CITATION: Corporation of the County of Oxford v. Vieraitis, 2017 ONSC 6615

COURT FILE NO.: 1854/16

DATE: 2017/11/03

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE CORPORATION OF THE COUNTY OF OXFORD

Plaintiff

– and –

JOHN VIERAITIS Sr., MARTA VIERAITIS and JOHN VIERAITIS Jr.

Defendants

T. Price, for the plaintiff/defendant by Counterclaim

J. Charland, for the defendants/plaintiffs by Counterclaim

HEARD: July 7, 2017

GRACE J.

A. Background

1The Canada Southern Railway Company (“Canada Southern”) was authorized by statute to acquire lands for the purposes of constructing a railway between two points in southern Ontario.

2On April 6, 1871, Samuel and Julia Cornell executed a document entitled “Conveyance of Line of Way” in favour of Canada Southern (the “Line of Way”). For stated consideration of $345.80, Mr. Cornell did “hereby…grant and confirm to the said Company, its successors and assigns for ever [sic]” an 8.67 acre portion of the south halves of lots fourteen and fifteen in the tenth concession of the Township of South Norwich, County of Oxford (the “Lands”). The Line of Way was registered on title to the Lands on April 18, 1871.¹

3Many years later, the railway line that ran through the Lands was discontinued. Canada Southern delivered notice of discontinuance as required by the Canada Transportation Act. It was effective February 26, 2002. Canada Southern no longer had any need for the Lands and decided to divest itself of them and other parcels along the line.

4In May, 2004, the County and Canada Southern entered into an Agreement of Purchase and Sale (the “APS”) involving parcels of land in various Townships within the County of Oxford. The County agreed to accept title from Canada Southern “by way of Quit Claim Deed…excluding statutory covenants”. The APS was amended in July, 2004 and then terminated by the County in March, 2005.

5On February 22, 2006, the County passed by-law no. 4654-2006 authorizing the execution of an APS with Canada Southern “for the purchase of the Company’s right-of-way…as more particularly described in the agreement.” The following month, the parties reinstated the APS with minor amendments.

6The Lands and other parcels were transferred by Canada Southern to the Corporation of the County of Oxford (the “County”) pursuant to a transfer/deed of land registered on March 12, 2007 (“transfer”). According to the transfer, fee simple was the nature of the interest/estate conveyed.

7John Vieraitis Sr. and Marta Vieraitis dispute the County’s claim to ownership of the Lands. They are the current owners of the parts of lots fourteen and fifteen that formerly included the Lands. Ira Pearce was the successor of Samuel Cornell who executed a deed in favour of John Sr. and Marta. It was registered on March 10, 1960.

8John Sr. and Marta maintain the Lands reverted to the Cornell’s successors in title once use for railway purposes ceased.

9This action was commenced by the County on July 25, 2016. It wishes to incorporate the Lands into a recreational trail. The statement of claim alleges that the defendants have interfered with the County’s attempted use of the Lands.

10The defendants maintain the County has no right, title or interest in them. They intend to use the Lands for agricultural purposes.

11Both sides seek, among other things, a declaration of fee simple ownership of the Lands. They also ask the court to declare that the opposing side has no interest of any kind therein.

12After the exchange of pleadings, the defendants moved for partial summary judgment to the extent their counterclaim seeks declaratory relief. A limited factual record was assembled which the parties agree is sufficient to enable the court to make a final determination of the ownership issue.

B. The Parties’ Positions

13The County maintains that Samuel Cornell conveyed full ownership in the Lands to Canada Southern in 1871. The plaintiff argues that it obtained an interest in fee simple from Canada Southern in 2007.

14The defendants’ argument follows a longer path. They acknowledge Canada Southern was legislatively entitled to acquire real property for the purposes of constructing, operating and maintaining a railway. However, while some incorporating statutes allowed railroad companies to acquire the fee simple, they submit the statute that governed Canada Southern was not one of them. They ask the court to accept that the company was only capable of obtaining a temporary interest for the purposes of constructing, operating and maintaining a railway. That interest was an easement in the nature of a right-of-way.

15John Sr. and Marta submit that once Canada Southern ceased to use the Lands for a purpose connected to a railway, the temporary interest ended. In other words, the right-of-way was extinguished. It follows, they say, that unqualified ownership of the Lands then reverted to the original transferor (Samuel Cornell) or because he had sold his interest, his current successors in title (John Sr. and Marta).²

C. Analysis and Decision

i. The Legal Framework

16Rule 20.04(1) (b) of the Rules of Civil Procedure directs the court to grant summary judgment if the parties agree to have all or part of the claim determined without a trial and the court is satisfied that summary judgment is appropriate.

17The underlying facts are undisputed. The legal principles seem to be accepted too. The source of the parties’ disagreement is in their application.

18For that reason, the court was told that a dispositive finding is fitting in the context of the action and the claims and counterclaims asserted within it. Other issues will remain. However, a crucial question will have been answered. There is no discernible risk that the trial judge will be asked to make findings that are duplicative or inconsistent: Canadian Imperial Bank of Commerce v. Deloitte & Touche, 2016 ONCA 922, at para. 4.

19Further, the parties agree that the motion is within the spirit of procedural rules that are to be liberally construed “favouring proportionality and fair access to the affordable, timely and just adjudication of claims”: Hryniak v. Mauldin, 2014 SCC 7, at para. 5.

20The overarching principles in disputes of this kind are well settled. In order to define the nature of the interest acquired by Canada Southern the court must examine: (i) the language of the applicable statutes, (ii) the transactional documents between the original parties; and (iii) subsequent actions and declarations.³

21I will deal with them in turn.

ii. The Legislation

22The Erie and Niagara Railway Company (“Erie and Niagara”) was authorized to construct a railway line running from Fort Erie, Ontario to a point in the County of Essex by the Erie and Niagara Extension Railway Act of 1868 (the “1868 Act”).⁴ Thereafter, the extension was constructed. The Lands are along its route.

23Erie and Niagara’s name was changed to Canada Southern by an amending statute enacted in 1869 (the “1869 Act”).⁵ The 1868 Act and the 1869 Act referred to The Railway Act and incorporated the provisions to which I will refer.⁶ The latter statute contained a list of the powers companies involved in the railway industry could exercise.

24Those entities were allowed to “purchase, hold and take of any…person any land…necessary for the construction, maintenance, accommodation and use of the Railway”. They were also permitted “to alienate, sell or dispose of the same”.⁷

25The means by which real property could be obtained was also addressed. Acquisition could occur pursuant to an agreement made willingly by a person having an interest in land or through a process akin to expropriation.⁸

26If the transaction was compelled, the railway was obligated to compensate the land owner for the value of what was taken and for damages the owner “may suffer…from the taking of materials or the exercise of any of the powers granted for the Railway”.⁹ The Railway Act set forth a detailed process in the event the parties were unable to agree on the amount of the compensation to be paid.¹⁰

27Satisfaction of the amount agreed to or determined by arbitration, vested in the railway “the power forthwith to take possession of the lands, or to exercise the right, or to do the thing for which such compensation…has been awarded or agreed upon”.¹¹

28Furthermore, once paid, the compensation stood “in the stead of such lands; and any claim to or incumbrance upon the said lands, or any portion thereof, shall, as against the [railway] Company, be converted into claim to the compensation”.¹²

29A form of “deed and conveyance” was set forth in the 1868 Act. Its use was permitted but not mandatory.

30If the party entitled to compensation refused to provide “the proper conveyance”, The Railway Act provided that the award or agreement establishing the amount payable could be filed with the court. Upon filing, “such award or agreement shall thereafter be deemed to be the title of the Company to the land therein mentioned”.¹³

31I was referred to prior cases which have considered the enabling legislation. Charts helpfully compiled by counsel for John Sr. and Marta demonstrate the range of language used in statutes enacted in various parts of Canada.

32In Paul v. Canadian Pacific Ltd., 1988 CanLII 104 (SCC), [1988] 2 S.C.R. 654 the incorporating statute allowed the railway company “to take and hold” the real estate needed to lay out, construct and operate a railroad. Nonetheless, based on a broad review of the statutory provisions, the Supreme Court of Canada concluded that the interest acquired by the railway in the parcel there in issue was limited; a statutory easement in the nature of a right-of-way. The court noted that the legislation distinguished between the railway company on the one hand and the “owner” of the lands traversed by the railroad line on the other even after completion of the parties’ transaction. In doing so, the enabling statute regarded the holder of the fee simple and the railway as being different persons.

33Carver J. reached the opposite conclusion in Canadian Pacific Ltd. v. Lowe, [1998] N.S.J. No. 69 (Q.B.) (“Lowe”). The railway company was statutorily permitted to acquire and own real estate either by agreement or by expropriation. No provision for a reversionary interest was made. Once acquired, the land could be used as collateral for loans made to the predecessor of Canadian Pacific. It could also be sold. The decision was affirmed on appeal.¹⁴

34The statutory provisions applicable in this case are, in my view, similar to those considered in Lowe. As long as the acquisition of real property was for a purpose related to the establishment, maintenance and/or operation of a railroad, Canada Southern was statutorily empowered to acquire a fee simple interest in land. The company could do so by negotiating an agreement with a land owner or in the event of an unwillingness to sell, through a process akin to expropriation.

35Contracts for the sale and conveyance of lands were expressly stated to be “valid and effectual in law to all intents and purposes whatsoever.”¹⁵ Once acquired, railways were given the power “to hypothecate, mortgage or pledge the lands…of the Company” in order to obtain financing for their operations.¹⁶

36Compensation payable to owners compelled to convey real property stood in the place of the real property once paid. That provision bound those with interests in the land, including those holding an encumbrance.

37Notably, The Railway Act distinguished between voluntary grants and donations of land on the one hand and those involving consideration on the other. Real property acquired by the former means were “to be held and used for the purpose of such grants or donations only” [Emphasis added].¹⁷ No such limitation existed if the transaction involved consideration.

38Based on the legislative scheme, the County’s position is to be preferred even if the applicable provisions are read narrowly.¹⁸

39I turn to the second component of the analysis.

iii. The Transactional Documents

40Little is known concerning the dealings between Samuel Cornell and Canada Southern. The only document in evidence that relates to the Lands is the Line of Way. Section 12 of the 1868 Act was its genesis. In part the section provided:

All deeds and conveyances for land required by the [Erie and Niagara] may be in the form given in Schedule A, annexed…

41As mentioned, Erie and Niagara’s name was changed to Canada Southern in 1869. While certain provisions of the 1868 Act were amended at that time, section 12 and the form described as Schedule A were unaffected. Although not identical, the Line of Way was substantially similar to the schedule.

42The circumstances that pre-dated the registration of the Line of Way are unknown. The evidentiary record does not establish whether the transaction between Mr. Cornell and Canada Southern was voluntary or compelled. The 1868 Act contained only one form of deed and conveyance. The statutory language provided no assistance on that score. Also unknown is how the consideration of $345.80 was determined and whether it was established by agreement or arbitration.

43For those reasons, the Line of Way is a singular, though important, document. The parties rely on different excerpts drawn from it.

44Counsel for the defendants notes that the form of conveyance found in a statute enacted in relation to the Fort Erie Railway Company in 1857 (“1857 Act”) contained additional language. “Bargain, sell, convey” were words it included in addition to “grant and confirm”. The 1857 Act also provided the Fort Erie Railway Company was “to have and to hold the said land…together with everything appertaining thereto”.¹⁹ Those words did not appear in the 1868 Act or in the Line of Way.

45The defendants also contrast the wording of the Line of Way with that found in a deed Canada Southern received from Samuel Cornell in 1872. On that occasion Canada Southern acquired a piece of real property for the purposes of constructing a railway station. A long form of deed was used (the “1872 deed”). It granted the parcel it described to Canada Southern and its successors and assigns “to have and to hold...for their sole and only use for ever”.

46I do not accept the submissions of counsel for John Sr. and Marta on this point. As explained earlier, Canada Southern had the statutory power to acquire a fee simple interest in real property. The 1868 Act included the form Canada Southern was at liberty to use for all “deeds and conveyances for land” it required.

47The Line of Way substantially adopted the language used in the schedule the 1868 Act contained. In it John Sr. did “grant and confirm to [Canada Southern] its successors and assigns for ever” the Lands. The same words appeared in the 1872 deed. Neither instrument included any of the words “bargain” “sell” or “convey”. In my view, they were superfluous.

48As mentioned, the 1857 Act also contained the words “to have and to hold the said land…together with everything appertaining thereto”. The Line of Way did not include that language. However, nor did the 1872 deed. The absence of the phraseology did not evidence an intention to convey something less that an interest in fee simple. As noted, the interest Canada Southern obtained extended to its successors and assigns forever.

49Counsel for John Sr. and Marta note that the grant in favour of Canada Southern was stated to have been “taken for the line of the said Railway” and “for the purpose of their Railway”. They submit those words meant Canada Southern’s interest existed only so long as the Lands were required and used in that manner. That argument found favour in Vihvelin v. Saint John (City), [2000] N.B.J. No. 323 (Q.B.), at para. 52 (“Vihvelin”). In this case it does not.

50As noted previously, the power conferred on railway companies by The Railway Act to acquire property, including land, was only to the extent required to construct, maintain, accommodate and operate a railway. The references to the railway in the Line of Way did not indicate an intention to qualify Canada Southern’s interest in the Lands. They simply demonstrated that the company was acting within the scope of its statutory authority when the Lands were acquired.²⁰

51Once again, the form of the transactional document supports the County’s position.

52Counsel for John Sr. and Marta contemplated the possibility the court would accept the County’s argument on this point. An alternative submission was made. John Sr. and Marta take the position that Canada Southern’s interest in fee simple was determinable. They maintain that Canada Southern’s interest in the property terminated when it stopped using the Lands for the purpose of a railway. At that point, they argue, the Lands reverted to the successors in title of Samuel Cornell.

53The law has long distinguished between such transactions and those that contain a condition subsequent. The former are recognized and enforced. The latter violate the rule against perpetuities because the occurrence of the event that triggers the reversion is uncertain.

54The difference between the two concepts is explained in Cheshire’s Modern Real Property, 9th ed., at p. 281:

In short, if the terminating event is an integral and necessary part of the formula from which the size of the interest is to be ascertained, the result is the creation of a determinable interest; but if the terminating event is external to the limitation, if it is a divided clause from the grant, the interest granted is an interest upon condition.

55A conveyance “for so long as [the land] shall be used and needed for school purposes and no longer” was found to have ”created a fee simple determinable with a right of reverter” in Tilbury West Public School Board v. Hastie, [1966] O.R. 20 (H.C.J.) (“Tilbury”). Conversely, in Re McKellar, 1972 CanLII 407 (ON SC), [1972] 3 O.R. 16 (H.C.J.) (“McKellar”) a grant to the Canadian National Railway “but only so long as the…Railway Company shall…use the lands for [railway] purposes” was held to constitute a condition subsequent that violated the rule against perpetuities. The decision was upheld on appeal.²¹

56In my view the distinction is of academic interest only in this case. Time limitations were present in the conveyances in issue in Tilbury (“for so long as”) and in McKellar (“but only so long as”). The Line of Way contains no such language.

57The transactional document purported to create a right of reversion in those cases. No wording was included within the Line of Way which suggested, for even an instant, that the Lands would revert to Samuel Cornell or any successor in title in the event they ceased to be used for railway purposes.²² Tilbury and McKellar are both distinguishable from the situation under consideration. The Line of Way did not create a determinable fee or condition subsequent.

iv. Subsequent Events

58Several things occurred after registration of the Line of Way.

59Previously mentioned was the deed registered in favour of John Sr. and Marta in 1960 in relation to parcels formerly owned by Samuel Cornell.

60The description of the parts of the two lots that were the subject of the transaction contained nearly identical limiting language. The common portion read:

SAVE AND EXCEPT those portions…conveyed by one Samuel P. Cornell to the Canada Southern Railway Company.

61Counsel for John Sr. and Marta submit the words “Save and Except” should have read “Subject to”. With respect, the submission lacks any evidentiary foundation. The instrument registered in 1960 is supportive of the County’s position that the grantor and grantees knew that the Lands were owned by Canada Southern and intended to and did exclude them.

62The dispute in Vihvelin required a determination of the nature of the interest a railway acquired in a parcel of real estate. In that case the plaintiff successfully argued that the railway company had acquired a right-of-way that had been extinguished. Unlike here, the plaintiff’s competing claim arose as a result of the registration of a deed which made no mention of and which did not except the railway line. That is an important factual distinction.

63John Sr. and Marta also rely on the APS entered into between Canada Southern as vendor and the County as purchaser in 2004. It related to a number of parcels of real property, including the Lands. The County was to pay an aggregate purchase price of $125,100. It agreed “to accept title by way of Quit Claim Deed”. That clause was to apply notwithstanding another provision of the APS which promised that “title…is good and free from all encumbrances” other than those specifically listed. Any representation or warranty that the County could use the parcels for a future intended use was also excluded.

64The APS was terminated in 2005 and revived the following year. The County’s authorizing by-law permitted the purchase of Canada Southern’s “right of way from the eastern County boundary to the western County boundary”.

65The APS and by-law do not advance the position of John Sr. and Marta. The APS does not describe the nature of Canada Southern’s interest in the real property it describes. It simply provides that the County agrees to accept whatever that interest may be.

66The by-law refers to a right-of-way. However, that description is found in the County’s internal document. There is no evidence Canada Southern had knowledge of its contents, let alone a role in its preparation.

67In this case and despite the APS, Canada Southern executed a transfer/deed of land in the usual form utilized in Ontario at the time of registration. The stated consideration was $127,140. “Fee Simple” described the “Interest/Estate Transferred” in box 7 of that document. The interest conveyed was not qualified in any way.

68The APS had contemplated utilization of a quit claim deed. The defendants’ position would not have been on a different footing even if that form of document had been used. As Epstein J.A. wrote in Tiny (Township) v. Battaglia, 2013 ONCA 274, at para. 32:

A quit claim deed operates as a release by a party of his or her claim to or interest in land. A quit claim deed passes any title, interest or claim that the grantor may have in the property to the grantee.

69Use of a quit claim means the transferee acquires the interest of the transferor, whatever it may be. It does not identify or qualify the rights the transferor had in the underlying real property, if any.

70The schedule that was attached to the transfer/deed of land the County received also supports its position. The schedule described the parcels that were being conveyed. The portion that referred to the Lands mentioned various “Deed numbers” including SN 592 and SN48823. Those were the instrument numbers assigned to the Line of Way upon registration on title in 1871.

71Once again, this case is unlike Vihvelin. There Canadian Pacific Railway assigned, rather than deeded, its interest in the real property once used to accommodate a rail line. In this case, Canada Southern executed a deed/transfer of land. The schedule attached to that document described the Line of Way Canada Southern had obtained more than a century earlier as a “deed”. In each case, unqualified ownership of the Lands passed from seller to buyer.

72The separate transactions completed by John Jr. and Marta in 1960 and by Canada Southern and the County in 2007 further support the conclusion that the railway acquired, held and then sold a fee simple interest in the Lands.

D. Conclusion

73Consideration of the applicable legislation, the transactional document and the subsequent actions and declarations of the parties support the conclusion that Canada Southern acquired a fee simple interest in the Lands in 1871 rather than an easement in the nature of a right-of-way. The interest of Canada Southern did not revert to Samuel Cornell or any successor. It was sold to the County.

74For the reasons given, the defendants’ motion is dismissed in its entirety.

75While the County did not bring a motion for partial summary judgment of its own, the parties acknowledge the court is in a position to make dispositive findings. I agree.

76Oxford is the owner of the Lands in fee simple. John Sr. and Marta did not acquire and do not have any interest in the Lands. Declarations to that effect are hereby made.

77Cost submissions not exceeding ten pages may be provided to me through the Superior Court of Justice counter by the close of business on November 20 and December 8, 2017 by Oxford and the defendants respectively.

Footnotes

1. 1Two instrument numbers were associated with the Line of Way: SN592 and SN48823.
2. 2That was the conclusion reached in Vihvelin v. Saint John (City), [2000] N.B.J. No. 323.
3. 3Paul v. Canadian Pacific Ltd., 1988 CanLII 104 (SCC), 1988 2 S.C.R. 654, at paras. 14 and 25.
4. 4S.O. 1868, 31 Vict. Cap. 14.
5. 5An Act to amend the Act incorporating the Erie and Niagara Extension Railway Company, and to change the name to the Canada Southern Railway Company, S.O. 1869, 32 Vict. Cap. 33.
6. 6The Railway Act, C.S.C. 1858, 22 Vict. Cap. 66.
7. 7The Railway Act, supra note 5, s. 9
8. 8The Railway Act, supra note 5, s. 11.
9. 9The Railway Act, supra note 5, s. 11, Fifthly.
10. 10The Railway Act, supra note 5, s. 11, Fifthly through Thirty-firstly.
11. 11The Railway Act, supra note 5, s. 11, Twentiethly.
12. 12The Railway Act, supra note 5, s. 11, Twenty-secondly.
13. 13The Railway Act, supra note 5, s. 11, Twenty-thirdly.
14. 14[1999] N.S.J. No. 195 (C.A.), leave to appeal to the S.C.C. denied without prejudice to the right of the appellant to seek leave from the S.C.C. [1999] N.S.J. No. 321 (C.A.), leave to appeal denied (2000), 184 N.S.R. (2d) 200 (S.C.C.). The same conclusion was reached in Prince Edward Island (Attorney General) v. Thompson, [1999] P.E.I.J. No. 25 (S.C.), at paras. 18-34, 46 and 50.
15. 15The Railway Act, supra note 5, s. 11, Firstly.
16. 16The Railway Act, supra note 5, s. 9, Eleventhly.
17. 17The Railway Act, supra note 5, s. 9, Firstly.
18. 18Vihvelin v. Saint John (City), [2000] N.B.J. No. 323 (Q.B.), at para. 112.
19. 19Similar wording appeared in An Act to Incorporate the Port Whitby and Port Perry Railway Company, S.O. 1868, 31 Vict. Cap. 42
20. 20Gwynne J. used the words “within the limits authorized by the statute” in Canada Southern Rwy. Co. v. Clouse (1885), 1886 CanLII 14 (SCC), 13 S.C.R. 139, at p. 149.
21. 21[1973 CanLII 1301 (ON CA), [1973] 3 O.R. 178.
22. 22In Tilbury West Public School Board v. Hastie, 1966 CanLII 268 (ON SC), [1966] 2 O.R. 20 (H.C.J.), Grant J. found that a grant “for so long as [the land] shall be used and needed for school purposes and no longer…and when…no longer used for school purposes it shall be returned to the owner…” created a determinable fee because it was subject to a possibility of reverter at the outset. Analogous wording is not found in the Line of Way.