April 21, 1997, E.C.B. No. 55/95/138
(61 L.C.R. 68)
Square Holdings Ltd.|
Majesty The Queen in Right of the Province of|
British Columbia as represented
by the Minister of
Transportation and Highways
M. St. Clair, Vice Chair|
Julian K. Greenwood, Board Member
Sharon I. Walls,
Bruce Melville, for the Claimant|
Robert J. Musto, for the Respondent
The claimant in this proceeding is Captain's Square Holdings Ltd. ("Captain's
Square"), a limited company owned 50% by its president, Eric Rastad, and 50% by
another limited company, Rastad Construction Ltd. ("Rastad Construction"). Rastad
Construction, in turn, is owned 99% by Mr. Rastad and 1% by his mother.
This compensation claim arose from Captain's Square's ownership of a multi-tenanted
commercial warehouse building located at 3001/3005 Murray Street in Port Moody.
The building measures about 16,500 square feet in area, and contains the businesses
of 11 tenants. For the purposes of this decision, we will refer to Captain's Square's
property as Lot 81. Next door to Lot 81, at 2933 Murray Street, is a commercial
building owned by Rastad Construction. This property will be referred to here
as Parcel A.
On October 4, 1995, Her Majesty The Queen
in Right of the Province of British Columbia, as represented by the Minister of
Transportation and Highways ("MoTH"), expropriated Parcel A from Rastad Construction.
As a result, Captain's Square filed a claim with the Expropriation Compensation
Board ("the board") for compensation under the Expropriation Act, S.B.C.
1987, c. 23, ("the Act") for an interest as owner of "a right of access and for
parking purposes" in Parcel A. (The Form A Application for Determination of Compensation
originally claimed compensation based on ownership of "an easement for access
and parking purposes", but Captain's Square was granted the right to amend its
Form A in the course of this application.)
says that the expropriation of Parcel A has caused a serious access problem to
the west side of its warehouse adjacent to the expropriated property. There are
four large (10 ft x 12 ft) vehicle access doors along the west side of the warehouse
building that allow vehicles direct access into those units on that side of the
building for loading and unloading goods and materials. Ever since the warehouse
was constructed in 1980, vehicles regularly used part of Parcel A in order to
have enough room to make the 90 degree turn into these large doors. The 12 foot
driveway on Lot 81 is not sufficiently wide to permit most vehicles to execute
the turn for entry into the warehouse through these doors.
Captain's Square seeks compensation for the market value of its interest in Parcel
A pursuant to s. 30 of the Act, in the amount of $100,000. It also seeks compensation
under s. 39 (1) (a) of the Act for a reduction in the market value of Lot 81,
in the amount of a further $200,000. In addition, it seeks disturbance damages
under s. 33 of the Act in the amount of $4,000, for a total net claim of $304,000.
It also seeks costs and interest.
On November 20, 1996,
the board heard oral testimony from Mr. Rastad (who had also filed an affidavit),
along with legal argument from Bruce Melville, counsel for Captain's Square, and
from Robert Musto, counsel for MoTH, regarding the issue of MoTH's liability to
pay compensation to Captain's Square under the Act. By agreement of the parties,
we did not hear any evidence with regard to quantum, and will not do so unless
we find liability as a result of the first part of the hearing.
to Lot 81, Captain's Square once owned the part of Parcel A that is used for access
to the westerly units of its warehouse. This parcel, which was once called Remainder
of Lot A, was adjacent to the west side of Lot 81 and was approximately 10 metres
wide by 40 metres deep (33 feet by 132 feet). For ease of reference, we will refer
to this portion of Parcel A as "the disputed area." Rastad Construction Ltd. acquired
three other lots adjacent to this parcel, and purchased the parcel from Captain's
Square in order to consolidate all four lots into Parcel A. Although the evidence
as to the dates on which these different parcels were purchased by the two companies
was vague, there was a reference plan showing this consolidation that was deposited
in the Land Title Office in 1989. Rastad Construction had initially built a commercial
building on what was to become the westerly part of Parcel A in 1986 and expanded
this building for its tenant with the consolidation of the four parcels into Parcel
A in 1989. None of this building was situated on the disputed area. The evidence
was that Captain's Square used the disputed area for access to the west side of
the warehouse both before and after Rastad Construction built and leased the commercial
building on what was to become Parcel A.
The highway overpass
for which Parcel A was expropriated has not yet been constructed, but Mr. Rastad
testified that MoTH has rented the building on Parcel A to a private boat sales
business which routinely blocks the disputed area with numbers of large parked
boats and boat trailers. Once the construction has been completed, Captain's Square
will have no access at all to the disputed area.
described himself as the controlling mind of both Captain's Square and Rastad
Construction. He testified that, while he effectively controlled both Lot 81 and
Parcel A, he did not believe that there was a need for a formal agreement to record
Captain's Square's interest in the disputed area. However, when he learned in
March of 1995 that MoTH intended to expropriate Parcel A, he sought legal advice
about obtaining compensation for the impact of the proposed taking on Captain's
Square. Acting on that legal advice, he instructed Captain's Square's lawyer to
file a caveat against Parcel A in the New Westminster Land Title Office and to
draw up an agreement to document Captain's Square's interest in the disputed area.
The caveat, which was filed on March 31, 1995, sets out the following allegations
of fact in its paragraph 3, which details the grounds on which the claim for an
interest in Parcel A are founded:
81 is immediately adjacent to Parcel A.
3.2 A commercial
building is constructed on Lot 81.
3.3 Reasonable access
to portions of the building on Lot 81 can only be obtained via Parcel A.
3.4 At all times since the present building on Lot 81 was constructed, the owners
of Parcel A have permitted the owners of Lot 81 to access their property by way
of Parcel A.
3.5 The owners of Parcel A have orally agreed
to provide a registrable easement for the benefit of Lot 81 in the event they
should decide to sell Parcel A.
3.6 The owners of Parcel
A have just determined that an expropriation of Parcel A is imminent.
3.7 There is insufficient time to prepare a registrable easement instrument before
the expropriation is expected to take place.
On April 3, 1995, Captain's Square and Rastad Construction entered into a letter
agreement that provides as follows:
letter will confirm an existing agreement whereby Rastad Construction Ltd., the
owner of Parcel A, District Lot 201, Group 1, New Westminster District, Reference
Plan 83794 ("Parcel A"), has given an easement for access purposes across Parcel
A in favour of the adjacent lot, Lot 81, District Lots 190 and 201, Group 1, New
Westminster District, Plan 50472 ("Lot 81"), owned by Captain's Square Holdings
Ltd. The easement covers the area lying within 30 feet of the easterly boundary
of Parcel A and is for the purpose of providing access and parking for vehicles,
pedestrians and equipment to the building constructed on Lot 81. The right of
access is not exclusive. Rastad Construction Ltd. agrees to provide a registrable
document upon request and in any event if it should sell or otherwise dispose
of its interest in Parcel A.
notice was subsequently filed at the New Westminster Land Title Office on May
12, 1995. Captain's Square did not obtain a registrable easement from Rastad Construction
for filing against Parcel A between the time it registered its caveat and that
date. Parcel A did not ultimately vest in MoTH until October 4, 1995.
3. THE ISSUES
issue to be determined here is whether Captain's Square is an "owner" under the
definition set out in s. 1 of the Act, and thus entitled to compensation under
the scheme of the Act. In order to determine Captain's Square's status as owner,
it will be necessary to decide whether Captain's Square has an "estate, interest,
right or title in or to the land" described here as the disputed area, as required
in subsection (a) of the definition of owner, or whether it was in "legal possession
or occupation of [the] land," as required in subsection (c) of that definition.
Qualification under either category constitutes qualification as an owner under
A number of sub-issues arise in connection with
the first issue regarding having an interest in the land. It needs to be determined
whether Captain's Square held a right in the nature of an easement to the area
in question, and if so, whether the fact that the easement was neither reduced
to writing nor registered against the property precludes Captain's Square from
qualifying as an owner under the Act. If we conclude that the legal requirements
for an easement are not satisfied, then it will be necessary to determine whether
Captain's Square had some other interest amounting to an "estate, interest, right
or title in or to the land" so as to qualify as an owner.
4. CAPTAIN'S SQUARE'S POSITION
Mr. Melville argued, on behalf of Captain's Square, that it had a right to and
did use and occupy the disputed area at the date of expropriation for the purposes
of access and parking. He said that it was this right that is recognized in writing
in the April 3, 1995, letter agreement, and that it amounts in law to an easement.
In the alternative, it constitutes an irrevocable licence coupled with an agreement
to grant an easement, which he argued amounts to an equitable interest in the
Mr. Melville was not troubled by the fact
that Captain's Square had not registered an easement against Parcel A. Whether
Captain's Square's right consisted of an easement or an agreement to grant an
easement, he argued that it constituted an equitable interest in Parcel A and
therefore could not be defeated by the lack of registration. He pointed out that
there is no provision in the Act that specifically denies compensation to an unregistered
interest per se, and cited a number of court and board decisions in support
of his position that Captain's Square has a compensable right or interest in Parcel
With regard to the issue of legal possession or occupation,
the third branch of the ownership definition in the Act, Mr. Melville maintained
that Captain's Square clearly had a right to possess or occupy the disputed area
and that this right was not in the nature of a residential lease. He maintained
that this right to possess or occupy the disputed area is sufficient to qualify
Captain's Square as an owner under clause (c) of the definition of owner.
5. MOTH'S POSITION
Musto, on behalf of MoTH, argued that Captain's Square did not hold an easement
over Parcel A, and said that at the very most it held a bare licence to cross
a part of Parcel A and to park vehicles on the disputed area.
He maintained that Rastad did not grant an easement to Captain's Square, nor did
it ever form the intention to do so. The evidence was, he pointed out, that Mr.
Rastad intended to hold both Lot 81 and Parcel A indefinitely, and that it was
only in the unlikely event of a sale of Lot 81 that he would have had to obtain
and register a formal easement over Parcel A in favour of Lot 81. Thus, no implied
easement should be found in this situation.
spent some time reviewing the law defining easements and licences. Citing Cheshire
and Burns, Modern Law of Real Property, 15th ed., (London: Butterworths, 1994)
he stated that an easement is an incorporeal interest in land. It is
... a right attached to one particular piece of land which
allows the owner of that land either to use the land of another person in a particular
manner, ... or to restrict its user by that other person to a particular extent.
A legal easement is a jus in rem, not a mere
jus in personam; it permanently binds the land over which it is exerciseable and
permanently avails the land for the advantage of which it exists. (p. 519)
A licence, on the other hand, is not an interest in land.
A licence is created in favour of B if, without being given any legal estate or
interest, he is permitted by A to enter A's land for an agreed purpose. It is
an authority that justifies what would otherwise be a trespass. (p. 529)
Again citing Cheshire and Burns, Mr. Musto set out the four necessary conditions
of an easement. They are:
1. There must be
a dominant and a servient tenement.
2. The easement must
accommodate the dominant tenement.
3. The dominant and
servient owners must be different persons.
4. The right
must be capable of forming the subject matter of a grant.
In addition, Mr. Musto argued, there must be more than a superficial appearance
of the essentials of an easement. The parties must intend to create an easement:
Gypsum Carrier Inc. v. The Queen (1978), 78 D.L.R. (3d) 175 (Fed.Ct.,
In this case, Mr. Musto maintained, the facts
indicate a clear lack of intention. Furthermore, the interest which was purportedly
granted is incapable of being the subject matter of a grant owing to the vagueness
of its description. He argued that there was no evidence of the width of the alleged
easement area, and that there was conflicting evidence about its length.
Finally with regard to the easement issue, Mr. Musto set out a number of facts
which he said support a finding of a grant of permission to use rather than of
1. Both parcels of land were
originally owned by the Claimant ... The claimant did not take the simple step
of reserving an easement in favour of the remaining land.
2. Captain's did not pay Rastad for the use of the Land, nor did Rastad expect
3. Mr. Rastad was the directing mind of Captain's
and Rastad. He claims that Rastad "agreed to provide" Captain's with an easement.
These are not words of grant.
4. The transfer occurred
in 1989, at least five years and three months before the caveat was filed, yet
no easement was ever drafted.
5. The caveat, which was
sworn by Captain's solicitor, says that Rastad "permitted the owners of Lot 81
to access their property by way of Parcel A." These are words of permission, not
words of grant.
6. The affidavit only says the Claimant
"was permitted to use the Rastad Property for both access and parking." These
are words of permission, not words of grant.
7. Mr. Rastad
"did not believe there was a need for a formal agreement to record the interest
of the Claimant in the Rastad Property". Informality is not an indicia of an intent
to grant an interest in land.
8. The caveat also says
"The owners of Parcel A have orally agreed to provide a registerable easement
for the benefit of Lot 81 in the event they should decide to sell Parcel A. "
It is not an indicia of an actual grant. An agreement to grant an easement is
not an easement or an interest in land.
9. Captain's did
not commence an action to establish title to its alleged interest and thereby
allowed the caveat to expire.
10. The letter of April
3, 1995, does not purport to be a grant of an easement, only confirmation of "an
existing agreement". The letter was made more than five years after the transfer
of the land to Rastad and only after the Claimant became aware of an impending
11. Mr. Rastad's evidence was that there
was no agreement.
12. Mr. Rastad's evidence was that there
was no intention to grant an easement.
regard to the question of whether Captain's Square might qualify as an owner under
the Act by virtue of legal occupation or possession of the disputed area, Mr.
Musto limited his argument to whether an easement confers a right of occupation,
and maintained that it does not. An easement, he maintained, is merely a right
attached to one parcel of land which allows the owner to use or restrict the use
of another parcel of land. He cited the following passage from Cheshire &
Burns in support of this position:
confers upon its owner no proprietary or possessory right in the land affected.
It merely imposes a particular restriction upon the proprietary rights of the
owner of the servient land. A right which entitles one person to the unrestricted
use of the land of another may be an effective right to ownership or possession,
but it cannot be an easement. (p. 518)
Musto did not address the issue of whether Captain's Square might have a legal
right of occupation or possession through some mechanism other than an easement.
6. DISCUSSION AND DETERMINATION
Mr. Musto's argument focused first on the lack of a written and registered easement
agreement, and second on the alleged absence of an actual agreement to grant an
easement. In our view, the determination of Captain's Square's status as an owner
does not turn on the existence of a written agreement, and certainly not of a
registered written agreement. Section 54 (3) of the Law and Equity Act,
R.S.B.C. 1979, c. 224 is pertinent to this issue. It provides:
A contract respecting land or a disposition of land is not
(a) there is, in a writing
signed by the party to be charged or by his agent, both an indication that it
has been made and a reasonable indication of the subject matter,
(b) the party to be charged has done an act, or acquiesced in an act of the party
alleging the contract or disposition, that indicates that a contract or disposition
not inconsistent with that alleged has been made, or
the person alleging the contract or disposition has, in reasonable reliance on
it, so changed his position that an inequitable result, having regard to both
parties' interests, can be avoided only by enforcing the contract or disposition.
Subsection (a) does require that an enforceable agreement about land be in writing.
In the case of someone who has transferred property without expressly reserving
an easement for the benefit of land retained, this subsection incorporates the
legal principle that a grantor is not permitted to derogate from his own grant,
and the rule in Wheeldon v. Burrows (1879), 12 Ch.D. 31 (C.A.) that
if a grantor intends to reserve any right over the tenement granted, it is his
duty to reserve it expressly in the grant. Subsections (b) and (c), however, set
out exceptions to the requirement established in subsection (a). They incorporate
the equitable principles of estoppel and acquiescence. Further to these provisions,
and to the common law relating to easements, it is possible to establish an enforceable
easement that will be implied from the circumstances of the way the two owners
of the dominant and servient tenements have conducted themselves with regard to
the disputed area.
We have found assistance in dealing
with the area of implied easements, in two cases not referred to by either counsel.
We have provided counsel with copies, however, and have obtained their written
submissions regarding the possible applicability of these cases to the legal question
before us. In McDonell v. Lambourn Holdings Ltd. and Williams (1977),
4 B.C.L.R. 58 (B.C.S.C.), the defendant Lambourn had transferred land and a marina
to the plaintiff, while retaining surrounding land for a proposed subdivision.
At the time of the agreement for sale Lambourn promised that access would be available
by public road, but later difficulties led the plaintiff to agree to the road
being private, use by easement, and the road to be maintained by Lambourn. Due
to inadvertence, however, no easement was ever registered, and Lambourn later
tried to restrict the plaintiff's use of the road. The defendant Williams had,
in a letter to the provincial Department of Highways, indicated "We are quite
willing to maintain this road ourselves as a private road and give the few lots
affected by it easements." This Gould J., the judge deciding the case, held "dispose[d]
of the defence of the Statute of Frauds" (which in British Columbia is now incorporated
in s. 54 (3) (a) of the Law and Equity Act, R.S.B.C. 1979, c. 224). He
went on to find that
[t]here is no question
whatsoever, and this court holds, that McDonell is entitled by implied grant to
a written registrable easement agreement appurtenant to Lot 1, over the access
road shown in Ex.1, such agreement nunc pro tunc to when it should have
been delivered ... As to easements by implied grant see Megarry on the Law of
Real Property, 3rd ed. (1966), p. 828 et seq., and Torosian v. Robertson,
 O.W.N. 427,  3 D.L.R. 142.
second case we have found useful is Barton v. Raine, (1980), 15
R.P.R. 287, a decision of the Ontario Court of Appeal upholding a finding of an
implied easement in a residential situation. A father owned two adjoining properties
and transferred one to a son and daughter-in-law in 1952. He and his wife continued
to live on the other property until their deaths in 1968. At that time, a second
son, the plaintiff, inherited the father's property and moved in. A few years
later, in 1971, the first son sold his adjoining property to a third party, the
defendant. A problem arose regarding a 12 foot strip separating the two residences,
which the owners of both properties had used for over 40 years as a common driveway
providing access to their respective garages at the rear of the two properties.
However, the most recent purchaser, the defendant, discovered that eight feet
or so of this driveway was on his land and only four feet was on the plaintiff's.
After a dispute with the plaintiff, he built a fence along the property boundary
that permitted him continued use of the driveway and access to his garage, but
which prevented the plaintiff from using the driveway or getting his car to his
garage. At no time had there ever been a written easement agreement regarding
The trial judge found that the plaintiff
was entitled to a registrable easement over the driveway on one of two alternative
grounds. He described these as follows:
my view, an implied reservation of an easement can be easily justified here using
one of the acknowledged major exceptions fully articulated by Thesiger L.J. [in
Wheeldon v. Burrows (1879), 12 Ch.D. 31 (C.A.)] -- the mutual or
reciprocal easement exception -- as well as by reference to the broader, umbrella-like
'common intention' principle.
or reciprocal easement exception is described as applying to "continuous and apparent
easements ... necessary to the reasonable enjoyment of the property conveyed".
Thorson, J.A., at p. 293, cites Gale on Easements (14 ed., 1972), as referring,
in addition, to implied reservations where:
... a grantee can be shown positively or, for instance, by necessary inference
from the effect on the property granted or some physical characteristic of the
property retained, to have recognised and acquiesced in an intention on the part
of the grantor to use his retained property, or part of it, in some definite manner
detracting from the natural rights incident to the ownership of the property granted."
(Thorson, J.A.'s emphasis)
He also cites
the decision in Jones v. Pritchard,  1 Ch. 630, in which Parker
J. stated at p. 636:
... the law will, I
think, imply the grant and reservation in favour of the grantor and grantee respectively
of such easements as may be necessary to carry out what was the common intention
of the parties with regard to the user of the wall, the nature of those easements
varying with the particular circumstances of each case.
In addition, he refers to the later case of Re Webb's Lease; Sandom v.
Webb,  Ch. 808,  2 All E.R. 131 (C.A.), in which the following
comment on the two established exceptions to the rule in Wheeldon v. Burrows
It is, however, recognised in the
authorities that these two specific exceptions do not exhaust the list, which
is, indeed, incapable of exhaustive statement as the circumstances of any particular
case may be such as to raise a necessary inference that the common intention of
the parties must have been to reserve some easement to the grantor or such as
to preclude the grantee from denying the right consistently with good faith, and
there appears to be no doubt that where circumstances such as these are clearly
established the court will imply the appropriate reservation. (Thorson, J.A.'s
Ultimately, Thorson J.A. concludes
that this set of facts qualifies as an exception to the general legal rule against
finding an implied reservation of an easement by a grantor. He finds that,
although the 1952 conveyance made no mention of a right of
way over the driveway between the two properties, there was, by necessary inference
from the circumstances in which the conveyance was made, a common intention on
the part of both the father on the one hand and the son and daughter-in-law on
the other hand that, after the conveyance, each of them would continue to use
the driveway in the same manner as, in fact, it had been used without interruption
since the late 1920's.
He therefore holds
that an easement in the nature of a right of way over the driveway was acquired
by implied reservation from the 1952 grant in favour of the grantor of the property.
The son and daughter-in-law were bound by the easement, and thus so was the defendant,
who purchased from them.
In Captain's Square's situation
there was also a transfer of property without the express reservation of an easement
for its continued benefit. This was the transfer in 1989 of the bulk of the disputed
area to Rastad Construction. The evidence is that, as in Barton v. Raine,
the disputed area was used after the transfer as it had been before the transfer
-- as an access route from Murray Street to their respective buildings by both
Captain's Square and Rastad Construction. The evidence is also clear that Captain's
Square's continued use of the disputed area took place with Rastad Construction's
full knowledge and approval. We are of the view that Captain's Square held an
implied easement over the disputed area both by virtue of the mutual or reciprocal
easement exception to the rule in Wheeldon v. Burrows, and also
by virtue of the common intention principle.
the language of Thorson J.A. in Barton v. Raine, we find that although
the 1989 conveyance made no mention of a right of way over the entrance from Murray
Street between the two properties, there was, by necessary inference from the
circumstances in which the conveyance was made, a common intention on the part
of both Captain's Square on the one hand and Rastad Construction on the other
hand that, after the conveyance, each of them would continue to use the entranceway
in the same manner as, in fact, it had been used without interruption since 1980.
Captain's Square therefore acquired an easement by implied reservation from the
1989 grant in its favour.
Mr. Musto attempted to make
much of the fact that Captain's Square and Rastad Construction had not actually
made an "agreement" about an easement, and that Mr. Rastad did not intend to register
an easement over Parcel A unless and until he sold Lot 81 to a third party. This,
to our minds, amounts to splitting legal hairs. Mr. Rastad was the controlling
mind of both entities, and his intentions regarding the use by Captain's Square
of the disputed area were clear and consistently evidenced by its actual use over
a long period of years. (As Mr. Rastad said in a moment of exasperation under
cross-examination, he didn't know who he would have to agree with.) In addition,
we consider the letter agreement of April 3, 1995, to be written evidence of the
common intention of Captain's Square and Rastad Construction. The two Federal
Court cases that Mr. Musto relied upon (Attorney-General of Canada v. Walsh
(1980), 19 L.C.R. 333 and Gypsum Carrier Inc. v. The Queen; Canadian
National Railway Co. v. The Ship "Harry Lundeberg" (1977), 78 D.L.R.
(3d) 175) both resulted in findings that there was no common intention of the
parties to create an easement. In Gypsum Carrier, there were contractual agreements
between the parties which the court examined in detail, finding that they did
not create an easement and did not reflect an intention to create one.
We also reject Mr. Musto's contention that the right here is not capable of forming
the subject matter of a grant, because of the imprecision with which Mr. Rastad
described the easement area in the course of his examination for discovery and
his testimony before us. The fact that there would be some degree of latitude
possible in negotiations with a third party purchaser of Lot 81 as to the precise
dimensions of an easement does not render the easement area incapable of description.
Indeed, the letter agreement between Captain's Square and Rastad Construction
does define a specific area, that is "the area lying within 30 feet of the easterly
boundary of Parcel A." We consider this to be a sufficient description to satisfy
the fourth requirement of defining an easement.
line here is that Captain's Square has suffered a clear and identifiable loss
as a direct result of the taking, based upon its former interest in and use of
the property taken. It appears clear to us that the Act and its hearing process
is the appropriate forum in which to determine the amount of this loss. We have
found Captain's Square to have held an implied easement over part of the land
taken. We agree with the authorities cited by Mr. Musto that an easement is not
a right that conveys a possessory interest, and thus do not find Captain's Square
to be an owner by virtue of subsection (c) of the definition. We do find, however,
that by virtue of its easement interest in the expropriated property, Captain's
Square qualifies as an owner under subsection (a) of the definition in the Act
-- that is, it held, at the time of the taking, an "estate, interest, right or
title in or to the land."