BC Supreme Court holds that a positive obligation in an easement is not binding on subsequent landowners

4 August 2017

By Kevin Zakreski

In The Owners, Strata Plan NWS 3457 v The Owners, Strata Plan LMS 1425, 2017 BCSC 1346, the Supreme Court of British Columbia considered “whether an obligation to pay certain expenses contained in an agreement registered against title to parcels of land can bind subsequent owners of the land.” Much like the court’s decision earlier this year in the Crystal Square case, the court in this case found little scope to hold that “such a positive obligation is . . . enforceable against the defendant.”

The Owners, Strata Plan NWS 3457 v The Owners, Strata Plan LMS 1425 was a dispute between two strata corporations located next to one another in Surrey. The plaintiff, called Scottsdale Village, was made up of “103 residential townhouse style strata lots.” The defendant, called La Costa Green, was “comprised of 150 residential apartment style strata lots.”

Residents of the two strata corporations have “shared recreational facilities located on the Scottsdale Village lands.” This arrangement was formalized by an easement, registered in the land title office when the lands were developed in the early 1990s, granted by Scottsdale Village to La Costa Green.

“The terms of the Recreational Facilities Easement,” the court noted, “granted Lot A [the land on which La Costa Green was located] the right to enter and have full use of the Recreational Facilities. It also required the owners of Lot A and Lot B [Scottsdale Village] to share in the cost of repairing and maintaining the Recreational Facilities including expenditures of a capital nature. The costs were to be shared on a pro rata basis based on the number of strata lots developed on Lot A and Lot B respectively.” This arrangement lasted for about 20 years, until late 2013, at which time “La Costa Green advised Scottsdale Village that it wished to withdraw from the terms of the Recreational Facilities Easement. Subsequently, by letter dated May 21, 2014, La Costa Green purported to ‘surrender’ its rights under the Recreational Facilities Easement effective July 1, 2014.”

Scottsdale Village refused to accept this surrender of rights. La Costa Green eventually stopped making payments under the easement. Scottsdale Village applied to the court, asking it for “a declaration that the terms of a recreational facilities easement registered at the Land Title Office . . . bind and are enforceable against the defendant, and an order that the defendant pay the plaintiff certain sums owing under that easement.”

Scottsdale Village “concede[d] that it is settled that, at common law, positive covenants do not run with the land and that positive covenants have been defined to include obligations requiring the expenditure of money.” It argued that there are “three alternative means that it says avoids the operation of this general rule on the facts of this case”:

The court rejected each of these arguments.

The bulk of the court’s analysis of the first argument turned on considering the question, “[w]hen is an easement a conditional grant, and when is it a grant with conditions?” The significance of this question derived from some comments by the Ontario Court of Appeal in the Amberwood case which Scottsdale Village argued provided some support for the idea that a conditional grant forms an exception to the general rule. The court rejected this argument:

The approach of the Ontario Court of Appeal to the Amberwood exception, although treated as persuasive authority, is not binding upon me. While the Ontario Court of Appeal has apparently sought to preserve some room for interpreting the grant of a positive easement in a way that sustains it, if the grant is sufficiently tied to the positive condition, I find that the adoption of this approach into B.C. law is not justified, and would introduce too much uncertainty into the law. The struggles that experienced counsel had before me drawing a distinction between the rejection of the conditional grant exception and accepting an exception when the grant is sufficiently conditional, only highlights the uncertainty that would be created if the Amberwood exception were adopted as proposed. Plaintiff’s counsel conceded that he was not aware of any case where a party had successfully applied the Amberwood exception for the benefit of the party owed obligations under a positive grant. This lack of authority makes it even more difficult to accept the proposed exception, given the lack of established principles as to how and when it could be applied.

The court dismissed the second argument (that La Costa Green could be bound by the terms of the easement as a pre-incorporation contract), concluding that:

Although the defendant certainly took the benefit of the easement, this is an insufficient basis upon which to derive the terms of a contract that extend beyond the date of surrender. . . . There is no evidence that the defendant did or would have negotiated access to the easement on the “same terms” as those sought to be imposed within the easement. Specifically, there is no evidence that the defendant would have agreed to an agreement that ran in perpetuity. Making payments during the period they were using the property is not evidence of an intention to be bound after they advised that they no longer wished to use the Recreational Facilities.

The third argument, relating to statutory covenants, referred to section 219 of the Land Title Act. “A local government,” the court noted, “may request or require that a developer provide what is now known as a ‘s. 219 covenant’ in a variety of situations, including as a pre-condition to a building permit.”

In this case, the city of Surrey was a party to the easement but not to the court proceeding. The court found that “this section was clearly designed to protect and enhance a municipality’s rights, and was not intended to confer rights on third parties beyond those otherwise available at common law, nor was this petition arranged procedurally so as to allow such an interpretation to flow.”

In the result, the court concluded “[g]iven that the positive covenant is no longer enforceable against the defendant in light of the surrender of any rights under the Recreational Facilities Easement, the action is dismissed.”

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