



COURT OF APPEAL FOR ONTARIO

CITATION: Sipsas v. 1299781 Ontario Inc., 2017 ONCA 265

DATE: 20170331

DOCKET: C61800

Hoy A.C.J.O., Benotto and Huscroft JJ.A.

BETWEEN

Ted Sipsas and Leslie Carruthers

Plaintiffs (Appellants)

and

1299781 Ontario Inc.

Defendant (Respondent)

Justin Winch, for the appellants

David Winnitoy, for the respondent

Heard:  October 4, 2016

On appeal from the order of Justice Kenneth G. Hood of
    the Superior Court of Justice, dated February 3, 2016, with reasons reported at
    2016 ONSC 212.

By
    the Court:

[1]

This is an appeal of an order denying the appellants request for a
    declaration that they own a part of the property that adjoins the property they
    purchased, as a result of adverse possession.

[2]

The appeal is dismissed for the reasons that follow.

Background

[3]

The appellants, Ted Sipsas and Leslie Carruthers, own 173 Gooch Ave.
    (173), which adjoins 171 Gooch Ave. (171). Both properties are in Toronto
    and were converted to Land Titles on October 22, 2001.

[4]

The appellants purchased 173
from Delila
    and Fred Hendricks on September 28, 2007. The Hendricks had purchased the
    property in 1969 from the builder who built their two-storey brick home on the
    property.

[5]

171 was purchased by the respondent, 1299781 Ontario Inc., from the City
    of Toronto on December 18, 2006. It was essentially a vacant piece of land. The
    City had taken ownership of the property as a result of unpaid taxes owed by
    the previous owner, Jennie D. Thompson (Thompson), who owned the property from
    1932 until 2005.

[6]

A dispute arose when the respondent listed 171 for sale. The appellants
    asserted ownership of part of that property as a result of adverse possession
    and took the position that 171 could not be sold if the sale included the
    disputed lands. The appellants commenced an application and obtained a
    certificate of pending litigation that prevented the sale of 171 until
    ownership of the disputed lands was resolved. The application was converted to
    an action that was tried pursuant to the simplified procedure, resulting in the
    order under appeal.

[7]

There is no evidence that the disputed lands were used by Thompson at
    any time between the Hendricks purchase of 173 in 1969 and the Citys
    assumption of ownership of 171, including the disputed lands, in 2005.

[8]

Mr. Hendricks, the prior owner of 173, gave evidence that the builder from
    whom he purchased it built a retaining wall on 171 and enclosed the disputed
    lands with a board fence in 1969, prior to his purchase. He said that he always
    understood from the builder that the disputed lands were part of his property.
    According to Mr. Hendricks, he completed the fencing of the disputed lands by
    1974. In addition, he built concrete steps on the disputed lands by 1970 and
    two sheds in 1979, one that was used as a tool shed and the other as a dog
    house and dog run.

The Trial Judges Decision

[9]

The trial judge noted Mr. Hendricks evidence that he believed the
    disputed lands were part of 173. The trial judge observed that none of the
    purchase and sale documentation from the sale of 173 in 1969 was put into
    evidence. He acknowledged that the Listing Agreement in connection with the
    Hendricks 2007 sale of 173 referred to a Garden Shed being included in the
    sale. However, the agreement of purchase and sale and the statutory declaration
    that were executed when the appellants purchased the property did not refer to
    the disputed lands. He gave more weight to those documents than to the Listing
    Agreement and found that they contradicted Mr. Hendricks evidence that he
    always believed that the disputed lands were part of 173.

[10]

The trial judge found that the evidence as to the current extent and
    state of the fence was unclear, but that it was irrelevant given that adverse
    possession could be established by possession for any continuous ten-year period
    prior to October 22, 2001.

[11]

The trial judge found that the disputed lands were used by the Hendricks
    only seasonally, from approximately November through March. Further, the trial
    judge accepted Mr. Hendricks evidence, at para. 28, that he did not believe,
    when he was using the Disputed Lands from April to October, that he was
    excluding someone elses right to them. It did not concern him. The trial
    judge found that there was no evidence that Thompson was aware of the use of
    her land by the Hendricks, and no evidence as to her intended use of the land
    in any event.

[12]

The trial judge applied the three-part test from this courts decision
    in
Masidon Investments Ltd. v. Ham
(1984), 45 O.R. (2d) 563 (C.A.),
    leave to appeal refused, [1984] S.C.C.A. No. 232. In that case the court held
    that an adverse possession claimant must have:

(1) had actual possession;

(2) had the intention of excluding the
    true owner from possession, and

(3) effectively excluded the true owner
    from possession.

[13]

The trial judge concluded the adverse possession claim failed at the
    first step: the Hendricks use of the land was seasonal and intermittent at
    best, and so did not meet the requirement of constant and continuous usage.
    Accordingly, there was no actual possession of the disputed lands. This
    conclusion was sufficient to dismiss the claim, but the trial judge also
    concluded that the appellants failed to satisfy the second and third steps of
    the
Masidon
test.

[14]

The trial judge noted that enclosure is the strongest evidence of
    adverse possession, and may also lead to proof of intention to exclude and
    actual exclusion of the true owner. However, he found that Mr. Hendricks was
    unable to give evidence as to the state of the fence during the relevant time
    because he never went out to look at it. He noted that this supported the
    respondents argument that the Hendricks had no intention to exclude Thompson.

[15]

The trial judge found there was no evidence concerning Thompsons
    understanding or her intentions as to the disputed lands, and as a result it
    could not be said that both Hendricks and Thompson mistakenly believed that the
    Hendricks owned the land.

[16]

Consequently, the appellants were required to establish inconsistent
    use, following
Masidon Investments
and
Fletcher v. Storoschuk
(1981), 35 O.R. (2d) 722 (C.A.). On this point, the
    trial judge found as follows, at para. 38:

There is no evidence put forward
    by the plaintiffs as to the use or intended use of the land by the defendants
    predecessor in title, Ms. Thompson. The plaintiffs have failed to show that
    what their predecessors in title, the Hendricks, did was inconsistent with the
    form of use and enjoyment that Ms. Thompson intended to make of the land owned
    by her. The plaintiffs have not proven that the use of the Disputed Lands was
    with the intention of excluding the true owner from possession. Nor is there
    any evidence that what the Hendricks did was even known to Ms. Thompson, so
    that there could be an argument that she gave permission to the use of her
    property and the use was adverse to her ownership.

[17]

The trial judge added, at para. 39, that the Hendricks sale of 173
    without mentioning the disputed lands is consistent with this conclusion: The
    Hendricks knew that they had no claim to any of 17[1] Gooch. They knew that the
    property they were selling was only 17[3] Gooch.

Analysis

[18]

Although title to lands registered in Land Titles cannot be obtained by adverse
    possession following the registration of title, title may be obtained by
    adverse possession that can be established for a continuous period of 10 years
prior to registration: s. 51(2) of the
Land Titles
    Act
,
R.S.O. 1990, c. L.5
and s. 4 of the
Real Property Limitations
    Act
, R.S.O. 1990, c. L.15.

Thus, as the trial judge found, the appellants were required
    to establish that the Hendricks adversely possessed the disputed lands for any
    10-year period ending October 21, 2001.

[19]

The appellants submit that the trial judge erred in concluding that the
    appellants failed at the first step of the
Masidon
test because the
    Hendricks use of the disputed lands was seasonal and intermittent at best.

[20]

It is clearly arguable that the Hendricks use of the disputed
    lands was sufficient to establish actual possession. The Supreme Court recently
    reiterated that the requirement that a claimant have actual possession does
    not require continuous occupation:
Nelson v. Mowatt
, 2017 SCC 8, [2017]
    S.C.J. No. 8, at para. 31. The Hendricks could be said to have used the
    disputed lands as a backyard, and backyards are necessarily used on a seasonal
    basis. But even assuming that the actual possession requirement were satisfied,
    the appellants claim would fail on the second step of the
Masidon
test.

[21]

The appellants were required to establish that the Hendricks
    intended to use the disputed lands in a manner inconsistent with the rights of
    Thompson and the use she intended to make of it. There is no question that the inconsistent
    use test makes it more difficult for claimants of adverse possession to establish
    an intention to exclude, especially where, as in this case, the intentions of
    the true owner of the disputed lands are unknown.

[22]

The appellants sought to avoid this problem by arguing that this was a
    case of mutual mistake, rendering the inconsistent use test irrelevant: see
Teis
    v. Ancaster (Town)
(1997), 35 O.R. (3d) 216 (C.A). However, a mutual
    mistake cannot be established on this record. It was not established that Thompson
    was mistaken about anything at all. The appellants could do no more than
    suggest it was
possible
that Thompson also believed that the disputed
    lands were owned by the Hendricks.

[23]

At the hearing of the appeal, the appellants sought to characterize this
    as a case of unilateral mistake, submitting that the Hendricks mistakenly
    believed that they owned the disputed land.

[24]

As noted in
Barbour v. Bailey
,
2016 ONCA 98, 345 O.A.C.
    311, at para. 43, this court has not determined whether inconsistent use is
    necessary in cases of unilateral mistake, although there is Superior Court
    authority that supports the proposition that it is not: see
Marotta v.
    Creative Investments Ltd.
,
[2008] O.J. No. 1399, 69 R.P.R. (4th) 44
     (S.C.).

[25]

This argument was not properly raised on appeal, as it had not been
    argued at trial. But in any event it cannot surmount a factual hurdle.

[26]

At para. 35 of his reasons, the trial judge wrote: Even if I was
    prepared to accept Mr. Hendricks evidence that he was told by the builder that
    the Disputed Lands were theirs and he actually believed this, there is no
    evidence as to what Ms. Thompson believed or what use she intended to make of
    the property. While this may suggest that the trial judge stopped short of
    determining whether the Hendricks believed they owned the disputed lands, he
    clearly found at para. 39, referenced above, that The Hendricks knew that they
    had no claim to any of 17[1] Gooch. It is clear from his reasons as a whole
    that that he was not persuaded that the Hendricks believed that they owned the
    disputed lands.

[27]

The appellants argue the trial judge was not entitled to give any weight
    to the agreement of purchase and sale and the statutory declaration that the
    Hendricks signed because they came after adverse possession had to be
    established. They say the trial judge made a palpable and overriding error by
    not finding  in the face of Mr. Hendricks evidence and the Listing Agreement
    that referred to the Garden Shed  that the Hendricks believed they owned the
    disputed lands.

[28]

In our view, it was open to the trial judge to consider the agreement of
    purchase and sale and statutory declaration in rejecting Mr. Hendricks
    evidence that he believed that the Hendricks owned the disputed lands. We are
    not persuaded that the trial judges conclusion that the Hendricks knew they
    had no claim to 171 is a palpable and overriding error.

A note on
Mowatt

[29]

After this appeal was heard, the Supreme Court released
Mowatt
, a decision concerning the law of
    adverse possession in British Columbia. We refer to
Mowatt

in para. 20, above. In
Mowatt
,
the Supreme Court also noted, citing
Masidon
and other cases, that the inconsistent use requirement appears in
    the jurisprudence of Ontario.  It held that the law of British Columbia
    governing adverse possession does not require a claimant to demonstrate that
    his or her use of disputed lands was inconsistent with the intended use of the
    true owner. At para. 27, Brown J., for the court, wrote: Whether the
    requirement is properly applicable in other provinces remains an open question
    subject to examination of their respective legislative histories, the wording
    of their particular limitation statutes, and the treatment of these matters by
    the courts of those provinces.

[30]

In supplemental submissions following the release of
Mowatt
, the appellants effectively urge this panel to overrule
Masidon

and eliminate the inconsistent use requirement in Ontario,
    without regard to whether there is mutual or unilateral mistake.

However, this panel is not in a position to overrule
Masidon
.


The easement claim

[31]

The appellants argued in their factum that the trial judge failed
    to consider their claim for an easement, but did not pursue the argument at the
    hearing of the appeal. There is no merit to the argument in any event. There
    was no evidence to support the claim that an easement was reasonably necessary
    for the enjoyment of the appellants land. Furthermore, the grant of an
    easement would all but preclude the respondents use of the disputed lands.

Disposition

[32]

The appeal is dismissed.

[33]

The respondent is entitled to its costs on the appeal fixed at the agreed amount of $17,500, inclusive of taxes and disbursements.

Released: AH MAR 31 2017

Alexandra Hoy
    A.C.J.O.

M.L. Benotto J.A.

Grant Huscroft J.A.


