Executive Summary: Key Legal and Evidentiary Issues

• Central issue concerned whether long-standing use of municipally owned docks created proprietary rights in favour of island property owners under the doctrine of proprietary estoppel.
• Evidence focused on six decades of open, consistent and responsible use of docks at the City-owned water lot, allegedly encouraged by a City policy dating back to 1956.
• The court concluded that, on the particular facts, the elements of proprietary estoppel were not made out and GIPOA did not acquire proprietary rights over the water lot.
• Both parties’ conduct in the litigation was found reasonable; there was no proved bad faith by the City despite questions about why another stakeholder was granted a licence of occupation.
• Proportionality and indemnity principles guided the costs assessment, balancing the public interest in municipal control of waterfront lands against the narrower interests of Grape Island residents.
• The City’s unaccepted offer to settle was treated as a “non-starter,” and the court declined to apply Rule 49.10 costs consequences, ultimately awarding only partial indemnity costs.

Background and parties
The dispute arose between Grape Island Property Owners Association Inc. (GIPOA), representing the majority of property owners on Grape Island, and the Corporation of the City of Orillia. The conflict centered on a water lot owned by the City at the end of Forrest Avenue in Orillia, which served as a mainland access point for island residents using docks to reach their properties. GIPOA commenced an action seeking a remedy in proprietary estoppel, asserting that its members had acquired proprietary rights over this water lot through long-standing use and reliance.

Factual history and dock usage
For approximately 60 years, Grape Island property owners had installed and maintained docks at the City-owned water lot. These docks afforded a dependable means of access between the mainland and Grape Island and were used openly and consistently. The court found that islanders’ use of the docks was not clandestine or irregular; rather, it was responsible and in line with a City policy dating back to 1956, which effectively tolerated and structured such use. Over time, the docks became integral to the islanders’ daily lives, providing what they perceived to be a stable and affordable transportation link. When disputes over the use of, and rights in, the water lot surfaced nearly a decade before trial, GIPOA did not immediately resort to litigation. Instead, it engaged with the City and other stakeholders in an effort to negotiate a resolution, including exploring licensing or other formal arrangements. GIPOA had initially advanced a claim for damages but abandoned that claim well before trial, narrowing the case to declaratory and proprietary relief. Throughout the lead-up to trial, GIPOA’s case was presented in a focused way; the evidence spanned several decades and numerous witnesses, and cross-examinations were directed at clarifying the factual matrix that might support a proprietary estoppel claim.

Claims and legal issues at trial
At trial, the principal legal issue was whether GIPOA and, by extension, its member property owners, had established a claim in proprietary estoppel against the City. GIPOA maintained that the combination of: (i) the City’s longstanding policy and conduct permitting dock use at the water lot; (ii) the islanders’ decades-long investment in installing and maintaining docks; and (iii) their reliance on continued access for everyday life and property enjoyment, created an equity in their favour that the court should recognize as proprietary rights over the water lot. The City resisted, arguing that, while it had permitted use of the water lot, it had never conferred proprietary rights and remained the lawful owner entitled to control its waterfront lands. The case therefore turned on classic proprietary estoppel elements: representation or assurance, reliance, and detriment, all against the backdrop of municipal ownership and public interest in waterfront management. Although broader implications for municipalities across Ontario were raised by GIPOA, the court characterized the matter largely as a private dispute between the association and the City about whose rights would prevail on the specific water lot.

City policy and municipal context
A key contextual feature was the City’s policy from 1956 governing dock use at the water lot. While framed as a permissive regime under which islanders had long used the location for access, the policy did not, in the court’s view, translate into a grant of proprietary rights. The municipal dimension figured prominently: the City sought to protect what it described as its “sacred” waterfront, emphasizing its obligation to manage public lands in the broader public interest rather than entrench permanent private rights in favour of a relatively small group of residents. Questions arose about why the City had issued a licence of occupation to one stakeholder and not to GIPOA, but the court ultimately treated that issue as outside the scope of its determination. Importantly, there was insufficient evidence to support an allegation of bad faith by the City, and no finding was made that municipal decision-making had crossed into misconduct. Thus, while municipal policy and licensing decisions framed the factual setting, they did not yield a successful proprietary estoppel claim.

Trial decision on proprietary estoppel
In reasons released on March 6, 2025, the court dismissed GIPOA’s claim for proprietary estoppel. It held that, on the evidence, GIPOA had not met the legal threshold necessary to obtain proprietary rights over the City’s water lot. The case was decided largely on detailed findings of fact rather than on the creation of any new legal principle. The court rejected the characterization of the matter as a novel test case for municipalities across Ontario; instead, it saw the outcome as turning on the “peculiar facts” surrounding this particular water lot and the interactions between these particular parties. Although islanders had made open, responsible, and very long-standing use of the docks, and although the case raised a genuine issue requiring a trial, the court was not persuaded that any assurances, reliance, and detriment rose to the level required to displace the City’s ownership or to create proprietary rights in GIPOA’s favour. Accordingly, the City successfully resisted the claim, and GIPOA left the merits stage without any declaration of rights over the water lot or compensation.

Costs positions following dismissal
After the claim was dismissed, the parties sought a determination of costs. The City, as the successful party, argued that it was presumptively entitled to recover its costs of the action. It sought substantial indemnity costs in the amount of $211,681.66 and, in the alternative, partial indemnity costs of $143,519.71. The City also pointed to an unaccepted offer to settle and sought to engage the cost-shifting provisions under Rule 49.10 of the Rules of Civil Procedure. GIPOA, by contrast, asked that each party bear its own costs, contending that the case was of significant importance and arguably novel, with implications for proprietary estoppel claims involving municipalities across the province. It relied on the public significance of the issues and the manner in which it had advanced the litigation to justify a departure from the ordinary rule that costs follow the event. Additionally, GIPOA emphasized the reasonableness of its conduct: it had abandoned damages, focused the issues for trial, presented relevant and probative evidence, and engaged responsibly with the City over nearly a decade before trial.

Costs ruling and overall outcome
In his December 22, 2025 costs endorsement, the trial judge concluded that while the City was the successful party and presumptively entitled to costs, both sides had conducted themselves reasonably. The court expressly found nothing unreasonable in GIPOA’s decision to advance its proprietary estoppel claim or in how the litigation was managed; there was a genuine issue for trial, well-presented in articulate and focused fashion. At the same time, the judge found no unreasonable conduct or bad faith on the part of the City, despite lingering questions about why a licence of occupation had been issued to another stakeholder. Weighing proportionality and indemnity, the court observed that the trial was lengthy and complex, involving extensive preparation, numerous witnesses, decades of evidence, and exhaustive submissions. There was no suggestion that GIPOA could not have anticipated the risk of paying costs if unsuccessful, and its counsel did not dispute the quantum claimed on a partial indemnity basis. The court treated the City’s unaccepted offer to settle as effectively a “non-starter,” amounting to little more than an invitation to GIPOA to capitulate and accept a regime that would strip it of benefits it had enjoyed for nearly 60 years. In the exercise of discretion, the judge declined to impose the enhanced costs consequences of Rule 49.10. Ultimately, the court awarded the City partial indemnity costs, fixed at $143,519.71 inclusive of fees, disbursements and HST, payable forthwith. In the result, the City of Orillia emerged as the successful party on both the merits and costs, with the only quantified monetary order being this costs award of $143,519.71 in its favour.