DAVID DUNCAN YOUNG Applicant - v. -, 2023 NBKB 213

2023 NBKB 213 BM-43-2022 COURT OF KING’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF BATHURST BETWEEN: DAVID DUNCAN YOUNG Applicant - and - DONALD FRANCIS DEMPSEY, SUZANNE LANG Respondents BEFORE: The Honourable Judge Ivan Robichaud AT: Bathurst, New Brunswick DATE OF HEARING: January 27, 2023 DATE OF DECISION: March 31, 2023 APPEARANCES: Andrew R. Kinley for the applicant. Christopher D. J. Isnor for the respondents.

Robichaud, J : A. INTRODUCTION [ 1 ] In 2008, the parties executed an easement to grant access to the Respondents to their lot of land through the land of the Applicant. [ 2 ] One paragraph provided for extinguishment of the easement. It reads: 3. In the event that a public street (the “New Street”) is extended from Anderson Point Lane to, or in the direction of, the Grantee Lands, the Grantor shall, subject to all applicable laws, ensure that the New Street follows the path of the Easement Lands to the extent reasonably practicable.

The right-of-way and easement hereby granted shall terminate with respect to the Easement Lands lying within the boundaries of the New Street. [ 3 ] A public street has since been created leading up to the Respondents’ lot of land but not following the former easement on its entire length. [ 4 ] The parties disagree as to the continuing existence of the easement for the portion not lying within the boundaries of the new street. B. THE ISSUES

a) Has the easement been extinguished by operation of law?

b) Has the easement been extinguished by express release? [ 5 ] The Applicant submits that the easement has been extinguished by operation of law, since the purpose for which it was created has come to an end.

It also submits that the words of the agreement, properly constructed, contain an express release by providing for the easement to terminate when Anderson Point Lane, a public street, was extended to the Respondents' lot, following the path of the easement to the extent reasonably practicable. [ 6 ] The Respondents submit that the easement has not been extinguished by operation of law and that a proper construction of the agreement means that only the portion of the easement lying within the boundaries of the new street is extinguished.

a) Has the easement been extinguished by operation of law? [ 7 ] As indicated above, the Applicant submits the purpose for which the easement was created has come to an end, thus extinguishing the easement.

[8] In Remicorp Industries Inv. V. Metrolinx et al.[1], the Court of Appeal for Ontario reviewed the “knotty question ofnomenclature in this area of the law, and the components of extinguishment by operation of law.” [9] After reviewing Anger & Honsberger, Law of Real Property[2], Megarry and Wade, The Law of Real Property[3], Gale onEasements[4], Halsbury’s[5], it arrived at the following conclusion, which I adopt: [70] A reasonable conclusion is that an easement may be extinguished by operation of law in two ways. First, it may be extinguished bystatute.

A good example is found in British Columbia’s Property Law Act, R.S.B.C. 1996, c. 377, s. 35(2), which allows the court tomodify or cancel an easement where there is, inter alia, a material change in the character of the land such that the easement is obsolete.Ontario’s legislation does not mirror that of British Columbia. In extinguishing an easement by statute, some caution may be required.

Asthe authors of Gale on Easements note, at para. 12-12: “An Act should not, however, be construed so as to interfere with somebody’sproperty rights without compensation unless the court is obliged so to construe it”, citing Jones v. Cleanthi, [2007] 1 W.L.R. 1604, atpara. 82. [71] Second, an easement may be extinguished by operation of the common law. Examples include unity of ownership and possession ofthe dominant and serviant lands or destruction of either the dominant or serviant lands.

As seen from Anger & Honsberger, Gale onEasements and Halsbury’s, extinguishment by operation of law also includes expiry of a time-limited easement and disappearance orexpiry of the purpose for which the easement was created…. [72] As for expiry of the purpose for which the easement was granted, an easement is not typically extinguished by temporary eventsthat impact its use. Some permanence must exist.

In “Easement Caselaw Update” (paper presented to the Ontario Bar Association,Continuing Legal Education Program, Easements for Real Estate and Municipal Lawyers: Level II, October 6, 2016), Craig Carter writesthat "[a]n easement can be extinguished as a matter of law when some event occurs that makes the easement unusable or unnecessary.Some permanence must exist. A flood that washes over an easement is not extinguishment. But global warming causing a sea to cover aright of way will be." [73] A further example is found in National Guaranteed Manure Co. v.

Donald (1859), 157 E.R. 737, where the court held that aneasement to take water to fill a canal ceased when the canal no longer existed and was converted to a railway. [10] New Brunswick does not have a statute which provides for extinguishment of easements. [11] In applying the law to the case at hand, the Ontario Court of Appeal said: [78] This case is more akin to Fyfe v. James, (ON SC), [2006] O.J. No. 325, 42 R.P.R. (4th) 221 (S.C.J.), where thecourt held that an access easement was not extinguished after a new, alternate access road was built.

The court distinguished the facts inBost Properties, and rejected the respondents' argument that, because the new road provided full ingress and egress to the relevantproperties, the right-of-way was no longer necessary and therefore extinguished. The grant did not provide for the easement to beextinguished by alternative access, nor did it stipulate a time limit. [12] I adopt the same reasoning. The purpose of the easement was to provide access to the Respondents through the Applicant’sland. That purpose has not expired.

The grant did not provide for the easement to be extinguished by alternative access, except for theprovisions of

section 3 of

Schedule “C,” nor did it stipulate a time limit. [13] Even if at law, the purpose would deem the easement extinguished, the parties have displaced the common law by expresslyagreeing to the circumstances that would terminate the easement.

b) Has the easement been extinguished by express release? [14] There remains the question of the proper construction of

section 3 of

Schedule “C” of the agreement. [15] In Arbutus Bay Estates Ltd v. Canada[6], quoting from Robb v. Walker[7], the British Columbia Court of Appeal summarized

the law on the

interpretation of easements, stating at paragraph 27 that there is no principled basis to distinguish between cases involvingthe

interpretation of easements and the

interpretation of contracts, with the result that Sattva Capital Corp. v. Creston Moly Corp., 2014,is the governing authority with respect to the standard of review. It added, at paragraph 30: [30] Robb also dealt with the general principles of interpreting an easement: [31] When interpreting an easement, the Court must have regard to the plain and ordinary meaning of the words in the grant to determinewhat the intention of the parties was at the time the agreement was entered into.

Surrounding circumstances, that is, objective evidenceof the background facts at the time of the execution of the contract, are to be considered in interpreting the terms of a contract: Sattva atpara. 58. [32] The wording of the instrument creating the right of way should govern

interpretation unless (1) there is an ambiguity in the wording,or (2) the surrounding circumstances demonstrate that both parties could not have intended a particular use of the easement that isauthorized by the wording of the document: Garfield v. Cowichan Valley (Regional District) (1996), (BC CA), 16B.C.L.R. (3d) 382 (C.A.). [16] In Fredericton International Airport Authority Inc. v. O’Toole[8], our Court of Appeal said, at paragraph 12: [12] In Voye and Page v.

Hartley, 2002 NBCA 14, 247 N.B.R. (2d) 128, Drapeau J.A. (as he then was) explains the principlesgoverning the construction of an easement: The following excerpt from Lord Justice Mummery’s reasons for judgment in West v. Sharp, [1999] E.W.J.

No. 2298 at para. 34 (C.A.),online: QL (EWJ), encapsulates the principles that govern the construction of an express grant of right of way: The nature and extent of a right of way created by an express grant depends on the language of the deed of grant, construed in the contextof the circumstances surrounding its execution, including the nature of the place over which the right was granted. But a right of wayexpressly granted is not necessarily limited by the physical characteristics of the site of the easement at the time of the grant… [17] See also Roussel v.

Bélanger, 2004 NBQB 250. [18] In Sattva, the Supreme Court said that contractual

interpretation involves issues of mixed fact and law as it is an exercise inwhich the principles of contractual

interpretation are applied to the words of the written contract, considered in light of the factual matrix. [19] It is also helpful to be reminded that the goal of contractual

interpretation is to ascertain the objective intent of the parties. SeeAlgo Entreprises Ltd. V. Repap New Brunswick Inc.[9] In that decision, our Court of Appeal also dealt with the concept of surroundingcircumstances and the use of the factual matrix in contractual

interpretation, and I quote: [30] The concept of “surrounding circumstances,” and the use of the “factual matrix,” in contractual

interpretation was described byLord Wilberforce in Prenn v. Simmonds, [1971] 3 All E.R. 237 (H.L.), where he said: In order for the agreement of 6th July, 1960 to be understood, it must be placed in its context. The time has long passed whenagreements, even those under seal, were isolated from the matrix of facts in which they were set and interpreted purely on internallinguistic considerations. … We must … enquire beyond the language and see what the circumstances were with reference to which thewords were used, and the object, appearing from those circumstances, which the person using them had in view. [pp. 239-240] [Emphasis added.]

[31] Lord Wilberforce expanded on this a few years later in Reardon Smith Line Ltd. v. Hansen-Tangen, [1976] 3 All E.R. 570 (H.L.)when he said: No contracts are made in a vacuum: there is always a setting in which they have to be placed. The nature of what is legitimate to haveregard to is usually described as ‘the surrounding circumstances’ but this phrase is imprecise: it can be illustrated but hardly defined.

In acommercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposesknowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating. [p. 574] [32] The Supreme Court in Sattva described fully both the role the surrounding circumstances/factual matrix may play in contractualinterpretation and the nature of the evidence that may be considered for this purpose. Rothstein J. stated: I now turn to the role of the surrounding circumstances in contractual

interpretation and the nature of the evidence that can beconsidered. […] While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelmthe words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence is to deepen adecision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract.

Theinterpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, at pp.15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviate fromthe text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), (BC CA), 101 B.C.A.C. 62). The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case tocase. It does, however, have its limits.

It should consist only of objective evidence of the background facts at the time of the execution ofthe contract (King, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge of bothparties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, inthe words of Lord Hoffmann, “absolutely anything which would have affected the way in which the language of the document wouldhave been understood by a reasonable man” (Investors Compensation Scheme, at p. 114).

Whether something was or reasonably ought tohave been within the common knowledge of the parties at the time of execution of the contract is a question of fact. [20] So what are the surrounding circumstances in this matter?

In other words, what is the objective evidence of the backgroundfacts at the time of the execution of the contract? [21] I find that the following constitute the surrounding circumstances in this matter: [22] The Respondents' lot, although not exactly configured as it is today, was created in 1998 and was already subject to easementsas the Respondents' lot was not adjacent to the public highway.

A road was constructed to access the property and can easily be seen onthe various survey plans filed as exhibits. [23] In 2008, a newly constructed public street was created, reaching from the main public highway towards the Respondents'property, without reaching it. [24] A new easement agreement was negotiated between the parties, replacing all previous such agreements. [25] The parties were represented by counsel. A first draft was prepared by the solicitor for the Applicant. The

section dealing withextinguishment of the easement read: 3. In the event that a public street is extended from Anderson Point Lane to, or in the direction of, the Grantee Lands, the right-of-wayand easement hereby granted shall terminate with respect to that portion of the Easement Lands that is incorporated in or runs parallel tothe new public street.

[ 26 ] That wording was objected to by the Respondents and the parties agreed to and executed a grant with the following wording: 3. In the event that a public street (the “New Street”) is extended from Anderson Point Lane to, or in the direction of, the Grantee Lands, the Grantor shall, subject to all applicable laws, ensure that the New Street follows the path of the Easement Lands to the extent reasonably practicable.

The right-of-way and easement hereby granted shall terminate with respect to the Easement Lands lying within the boundaries of the New Street. [ 27 ] In 2022, an extension of Anderson Point Lane to the boundary of the Respondents' land was completed and vested in the City of Bathurst as a public street. [ 28 ] The new extension does not follow the path of the easement as it existed previously.

The Applicant had instructed its surveyor to follow that path to the extent reasonably practicable. [ 29 ] The Respondents have continued to use the portion of the easement that does not lie within the boundaries of the new street. That portion covers the portion of the existing road leading to the Respondents’ paved entrance. [ 30 ] There are no other parts of the grant that could inform the objective intention of the parties. [ 31 ] The parties have each submitted evidence as to the inconvenience each would suffer should be application be granted or denied.

This balancing of interest would be a factor in an analysis under a statute similar to the British Columbia’s Property Law Act but in the absence of such a statute, the Court’s role is limited to ruling on the proper construction of the grant of easement. [ 32 ] I find that the Respondents did not accept the wording that would terminate the entire easement even if the new street were parallel to the existing road. [ 33 ] Having considered the wording of

section 3 of

Schedule C of the 2008 grant, the entire document and the surrounding circumstances, I find that a reasonable person would conclude that the parties agreed that any extension of the street would not need to follow the exact path of the easement if it were not reasonably practicable to do so, but that in that event, only the portion of the easement within the boundaries of the new street would terminate. There is no ambiguity. [ 34 ] The application is therefore denied. [ 35 ] The Respondents are entitled to their costs, set at $1000 plus HST and disbursements. Dated at Bathurst, New Brunswick, this 31st day of March 2023. Ivan Robichaud