Over the years, the property owners would encroach further and further onto the railway's land, to the point where some of the "backyards" were in line with the hydro pylons. The same thing has happened all over where railways have owned corridors far larger than their current needs. It was the case on the Stouffville line before the work started there (especially north of Sheppard), on the Kitcherner Line before UPX, etc.
I recall reading about a spur in the Greater Vancouver Area that had been long disused but not abandoned and it had been virtually taken over by garden plots by adjacent and nearby landowners.
But squatter's rights don't equal actual legal rights. And so Metrolinx removed all of their extended yards in order to have room for their construction.
It can if somebody is willing to initiates a claim and can convince the court that it meets the criteria. "Squatter's right's' is a bit of misleading handle. 'Title by possession' is more accurate because, if you win, it is registered on the title.
Property law is a complex area, by as a bit of a primer on the topic:
Squatters Rights - Land Titles Conversion Qualified Is Not Enough. In Ontario, You Have To Watch For Adverse Possession. Can It Impact You?
www.hummingbirdlaw.com
It is possible but a tough hill, and I'm not sure why anyone would. As it stands, you get to de facto enjoy a slightly extra back yard for free, but if you try and claim it and win you get to pay more property taxes and inherit responsibility for it.
Depending on how wide it is, I doubt it would be useful as an easement for utilities.
My guess is nothing will change. The railway will ignore maintenance of 'the strip''; some landowners will assume, maintain and enjoy their slice. If they make any improvement or build any structures on the strip that gets in the way of wall maintenance, it would be subject to removal or damage without compensation.
EDIT: As a bit of an addendum, it struck me that property law in relation to 'squatter's rights', 'adverse possession' or whatever you wish to call it involves private property registered under the
Land Titles Act or
Registry Act. Railways are governed by federal legislation and, like public property (city boulevards, etc.), do not fall under this legislation. There might be, but I've not heard of a case of somebody winning title over public land, and I suspect railway land would be the same.