The spat between the two families in rural Uxbridge, northeast of Toronto, began two years ago when Iain Pike spent $13,400 on the device, which he told the Globe and Mail newspaper lowered his home and garage heating bills by two-thirds.
Neighbor Robert Scott complained the smoke was causing him and his family health problems and he sued for $200,000 in damages.
Pike argued unsuccessfully in court that neighbors on the other side didn't smell smoke and said they even paid to be hooked up to the water heating system for their home, the report said.
In ordering the boiler shutdown, Justice Fred Graham of the Ontario Superior Court cited medical concerns under review in Canada and the United States.
Figures for Canada aren't available, but the newspaper said the number of boilers sold in the United States jumped from 195 in 1990 to 67,546 in 2005, the latest year of statistics available.