Repair and Maintenance of Easements – Whose Responsibility?

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

The Ontario Superior Court of Justice ruled on a case where the duties surrounding easements and who has the obligation to maintain an easement were at issue.  An easement is a legal right to use another person’s land for a specified purpose and must have four characteristics to be effective. There must be a dominant and a servient tenement – the “dominant” land is benefitted by the “servient” land over which the easement applies; the easement must “accommodate” the dominant tenement in that it is reasonably necessary for the enjoyment of that land; the owners of the dominant and servient tenements must be different persons (you can’t have an easement over your own land); and a right over land cannot amount to an easement unless it is capable of forming the subject-matter of a grant (for instance, the right can’t be vague or uncertain). Case law has established that where an easement is created by express grant, the nature and extent of the easement should be determined based on the language of the instrument that created it, taking into account the circumstances at the time the easement is created.

In the recent court decision, the “dominant” owner was found to have no positive obligation to repair and maintain a drain located on the “servient” owner’s land. The servient land was located adjacent to the Highway 401 corridor.  In 1959, the owner of the servient land, part of a farm, had granted the Province an easement for the installation of a drainage system.  The drain was properly installed but, as the years went by, the drain deteriorated and caused the farm property to retain water.  The servient owner experienced crop loss and had to undertake significant repairs to the drain at a cost of roughly $60,000.  The servient owner sued the Province (and later the Municipality that took over the easement) to recover his losses.  After the Plaintiff passed away, his estate carried on the action and asked the Court to grant summary judgment (a decision made by the court without a full trial) against the Municipality.

After repairing the drainage system, the Plaintiff had contacted the Province and the Municipality to inform them of the problems in hopes of having the repair costs covered. The Municipality informed the Plaintiff that it only had the right to maintain the drain and not an obligation to do so.  Hearing this news caused the Plaintiff to write a letter to the Mayor of the Municipality setting out the background behind the drainage easement.  The Municipality did not respond to the letter or take responsibility for the repair costs, which led to the Plaintiff commencing his action.

The Plaintiff’s claims included requests for a declaration that the Municipality is liable for the continuing maintenance of the drain, reimbursement of the costs to repair and replace the drain,  and damages for the loss of crops. The Court considered several issues in deciding the claim, including the applicable test for summary judgment, the nature of the easement, whether the Municipality had a positive obligation to repair the drain, and whether the Municipality was liable to the Plaintiff for the cost of the drain repair and/or the crop loss and in what amount(s).

In considering what the nature of the easement was, the Court determined that both the original easement (originally granted to the Province) and the transferred easement (as transferred from the Province to the Municipality) are valid in law.  The Highway 401 corridor was considered to be the dominant tenement and the Plaintiff’s property was the servient tenement; the original easement and the transferred easement accommodated the drainage of the highway (reasonably necessary for the use of the highway); the owners of the dominant and servient tenements were different persons; and, the right to build and maintain a tile drain on a strip of the property was a right capable of forming the subject matter of a grant.  Having concluded that the easements are valid, the Court then addressed the Plaintiff’s claim that the Municipality had a positive duty to repair and maintain the drain and cover the costs incurred.  The Court ruled against the Plaintiff based on its interpretation of the easement.

The Court referenced the legal principles established by the Supreme Court of Canada in a 2014 decision that stated evidence should be examined by considering the mutual and objective intention of the parties.  When it comes to easements, the words of the grant must be interpreted in an ordinary and grammatical meaning that aligns with the circumstances of the parties involved at the time the easement was created.  The Court found in this case that the original easement was silent with regard to any obligation to repair.  While in some cases, the party enjoying the use of the easement will be liable for repairs, that was not the case in this scenario.

Absent express language in the grant of the easement, the “dominant owner” (the person benefitting from the easement) does not have an obligation pursuant to the grant of easement to keep the easement in proper condition. However, that doesn’t necessarily leave the “servient” owner (whose land is subject to the easement) without a remedy. Where the dominant owner acts negligently or commits a nuisance, they can still be held liable for repair costs and damages.  In this case, the Plaintiff’s estate was permitted to continue with a claim for damages based on the law of nuisance.

Read the decision at:  2024 ONSC 2811 (CanLII).

Long-time farmhand awarded damages and retirement allowance

AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

Employees in Ontario can be formally dismissed or “terminated” from their jobs for just cause or without just cause.  If a dismissal is for cause, such as in the case of serious misconduct, habitual neglect of duty or incompetence, for instance, no prior notice is required.  Where an employee’s job is terminated without just cause, the employer must provide reasonable notice of termination to the employee.  The length of the notice period will depend on factors such as the character of the employment, the length of the employee’s service, the age of the employee, the availability of similar jobs, etc.  In some cases, working notice will be given and the employee will continue to work until the end of the notice period.  In most cases, though, payment in lieu of notice (i.e. the payments that the employee would have received during the notice period) will be provided.

However, many terminations occur without the employer formally firing or dismissing the employee.  An employee can be constructively dismissed where the employer’s conduct amounts to a repudiation of the employment contract.  For example, an employer might unilaterally change a significant term of an employee’s employment such as imposing a pay cut and by doing give the employee the right to treat the employment contract as terminated.  If the boss says that the employee now needs to work extra hours for less pay, it may be that the employee can leave the job and then seek compensation on the basis that the employee was constructively dismissed.  The employment was effectively, but not formally, terminated by the employer.

Constructive dismissal was the finding in a recent decision of the Ontario Superior Court of Justice in a case involving a long-time farmhand.  The claimant in the case had worked exclusively for one individual farmer (and the individual farmer’s companies) for over 40 years, his entire adult working life, employed as a farm labourer and manager in a mixed cash crop and livestock operation.  In January, 2019, the claimant was told that he was laid off but that the layoff would be temporary and would last only a few months.  The claimant actually continued to assist the employer from time to time with work tasks where needed during the layoff, but was not paid by the employer after January, 2019.

In May, 2019, the employer met with the claimant and told him that he could come back to work at the farm on the condition that the claimant continue to collect Employment Insurance benefits with the balance of his salary (about $55,000 per year) paid in cash.  Also, the employer confirmed that the claimant would no longer have the assistance of a student for heavy lifting jobs, something that the claimant required because of a back injury suffered several years earlier when lifting a propane tank.  In effect, the employer was asking the claimant to do the same job as before but on vastly different terms. 

Justice G.D. Lemon did not hesitate to find that the claimant had been constructively dismissed by his employer when the employer: 1) told the claimant that there would be fundamental changes to his job duties, effective immediately; 2) required that the claimant agree to improper and illegal payment arrangements as compensation for the job; and, 3) having effectively terminated the claimant’s previous employment, failed to provide the claimant with any notice of the termination or payment in lieu of notice.  Justice Lemon examined the relevant factors for determining the reasonable notice period and found that the claimant was entitled to 24 months of salary in lieu of working notice, amounting to just under $110,000.

The claimant also requested an order for payment of a retirement allowance from his former employer.  At the time of his layoff in January, 2019, the claimant’s annual salary was approximately $55,000, an amount that had remained more or less unchanged for the previous 25 years.  Also, prior to 1996, the claimant had been provided by his employer with an on-farm residence.  After 1996, the residence was no longer provided such that the claimant’s overall compensation was significantly reduced.  Nevertheless, the employer induced the claimant to continue to work for less money, even including overtime, on the basis of assurances and agreement that the employer would provide a retirement allowance to the claimant.

The claimant sought $250,000 for his retirement allowance.  The employer had told the claimant that he would be well taken care of and would receive 8-10% of non-voting shares in one of the farm companies.  The employer said that “the big money is at the end”, being a reference to a future sale of the company.  The claimant learned in 2008 or 2009 that the company was sold for $2,200,000 and assumed that he would receive about $250,000.  For that reason, the claimant continued to work on the farm, his concerns about a lack of a retirement safety net having been addressed.

Justice Lemon awarded the full $250,000 retirement allowance, finding that the claimant worked long hours at a “reducing income” in reliance on the employer’s assurances.  Justice Lemon also awarded the claimant $5,000 for unpaid wages (for the “layoff” period when the claimant continued to work without pay), $50,000 for aggravated damages (based in part on the manner of termination of employment which left the claimant with “the embarrassment of having been betrayed and cheated by the man he had trusted for many years”), and $20,000 for punitive damages (for conduct overall that “drops to the level of being so malicious and outrageous that it is deserving of punishment on its own”).

Read the decision at: 2024 ONSC 3876 (CanLII).

Supreme Court talks de facto expropriation again

 AS PREVIOUSLY PUBLISHED IN THE RURAL VOICE:

The concept of “de facto” expropriation was the focus of another decision of the Supreme Court of Canada in 2024.  In certain cases, government action outside of expropriation legislation may effectively result in a taking of property, which may entitle a property owner to compensation for the taking.  This is known as a “constructive” or “de facto” taking.  There is a presumption that there will be no expropriation without compensation.  If government action (often in the form of regulation) removes all reasonable uses of a property, then the property has been effectively expropriated and compensation may be payable.

Importantly, though, “compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.”  This “Pointe Gourde principle”, taken from a 1945 case of the same name heard before the Judicial Committee of the Privy Council in the UK, flows from the rule that compensation is to be based on the value of property to the owner, not the value to the taker.  An owner who suffers expropriation, de facto or otherwise, is entitled generally to be compensated for the market value of the property based on its highest and best use before the taking.  If the expropriating authority’s reason for taking the property actually enhances the market value of the property, the property owner does not get to rely on the enhanced value in the calculation of compensation payable.

The Pointe Gourde case involved the expropriation of land in Trinidad for use as a quarry from which stone would be taken to construct a nearby naval base.  The compensation owing to the owners was to reflect the “value of the quarry as a going concern”.  The quarry owners argued that the value of their quarry should include consideration of the higher profits they would make because their stone was to be used for the naval base.  The Judicial Council, which was the highest court for cases from Trinidad (as it was at one time the highest court for Canadian cases), decided against the quarry owners.  The increase in the market value of the property was due entirely to the expropriating authority’s plan to build the naval base.  The expropriating authority benefitted from a nearby and accessible source of a large quantity of stone, but without the plan for the naval base construction this did not increase the value of the quarry to the owners.  Value to the owner, not value to the taker.

The Supreme Court of Canada addressed similar issues in the recent Canadian case, which originated in Newfoundland.  In 1917, a landowner was issued a Crown grant for the purposes of harvesting trees to produce barrels and for firewood.  The grandchildren of the original grantee still own a 7.36-acre portion of the original Crown grant.  This remaining land is in a natural state, covered in trees and shrubs, and is located within a watershed area that drains into a river used by the City of St. John’s for its local water supply.  For decades, the land has been made subject to a series of by-laws and regulations prohibiting development in the watershed area.

Since the 1990s, the grandchildren landowners have attempted to obtain permission to develop their property.  In 2011, they asked the City about the possibility of residential development and also other activities such as tree harvesting, farming, saw milling, and the installation of solar panels and wind turbines.  The City advised that those uses were not permitted and that the land must be kept “unused” in its “natural state”.  The landowners went ahead in spite of this and applied for permission to develop a 10-lot residential subdivision.  Their application was rejected, in part on the basis of the watershed zoning that prohibited most if not all forms of development on the landowners’ property.

The landowners sued the City of St. John’s in court and obtained a declaration (upheld by the Court of Appeal of Newfoundland and Labrador and not contested before the Supreme Court of Canada) that their property had been “constructively expropriated”.  The Court of Appeal ruled that the City had acquired a “beneficial interest” in the land that consisted of “the right to a continuous flow of uncontaminated groundwater downstream to the City’s water facilities”.  While the grandchildren landowners had acquired the land their grandfather had received through the Crown grant, all they had now was a right to keep the land “unused in its natural state”.  The Court of Appeal concluded that this was a taking of “virtually all of the aggregated incidents of ownership” and that the landowners had no remaining reasonable use of the property.

The case that came to the Supreme Court arose from a legal question posed to the lower court in Newfoundland by the Board of Commissioners of Public Utilities, the authority tasked with determining the amount of compensation owing to the landowners.  The landowners were arguing that compensation should be based on land value as if the watershed regulations were not in place and a medium-density residential development were possible.  The City contended that value should be based on a highest and best use of agriculture and forestry that would be acceptable to the City and would not cause adverse impact to the watershed (something possible within the watershed zoning).  The lower court in Newfoundland relied on the Pointe Gourde principle and sided with the City.  The Court of Appeal in Newfoundland reversed this decision. 

The Supreme Court of Canada restored the decision of the lower court on the basis of the factual finding that the watershed zoning “was an independent enactment and not made with a view to expropriation”.  If the City had enacted the zoning specifically for the purpose of reducing the value of the landowners’ land so that it could then take the land for a public use, the value of the land could be determined as if the land were not subject to the zoning and was eligible for subdivision development.  However, as it was found that the zoning was enacted independent of any plan to “take” (constructively) the land, the landowners were only entitled to compensation based on the value of the land with the watershed zoning regulations in place.

Read the decision at: 2024 SCC 17 (CanLII).