Kelian v. Trafford, 2025 ONSC 734, serves as a crucial reminder for real estate practitioners about the importance of proper easement documentation and the risks that arise when property rights remain unclear. This recent Ontario Superior Court decision demonstrates how seemingly settled arrangements can unravel when properties change hands, leaving new owners exposed to significant liability.
The Facts
Vatcho Kelian owned a property in Gorrie, Ontario, with multiple residential buildings served by a septic system located underneath his neighbor Paul Trafford’s property. When the aging septic system failed and was permanently decommissioned, Kelian sought a court order requiring Trafford to permit installation of a new, larger-capacity system on Trafford’s land. Trafford refused, setting up a dispute that would ultimately turn on fundamental principles of easement law.
The septic system had existed in its location since at least 1975, when Kelian first acquired his property. However, the legal framework governing its use was muddied by a complex history involving previous owners, a prior settlement agreement, and documentation that was never properly registered on the title.
The Critical Settlement Agreement
In 1995, a dispute arose between Kelian’s mother (who held title at the time) and the previous owners of Trafford’s property, the Booths. This led to a court application and ultimately a settlement agreement signed in March 1997. The settlement appeared to grant an easement for the septic system, including provisions for repairs, replacement with a system of “similar capacity,” and various operational requirements.
Crucially, the settlement contemplated that a survey would be conducted to properly locate and describe the easement, with the survey to be registered on the title. This survey was never completed and the easement was never registered.
The Court’s Analysis: Four Requirements for Easements
Justice Nicholson examined whether the four characteristics of an easement, as held in Mihaylov v. 1165996 Ontario Inc., were present. These four characteristics were as follows: (1) whether there is a dominant and servient tenement; (2) whether the easement accommodates the dominant tenement; (3) whether the dominant and servient tenement are owned by different persons; and (4) whether the easement is capable of forming the subject matter of a grant.
The court found that the fourth requirement failed because the settlement agreement did not specify the precise location or size of the septic system. Without the contemplated survey, future owners could not determine what constituted a system of “similar capacity,” making the purported easement too vague to constitute a valid property interest.
Personal Rights vs. Property Rights
The court distinguished between personal licenses and property easements, noting that the settlement used terms like “Applicant” and “Respondent” rather than language clearly indicating the rights would run with the land. This created personal rights between the original parties rather than easements that would bind successive owners.
While the Booths could not have revoked their agreement with Kelian’s mother during their ownership, Trafford, as an innocent purchaser, was not bound by the incomplete arrangement.
Termination by Express Terms
Even if an easement had been established, the court found it would have terminated under the settlement’s own terms. The agreement specified that the easement would end if the septic system needed replacement with one “occupying or requiring more land than the present septic system.” Since the original 600-gallon system required replacement with a minimum 1000-gallon system (as 600-gallon systems are no longer available), the easement would have automatically terminated.
Prescriptive Rights Rejected
Kelian also failed to establish prescriptive easement rights. The court found that his use of the septic system was with the permission of previous owners rather than “as of right.” Evidence showed that since 1988, Kelian had requested permission for septic system maintenance, undermining any claim to adverse possession.
Additionally, the properties were registered under the Land Titles Act in 1999, which interrupted any prescriptive rights that might have been developing.
Practical Implications for Real Estate Lawyers
This decision highlights several critical practice points:
Due Diligence: The case underscores the importance of thorough title searches and physical inspections. Trafford relied on the vendor’s declaration that no easements affected the property “except as provided in the Land Registry Office,” which was technically accurate but incomplete.
Documentation: Informal arrangements and incomplete settlements create significant risks. The failure to complete the survey and register the easement left all parties vulnerable.
Successor Liability: Personal agreements between previous owners do not automatically bind purchasers. Clear language indicating that rights “run with the land” and proper registration are essential.
Physical Infrastructure: When dealing with properties that may have cross-boundary infrastructure (septic systems, utilities, drainage), specific inquiries and surveys may be necessary beyond standard title searches.
Settlement Implementation: This case demonstrates the dangers of treating settlement agreements as complete when they contemplate further steps. The court was clear that the parties had only “agreed to agree.” The actual easement was never finalized.
Conclusion
Kelian v. Trafford serves as a cautionary tale about the intersection of property law and practical necessity. While the court expressed sympathy for Kelian’s situation, it ultimately protected Trafford as an innocent purchaser who relied on proper legal documentation.
For transactional lawyers, the case reinforces that careful attention to easement documentation, complete implementation of settlement terms, and thorough due diligence remain the best protection against costly disputes. When in doubt, obtaining surveys and ensuring proper registration of property interests is always preferable to relying on informal arrangements or incomplete documentation.
The decision also highlights that courts will not impose property burdens on innocent purchasers without clear legal authority, regardless of practical hardships that may result.
