221 Requirements Of Registrable Restrictive Covenant

PRACTICE

Restrictive Covenant Must Run with the Land

A restrictive covenant runs with the land when it fulfills the following three conditions:

1. the covenant must be negative in nature;
2. the covenantee must own land that benefits from the covenant; and
3. the burden of the covenant must attach to the covenantor’s land.

The Covenant Must Be Negative in Nature

Megarry and Wade, in The Law of Real Property (6th ed.), cite the following test at p. 1017:

A test which is often applied is whether the covenant requires expenditure of money for its performance; if the covenant requires the covenantor “to put his hand into his pocket”, it is not negative in nature. But the converse does not necessarily follow; a covenant that can be performed without expense may still require some positive act and so not be restrictive.

The Covenantee Must Own Land That Benefits from the Covenant

The land owned by the covenantee must be in proximity to the land affected by the covenant and the land owned must benefit from the covenant. In other words, the covenant must “touch and concern” the covenantee’s land.

The Burden of the Covenant Must Attach to the Covenantor’s Land

The covenant must bind not only the covenantor but also anyone buying from the covenantor.

Enforcement of a Restrictive Covenant

A party seeking to enforce a restrictive covenant must be entitled to the benefit of the covenant. The owner of dominant land can prove entitlement to the benefit of the covenant when:

1. the benefit of the covenant was expressly annexed to the dominant land when the covenantor entered into the restrictive covenant; or
2. the benefit of the covenant was expressly assigned to the owner of dominant land when the land was conveyed to that owner; or
3. both the dominant land and the servient land are subject to a common law building scheme.

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Registration of Restrictive Covenants

See s. 182 of the Act regarding the registration of restrictive covenants.

Benefit of Restrictive Covenant

See s. 25 of the Property Law Act which provides as follows:

• 25 If the benefit of a restrictive covenant about building on or the use of land is annexed or purports to be annexed by an instrument to other land, the benefit, unless expressly agreed otherwise, is deemed to be annexed to the whole and to each and every part of that other land capable of benefiting from the restrictive covenant.

Restrictive Covenants under Other Statutes

See chapter 68 (Registration of Instruments) for a summary of other statutory provisions that provide for the creation of restrictive covenants.

Power of Supreme Court to Cancel or Modify Restrictive Covenants

See s. 35 of the Property Law Act regarding the power of the Supreme Court to cancel or modify a restrictive covenant.

Covenant Charging Interest Less Than the Fee Simple

See the discussion under “Practice” under s. 219 of the Act.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 1, §5:28, and vol. 2, §10:1 to §10:26.

CASE LAW

Description of Land

“Land”, as referred to in s. 221 of the Act, may be satisfactorily described even though the legal description has not been specified (Becker v. Butterfield, [1986] B.C.J. No. 1234 (QL) (S.C.) and Wines v. Butterfield, [1986] B.C.J. No. 1354 (QL) (S.C.)).

Certainty of Terms

A restriction that a house must not be built in such a way as to block the lake view of an adjacent property is not sufficiently precise to comply with s. 221 of the Act (Stenmark v. Woywitka’s Building Supplies Ltd., 1978 CanLII 2014 (BC SC)).

A 1.5-acre lot that was subject to a restrictive covenant was subdivided into seven strata lots, five of which were purchased by the appellant. The appellant sought to develop each of its five lots, but the respondent claimed that the restrictive covenant that attached to each of them upon subdivision prohibited development. The restrictive covenant, which had been imposed on the land in 1936, stated that only one dwelling was to be erected on the land at any one time. One dwelling already existed on one of the two new strata lots not owned by the appellant. The restrictive covenant did not contain a provision prohibiting subdivision. At trial, the judge dismissed the appellant’s application for modification or cancellation of the restrictive covenant and allowed the respondent’s action, permanently enjoining the appellant from erecting any building on its five strata lots. The Court of Appeal allowed the appeal for two different reasons. A majority of two held that the trial judge erred in holding that the restrictive covenant sufficiently identified the dominant tenement so as to make it enforceable against the appellant. In interpreting a restrictive covenant, extrinsic evidence cannot be adduced to identify dominant lands where an instrument does not purport to do so. However, where an instrument does contain a term purporting to identify dominant lands, extrinsic evidence may be used to explain that term or to identify its subject matter. In this case, the extrinsic evidence failed to clarify the ambiguity on the face of the instrument and it was impossible to ascertain the lands intended to benefit from the covenant. The third Court of Appeal judge allowed the appeal on the grounds that the trial judge erred in failing to modify or cancel the restrictive covenant under s. 35(2)(b) of the Property Law Act. The objections to development expressed by various parties, including the respondent, were unrelated to the objects of the covenant. If the restrictive covenant was not modified to permit construction of one house on each of the strata lots, each of which was as large or larger than the neighbourhood’s surrounding lots, the reasonable use of the land would be impeded without practical benefit to others (Kirk v. Distacom Ventures Inc., 1996 CanLII 1442 (BC CA), reversing 1994 CanLII 1030 (BC SC); see also the annotation for this decision under s. 35 of the Property Law Act).

In 1946, Mr. Simpson, owner of Kelowna Sawmills, sold two parcels of the company’s land to the City of Kelowna on two conditions, namely that the city could only use the property for municipal purposes and that the city could not, at any time, sell the property or use it for any commercial or industrial purpose. The conditions were included in the deeds of transfer and registered, as restrictive covenants, against the city’s title to the property. In 2004, the city passed a resolution approving the removal of the covenants from the property. The city also obtained written consent to release the covenants from the corporate successor to Mr. Simpson’s company. In 2008, the petitioner brought this action for a declaration that the restrictive covenants were valid and enforceable and could not be released. Following Kirk v. Distacom Ventures Inc., the court held that the identification of dominant lands could not be regarded as a mere technicality in determining the validity of a restrictive covenant. In this case, there was nothing in the covenants, the option to purchase, or the deeds of transfer that annexed the benefit of the covenants to any other lands owned by Mr. Simpson’s company, by Mr. Simpson in his personal capacity, or by anyone else including the city. Without identification of the dominant lands, it was impossible to determine who could enforce the covenants. Furthermore, registration was not determinative of the covenants’ validity and enforceability. Even though the covenants were accepted and registered under legislation in force in 1946 and even though that legislation might have been different from provisions in force in 2008, the underlying validity of the covenants could only be reviewed in accordance with legislation in effect on the date of the review application. In 2008 when the petition was filed, s. 221(1) of the Act placed an obligation on the registrar to ensure that restrictive covenants met certain prerequisites before registration. Section 221(2) confirmed that registration was not a determination by the registrar of a covenant’s essential nature or enforceability. The court found that s. 221(2) was enacted for the purpose of preserving a party’s right to challenge the validity of a registered covenant or to foreclose an argument that this right had been curtailed by the enactment of s. 221(1). In this case, the court found that the covenants were not valid and hence could not be enforced. On other grounds, the court confirmed the intention of the parties to create a trust in perpetuity to use the property for municipal purposes for the benefit of the residents of Kelowna (Save the Heritage Simpson Covenant Society v. Kelowna (City), 2008 BCSC 1084).

Personal Covenants

A “restrictive covenant” that restricted a landlord from leasing its adjoining lands to businesses competing with the tenant and that was registered against title to the other lands was not, in fact, a restrictive covenant. The covenant did not charge the land but was only a personal covenant binding a particular landlord not to enter into certain types of lease. There is a distinction between restrictions on “use” running with the land and restrictions on alienation or other incidental matters collateral to the land itself. The fact that a covenant may affect the use to which land may be put is, in itself, insufficient to make the covenant a valid restrictive covenant running with the land (Nylar Foods Ltd. v. Prince Rupert Roman Catholic Episcopal Corporation, 1988 CanLII 3355 (BC CA)). For other examples of the distinction between a covenant running with the land and a personal covenant, see Brigg v. Thornton, [1904] 1 Ch. 386; Noble v. Alley, 1950 CanLII 13 (SCC); Canadian Construction Company v. Beaver (Alberta) Lumber Ltd., 1955 CanLII 61 (SCC); Canadian Petrofina Ltd. v. Rogers, 1962 CanLII 220 (ON SC); and White v. Lauder Developments Ltd., 1975 CanLII 376 (ON CA).

The appellant’s predecessor in title, R, owned four parcels of land on which he operated a campground and a golf course. R sold three of the parcels to the respondents’ predecessor in title and registered a covenant against his remaining parcel restricting its use to the golf course. Upon R’s death, title to the golf course property passed to R’s son. As the petitioner in the trial court, R’s son applied to cancel the charge registered against title to his property. In upholding the agreement as a registrable covenant, the trial court found that the agreement did not create any positive obligations because R’s son was not required to operate the golf course. Rather, R’s son was simply prevented from using the land for any other purpose. The Court of Appeal disagreed. While the first part of the agreement used negative language (the land could not be used for any purpose other than a golf course), the covenant was positive in substance. In reading the agreement as a whole, the Court of Appeal found that the agreement required R to use the property only as a golf course, to keep the property in repair, and to give preferential rates to certain golfers. There was nothing in the language of the agreement, or in the surrounding circumstances, to suggest that no use of the lands was intended by R. The only sensible interpretation of the agreement was that the parties intended the lands to be used as a golf course and only as a golf course. As such, the agreement created positive obligations that could not be enforced against R’s successors in title. The Court of Appeal allowed the appeal and also ordered the registrar to cancel registration of the agreement as a charge against the appellant’s land (Aquadel Golf Course v. Lindell Beach Holiday Resort Ltd., 2009 BCCA 5).

Effect of Guidelines

The plaintiffs and defendants owned lots in a residential subdivision that were subject to a statutory building scheme. The plaintiffs applied for a declaration that the defendants were in breach of the building scheme. A clause in the building scheme set out guidelines with respect to what must be done by an owner to obtain the approval of the developer before the construction of a new home. Part of the clause in question dealt with acceptable roofing materials. At all material times, the defendants were aware that the developer would not approve the roofing materials they proposed and subsequently installed. The installation of the defendants’ roof from materials not included in the guidelines and without the approval of the developer raised an issue between the defendants and the developer. However, although other clauses in the building scheme appeared to include negative covenants, guidelines with respect to acceptable roofing materials are guidelines only and are not a negative covenant that the court can enforce (Swiatlowski v. Jackman, 2000 BCSC 553).