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.