Date: 20011127
NOVA SCOTIA COURT OF APPEAL
[Cite as: Maritime Telegraph and Telephone Company v. Chateau LaFleur
Development Corporation, 2001 NSCA 167]
Roscoe, Cromwell and Saunders, JJ.A.
BETWEEN:
CHATEAU LAFLEUR DEVELOPMENT CORPORATION,
a body corporate, and CAN-EURO INVESTMENTS LIMITED,
a body corporate
Appellants
Respondents by cross-appeal
- and -
MARITIME TELEGRAPH AND TELEPHONE COMPANY
LIMITED, a body corporate, and MARITIME TEL & TEL
LIMITED, a body corporate
Respondents
Appellants by cross-appeal
REASONS FOR JUDGMENT
Counsel: Douglas J. Livingstone for the appellants (respondents by cross-appeal
Michael E. Dunphy, Q.C. and Loretta Taylor for the respondents (appellants by cross-appeal)
Appeal Heard: September 14, 2001
Judgment Delivered: November 27, 2001
THE COURT: Appeal and cross-appeal dismissed per reasons for judgment of Cromwell, J.A.; Roscoe and Saunders, JJ.A. concurring.
CROMWELL, J.A.:
I. Introduction:
[1] The issues in this case are whether the respondents have an easement over the appellants’ land and, if so, whether the appellants should pay damages for wrongful interference with that easement.
[2] The respondents (“MTT”) sued the appellants (“Can-Euro”) for declarations of right and damages. The declarations claimed were: (1) that MTT has an easement over certain lands belonging to Can-Euro (and previously to Chateau LaFleur) near the MicMac Mall in Dartmouth; and (2) that Can-Euro is obligated to maintain the easement to the standard of a public street. The claim for damages related to the failure of a sale by MTT of its lands to Mark, Joe, Ron and Robin Ghosn (“the Ghosns”). MTT claimed that the Ghosns withdrew from the purchase as a result of unlawful interference in the transaction by Can-Euro’s principal, Mr. Gaspar.
[3] At trial in the Supreme Court of Nova Scotia, Kelly, J. found that the respondents had an easement as claimed and that it was the appellants’ duty to maintain it. The judge reached this conclusion on the alternative bases that an easement had been created by express grant or that there was an easement in equity binding on Chateau LaFleur. (The parties also interpret the judge’s reasons as holding that an easement of necessity arose in MTT’s favour.) The learned judge dismissed MTT’s claim for damages against Chateau LaFleur, being of the view that entitlement to such damages had not been proved.
[4] The appellants appeal the judge’s findings that there is an easement and that they must maintain it. The respondents cross-appeal the dismissal of their damages claim.
[5] For reasons which follow, I have concluded that both the appeal and the cross-appeal should be dismissed. In my opinion, the trial judge was correct to find that there was an equitable easement in the respondents’ favour which the appellants must maintain. He was also correct, in my view, to dismiss the respondents’ claim for damages arising from the lost sale. He found that the transaction failed, not as a result of the appellants’ conduct, but rather, as a result of the respondents’ inability to provide legal assurance of access to the property. This is essentially a finding of fact which is reasonably supported by the record. It should, therefore, not be disturbed on appeal.
[6] I will refer, at times, to the parties as “the appellants”, “Can-Euro” or “Chateau LaFleur” and “the respondents” or “ MTT”. The appellant, Chateau LaFleur Development Corporation, acquired the land which is subject to the disputed easement in August of 1984 and later conveyed it to the appellant Can-Euro Investments Limited. The principal of both companies is Mr. Otto Gaspar. The respondent Maritime Telegraph and Telephone Company Limited is a predecessor company of the respondent Maritime Tel & Tel Limited and the two were amalgamated under the latter name in April of 2000. For the purposes of this appeal, nothing turns on the successorship between, or amalgamation of, the respondents or on the conveyance of the land from the first to the second appellant.
II. Facts:
[7] MacCulloch and Company Limited (“MacCulloch”) owned a large parcel of land in Dartmouth (the “MacCulloch lands”) in the area where the MicMac Mall is now located. MTT purchased a portion of this land (the “MTT lands”) on which it operated a work centre. Access to the MTT lands for many years was over a public street known as Crichton Avenue which ran through the MacCulloch lands. This portion of Crichton Avenue was a gravel road.
[8] In the 1970's, MacCulloch entered into discussions with the City of Dartmouth with a view to the City closing a portion of Crichton Avenue and conveying it to MacCulloch. As this would affect access to the MTT lands, the City advised MacCulloch that it would only do so if (among other conditions) appropriate alternate access were provided to the MTT lands.
[9] MTT and MacCulloch discussed the matter and reached agreement concerning alternate access. They signed a letter agreement in May of 1976. The letter, dated April 26, 1976, and accepted by MTT on May 6, 1976, briefly sets out the parties’ understanding that: (i) the City would convey the relevant portion of Crichton Avenue to MacCulloch; (ii) MacCulloch undertook to supply MTT with proper access to city streets; (iii) MacCulloch had designed and partially constructed Avonhurst Road to the boundary of the MTT lands; and (iv) MacCulloch undertook “... to maintain Crichton Avenue between MicMac Boulevard and Maritime Tel & Tel property, in a suitable condition, until Avonhurst Road is completed.”
[10] MacCulloch and MTT then entered into a formal written agreement dated July 16, 1976. In summary, MacCulloch: (1) undertook to construct an access road (referred to as Avonhurst Road) in accordance with the standards for public streets in the City and to convey it to the City; and (2) agreed that prior to completion, it would provide and maintain acceptable access to MTT “... either over the former Crichton Avenue or Avonhurst Road.” MTT undertook to consent to all steps to be taken by the City for the closure of Crichton Avenue. The new access over Avonhurst Road was to connect over Glencairn Crescent to MicMac Boulevard.
[11] In Annex “A” to my reasons is a part of a 1977 plan showing the MTT lands, a portion of Crichton Avenue and the proposed new Avonhurst Road. As the July 16, 1976 agreement is relatively brief and highly relevant to this appeal, it is substantially reproduced in Annex “B”.
[12] With the July agreement resolving MTT’s access in hand, MacCulloch reached agreement with the City, in August of 1977, on the closure and conveyance of Crichton Avenue. The City undertook to convey a portion of Crichton Avenue to MacCulloch “... provided that ... [MacCulloch] guarantee[d] road access to the Maritime Telegraph and Telephone Company Limited from its lands ... ”.
[13] In November of 1977, the City closed the relevant portion of Crichton Avenue and conveyed it to MacCulloch. Before and after the closure of Crichton Avenue as a public street, MTT continued to use it as its means of access. In January of 1978, MacCulloch conveyed to MTT a small triangular piece of property necessary to link the MTT lands with the proposed Avonhurst Road. On Annex “A”, the original MTT lands are labelled “Lot A” and the small triangular parcel “Lot T”.
[14] MacCulloch did not construct Avonhurst Road as contemplated by the July, 1976 agreement with MTT. In August of 1981, MacCulloch conveyed certain of its lands, including a portion of the land upon which it was originally contemplated that the new access over Avonhurst Road would be constructed, to the Hudson’s Bay Company. At the same time, MicMac Shopping Centre Limited (“MicMac”), Hudson’s Bay and MacCulloch granted mutual rights of way over portions of what had been Crichton Avenue.
[15] In 1982, MacCulloch asked the City to close the constructed portion of Glencairn Crescent in order to allow for future expansion of the MicMac Mall. MacCulloch proposed that future access to the MTT lands would be by way of “... an upgraded road to subdivision regulations...” over the former Crichton Avenue. MTT was, of course, consulted and responded that it could “... foresee no problems as long as suitable access is made available while any construction is being carried out.” In late 1982, the City closed the relevant portion of Glencairn Crescent and conveyed it to Hudson’s Bay Developments Limited.
[16] In 1984, Chateau LaFleur purchased some remaining MacCulloch lands known as Block L-8. This land included the portion of the former Crichton Avenue between the MTT land and MicMac Boulevard which had been acquired from the City as well as land on which the proposed Avonhurst Road was to have been built. MTT continued to use the former Crichton Avenue as its access route.
[17] At the time of Chateau LaFleur’s purchase in 1984, the agreement of July, 1976 between MacCulloch and MTT was not registered. However, Chateau LaFleur was aware that MTT had some right of access over the property. Prior to the closing of the 1984 transaction, Chateau LaFleur’s solicitor raised certain objections to MacCulloch’s title relating to access as follows:
5. We refer you to a plan of survey provided us by Servant, Dunbrack, MacKenzie and MacDonald Limited, Land Surveyors, dated July 7, 1982, and signed by Granville Leopold. On that plan of survey, the road formerly known as Crichton Avenue and connecting Micmac Boulevard and Woodland Avenue is shown as a portion of the lands in question. The title reference is a Deed from the City of Dartmouth recorded at 3181/611. From our discussions with Mr. Vincent MacCulloch, we are advised that Maritime Telegraph and Telephone Company Limited has a right of access over that portion of the former Crichton Avenue connecting Micmac Boulevard and their driveway situate at the northeast corner of Lot A-T. We have been unable to determine when, if at all, such rights of access were created and therefore request that you advise as to what rights of access, if any, Maritime Tel & Tel has over that road as against your clients.
...
10. We note that the plan showing Block L-8 has not to this point received municipal subdivision approval. It is clear from our investigations that the lands being conveyed herein are not the only remaining lands of MacCulloch and Company Limited from their original grant in this area and as such, we would submit that such approval is required before the lot may be conveyed.
(emphasis added)
[18] In response, MacCulloch’s solicitor noted the obligation to provide access was ongoing and that provision of access was a condition of subdivision approval. She wrote:
5. I enclose a copy of correspondence between MacCulloch & Company Limited and M.T.&T. [it is agreed that this correspondence was the April/May 1976 letter agreement] together with a copy of the Agreement entered into between those two parties in July, 1976. MacCulloch was deeded Crichton Avenue by the City of Dartmouth on the condition that an arrangement be made with M.T. & T. so that it would not become land-locked. You will note that MacCulloch has agreed to construct an access road for M.T. & T. known as Avonhurst Road as part of its development of these lands. This road was never constructed, so the obligation to provide access to M.T.& T. continues. There is reference to the rights of M.T. & T. in the legal description of L-8 and I understand from Stephen Lockyer at Price Waterhouse that Mr. Gaspar is fully aware of the obligation. In any event, continued provision of access to M.T. & T. is a condition of the granting of subdivision approval by the City of Dartmouth for the transfer of title of L-8.
. . .
10. Subject to the City being satisfied that the M.T. & T. access is guaranteed, there is no problem with subdivision approval and I expect to have the plan in hand and registered by the end of this week.
(emphasis added)
[19] There is no dispute that Chateau LaFleur’s solicitor had copies of the April/May, 1976 letter agreement and the July, 1976 final agreement between MacCulloch and MTT prior to the 1984 closing. There is no evidence, however, that he had any knowledge of the 1982 correspondence between MacCulloch and MTT.
[20] The transaction proceeded and the deed from MacCulloch to Chateau LaFleur referred to the access to MTT land in the following clause:
Subject Also To rights granted to Maritime Telegraph & Telephone Company Limited over the Travelled Way contained within the strip of land conveyed to MacCulloch & Company Limited by Indenture recorded at the Registry of Deeds office for the County of Halifax in Book 3181 at page 611 as shown on the above referred to plan.
(emphasis added)
[21] Subdivision approval was granted prior to closing. Chateau LaFleur’s solicitor thereafter provided his client with a certificate of title which specifically excepted the rights of MTT. He wrote, in part:
... you have a good and merchantable title to the above-noted lands, subject to the following:
...
5. Rights granted to Maritime Telegraph & Telephone Company Limited over the Travelled Way contained within the strip of land conveyed to MacCulloch & Company Limited by Deed recorded at the Registry of Deeds in Book 3181, at Page 611, and as shown on above referred to plan;
(emphasis added)
[22] The judge found as a fact that Chateau LaFleur was aware of the terms of the right of way arrangement made between MacCulloch and MTT.
[23] By 1986, Chateau LaFleur was disputing MTT’s access; MTT claimed it had a right of way, Chateau LaFleur that it was merely, in effect, a licence.
[24] In or about 1988, Chateau LaFleur’s successor, Can-Euro, constructed a high-rise building on a portion of Block L-8 and built a paved private street known as Horizon Court. In the area between MicMac Boulevard and the MTT lands, Horizon Court follows the route of the old Crichton Avenue with the exception of a distance of approximately 10 to 12 feet between Horizon Court and the MTT lands. This 10 to 12 foot area is part of the old Crichton Avenue lands. Horizon Court is maintained by Can-Euro and used for access by the occupants of Can-Euro’s properties. MicMac and Hudson’s Bay (or their successors in title) have the right to use Horizon Court in accordance with the right of way Agreement entered into in 1981 among MicMac, Hudson’s Bay and MacCulloch.
[25] By 1988, MTT had ceased to operate its work centre on its lands and decided to sell the property. In October of that year, Can-Euro submitted an offer of $340,000 for the land. MTT was of the view that it was worth about $1,000,000 and rejected the offer.
[26] In June of 1993, MTT received a conditional offer from the Ghosns to buy the property for $800,000. In October of the next year, Can-Euro purported to forbid access to the MTT lands over Horizon Court and physically blocked access for a 24 hour period. Can-Euro’s position was communicated to the Ghosn’s solicitor. The Ghosns advised MTT that they would not proceed with the transaction unless they were provided with written assurances by Can-Euro and MTT that the access issue had been resolved to their mutual satisfaction. These assurances were not forthcoming and the transaction did not proceed.
[27] MTT commenced this action in November of 1998.
[28] As noted earlier, Kelly, J. at trial found that the agreements between MacCulloch and MTT created an easement by grant of which Chateau LaFleur had actual notice. He further held, in the alternative, that an easement arose in equity. He reasoned that MTT had agreed to release its right to use Crichton Avenue as a public street in order to allow MacCulloch to obtain the closure and conveyance to it of Crichton Avenue. He held that it would be unfair to permit Chateau LaFleur, as MacCulloch’s successor in title, to benefit from this by receiving title to the former Crichton Avenue and while, at the same time, denying MTT an easement over the property. The judge also made certain findings of fact on the question of an easement of necessity which both parties to this appeal interpret as a further alternative finding that MTT had an easement by necessity.
[29] The trial judge then turned to the question of whether Chateau LaFleur had a duty to maintain the easement for MTT’s benefit. He concluded it did, holding that the right of way agreement among Can-Euro, Hudson’s Bay and MicMac required Can-Euro to maintain Horizon Court and that this therefore constituted the most cost effective way of providing a maintained right of way for MTT.
[30] With respect to MTT’s claim for damages, the judge found that: (1) there was no damage resulting from the one day denial of access by Chateau LaFleur; and (2) Chateau LaFleur’s actions did not cause the loss of the Ghosn transaction.
III. Issues:
[31] Both the appeal and the cross-appeal raise several issues, but in my view it is only necessary to address two of them, one on each of the appeal and the cross-appeal.
[32] On the appeal, the judge held, in my view correctly, that MTT has an equitable easement which Can-Euro is obliged to maintain. If that is so, the appeal must fail. I will, therefore, limit myself to explaining my view that the judge was correct to find that MTT has an equitable easement which Can-Euro must maintain.
[33] By restricting my analysis to this issue, I would not want to be taken as approving the trial judge’s conclusion that there was an easement by grant. My concern on this aspect of the case is that MacCulloch did not own the Crichton Avenue land at the time of the July, 1976 agreement. However, as I think that the trial judge was correct to find that there was an equitable easement, I need not express a final opinion on that issue or with respect to whether an easement by necessity arose.
[34] On the cross-appeal, my view is that it was reasonably open to the judge on this record to find that the loss of the Ghosn transaction, on which the claim to substantial damages is based, was not the result of any unlawful act by Mr. Gaspar. If that is so, the judge’s dismissal of the damages claim was correct. I will, therefore, limit my analysis of the cross-appeal to the attack on this key finding by the judge.
IV. The Equitable Easement Issue:
[35] It will be convenient to address this issue under four headings: 1. the legal principles relating to equitable easements; 2. the trial judge’s findings; 3. the appellants’ submissions; and 4. analysis and conclusions.
1. Equitable Easements:
[36] An easement is a right attached to the land of a dominant owner allowing use of the land of a different owner (the servient owner) in a particular way for the benefit of the dominant owner: A. H. Oosterhoff and W. B. Rayner, Anger and Honsberger Law of Real Property (2d, 1985) at para. 1803. The essential qualities of an easement are that there must be dominant and servient land, the easement must accommodate the dominant land, the owners of the dominant and the servient land must be different persons and the right must be capable of forming the subject-matter of a grant: Ibid at para. 1803.2. An easement may be created by statute, express or implied grant, prescription or through the application of equitable principles: Ibid para. 1803.4. I am concerned here with this last type of easement.
[37] Equitable easements may arise through the operation of the equitable doctrines of proprietary estoppel and part performance or through the operation of related equitable principles. Proprietary estoppel comes into operation when one party is encouraged to act to its detriment in relation to its land by the promise or encouragement of another in circumstances in which it would be unjust to allow the latter to insist on its strict legal rights: J. McGhee, Snell’s Equity (30th, 2000) at para. 39-12.
[38] As stated in a leading English case, when the doctrine of proprietary estoppel is raised, the court must answer three questions: first, whether an equity is established; second, what is the extent of the equity; and, third, what relief is appropriate to satisfy the equity: Crabb v. Arun District Council, [1976] Ch. 179 (C.A.) at pp. 192 - 193. Whether an equity arises and its extent depends on the dealings between the parties, including their contract, their promises and their conduct: see, e.g. Crabb, above at p. 187 - 8. The ultimate question in light of all of this is whether it would be inequitable to permit one party to insist on its strict legal rights.
[39] Crabb has been approved and followed in Canada, notably in the recent decision of the British Columbia Court of Appeal in Zelmer v. Victor Projects Ltd. (1997), 147 D.L.R. (4th) 216; B.C.J. No. 1044 (Q.L.)(B.C.C.A.); see also: Hill v. Nova Scotia, [1997] 1 S.C.R. 69 at para. 11; Hastings Minor Hockey Association v. Pacific National Exhibition (1981), 129 D.L.R. (3d) 721; B.C.J. No. 1388 (Q.L.) (B.C.C.A.).
[40] If the equity arises, the courts have broad discretion to fashion an appropriate remedy. As the editor of Snell’s Equity, supra, puts it, effect is given to the equity “... in whatever is the most appropriate way taking into account all relevant circumstances including the conduct of the parties”: at para. 39-19.
[41] An easement arising in equity is binding on everyone except a purchaser of the servient tenement who buys without notice of the equitable right: see Jonathan Garret and Paul Morgan, Gale on Easements (16th, 1997) at para. 2-25. In the present case, therefore, the issue of whether there is an equitable easement binding on the appellants which they are obliged to maintain in favour of MTT depends on the answer to two questions. Did such an equitable easement arise as between MacCulloch and MTT? If so, was Chateau LaFleur a purchaser in good faith without notice?
2. The trial judge’s findings:
[42] The judge found that MTT had acted to its detriment in reliance on promises given by MacCulloch. Specifically, MTT gave its consent for the City to close Crichton Avenue and to convey it to MacCulloch as a result of MacCulloch’s promise to provide MTT with access over a public street to be constructed and, until then, over the former Crichton Avenue. The judge stated:
[34] In the matter before the Court, MTT agreed, to its detriment, to release its permanent right to use [Crichton] Avenue as a city street. If it had not done so, MacCulloch would not have obtained the conveyance of the street from the City of Dartmouth. In the interim, MacCulloch agreed to give a right of way to MTT over that street when it was conveyed to it, and when it was MTT had open unopposed use of the “Travelled Way” to gain ingress and egress from the city streets to its lands for over twenty years. ...
(emphasis added)
[43] The judge noted that MacCulloch had agreed to provide and maintain acceptable access to MTT either over the former Crichton Avenue or Avonhurst Road and it followed from this that it was MacCulloch’s responsibility to maintain the right of access. He found that “... it was intended by MacCulloch and MTT that the latter receive a property right by way of right of way ... ”. He further found that Can-Euro had “notice and actual knowledge” of these rights and responsibilities. Finally, he concluded that imposing the obligation to maintain a right of way over Horizon Court which, at the relevant point, substantially follows the route of the former Crichton Avenue and which Chateau LaFleur was already obliged to maintain by virtue of the right of way agreement with Hudson’s Bay and MicMac would be the most cost effective way of providing the maintained right of way to which MTT was entitled.
3. The appellants’ arguments:
[44] The appellants attack the trial judge’s finding that there is an equitable easement, raising two main points.
[45] First, it is argued that the judge was wrong to find that MacCulloch and MTT intended that the latter receive a property right over MacCulloch’s lands pursuant to the July, 1976 agreement. That agreement, it is argued, was for access over a city street to be constructed by MacCulloch, but conveyed to and maintained by the City. Any access over what had been Crichton Avenue was a merely temporary licence, not an easement.
[46] Second, the appellants submit that Chateau LaFleur did not have notice of any property right in MTT’s favour over the lands it acquired from MacCulloch. In other words, even assuming that there was an equitable easement as between MacCulloch and MTT, it is not binding on the appellants because they were purchasers in good faith without notice of it.
4. Analysis and Conclusions:
[47] The linchpin of the appellants’ first point is this. The July, 1976 agreement should be interpreted as MacCulloch promising MTT nothing more than a temporary right of access not binding the land, pending the completion of Avonhurst Road, over the former Crichton Avenue. Simply put from the appellants’ perspective, MacCulloch promised to provide access by way of a mere temporary license pending completion of the new public road, not to grant an easement binding the MacCulloch land until access by way of the planned public road was completed.
[48] With respect, this submission is based on much too narrow a view of the equities between MacCulloch and MTT.
[49] Following Crabb, the first question is whether the dealings between MacCulloch and MTT gave rise to an equity in MTT’s favour. What gives rise to an equity? In general, an equity will arise where one party acts to its detriment acting on the strength of an expectation or belief encouraged by the other party. When these conditions are present it will be inequitable for the party who encouraged the belief in the other to thereafter insist on its strict legal rights: see, e.g. Crabb, supra, at p. 187 - 188.
[50] Proprietary estoppel in a case like this one is concerned with equitable rights to land. It follows, therefore, that the expectation or belief on which the estoppel is based must relate to the acquisition of rights in or over land: see Snell’s Equity, supra at 39-13. So, for example, in Western Fish Products Ltd. v. Penwith District Council, [1981] 2 All E.R. 204 at 217, Megaw, L.J. described the doctrine of proprietary estoppel as follows:
... when A to the knowledge of B acts to his detriment in relation to his own land in the expectation, encouraged by B, of acquiring a right over B’s land, such expectation arising from what B has said or done, the court will order B to grant A that right on such terms as may be just.
[51] Are these conditions satisfied here? In my opinion, they are.
[52] Under the terms of the July, 1976 agreement, MTT was promised three things by MacCulloch. First, there would be a new access route in exchange for the former one over Crichton Avenue. This access road would be built over land belonging to MacCulloch. Second, the new access route would ultimately be over a city street because MacCulloch undertook to convey it to the City after construction. Unlike the portion of Crichton Avenue previously used as access, this new access would be built to the standard of a city street. Third, there would be ongoing access over the former Crichton Avenue until the new access was constructed.
[53] From this it is clear that MacCulloch encouraged MTT’s belief that MTT would acquire rights over MacCulloch’s lands — both over Avonhurst Road to be constructed on MacCulloch’s lands and, pending construction, over the former Crichton Avenue which was to become MacCulloch’s land. This encouragement was unambiguously given by MacCulloch in the July, 1976 agreement in the form of express contractual promises.
[54] In exchange for these promises, MTT consented to the closing of Crichton Avenue, thereby depriving itself of access over a city street until MacCulloch constructed Avonhurst Road and conveyed it to the City. MTT did this because MacCulloch had promised that MTT’s consent to the closure of Crichton Avenue would be rewarded by alternate access at the standard of a city street to be provided at MacCulloch’s expense and thereafter maintained by the City. MacCulloch failed to construct Avonhurst Road and, as a result, MTT suffered detriment in reliance on MacCulloch’s promises. Therefore, MTT expected, on the basis of MacCulloch’s encouragement, that it would receive rights over MacCulloch’s land, and acted to its detriment in reliance on that expectation. MTT having fulfilled its part of the bargain, it would be inequitable to permit MacCulloch to insist on its strict legal rights.
[55] An equity having arisen, what is its extent? As the editor of Snell’s Equity, supra, puts it, the extent of the equity is to have made good, so far as may fairly be done between the parties, the expectations of MTT which MacCulloch has encouraged: at para. 39-18. What MTT failed to get, as a result of MacCulloch’s conduct, was permanent access to the standard of a city street constructed and maintained at no expense to it. MTT expected to get such access and this expectation was based on MacCulloch’s contractual promise. The extent of the equity is, therefore, that MTT should have such access over MacCulloch’s land and at MacCulloch’s expense.
[56] The third question is what remedy is necessary to satisfy the equity. As between MacCulloch and MTT, the equity would be satisfied by imposing an easement in favour of MTT over the former Crichton Avenue to be constructed and maintained to the standard of a city street by MacCulloch. The easement in this location is appropriate because it was the route surrendered by MTT in exchange for MacCulloch’s broken promises. Moreover, MacCulloch promised temporary access over this route pending completion of Avonhurst Road and retained title to the former Crichton Avenue lands after the conveyance in 1981 of a portion of the land on which Avonhurst Road was to have been constructed. The standard of construction and the obligation to maintain are appropriate because MTT would have received an access road to this standard maintained at no cost to it had MacCulloch performed its part of the July, 1976 agreement.
[57] The justice and good sense of this conclusion may be tested by comparing it with the appellants’ position. That position, if accepted, would have the following result. MTT, because of MacCulloch’s failure to construct the alternate access and dedicate it as a public road, would end up with a mere temporary licence. In other words, MacCulloch’s failure to provide the new access it had promised coupled with MTT’s reliance on this promise to its detriment would result in MacCulloch acquiring title to the former access route over Crichton Avenue subject only to a license in favour of MTT. That is not what was promised nor would such a result be equitable given MacCulloch’s promise and MTT’s detrimental reliance on it. The result advanced by the appellants is, in my respectful view, neither equitable nor just in the context of the dealings among the City, MacCulloch and MTT and particularly having regard to the July, 1976 agreement.
[58] The appellants submit that MTT has had a claim against other entities for completion of Avonhurst Road since the signing of the July, 1976 agreement and that there was no evidence that Avonhurst Road could not have been completed. Simply put, this submission is that MTT has sued the wrong party claiming access over the wrong route. With respect, this submission confuses the rights and duties as between MTT and MacCulloch prior to the 1984 purchase by Chateau LaFleur with the question of whether Chateau LaFleur had notice of those rights.
[59] There is no doubt that, as between MTT and MacCulloch, there was a further agreement reached in 1982 that access to the MTT lands would be by way of an upgraded road to subdivision regulations over the relevant portion of the former Crichton Avenue. MTT consented to this arrangement and the City closed the constructed portion of Glencairn Crescent, to which Avonhurst Road was to connect. In these circumstances, I cannot accept the appellants’ contention that, after 1982, MTT could have insisted that MacCulloch or anyone else construct Avonhurst Road or that equity would permit MacCulloch to resile from its guarantee of access over the former Crichton Avenue by way of an upgraded road to subdivision regulations.
[60] To summarize, as between MacCulloch and MTT the equitable doctrine of proprietary estoppel applies with the result that MTT had an equitable easement over MacCulloch’s lands along the former Crichton Avenue which it was MacCulloch’s duty to maintain.
[61] That brings me to the position as between the appellants and MTT. The appellants are not bound by the unregistered equitable easement if they purchased the MacCulloch land (i.e., the servient tenement) in good faith and without notice of it. There is no question here that the appellants acted in good faith and paid valuable consideration when Block L-8 was purchased. The issue for decision, therefore, is whether the appellants had notice.
[62] In this context, the term “notice” includes three types of knowledge: actual knowledge (what the party in fact knew), constructive knowledge (what the party might reasonably be considered as having known) and imputed knowledge (what the party’s agent knew). All of this is well summarized in the following passage from R.E. Megarry, H.W.R.Wade and Charles Harpum, The Law of Real Property (6th, 2000) at pp. 144 - 145:
A person is commonly said to have “actual notice” of a fact where he subjectively knows of it, regardless of how that knowledge was acquired.
...
... Equitable interests would have been entirely insecure if it had been made easy for purchasers to acquire the legal estate without notice, as by merely asking no questions. Accordingly the Court of Chancery insisted that purchasers should inquire about equitable interests with no less diligence than about legal interests, which they could ignore only at their own peril. The motto of English conveyancing is caveat emptor: the risk of incumbrances is on the purchaser, who must satisfy himself by a full investigation of title before completing his purchase.
... By the doctrine of constructive notice equity adopted a similar principle and adapted itself to the ordinary conveyancing practice. A purchaser would be able to plead absence of notice only if he had made all usual and proper inquiries, and had still found nothing to indicate the equitable interest. ...
[63] There is no factual dispute about what the appellants actually knew as a result of the knowledge of their principal, Mr. Gaspar, or what knowledge is imputed to them as a result of the enquiries of their solicitor. In my view, the appellants had actual or imputed notice of all of the essential facts which gave rise to the equitable easement in favour of MTT over the former Crichton Avenue. To put it more precisely, the appellants cannot say that they “... found nothing to indicate the equitable interest” (to use the language of Megarry and Wade, supra at p. 145).
[64] It may be helpful to consider the facts under the three questions which I used to determine whether the equitable easement should be imposed as between MacCulloch and MTT.
A. Did an equity arise?
(i) Chateau LaFleur’s solicitor had a copy of the July, 1976 agreement.
(ii) He was advised by Vincent MacCulloch that MTT had a right of access over the portion of the former Crichton Avenue connecting MicMac Boulevard and the driveway situate at the northeast corner of Lot A-T (i.e., MTT lands);
(iii) He was advised by MacCulloch’s solicitor: (i) that MacCulloch was deeded Crichton Avenue by the City on condition that an arrangement be made with MTT so that it would not become land-locked; (ii) that MacCulloch had agreed to construct an access road for MTT known as Avonhurst Road as part of its development of these lands; (iii) that Avonhurst Road was never constructed; (iv) that “... the obligation to provide access to MTT continues”; (v) that there was a reference to the rights of MTT in the legal description of Block L-8; and, finally, (vi) that “... continued provision of access to MTT is a condition of the granting of the subdivision approval by the City for the transfer of title of L-8". (the quoted passages are from the letter from MacCulloch’s solicitor, to the appellants’ solicitor dated May 14, 1984). He reviewed this letter and its enclosures with Mr. Gaspar.
(iv) The appellants’ solicitor had the legal description of Block L-8 which contained a reference to “... rights granted to [MTT] over the Travel [sic] Way contained within the strip of land conveyed to [MacCulloch] by Indenture recorded at the Registry of Deeds office for the County of Halifax in Book 3181 at page 611 as shown on the above referred to plan”. This legal description was reviewed with Mr. Gaspar.
(v) The appellants’ solicitor, of course, had the plan just referred to and which shows a travelled way along the former Crichton Avenue from the northeast corner of the MTT lands to MicMac Boulevard.
(vi) The appellants knew that, as of 1981, MacCulloch could not complete the promised access over Avonhurst Road.
(vii) The appellants’ solicitor testified at trial that he had “probably” seen the plan of Block L-8 dated June 4, 1984 which referred to a Travelled Way within the Crichton Avenue lands between MicMac Boulevard and the MTT lands and which contained Note 2 stating that the “... travelled way [was] currently utilized for ingress and egress to and from [the MTT lands] ...”.
[65] In short, the appellants knew in detail the nature of MacCulloch’s promises as set out in the July, 1976 agreement, that MTT had acted to its detriment by relying on those promises and that, as of 1981, MacCulloch could not complete the promised access over Avonhurst Road.
B. The extent of the equity:
(i) From the review of the July, 1976 agreement, the appellants knew that MacCulloch had promised new access over lands owned by MacCulloch to the standard of a City street and conveyed to the City. The new access would, therefore, be maintained at no expense to MTT.
(ii) From the review of the July 1976 agreement, the appellants knew that MTT agreed to give up access over a City street (Crichton Avenue) by promising to consent to its closure by the City. The appelants would also have known from the review of the registered instruments that the relevant portion of Crichton Avenue had been conveyed by the City to MacCulloch in apparent conformity with the July, 1976 agreement.
(iii) The appellants would also have known from its review of the July, 1976 agreement that MacCulloch had promised ongoing access over Crichton Avenue until Avonhurst Road was constructed. They also knew that MacCulloch had never constructed Avonhurst Road and that after 1981 it could not do so.
(iv) The appellants’ solicitor had the legal description of Block L-8 which contained a reference to “... rights granted to [MTT] over the Travel [sic] Way contained within the strip of land conveyed to [MacCulloch] by Indenture recorded at the Registry of Deeds office for the County of Halifax in Book 3181 at page 611 as shown on the above referred to plan”;
(v) He, of course, had the plan just referred to and which shows a travelled way along the former Crichton Avenue from the northeast corner of the MTT lands to MicMac Boulevard.
(vi) The appellants’ solicitor testified that he had “probably” seen a second plan of Block L-8, one dated June 4, 1984, which referred to a Travelled Way within the Crichton Avenue lands between MicMac Boulevard and the MTT lands. The plan contained Note 2 which stated that the “... travelled way [was] currently utilized for ingress and egress to and from [the MTT lands] ...”.
[66] In summary, the appellants knew that MTT had agreed to the closure of Crichton Avenue in exchange for alternate, permanent access over a new city street to be constructed by MacCulloch, that the alternate access had not been constructed, that MacCulloch could no longer do so and that MTT had been promised, and were exercising, access over the former Crichton Avenue. All of the essential facts relating to the extent of MTT’s equity were known to the appellants.
C. The relief necessary to give effect to the equity:
[67] In addition to all of the points mentioned earlier, I note the following:
(i) The appellants’ solicitor knew that the City’s approval of the plan of subdivision necessary for the conveyance of Block L-8 to Chateau LaFleur was conditional on access to MTT being guaranteed and that such approval had been given prior to closing.
(ii) The appellants’ solicitor acknowledged that the MTT access issue was something that had to be brought to his client’s attention — something that he described as being “a bit disconcerting or confusing ...”. He recognized that Chateau LaFleur was taking title to Block L-8 subject to the rights of MTT “... whatever they were ...”.
(iii) After the July 23, 1984 letter from MacCulloch’s solicitor, the appellants’ solicitor took no further steps and made no further inquiries in relation to the issue of MTT’s access to its lands.
[68] The appellants submit they had no notice of the 1982 arrangement among the City, MacCulloch and MTT in which MacCulloch undertook to provide MTT with access by way of an upgraded road to subdivision regulations over the former Crichton Avenue. In my view, there are two answers to this submission. The first is that, even without actual notice of this 1982 arrangement, the appellants had notice of all of the essential facts giving rise to the equity, defining its extent and in relation to the appropriate relief. Second, Chateau LaFleur took title subject to the rights of MTT, “whatever they were”, and made no further inquiries about these rights after the July 23, 1984 letter from MacCulloch’s solicitor. It can hardly be said that the appellants found nothing to indicate the equitable interest. They are, therefore, bound by the equitable easement in favour of MTT.
[69] I would conclude that the trial judge was correct to find that MTT, as against the appellants, has an equitable easement following the former Crichton Avenue which the appellants are obliged to maintain. For clarity, I would add that the easement is over Horizon Court from MicMac Boulevard except for the final 10 to 12 feet between Horizon Court and the MTT lands where the easement follows the former Crichton Avenue to the northeast corner of the MTT lands. It is the appellants’ obligation to maintain the whole of this easement to the appropriate standard, including the final 10 - 12 foot section which is at present a gravel road. As I understand that the standard of the existing Horizon Court is satisfactory to MTT, that should be the appropriate standard.
[70] The trial judge has not yet issued a formal order and there are, no doubt, technical matters to be resolved before such an order is issued. In this court, I would simply issue an order dismissing the appeal and leave the settling of the order at trial, in accordance with the trial judge’s reasons and the reasons of this Court, to the trial judge.
V. The Damages Issue:
[71] At trial, MTT claimed damages for wrongful interference with its right of way and for unlawful interference with economic relations. These claims were dismissed by the trial judge and MTT challenges that dismissal in its cross-appeal.
[72] The focus of the damages claim is the failure of MTT’s sale of its property to the Ghosns. Simply put, MTT claims that the transaction failed as a result of illegal interference by Can-Euro which is, therefore, liable for the resulting damages.
[73] The trial judge relied on a number of grounds to reject this claim. In my view, it is only necessary to consider one of them. The judge found that MTT’s sale to the Ghosns did not close because the predecessors’ title objections based on the right of way were not satisfied. He stated that:
[48] ... the Ghosns would not have purchased the property without being satisfied that legal access to city streets was available to MTT’s lot. The inability of MTT to provide this was the essential reason the agreement of sale was not renewed by the Ghosns, not Mr. Gaspar’s attitude or threat of suit if the sale went through.
(emphasis added)
[74] Mr. Dunphy, for MTT, very fairly and, in my view, correctly conceded during argument that if this finding is supportable on the record, the cross-appeal fails. He submits that the finding is not supported by the evidence and that Mr. Gaspar’s communication with the Ghosn’s solicitor was the proximate cause of the Ghosn’s decision not to renew the agreement and proceed with the purchase.
[75] Mr. Dunphy submits the trial judge erred in failing to act in accordance with the following evidence.
[76] On October 7th, 1994, Patrick Duncan, solicitor for the Ghosns, contacted Stefan Gaspar to discuss the access to the MTT lands. Mr. Duncan advised Mr. Gaspar that he was acting for the Ghosns in the prospective purchase of the MTT lands. Mr. Gaspar provided Mr. Duncan with a copy of the October 6, 1994 letter to MTT, which “forbid” access to the MTT lands over Horizon Court which, as noted, mainly follows the route of the former Crichton Avenue at the relevant location. He also advised Mr. Duncan that if the Ghosns proceeded with the purchase without the access being clarified by written agreement, Can-Euro would sue the Ghosns.
[77] Following his discussion with Stefan Gaspar, Mr. Duncan received instructions from his client not to renew the Agreement of Purchase and Sale which required renewal if it was to remain in existence. Mr. Duncan wrote to Brian Tabor, solicitor for MTT, on October 11, 1994 and stated:
Further to your letter of September 12, 1994 and our telephone conference of September 22, 1994 I now have instructions from my clients in relation to this matter.
Subsequent to our telephone conference I spoke with Stefan Gaspar, Vice-President of Can-Euro Investments Limited in relation to the access to the Dartmouth Service Centre land. He provided me with copies of surveys and a letter written to Don Steward, Real Estate Manager for Maritime Tel & Tel which letter was dated October 6, 1994. By these documents and in my conversation with him, it is clear that Can-Euro Investments Limited denies the existence of the easement. It has also been made clear to my clients that if they proceed with the purchase without the access being clarified by written agreement that they will be the subject of litigation which they have no interest in.
Therefore, I am instructed to advise that while my clients are still anxious to proceed with the purchase of the land they will not renew their agreement with Maritime Tel & Tel until such time as they have been provided written assurances by Can-Euro Investments Limited and by Maritime Tel & Tel that the access issue has been resolved to the mutual satisfaction of the parties and to the satisfaction of the Ghosns.
[78] I cannot accept the submission that the judge erred in finding that Mr. Gaspar’s threats of suit were not the proximate cause of the failure of the transaction. The trial judge was required to, and did, assess this evidence in light of all the evidence before him. When all of the relevant evidence is considered, the judge made no palpable or overriding error in reaching the conclusion he did. I will briefly review the evidence which supports the trial judge’s conclusion.
[79] The agreement of purchase and sale between MTT and the Ghosns was dated June 18, 1993 with a closing set for February 18, 1994. The agreement was conditional on many things including MTT obtaining rezoning of the property from light industrial to multi-unit residential. Mr. Duncan testified that he received the agreement in July of 1993 and conducted a title search in August of that year. In reviewing his title search he had concerns about the access to the lot. He had corresponded with MTT’s then solicitor and, after receiving his explanation of why MTT thought it had a valid access, the Ghosns were prepared to proceed at that stage.
[80] As noted, the agreement was conditional on rezoning. By late 1993 and early 1994, the City was taking the position that it would not permit the rezoning unless the access issue was clarified. This is reflected in a November, 1993 letter from a senior planner with the City in response to MTT’s rezoning request. The letter stated that the City was aware of an access dispute and that in order to rezone the MTT lands, the City’s Planning and Development Department would require confirmation that the property had full and permanent access to a City street.
[81] Mr. Duncan summed all of this up as follows in his evidence:
Q. You indicated that you, as a result of your title search, I believe you said, had concerns about access?
A. Yes.
Q. Do you recall how your concerns were raised? Like, what raised that concern in your mind?
A. I wrote a letter to Mr. Tabor setting it out as an objection.
Q. Okay. So you found in your title search that there was no public street attaching to the MT&T property?
A. Yes, that was what it appeared to be at the time, as I recall it.
Q. And you were unable to find anything in your search, title search that gave you comfort or satisfaction that there were other, there was other access provided on the records of the Registry?
A. There was the easement agreement, as I recall, that MT&T had entered into with MacCulloch and, again, without looking at the - I’d have to look at the title search notes to be sure of it. But my recollection was that there was, my sense of it at the time was that there was a valid easement that had been granted by MacCulloch to MT&T when they closed Crichton Avenue. The, if I remember how this worked, initially the problem was that I couldn’t see anything that passed that right of easement on to the successors in title to MT&T.
Mr. Tabor and I discussed the impact of the Conveyancing Act, and whether that would have assisted in the process. At that point, I guess our initial view, and I really, this is, part of it’s pretty vague for me. I can’t remember exactly what all we had resolved, but it seemed to me at that time that I thought that the access issue probably was not as big a problem as I’d initially thought. I thought that the MT&T - it should have been valid but, and I don’t recall and I don’t have a note to this, but I suspect that I probably thought that the rezoning that was going to be required, that this would have to be sorted out in that process. I can’t say that with certainty today. In any event, it wasn’t very long after we had those discussions that it became evident that access was an issue, culminating with the letters in the fall of ‘94.
Q. But certainly you objected to it in your report to Mr .Tabor?
A. Yes, I did.
Q. In your letter of objection?
A. Yeah.
Q. And you never waived that objection?
A. I, I think we, quite frankly, I think we, I suppose, yes, the answer to that is I did not, but I think the discussions went silent on the issue. We moved on and - we didn’t have to worry about, as between us, because the City of Dartmouth was in the picture by that time. That’s sort of how I remember it.
(emphasis added)
[82] MTT and the Ghosns apparently extended their agreement to approximately July of 1994. MTT asked for a further extension of one year to July of 1995 for the rezoning condition to be met. As Mr. Duncan put it, his clients were being asked to wait a year in circumstances where it seemed to be that there was a real problem about access.
[83] From this evidence, it was open to the trial judge to conclude that the rezoning, which was a condition of the agreement, was not going to occur quickly and that the Ghosns recognized this and moved on.
[84] In addition to this evidence, the trial judge had before him evidence that MTT was not able to satisfy other potential purchasers that it could convey good access. The trial judge found that the access issue raised by the appellants was at least arguable. He had before him all of the evidence relevant to MTT’s claim for access. There was no evidence that MTT took the position with the Ghosns that the access issue was clear enough that MTT could force the conveyance on an unwilling purchaser. There was no evidence that MTT instituted proceedings in a timely way to clarify the access issue during the currency of the agreement with the Ghosns. These proceedings were instituted only in November of 1998. As noted, Mr. Duncan raised access in his objections to title following his title search in August of 1993 and never waived the objection. The City made it clear in November of 1993 that it was not satisfied that MTT had a clear right of access. This was fatal to the rezoning on which the Ghosn agreement was conditional.
[85] Although the trial judge did not put it precisely this way, as I read his reasons, his fundamental holding on this issue was that MTT’s rights of access on the face of the registered documents was at best uncertain. MTT could not satisfy a prospective purchaser that it could convey good access or, for that matter, convince the City of this in the context of its rezoning application. He found that it was MTT’s inability to demonstrate to the Ghosns or the City that it had a valid right of access that caused the transaction not to proceed.
[86] While this is, perhaps, not the only conclusion that one could draw from the evidence at trial, it is one that, in my opinion, was reasonably open to the trial judge. He committed no reviewable error in reaching it.
[87] It follows that the cross-appeal fails and should be dismissed.
VI. Disposition:
[88] I would dismiss the appeal and the cross-appeal. As success is divided, I would make no order as to costs.
Cromwell, J.A.
Concurred in:
Roscoe, J.A.
Saunders, J.A.
Annex “A”
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ANNEX “B”
WHEREAS MT&T owns and maintains land and building on Crichton Ave. in the City of Dartmouth and shown on the plan attached as Schedule “A”.
AND WHEREAS MacCulloch has entered into an agreement with the City of Dartmouth for the redevelopment of the area, known as “Micmac Village” including the closing of Crichton Avenue in the area.
AND WHEREAS MacCulloch has agreed to construct an access road to the property of MT&T to give access to Glencairn Crescent to replace the existing access to Crichton Avenue.
NOW THE PARTIES AGREE:
1. MacCulloch will construct at its expense an access road from Glencairn Crescent to serve the lands of MT&T, the said access road being shown as Avonhurst Road on the plan attached as Schedule “A”.
2. Avonhurst Road shall be completed in a good and workmanlike manner, in accordance with the plan attached hereto as Schedule “A” and in accordance with the standards for public streets in the City of Dartmouth, and shall convey and dedicate the said Avonhurst Road to the City of Dartmouth as a public street. Prior to completion MacCulloch will provide and maintain acceptable access to MT&T either over the former Crichton Avenue or Avonhurst Road.
3. MacCulloch shall convey to MT&T the triangular piece of property outlined in red on the attached Schedule “A”.
4. MT&T shall at its expense install 6" water main service and 8" sanitary sewer service along and under Avonhurst Road to serve the MT&T property.
5. If at any future time connections are made to the sewer so installed on Avonhurst Road to serve any property or properties abutting on Avonhurst Road, then the cost of the water and sewer service shall be apportioned as the parties shall agree, and failing agreement, as apportioned by a single arbitrator under the provisions of the Arbitration Act.
6. MacCulloch shall pay to MT&T that portion of the cost of installation of the water and sewer service as shall be determined in accordance with paragraph 5 to be applicable to the adjacent property or properties.
7. MT&T shall consent to all steps to be taken by the City of Dartmouth for the closure of Crichton Avenue.