A decision of the Superior Court of Ontario last month was a powerful reminder that real estate disputes can become very costly if they ever reach a courtroom.
Millstone Consulting Services Inc. is a corporation owned by Paula and Vico Von Stedingk. In 2002, the company bought a cottage property on Georgian Bay from the Township of Tiny under a tax arrears sale. The cottage is not waterfront property, but it has access to the water by way of a nearby public dock.
Across the road known as Shoreline Dr., just north of the Von Stedingk cottage, is a 30-foot-wide lot known as Lot 6, which provides access to the beach. That lot is owned by the Cleary family.
After the Clearys blocked beach access, Millstone sued them, claiming access to Georgian Bay through Lot 6. The claim is based on what is known in law as a prescriptive easement, which is a right to travel over a parcel of land based on long-term usage.
Immediately east of the Millstone property is a large triangular parcel of land which sits between the cottage and Point Rd., just east of the cottage. Running through this triangular lot is a 10-foot-wide driveway which provides access to the Millstone cottage.
Millstone sued the Clearys, claiming either ownership of the triangle by adverse possession (known colloquially as squatter's rights) or the continued right to use the driveway that cuts across the triangle. The rights over this driveway were not disputed in court, but everything else was, including ownership of the underlying land.
The trial was held over the course of six days last October before Justice Rose Boyko, with Ronald Flom representing Millstone and Gavin Tighe acting for the Clearys.
In July, Justice Boyko released her 17-page decision, which dismissed Millstone's claim for the right to access the beach through Lot 6, and for ownership of the triangle adjacent to the Von Stedingk cottage.
Perhaps just as interesting as the case itself is the judge's ruling on costs, released last month.
In her reasons, the judge noted that each party made offers to settle prior to trial.
Under Ontario law, the party winning a court case is entitled to receive partial payment of legal costs from the losing party. If, however, it turns out that prior to trial the loser rejected a settlement offer which was better than the final outcome, the loser has to pay substantially all of the winner's legal costs. This is known as an award of "substantial indemnity" costs.
In October 2003, the Clearys offered to sell the triangle to the Von Stedingks for $25,000 plus legal fees, and to provide an annual, renewable licence to use Lot 6 to access the beach for $1 a year. In 2007, they offered to sell the triangle for $5,000.
"Clearly," said the judge, "the plaintiff did worse than this at the end of the trial ... The plaintiff chose to go to trial in the hopes of obtaining a better result than was offered."
She awarded the defendants partial indemnity costs up to January 12, 2007, and substantial indemnity costs after that date.
In the end, Justice Boyko ordered the plaintiffs to pay costs of $191,013.09, including GST. The plaintiffs also have to pay their own lawyer's bill.
All of this relates to a cottage that the Von Stedingks bought for about $75,000. They have filed an appeal of the decision.
Anyone interested in buying a cottage would be well advised to learn from this case that a right-of-access to the cottage or to the beach should be nailed down before the purchase, not after.
Bob Aaron is a sole practitioner at the law firm of Aaron & Aaron in Toronto. Bob specializes in the areas of real estate, corporate and commercial law, estates and wills and landlord/tenant law. His Title Page column appears Saturdays in The Toronto Star and weekly on Move Smartly. E-mail firstname.lastname@example.org
October 27, 2008Legal |