What recourse do you have when your commercial neighbour decides to unilaterally remove parking that you both share? This issue was addressed by the Ontario Superior Court of Justice in York Region Condominium Corporation No. 890 v. Market Village Markham Inc.
York Region Condominium Corporation No. 890 (Pacific Mall) and Market Village Markham (Market Village) owned two commercial buildings and the land around their respective buildings. In order to facilitate easy parking and access for their customers, Pacific Mall and Market Village entered into reciprocal agreements in 1994, granting each other certain rights.
Before delving into the case, it’s helpful to get a handle on all the legalese. As the court clarified, these types of agreements are called easements. Unlike a contract or a license, an easement is a right in the land, much like a form of land ownership. So, when a purchaser takes over a parcel of land, they inherit any easements registered against the title to that land.
The court reaffirmed that easements are also a right that may be exercised over land that belongs to someone else. The landowner who grants the easement is referred to as the servient owner, because their land is now “servient to” the easement right. The party receiving the easement right may be a neighbour, a municipality, a utility or a condominium corporation. And they are referred to as the dominant owner. They now have a right that is capable of being asserted against the landowner and can consequently restrict the landowner’s use of their own land.
How that right can be asserted against a landowner was exactly at issue in this case.
Market Village sought to further develop its own land. In order to do so, it sought to move surface level parking on its servient land to underground parking. Pacific Mall objected to this proposed development. It complained that the development substantially interfered with Pacific Mall’s easement. Market Village, in turn, argued that it could move these parking spots because of a Relocation Clause included in the 1994 easement agreement.
The court began its analysis by determining the nature and extent of the rights granted by the easement. It noted that these rights can be understood through an interpretive exercise. Courts must give the words used in their agreement their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties of the time of formation of the contract. And courts must use a common-sense approach, by achieving a contract interpretation that has a fair and sensible commercial result. Of course, how the parties act after the fact can also be instructive in figuring out what they understood to be the agreement.
Here, the court found the reciprocal easement granted both, Pacific Mall and Market Village, with the right to park and the right to access their respective easements. Referring to the Easement Purposes Clause included in the 1994 agreement, the court held that the purpose of the right to park and the right to access, was to allow customers and employees to pass freely to and from the respective lands and buildings, for the purpose of carrying on normal shopping, commercial and retail activities.
Having identified the easement rights, the court turned to Market Village’s argument that the Relocation Clause gave it the right to remove parking spots and to develop new ones. The court completely disagreed.
The Relocation Clause did give Market Village the right to relocate the parking spots on the easement land, at any time, and from time to time. However, the court found that the clause was quite limited.
First, the clause only allowed Market Village to move the spots on the easement land and to change their configuration. In other words, Market Village could not move the parking spots under the easement land, because doing so would change the nature and character of the parking. It would transform the parking from surface parking to underground parking. Therefore, removing the parking spots and moving them underground was tantamount to eliminating the parking spots altogether. And that was a violation of Pacific Mall’s easement right to park.
The court also found that Market Village’s proposed development substantially interfered with Pacific Mall’s easement rights. The legal test is whether there is substantial interference with a reasonable use of the servient land for its granted purpose. Here, the purpose of the land was to permit shopping, commercial and retail activities. The court held that the elimination of 948 parking spots amounted to the removal of 70 per cent of the available parking spaces used by Pacific Mall and its customers. The additional curbing and landscaping required by the development would make it all the more difficult for Pacific Mall customers to access the mall itself. Thus, the court held that Pacific Mall’s easement was substantially interfered with.
Lastly, the court noted that the proposed development would also overburden the easement. Overburdening occurs when an easement is used excessively, or significantly beyond the rights conveyed by the easement. It’s a balancing act. Increase in the use of an easement is not enough to constitute overburdening. Unfortunately for Market Village, the development project did amount to an overburden. It would increase demand for the remaining surface parking on Pacific Mall’s servient land, well beyond what was intended in 1994.
In wrapping up, it’s important to remember that easements are interests in the land. When purchasing commercial real estate be sure to note what easements are registered, how they’ve been handled previously, and the impact they might have on future development. Once an easement is registered, you cannot act unilaterally with respect to your land. The dominant owner has rights that can be enforced against you, and may throw a wrench in potential development, and future growth of your business.