247 Cancellation Of Lease On Breach Of Covenant

FORMS

On the Form 17 Cancellation of Charge, Notation or Filing, select Nature of Interest, Lease (Breach of Terms), and attach an image of the original statutory declaration and proof of service.

The registrar’s order is appended by the land title office.

PRACTICE

Proof of Breach of Covenant, Re-Entry, and Possession

To prove breach of a covenant and re-entry and recovery of possession by the lessor or owner, the registrar requires a statutory declaration.

Notice Prepared by Registrar

The registrar prepares the notice(s) for the applicant and gives the applicant the originally signed notice. The applicant must serve the notice(s) on the lessee and on the holder of any derivative charge.

Form of Notice

The following is an example of the form of notice sent by the registrar to a lessee under s. 247(2). The registrar may alter this form of notice to deal with derivative charges.

Order Made by Registrar Following Hearing

The following is an example of the form of order made by the registrar following a hearing held under s. 247(2).

CROSS REFERENCES AND OTHER SOURCES OF INFORMATION

Service of Notice

See Part 22 of the Act regarding the requirements for service of notice.

Form and Manner of Making Application

See s. 148(2) of the Act which provides that an agent or solicitor of an applicant may make application on an applicant’s behalf. The registrar appends the order to the original application.

Secondary Sources

See Di Castri, Registration of Title to Land, vol. 2, para. 395.

CASE LAW

Cancellation of Lease Following Expiry of Lease

The lessor applied for an order under the Bankruptcy Act, R.S.C. 1970, c. B-3 to cancel a lease. The lessor had terminated the lease and re-entered, following expiry of the lease. The lessee did not renew. Subsequently, a trustee in bankruptcy of the lessee was appointed, and the trustee filed in the land title office a caution against the property in question under s. 52 of the Bankruptcy Act then in force. Sections 49, 50, and 52 of the Bankruptcy Act (corresponding roughly to current provisions in Part IV of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3) did not operate to prevent the lessor from obtaining cancellation of the lease because the lessor’s application related to a document and registration under which the bankrupt no longer had an interest (Strata Corp. K353 v. British Columbia (Registrar of Land Titles), [1984] B.C.J. No. 1313 (QL) (S.C.) (Chambers)).

Actual Notice of Restrictive Covenant

A shopping centre was located on three contiguous lots, each of which had a separate legal title. Part of the western lot was subject to a registered sublease under which Overwaitea operated a grocery store. The middle lot was owned by the municipality and leased to BC Retail as a parking lot. The eastern lot was owned by BC Retail and held by BC Retail as a bare trustee and agent for Janda. The Overwaitea sublease included a restrictive covenant prohibiting the operation of a grocery store in any other premises within the shopping centre. After a series of transactions in 2003 and 2004, the land title office issued a correction in 2004 removing the restrictive covenant from the title to the BC Retail lot. In 2008, the beneficial ownership of the BC Retail lot was transferred to Janda. In 2013, Overwaitea became aware that Janda was proposing to lease the BC Retail lot to a national grocery retailer. It was not until this time that Overwaitea learned the restrictive covenant had been removed. In this petition, Overwaitea sought to have the restrictive covenant restored. The court found that, under s. 247 of the Land Title Act, the land title office could remove a restrictive covenant where a head lease was forfeited. However, in this case, the head lease was surrendered, s. 247 had no application, and the terms of the sublease remained in effect, including any charges registered with the sublease. The court’s finding was supported by s. 38 of the Property Law Act that provides that when a head lease is surrendered, the head landlord becomes bound by the terms of any sublease. The court then considered whether, in the absence of notice of the restrictive covenant in 2008 when Janda acquired the beneficial ownership of the BC Retail lot, the restrictive covenant should be restored. The court held BC Retail had actual notice of the restrictive covenant when it became the registered owner of the BC Retail lot in 2004, and therefore, that BC Retail was bound by the covenant. As agent for Janda, BC Retail’s actual knowledge of the existence of the restrictive covenant must be imputed to Janda. Further, as the interest that Janda acquired in 2008 was only an unregistered beneficial interest, there was no transfer of land and Janda could not rely on ss. 23 and 29 of the Land Title Act to protect itself against the unregistered restrictive covenant on the BC Retail lot. BC Retail and Janda also raised issues of estoppel and ambiguity. The court declined to address those issues in the absence of a full evidentiary record and ordered, on being satisfied Overwaitea had a good safeholding and marketable title, that the restrictive covenant be restored (BC Retail Partners (Boitanio Mall) Ltd. v. Overwaitea Food Group, 2015 BCSC 404).

In a subsequent proceeding, the head lease was set to expire in 2017, but Overwaitea’s sublease included a right to renew until 2027. The court held that it was clear that the landlord and tenant intended that the burden of the restrictive covenant was to run with the lots and bind subsequent owners. The proposition that the term of a sublease cannot generally extend beyond the term of a head lease is not absolute where, as here, it was clear that from the outset that the head landlord, the sublandlord, and the subtenant knew and intended that the term of the sublease and the restrictive covenant could be renewed up to 2027. The restrictive covenant was valid and enforceable and did not expire until 2027 (BC Retail Partners (Boitanio Mall) Ltd. v. Overwaitea Food Group, 2017 BCSC 1491).