



COURT OF APPEAL FOR BRITISH
COLUMBIA




Citation:



Sykes v. Rosebery Parklands Development Society,









2011 BCCA 15




Date: 20110119

Docket: CA037970

Between:

Brian Joseph Sykes
and Mary Jane Sykes

Respondents

(Plaintiffs)

And

Rosebery Parklands
Development Society

Appellant

(Defendant)

Corrected
Judgment:  The text of the judgment was corrected
at paragraphs [17], [44], [45], [47] and [48] on 23 February 2011.




Before:



The Honourable Chief Justice Finch





The Honourable Madam Justice Huddart





The Honourable Madam Justice Garson




On appeal from: 
Supreme Court of British Columbia, 23 February 2010,
(
Sykes v. Rosebery Parklands Development Society
, 2010 BCSC 227, Kelowna
Docket 75905)




Counsel for the Appellant:



T.W. Pearkes,
A. Fernandez





Counsel for the Respondents:



D.M. Frechette





Place and Date of Hearing:



Kelowna, British
  Columbia

November 1, 2010





Place and Date of Judgment:



Vancouver, British
  Columbia

January 19, 2011





Written Reasons by:





The Honourable Chief Justice Finch





Concurred in by:





The Honourable Madam Justice Huddart

the Honourable Madam Justice Garson








Reasons for Judgment of the Honourable
Chief Justice Finch:

I.  Introduction

[1]

The defendant Society appeals from the order of the Supreme Court of
British Columbia pronounced 23 February 2010 following a summary trial under
Rule 18A granting the plaintiffs an easement over lands formerly owned by the
defendant, and now owned by the Regional District of Central Kootenay
(RDCK).  The easement grants the plaintiffs access from their property across
the defendants parkland for moorage on the waterfront of Slocan Lake.

[2]

The plaintiffs claim to the easement is based on proprietary estoppel. 
The learned summary trial judge held that the defendants representations, the
plaintiffs reliance, and the parties conduct established an equity giving
rise to proprietary estoppel in the plaintiffs favour, and that it would be
unjust for the defendant to resile from its earlier position.

[3]

A licence for private moorage tenure must be obtained from the
Integrated Land Management Bureau (ILMB).  For this reason the courts order
includes this provision:

3.         the easement shall
establish access from Lot 2 across Lot 6 to the waterfront for moorage and
shall be granted in terms which will satisfy the Integrated Land Management
Bureau and result in the grant of a private moorage tenure.

[4]

On this appeal the defendant asserts that the foundation for proprietary
estoppel has not been made out, and attacks the order on several other grounds
as well.

[5]

For the reasons that follow I would not accede to any of the grounds of
appeal advanced, and would dismiss the appeal.

II. 
Facts

[6]

In 1989 the Canadian Pacific Railway decided to sell its marshalling
yard located on Slocan Lake in Rosebery, B.C.  Some local residents decided to
purchase the land from the CPR and on 24 August 1989 incorporated the defendant
Society for that purpose.  Their goal was to create a public, low impact
tourism park.

[7]

Funds for the land purchase were raised from donations, an unsecured
loan, and a registered mortgage.  The Society proposed to repay the unsecured
loan and the mortgage by subdividing the land, and selling the subdivided lots.

[8]

The land was subdivided into six lots.  Lots 1 through 5 were intended
for sale to individual owners.  Lot 6 was retained by the Society for
parkland.  Lot 6 is an irregular shaped parcel, varying in width from 75 to 230
feet, and includes a strip of lake front that separates Lots 1 through 5 from
Slocan Lake.

[9]

Prior to the sale of the subdivided lots the Society granted an easement
in favour of Lots 1 through 5 which included this:

The Grantor does hereby grant,
convey and confirm unto the Grantee the full, free and uninterrupted right,
liberty and easement to use the Servient Tenement [Lot 6] for purposes of
ingress and egress from Slocan Lake by foot only.

[10]

Between 1989 and 1995 Lots 1 through 5 were sold to individual owners. 
The proceeds of these sales were applied to the Societys mortgage liability. 
There remained an balance owing of $68,000.

[11]

In 1994 an additional lot, Lot A, was subdivided from the parkland, Lot
6, but Lot A could not be sold for an amount sufficient to pay for the
Societys outstanding debts.  In 1995 Scott Leyland, a founder of the Society,
and its president from 1997 until 2006, loaned the society a sum sufficient to
pay out the mortgage.  When Lot A was eventually sold in 2005 the Society
repaid Mr. Leylands loan.

[12]

John Herrmann was also involved in the Society from its inception in
1989.  He was vice-president of the Society from about 1995 until 2006.

[13]

The plaintiffs became interested in acquiring a property in the subject
area in 2003.  The learned summary trial judge said:

[16] In 2003, the plaintiffs arrived from Alberta and
approached Leyland regarding the possible purchase of the lot owned by the
Society, lot A, as well as in regards to lot 2 which was privately owned but up
for sale. As the plaintiffs wished to moor a boat near any property they would
own, Mr. Sykes made inquiries with the Society regarding access to the lake and
rights of moorage prior to purchase.
Leyland deposes that he advised Mr.
Sykes that all lots in the subdivision had the right of common moorage. This is
confirmed in a facsimile Leyland sent to Mr. Sykes, attached to Leylands
affidavit.


[17]
Based in part on that representation, the plaintiffs
purchased lot 2 in the subdivision in the spring of 2003.
The plaintiffs
eventually built a home on their property. They became members of the Society
in 2003. The plaintiffs attended the Societys Annual Meeting in December 2003.
The only other people in attendance were Herrmann, Leyland and Betty Ann
Lawson. The plaintiffs were asked and became members of the board of the
Society.

[Emphasis added.]

[14]

The plaintiffs inquired about moorage and construction of a common dock,
but the Society took the view it could not afford a dock due to permitting and
insurance costs.  The learned judge said:

[19] The plaintiffs, Leyland, and Herrmann carried out
further discussions regarding the construction of a dock. In a letter dated
January 31, 2006, Leyland and Herrmann (writing in their capacities as
President and Vice-President of the Society) stated:

As requested by Brian and Mary Jane
Sykes, I am forwarding this document granting permission to moor a dock on the
shoreline of lot 6 in the Parklands in the northwest corner of the bay.

This subject has been discussed
since the inception of our society in 1989 and there has never been any
wavering. Owners of subdivided lots... will have access across lot 6 to the
shore and rights of moorage in a place we agree with (the corner of the bay as
is being proposed by the Sykes).

...So, to reiterate, we have built
into the covenants of each lot, the right to cross lot 6 to access Slocan Lake.
We have noted in several meetings (including AGMs) that moorage in the corner
of the bay would be a right of each lot owner.

[20] A further letter was sent by Leyland and Herrmann to the
plaintiffs on August 30, 2006, which stated in part:

The second part of this letter is
to confirm that the Society granted permission to the Sykes to place their
float perpendicular to the shore, in-line with the northwest iron-pin of lot 2.
This was after discussion and a site-visit with the architect Michael
Karassowitsch and John Herrmann.

[21] Prior to the dock being constructed, Mrs. Sykes
contacted the ILMB regarding the licencing process. She was informed that the
plaintiffs could install the dock before the licence was granted, and that
obtaining a licence should not be a problem as long as the Society consented.

[22] In the spring of 2006, the
plaintiffs constructed the dock at a cost of $12,000 and placed it in the
location agreed to in consultation with the Society on Slocan Lake, attached to
the Parkland lands. It is deposed by Leyland that the dock constructed by the
plaintiffs does not in any way restrict or limit the use of the Parkland. It is
used by members of the public for walking on and for mooring boats generally.

[15]

The Society held an annual meeting in September 2006.  Many more people
attended than had previously taken an interest in the Societys affairs.  They
were opposed to the construction of the Sykes dock.  Mr. Leyland subsequently
resigned as president of the Society.

[16]

The plaintiffs tried, unsuccessfully, to resolve issues related to the
dock with the Society.  This eventually led to the plaintiffs commencing this
lawsuit against the Society on 25 June 2007, and their filing of a certificate
of pending litigation against the parkland.  The judge recorded that:

[28] On September 26, 2008, the Society transferred the
Parkland to the Regional District of Central Kootenay (RDCK). RDCK did not
pay for the land and the transfer was essentially a gift from the Society. At
the time of the transfer the Society required RDCK to register a restrictive
covenant on the title of lands. The covenant includes a term which purports to
restrict the rights of moorage.

[29] RDCK took no part in this
proceeding. I am satisfied that they are aware of it. I am satisfied that they
were aware of the nature of this litigation when they took title to the
property. They are aware from reviewing the pleadings that the Court is being
asked to modify the easement and such modification may affect the validity of
the restrictive covenant. They are clearly aware that they took title subject
to any determination to be made in this litigation.

III.  The Reasons
for Judgment

[17]

The learned summary trial judge reviewed the law relating to proprietary
estoppel including references to
Zelmer v. Victor Projects Ltd.
(1997),
34 B.C.L.R. (3d) 125 (C.A.),
Trethewey-Edge Dyking District v. Coniagas
Ranches Ltd.
, 2003 BCCA 197, 12 B.C.L.R. (4th) 46,
Erickson v. Jones
,
2008 BCCA 379, 83 B.C.L.R. (4th) 333, and
Crabb v. Arun District Council
,
[1976] 1 Ch. 179 (C.A.).

[18]

He  held:

[45] Applying the foregoing principles of law to the facts of
this case, in my view, the plaintiffs have made out a cause of action in
proprietary estoppel. The plaintiffs were unequivocally advised that they had
the legal right to cross lot 6 and construct moorage facilities thereabouts;
they reasonably believed in and relied upon these representations and expended
funds as a result; the Society encouraged this expenditure at the material time
as it meant it would incur no liability for licencing or insurance premiums;
and, the Society now seeks to resile from its earlier position and rely upon
the strict wording of the easement registered against title, which it says conflicts
with the content of the representations.

[46] Having regard to the
representations made, the conduct of the parties, and the detriment incurred by
the plaintiffs in the course of their reliance on the Societys unequivocal
position, I find that an equity giving rise to proprietary estoppel has been
established in the plaintiffs favour, and that in all the circumstances it is
unjust for the Society to rely on its purported strict legal rights.

[19]

The judge held the plaintiffs had shown deprivation in incurring the
expense of constructing the dock in reliance on the Societys representations.

[20]

With respect to the appropriate remedy he held:

[82] Keeping these principles in mind, in my view the
appropriate remedy in the circumstances of this case is to grant a declaration
that an easement to be registered across the Parkland, establishing access from
the plaintiffs lot to the waterfront for moorage, in terms which will satisfy
the ILMB and result in the grant of a private moorage tenure. This remedy is the
minimum required to provide effective relief, and is in keeping with the
defendants representations and the parties mutual understanding at the time
the estoppel arose.

[83] Another issue arises as a result of the conveyance of
the property by the Society to the RDCK. In both
Zelmer
and
Trethewey-Edge
,
the court cited
Stiles v. Tod Mountain Development Ltd.
(1992), 64
B.C.L.R. (2d) 366 (S.C.), with approval. In that case, an equity giving rise to
proprietary estoppel was enforced against a successor in title who took with
notice and where the plaintiff had acted to his detriment.

[84] The plaintiffs filed a
Certificate of Pending Litigation against the Parkland, and it appears that the
RDCK took the property as a volunteer with notice, and as such is not a
bona
fide
purchaser without notice. In those circumstances, it is appropriate to
make it a term of the order that the easement granted is binding against the
RDCK as a successor in title, and that the covenant placed on the Parkland at
the time of its transfer by the Society to the RDCK, as it relates to moorage
rights, be removed from title.

[21]

The trial judge rejected the defendants submission that the
representations of the president, Mr. Leyland, and of the vice-president, Mr.
Herrmann, could not bind the Society.  The judge also rejected the allegation
that the plaintiffs should be denied relief because of self dealing or other
alleged breaches of the
Society Act
, R.S.B.C. 1996, c.433.

IV.  Issues on Appeal

[22]

The defendant asserts that the learned summary trial judge made a number
of errors in his treatment of the evidence tendered on this summary trial, and
in the inferences he drew from that evidence.  The defendant says the judge
failed to consider whether the case was appropriate for determination under
Rule 18A.

[23]

The defendant says the judge erred in his interpretation of the
Society
Act
.  The defendant further argues that the plaintiffs failed to establish
a claim in proprietary estoppel, and that the judge erred in granting relief
that was too extensive.

V.  Analysis

A.  The Evidence  Suitability
For Summary Trial

[24]

The defendants first three grounds of appeal relate to the evidence
adduced by affidavit on the summary trial, and on the inferences the judge drew
from that evidence.

[25]

Specifically, the defendant contends the judge erred in preferring the
affidavit evidence adduced on the plaintiffs behalf over the affidavit
evidence of Leah Main, the principal deponent on the defendants behalf.  The
defendant says the judge erred in accepting the hearsay evidence of Mary Sykes
concerning a telephone conversation she had with an ILMB representative.  And,
the defendant says it was unfair for the judge to accept Mr. Herrmanns
evidence without explaining his rejection of Ms. Mains evidence.

[26]

In the result, the defendant says the summary trial judge erred in
proceeding to try the case under Rule 18A, and in finding facts which cannot
reasonably be supported by the evidence.

[27]

I see no merit in these grounds of appeal.  As the judge recorded in
para. 1 of his reasons, neither of the parties suggested that a Rule 18A trial
was inappropriate in the circumstances.  There is nothing in the record to
show that the defendant objected to a summary trial at any stage of the
proceedings.

[28]

Counsel for the defendant did not at any time seek to cross-examine any
of the deponents who swore affidavits in support of the plaintiffs case.

[29]

The fact that there is some conflicting affidavit evidence is not an
absolute bar to a trial under Rule 18A:  See
Inspiration Management Ltd. v.
McDermott St. Lawrence Ltd.
(1989), 36 B.C.L.R. (2d) 202 (C.A.) at 215-16.

[30]

More importantly, it does not appear to me that there was conflict or
dispute on those matters critical to a determination of whether there was a
basis for proprietary estoppel.  There was no conflict concerning the
representations made by Messrs. Leyland and Herrmann to Mr. and Mrs. Sykes at
the time they purchased their lot.  No one denies the Societys two
representatives told the Sykes they could build a dock.  No one disputes the
Sykes were told consistently that they were entitled to access across the
parkland for moorage purposes.

[31]

Ms. Main was not involved in any of the defendant Societys affairs
between 1995 and 2006, and she had no direct knowledge of the representations
made by Mr. Leyland and Mr. Herrmann during that period of time.

[32]

With respect to Mrs. Sykes telephone conversation with a representative
of ILMB as to whether the Sykes could install a dock before a licence was
granted to them, it does not appear that the trial judge relied on that
evidence for any improper purpose.  The evidence of that conversation was
tendered to explain why the Sykes proceeded as they did, and to show they made
reasonable inquiries before commencing to build.  It was not tendered for the
truth of its contents and therefore does not fall within the definition of
hearsay:  See Bryant, Lederman and Fuerst,
Sopinka, Lederman & Bryant: 
The Law of Evidence in Canada
, 3d ed. (Markham, Ont.: LexisNexis, 2009) at
229.  In any event, this evidence did not go to any issue fundamental to the
decision on proprietary estoppel.

[33]

In short, although there was some conflicting affidavit evidence, there
was a proper evidentiary basis on which the judge could find the facts he did. 
There was no objection to proceeding under Rule 18A and no request to
cross-examine any of the plaintiffs deponents.

[34]

I would not give effect to the first three grounds of appeal.

B.  Directors Conflict of Interest and the Society Act

[35]

The plaintiffs became members of the Societys board of directors in
2003, shortly after they purchased their lot.  The defendant now asserts that
both they, as well as Mr. Leyland, were in a conflict of interest; and that the
Sykes knew, or should have known, that Mr. Leyland was in a conflict of
interest.  The defendant says the plaintiffs knew that the Societys board had
not delegated authority to Mr. Leyland or Mr. Herrmann to grant an interest in
land to the Sykes.  The defendant says the courts rectification of the
Societys proceedings was unilateral and made without submissions from
counsel for the defendant.

[36]

Both Mr. Leyland and Mr. Herrmann were directors of the Society at all
material times, and were president and vice-president respectively.  They were
clearly authorized by the
Society Act
, and by the bylaws, to exercise
the powers of the Society.  The words and conduct of an agent acting within the
ambit of his instructions may effectively give rise to an estoppel:  See
Mooregate
Mercantile Co. Ltd. v. Twitchings
, [1976] 2 All E.R. 641 (H.L.), and
Crabb
v. Arun District Council
.

[37]

The learned trial judge said this with respect to the roles of Mr.
Leyland and Mr. Herrmann:

[57] The evidence establishes that at all material times
Herrmann and Leyland were the guiding minds of the Society, who kept it afloat
both financially and operationally. Mr. Sykes contacted Leyland prior to
purchasing the property and sought his advice as the President of the Society,
and it is clear that all negotiations regarding the construction of the dock
were contingent on the plaintiffs obtaining direction and assurances from
Leyland and Herrmann.

[58] Further, the letter of August 30, 2006 authorizing the
plaintiffs construction also describes an unrelated matter pertaining to the
use of the Parkland and the plaintiffs land. In this letter, Leyland and
Herrmann, on behalf of the Society, directed the plaintiffs to remove materials
they had mistakenly placed the Parkland. In my view, this letter further
exemplifies the fact that Leyland and Herrmann were both the
de facto
and the
de jure
managers of the defendants lands, and that they were
viewed as such by the plaintiffs.

[59] On the evidence as a whole
it is clear that, in the words of Lord Denning, these gentlemen were entrusted
to look after the property and interests of the Society, and that the
plaintiffs viewed them as responsible for doing so. I find that Leyland and
Herrmann were capable of, and did as a matter of fact, make representations
that bound the Society in equity.

[38]

The judge rejected, rightly in my view, that Mr. Leyland was in a
conflict of interest.  He said:

[65] The defendant submits that the plaintiffs ought to be
denied equitable relief on the ground that they did not declare a conflict of
interest, and that Leyland acted in furtherance of his own self-interest when
discussions took place at meetings regarding moorage, negating the effect of
his representations.

[66] The allegations against
Leyland are nothing more than speculation. Ms. Mains allegations relating to
Leylands future intentions are based on information and belief, and the source
of this information is not provided.

[39]

There is nothing to show that Mr. Leyland gained any benefit from his
dealings with the Sykes.  Mr. Leylands loan to the Society was paid out in
2005 when Lot A was eventually sold.  There is nothing to indicate that the
Sykes had any role in this transaction.

[40]

As to the courts unilateral rectification of the Societys affairs,
the defendant says that the trial judge should not have addressed this question
because the issue was not properly joined.

[41]

I am not persuaded that resort to relief under the
Society Act
was necessary, but to the extent that it was, the defendant has not advanced
any submission that would demonstrate an error in the judges reasoning, or in
his interpretation or application of s. 85(2) of the
Society Act
. 
Moreover as the judge said:

[72] Regarding s. 85(2), there
are no creditors of the Society I am aware of. As for the Society, and its
directors, officers, and members, one could say that as the Society no longer
owns the Parkland, any order curing non-compliance for the limited purposes of
this transaction would have no effect on these parties; in any event, an
order excusing technical non-compliance would simply result in the Society
being bound by the unequivocal representations of its guiding minds, a result
in keeping with equity and justice.

[42]

I see no merit in the technical submissions advanced with respect to the
directors conduct, or their authority to act on the Societys behalf in their
dealings with the Sykes.

[43]

I would not give effect to these grounds of appeal.

C.  Proprietary Estoppel

[44]

The learned summary trial judge applied the broad, flexible approach to
proprietary estoppel endorsed by this Court in
Trethewey-Edge Dyking
District v. Coniagas Ranches Ltd.
and
Erikson v. Jones
, which relied
on English authorities such as
Crabb v. Arun

District Council
,
and
Taylors Fashions Ltd. v. Liverpool Trustees Co. Ltd.
, [1982] 1 Q.B.
133 (Ch. Div.).

[45]

At para. 64 of
Trethewey
, Madam Justice Newbury cited with
approval the following test from
Halsburys Laws of England
, 4th ed.
vol. 16 (London: Butterworths, 1992) at para. 1072:

The real test is said to be
whether upon the facts of the particular case the situation has become such
that it would be dishonest or unconscionable for the plaintiff, or the person
having the right sought to be enforced, to continue to seek to enforce it.

[46]

At para. 65 of
Trethewey
Madam Justice Newbury, citing
Taylors
Fashions
, further described the test as whether it would be unconscionable
for the representor to go back on the assumption which he had allowed the
plaintiff to make.

[47]

While detrimental reliance is sometimes identified as a necessary
element, it is perhaps better to consider it as part of the question of unconscionability.
  In the absence of detrimental reliance it would rarely, if ever, be
unconscionable to insist on strict legal rights: see Harpum, Bridge and Dixon,
Megarry
& Wade: The Law of Real Property
, 7th ed. (London: Sweet & Maxwell,
2008) at 711.

[48]

The defendant says the question should be framed in this way:

Has the appellant, by words or
conduct, affirmed the respondents right to establish a dock and have access
across its property for that purpose in circumstances making it unfair or
unjust for it now to assert its strict legal rights (citing
Litwin
Construction (1973) Ltd. v. Pan
(1988), 52 D.L.R. (4th) 459, 29 B.C.L.R. (2d)
88 (C.A.)).

[49]

The question as posed by the defendant is very much in accord with the
test referred to in the above authorities, adopting and applying the broad,
flexible approach to proprietary estoppel.

[50]

The defendant contends that the question so posed should be answered in
the negative.  It says it did not induce the plaintiffs to change their
position to their detriment.  It says it did not covenant to give the
plaintiffs an interest in land, and that it did not contract to apply for
moorage on the plaintiffs behalf.  It says it did nothing to encourage the
plaintiffs to go to the expense of building a dock, and that the plaintiffs
took that risk on their own initiative without first obtaining the necessary
moorage tenure from ILMB.

[51]

In my respectful view these submissions do not accord with the facts as
found by the trial judge.

[52]

In 2003, before the plaintiffs purchased their lot, Mr. Sykes spoke to
Mr. Leyland who was then president of the defendant Society.  Mr. Leyland told
Mr. Sykes that the lots adjacent to the parkland had the right of access across
the parkland for moorage purposes.  He confirmed that in writing.  Moorage was
important to the plaintiffs.  They purchased the lot relying on Mr. Leylands
representation, and believing they would have a right of access across the
parkland for moorage purposes.

[53]

The Societys subsequent conduct affirmed their original position.  When
the Society decided not to build a common dock for reasons of expense, Mr.
Leyland and Mr. Herrmann told the Sykes they could construct moorage adjacent
to the parkland, and have access to it across the parkland.  No one has
suggested that the access be by other than foot.

[54]

The representations of the defendant were relied on by the plaintiffs,
at least in part, in their decision to buy Lot 2, and in their subsequent
decision to build a dock.  I respectfully agree with the learned trial judges
conclusion at paras. 45 and 46, quoted above at para. 18, that in all the
circumstances it would be unjust for the defendant to rely on its purported
strict legal rights.

[55]

I would not give effect to this ground of appeal.

D.  Remedy

[56]

The defendant contends that the declaratory relief granting the
plaintiffs a registrable interest in land for moorage access (quoted above at
para. 3 of these reasons) is too extensive, and well beyond the minimum relief
necessary to balance the equities.  The defendant says that rather than a
perpetual interest in land, the relief should have been limited to a licence
for the life of the dock, or alternatively monetary compensation.  The
defendant acknowledges the court could not grant a licence, because only the
ILMB has authority to grant such a licence over Crown land.

[57]

The learned summary trial judge directed his attention to the principle
that the remedy in cases of proprietary estoppel should be the minimum equity
necessary to do justice to the claimant, and concluded that a declaration in
the terms granted was appropriate.

[58]

I am unable to say that the learned judge erred in this conclusion.  He
considered the relevant legal principles, and the critical facts.  He exercised
the wide discretion available in such cases in a way that gave the plaintiffs
essentially what they had been promised, and nothing more.

[59]

I would not interfere with the relief granted.

VI.  Conclusion

[60]

I would dismiss the Societys appeal with costs.

The
Honourable Chief Justice Finch

I agree:

The Honourable Madam Justice
Huddart

I agree:

The Honourable Madam Justice
Garson


