CITATION: Square-Boy Limited v. The City of Toronto, 2017 ONSC 7178
COURT FILE NO.: CV-17-571789
DATE: 20171130
ONTARIO
SUPERIOR COURT OF JUSTICE
Application under Rules 14.05(3)(d), 14.05(e) and 14.05(3)(g) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194
BETWEEN:
SQUARE-BOY LIMITED
Applicant
– and –
THE CITY OF TORONTO
Respondent
Kenneth Prehogan and Scott McGrath, for the Applicant
Christopher J. Henderson, for the Respondent
HEARD: October 20, 2017
REASONS FOR DECISION
SANFILIPPO J.
A. Overview
[1] This application was brought by Square-Boy Limited (“Square-Boy”) for a declaration that a certain right-of-way granted by the City of Toronto (the “City”) as part of the purchase of land by the City from Square-Boy in 1971 (the “City Property”) included a right on the part of Square-Boy to park on the City Property. The City’s submission is that rights-of-way are intended to provide access and egress, the right to “pass and repass”, but are by their very nature not intended to be parked on.
[2] In my view, rights-of-way do not allow for parking when to do so would defeat or obstruct the purpose for which the right-of-way was granted. However, a right-of-way can include a right to park if that was one of the purposes for which the right-of-way was granted.
[3] The right-of-way in issue is not a routine right-of-way. It does not occupy a portion of the land conveyed by Square-Boy to the City; it does not run discretely along a boundary or dissect narrowly the City Property. The right-of-way does not connect two properties and would never be mistaken for a laneway. Rather, it applies to the entire parcel of land that was conveyed by Square-Boy to the City. This parcel was used by Square-Boy as a parking lot when transferred to the City in 1971 and has been continuously used as a parking lot by Square-Boy in the 46 years since.
[4] For the reasons set out herein, I have determined that the right-of-way granted by the City to Square-Boy in 1971 includes an entitlement to permit parking on the City Property to access commercial premises on the Property provided that the parking does not impede any right of access or egress over the City Property, is non-exclusive in nature and is not of a duration or character that constitutes occupation of the City Property.
[5] The applicant also claimed injunctive relief to prevent the City from impeding or interfering with Square-Boy’s use of the right-of-way. The City agreed to take no such steps while this application was pending and submitted that an injunction is not required to ensure the City’s compliance with any declaration ordered. The applicant has not established a basis for injunctive relief such that this component of the application is dismissed.
B. Background
[6] Square-Boy is an Ontario corporation that was, in the late 1960s, directed by the late-Sidney Sitzer and his brother Paul, both Ontario lawyers. In 1968, Square-Boy purchased a property known municipally as 3038 and 3040 Danforth Avenue, Toronto, Ontario (the “Property”). The Property’s fronting on Danforth Avenue made it prime commercial space.
[7] After the purchase of the Property, Square-Boy constructed a building that housed a restaurant (the “Initial Building”). A restaurant has been operated from the Initial Building since. From the time of construction of the Initial Building, parking stalls were marked at the Property’s edge abutting and parallel to Danforth Avenue, with space for approximately 12 vehicles (the “Front Parking Lot”).
Square-Boy’s Front Parking Lot
[8] The timing of the construction of the Initial Building is important because this pinpoints when the Front Parking Lot was first put into use. Paul Sitzer testified that the Front Parking Lot is precisely the same today in location and configuration as it was in 1968. The City disputes that the Initial Building was constructed in 1968 but is unable to establish the precise date of construction as the City’s building department records are no longer available.
[9] The City submits that the Initial Building had not been built as at September 20, 1970 on the basis that an internal City document, being a Report No. 14 of the City’s Transportation Committee dated September 20, 1970, refers to the Property as “vacant land”. That report is ambiguous, however, as to whether the reference to “vacant land” refers to the Front Parking Lot or the entirety of the Property. In any event, the determination most important to the analysis is whether the Front Parking Lot was established as at the date of its conveyance to the City on June 7, 1971 and the City’s best evidence is simply that the Property was vacant land a year earlier.
[10] While the City has a basis on which to call into question Paul Sitzer’s testimony that the Front Parking Lot was in place since 1968, it has no evidence to counter Paul Sitzer’s unchallenged testimony that the Front Parking Lot was in place in the time leading to the events of June 1971. Having considered and weighed all available evidence, I have determined that as at June 1971, the Initial Building and the Front Parking Lot had been constructed on the Property.
The Creation of the Right-of-Way
[11] In 1971, the City planned to expand Danforth Avenue in the area between Eldon and Victoria Park Avenues to accommodate the construction of a new ramp onto the Gardiner Expressway. This expansion required the acquisition of strips of land from properties abutting and parallel to Danforth Avenue as necessary to allow for the anticipated lane expansion. The City’s expropriation initiative came to focus on the Property.
[12] Sometime prior to June 7, 1971, the City notified Square-Boy of its intention to expropriate the strip of the Property that abutted and was parallel to Danforth Avenue. The portion of the Property proposed to be acquired by the City was the Front Parking Lot.
[13] A Sketch of the Property is annexed as a Schedule to these Reasons. Although prepared by the City in 2003, this Sketch allows for an understanding of the state of the Property in 1971. The Sketch’s reference to the “Square-Boy Property” is to an additional building that was constructed adjacent to the Initial Building after 1971, and which will be addressed later in these Reasons. The Initial Building is the middle building in the Sketch immediately below the label “Square-Boy Property”. Most important to the present analysis, the parcel labelled on the Sketch as “Parking Lot” was the Front Parking Lot and is the property that the City sought to expropriate.
[14] It can thereby be readily observed that the expropriation proposed by the City would cause the Initial Building, and the restaurant operated from it, to lose its parking lot. Also, unless some provision was made by way of easement, after conveyance of the Front Parking Lot the Initial Building would become land-locked as there would be no access from Danforth Avenue without traversing what would become City property.
[15] Sidney Sitzer was then the secretary-treasurer and director of Square-Boy and he addressed the City’s expropriation initiative in 1971. There is no evidence regarding these negotiations due to Sidney Sitzer’s passing and as the City is unable to produce any evidence of any representative of the City involved in the negotiations. The record establishes, however, that a deal was struck whereby the entirety of the Front Parking Lot was sold by Square-Boy to the City for $50,000 as a market sale rather than through expropriation. The City produced Item 16 from Report 22 of the Transportation Committee of Metro Council, which was adopted on June 4, 1971, (the “1971 City Committee Report”) and which makes clear that the strip of land to be conveyed would be across the entire frontage of the Property abutting Danforth Avenue. It states as follows:
Included in the requirements is a portion of the above-mentioned property, located on the north side of Danforth Avenue between Eldon and Victoria Park Avenues.
The land required is an irregular strip 32.3 foot in average depth across the full frontage of about 152.6 feet, of the property. [Emphasis added.]
[16] A Deed dated June 7, 1971 evidences the transfer of the Front Parking Lot from Square-Boy to the City (the “Deed”). At that time, the Front Parking Lot became what will be referred to in these Reasons as the “City Property”, it being recognized that for all purposes of measurement, physical description or visual identification, the “Front Parking Lot” and the “City Property” are, and always have been, one and the same.
[17] On its third page, the Deed engrafts the requirement set out in the 1971 City Committee Report that the property be free from all encumbrances:
AND THAT the said Grantee shall have quiet possession of the said lands, free from all encumbrances.
[18] On its first page, the Deed contains the right-of-way in favour of Square-Boy (the “Right-of-Way”):
RESERVING UNTO THE GRANTOR its successors and assigns a right-of-way in, over, along and upon the lands herein described and being conveyed to the Municipality of Metropolitan Toronto for all purposes until the same is dedicated by the Municipality of Metropolitan Toronto as a public road. [Emphasis added.]
[19] Considerable submissions were made concerning the interpretation of the wording of the Right-of-Way, and most specifically whether it allows for parking on the City Property to access commercial premises, focusing sharply on two issues. First, the import of the term “for all purposes”. Second, the seeming ambiguity resulting from an encumbrance being featured so prominently in a Deed that specifically disclaims the existence of any encumbrance. Both issues must be addressed as a matter of contract interpretation.
C. Is Parking an Included Right in the Right-of-Way?
[20] There are four characteristics of an easement: (i) there must be a dominant and a servient tenement, the owner of the easement being the dominant tenement and the owner of the land on which the easement is located being the servient tenement; (ii) the easement must accommodate the dominant tenement; (iii) the dominant and the servient tenements must be different persons, and; (iv) a right over land cannot amount to an easement unless it is capable of forming the subject-matter of a grant: Re Ellenborough Park, [1955] 3 All E.R. 667 (Eng. C.A.), at p. 673, as quoted in Robinson v. Pipito, 2014 BCCA 200, 373 D.L.R. (4th) 129, at para. 18.
[21] The Supreme Court of Canada has long-defined an easement as “being the privilege of imposing certain burdens on the land of the grantor for the benefit of the adjoining land of the grantee”: Ross v. Hunter (1882), 1882 CanLII 27 (SCC), [1884] 7 S.C.R. 289, at p. 316. This is precisely what the Right-of-Way does. It grants to Square-Boy “benefits of the adjoining” City Property. The question is to determine whether one such benefit is the right to permit parking to access commercial premises.
[22] The applicant contends that the Right-of-Way includes a right to permit parking on the City Property in order that invitees can access the commercial premises on the Property.
[23] The City contends that a right-of-way ought not to include the “benefit” of parking on the grantor’s land. In support of this submission, the City relies upon case law that has addressed disputes in use of rights of easement between grantors (servient tenements) and grantees (dominant tenements) as well as between parties jointly entitled to use of the right-of-way.
[24] In Soares v. Café Regional Bar and Grill Inc., 2013 ONSC 7939, 40 R.P.R. (5th) 140, the court addressed the competing interests of residential and commercial landowners who shared entitlement to pass and repass over a right-of-way to access their properties. The residential homeowner sought injunctive relief to bar the commercial landowners and their customers from parking on the right-of-way on the basis that the parking was obstructing the homeowner’s ability to access her garage. Greer J. determined that the right-of-way constituted a right to pass and that any parking of less than 15 minutes was permissible but that parking in excess of 15 minutes would constitute parking and interfered with the use of the right-of-way by the other right holders.
[25] The Soares decision referred to Anthony v. F.W. Woolworth Co., 1962 CanLII 212 (ON SC), [1962] O.R. 1005, 35 D.L.R. (2d) 82 (Ont. H.C.), wherein Grant J. issued an injunction preventing joint right holders using a common right-of-way from “placing, parking, leaving or permitting” any vehicle to remain on the laneway in circumstances in which doing so had an adverse effect on the other homeowners entitled to use the laneway. I read this decision, as well as Soares, as addressing more the need to balance competing uses of a common laneway amongst those entitled to passage than, as submitted by the City, a statement that parking cannot intrinsically be an element of a right-of-way.
[26] A right will be determined to be ancillary to an easement if it is necessary for the purpose for which the easement was granted. Comment on the analysis for determination of an ancillary right in an easement is contained in Fallowfield v. Bourgault, 2003 CanLII 4266 (ON CA), 235 D.L.R. (4th) 263 (Ont. C.A.), at para. 11, as follows:
In interpreting the meaning and intent of an express easement, the concept of ancillary rights arises. The grant of an express easement includes such ancillary rights as are reasonably necessary to use or enjoy the easement. However, to imply a right ancillary to that which is expressly granted in the easement, the right must be necessary for the use or enjoyment of the easement, not just convenient or even reasonable.
[27] Indeed, in Lafferty v. Brindley / Boone v. Brindley (2001), 8 RPR (4th) 279 (Ont. S.C.J.), parking was found to be an ancillary right in interpreting a right-of-way that was silent on any entitlement to park. Here, a right-of-way held by cottagers over a farmer’s property was required to access their lakeside properties but the right-of-way did not speak to any express right to park. The evidence lead by the cottagers was that they had, for some forty years, parked on the right-of-way because the topography, with its steep slope to the lake, did not allow for level parking on their properties. The owner of the farm resisted any use of the right-of-way beyond the bare access and egress. At para. 41, Donohue J. held that parking was an ancillary right to the right-of-way:
In these circumstances, I am satisfied that the parking of vehicles is an ancillary right included within the granted right of way. The matter is so obvious that the Hunter brothers probably took it for granted and considered it unnecessary to be spelled out. The 40-year history between the early 50’s and the early 90’s indicates no objections to parking by the cottagers. Clearly it was simply accepted by the succeeding farmers that the vacationers had a right to park at the edge of their lots on the right of way itself.
[28] On appeal, this determination was upheld: 2003 CanLII 20920 (ON CA), 13 RPR (4th) 181 (Ont. C.A.). At paras. 1-2, the Court of Appeal highlighted the factors that are pertinent in determination of the scope of a right-of-way:
The trial judge relied upon clear evidence that for over forty years, the Hunter’s Beach cottages including the respondents and their predecessors in title, used the disputed area for parking of their vehicles. He was fully justified in concluding that the parking of the vehicles along the right of way was an ancillary right included with the grant of the right-of-way to the cottages.
In determining that parking is an ancillary right, the trial judge properly considered those factors relevant to determining what is reasonably necessary to the enjoyment of the right of way, including a consideration of the language of the conveyance creating the easement, the purpose and circumstances surrounding the creation of the right of way, the history of its development and the circumstances of its use. [Emphasis added.]
See also: MacKenzie v. Matthews (1999), 1999 CanLII 19931 (ON CA), 46 O.R. (3d) 21 (Ont. C.A.), at para. 12; Muir v. Drozdoski (2003), 16 R.P.R. (4th) 279 (Ont. C.A.).
[29] Interestingly, the factors identified by the Court of Appeal in 2003 as material to the interpretation of the right-of-way to determine whether parking is an included or ancillary right foreshadow the principles identified as material to contract interpretation by the Supreme Court 11 years later in Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633.
Interpreting the Language of the Right-of-Way
[30] The modern-day statement of contract interpretation is set out in Sattva Capital Corp. which directs that the interpretation must be conducted “giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract” (para. 47). In its full context, the court stated as follows:
Regarding the first development [the adoption of an approach to contract interpretation which directs courts to have regard for the surrounding circumstances of the contract – often referred to as the factual matrix], the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”. … To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning. [Citations omitted.]
[31] The common-sense approach to contract interpretation set out in Sattva builds upon the Supreme Court’s statement in Eli Lilly & Co. v. Novopharm Ltd., 1998 CanLII 791 (SCC), [1998] 2 S.C.R. 129, that contractual intention of the parties is to be ascertained by reference to the words used in the contract read in light of the surrounding circumstances, with the objective of achieving a contract interpretation that is a fair and sensible commercial result but without reliance on subjective intention.
[32] The parties submitted that the principles specifically applicable to the interpretation of a grant of easement are those stated in Anger & Honsberger, Law of Real Property, 3rd edition, at 17.20.30(a). I am guided by the statement on this issue by the Court of Appeal in Fallowfield at para. 10, where the Court of Appeal for Ontario set out the principles applicable to the construction of an easement as follows:
Where an easement is created by express grant, the nature and extent of the easement are to be determined by the wording of the instrument creating the easement, considered in the context of the circumstances that existed when the easement was created. This principle is set out in Halsbury's Laws of England, vol. 14, 4th ed. (London: Butterworths, 1980) at p. 26, para. 54:
The nature and extent of an easement created by express grant primarily depend upon the wording of the instrument. In construing a grant of an easement regard must be had to the circumstances existing at the time of its execution; for the extent of the easement is ascertainable by the circumstances existing at the time of the grant and known to the parties or within the reasonable contemplation of the parties at the time of the grant, and is limited to those circumstances.
[33] Consideration of the circumstances that existed when the easement was created is necessary to give effect to the intentions of the parties, particularly where the express grant contains an ambiguity as to the nature and extent of the rights conveyed. In this regard, the Supreme Court of Canada in Laurie v. Bowen (1952), 1952 CanLII 10 (SCC), [1953] 1 S.C.R. 49, at p. 56, has held as follows:
With respect to the nature and extent of the easement granted, it is to be observed that the grant is one of a right-of-way simpliciter with no express restriction as to use. Just as the circumstances existing at the time of the grant may be looked at for the purpose of ascertaining the intention of the parties as to the dominant tenement and as to the location and termini of the way, the circumstances may also be looked at for the purpose of construing the conveyance as to the nature and extent of the rights conveyed.
[34] Square-Boy tendered testimony by Paul Sitzer of the details told to him by the late Sidney Sitzer of the negotiations conducted in 1971 with a representative of the City, of Sidney Sitzer’s intentions on behalf of Square-Boy and of the City’s stated position concerning the use of the City Property as a parking lot. This evidence has little, if any, probative value. First, it is unreliable hearsay: Ontario v. Rothmans Inc., 2011 ONSC 2504, 5 C.P.C. (7th) 112, at para. 111, citing R. v. Khelawon, 2006 SCC 57, [2006] 2 S.C.R. 787. I agree with the statement of the law on this point made by Brown J., as he then was, in Beach v. Toronto Real Estate Board, 2010 ONSC 30001, 97 C.P.C. (6th) 127, at para. 5: “[a]lthough the rules permit a party to include evidence based on information and belief in an affidavit in support of a motion, the inclusion of hearsay evidence on a key point is not proper.” Second, evidence of subjective intention has a limited role, if any, in contract interpretation: Eli Lilly & Co., at paras. 54, 58.
[35] The surrounding circumstances present in 1971 must be constructed objectively from the context in which the City Property was acquired and the Right-of-Way granted. The City was purchasing an operational parking lot and was granting a right-of-way over the entirety of that very parking lot. The restaurant that the parking lot served was not a “drive-through”. In order to access the restaurant by car and to enter to dine the customer had to park. It is clear, then, that Square-Boy needed two rights by way of easement if it was going to convey its Front Parking Lot to the City while still operating a restaurant: namely, the ability of motoring customers to access the restaurant and the ability for them to park in order to transact business there.
[36] At the same time, the City had no immediate use for the parking lot that it was acquiring. Rather, its use by the City was necessary only in the event of an expansion of Danforth Avenue for access to the Gardiner Expressway. These plans had not been finalized in 1971.
[37] Last, in the event that Danforth Avenue should be expanded, and the City Property converted to use as a road allowance, the Initial Building and its restaurant would have no parking but would not have been landlocked. It would be accessible by foot by those in the neighborhood or arriving by transit or by parking off-site. The issue faced by the late Sidney Sitzer and the City was how to allow for the conveyance of the Front Parking Lot to the City, whether by expropriation or by negotiated sale, without rendering the Initial Building and the restaurant land-locked in the period before the City’s proposed expansion of Danforth Avenue.
[38] There was a potential detriment to Square-Boy of being land-locked in the period before the expansion of Danforth Avenue. There was no benefit to the City in excluding parking from the property that it was seeking to acquire from Square-Boy prior to needing this strip of land as part of its projected road expansion. There was a benefit to Square-Boy in being able to continue to park on the strip of land before it was needed by the City and there was nothing to be gained by the City in excluding parking.
[39] It was in this factual context that the draftspersons of the Right-of-Way prepared wording that granted “a right-of-way in, over, along and upon the [City Property] … for all purposes until the [City Property] is dedicated … as a public road.” This wording reflected a broad grant of easement that was time-limited to last until the City Property is used as part of the expansion of Danforth Avenue. Whatever value Square-Boy would be receiving in this parking entitlement prior to road development can be inferred to have been a factor in the negotiation of the sale price of the Front Parking Lot.
[40] There is no dispute that the easement was time-limited and would expire upon the expansion of Danforth Avenue. As such, this element of the Right-of-Way (“until the same is dedicated”) requires no interpretation. Also, this explains the apparent ambiguity in the Deed between the granting of an easement and the qualification that the City Property would have no encumbrances. The easement was an encumbrance on the City Property but was time-limited until the City needed to use the property for the purpose for which it was acquired, at which time it would for all time thereafter be free of any encumbrance.
[41] Turning to the interpretation of the phrase “for all purposes”, principles of contract interpretation mandate that the court strive to attribute a meaning and thereby give effect to all words in a contract: National Trust Co. v. Mead, 1990 CanLII 73 (SCC), [1990] 2 S.C.R. 410, at p. 425. A contract ought to be construed so that no clause, sentence or word is superfluous, void or insignificant: Elliott v. Billings (Township) Board of Education, 1960 CanLII 155 (ON CA), [1960] O.R. 583 (Ont. C.A.), at p. 587.
[42] The parties disagree about the meaning of the term “for all purposes”. The parties submit that the phrase “for all purposes” can mean one of two things: (i) for all the purposes for which the City Property was used at the time the easement was granted in 1971, as is submitted by Square-Boy; or (ii) for all the purposes related to a right-of-way which, in the City’s submission, does not include a right to park but rather includes only a right to pass over to gain access or egress, otherwise known as a right to “pass and repass”.
[43] I do not accept Square-Boys’ submission on this point, as to do so would entitle Square-Boy to all the vestiges of ownership that it enjoyed over the Front Parking Lot before it became the City Property. This cannot be the case. Even a robust right-of-way does not provide rights that are tantamount to ownership.
[44] Rather, I accept the City’s submission to the extent that “for all purposes” was intended to describe the Right-of-Way which always remains a right-of-way. I find, however, that the term “for all purposes” means that the Right-of-Way is to be interpreted in a manner that includes all of the purposes for which it was agreed upon, created and granted to encompass which, in the context of this case, includes the right to permit parking to access commercial premises of the Property.
[45] In applying the interpretative factors identified by the Court of Appeal in Brindley, the contract interpretation principles stated by Sattva and Eli Lilly, and mindful of the parties’ submissions on the interpretation of easements based on real estate law commentators in Anger & Honsberger, Law of Real Property, I have determined that the Right-of-Way includes, as an included or ancillary right, the right to permit parking on the City Property to access commercial properties on the Property.
Qualifications on the Included Right to Park
[46] Although the Right-of-Way includes the right to permit parking on the City Property to access commercial premises on the Property, it does not convey rights to Square-Boy that are tantamount to the rights of an owner. The City forcefully submitted that even if the Right-of-Way includes a right to park, the Right-of-Way cannot be used in a manner that overtakes the City’s entitlements as owner. These submissions are well-founded on applicable authority.
[47] In Bibieffe International Holding B.V. v. York Region Condominium Corp. No. 838, [2000] O.J. No. 3579 (Ont. C.A.), the Court of Appeal considered an easement that allowed a right-of-way “for the purposes of pedestrian and vehicular access and egress and for the purpose of parking vehicles.” The holder of the right-of-way contended that this easement provided it with the exclusive right to park on the land governed by the easement. The owner of the land on which the easement attached, submitted that it had a right to use its lands for access and parking. The trial judge’s determination that the easement did not provide the right holder with exclusivity was upheld by the Court of Appeal, at paras. 4-5, as follows:
The grant of an easement does not amount to the grant of title to the lands and easements are ordinarily interpreted in a manner that does not deprive the servient owner of its proprietary rights. We agree with the trial judge that there is nothing in the language of this easement that would amount to a grant to the appellant the exclusive right to access and park vehicles on the land.
On the other hand, it is clear that the respondent must exercise its residual rights as owner of the servient tenement in a manner consistent with the rights accorded by the easement. [Emphasis in original.]
[48] The Right-of-Way does not, and cannot at law, grant to Square-Boy exclusivity over parking on the City Property and cannot allow Square-Boy to occupy the City Property. This is fundamental to an easement which must, by its nature, preserve a proprietary interest or right in the owner (the servient tenement) notwithstanding the grant of certain entitlements to the right holder (dominant tenement): Re Ellenborough Park. These principles are stated by the British Columbia Court of Appeal in Robinson v. Pipito, at paras. 20, 22, as follows:
Every easement will, to some extent, exclude the servient owner from the property and prevent the servient owner from exercising some proprietary rights over the property reserved for the easement. The degree of occupation or possession, and the question whether that degree of occupation or possession is compatible with the existence of an easement, should be governed by the document conceding the grant. The conduct of the parties in the purported exercise of the rights granted under the easement is not helpful as a guide to interpreting the document: they may misapprehend their legal rights.
The parties, here and below, have not sought to challenge the well-settled law that an easement cannot give exclusive possession or unrestricted use of a parcel of land.
[49] Square-Boy has a right that parking be permitted on the City Property of a duration and character necessary for access to and use of the commercial and retail premises on the Property, currently a restaurant and other retail outlets. Square-Boy does not own the City Property. As a result, Square-Boy’s entitlements with regard to the City Property ought never to be confused with the rights of ownership. This manifests in several ways:
a) Square-Boy’s entitlement to park is not exclusive. Square-Boy cannot bar others from parking, cannot charge for the parking and cannot lease the parking spaces. These are rights of ownership of the land and not ownership of an easement.
b) Square-Boy cannot occupy the City Property. Square-Boy cannot intrude upon the City Property by physically altering it in any way.
c) Square-Boy cannot impede the City’s use of the City Property.
[50] At the same time, the City’s use of the City Property must be in a manner that respects the right included or ancillary to the Right-of-Way to permit parking to access commercial premises on the Property. Particularly, the City cannot interfere, impede, block or in any manner prevent the use of the Right-of-Way by Square-Boy and its invitees.
The Parties’ Subsequent Conduct as Validating the Interpretation of the Right-of-Way
[51] Assessment of the use of the Right-of-Way since its creation in 1971 is necessary both in accordance with the factors listed by the Court of Appeal in Brindley and also because doubt concerning the intention of the contracting parties can be clarified by considering how the parties acted under the Right-of-Way: 2123201 Ontario Inc. v. Israel Estate, 2016 ONCA 409, 130 O.R. (3d) 652 (Ont. C.A.). Referring to Montreal Trust Co. of Canada v. Birmingham Lodge Ltd. (1995), 1995 CanLII 438 (ON CA), 24 O.R. (3d) 97 (Ont. C.A.), at p. 108, the Court of Appeal stated, at para. 41:
The way parties act under an Agreement may be helpful in determining its intended meaning when there is doubt about the appropriate interpretation. The parties’ later conduct may show what meaning they gave to the Agreement after it was made, which in turn may show the parties’ intent when the Agreement was made.
[52] As previously discussed, the grant of an easement includes a grant of ancillary rights that are reasonably necessary to the use and enjoyment of the easement and which were contemplated by the grantor. When determining what ancillary rights were contemplated by the grantor, it may therefore be necessary to go beyond the precise language of the grant and, as in this case, consider the subsequent conduct of the parties: Brindley; Mackenzie; Muir.
[53] The largest component of the record on this Application was directed to the parties’ conduct after the grant of the Right-of-Way in 1971. This evidence may be summarized as follows:
a) In the thirteen-year period from June 1971 to 1984, the City raised no issue with parking on the City Property by Square-Boy and its customers to access the restaurant on the Property.
b) In the mid-1980s, Square-Boy planned an expansion of the retail use of the Property by the addition of buildings on either side of the Initial Building. Section 8.5.1 of City By-Law 6752 required 28 on-site parking spaces for the additions sought. Square-Boy had 17 parking spaces at the rear of the Property and sought, by way of minor variance, to count the 12 parking spaces on the City Property. By decision rendered on February 15, 1984, the Committee of Adjustment granted a minor variance on the condition that Square-Boy enter into a five-year lease with the City of Toronto for the leasing of the 12 parking spaces on the City Property and that this lease be renewed for further terms as the land is required (the “1984 Committee of Adjustment Decision”).
c) Square-Boy entered into a lease with the City of Toronto for the 12 parking spaces on the City Property for the time period from September 1984 to September 1989 (the “1984 Square-Boy/City Lease”).
d) The Property was developed into a commercial plaza, with a building constructed on the west side and the east side of the Initial Building (the “Additional Buildings”), housing retail food and service outlets. These are seen on the Schedule attached to these Reasons.
e) In September 1989, Square-Boy refused to renew the 1989 Square-Boy/City Lease on the basis that it was otherwise entitled to use the 12 parking spaces on the City Property. This dispute continued from 1989 to 1992 through exchange of positional letters between Square-Boy and the City. However, September 1989 marked the last time that Square-Boy paid the City any rent for the use of the City Property for parking to access its retail outlets.
f) On July 15, 1992, the Committee of Adjustment granted to Square-Boy a minor variance to validate as sufficient the use of the parking spaces located at the rear of the Property for the purposes of the municipal by-law, thereby alleviating the necessity for Square-Boy to lease the 12 parking spaces on the City Property (the “1992 Committee of Adjustment Decision”).
g) In 2004, the City declared that the City Property was surplus to its needs: Declaration of Surplus, Administration Committee, City Council, dated January 27, 28 and 29, 2004 (the “2004 Declaration of Surplus”). As there are no plans for expansion of Danforth Avenue, and therefore no use by the City for the City Property, the time limitation contained in the Right-of-Way is now functionally redundant.
h) In the thirteen-year period from 1992 to 2015, the City raised no issue with parking on the City Property to access the commercial premises on the Property.
i) In or about 2015, the City approached Square-Boy regarding its plan to expropriate a strip at the rear of the Property behind the Initial Buildings and Additional Buildings (the “Rear Parcel”). The negotiations included the possibility of exchanging the Rear Parcel with the City Property and have continued from 2015 to 2017.
j) On January 27, 2017, the City delivered a Notice of Application for Approval to Expropriate the Rear Parcel.
k) On February 3, 2017, the City notified Square-Boy of its intention to barricade the City Property to prevent any parking on the City Property including any right to park to access the commercial premises, as follows:
Therefore, please be advised that around March 9, 2017, the City will be installing concrete curbs on the portions of the City Lands that are currently used for parking to ensure that the City Lands are no longer used for this purpose. Square-Boy will continue to have the benefit of its right-of-way over the City Lands.
l) The City agreed to postpone its barricading of the City Property until the scope of the Right-of-Way was determined. The Notice of Application was issued by Square-Boy on March 17, 2017.
[54] The conduct of the parties in the thirteen-year time period from the time of the grant of the Right-of-Way in 1971 to 1984 supports a determination that Square-Boy had a right that parking would be permitted on the City Property for the purpose of accessing the commercial premises on the Property. This is the most formative time period for analysis of the parties’ conduct as it is most proximate in time to the grant of the Right-of-Way.
[55] Even in 1984, it was the Committee of Adjustment that raised the issue of Square-Boy’s entitlement to permit parking on the City Property, not the City. The City was the beneficiary of the Committee of Adjustment’s work, in this regard, which was manifested in the form of the 1984 Square-Boy/City Lease.
[56] In 1989, the City took issue with Square-Boy’s use of the City Property to permit parking to access the commercial premises: 18 years after the Right-of-Way was granted.
[57] Interestingly, the 1984 Square-Boy/City Lease provided Square-Boy with what it now seeks: the ability to use the City Property with rights tantamount to an owner. For an annual lease cost of $4,500, the 1984 Square-Boy/City Lease provided Square-Boy with the rights of exclusive use and occupation that are the hallmarks of ownership and capable of being achieved by leasing as well as by ownership.
[58] The City submitted that the 1984 Square-Boy/City Lease established that Square-Boy knew that it did not have an entitlement to permit parking on the City Property and could only acquire this through leasing. Square-Boy submits that its leasing of the City Property in 1984 was purely for ease of advancing its greater priority, being the development of the Property into a retail plaza, wherein it was cost-efficient to simply pay the $4,500 in annual lease cost rather than engage in a lengthy process to establish entitlement and thereby delay its development project. I accept Square-Boy’s submission that the leasing of the City Property in 1984-1989 was not as much about recognition of an entitlement on the part of the City, particularly as the Committee of Adjustment had imposed the requirement to lease, as it was to achieve expediency in achieving Square-Boy’s development objectives.
[59] However, the period of tenancy may well have led to confusion concerning Square-Boy’s rights under the Right-of-Way, conflating its rights as a dominant tenement with its rights as a tenant. Manifestations of this continue to date, with the City’s complaint of conduct on the part of Square-Boy that would have been proper during the period in which it was a tenant but not so as a dominant tenement under the Right-of-Way. For instance, much was said of signage erected by Square-Boy on the City Property without clarity in the record concerning whether this is over-holding from the period of tenancy or was installed on the basis of the Right-of-Way.
[60] A lengthy letter campaign between the City and Square-Boy in the period from 1989 to 1992 raised the possibility of the City selling the City Property to Square-Boy, or perhaps a further lease. These exchanges produced nothing and the City’s dealing with the City Property again went dormant for a further 12 years from 1992 to 2004.
[61] The 2004 Declaration of Surplus caused the City to inquire of Square-Boy concerning its interest in purchasing the City Property, without result. The City’s dealing with the City Property again went silent for a further 12 year time period from 2004 to 2016.
[62] The City’s 2016 notification to Square-Boy of its desire to acquire Square-Boy’s Rear Parcel, through expropriation if necessary, proved to be the catalyst leading to this application. The inability to negotiate a market sale of the Rear Parcel resulted in the City’s 2017 Notice of Application for Approval to Expropriate.
[63] Square-Boy submitted that the decision by the City to exert “self-help” by threatening to erect barricades on the City Property was all about exerting pressure on the negotiations of a market sale of the Rear Parcel. The City contended that it was in keeping with the Right-of-Way to erect barricades that would allow vehicles to enter one of the two entrance points into the City Property and have only the ability to drive past the front of the retail stores before exiting, without stopping, through the other entrance point into the City Property. In other words, a form of round-about allowing for a view of the front windows of the commercial outlets but without ability to stop to shop. Alternatively, the City submitted, on the basis of Soares, that stopping for less than 15 minutes would be permissible. However, Soares dealt with a laneway affecting a small number of property owners and not a commercial plaza wherein issues of managing a 15 minute parking allowance would abound.
[64] The City considers that it has an obligation to contest Square-Boy’s use of the City Property as Square-Boy cannot receive a “bonus” or benefit to which a ratepayer is not entitled. The City rejects Square-Boy’s contention that the timing of addressing this “bonus” issue is tactically related to the City’s 2017 Notice of Application for Approval to Expropriate.
[65] That being said, this Application was framed narrowly. The only materiality of the conduct of the parties after the grant of the Right-of-Way is to assess whether it validates or calls into question the interpretation of the Right-of-Way to include a right to permit parking to access commercial premises. It does. The City’s conduct in permitting parking of this nature on the City Property in the 13-year period from 1971 to 1984 shows an intention on the part of the City that this was permitted. To a lesser but nonetheless meaningful way, this is also seen in the City not taking any steps in the 12-year period from 1992 to 2004 and in the 12-year period from 2004 to 2016.
[66] The business motivation of the parties in their current dispute is not material to the issue before the court. Each side criticizes the other for opportunism and seeking tactical advantage in dealing with the Rear Parcel. The City submits that Square-Boy is acting beyond its rights as dominant tenement and consistent with assertions of ownership, such as erecting a sign on the City Property and entering into leases where exclusive control is said to be asserted over the 12 parking spaces. No remedy was sought in relation to these issues on this application such that these elements were meaningful only as informing post-contractual conduct. It is expected, however, that the determinations made herein will be applied by the parties reasonably to resolve issues that were not presented on this application but which can now be addressed and resolved on the foundation of the determinations made herein.
D. Disposition
[67] The Notice of Application was narrowly framed for a determination of whether the Right-of-Way includes the right to park on the City Property to access the commercial premises on the Property. I have determined that it does.
[68] The parking permitted on the City Property must be of a duration and character necessary for access to the commercial/ retail outlets situated on the Property. Square-Boy cannot use the City Property for parking on an exclusive basis and cannot occupy the City Property. Consistent with Bibieffe International Holding, the right of Square-Boy to park on the City Property cannot deprive the City of its entitlements as owner. To have rights tantamount to ownership, Square-Boy would have to purchase or lease the City Property.
[69] A declaration is granted that the right-of-way, in, over, along and upon the City Property, as legally described in the Notice of Application, as contained in the Deed between the applicant and respondent dated June 7, 1971, includes the right to permit parking to access the commercial premises on the Property, provided that the parking does not impede any right of access or egress over the City Property, is non-exclusive in nature and is not of a duration that constitutes occupation of the City Property.
[70] Minute details that may emerge in managing the co-existence between Square-Boy and the City on the City Property were not framed for determination by the court in this application. This is similar to Bibieffe International Holding, where the Court of Appeal commented at para. 3 that the general and abstract manner in which the case was framed for consideration by the court did not allow the trial judge “to make anything approaching a definitive or exhaustive pronouncement of the rights of the parties”. This applies equally to this application. Operational issues that arise on a micro level as a result of the parties’ use of the City Property can be addressed by them in a manner consistent with the findings herein.
[71] The elements required to be established for injunctive relief have not been established, such that the applicant’s claim for injunctive relief is dismissed, without prejudice to the right to seek relief in the event of non-compliance with this decision.
E. Costs
[72] The parties are encouraged to discuss and attempt to resolve the issue of costs.
[73] In the event that the parties are not able to reach agreement on the issue of costs, the applicant shall deliver written cost submissions of no more than five pages within seven days of the release of this decision. Counsel for the respondent shall deliver written submissions of a similar length within fourteen days of release of this decision. I will then consider and deliver an endorsement on the issue of costs.
Sanfilippo J.
Released: November 30, 2017
SCHEDULE TO REASONS
PLAN OF SURVEY
CITATION: Square-Boy Limited v. The City of Toronto, 2017 ONSC 7178 COURT FILE NO.: CV-17-571789 DATE: 20171130
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
SQUARE-BOY LIMITED
Applicant
– and –
THE CITY OF TORONTO
Respondent
REASONS FOR JUDGMENT
Sanfilippo J.
Released: November 30, 2017