A long-running dispute between neighbours over a strip of land just 21.9 centimetres wide ended in court after years of litigation and 10 affidavits.

In Margaritis v. Milne, the Ontario Superior Court of Justice ruled on whether the doctrine of adverse possession applied, ultimately granting the land to one neighbour based on lasting improvements made under the belief it was their property.

Negotiations fail over small property encroachment

Milne bought his property in 1996, while Margaritis inherited his in 2017. A wooden fence and stone retaining wall marked the boundary between their properties. After his purchase, Milne made extensive changes, including building a new fence and retaining wall.

When Margaritis planned to redesign his backyard, a survey revealed a small encroachment from Milne’s property. Negotiations failed, leading to the lawsuit.

Cannot claim adverse possession

Milne claimed the land through adverse possession, which requires 10 years of exclusive use. However, Margaritis argued that Milne had moved the fence line to its current location in 1996, while Milne maintained that he re-built the fence on the pre-existing fence line.

It was found that both properties were converted to Ontario’s Land Titles system in 2002, and registered land in the system can’t be obtained by adverse possession unless that 10-year period took place prior to registration. Milne’s use didn’t meet the 10-year requirement before this time.

The court couldn’t confirm where the boundary was before the 1996 renovations, as Milne was unable to provide surveys, plans, permits or engineering drawings showing the work done. So, his claim to title under adverse possession was denied.

Milne obtains land because of honest belief it was his

Despite rejecting the adverse possession claim, the court awarded Milne the land because he made lasting improvements, like the retaining wall and stairs, believing it was his. This decision was supported by section 37 of the Ontario Conveyancing and Law of Property Act, which allows a person to retain land if they made improvements under an honest belief it was theirs.

The court found Milne’s belief genuine and the improvements lasting and substantial. Changing the boundary now would require significant modifications to Milne’s property, plus the boundary existed for more than 20 years without complaint. As well, granting the disputed area to Margaritis would require significant renovations to Milne’s backyard to add an “objectively insignificant area” to Margaritis’ property — no compelling reason arose as to why Margaritis required the strip of land.

So, Milne was granted the land but had to compensate Margaritis for its value. The exact compensation method is yet to be determined. An appeal was dismissed, as the Divisional Court upheld the original decision, agreeing that the improvements were lasting and that the judge had exercised appropriate discretion.

QUICK HITS

• The Pennys built a home and lived in it without issue for four years. Their new neighbours got their property surveyed and found most of the Pennys’ garage and a corner of the house extended onto their property.
• With the neighbours not expecting to use the land at the time of purchase, the court gave jurisdiction to award damages instead of requiring remediation.
• All third parties were liable for contributory negligence: the builder 70 per cent, and the surveyor and the municipality each 15 per cent. The Pennys were compensated for the severed land purchase, damages for trespassing and land transfer.

A homeowners’ nightmare scenario of discovering their home had been constructed over the property line onto their neighbour’s land was brought to court, in Armstrong vs Penny.

Building a new waterfront property

In 1998, the Pennys hired a builder to create a custom-built home on their vacant waterfront property in Sturgeon Lake (what is now the city of Kawartha Lakes). The builder hired a surveyor to determine the boundary line for construction, and the municipality issued a building permit allowing construction to begin.

After the home was completed, the Pennys moved in and lived there for several years incident-free.

Survey reveals property crossed boundary line

Then, in 2002, the Armstrongs purchased the northern adjacent property and the following year, they obtained a survey of the property’s southern line and learned that most of the Pennys’ garage and a corner of the house extended onto their property.

Later on, the Armstrongs pursued legal action against the Pennys, stating they were trespassing. This caused the Pennys to make third-party claims against the builder, the surveyor and the municipality, alleging that those parties were negligent for allowing the home to be constructed over the boundary line.

2022 trial

Eventually, the litigation went to trial in 2022 (the reason it took so long is unknown). The trespass of the Pennys’ property onto the Armstrongs’ was evident and admitted in court, but it was unclear what should be done.

The Armstrongs felt that the most equitable, fair and balanced solution was to demolish and remove the Pennys’ garage while allowing the Pennys to purchase land needed to rebuild the garage. They would also leave a smaller piece of land so the corner of the Pennys’ house could stay.

How the court found a solution

The court felt that the Pennys weren’t at fault and shouldn’t go through the hardship of demolishing their property. It saw this as oppressive.

Instead, the court considered:

• section 99 of the Courts of Justice Act, which gives jurisdiction to award damages instead of an order requiring specific remediation, and
• section 37 of the Conveyancing and Law of Property Act, which states that a person may be entitled to retain land on which they have made lasting improvements under the belief that the land is the person’s own.

These sections were appropriate considering the garage had been in the location for many years. The court focused on the importance of prior knowledge during the purchase and each party’s expectations — that is, the Armstrongs did not expect to use the land the Pennys’ property sat on when they purchased their home.

The decision

The court ordered that the Pennys’ home and garage could remain as-is but they must pay the Armstrongs for the land used at $9.10 per square foot, plus the costs associated with the land transfer.

Also, the Armstrongs argued that the facts underlying an unjust enrichment claim were admitted — the Pennys had used the land under the garage since the Armstrongs purchased it, and the Armstrongs were deprived of using it. The court awarded general damages of $1,000.

Third-party claim against the builder

The Pennys argued that there was a breach of contract and negligence on the part of their builder, to which the trial judge agreed since the home was not entirely built within the property’s boundaries. As well, the builder didn’t complete the building permit application form correctly and failed to review a reporting letter received for work conducted before paying an invoice for that work.

This meant the builder failed to meet the required standard of care — had it not been negligent, the house would have been constructed in the correct location, and the Pennys would not be liable to the Armstrongs.

The surveyor

The court found it was critical to the whole construction process that the surveyor establish a correct boundary line. Despite the builder’s poor guidance, it was noted that surveyors should ensure clear instructions are being used and if they were lacking, that they be clarified before work commences.

Since no documents showed the surveyor inquired about the instructions, they were responsible for the choices made and found negligent in proceeding with the job, which contributed to the wrong location of the home’s construction.

The municipality

The trial judge found this was one of the rare cases where the plain facts were enough to meet the test of common sense of how the municipality breached the standard of care.

The municipality’s chief building inspector was responsible for getting further information before issuing a building permit and examining all documents filed in support of the building permit application for uncertainties, inconsistencies or omissions. Although municipalities cannot insure against all possible risks, ensuring that a structure is built within the correct property boundaries is one of its basic required functions.

Each party had different level of fault

In the end, all three third parties were liable for contributory negligence, but the builder was most at fault (70 per cent). It signed the construction contract with the Pennys and took on the responsibility to build their home and garage where directed. The builder’s role also required engaging the surveyor and the municipality, which were also at fault but not to the same degree (15 per cent each).

All compensation was to be awarded to the Pennys, including the costs for the severed land purchase, damages for trespassing and land transfer.