February 2017

Sometimes, in order to make full - or even some - desired usage of one's land, it is necessary for the landowner to be able to (legally) make use of a neighbouring property owner's land.  Such usage of the neighbouring owner's land involves rights constituting something less than full ownership of the neighbouring property.  The most common situation is where one owner needs to use a path or roadway over its neighbour's property to be able to access a road, lake or a river waterfront.  Similarly, a property owner may need to be able to connect the improvements on its land to a water distribution system, a sewage system, a natural gas transmission system, or an electrical transmission system, and such connection involves the installation and maintenance of pipes, conduits, etc. over the neighbouring owner's land.  The need to make use of the neighbouring owner's land will frequently arise in the situation where an owner subdivides its land into two or more parcels, with the subdivider retaining ownership of part of the property, and selling and transferring the other part or parts to someone else.  The parcel retained by the subdivider is now "isolated" from a main roadway (or from utility type services transmission facilities), and needs to obtain access over the neighbouring owner's lands to "connect".  Ideally, the subdividing party will have anticipated its retained property's "isolation", absent the right to access/connect over the neighbouring owners' lands, and accordingly reserves or bargains for the required limited usage rights over the neighbour's lands.  The rights so reserved, or acquired (typically by way of bargain as part of the subdivider's transfer and sale to the neighbour), are a species of a land interest long time recognized in our legal system and is known as an "easement".  As an interest in land, an easement, if it is properly conceived of and documented, will bind not only the original owner of the neighbouring (affected) lands, but also its successors-in-title, indefinitely.  Similarly, the benefit of the easement will enure to the benefit of not only the original subdividing land owner (who needs the easement for its benefit), but also for the benefit of such original owner's successors-in-title.

But what happens where the original subdividing owner and its neighbouring purchaser(s) fail to create the required legally enforceable easement (or easements), and instead, the owner benefitting from the easement simply exercises access rights over its neighbour's (or neighbours') land(s), without the formal and legal creation of one or more easements, and without the neighbouring owner (or owners) objecting to or challenging the use of its (their) land(s)?  In other words, what happens where the benefitted land owner simply goes ahead and acts as if it had an easement, with the neighbouring owner acquiescing in that usage?  Of course, as long as the benefitting owner (and its successors-in-title) make use of the neighbour's lands, and the neighbour doesn't object, there is no real problem.  But if at some later point in time, the current owner of the neighbouring property chooses to object - and perhaps takes active steps to stop or hinder the usage of its land - such as, by way of erecting barriers, putting up fences, etc. - does the then owner of the benefitted property have any legal recourse?  For a long time, the law has recognized that in some situations, the owner of the benefitted property should be given easement rights over its neighbour's property, notwithstanding the absence of a previous formally created easement.  One of those situations is where the benefitted property owner's (or owners') usage has been longstanding, open and unchallenged.  Then the owner of the benefitted property is said to have acquired an easement by prescription (or an easement obtained by lengthy and unchallenged usage).  The other basis on which a non-formally created easement may be recognized is where the benefitted owner is able to convince a Court that without the benefit of an enforceable easement, the benefitted owner's property is not capable of being used, at least for most, if not all, purposes.  This is called an "easement of necessity".

The problem with a benefitted owner having to rely on a Court recognizing that it has an easement of necessity over its neighbour's (or neighbours') lands is that the Courts have, for many years, taken the position that an easement of necessity will not be recognized merely because, without the entitlement to the easement, the usage of or access to the benefitted owner's property is merely inconvenient.  The Court must be convinced that it is virtually impossible for the benefitted owner's property to be used without the benefit of the easement.  Thus the use of the word "necessity" here.

The difficulty in establishing an easement of necessity was recently illustrated by the Ontario Court of Appeal decision in Toronto-Dominion Bank v. Wise (Judgement, August 16, 2016, hereinafter, the "Wise Case").  In the Wise Case, Mr. and Mrs. Wise owned property fronting on a lake, and they decided to - and did - split their land into two lots, gifting one of the lots to their daughter and retaining the balance of the land which then had access only by way of the lake, and not by way of the neighbouring municipal road which ran adjacent to the daughter's lot, but after the title split, was not adjacent to the Wises' (retained) lot.  The Wises did not arrange for the formal creation of an easement over the lot transferred to their daughter.  The Toronto-Dominion Bank was involved because it held a mortgage on the Wises' (retained) lot and wished to protect or enhance its security by ensuring that it had proper access to the municipal road. At the original trial of this matter, the trial judge held that the Wises' property did have an easement of necessity over their daughter's lot because water access to their lot was, compared to access by way of land, "impractical".  In particular, the trial judge concluded that the "common law requirement of absolute or strict necessity (to justify an easement of necessity) had developed into a rule of "practical necessity"".

The Ontario Court of Appeal held/concluded that:

(i)            An easement of necessity "must be necessary to use or access the property; if access without it is merely inconvenient, the easement will not be implied".  This was and continues to be true, and accordingly, the trial Court was in error in holding (as above mentioned) that the law pertaining to easements had been modified into something more "practical".  In other words, if you believe that your property requires an easement over a neighbour's property, get the neighbour to agree "at the outset".

(ii)           Whether or not an easement of necessity may be implied depends on the circumstances of the property or properties at the time when one parcel of land becomes split into two or more parcels. 

(iii)          An easement of necessity may be implied - if the right circumstances are present - in the situation where the original owner of the whole property splits its ownership and transfers part to a new owner where the original owner then lacks access, or, where the original owner retains access, but transfers part of what was its property to a new owner and the new owner is without access (the former situation being the one present in the Wise Case).

In the Wise Case, at the time of the split in ownership, the originally held lands had water access, and that in itself was sufficient to defeat Mr. and Mrs. Wise's claim for an implied easement over their daughter's adjacent property.  It didn't matter that access to Mr. and Mrs. Wise's property by way of water was inconvenient - and perhaps difficult - compared to being able to have access (by way of a path or roadway) over their daughter's property, and, it didn't matter that in fact, no one had ever accessed Mr. and Mrs. Wise's property from the adjacent lake.

So, what is the "moral" of this story?  The writer suggests that the Wise Case emphasizes the need for people who are intending to subdivide their property to ensure that they will have proper access once ownership of the adjacent (subdivided) lands has changed, and this should be properly dealt with (with input from knowledgeable counsel) before any transfer or commitment to transfer is made.

March 2017

You and a neighbour own adjoining properties, and you grant an easement to the neighbour to come and go over a road which runs over your property, for the purpose of giving your neighbour access to the public street (or it could be a park or a shoreline) adjacent to your property.  Or, you grant an easement to your neighbour to enable your neighbour to run connecting pipes to a water well on your property (and to draw water from the well for the neighbour's purposes).  The right to make use of the easement is stated to be binding on not only you and your neighbour, but also your and your neighbour's respective successors-in-title to the adjacent two properties.  To bolster this ongoing binding nature of the easement rights, your neighbour registers a caveat against your property's title giving notice of the easement.  The easement agreement provides that you and your successors-in-title to your property, will maintain (and perhaps insure and pay the property taxes applicable to) the well and the connecting pipes which run through the easement area from your neighbour's property to the wellhead on your property.

Just what obligations do you owe to your neighbour with respect to the easement?  Clearly, you have no right to complain about the fact that the neighbour uses its easement rights to access and draw water from your well.  Additionally, as between you and your neighbour, and based on the easement contract between the two of you, you have an obligation to maintain (and, depending on the terms of the easement agreement, insure and pay the property taxes applicable to) the well and connecting pipes.

But what happens if you sell your property to a new owner (the "New Servient Tenement Owner")?  Does the New Servient Tenement Owner owe an obligation to its neighbour to honour the easement rights granted to the neighbour? The answer to this question is clearly "yes".  But what about the contractually specified (in the easement agreement) obligation to maintain, repair (and, if applicable), insure and pay the property taxes referable to the road, well and connecting pipes?  Under long existing non-statutory law, the New Servient Tenement Owner (i) does not owe any obligation to do anything other than to honour the neighbour's easement rights of usage or utilization, and, (ii) in particular, does not owe any obligation to take any active steps to maintain or to pay for anything referable to the easement and the equipment/facilities it protects for the neighbour's benefit.  However there are two exceptions to this, namely: (a) the New Servient Tenement Owner will be obliged to maintain, pay costs, etc. if the New Servient Tenement Owner has specifically bound itself to the neighbour under the easement agreement.  That is, where the New Servient Tenement Owner has "stepped into the shoes" of the original servient tenement owner for all purposes under the easement agreement, and, (b) the New Servient Tenement Owner is obliged to not take any positive action or steps to destroy, hinder or adversely affect the neighbour's easement rights.  However, and assuming no new binding obligation is undertaken in favour of the neighbour, if the New Servient Tenement Owner simply does nothing, it owes no further obligations to the owner of the dominant tenement.

The recent Ontario Superior Court of Justice case Middlesex Condominium Corporation No. 229 and 1510231 Ontario Inc. (judgement date October 11, 2016, hereinafter, the "Middlesex Condominium Case") dealt with this issue.  The pertinent facts of the Middlesex Condominium Case were:

(i)            the plaintiff condominium corporation and the defendant each owned lands bordering a creek in London, Ontario;

(ii)           the plaintiff and the defendant shared ownership of a retaining wall which provided support to each of their properties in relation to the creek bank, and it also provided support to easements benefitting the plaintiff over the defendant's property relating to an access road and a sanitary sewage pipe;

(iii)          the retaining wall was built and the easements granted for the benefit of the plaintiff's land prior to when each of the plaintiff and the defendant acquired their respective properties;

(iv)          the plaintiff acquired its property in 1991, 12 years before the defendant acquired its property;

(v)           the retaining wall commenced to deteriorate in 1998, and in 2003 there was a "catastrophic failure" of the wall on the properties of both of the plaintiff and the defendant;

(vi)          the defendant acquired its property in October of 2003, after the wall's failure;

(vii)         after 2003, the wall continued to deteriorate and was not repaired or remediated by either of the parties; and

(viii)        in 2009, the plaintiff commenced an action against the defendant alleging that the defendant was "negligent in failing to maintain and repair that portion of the (retaining) wall located on its (ie, the defendant's) property, thereby causing and continuing to cause damage to the plaintiff by interfering with its easement rights.".

The Court observed:

(a)          The case "is about what the (defendant) did not do, rather than what it did do".  The claim against the defendant was one for damages to the plaintiff's easement rights, "arising solely from the defendant's failure to maintain and repair the wall since its acquisition of the property in 2003".

(b)          The claim does not relate to loss to the plaintiff with respect to its property generally, only with respect to the plaintiff's loss of the benefit of its easement rights over the defendant's land (in fact, five years earlier than the Middlesex Condominium Case, the plaintiff had commenced an action against the defendant for loss/damage suffered by the plaintiff to its property in addition to, or over and above, the plaintiff's loss of the benefits of its easements).

(c)          The Middlesex Condominium Case did not involve the conduct of the defendant relating to the collapse of the retaining wall.  Rather, the claim was based on the plaintiff's view that the defendant owed an obligation to the plaintiff to repair the defendant's portion of the wall so that the plaintiff (could) continue to enjoy its rights of easement over (the defendant's) property".

(d)          In addition to alleging the existence of a duty by the defendant to take positive action to repair the retaining wall as an incident of the defendant's primary obligation to permit the from time to time owners of the plaintiff's lands to exercise their right-of-way entitlements, the plaintiff also claimed that the defendant had a contractual or "deemed" contractual obligation to repair and maintain the retaining wall by virtue of the defendant's predecessor-in-title having entered into a development agreement with the local government which obligated the property owner to maintain, which agreement was stated to be binding on all "successors-in-title", and which was registered against the title to the defendant's property.

The Court neatly summed up the essence of the dispute as being whether or not "a servient tenement (owner) has a duty to repair with respect to easement rights of the dominant tenement (owner)?".  And, "…whether substantial interference with the dominant tenement (owner)'s easement rights may arise from passive conduct of the servient tenement (owner) by failing to do something". And, "…does a servient tenement (owner) have an obligation to be proactive to prevent damage to the dominant tenement (owner)'s easement rights"?

The Court held:

(A)          Pursuant to long-standing non-statutory law (common law and equity), the plaintiff's case could not succeed because the defendant not only did not own its property at the time that the retaining wall collapsed (and caused consequent damage to both parties' properties), but additionally, the defendant had not done anything since its acquisition of its property that could be considered as causing or amplifying the problem originally caused by the retaining wall's collapse.  The defendant simply "did nothing", and as noted, the owner of a servient tenement is not obliged to take any positive action (or expend any funds) in order to protect, maintain or enhance the works or facilities on or forming the subject matter of the dominant tenement owner's easement.

(B)          The plaintiff's argument that the municipal development agreement obligated the from time to time owners of the defendant's property to maintain the retaining wall, and thus the plaintiff had a claim against the defendant  based on the defendant's breach of that agreement, also failed because "the Plaintiff and its predecessors in title (were) not parties to the development agreement".  In other words, a breach by the defendant of its (continuing) obligations under the development agreement did not give the plaintiff a cause of action against the defendant.

Readers should keep in mind the fact that a statute can impose positive obligations (to do something or expend monies) on a successor-in-title to the original grantor of an easement (or other owner of real estate or a real estate interest) to maintain, pay the taxes on and insure at its cost, etc.  Four Manitoba examples of such statutory "interference" with "judge made law" are:

(i)            Section 111.1(1) of The Manitoba Real Property Act which provides that where a "statutory easement" is registered on title, the easement constitutes an interest in land, runs with the title to the land, and, "the conditions and covenants expressed in the instrument apply to and bind the respective successors, personal representatives and assigns of the grantor and the grantee (except to the extent that a contrary intention appears in the instrument)".  A "statutory easement" is, generally speaking, an easement in favour of the provider of a service, in particular, "utility type" services, and which (usually) are created for the benefit of the service provider, without the service provider holding an adjacent or neighbouring "dominant tenement" parcel.

(ii)           The City of Winnipeg Charter, dealing with development agreements, and with zoning and subdivision agreements, provides that when these types of agreements are registered against a title to land (typically, by way of caveat), such agreements bind both the owner and the owner's successors-in-title.  (The writer acknowledges that a Court might well hold that all this means is that an agreement's negative type obligations run with the title, and that more specific language would be required in order to cause a positive contractually created obligation to run with land, but I wouldn't want to take the chance!).

(iii)          Pursuant to The Manitoba Condominium Act, simply by reason of acquiring ownership of a condominium unit, such owner thereby becomes bound - without specifically covenanting or agreeing to become bound - to maintain not only the owner's unit, but frequently also, some (typically those adjacent to the owner's unit) common elements or common property, and, to pay a specified share of the condominium regime's common elements or common property.  Such obligations are "deemed" to be owed to the condominium corporation, and sometimes to a unit owner's neighbours.  The legislation also creates or "deems" the existence of various easements required to support and protect the condominium property including the units, again, without the owner specifically granting or confirming the existence of such easements.

(iv)          The current owner of a real estate interest is almost always subject to the imposition of property taxes upon its ownership interest, without the owner having to consent to being responsible for same.

The above examples are but a few of the situations in which the common law's tendency to not obligate a person to have to take action or expend monies simply by reason of one's ownership of real property or an interest in real property, has been eroded by statutory intervention.  Many - although clearly not all - such interventions are created for the benefit of one or more levels of government.  It is this writer's belief that our laws should be amended so as to better facilitate the establishment of positive obligations imposable upon property owners, especially in arrangements, such as "building schemes", where there is more than the average interconnectedness and proximity of interests amongst the neighbouring owners.