Executive Summary: Key Legal and Evidentiary Issues

• Whether the 1977 right-of-way grant permitted commercial use, including access to a proposed RV campground.

• The trial judge’s reliance on objective intentions from the deed and surrounding circumstances, not subjective intentions or hearsay.

• If the proposed campground use would overburden and alter the character of the right-of-way.

• The appropriateness of the scope of the injunction, particularly its application to any commercial use.

• Whether the dismissal of Ponhook’s counterclaim for right-of-way improvements was justified.

• The correctness of the costs award, including consideration of settlement offers.

Facts of the case

This case involved a dispute between Ponhook Lodge Limited and the Freeman Estate regarding the use of a right-of-way on rural property in Queens County, Nova Scotia. Ponhook owns property south of the Freeman property, where it operates an RV campground. In 2017, Ponhook purchased approximately 40 acres north of the Freeman lot, creating a situation where the Freeman land was sandwiched between Ponhook’s properties. Ponhook intended to develop the northern property as an RV campground. Access to this northern property required use of a right-of-way that crosses the Freeman property, granted by a 1977 deed.

The 1977 deed granted a right-of-way up to 30 feet wide “to service [the grantor], her heirs and assigns, and her family’s lots.” The Freemans argued that the right-of-way was intended solely for private, personal use. Ponhook maintained it permitted access for campers visiting the proposed campground. The Freemans sought and obtained a permanent injunction from the Supreme Court of Nova Scotia to prevent commercial use of the right-of-way, including access to the proposed campground.

Discussion of policy terms and clauses at issue

The 1977 deed’s key clause described the right-of-way as being “to service her, her heirs and assigns and, her family’s lots situated on the so-called Ephraim Hunt lot, crown grant no. 9284 (Index sheet #32 Dept. of Lands and Forests, N.S.).” The trial judge found that this wording, interpreted in the context of the surrounding circumstances, indicated the right-of-way was intended for private use by the owner and invited guests to access residential or undeveloped wilderness lots. The judge concluded that use for an RV campground would overburden the right-of-way and substantially alter its character, going beyond what was reasonably contemplated by the parties in 1977.

Outcome of both decisions

The Supreme Court of Nova Scotia granted a permanent injunction restraining Ponhook from using the right-of-way to access any campground or other commercial establishment north of the Freeman land. The court found that the proposed use would overburden the right-of-way and radically change its character. Ponhook’s counterclaim seeking to improve the right-of-way was dismissed, as Ponhook conceded the work was contingent on the campground proceeding.

On appeal, the Nova Scotia Court of Appeal dismissed the appeal and upheld the trial decision. The Court of Appeal agreed that the trial judge correctly applied legal principles, relied on objective intentions derived from the deed and surrounding circumstances, and made findings supported by the evidence. The injunction’s scope, including its application to commercial use, was upheld. The award of costs against Ponhook—$196,858.50 plus $9,268.22 in disbursements—was found to be a proper exercise of discretion. The Court of Appeal awarded the respondents an additional $7,500 in costs for the appeal.