



COURT OF APPEAL FOR ONTARIO

CITATION: Oakville (Town) v. Sullivan, 2021
    ONCA 1

DATE: 20210106

DOCKET: C68261

Trotter, Zarnett and Jamal JJ.A.

BETWEEN

The Corporation of the Town
    of Oakville and

Oakville Hydro Electricity
    Distribution Inc.

Applicants (Respondents)

and

Michael Arthur Sullivan and
    Margaret Di Pede

Respondents (Appellants)

Albert G. Formosa and Marie-Pier
    Nadeau, for the appellants

Charles M.K. Loopstra and Scott E.
    Hamilton, for the respondents

Heard: November 24, 2020 by video conference

On appeal from the
    order of Justice Clayton Conlan of the Superior Court of Justice, dated March
    6, 2020, with reasons reported at 2020 ONSC 1419.

Jamal J.A.:

Introduction

[1]

This appeal involves a claim for actionable
    encroachment on an easement. The appellants, Michael Sullivan and Margaret Di
    Pede, built a swimming pool and surrounding deck, platform, and other elements
    (Pool Amenities) behind their house in Oakville. The Pool Amenities extend over
    a ten-foot strip of land which, although owned by the appellants, is subject to
    an easement held by the respondents, The Corporation of the Town of Oakville
    (Town) and Oakville Hydro Electricity Distribution Inc. (Hydro). The easement
    prohibits the erection of any building or structure within that strip of land.
    The appellants knew about the easement when they bought the property and proceeded
    to build the Pool Amenities without a municipal building permit.

[2]

The application judge declared the Pool
    Amenities to be a building or structure erected on the land that was subject
    to the easement, and thus an actionable encroachment upon it. He ordered the appellants
    to remove the Pool Amenities and remediate any damage to the easement by June
    1, 2020. The appellants now appeal.

[3]

For the reasons that follow, I would dismiss the
    appeal.

Background

[4]

In June 1972, the appellants predecessors in
    title granted an easement to the Town over the most westerly ten feet (10) of
    their property. The easement indenture, which is registered on title, provides in
    relevant part:

WHEREAS the Owners are the owners of the lands
    described in Schedule A
hereto
and have
    agreed to grant the herein mentioned easements;

NOW THEREFORE the Owners in consideration of
    other good and valuable consideration and the sum of Two Dollars ($2.00) now
    paid to it by the Town,
hereby
grants to the
    Town the right, liberty and privilege appurtenant to its undertaking as a
    Municipal Corporation to construct, operate, maintain, replace and repair
    underground sewers, drains, pipes, conduits, wires and services generally with
    such above ground accesses, manholes, catch basins, hydrants, service boxes and
    other appurtenances as it desires, at its expense and for so long as it
    desires, upon, across, along and under the land described in Schedule A
hereto
and for every such purpose the Town and those
    claiming under it shall have access to the said land
at
    all times
but
reserving to the Owners the right to use the surface of
    the said land for any purpose which does not conflict with the Towns rights
hereunder
and specifically excluding the planting of
    any tree and the erection of any building or structure
. [Emphasis added.]

[5]

In February 2000, the Town sold the easement to
    Hydro but retained an interest in it under the municipal by-law authorizing the
    sale.

[6]

In October 2012, the appellants bought the
    property. They knew about the easement before closing, but believed it was abandoned
    or never used. In fact, located within the easement is an underground conduit
    that houses a hydro cable providing electricity to a neighbouring property.

[7]

In early 2014, the appellants built the Pool
    Amenities in their back yard within the easement.

[8]

It is not disputed that the Pool Amenities are a
    building under the Ontario
Building Code Act, 1992
, S.O. 1992, c.
    23, and thus legally required a municipal building permit. No such permit was
    obtained. In January 2018, the appellant Michael Sullivan pleaded guilty to
    building the Pool Amenities without a building permit and breaching an order to
    comply. Mr. Sullivan offered to pay to relocate the hydro service of the
    neighbouring property, but his affected neighbour was unwilling to agree to
    this proposal.

[9]

It is also not disputed that, over the years, several
    other structures have been erected within the easement with the Towns approval,
    including a carport and part of the house. Two large trees are also within the
    easement.

[10]

In May 2018, the respondents applied to the
    Ontario Superior Court for a declaration that the Pool Amenities encroach upon
    the easement and for an order requiring their removal.

The application judges decision

[11]

By order dated March 6, 2020, the application
    judge granted the application. In his reasons, he ruled that the Pool Amenities
    actionably encroach upon the easement because they contravene the express
    prohibition against erecting a building or structure within it. He also ruled
    that the equitable doctrine of proprietary estoppel does not prevent the Town
    and Hydro from enforcing their rights under the easement. He therefore ordered
    the appellants to remove the Pool Amenities and to remediate any damage to the
    easement at their own expense by June 1, 2020.

[12]

In
obiter dicta
, however, the application
    judge added that had he not concluded that the Pool Amenities contravened the
    express terms of the easement, he would have ruled that the Town and Hydro had
    not established an actionable encroachment. He was prepared to accept that the
    Pool Amenities could cause some unspecified or unknown, but probably quite
    minor, degree of inconvenience to the Town and/or Hydro in exercising their
    Easement rights, however, that is not the test for substantial interference.

Issues

[13]

This appeal raises three issues:

1.

Is there an actionable encroachment on the easement?

2.

Was the easement abandoned or partially
    extinguished?

3.

Does the equitable doctrine of proprietary
    estoppel preclude enforcement of the easement?

Discussion

Issue #1: Is there an actionable encroachment
    on the easement?

(a)

Applicable principles

[14]

In evaluating whether there is an actionable
    encroachment on an easement created by express grant, the court first determines
    the nature and extent of the easement by interpreting the wording of the
    instrument creating the easement, considered in the context of the
    circumstances that existed when the easement was created:
Fallowfield v.
    Bourgault
(2003), 68 O.R. (3d) 417 (C.A.), at para. 10; see also
Raimondi
    v. Ontario Heritage Trust
, 2018 ONCA 750, 96 R.P.R. (5th) 175, at para.
    11.

[15]

Once the nature and extent of the easement have been
    determined, the court then considers whether there is an actionable
    encroachment upon it. The test for an actionable encroachment is whether there is
    a substantial interference with the use and enjoyment of the easement for the
    purpose identified in the grant:
Weidelich v. de Koning
, 2014 ONCA
    736, 122 O.R. (3d) 545, at paras. 9-11;
Fallowfield
, at paras. 40-41;
Hunsinger
    v. Carter
, 2018 ONCA 656, 91 R.P.R. (5th) 175, at para. 11; Anne Warner La
    Forest,
Anger & Honsberger, Law of Real Property
, loose-leaf, 3rd
    ed. (Toronto: Thomson Reuters, 2019),
at para.
17:20.50; and
Halsburys Laws of Canada

Real Property
(Toronto:
    LexisNexis Canada, 2016 Reissue), at HRP-325.

(b)

Application to this case

[16]

The appellants assert that the application judge
    erred in ruling that the Pool Amenities are an actionable encroachment, for two
    reasons:

1.

The easement does not limit the appellants right to build the Pool
    Amenities on their property, because the easement was only ever intended to be
    used, and has only ever been used, for a hydro line, which can be serviced even
    with the Pool Amenities located within the easement; and

2.

The application judge applied the wrong test for actionable
    encroachment by ruling that the appellants are prohibited outright from
    erecting any building or structure within the Easement, regardless of whether
    that building or structure conflicted or substantially interfered with the
    rights of the Easement holder(s). Had the application judge applied the
    correct substantial interference test, he would have concluded that no actionable
    encroachment was established.

[17]

I do not accept these submissions.

[18]

First, the application judges ruling as to the nature
    and extent of the easement involves a question of mixed fact and law that attracts
    appellate deference, and is reviewable (absent an extricable error of law)
only for palpable and overriding error: see
Sattva Capital Corp. v. Creston Moly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633, at para.
    50;
Owners, Strata Plan LMS 3905 v. Crystal Square Parking
    Corp.
, 2020 SCC 29, 450
    D.L.R. (4th) 105, at para. 101,
per
Rowe J. (dissenting, but not on this
    point);
Tessaro v. Langlois
, 2019 BCCA 95, 100 R.P.R. (5th) 51, at
    paras. 18-20; and
Twogee Developments Ltd v. Felger
    Farming Co Ltd
,
    2017 ABCA 138, 52 Alta. L.R. (6th) 270,

at
    para. 27.

[19]

In my view, the application judge properly
    focused on the wording of the easement indenture. The indenture states that the
    appellants rights to use the surface of the lands within the easement
    specifically exclud[es] the planting of any tree and the erection of any
    building or structure. He was entitled to conclude that the easement delivered
    a two-part message to the homeowner: (i) do not use the surface of the
    Easement land for any purpose that conflicts with the Towns rights (described
    above),
and
(ii) so that there is no confusion, do not under any
    circumstances plant a tree or erect a building or structure within the Easement
    (emphasis in original). The bottom line, the application judge stated, is that
    the planting of a tree or the erection of a building or structure on the
    Easement land is not permitted, period.

[20]

The application judge was also entitled to
    conclude that interpreting the easement as an outright prohibition reflects its
    broad purpose of allowing the Town unfettered access within the easement to
    provide municipal services:

One must remember that
the purpose of this
particular
Easement
    is very broad. The Town, from the outset of the Indentures creation, has the
    right to (i) go underground within the Easement for, effectively, any reason
    connected to municipal services and to (ii) access, above ground and within the
    Easement, any item related to such a service. An outright prohibition against
    the planting/erection of any tree, building or structure within the Easement
is neatly consistent with
such a broad purpose.

[21]

The appellants say that the application judges interpretation
    focuses principally on the wording of the indenture and ignores contemporaneous
    extrinsic evidence that suggests that the easement was primarily if not
    exclusively intended to permit a hydro line under the appellants property.
    They say that modern technology now allows the hydro line to be repaired or
    replaced even if a building or structure is erected within the easement.

[22]

I do not accept this submission. It is, in
    effect, an invitation for the court to read down the clear words of the
    easement indenture based on the surrounding circumstances and the use made of
    the easement to date. But, as Rothstein J. for the Supreme Court of Canada cautioned
    in
Sattva
, [w]hile the surrounding circumstances will be considered
    in interpreting the terms of a contract, they must never be allowed to
    overwhelm the words of that agreement: at para. 57. The easement indenture here
    is not limited to placing a hydro line under the appellants property. It also
    allows the Town to install and maintain underground sewers, drains, pipes,
    conduits, wires and services generally. That these facilities have not been
    installed within the easement to date is of no moment. The easement is not time
    limited and is therefore perpetual:
Remicorp Industries Inc. v. Metrolinx
,
    2017 ONCA 443, 138 O.R. (3d) 109, at para. 47, citing
Gale on Easements
,
    20th ed. (London: Thomson Reuters (Professional) UK Limited, 2017), at para.
    12-26. Indeed, the easement indenture expressly permits the Town access to
    provide the other listed municipal services, as it desires and for so long
    as it desires.

[23]

Thus, in my view, the application judges determination
    of the nature and extent of the easement is not tainted by palpable or overriding
    error. I would therefore reject the appellants first argument that the
    easement does not prohibit the erection of a building or structure such as the
    Pool Amenities.

[24]

Second, I disagree with the appellants claim that
    the application judge applied the wrong test for an actionable encroachment. Although
    I accept that the application judges reasons could have been clearer, I read those
    reasons as implicitly applying the substantial interference test. By contravening
    the outright prohibition against erecting a building or structure, the Pool
    Amenities necessarily encroach upon the easement. The easement indenture does
    not say that the appellants are prohibited from erecting a building or
    structure unless it creates a barrier or obstacle to the respondents exercise of
    their rights under the easement. Rather, as the application judge held, the
    appellants are prohibited outright from erecting any business or structure
    within the Easement. By agreeing to an outright prohibition, without
    qualification, the parties have effectively defined for themselves what will
    constitute a substantial interference with the easement.

[25]

The application judges observation in the
    alternative and in
obiter
that the respondents did not discharge their
    onus of establishing substantial interference does not detract from this
    conclusion. His
obiter
observation considered only one aspect of the
    easement  the appellants obligation not to use the surface of the easement
    for any purpose that conflicts with the Towns rights. Because it was in the
    alternative, it did not consider the outright prohibition against erecting any
    building or structure. But when the outright prohibition is considered, as it
    was under the first part of the application judges analysis, a substantial
    interference is established.

[26]

I therefore see no basis to intervene with the
    application judges conclusion that the Pool Amenities are an actionable
    encroachment on the easement.

Issue #2: Was the easement abandoned or partially
    extinguished?

(a)

Applicable principles

[27]

In
Remicorp
, this court reviewed the
    general principles relating to abandonment of an easement by release (at paras.
    47-51) and partial extinguishment of an easement (at paras. 63-73). In broad
    outline:

·

Unless an easement is granted for a term of
    years, the rights conferred by an easement are perpetual and, accordingly, are actually
    or potentially valuable rights. Therefore it is not lightly to be inferred that
    the owner of such a right should give it up for no consideration: at para. 47,
    citing
Gale on Easements
, at para. 12-26.

·

Other than by an express release, an easement
    can be abandoned by release impliedly by non-use coupled with evidence of an
    intention to abandon the easement: at para. 49.

·

An easement can be extinguished either by
    statute or at common law: at paras. 70-71.

(b)

Application to this case

[28]

Here, in the alternative, the appellants assert that
    the easement has been abandoned for any purpose other than the hydro cable.
    They say this is the only purpose for which the easement has been used, and that
    modern technology allows the cable to be serviced effectively even with the Pool
    Amenities within the easement. They also suggest the easement has been partially
    extinguished at common law because the easement serves no purpose other than
    servicing the hydro cable.

[29]

However, the application judge made no express findings
    on abandonment or partial extinguishment, and it is not clear whether these
    issues were even argued before him. This court will generally not entertain entirely
    new issues on appeal where doing so might unfairly deprive the other party of
    the opportunity to lead relevant evidence:
Kaiman v. Graham
, 2009 ONCA
    77, 245 O.A.C. 130, at para. 18;
Whitby (Town) v. G & G 878996 LM Ltd.
,
    2020 ONCA 654, 5 M.P.L.R. (6th) 174, at para. 9.

[30]

In any event, based on the evidence before the
    court and the findings that were made, I see no basis to conclude that the easement
    was abandoned or partially extinguished:

·

No
express

abandonment
is alleged, nor have the appellants
    established implied abandonment. In my view, the creation of the easement by express
    grant registered on title and its use continuously for a hydro cable is
    sufficient to find that the respondents did not intend to abandon it: see
Remicorp
, at paras. 50-51.

·

Nor is there any basis to find that the easement
    was extinguished at common law. There is no evidence that the municipal purposes
    for creating the easement have
come to an end
:
Remicorp
, at para. 65, citing
Anger & Honsberger
,
Law
    of Real Property
, at para. 17:20.60(a). Nor does lack of use and lack
    of need suffice to extinguish an easement by
operation
    of
law:
Remicorp
, at para. 76.

[31]

I therefore conclude that the appellants have
    not established that the easement was abandoned or partially extinguished.

Issue #3: Does the equitable doctrine of proprietary estoppel preclude
    enforcement of the easement?

(a)

Applicable principles

[32]

Proprietary estoppel is an equitable doctrine that
    can create or affect property rights when there is a want of consideration or
    of writing:
Clarke v. Johnson
, 2014 ONCA 237, 371 D.L.R. (4th) 618, at
    para. 41, citing
Anger & Honsberger, Law of Real Property
, at
para.
28:10.20. As noted in
Clarke
,
    at para. 52, three elements must be established:

(i) the owner of the land induces, encourages
    or allows the claimant to believe that he has or will enjoy some right or
    benefit over the property;

(ii) in reliance upon his belief, the claimant
    acts to his detriment to the knowledge of the owner; and

(iii) the owner then seeks to take unconscionable
    advantage of the claimant by denying him the right or benefit which he expected
    to receive[.]

(b)

Application to this case

[33]

In the further alternative, before this court the
    appellants largely repeat the argument they made before the application judge to
    invoke proprietary estoppel: (i) the Town expressly permitted the construction
    of a portion of the appellants house and carport within the easement, and thus
    induced, encouraged, or allowed them to believe that the easement was abandoned
    or no longer in use; (ii) the appellants relied on this belief when building
    the Pool Amenities within the easement; and (iii) it would be unconscionable to
    allow the respondents to now assert that the Pool Amenities encroach on the
    easement.

[34]

The application judge rejected this argument and
    concluded that the appellants had established none of the conditions for proprietary
    estoppel:

[T]here is no evidence to suggest that Hydro
had any knowledge of
the other structures
located
within the easement that existed before the
    Pool Amenities were installed, and thus, it cannot be said that Hydro induced,
    encouraged or allowed [the appellants] to do what they did in early 2014.

Second, we know for certain that the
    [appellants] did not enquire with the Town and/or Hydro about
the scope of
the Easement or a building permit
    before installing the Pool Amenities, and thus, there is no evidence to suggest
    that the [appellants] acted to their detriment to the knowledge of either the
    Town or Hydro.

Third, though perhaps unforgiving
to some degree,
there is nothing unconscionable
    about the Town and Hydro enforcing the clear wording of the said Indenture.

[35]

The application judge correctly cited the elements
    for proprietary estoppel enunciated in
Clarke
, and asked whether those
    elements were met based on the facts. His conclusion that the appellants had
    not established the conditions for proprietary estoppel is a finding of mixed
    fact and law that attracts appellate deference, absent palpable and overriding
    error. In my view, the appellants have shown no such error.

[36]

I therefore conclude that the equitable doctrine
    of proprietary estoppel does not preclude the enforcement of the respondents easement.

Disposition

[37]

I would dismiss the appeal, order the appellants
    to comply with the order of the application judge by June 30, 2021 (the date agreed
    to by the parties), and award the respondents costs of the appeal in the agreed
    amount of $40,000, all inclusive, payable within 30 days.

Released: January 6, 2021 (G.T.T.)

M.
    Jamal J.A.

I agree.
G.T. Trotter J.A.

I agree. B. Zarnett J.A.


