Adverse Possession: Tasker v. Badgerow
In a world of electronic commerce, 'squatter's rights' seems to be an anachronism. Nevertheless, it still applies in many areas in Canada. The law calls it "adverse possession". Where the law permits adverse possession" anyone one who uses land for 10 years or more openly as if they owned it, will be granted ownership it. The court will order 'paper title' to be transferred to the squatter. A key to adverse possession is that the paper title holder must be excluded from the use to which the paper title holder wishes. Yesterday's Court of Appeal decision in Tasker v. Badgerow, 2008 ONCA 202 emphasizes the importance of the use of the paper title holder. Unless that title owner's use of the land is impaired by the squatter, the court will not consider the possession "adverse" and therefore there is no "adverse possession". In this case the squatter put a fence around the property, and argued that this was strong evidence of its actual open possession for over ten years without objection by the original owners, and therefore it should have title by adverse possession. The squatter lost. The court noted that the land in question is a Mill Reserve, and the claimant’s use was not inconsistent with the title owners’ use. The owners of the Mill Reserve only ever intended keep the land for purposes containing a millpond or head pond resulting from damming the River, and so the squatters use was not adverse to the interest of the owner.
The Impact of the Smoke-Free Ontario Act on Property Owners
Ontario Act came into effect on
An enclosed public place includes the inside of any place, building or structure that is covered by a roof and to which the public is ordinarily invited or permitted access, either expressly or by implication, whether or not a fee is charged. This would include indoor shopping malls, the lobbies of office buildings, retail shops, restaurants and places of entertainment. Smoking is prohibited in these public places.
The proprietor (person in charge) has certain duties. These include ensuring that the public is aware that smoking is prohibited, posting no smoking signs at all entrances and exits and other appropriate locations, ensuring there are no ashtrays or other similar equipment and ensuring that members of the public do not smoke in these areas.
Property owners should be aware that the prohibition does in fact extend to certain outside areas. Any public area with a roof where food or drink is served or sold or offered for consumption or a public area operated in conjunction with food or drink services is prescribed under the Act as being a place where smoking is prohibited. The obvious examples are restaurant and bar patios with roofs. A less obvious example is the outside area of a building cafeteria or a picnic table outside the door of a kitchen. These are prohibited places for smoking where the public is invited where there is a roof of any nature. Accordingly, an overhanging roof would result in this prohibition applying.
Where a public space is not part of a food or drink operation and not operated in conjunction with the food or drink operation, then the test is not whether or not there is a roof but whether or not there is a roof and more than two walls. Accordingly, an outside smoking shelter with two walls (but not more) can be constructed. However, to repeat, this smoking shelter cannot be operated in connection with a food or beverage operation (as no roof is permitted in these circumstances).
Supreme Court of Canada Decides Right of Way Issue
The Supreme Court of Canada has refused to grant leave to appeal a decision of the Ontario Court of Appeal in a case that had potentially serious consequences for some Ontario property owners.
In December 2005, we wrote about the Ontario Court of Appeal decision in 1387881 Ontario Inc. v. Ramsay, regarding whether the benefit of a registered right of way could be preserved beyond the 40 year expiry period under the Registry Act by merely referring to the easement in a subsequent deed, or whether registration of a Notice of Claim in the form prescribed by the Act was necessary. The Court upheld the lower court's ruling and confirmed that a claim against land can be preserved in two ways: by registration of a Notice of Claim or by a “true acknowledgment” of the claim set forth in an instrument registered within the notice period.
The decision was significant because some commentators felt that, had the Court of Appeal reached the opposite conclusion, it would have opened the door for an owner of a property subject to a registered easement created more than 40 years ago to delete the easement by, for example, registering a deed to itself not referring to the easement. As there are still properties in Ontario which rely on just such easements for access or other rights, the potential consequences were serious (although with the ongoing conversion of land from the Registry Act to the Land Titles Act, under which this issue does not arise, the problem is gradually becoming of less practical significance).
While the Court of Appeal's decision provided reassurance to property owners who rely on these sorts of easements, the decision was appealed to the Supreme Court and thus a degree of uncertainty remained. With the Supreme Court's recent refusal to grant leave to appeal, this matter should now be resolved once and for all. See 1387881 Ontario Inc. v. Ramsay (2006), 41 R.P.R. (4th) 208.
Tender With Caution - Toronto Transit Commission v. Gottardo Construction Limited et al.
The tendering process in Canada is governed by the traditional common law principles of contract law, as well as some unique principles not applicable to other areas. On September 7, 2005, Ontario’s Court of Appeal released its decision in Toronto Transit Commission v. Gottardo Construction Limited et al. which re-affirmed one of the unique aspects of the law of tendering. A contractor will not be entitled to rely on its own pricing errors in order to avoid being bound by its original tender bid.
In December 2000, the TTC opened
tenders it received for a major project and Gottardo Construction Ltd. was the
lowest bidder. Shortly after tenders
were made public, Gottardo informed the TTC that it had made a $557,000 error
in its tender bid and that as a result it was not obligated to honour the
tender price. The TTC took the position
that Gottardo was bound by its bid and when Gottardo refused to sign the
contract, they awarded the contract to the next lowest bidder, which was
$434,000 greater than Gottardo’s. The
TTC sued Gottardo and its insurer in order to make up the difference.
The leading authority in the area of tenders is the Supreme Court of Canada decision of R. v. Ron Engineering & Construction (Eastern) Ltd.  1 SCR 111, which determined that a unilateral contract, referred to as “Contract A”, arises automatically between a tenderer and owner upon the submission of a tender bid. One of the terms of this contract is that the tenderer cannot withdraw the bid during the period set out in the tender instructions. If the tender is accepted, the tenderer and the owner enter into a construction contract, called “Contract B”.
In this case, the trial judge found
that Contract A was not complete because the tender instructions called for
additional documents to be provided by Gottardo. Once these documents were submitted, the
error in the tender amount was obvious and the TTC could not compel Gottardo to
honour the price.
The Court of Appeal disagreed with the trial judge’s reasoning and allowed the appeal, holding that Contract A comes into existence upon the delivery of the tender by the contractor. Once the tender is accepted, the parties enter into Contract B. The fact that certain steps are taken and certain documents are to be produced by the tenderer after the submission and opening of tenders will not delay the formation of Contract A when the intent of the parties is to be bound as of the opening of the tenders.
In this case, it was clear from the tender documents that the parties intended to initiate contractual relations the moment the tenders were opened. The Court of Appeal awarded damages in the amount of $434,000.
This decision highlights the fact that those participants in the construction industry must ensure they read tender instructions carefully before submitting their bids and understand the particular principles applicable to the tendering process.
Ontario Court of Appeal Decides Right of Way Issue
The Ontario Court of Appeal has released its decision in a case that could seriously affect the property rights of many Ontarians.
In April 2005, we wrote about 1387881 Ontario Inc. v. Ramsay, a decision of the Ontario Superior Court of Justice regarding whether the benefit of a registered right of way could be preserved beyond the 40 year expiry period under the Registry Act by merely referring to the easement in a subsequent deed, or whether registration of a Notice of Claim in the form prescribe by the Act was necessary. The lower Court decision held that a reference to the right of way in a subsequent deed was sufficient to preserve it. The case was appealed. Some commentators had expressed fear that, if the Court of Appeal reversed the lower Court, it would open the door for owners of the properties subject to registered easements created more than 40 years ago to delete the easement by, for example, registering a deed to itself not referring to the easement. As there are still many properties in Ontario which rely on just such easements for access or other rights, the potential consequences could be very serious.
In June 2005, the Court of Appeal released its decision, and
upheld the lower Court’s ruling ((2005), 32 R.P.R. (4th) 161). It considered the relevant provisions of the
Registry Act in their entirety and the policy objectives underlying the current
statutory regime, and concluded that the rights of way had not expired. It confirmed that a claim against land can be
preserved in two ways: by registration of a Notice of Claim or by a “true
acknowledgment” of the claim set forth in an instrument registered within the
This decision should provide some reassurance to property owners who rely on these sorts of rights of way for access to their properties, or who rely on registered easements for other rights. However, the respondents have applied for leave to appeal to the Supreme Court of Canada. If leave is granted, this important issue will once again be before the courts for a definitive answer.
Highway Sign Restrictions and the Charter
Real estate related cases don’t often involve freedom of expression issues under the Canadian Charter of Rights and Freedoms (the “Charter”). However, in the recent case of Ontario (Minister of Transportation) v. Miracle (2005), 74 O.R. (3d) 161, the Ontario Court of Appeal dealt with just such a challenge to the provisions of the Public Transportation and Highway Improvement Act (the “Act”) which prohibit certain signs within 400 meters of controlled access highways, unless a permit is obtained from the Minister.
In this case, Miracle attached a billboard to a tractor trailer parked on land he owned abutting Highway 401. The sign was within a few metres of the highway. The Minister applied for a warrant authorizing the removal of the sign. Miracle opposed the application on the grounds that the restrictions in the Act infringed upon his right to freedom of expression as guaranteed by the Charter.
Although the Minister conceded that the restrictions were an infringement of freedom of expression, it argued they were permitted under Section 1 of the Charter as a “reasonable [limit] prescribed by law as can be demonstrably justified in a free and democratic society”.
The Court first determined that the limit was indeed prescribed by law, thus rejecting Miracle’s argument that the Minister’s discretion in granting permits was unfettered and not subject to an “intelligible standard”. The Court found that it is a well established common law principle that a Minister’s discretion must be exercised in a manner consistent with the purposes of the governing legislation, and that this was in fact an intelligible standard. The Court applied the classic test from R. v. Oakes to determine whether the infringement was justified under Section 1. Applying the Oakes test, the Court held that the objective of the legislation (i.e. preventing visual pollution and enhancing driver safety) were pressing and substantial and that the carefully defined and restricted limitation provided by the Act was proportional with the above objectives. Therefore, the deleterious affects of the measures were clearly outweighed by the objectives of the legislation, and the Charter challenge was unsuccessful.
Time Really is of the Essence
Many agreements for the sale of property include provisions that “time is of the essence”. This means that the time set for the performance of the various obligations of the parties under the contract is an essential term of the contract. However, what happens when a party to a contract which includes a time is of the essence provision fails to fulfill one of its obligations in the time period specified? Is this a ‘fundamental’ breach which the non-defaulting party can rely on to terminate the contract, regardless of whether the breach was subsequently rectified?
In the recent decision in 1473587 Ontario Inc. v. Jackson (74 O.R. (3d) Part 7, 539-550; appeal dismissed by the Ontario Court of Appeal, 75 O.R. (3d) 484) the Ontario Superior Court of Justice considered the following scenario: a major grocery store operator entered into an agreement of purchase and sale which provided that a deposit was to be paid within five days of acceptance of the agreement. However, through oversight on the part of the purchaser, the deposit was paid a few days later than stipulated. The purchase agreement included a time is of the essence provision, and the vendor took the failure of the purchaser to deliver the deposit on time to mean that the agreement was at an end and entered into an agreement to sell the property to another purchaser. The original purchaser sought a summary judgment for specific performance.
In deciding whether to require specific performance, the court considered, among other things, whether the intention of the parties was to be able to rely on strict compliance with the terms of the agreement. The applicable provisions read as follows:
21. This offer, when accepted, shall
constitute a bind contract of purchase and sale, and time in all respects shall
be of the essence of this Agreement.
22. Time shall be of the essence of this Agreement, but no extension of time for the making of any payment or the doing of any acts hereunder shall be deemed to be a waiver or modification of or affect this provision.
The Court found that these provisions clearly required that any breach of any of the obligations set out in the agreement requiring performance at a particular time amounted to the breach of an essential element of a contract. The failure of the purchaser to deliver its deposit at the specified time period amounted to the breach of an essential term of the contract which the vendor did not waive and which it was entitled to treat as ending the agreement regardless of the fact that the purchaser displayed every intention to complete the contract and in fact cured the breach shortly thereafter.
In light of the foregoing, all time-sensitive obligations in contracts which include time is of the essence provisions should be strictly complied
Boundary Dispute Standards Clarified
Can a surveyor turn a 100 acre parcel of land into 87 acres, based on the location of a fence that doesn't follow the lot line set out in the legal description? Perhaps surprisingly, the answer appears to be yes, based on a recent decision of the Ontario Court of Appeal.
The recent Ontario Court of Appeal decision Nicholson v. Halliday, 74 O.R. (3d) 81 is a case which reviews a boundary dispute between two hundred acre bush lots located on Manitoulin Island. While the case stands primarily for the Court’s views on the standard of reasonableness to be applied by the Director of Titles under the Boundaries Act R.S.O. 1990, c. B.10, what was most interesting for Bruce McKenna was the discussion of the basic legal principles governing surveyors establishing boundaries.
There were two bush lots; lots 22 and 23, on Manitoulin Island that had been originally surveyed in 1870. Each lot was to be 100 acres, being 20 chains (1,320 feet) wide and 50 chains (3,300 feet) deep. The disputing owners acquired their lots in 1962 and 1979, respectively, and assumed as others had before them, that a fence marked the boundary between the lots.
One owner hired a surveyor who did not consider the fence to be a boundary fence because it did not extend completely from the front to the rear limit of the lot and because it followed an irregular path. It was a much as 830 feet off a straight line dividing the lots. That surveyor established another straight boundary line which produced two lots of approximately 100 acres each. The second owner then retained another surveyor who thought that the fence was intended to be a boundary line and established a different line along the fence between the two lots. The second owner who retained that surveyor ended up with 113 acres and the first owner 87 acres.
The Director agreed with the second surveyor in a decision so poorly written that the Court of Appeal made a point of saying that it would not focus on “his lack of expertise in writing judicial reasons”. The Divisional Court held that the Director has made four distinct errors and reversed the decision. The Court of Appeal held that Directors’ conclusion that the fence represented the best evidence of the original running of the line between the two lots was a reasonable decision. The Court said that the Director was entrusted with the broad discretion in determining the boundary disputes because of his expertise about surveying. The Director had considered the evidence, weighed the evidence in a reasonable manner and gave considered reasons, which (when read as a whole) supported his determination. Accordingly, the original Order of the Director was affirmed.
What was most interesting for me about the judgement was not the decision itself but the affirmation by the Court of Appeal of 1989 lower court decision Thelland v. Golden Haulage Ltd.,  O.J. No. 2303 (Dist. Ct.) which affirmed an approach to boundary settlement that is “counter-intuitive” to my lawyer’s biases. I started to practice real property law when we used metes and bounds descriptions and detailed measurements governed. Accordingly, I always tend to focus on the measurements and the descriptions contained in deeds and agreements.
However, the Court of Appeal affirmed the district’s court earlier approval of a 1983 article by the Executive Director of the Association of Ontario Land Surveyors. That article provided that a surveyor’s “hierarchy of evidence”, which ranks the evidence to re-establish a boundary for most compelling to least compelling is as follows:
a) natural boundaries;
b) original monuments;
c) fences or possession that can reasonably be related back to the time of the original survey; and
d) measurements (as shown on the plan or as stated in the metes and bounds description).
So, while my experience with metes and bounds legal descriptions would have suggested that the correct answer was the straight line between lots 22 and 23 which gave each party a 100 acre parcel, the surveyor’s “hierarchy of evidence” focused on the irregular fence ahead of the measurements and, accordingly the Court could hold that the Director’s decision was reasonable. That surprised me, it’s something I wanted to keep in mind so I thought making a note of it here would help me do that.
In Ontario, Do You Have a Right to Your Right of Way?
Does your property have a right of way, such as a driveway, across an adjoining property? You may be surprised to learn that a number of lawyers and legal commentators believe that for certain properties this right of way will expire 40 years after it was first granted, unless you take positive steps to preserve your interest. This issue was considered in a recent decision of the Ontario Superior Court of Justice.
Where a property is registered under the Ontario Registry Act, a registered claim or interest against that property expires after 40 years, subject to certain exceptions. A claim or interest can be preserved by registering a notice in the form set out in the Registry Act (a “Notice of Claim”) before the expiration of the 40 year notice period (and if certain requirements are met, thereafter where the interest is full ownership).
The legal descriptions of thousands of properties in Ontario, including Registry Act properties, are expressed as being “together with” and/or “subject to” rights of way and various other forms of easements. These easements can be crucial to the access to, and use and enjoyment of, a property. Most practitioners will check that an easement is properly described, complies with the Planning Act, and contains the basic legal elements required for validity. But it’s likely that most don’t consider the possible impact of the 40 year period.
Many properties have the benefit of or are subject to easements originally granted far more than 40 years ago. Since, at law, easements “flow with the land”, subsequent deeds will usually include the easement in the legal description, and it is common practice among many (likely most) practitioners to simply rely on such descriptions. But is this approach justified? Or, in the absence of a Notice of Claim, does an easement registered under the Registry Act simply cease to exist 40 years after it was granted?
The Ramsay Decision
The case, 1387881 Ontario Inc. v. Ramsay (“Ramsay”) is a decision of the Ontario Superior Court of Justice dated June 25, 2004. In this case, the applicant was the owner of a Registry Act property (the “Servient Property”) which was subject to certain registered rights of way (the “Easements”) which had been granted in 1941 and 1945, more than 40 years prior to the time in question. The respondents were the owners of several cottage properties that had the benefit of the Easements (the “Dominant Properties”). Each of the respondents had purchased the Dominant Properties within 40 years after the creation of the Easements, and their deeds to the Dominant Properties specifically referred to the Easements. The deed by which the applicant took title to the Servient Property also noted the Easements. None of the respondents registered a Notice of Claim with respect to the Easements prior to expiry of the 40 year search period.
The owner of the Servient Property argued that the Easements had been extinguished because no Notice of Claim had been filed within the 40 year notice period. The applicants contended that the registration of the deeds of the Dominant Properties constituted notice of the Easements, and since less than 40 years had passed since the registration of the deeds, the Easements had not expired. The court had to decide whether the references to the Easements in the deeds was enough to keep them alive, or whether the respondents had to take the extra step of registering a Notice of Claim in the prescribed form.
Clark J. of the Superior Court of Justice reviewed the relevant statutory provisions, caselaw and policy objectives underlying the 40 year rule, and concluded that notice of an interest in land can be given by either the registration of an instrument or the registration of a Notice of Claim. Therefore, the registration of the deeds to Dominant Properties and the Servient Property, which all specifically referred to the Easements, constituted notice of the Easements. Accordingly, the Easements had not expired and still affected the Servient Property.
Ramsay should give some comfort to property owners relying on registered easements for access to and use of their lands. However, an appeal of this decision was heard by the Ontario Court of Appeal in January, 2005. The decision of the Court of Appeal has still not been released. There is a chance that the Court of Appeal may overturn the decision and hold that the only method for protecting an easement or other claim under the Registry Act beyond the 40 year period is by registering a Notice of Claim in the prescribed form. Some commentators have strongly criticized the lower court ruling and have cited caselaw which offers some support for this position.
If the Court of Appeal overrules the lower court, it opens the door for the owners of lands subject to registered easements created more than 40 years ago to deny the owner of the benefiting land the use granted under that easement. The easement could also be removed from title by the owner registering a deed of the land to himself, with the easement deleted from the legal description. Such a result could be catastrophic for the benefiting landowner. Registration of a Notice of Claim would preserve a registered easement less than 40 years old, but beyond that point a new easement would have to be granted, or the benefiting landowner would have to try to prove that her property has the benefit of an unregistered right of way or other easement or right that she is openly enjoying and using (such an interest is not subject to the 40 year rule, but there has been some debate as to whether this exception can ever apply to a registered easement).
This case has potentially serious consequences and has stirred much academic debate. This is sure to continue after the Court of Appeal releases its decision. We’ll keep you updated.