their expense for another’s benefit.

[127] Finally, I was able to locate a definition of the term easement in gross at http://legal-dictionary.thefreedictionary.com/easement. There, too, this type of easement was described as not appurtenant to an estate in land. Rather, it is said to arise when a servient piece of land exists without a dominant one being affected. Again, that is not the case here, as the purpose of the alleges easement is to benefit Access’s land, in hopes of making it capable of being developed. And again, this text notes that this type of easement is ordinarily personal to the holder and does not run with the land. The typical example is allowing someone to come onto your land to cut timber. This is a matter of contract between the two parties.

[128] The sudden appearance of a reference to a gross easement during the course of the hearing appears to be Access, grasping at straws. They are aware that their inability to pin point a location for this alleged easement is the focus of the defence and that it amounts to a flaw in their position. Because of their inability to address this omission, Access has, very late in the day, come up with the concept of a gross easement (sic) as the solution. This would allow them to say that no drawing is needed to locate the easement, as the entirety of land is affected. Aside from the fact that this is inconsistent with the pleadings, so amounts to an unauthorized withdrawal of an admission, it is quite a different position from what was before the ex parte master so amounts to a further material misrepresentation at the first level. Perhaps of greatest significance, however, is that it does nothing to advance Access’s position in any event. They simply adopted the term without, apparently, looking into what it refers to.

[129] The issues left on the table therefore are whether there can be an easement over an indeterminate area of land, requiring the successor in title to that land to erect a structure on it at his expense and, if so, if he is precluded from developing any of his property until such time as the easement holder decides where on his property he wants the structure to be erected. Reducing the inquiry to these questions gives focus to how irrational Access’s position is, certainly with respect to trying to sustain this CPL, and perhaps, in the context of the action as against 182.

[130] Access’s counsel directed few submission to these issues, relying instead, on his newly crafted argument of the gross easement (sic). They are, however, the threshold for all that follows

[131] While there are clearly cases of a land owner being required to permit another to come onto his land to erect a fence, I have come across nothing that suggests he can require the owner of the land on which the fence is to be built to actually build it himself and to and pay for it, when the sole purpose of that fence is to benefit the adjacent owner. In other words, positive easements requiring a servient owner to do something do not require that he pay for it, too.

[132] In The Law of Real Property, McGarry and Wade, 4th ed., 1975, they state, at page 811, that it is most unlikely that a right would be accepted as an easement if it involved the servient tenant in the expenditure of money. The only recognized easement that has that impact involves having to erect a fence to keep out cattle, and even that is referred to as a “spurious easement”. The authors go on to say that, while new easements are recognized from time to time, they have not involved the owner of the servient land – 182 in this case- having to incur an expenditure.

[133] They also make clear, at page 812 of their text that, among the requisites for an easement to exist is that the right must be sufficiently definite. In this case, it is not. Neither counsel nor client has been able to put a clear picture forward as to where this alleged easement is meant to be. You cannot have an easement at large.

[134] To the extent that Access wants this easement to be viewed as a right of way, the literature indicates that that would not bring them any closer to what they hope to achieve here. In Law of Real Property, Anger & Honsberger 3rd ed., 2015, they say that the owner of the servient land is not required to construct or repair the right of way unless that is what has been agreed between the two landowners. However, because this is a positive covenant, the burden would not run with the servient lands in either law or equity. In other words, because Access is asking to have 182 construct a pond before any of the other parts of the easement can be triggered, 182, as a successor in title, is not bound by what 132 may have agreed to do. We are back to this being a case of Access having left it too late.

[135] Access maintains that this may be a positive easement, but that it is a negative easement, as well, as it prevents 182 from developing its land without taking into account their rights. In view of the factual matrix, this would amount to creating a new form of easement. While Anger & Honsberger agree that the law of easements is not closed, it appears the courts while open to new forms of positive easements, have not had a similar view with respect to negative easements. Further there is nothing is the SWPA which suggests that Access has any rights against successors in title that would go as far as they suggest. This right simply does not exist.

[136] To the extent there is any doubt about any of this, one can simply turn to the SWPA signed by 132. 312 did not bind their successors in title to construct the pond – this was a personal obligation to which they bound only themselves.

[137] It is not rationale to accept that 132 would have signed away all of their rights to develop their property or to sell it to someone who would want to do so, subject to Access deciding to develop their property at some time in the future. Access had an arrangement with 132 that involved the parties working together towards Access trying to get planning approval. If they were unable to do so after having taken a series of defined steps, 132 would assist, and build a storm water pond on their land at their own expense, somewhere in the vicinity of where 182 built a parking lot. That was a burden that only 132 accepted – what was passed along to successors in title was simply the use and upkeep of the pond. No one except 132 was charged with building the pond and as they were never asked to do so, there is no pond there that 182 is charged with maintaining.

[138] For all of the above reasons, I can say unequivocally that there is no triable issue here. It is clear that Access does not have a reasonable claim to an interest in any part of 182’s land.

[139] As I have found that Access obtained their ex parte CPL order on the basis of omissions and material misrepresentations, the order is struck. This is enough to dispose of the motion so I will not deal with damages as an alternative form of relief claimed or delay on the part of Access in any depth. Suffice to say that Access does not fare well in the context of either of these issues, either.

[140] I find, as well, that Access does not have a reasonable claim to an interest in land. Further, in my view, registering the actual order rather than a CPL does not insulate Access from a damage claim and I leave it to 182 to pursue that relief if so advised.

[141] As this decision will be released within a day of my retirement, I will not be able to deal with quantum of costs. I am of the view, however, that, as a result the nature of my findings, costs should be awarded to 182 on a substantial indemnity scale. If counsel are not able to agree as to quantum, they can move before the court on the basis of my Reasons or seek to have the costs assessed at a substantial indemnity level.

(original signed)__________

Master Joan M. Haberman

Released: November 29, 2016