Audze et al. v. Township of Innisfil [1973] 2 O.R. 228

By Lacourciere, J.:
Ontario High Court
Jan 18, 1973

Real property -- Easements -- Company registering plan of subdivision for cottage development -- Certain lots on plan of subdivision not fronting on lake -- Block A on registered plan stated to be "Area of User Common to each Property Owner in the Subdivision" -- After sale of lots to cottage owners company conveying Block A to municipality -- Deeds to cottage owners and municipality containing no covenants with respect to Block A -- Whether cottage owners entitled to use Block A for swimming and boating.

Real property -- Restrictive covenants -- Building scheme -- Company registering plan of subdivision for cottage development -- Certain lots not fronting on lake -- Block A on registered plan stated to be "Area of User Common to each Property Owner in the Subdivision" -- After sale of cottage lots company conveying Block A to municipality -- Deeds to cottage owners and municipality containing no covenants with respect to Block A -- Whether building scheme in existence.

S. Co. registered a plan of subdivision with respect to a cottage development that it was undertaking on a lake. Part of the back lots in the subdivisionhad no access to the water. The plan of subdivision contained an area known as Block A which fronted on the water. In this area on the plan ofsubdivision the words "Area of User Common to each Property Owner in the Subdivision" were to be found. After the sale of all of the cottage lots, S Co. conveyed Block A to the municipality in order to be exempt from taxes on the block. The lands were to be used for park purposes only. The evidenceof an officer of S Co. made it clear that the company was attempting to create a cottage area and that there was a common intention that persons purchasing lots not fronting on the lake would be given access to the lake for swimming and boating purposes. Certain discussions with officials of the municipality made clear this intention several years prior to the conveyance to the municipality.
In an action for a declaration that Block A was held by the defendant in trust for the benefit of the plaintiffs and to her owners of lots in the subdivision, held, a declaration that the plaintiffs and all other owners in the subdivison have the exclusive right to use the block in question should be made. Since S Co. did not intend to impose restrictions on all of the lots in the subdivision but rather intended to grant a right to use the common areas, a building scheme had not been created. However, although there were no covenants in the deed there was specific reference to the lots according to their lot numbers on the registered plans. That specific reference to the registered plans was sufficient to pass with the lots the right of each property owner in thesubdivision to use the common block areas for swimming and boating. This was throughout the intention of the company, the cottage owners, and the officers of the township who were made aware of the situation by the company.

ACTION for a declaration of the plaintiffs' rights in connection with certain blocks in a subdivision.

[Nantais v. Pazner (1926), reflex, 59 O.L.R. 318, [1926] 4 D.L.R. 258, apld; Re Lorne Park (1913), reflex, 30 O.L.R. 289, 18 D.L.R. 595; affdreflex, 33 O.L.R. 51, 22 D.L.R. 350; Elliston v. Reacher, [1908] 2 Ch. 374; Re Wheeler (1926), reflex, 59 O.L.R. 223, [1926] 4 D.L.R. 392; White v. Lauder Developments Ltd. et al., 1972 CanLII 575 (ON SC), [1973] 1 O.R. 473, 31 D.L.R. (3d) 421, refd to]

G. Smith and P. Leamen, for plaintiffs. 

G. Palmer, for defendant.

LACOURCIERE, J.: The plaintiffs in this action each own one lot on registered plans in the Township of Innisfil in the County of Simcoe; in the caseof the plaintiff Alfred Audze, Lot 40, Plan 911, and in the case of the plaintiff Raymond Partelpoeg, Lot 81, Plan 1066. They bring this action on their own behalf and on behalf of the owners of residential and cottage properties near Lake Simcoe who derive their title through the company which developed the subdivision, namely, Shoreacres Beach Limited.
The action is brought against the municipality for a declaration of the plaintiffs' rights in connection with certain blocks in the subdivision which were allegedly dedicated as areas of common user for the benefit of each owner of property in the subdivision. The action is brought against the municipal corporation by reason of the fact that the blocks said to be common land were transferred to the municipality and are now held by the said municipality.
The question to be decided is whether the plaintiffs are entitled to a declaration that the said blocks of land are held in trust for the limited use of property owners in the subdivision, or whether, as contended by the defendant municipal corporation, the said lands are held as public parklands for the use of the general public and without restriction or limitation of use for the benefit of the subdivision property owners.
The original plan of subdivision, No. 911, of parts of Lots 23 and 24, Concession 1, Township of Innisfil (ex. 1), was certified by a surveyor on September 4, 1947, approved under s. 28 of the Planning Act, 1946 (Ont.), c. 71, on April 23, 1948, by the then Minister of Planning and Development, and registered in the Registry Office for the Registry Division of the County of Simcoe on July 12, 1948. The plan indicates approximately 100 lots ofvarious measurements but mostly 60 ft. by 200 ft. and 60 ft. by 300 ft., with some 33 lots actually fronting on the shore of Lake Simcoe, and more particularly on Cook Bay. Block "A", a block of land fronting on the lake, runs from a creek marking its southern boundary northerly to a road allowance called Beach Promenade for a distance from the high water mark varying in width between 135 and 150 ft. approximately. The following printed words inlarge print appear on the plan in the Block A area: "Area of User Common to each Property Owner in the Subdivision." The same printed words appear on the plan over Block "B", an extended area following the southerly contour of the creek between Lake Shore Blvd. and Lake View Dr.
Part of Plan 911 was amended by a subsequent plan of redivision, No. 1066 (ex. 2) affecting 10 lots only, namely, 5 to 15 inclusive, Block A as well as the Beach Promenade roadway; this plan of redivision, certified by the surveyor on November 22, 1951, was approved under s. 26 of the Planning Act, R.S.O. 1950, c. 277, on April 15, 1952,and registered in the Registry Office for the Registry Division of the County of Simcoe on June 17, 1952. For the purpose of this action I need only note that the area of redivision was recast; nine lots with frontage on Cook Bay and extending back to Lake Shore Blvd. on the former plan were laid out; the area of common user formerly known as Block A was eliminated and apparently in lieu thereof, a new Block "A" and Block "B" were created. Block A, immediately north of the creek with a frontage on Cook Bay is of irregular shape measuring 317 ft. at the northboundary, had a similar boldly printed restriction in the following words:
"Area of User Common to each Property Owner in the Subdivision." Block B, also with a frontage on the lake and inserted between new Lots 6 and 7 with a depth of 367 ft. at the north side, has thereon the similar printed words referring to common user.
The claim in the present action as to Block B on Plan 911 has been abandoned at trial: it has been sold and a lis pendens with respect to it has been vacated.
Prior to June 17, 1952, the date of registration of Plan 1066, many lots on Plan 911 were conveyed. Maxwell Lewis, Q.C., a solicitor who was an officerof Shoreacres Beach Limited, gave evidence that he personally had discussions with the township clerk and a meeting with the reeve at the time of theplans, exs. 1 and 2, and with several councillors to explain to them the purpose of the blocks reserved for the user of the property owners in thesubdivision. It is clear that at that time his company was attempting to create a cottage area; that there was a common intention that persons purchasing lots not fronting on Lake Simcoe would be given access to the lake for swimming purposes as well as boating. His evidence is that he worked out the wording placed on the plan and that it was agreed where the common areas would be placed at a meeting with the then reeve of the defendant corporation; it appears that originally Block B along the creek would be used in common for boating and Block A for swimming and beach purposes; apparently the redivision resulted in Block A at the creek being intended for boating and Block B for beach and swimming purposes.
The promotion for the sale of these lots apparently stressed to all the prospective purchasers the advantages of the common areas; the purchasers were taken to the site and shown the common areas on the land and verbally assured that the land had been set aside for the purposes of boating and swimming.In the discussions with the township officials at that time there apparently never was any mention of public parks.
The difficulty arises apparently through the fact that the deeds for Blocks A and B on Plan 1066 were delivered to the township many years after the discussions referred to; deed No. 150158 (ex. 4), dated October 5, 1961, and registered on May 29, 1962, from Shoreacres Beach Limited to the defendant Corporation, granted Block A on Plan 1066 and Block B on Plan 911 in fee simple without any reference to any right of the property owners in these blocks, although the deed did refer to the registered plans on which the restrictions were printed; similarly, deed No. 150159 (ex. 5), dated May 18, 1961, and registered on May 29, 1962, conveyed Block B on Plan 1066 to the defendant corporation. The covering letter (ex. 15) from the subdivider's solicitors forwarding the draft deed in connection with Block B on Plan 1066 referred to an understanding with the defendant that their client, Shoreacres Beach Limited, would thereafter "be exempt from taxes on this block and the said lands will be used for park purposes only". There was no such reference in the covering letter (ex. 16) from the same solicitors forwarding the deed to Block A on Plan 1066.
It appears clear that the purpose of the conveyance to the municipality by the subdivider was to obtain tax relief. It may be that the reference to "park purposes" was for the purpose of enabling the municipality to hold the lands pursuant to powers under the Planning Act. There was, however, no restriction in the deed.
I will now deal with the user of the land by the property owners in the subdivision, on the one hand, and with the actions of the municipality with respect to such lands, on the other. The plaintiff, Alfred Audze, bought his lot, No. 40, in October, 1967, and his wife bought the adjoining lot, No. 41. The lots were inland, not adjoining the lake, and were intended to be used for the building of a summer cottage. This purchaser, as others apparently, had been told that the beach and boating areas were to be accessible to the owners of back lots in the subdivision. They were interested in the summer beach as a playground for children, and in the dock area to tie up boats used in fishing. This was the general use made of the block areas by other people in thesubdivision. The property owners did some maintenance work on the blocks cutting grass, removing dead trees and spreading sand, although the budget devoted for some purposes by the Shoreacre Beach Cottagers Association appears to have been somewhat limited (ex. 14). The plaintiff Partelpoeg substantially confirms this evidence. As to ground maintenance, it appears that the only maintenance work done by the township had to do with the construction of a retaining wall on Block A.
The evidence of the clerk-treasurer of the township, Mr. Richard Groh, is that the township accepted the conveyance of Blocks A and B as public park property without any restrictions for the benefit of the subdivision residents; as previously mentioned, the township felt at liberty to sell Block B on Plan911 without any approval from the Department of Municipal Affairs, the sale being more than five years after acquisition. The township refers to the correspondence with the company's solicitors referring to the lands to be used for park purposes only and relies on the absence of any restrictive covenantsin the deed.
As to the restrictions printed on the original registered plan, the township points to four other registered plans between 1949 and 1954 which contain somewhat similar wording, namely, "Park Lot A" on Plan 959, ex. 18, "Common to each Property Owner in the Subdivision", "Block 'A'", Plan 1065, ex. 17, "Area of User, Common to each Property Owner in the Subdivision", and similar wording in exs. 19 and 20. Similar wording has not been used since 1954.
The money obtained by the municipality from the sale of Block B, Plan 911, was placed in a reserve fund for park purposes, a fund created under the Municipal Act, R.S.O. 1960, c. 249, to be used for restricted purposes unless extended with the Minister's approval. Apparently, the breakwall was built with this money.
The present Blocks A and B are included as park areas to be retained in a report (ex. 21) of a special committee appointed by council in 1968 to review park lands in the defendant municipality. This report has not been approved by a resolution of council and only represents a policy report for the township; consequently, the plaintiffs remian apprehensive that the defendant corporation may deal adversely with the said blocks of lands notwithstanding the said special committee recommendation. The chain of correspondence filed fully justifies such fear which prompted the plaintiffs to seek the exercise by this Court of its equitable jurisdiction.
Regardless of the propriety of the plan of redivision amending the original plan without the formal consent of the lot owners concerned, it seems to me that the Court has to accept the second plan registration as a fait accompli. The plaintiffs actually rely on the statutory right under the Registry Act, R.S.O. 1950, c. 336, s. 89(1), providing as follows:

89(1) A plan, although registered, shall not be binding on the person registering it, or upon any other persons unless a sale has been made according to the plan, and in all cases amendments or alterations thereof may be authorized or ordered to be made by a judge of the Supreme Court or by a judge ofthe county or district court of the county or district in which the land lies, on application for the purpose and upon hearing all persons concerned, upon such terms and conditions as to costs and otherwise as may be deemed just.

In my view, the above section is of no assistance to the plaintiffs at this date, because of its subsequent legislative history. Section 89(1) was carried over into the Reigstry Act, R.S.O. 1960, c. 348, as s. 91(1), which was repealed by the Registry Amendment Act, 1964, c. 102, s. 24(1), and a new s. 91(1) and (2) substituted therefor, which in turn were repealed by the Registry Amendment Act, 1970, c. 40, s. 21. There does not appear to be any comparable provision in the present version of the Registry Act, R.S.O. 1970, c. 409.
In addition, counsel for the plaintiffs argued that the lands in question formed part of a building scheme and were not public parks: Re Lorne Park (1913),reflex, 30 O.L.R. 289, 18 D.L.R. 595; affirmed reflex, 33 O.L.R. 51, 22 D.L.R. 350 (App. Div.). In that case, a company was incorporated to purchase, improve and manage a piece of property known as "Lorne Park" as a summer resort; a certain portion of the property was subdivided by registered plan, showing a number of streets and building lots laid out and fronting thereon; three undesignated blocks (approximately 25 acres) were shown on the plan without mark or name to indicate their purpose; circulars issued by the company indicated that a "splended square of about 25 acres had been set aside for picnics and sports"; on the faith of statements contained in the circulars and made orally, a number of the building lots were sold and conveyed; the lots were described simply by their number according to the registered plan; each conveyance contained a clause providing that the purchaser, his heirs, etc. "shall have free access to all the streets, avenues, terraces, and commons of the said park", and also contained certain restrictive provisions as to the buildings to be erected on the lots. The issue was whether the subsequent owner of "Lorne Park" deriving title from the grantors held the three undesignated blocks in fee simple or subject to some qualification.
Middleton, J. held that the word "commons" in the clause in the deed should be taken to include the three blocks in question, and that it was the intentionof the parties that these three parcels should be set apart and held as recreation grounds for the use of those who might buy lots upon the faith and strengthof the scheme put forward by the vendors. It was also suggested at p. 298 O.L.R., p. 603 D.L.R., that this situation could be likened to a building scheme:

The cases cited mostly arise upon plans, but the principle is of wider application, and includes all cases in which the land is sold upon what may be called a "building scheme," a scheme by which a part of the entire tract is set apart by the vendors for the benefit of the purchasers. When this is shewn, either by indications found upon a plan used in making the sales or otherwise, the vendors cannot depart from the plan or scheme which was the foundation of the sales. This may be regarded as an implied covenant, an implied grant of an easement, an equity in the nature of an easement, or it may rest on the principles of estoppel. In any case, the property so dedicated or quasi-dedicated is rendered subject to the rights held out to the purchaser as an inducement to purchase. These rights may exist in perpetuity.

On further appeal, the reasoning of Middleton, J., was upheld:
see the following passage from the appeal judgment at p. 60 O.L.R., p. 353 D.L.R.:

I agree with the learned Referee and my brother Middleton that the word "commons," as used in the deeds of the purchasers of lots, was not intended to have any strict or technical meaning, but to signify certain places in the park which were to be open and free to all for the purposes of general enjoyment and amusement, and I have nothing to add in that respect to the view so clearly expressed in the Court below. The covenant being thus infavour of the purchasers, and having relation to a building scheme of lots known as Lorne Park, it thereby became restrictive in its effect as against the vendor of those lots, and those claiming under him. It could not operate in favour of the purchasers giving them the right to use the spaces referred to as commons without impliedly restricting the vendors from doing any act, or thing, whether by sale or otherwise, which would preclude the purchasers from the enjoyment of the right which they had purchased and paid for.

The analogy of a building scheme may have been more appropriate in the Lorne Park situation than in the present one inasmuch as there was a specific covenant in the deed providing access and restrictive provisions respecting buildings. The four essentials of a building scheme were set out in Elliston v. Reacher, [1908] 2 Ch. 374 at p. 384, as set out below, and approved in Re Wheeler (1926), reflex, 59 O.L.R. 223, [1926] 4 D.L.R. 392, and White v. Lauder Developments Ltd. et al., an unreported judgment of Osler, J., dated November 27, 1972 [since reported 1972 CanLII 575 (ON SC), [1973] 1 O.R. 473, 31 D.L.R. (3d) 421]:

... it must be proved (1.) that both the plaintiffs and defendants derive title under a common vendor; (2.) that previously to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying indetails as to particular lots, are consistent and consistent only with some general scheme of development; (3) that these restrictions were intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other lands retained by the vendor; and (4.) that both the plaintiffs and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme whether or not they were also to enure for the benefit of other lands retained by the vendors.

There is no problem with the first of these conditions as both the plaintiffs and defendant derived title from a common vendor, Shore Acres Beach Limited. There is some doubt about fulfilment of the second condition since no restrictions were intended to be imposed on all the lots, but rather a right to use the common areas. Similarly, the third and fourth conditions are not satisfied. Accordingly, in my view, the plaintiffs cannot rely on the analogy of a building scheme in these circumstances.
Reference was also made by the plaintiffs to the case of Nantais v. Pazner (1926), reflex, 59 O.L.R. 318, [1926] 4 D.L.R. 258, a decison of the Appellate Division, to counter an argument by the defendants that there were no covenants in the deeds and, therefore, no right to use the blocks passed inthe conveyances. In that case, a registered plan showed three lots fronting on a street and a land marked "private alley-way" extending along the rear ofthese three lots to another street. The lots were described in conveyances according to their lot numbers on the registered plan. Subsequently, the defendant built a garage partly on his own property and partly on the lane, completely blocking the plaintiff from use of the lane as a means of access. The plaintiff was granted a declaration that he was entitled to a right of way over the lane based on the following reasoning by Smith, J.A., at p. 320 O.L.R., p. 259 D.L.R.:

I think it is quite clear that where an owner subdivides his land by a plan shewing numbered lots abutting on a lane, giving access over it from these lots to a street, registers the plan, and sells and conveys such lots, describing them by number according to the plan, there passes with the lots the grant of an easement appurtenant to them over the lane:
Rossin v. Walker (1858), 6 Gr. 619; Mykel v. Doyle, 45 U.C.R. 65; Slitzsky v. Cranston (1892), reflex, 22 O.R. 590; Brett v. Toronto Railway Co., 13 O.W.R. 552, 14 O.W.R. 74; Bell v. Golding, reflex, 23 A.R. 485; Ihde v. Starr (1910), reflex, 21 O.L.R. 407; Town v. Collins (1924), 25 O.W.N. 525; Roberge v. Martin, reflex, [1926] 2 D.L.R. 890.

In the present case, although there were no covenants in the deeds, there was specific reference to the lots according to their lot numbers on registeredPlans 911 or 1066. I would apply the reasoning of Smith, J.A., in the Nantais case and hold that the specific reference to the registered plans was sufficient to pass with the lots the right of each property owner in the subdivision to use the common block areas for swimming, boating, etc; this was throughout the intention of the subdivider, the purchasers from the subdivider and the officers of the township who were brought into the picture by the officers of Shoreacres. I also rely on Re Peck and Town of Galt (1881), 46 U.C.Q.B. 211.
There is no indication in the evidence or in the township records that the lands in question were conveyed to the municipality as a result of a condition imposed by the Minister for the approval of the subdivision pursuant to the Planning Amendment Act, 1947 (Ont.), c. 75, s. 11(5), as amended, and later carried forward in R.S.O. 1950, as s. 26(5). It would appear rather that the deed to the municipality was given for the purpose of tax relief to the subdivider and that the municipality, with the encouragement of the solicitors, chose to deal with the blocks as public lands.
The position taken by the defendant corporation appears to be inconsistent with a statement typewritten on the stationery of the Township of Innisfil (ex. 7), dated May 24, 1966, under the hand of the very township clerk who was examined as a representative of the defendant in this action, and bearing the township seal, which read as follows:
To Whom it May Concern:

This is to certify that as specified in Registered Plan No. 1066, Block "A" on this Plan is designated as an "Area of user, common to each property owner in the Subdivision". This means that each property owner in the Shore Acres Subdivision has the right to use that land.

"R.I. Groh" Richard I. Groh, Clerk Township ofInnisfil.

At an even earlier date, a letter to the same township clerk from the Community Planning Branch of the Department of Municipal Affairs, dated June 1, 1962 (ex. 24), with respect to a proposed sale of Block A on Plan 1066, raised the question of a possible interest in Block A by some or all of the ownersin the subdivision:

Incidently, [sic] we note that the final plan of this subdivision shows Block "A" as being designated as an 
-- "area of user common to each property owner in the subdivision". We are not aware, of course, what clauses may have been inserted in the deeds for properties sold in the subdivision subsequent to the registration of Registered Plan No. 1066, but we should appreciate being advised of any change in the status of these lands since the registration of this plan, in connection with this application. It occurs to us that, unless some appropriate action has been taken through expropriation or other proceedings to vest the title to Block "A" in the municipality, an interest in Block "A" may have been acquired by some or all of the owners of lots in the subdivision. This is a matter you might wish to discuss with your municipal solicitor.

The declaration sought by the plaintiffs is that the blocks in question are held in trust by the defendant for the benefit of the plaintiffs and the other owners of lots in said Plans 911 and 1066, as areas of user common to each property owner. In reply to a question from the Court as to whether the municipality would have a statutory right to accept the land as trustee for private lot owners in the subdivision, it was the plaintiff's suggestion that the declaration be made and if necessary the municipality could convey the blocks to trustees on behalf of the lot owners. The defendant argued that a municipality did not have power to accept dedication of lands as trustee for private purposes but was only empowered to accept lands "dedicated as a public park for the use of the inhabitants of the municipality" under s. 352, para. 69 of the Municipal Act, R.S.O. 1970, c. 284.
In my opinion, therefore, a declaration should be made that the plaintiffs and all other property owners in the subdivision have the exclusive right to use the blocks in question and that the deeds to the defendant corporation are subject to that right. Such declaration negativing as it does the township position that it holds the lands for park purposes, may well place the municipality in the position of holding the land illegally. Whatever the defendant corporation decides to do after obtaining legal advice, it cannot derogate from the property rights acquired by the plaintiffs. To that extent, an injunction will be granted to restrain the corporation from dealing with the subject lands in any manner inconsistent with the declared property rights.
The plaintiffs will have their costs, to be taxed.

Judgment accordingly. &D#*