Lines in the Sand: A Case of Adverse Possession from Cottage Country

Written By Simon Crawford and Samantha Weng

Once again, cottage season is upon us—and like the return of the season, the Ontario Superior Court of Justice (Court) has returned to the well-settled law of adverse possession, which continues to surface in modern property disputes where long-term use of a property by an adjoining owner can sometimes erode the ownership rights of the legal owner. Harmur Investments Ltd. v. Pearce is a recent case which takes a closer look at the law of adverse possession to resolve a title dispute between two cottage neighbours. A caveat—for brevity, the authors have excluded certain details of the case from this discussion.  In addition, claims for adverse possession must have crystallized while the properties are or were under the registry system.  Once the properties are converted to the land titles system, such claims cease to accrue.

Background

Harmur Investments Limited (Harmur) and Katherine Lillian Pearce (Pearce, and, with her now late husband, the Pearces) own adjacent properties on Calabogie Lake off O'Neill Point Road in the Township of Greater Madawaska. Harmur's property is Lot 110 on Plan 156 (Harmur Property), while Pearce's property comprises Lots 111 and 112 on the same plan to the east of the Harmur Property (collectively, Pearce Property).

The Harmur Property was purchased in 1943 by Harold Murphy I—the grandfather of the current president of Harmur, Paul Murphy. In 1974, the property was transferred to Harold Murphy II—Paul's father—and in 1994, the property was transferred to Harmur.

The Pearce Property was purchased by Pearce in 1975 and title was transferred by Pearce to both herself and her late husband in 1997.

On May 11, 1998 (Conversion Date), both the Harmur Property and the Pearce Property were converted from the registry system to the land titles system. Later, Harmur sought a vesting order claiming ownership of two parcels on the Pearce Property by adverse possession.

The first parcel, known as the "Triangle", is approximately 485 square metres and is located on the northwest side of the Pearce Property, abutting the Harmur Property to the northeast. Access to the Harmur Property is via a driveway off O'Neill Point Road that crosses the Triangle.

The second parcel, known as the "Boathouse Parcel", is approximately 80 square metres and sits on the southwestern corner of the Pearce Property along the lakeshore—between the Harmur Property and a boathouse belonging to Harmur that also encroaches on the Pearce Property.

The creation of the Triangle and the Boathouse Parcel, together with Harmur and Pearce's dispute over ownership of these lands, began with the installation of a "crooked wire fence" (Fence) by an unknown party many years ago.

The Fence runs north-south in direction, close to most of the lot line between the Harmur Property and the Pearce Property. To the north, the Fence extends beyond the shared boundary of the properties to O'Neill Point Road—crossing Pearce's Lot 111 and forming the Triangle. To the south, the Fence stops at a pine tree several metres north of the lake, then runs east across the Pearce Property, creating the Boathouse Parcel.

Both disputed parcels appear on several surveys, including one dated May 30, 1950. A plan of subdivision dated July 10, 1905 (Plan) also shows the Triangle as part of Lot 111.

At trial, Harmur asserted that Harold Murphy I and Harold Murphy II acquired possessory title to the Triangle and the Boathouse Parcel between 1943 and 1975—being the period between when the Harmur Property and the Pearce Property were first acquired by the disputing parties—and that the Murphys' possession continued until the Conversion Date. However, Harmur sought to prove adverse possession only for the period between 1962 to 1975 (Period Claimed), which spans from Paul's earliest memories of the Harmur Property to the year Pearce acquired the property.

Law of Adverse Possession

As Simon Crawford and Dana Talucci note in Good Fences Make Good Neighbours—Except When They Don't, the test for establishing adverse possession (Test) is well settled.  Both Harmur and Pearce relied on McCracken Estate et al. v. Gatt et al., a 2023 Ontario Superior Court of Justice case, which describes the Test as follows:

• the claimant and/or its predecessors in title must have had actual possession for the statutory period, being at least 10 years¹ before the disputed property was converted to the land titles system;
• the claimant's possession must be with the intention to exclude the owner or any others entitled to possession; and
• the owner and any others entitled to possession must be out of possession for the statutory period.

These three elements of the Test, summarized below, are also well settled; and the onus is on the claimant to demonstrate that all three are met.

Actual Possession

In general, actual possession refers to unauthorized possession of property. The claimant must show that its possession was "open, notorious, peaceful, adverse, exclusive, actual and continuous", and all of these elements must be present during the entire statutory period.² However, sufficient evidence of actual possession varies by context. For cottage properties, seasonal and weekend use would satisfy the requirement of continuous use because such intermittent use reflects the typical pattern of cottage ownership.³

Intention to Exclude

Next, the claimant must prove that it and/or its predecessors in title "sought to exercise dominion over the area claimed as against the world"⁴ by establishing that its use of the property is inconsistent with the legal owner's intended use (Inconsistent Use). Nonetheless, it is not necessary to establish Inconsistent Use in a case of mutual mistake⁵, where both the claimant and the legal owner mistakenly believe that the claimant owned the disputed property. A legal owner cannot have intended use of the disputed property if it falsely believes it does not own the property.⁶

Discontinuance of Possession

Finally, the claimant must show that the legal owner of the disputed property was in fact excluded from the property. In other words, the claimant must have exclusive possession of the property or control over access.

The Issues

To meet the requirements of the Test, Harmur must therefore establish all of the following to claim possessory title to the Triangle and the Boathouse Parcel:

• that Harmur and/or its predecessors in title had actual possession of the Triangle and the Boathouse Parcel for 10 years during the Period Claimed;
• that its possession of the disputed parcels was with the intention to exclude Pearce, which analysis involves determining whether a mutual mistake was present; and
• that Pearce was in fact excluded from the Triangle and the Boathouse Parcel for the entire statutory period.

Ruling and Analysis

The Court found that Harmur had acquired possessory title to the Boathouse Parcel but not to the Triangle for the Period Claimed.

Boathouse Parcel

For the Boathouse Parcel, Harmur produced evidence of actual possession—including numerous photographs—that showed continuous use and occupation of the property by the Murphys through, among other acts: crossing the parcel to access their boathouse, boat launch, storage area and swimming area; hosting family and friends on the parcel; and improving and maintaining the property by building gardens and removing deadfall.

On the issue of intention to exclude, the Court found that Harmur was not required to demonstrate Inconsistent Use because the Pearces did not appreciate their ownership of the Boathouse Parcel on the basis that, among other things, Pearce had visited the parcel only once in the 50 years since acquiring Lots 111 and 112, and had never attempted to access the parcel from her cottage. 

Moreover, the Court found it odd that Pearce's late husband retained a lawyer in 1976 to raise concerns with the Murphys about the size and location of a new boathouse they planned to build on the parcel, yet took no further steps to confirm or assert the Pearces’ ownership of the property afterward.

Finally, exclusion of the Pearces from the Boathouse Parcel was satisfied because: Pearce's visit to the parcel was limited to a single occasion in almost 50 years, and evidence suggests that it was by invitation; there was no direct access from the Pearce cottage to the parcel; and there is no evidence that Pearce's late husband ever set foot on it.

For these reasons, Harmur's claim to the Boathouse Parcel by adverse possession succeeded.

Triangle

Harmur was able to establish that its predecessors in title had actual possession of the Triangle for 10-years during the Period Claimed.  In particular, the Court accepted Harmur's evidence that: Harold Murphy I and Harold Murphy II accessed the Harmur Property via the driveway crossing the Triangle because there was no alternate access to the property. The Murphys also maintained the Triangle as their own, including asphalting the driveway and removing deadfall, poisonous vegetation and snow.

Respecting intention to exclude, the Court found no evidence of mutual mistake, despite Harmur's assertion to the contrary.

The Plan was available to Harold Murphy I, and—except for him—the Murphys are a family of lawyers. Notably, Harold Murphy II practised real estate law and acted for the Calabogie Peaks resort on matters involving rezoning and severance. The Court was therefore not persuaded that the Murphys would not have ascertained the boundaries of the Harmur Property by obtaining and reviewing a copy of the Plan.

The Court also accepted Pearce's evidence that following their acquisition of the Pearce Property, the Pearces had invited Harold Murphy II and his wife to continue crossing the Triangle to access the Harmur Property from O'Neill Point Road.  This shows that Pearce knew she owned this parcel.

These findings indicate that neither party was mistaken as to the true owner of the Triangle. Accordingly, Harmur needed to prove Inconsistent Use to establish possessory title. However, supporting evidence was limited in this regard.

On the question of use, Pearce's late husband had occasionally maintained the Triangle by removing deadfall and poisonous vegetation. The Murphys' use was therefore entirely consistent with the Pearces' use. The Court also considered and rejected Harmur's arguments that use of the Triangle by the Murphys for parking, children's play and running of electricity was contrary to the Pearces' intended use.

While a fence may signify an intention to exclude, the degree to which the Fence was meant to exclude Pearce and others from accessing the Triangle was unclear. It was also not shown that the Pearces were prevented from accessing the Triangle.

Based on the above, Harmur failed to establish the Murphys' intention to exclude the Pearces or their predecessors in title from possession.

Finally, discontinuance of possession was not established as Harmur's claim that neither Pearce nor her predecessors in title ever asserted ownership or used the Triangle was contradicted by Pearce's evidence.

For these reasons, Harmur's claim to possessory title of the Triangle failed.

Takeaways

Although the law of adverse possession is well settled, one should be aware that whether a claim for possessory title will succeed is highly dependent on the facts and circumstances surrounding the claim.

While owners can purchase title insurance to protect against claims of this nature, coverage does not guarantee that an adverse possession claim will not succeed. Generally, title insurance covers losses arising from undisclosed or unknown possessory title claims affecting a property as of the policy date; and it typically provides limited financial protection for legal defense costs and, in some cases, compensation for loss of property if a claim succeeds.

Today, most properties in Ontario have been converted to the land titles system (and have been since the early 2000s), but a small percentage remains under the registry system and continues to be vulnerable to claims of adverse possession.  In addition, properties which bear the Land Titles Conversion Qualified estate/qualifier are subject to the rights of anyone who acquired possessory title prior to the date of conversion. This means a claim for adverse possession is still possible even after a property has been transitioned to the land titles system.

To help safeguard against a possessory title claim, owners should know their property boundaries. This can be done by obtaining an up-to-date building location survey or by reviewing an existing one alongside any changes to the legal description of the property since the date of the survey to ensure that the survey remains accurate and current.

Other measures include: regularly monitoring one's property for signs of encroachment; marking and maintaining clear boundaries wherever possible, including erecting "no trespassing" or "private property" signs; challenging unauthorized use promptly; entering into formal agreements for land use with adjoining owners as applicable; and converting one's property to the land titles system as required and if feasible.

These suggestions are especially appropriate for properties located in rural or remote parts of Ontario—including certain parts of cottage country—where the availability of up-to-date surveys and owner presence are more limited, or where a small number of properties still exist under the registry system. After all, even when one escapes to cottage country, there is no break from property law, which demands vigilance from the titleholder.

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