2083927 Ontario Inc. v. Eleven Superior Ltd.
CITATION: 2083927 Ontario Inc. v. Eleven Superior Ltd., 2017 ONSC 5881
COURT FILE NO.: CV-16-00563012-00
DATE: 20171002
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
2083927 ONTARIO INC.
Applicant
– and –
ELEVEN SUPERIOR LTD.
Respondent
Mark Ross
for the applicant
Evan Tingley
for the respondent
HEARD: July 10, 2017
FAVREAU J.:
Introduction
[1] The applicant, 2083927 Ontario Inc., and the respondent, Eleven Superior Ltd., owned adjoining properties, with a shared laneway between the properties. The applicant seeks to enforce an agreement which it says required the respondent to pay for ongoing obstruction of the shared laneway, or alternatively, seeks a declaration that the respondent has encroached on the laneway for which the applicant is entitled to compensation.
[2] For the reasons set out below, I find that there was a valid agreement between the parties under which the applicant is entitled to a payment of $67,500, representing 9 months at a rate of $7,500 per month. The respondent has conceded that it obstructed the laneway for 2 months, and the applicant has established that the respondent obstructed the laneway for the 7 subsequent months.
Facts giving rise to the application
[3] The applicant owned a mixed use property in Mimico, Ontario, at 2386 Lakeshore Boulevard West from 2005 to August 2015. The applicant’s president is Eun Hee Kim. On the ground floor of the building, Ms. Kim and her family operated a variety store and television repair shop and they lived in an apartment upstairs. There were also two apartments upstairs rented to tenants.
[4] The respondent is the owner of a property at 2390 Lakeshore Boulevard West, which is immediately next to the applicant’s property. The respondent was incorporated for the purpose of developing a condominium building at that location.
[5] The buildings are separated by a nine foot laneway (the “Laneway”). The applicant owned a 5 foot wide strip of the Laneway adjoining its building, and the respondent owned the remaining 4 foot strip of the Laneway adjoining its building. The parties had reciprocal rights of way over the Laneway so that both owners had full use of the Laneway and could access the back of their respective properties.
[6] The applicant used the Laneway to receive deliveries to the stores through a side door and the side door was also used by the tenants to access their apartments. In addition, the applicant and tenants used the Laneway to access the parking at the back of the building.
[7] The condominium building developed by the respondent required the respondent to do extensive work in the Laneway, including building a below ground system that would shore up part of the excavation work. Accordingly, on March 20, 2013, the parties entered into an agreement they titled “Tieback and Access Agreement” (the “2013 Agreement”) for the purpose of giving the respondent use of the Laneway and compensating the applicant for such use.
[8] The preamble to the 2013 Agreement described the work to be done in the Laneway as follows:
As part of the process for constructing the Project, the Owner wishes to (i) install under and through a portion of the Neighbour’s lands, an underground system of soil anchor rods, tie backs and ancillary installations and materials as required for shoring up that part of the excavation to be undertaken on the Project Lands as shown on the plans attached hereto as Schedule “A” (the “Shoring System”); and (ii) erect and maintain construction hoarding on the Neighbour’s portion of the Mutual Right-of-Way as provided herein (the “Encroachment”).
[9] The 2013 Agreement provided that the respondent’s rights under the agreement would continue for a period of 10 months which could be extended at the applicant’s discretion:
The rights of access and encroachment given by the Neighbour in favour of the Owner in section 1.01 above shall continue in full force and effect for a period of ten (10) months from the date of this agreement (the “Termination Date”), subject to the right on the part of the Owner to leave the Shoring System in the Neighbour’s Lands after the Termination Date in accordance with the terms of this Agreement. At the Neighbour’s option, the term of this Agreement may be extended on a month to month basis at the rate of Two Thousand ($2,000.00) Dollars, plus HST per month for each and every month of extension. The Owner agrees that the full monthly payment shall be payable even if the extension is for part of a month.
[10] The 2013 Agreement also provided that the respondent would repair the Laneway upon termination of the Agreement:
At its sole cost and expense, the Owner shall, upon written notice thereof and upon termination of this Agreement, expeditiously repair and restore the Mutual Right-of-Way, including the laying of new asphalt thereon, as well as those parts, if any, of the Neighbour’s Lands as are damaged by Owner’s operations and installations in connection with the Shoring System or excavation of construction undertaken in connection with the Project. In addition, the Owner agrees to erect a new permanent fence along, the west (rear) property line of the Neighbour’s Lands. The Owner shall cut-off the tiebacks after the north foundation wall of the Project is formed to the ground floor and the Owner shall provide confirmation to the Neighbour once the tiebacks have been cut off, and provide evidence of such cut off from engineering/contracting company. Evidence of the cut-off tiebacks shall be provided to the Neighbour by way of photos.
[11] The 2013 Agreement also required the respondent to transfer the ownership of its portion of the Laneway to the applicant after the “Termination Date”.
[12] In addition to the 2013 Agreement, the parties entered into another agreement around the same time that dealt with the shadow of the crane used to build the condominium project (the “Crane Oversail Agreement”). That agreement is not at issue on this application.
[13] Following the ten month term of the 2013 Agreement, the respondent stopped making payments to the applicant, but the respondent continued to use the Laneway for the work on the condominium building. The applicant commenced an application in the Superior Court in June 2014, seeking to enjoin the respondent from encroaching on the right of way. The application was settled and the parties entered into an agreement permitting the respondent’s continued encroachment on the right of way (the “2014 Agreement”). The terms of the 2014 Agreement included the following:
a. The respondent was to pay a lump sum of $50,000 to extend the 2013 Agreement and the Crane Oversail Agreement from January 2014 to June 2014;
b. The terms of the 2013 Agreement were extended to October 31, 2014;
c. The respondent was to pay the applicant $7,500 per month until October 31, 2014;
d. The respondent agreed to pay the applicant $7,500 per month for any further extensions; and
e. All other terms of the 2013 Agreement remained in full force and effect.
[14] The respondent stopped making payments to the applicant in October 2014. However, the applicant claims that the respondent continued to obstruct its access to the Laneway from November 2014 to August 2015.
[15] In March of 2015, the applicant wrote to the respondent, enquiring about when the repair work and transfer of the Laneway would take place, and requesting payment for the period since October 31, 2014. In response, the respondent indicated that the work would be done during the month of April, but did not address the issue of payment. In a further email in July of 2015, the respondent indicated that it was still working on the documents required for the transfer of its portion of the Laneway to the applicant.
[16] The applicant sold its property in August 2015. As part of the agreement with the purchaser, the applicant retained the right to pursue a claim against the respondent for the alleged continued encroachment between November 2014 and August 2015. By the time of the sale, the respondent had not yet repaired the Laneway or transferred the rights to the Laneway.
[17] In May 2016, the applicant’s lawyer made a request to the respondent for payment of $75,000, representing $7500 per month for the period from November 2014 to August 2015. In response to the demand, the respondent indicated that it understood the matter to be concluded with the sale of the property.
[18] The applicant commenced this application on October 27, 2016, seeking a payment of $75,000 on the basis of the 2014 Agreement or, alternatively, on the basis that the respondent had trespassed and obstructed on the Laneway for the period November 2014 to August 2015.
Positions of the parties
[19] In support of its position that it should be entitled to payment, the applicant has produced a number of photographs taken between February and July 2015. The photos show some obstruction of the Laneway, primarily consisting of a swing stage at different locations in the Laneway, blue hoarding that extends from in front of the respondent’s building onto the sidewalk in front of the Laneway, and some moveable metal fencing in the Laneway. The applicant has also provided affidavit evidence that, during the relevant time, vehicles could not use the Laneway or access the rear of the property, and that when the applicant moved out in July 2015 the moving trucks could not enter the Laneway and furniture had to be carried manually through the Laneway.
[20] The respondent concedes that it occupied the Laneway in November and December 2014, but disputes that it did so from January 2015 to August 2015. For the whole period, the respondent argues that the 2014 Agreement was not extended because the applicant never requested such an extension. For the period January 2015 to August 2015, the respondent argues that from time to time there was a swing stage in the laneway, but it was kept on the respondent’s side of the Laneway and that it could have been removed if the applicant had made a request. The respondent also acknowledges the blue hoarding in front of part of the Laneway, but argues that it was not “in” the Laneway and is therefore not relevant, and that in any event, on cross-examination, the respondent’s witness stated that 90% of vehicles could get past the hoarding because it left 8 feet of passageway to the Laneway.
Analysis
[21] The issues to be decided on this application are as follows:
a. Should the applicant be granted leave to file the affidavit of Mr. Lum-Danson served after cross-examinations;
b. Is there an enforceable agreement requiring the respondent to pay $7,500 per month for its use of the Laneway after October 31, 2015;
c. Even if there is no enforceable agreement, is the applicant entitled to compensation on the basis that the respondent has substantially interfered with the Laneway; and
d. Quantum of damages.
Powers on an application
[22] This application is brought under Rule 14(3)(h) of the Rules of Civil Procedure which provides:
14(3) A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,
(h) in respect of any matter where it is unlikely that there will be any material facts in dispute.
[23] Rule 38.10 gives a judge on an application the following powers:
38.10 (1) On the hearing of an application the presiding judge may,
(a) grant the relief sought or dismiss or adjourn the application, in whole or in part and with or without terms; or
(b) order that the whole application or any issue proceed to trial and give such directions as are just.
[24] In Sundarampillai v. Ponnambalam, 2015 ONSC 5466 (Sup. Ct.) at para. 26, Diamond J. observed that the Court’s expanded fact finding powers on motions for summary judgment arising from Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, do not extend to applications. When there are facts in dispute on a matter that is material to the resolution of an essential issue, the Court must either convert the application into an action or direct the trial of an issue.
[25] He went on, at para. 28, to set out the factors a judge is to consider when deciding whether a case can be disposed of by way of an application:
A judge presiding on an application is entitled to finally decide the rights of the parties on the merits so long as the principles which inform and define the parameters of a properly constituted application have otherwise been met. As stated in Pereira v. Quatsch, [2013] O.J. No. 985 (S.C.J.), when determining whether it is possible to finally decide the rights of parties to an application on the merits, the Court must consider the following factors:
(a) whether there are material facts in dispute;
(b) whether there are complex issues requiring expert evidence or a weighing of that evidence;
(c) whether there is a need for the exchange of pleadings and discoveries; and
(d) the importance and impact of the application and the relief sought.
[26] In this case, I am satisfied that the matter can be disposed of by way of an application. While there are some facts in dispute regarding the extent to which the respondent occupied the Laneway after December 31, 2014, for the most part the resolution of this application turns on issues of contractual interpretation and the facts in dispute are not material to the resolution of essential issues.
Admissibility of Mr. Lum-Danson’s Affidavit
[27] Following the cross-examination, the applicant produced an affidavit sworn by one of its lawyers, Jeremy Lum-Danson, in which Mr. Lum-Danson provided some measurements of the relative width of a vehicle and the space left to access the laneway when the blue hoarding encroached on the sidewalk in front of the Laneway. While the respondent’s witness had indicated on cross-examination that he believed that the space left by the hoarding was eight feet, Mr. Lum-Danson’s evidence is that based on his measurements it was only 5 ½ to 6 feet, which he attests is not wide enough to allow any cars to pass through. The respondent disputes the admissibility of this evidence, given that it was produced after the cross-examination of the respondent’s representative.
[28] Rule 39.02(2) of the Rules of Civil Procedure provides that:
A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03.
[29] In Brock Home Improvement Products Inc. v. Corcoran, 2015 ONSC 776 at para. 23, this Court emphasized that leave is to be granted sparingly:
The jurisprudence about rule 39.02(2) indicates that: (a) leave should be "granted sparingly": Catalyst Fund Partnership II v. IMAX Corp., 2008 8778 (ON SC), [2008] O.J. No. 873 (S.C.J) at para. 14; Skrobacky v. Frymer, 2011 ONSC 3295 at para. 27; Sure Track Courier Ltd. v. Kaisersingh, 2011 ONSC 7388 at para. 51; (2) the moving party has "a very high threshold" to meet: Catalyst Fund Partnership II v. IMAX Corp., supra at para. 14; Skrobacky v. Frymer, supra at para. 27; Sure Track Courier Ltd. v. Kaisersingh, supra at para. 51; (3) the rule about the delivery of subsequent affidavits should not be used as "a mechanism for correcting deficiencies in the motion materials": Lihou v. VIA Rail Canada Inc., [2006] O.J. No. 4451 at para. 24 (Master); and (4) the rule is designed to fairly regulate and provide closure to the evidence gathering process for motions and applications.
[30] In First Capital realty Inc. v. Centrecorp Management Services Ltd., [2009] O.J. No. 4492 at para. 13, the Divisional Court described the factors to be considered when deciding whether to admit an affidavit following cross-examinations:
The case law under rule 39.02(2) confirms the criteria to consider in determining whether a party should be granted leave to respond to a matter raised on cross-examination:
Is the evidence relevant?
Does the evidence respond to a matter raised on the cross-examination, not necessarily raised for the first time?
Would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment?
Did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset?
See: Brock Home Improvement Products Inc. v. Corcoran (2002), 2002 49425 (ON SC), 58 O.R. (3d) 722 (S.C.) at paras. 8-9 and Nolan v. Canada (Attorney General) (1997), 1997 12213 (ON SC), 38 O.R. (3d) 722 at 727-8 (Gen. Div.).
[31] In this case, I am satisfied that Mr. Lum-Danson’s affidavit should be admitted.
[32] The evidence is relevant. The purpose of the 2014 Agreement between the parties was to compensate the applicant for its inability to use and access the shared right of way. Mr. Lum-Danson’s affidavit addresses the issue of whether access was impeded due to the hoarding in the period from November 2014 to August 2015.
[33] The evidence responds to a statement made by the respondent’s affiant during cross-examinations. The respondent’s only affidavit on the application is very brief. It was sworn by an officer of the respondent, David Chalmers. There is only one paragraph in which Mr. Chalmers addresses access to the right of way during the relevant period. In that paragraph, he simply makes a blanket denial that access was impeded after December 31, 2014:
Eleven Superior occupied a portion of the right-of-way between the parties’ respective properties from November 1 through December 21, 2014, only. Eleven Superior occupied no part of the applicant’s property after that date (save for a very brief period in June of 2015 when it installed temporary fencing to conduct sidewalk repairs.) Moreover, in November and December 2014, Eleven Superior had fencing only on the five-foot wide strip of the laneway that is owned by Eleven Superior. The right-of-way was never fully blocked and the portion of the laneway that is owned by the applicant remained open.
[34] In reply, the applicant provided an affidavit sworn by Joshua Kim, the son of the applicant’s principal, to which Mr. Kim attached several photos taken during the relevant time period showing the hoarding and other materials, and in which he states that the photos “clearly show that the right of way was obstructed and we did not have use of the right of way – vehicles could not use the driveway and could not access the parking at the rear of the property”. It was only during cross-examinations that Mr. Chalmers took issue with that statement, stating that 90% of cars could get past the hoarding because the width of the passage was 8 feet. Accordingly, the evidence in Mr. Lum-Danson’s affidavit responds to this statement.
[35] Admitting the evidence will not result in non-compensable prejudice. The respondent has not put forward any evidence to support a finding that it will be prejudiced if the affidavit is admitted.
[36] There is a reasonable explanation for why the affidavit was not initially included. Given the brevity of the respondent’s initial evidence of the issue of access, the applicant could not have anticipated that the applicant’s position on cross-examination would be that a car could get past the hoarding.
[37] Accordingly, in my view, Mr. Lum-Danson’s affidavit should be admitted. Having said this, as reviewed below, it is not essential to making a determination in this case.
Applicant entitled to payment under 2014 Agreement
[38] The applicant relies on the provisions in the 2013 Agreement that were incorporated into the 2014 Agreement to argue that the 2014 Agreement was extended and required the respondent to make payments until August 2015. The respondent argues that there was no extension of the agreement, and that in any event it did not occupy the Laneway as of January 2015.
[39] The 2013 Agreement explicitly provides that the agreement can be extended at the applicant’s “option”. This is a term that was incorporated into the 2014 Agreement. In addition, the 2014 explicitly foresaw that extensions beyond October 31, 2014, were to be paid at $7500 per month. While clearly anticipating that the agreement could be extended by the applicant, both agreements are silent as to how extensions are to occur. There is no requirement that the applicant provide formal notice of its intention to extend the agreement or that extensions be in writing. Presumably, the only reasonable interpretation of the intent behind this provision is that, in the event the respondent continues to impede the respondent’s access to the Laneway beyond the end of October 31, 2014, it was open to the applicant to advise the respondent that it no longer agreed to allow the respondent to impede its access to the right of way. Surely, it cannot mean that the respondent could continue to occupy the Laneway without compensating the applicant because the applicant failed to take steps immediately following October 31, 2017, to indicate that it intended to exercise its right to extend the agreement.
[40] This is in fact what occurred when the agreement was extended in 2014. At that time, the respondent had continued to occupy the Laneway but had not been making payments to the respondent. After the applicant commenced its earlier application, the respondent agreed to pay the applicant for prior and future occupation of the Laneway.
[41] Therefore, in my view, there is no merit to the respondent’s argument that the applicant’s failure to proactively indicate that it intended to extend the agreement means that the agreement was not extended. In any event, in March of 2015, the applicant did make a demand for payment to which the respondent did not respond.
[42] The respondent concedes that it continued to occupy the right of way until the end of December 2014, however the respondent argues that after that date the materials in the laneway could have been removed if the applicant had made a request that the respondent do so, and the hoarding would not prevent a car from entering the Laneway.
[43] Regardless of the factual dispute between the parties as to whether a car could or could not enter the Laneway, it is evident that throughout the relevant period the respondent conducted its affairs as though it still had the right to occupy the Laneway.
[44] First, the respondent kept its swing stage in the Laneway for part of the relevant period, and there is no dispute that the swing stage would impede the passage of a vehicle through the Laneway. While the swing stage could be moved, there is no evidence that the respondent communicated to the applicant that it would remove the swing stage if requested.
[45] Second, the respondent had agreed to repair and transfer the surface rights of the laneway “expeditiously” after the “Termination Date”. By August of 2015, the Laneway had not yet been repaired nor had the surface rights been transferred, again supporting a finding that the respondent acted throughout this time period as though the 2014 Agreement had not come to an end.
[46] Finally, at most, the respondent’s representative speculated on cross-examination that a vehicle could get past the blue hoarding. In contrast, the applicant’s uncontradicted evidence was that Mr. Shim and his family could not get a vehicle through the Laneway between November 2014 and July 2015, and that when they moved out after selling the property in July of 2015, they had to carry the furniture from the building to the front sidewalk because a truck was not able to get past the hoarding.
[47] Accordingly, I find that the contract was extended after October 2014. As discussed more below, in my view, the evidence supports a finding that the extension went to the end of July 2015.
Applicant entitled to compensation for the interference with its right of way
[48] Even if the contract was not extended, in my view the applicant would be entitled to compensation for encroachment on their right of way.
[49] In Weidelich v. de Koning, 2014 ONCA 736, the Court of Appeal for Ontario distinguished between trespass and encroachment on a right of way. Trespass involves situations in which a party occupies another party’s property. In contract, encroachment on a right of way occurs where the owner of a property interferes with another party’s rights under an easement. In the case of trespass, the owner is entitled to compensation as of right. However, in the case of interference with an easement, the holder of the easement is only entitled to compensation if there is “substantial interference” which the Court describes as follows at paras. 10 and 12:
I agree with the reasons of the motion judge. The authorities he cites and others fully support the conclusion that an encroachment on a private right-of-way is actionable only where the encroachment substantially interferes with the dominant owner's ability to use the right-of-way for a purpose identified in the grant. Gale on Easements, 19th ed. (London: Sweet & Maxwell, 2012), the leading English text on the topic, puts it this way, at para. 13-06:
As regards the disturbance of private rights of way, it has been laid down that whereas in a public highway any obstruction is a wrong if appreciable, in the case of a private right of way the obstruction is not actionable unless it is substantial. Again, it has been said that for the obstruction of a private way the dominant owner cannot complain unless he can prove injury; unlike the case of trespass, which gives a right of action though no damage be proved. In Hutton v Hamboro, where the obstruction of a private way was alleged, Cockburn C.J. laid down that the question was whether practically and substantially the right of way could be exercised as conveniently as before.
The requirement that the dominant owner prove substantial interference to maintain a claim reflects the nature of the dominant owner's right. He or she does not own the right-of-way or the land upon which the right-of-way runs, but only enjoys the reasonable use of that property for its granted purpose. The dominant owner may only sustain a claim predicated on substantial interference with that reasonable use. The distinction is between the rights of ownership and the right of reasonable use for an identified purpose.
[50] In this case, the evidence of encroachment during the relevant time period is primarily in relation to the swing stage and hoarding. There is some dispute as to whether the swing stage was kept on the side of the Laneway owned by the respondent. In any event, as reviewed above, the evidence supports the applicant’s position that these encroachments interfered with the purpose for which the easement was granted, namely the ability of the applicant to drive vehicles through the lane.
Quantum of payment
[51] The 2014 Agreement provided that the respondent was to pay $7500 per month to the applicant. The applicant claims that it is entitled to payments from November 1, 2014 to August 2015, which is the month when the property was transferred to the new owner. However, the evidence of continued use or encroachment does not extend to August 2015. Rather, the last photos contained in the record are from July 2015 and the applicant indicated that it was in July of 2015 that it had difficulty moving out of the property due to the issues with accessing the Laneway. Accordingly, I am satisfied that the applicant is entitled to $7500 per month up to the end of July 2015. This represents a nine month period for a total of $67,500.00.
[52] If I had based my decision on the finding that the respondent substantially interfered with the applicant’s access to the Laneway rather than the contract extension, I would award the same amount in damages. At the hearing, the respondent argued that if I were to find substantial interference at common law, that the applicant should only be entitled to nominal damages. However, the point of awarding damages for substantial interference is that it compensates the party whose rights have been substantially interfered with for the inability to use the easement for the purpose for which it was given. In this case, the easement was meant to give the applicant access to the Laneway and the parking at the back. In negotiating the 2014 Agreement, the parties had already valued this at $7500 per month. Accordingly, even at common law, I would still award $67,500 in damages to the applicant.
Conclusion
[53] For the reasons set out above, the application is granted and I find that the applicant that the 2014 Agreement was extended from November 1, 2014 to July 31, 2015, and that the applicant is entitled to $67,500 in damages.
[54] Having succeeded on the application, the applicant is also entitled to its costs on a partial indemnity basis in the amount $16,626.77.
FAVREAU J.
RELEASED: October 2, 2017
CITATION: 2083927 Ontario Inc. v. Eleven Superior Ltd., 2017 ONSC 5881
COURT FILE NO.: CV-16-00563012-00
DATE: 20171002
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N :
083927 ONTARIO INC.
Applicant
– and –
ELEVEN SUPERIOR LTD.
Respondent
REASONS FOR JUDGMENT
FAVREAU J.
RELEASED: October 2, 2017