The case of 2708959 Ontario Inc. v. City of Stratford, 2025 ONCA 512, is an important decision for Ontario municipalities dealing with encroachments — when a private building or structure extends onto municipal land, such as a road allowance. This case clarifies what municipalities can do when they discover such encroachments, even if they have existed for many years. The Court of Appeal held that the municipality's issuance of building permits did not expressly approve the encroachments.
Summary of the Facts
The property, located on Cobourg Street in Stratford, Ontario, currently used as a boutique inn, is owned by 2708959 Ontario Inc. ("Owner"). The building was put up between 1998 and 2001 by a previous owner. Some parts of the building and its features — part of a concrete retaining wall, access ramp, granite step, and a parking space — extend out onto land owned by the City of Stratford. This City land is a "road allowance," which means it was set aside for public use.
In 1998, the then-owner signed a site plan agreement with the City. The City issued a building permit and later an occupancy permit. For many years, no one noticed that these structures were on City land. In 2006, the City created a new policy about encroachments. It said that if a building or structure was found to be on City land, the owner had to either remove it or sign an encroachment agreement with the City.
In 2019, the Owner bought the property. In 2021, when the Owner applied to rezone the property, the City noticed the encroachments for the first time. It told the Owner that it required an encroachment agreement. The Owner was concerned that the City could later take away its rights to use the encroaching parts. It argued that the City had already approved the encroachments back in 1998, so the new policy should not apply.
The application judge dismissed the Owner's contention that it did not have to enter into encroachment agreements. The Court of Appeal agreed and held that there was no overriding and palpable error that would warrant overturning the application judge's decision.
Key Points from the Court's Decision
- No Express Approval of Encroachments
The Court of Appeal agreed with the application judge that none of Stratford's actions (e.g., approving the site plan or building permits and confirming that there were no outstanding work orders, etc.) formed "a sufficient basis on which to conclude that Stratford expressly approved the encroachments" (at para. 31). The Court of Appeal (at para. 35) declined to decide whether tacit approval by the municipality could be sufficient in this type of case. The application judge had found that the City's approval of the site plan and building permit did not mean it tacitly approved the encroachments (at para. 34).
- Onus Lies with the Owner and Their Advisors
The Court of Appeal confirmed the application judge's finding that "the onus for bringing encroachments to Stratford's attention fell on the original proponent [...] and on his professional advisors, not on Stratford. The application judge noted: 'At best, there [was] an oversight which arguably could have and should have been better understood by the architects submitting the plans than [Stratford] tasked with interpreting them" (at para. 22).
- Encroachment Policy Approach
The Court of Appeal seems to have had no issue with the City's 2006 encroachment policy generally, which required owners to sign an agreement if their building or structure was found to be on City land and permission had not been previously provided. That policy approach is one that municipalities should consider implementing for all of their lands, if they have not already done so.
- Municipal Land Is Special
The Court of Appeal (at para. 30) confirmed that "property that is owned by a municipality is held by way of a qualified title for public benefit" and "is imbued with special public significance", quoting Howden J. in Oro-Medonte (Township) v. Warkentin, 2013 ONSC 1416 at para. 118.
Implications for Municipalities
Here are the main insights for Ontario municipalities:
- Municipal Approval Must Be Clear: If a municipality wants to allow an encroachment (and avoid a potential claim of adverse possession), it should grant that permission in writing only through a clear and purposeful process. Ideally, the terms should include the right to have the encroachment removed in the future. Tracking this type of agreement in a property-related municipal database is also advisable.
- Old Encroachments Can Still Be Dealt With: Even if an encroachment has existed for many years, the municipality can still act when it is discovered. A professional legal review should be undertaken to consider other potentially applicable statutory rules and jurisprudence (e.g., adverse possession).
- Notification to Applicants: Municipalities should consider updating their standard notifications to applicants, requesting that they disclose any potential encroachments, relevant easements, etc. when submitting site plans and permit applications, so that issues can be addressed before structures are built.
- Robust Encroachment Policies: Municipalities could include a template encroachment agreement and reference to applicable fees in its policy that applies to all municipal land within its jurisdiction.
Conclusion
The Court of Appeal's decision in 2708959 Ontario Inc. v. City of Stratford provides helpful guidance for municipalities dealing with encroachments. It shows that municipalities have the right (and obligation) to protect public land. Approvals given in the past, such as building permits, do not necessarily mean that permission for encroachments has been provided. Municipalities should have clear policies and agreements to manage encroachments in the public's interest.
Originally published by Law360.
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