Lindner v. Chittick, 2010 ABQB 819

Court of Queen ’ s Bench of Alberta Citation: Lindner v. Chittick, 2010 ABQB 819 Date: 20101221 Docket: 1001 03347 Registry: Calgary Between: Peter Lindner Respondent (Applicant) - and - Dana C. Chittick, David G. Chittick, Kam Fong, Yusuf Senai Kozak, Irene Kozak George H. Duquesne, Daniel Bowman, Trudi Bowman, Lydia Smith and M. Dale Massie Applicants (Not Parties to the Original Application) _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice A.M. Lutz _______________________________________________________ I.

Introduction [ 1 ] The Applicants seek a motion to discharge the ex parte order granted March 3, 2010 by Master J. Hanebury in Chambers, ordering discharge and withdrawal of a restrictive covenant (the “Lindner Covenant”) registered on the Respondent’s Certificate of Title. II. Facts [ 2 ] The Parties are all owners of land along Briar Crescent N.W. in Calgary, Alberta. Briar Crescent is located on an escarpment and provides views of downtown Calgary and the Rocky Mountains. The vast majority of the properties on both sides of Briar Crescent

are subject to restrictive covenants. Among other things, these covenants dictate the maximum number of stories for a building and provide a minimum setback requirement. It is the evidence of the Applicants that they believed these covenants would preserve their views, in some cases, and would preserve the character of the neighbourhood. [ 3 ] The properties along Briar Crescent can be divided into the north properties, and the south properties. Briar Crescent runs roughly east-west and divides the north properties from the south properties.

The north properties are situated farther from the escarpment than the south properties. The north properties are subject to a set of restrictive covenants which are identical to each other (the “North Covenants”); similarly, the south properties are subject to a set of restrictive covenants which are identical to each other (the “South Covenants”). The South Covenants differ from the North Covenants.

There are four properties among the South Covenants where the covenants have been modified or discharged, which will be discussed later. [ 4 ] The results of a historical title search, adduced through the Affidavit of Dana C. Chittick (the “Chittick Affidavit”) show that the City of Calgary (the “City”) had title to the lands on either side of Briar Crescent. In particular, the Certificate of Title of June 29, 1951 gives the City title to the land immediately to the south, and some but not all of the land immediately to the north of Briar Crescent.

In addition, the Transfers of Land introduced through the Chittick Affidavit for all the lots along the North and South sides of Briar Crescent show a transfer from the City. The initial transfers from the City were largely made in the early 1950s. It appears that each property had its restrictive covenant imposed at the time of the transfer from the City. [ 5 ] The Lindner property is one of the south properties. The Lindner Covenant dates from January 8th, 1954.

Before the order of Master Hanebury, the Lindner property was subject to the following conditions, which appear in a transfer of land (the “Lindner Transfer of Land”): THE CITY OF CALGARY, a municipal corporation having jurisdiction in the City of Calgary in the Province of Alberta, being registered owner of an estate in fee simple, subject however, to such encumbrances, liens and interests as are notified by memorandum as underwritten, in all that certain tract of land situate in the Province of Alberta, being composed of: Lot 4 in Block 4, according to a plan of part of the City of Calgary in the Province of Alberta, of record in the Land Titles Office for the South Alberta Land Registration District as "BRIAR HILL - 1161-G.J." Subject to reservations and conditions in existing Certificate of Title, and subject to the following covenants and conditions: 1.

Only one family dwelling house and a private garage, attached or unattached to such dwelling house may be erected on each lot. Such private garage shall in either case conform in style and exterior finish to the dwelling house on the same lot. 2. Each such dwelling house shall occupy a ground area of at least 1,200 square feet and shall be of single storey construction only. The dimensions of any garage, attached or unattached, porch, verandah, sun-room or other appurtenant structure shall be excluded in computing such ground area. 3.

Each building on the said lot shall be set back from the front property line a distance of not less than Twenty

(20) Feet. Measurements shall be made in the same manner as similar measurements are made pursuant to the Building By-law of the City of Calgary. 4. No lot or any building erected thereon shall be used for any trade or business or otherwise than for private residential purposes. 5. If any dispute or difference arises over the

interpretation of the covenants numbered 2 and 3 herein, such dispute or difference shall be referred back to the City Engineer of the City of Calgary whose decision shall be final. 6. Failure to enforce any covenant herein shall not constitute a waiver of such covenant and any covenant herein may be enforced as soon

as a breach of such covenant occurs. does hereby in consideration of the sum of ONE THOUSAND TWO HUNDRED FIFTY ($1,250.00) Dollars paid to it by ALEXANDER SHEPHERD, of the City of Calgary, in the Province of Alberta the receipt of which sum is hereby acknowledged, transfer to the said ALEXANDER SHEPHERD, Builder all its estate and interest in the said piece of land. [ 6 ] The South Covenants have exactly the same restrictions as the Lindner Covenant. [ 7 ] The North Covenants allow construction beyond one storey, but are otherwise very similar to the South Covenants.

The only significant difference between the North Covenants and the South Covenants is in Clause #2. The North Covenants read as follows: 1. Only one single family dwelling house and a private garage, attached or unattached to such dwelling house may be erected on each lot. Such private garage shall in either case conform in style and exterior finish to the dwelling house on the same lot. 2. Each such dwelling house shall occupy a ground area of at least: (a) 1,200 square feet when of single storey construction, (b) 850 square feet when of one and one-half or two-storey construction.

The dimensions of any garage (attached or unattached), porch, verandah, sun-room or other appurtenant structure shall be excluded in computing such ground area. 3. Each building on the said lot shall be set back from the front property line a distance of not less than Twenty

(20) Feet. Measurements shall be made in the same manner as similar measurements are made pursuant to the Building By-law of the City of Calgary. 4. No lot in the said Plan or any building erected thereon shall be used for any trade or business or otherwise than for private residential purposes. 5. If any dispute or difference arises over the

interpretation of covenants numbered 2 and 3 herein, such dispute or difference shall be referred to the City Engineer of the City of Calgary whose decision shall be final. 6. Failure to enforce any covenant herein shall not constitute a waiver of such covenant and any covenant herein may be enforced as soon as a breach of such covenant occurs. [ 8 ] In many of the transfers of land put before me, it appears that the text identifying the piece of land and the restrictive covenant conditions was affixed as a separate piece of paper onto a standard transfer of land form.

The Lindner Transfer of Land is one of these. Some of these transfers bear a stamp, affixed partly on the transfer of land and partly on the paper, which states “form attached hereto is made part of this contract.” The Lindner Certificate does not have this stamp. I do not consider this stamp significant, but mention it here because the Respondent raised this stamp as evidence that nothing more was intended than a contract between the parties. [ 9 ] As mentioned previously, there are four lots on Briar Crescent which do not have the same conditions imposed as their neighbours.

Lots 7 and 8 of Block 4, which are two south lots, had the entire restrictive covenant removed by court order in 1979. Also, Lot 12, as well as one portion of Lot 17, both of Block 4 and both south lots, have had their respective covenants modified by court order to remove condition #3, the set back requirement of 20 feet. For completeness, it should also be mentioned that the other portion of Lot 17 is a south lot but has a covenant in the same form as the North Covenants. However, the second part of Clause #2 is struck out.

Clause #2 reads as follows for that portion of Lot 17: 2. Each such dwelling house shall occupy a ground area of at least: (a) 1,200 square feet when of single storey construction, (b) 850 square feet when of one and one-half or two-storey construction. The dimensions of any garage (attached or unattached), porch, verandah, sun-room or other appurtenant structure shall be excluded in computing such ground area. [ 10 ] It is important to note that each covenant on each lot has its own instrument number.

In other words, although the South Covenants impose identical restrictions, this is not done by means of one instrument registered against all the south lots. Rather, each south lot has the same restrictive covenant registered against it by a different instrument number. The situation is the same for the North Covenants, in that each lot has its own instrument number for its restrictive covenant.

There is one case among the North Covenants where two lots share an instrument number, but it appears that both lots in that case were initially transferred in the same transfer of land from the City. [ 11 ] As a result, the Lindner Covenant, being Restrictive Covenant 6857GO, is registered only against the title to the Lindner lands.

Restrictive Covenants with the same wording as Restrictive Covenant 6857GO are registered against other lands adjacent to and in the vicinity of the Lindner lands, but each of those Restrictive Covenants has a separate and distinct registration number and relates to a separate transfer of land from the City. [ 12 ] The Applicants own some of the south lands and some of the north lands. In particular, the Applicants Lydia Smith and M. Dale Massie own lands that are part of the south lands. The lands owned by Dale Massie are immediately adjacent to the Respondent's lands.

The lands owned by the other Applicants form part of the north lands. [ 13 ] In their affidavits, the affiants depose that they had knowledge of the restrictive covenants on Briar Crescent when they purchased their properties, and that the restrictions were important to them. The Affidavit of George H. Duquesne suggests that the covenants were common knowledge around the neighbourhood.

The affiants who are owners of the north properties depose that the restriction on the South Covenants which limits those properties to one storey was a very important feature to them both in terms of their enjoyment of the land, and the preservation of the land’s value. They state that they believed the height restriction in the covenant would preserve the view from their lands. Indeed, the Applicant Dana Chittick deposes that she caused land titles searches to be made on the 5 south lots in front of the Chittick land (a north property) to ensure the existence of the restrictive covenants.

This claim is substantiated by a copy of the purchase contract for the Chittick lands, appended to the Chittick Affidavit, which shows the purchase was conditional on the buyer verifying the existence of the restrictive covenants. All the Applicants also depose that the other restrictions were important to them in terms of enjoyment and value because the character of the neighbourhood would be preserved. III. Issues [ 14 ] The Court must resolve the following issues: 1. Is the Lindner Covenant a valid and enforceable restrictive covenant? 2. Is the Lindner Covenant part of a building scheme? 3.

If so, are the Applicants entitled to enforce the Lindner Covenant?

4. Have the conditions set out in section 48(4) of the Land Titles Act for discharging a restrictive covenant been met? [ 15 ] Issues 1 to 3 arise as a result of the same set of tests and are best resolved together. IV. Legislation [ 16 ] This application was launched under Rule 387 (3) of the Alberta Rules of Court, Alta. Reg. 390/68, as amended (the “former Rules”) which provides authority for a judge to vary or discharge an ex parte order: 387

(3) Any order made ex parte by a master in chambers may be varied or discharged by any master in chambers or any judge on notice given to every person affected. [ 17 ] When the application was heard, the new Alberta Rules of Court , Alta. Reg. 124/2010 ( the “new Rules”) were in effect. Rule 9.15 (1) allows the Court to discharge an order made without notice to one or more parties: 9.15

(1) On application, the Court may set aside, vary or discharge a judgment or an order, whether final or interlocutory, that was made (

a) without notice to one or more parties, or (

b) following a trial or hearing at which a party did not appear because of an accident or mistake or because of insufficient notice of the trial or hearing. [ 18 ] Rule 6.14 (3) of the new Rules concerns the evidence before the Court on an appeal from the judgment or order of a Master: 6.14

(3) An appeal from a master’s judgment or order is an appeal on the record of proceedings before the master and, if the judge permits, may also be based on new evidence that is significant enough that it could have affected the master’s decision. [ 19 ] The transitions provisions of the new Rules provide as follows, in Rule 15: 15.1 In this Part, (a) “existing proceeding” means a court proceeding commenced but not concluded under the former rules; (b) “former rules” means the Alberta Rules of Court (AR 390/68) in effect immediately before these rules come into force. ... 15.2

(1) Except as otherwise provided in an enactment, by this Part or by an order under rule 15.6, these rules apply to every existing proceeding.

... 15.6 If there is doubt about the application or operation of these rules to an existing proceeding or if any difficulty, injustice or impossibility arises as a result of this Part, a party may apply to the Court for directions or an order, or the Court may make an order, with respect to any matter it considers appropriate in the circumstances, including: (

a) suspending the operation of any rule and substituting one or more former rules, with or without modification, for particular purposes or proceedings or any aspect of them; (

b) modifying the application or operation of these rules in particular circumstances or for particular purposes. ... 15.12 Where these rules impose a new test, provide new criteria or provide an additional ground for making an application in an existing proceeding, these rules apply in respect of the application if the application was made but has not been heard prior to the coming into force of these rules. [ 20 ] Section 48(4) of the Land Titles Act , R.S.A. 2000, c. L-4 provides the Court with authority to discharge restrictive covenants under certain conditions: 48

(4) The first owner, and every transferee, and every other person deriving title from the first owner or through tax sale proceedings, is deemed to be affected with notice of the condition or covenant, and to be bound by it if it is of such nature as to run with the land, but any such condition or covenant may be modified or discharged by order of the court, on proof to the satisfaction of the court that the modification will be beneficial to the persons principally interested in the enforcement of the condition or covenant or that the condition or covenant conflicts with the provisions of a land use bylaw or statutory plan under

Part 17 of the Municipal Government Act , and the modification or discharge is in the public interest. [ 21 ] Section 48(5) of the Land Titles Act states that, if a covenant would not by its language run with or be annexed to the land, registration cannot cure that defect: 48

(5) The entry on the register of a condition or covenant as running with or annexed to land does not make it run with the land, if the covenant or condition on account of its nature, or of the manner in which it is expressed, would not otherwise be annexed to or run with the land. V. Analysis A. Applicable Rules of Court [ 22 ] The timing of this matter falls between the new Rules and the former Rules. In particular, the Applicants filed their notice of motion on July 12, 2010. The briefs for both sides were filed by October 26, 2010. The matter was argued before me on November 9, 2010. Therefore, this matter clearly fits into the definition of an “existing proceeding” under Rule 15.1(

a) of the new Rules as a “court proceeding commenced but not concluded under the former rules.” [ 23 ] The transition provisions provide guidance under

Part 15 regarding whether the former Rules or the new Rules should apply. In particular, Rule 15.2(1) provides that the new Rules apply to every existing proceeding unless otherwise stipulated. One of the

exceptions arises out of Rule 15.6, which provides that where there is any doubt about whether the former or the new Rules apply, or any difficulty, injustice, or impossibility arises, the Court may make an order suspending the operation of a new Rule and substituting a former rule.

In addition, Rule 15.12 provides that where the new Rules impose “a new test, provide new criteria or provide an additional ground for making an application”, the new Rules apply in respect of applications made but not heard prior to the coming into force of the new Rules. [ 24 ] The choice of the former Rules or the new Rules does not seem to make a difference to the outcome of this application.

Under the former Rules, Rule 387(3) provided that an ex parte order made by a Master “may be varied or discharged by any master in chambers or any judge on notice given to every person affected.” Under the new Rules, Rule 9.15(1) states that “the Court may set aside, vary or discharge a judgment or an order...that was made (

a) without notice or one or more parties.” Rule 15.2(1) provides that the new Rules apply to an existing proceeding. I do not see any reason not to apply the new Rules. [ 25 ] I have considered the question of whether an application to discharge a Master’s order made to a Judge is an appeal.

This question has significance because Rule 6.14(3) of the new Rules make an appeal from a Master an appeal on the record, though a Judge may permit “new evidence that is significant enough that it could have affected the master’s decision.” Before the new Rules, an appeal from a Master was an appeal de novo : United Utility Workers Assn of Canada v. TransAlta Corp. , 2004 ABCA 200 , 354 A.R. 58. There is now some case law that suggests the standard of review for an appeal from a Master has changed to the general standard of appellate review: Royal Bank of Canada v.

Place , 2010 ABQB 733 . [ 26 ] I find that an application to discharge an order or judgment under Rule 9.15(1) made without notice to one of the parties in not an appeal within the meaning of Rule 6.14(3). Rule 9.15(1) would have allowed the application to discharge Master Hanebury’s order to be brought in front of a Master as well as a Judge. It does not make sense to apply different criteria to the evidence that can be before the Court depending on whether the parties bring the application before a Master or a Judge.

The practical effect of applying Rule 6.14(3) in these circumstances would be to place limits on the parties’ evidence which would not apply if they had made the application to a Master. [ 27 ] If I am wrong and Rule 6.14(3) does apply, then I would use my power under that rule to permit the new evidence which was introduced before me. The evidence regarding the possible existence of a building scheme was significant and could have affected the master’s decision. [ 28 ] Further, if the new evidence were not admissible, a difficulty would result for the Applicants which could have led to an injustice.

If that were so, I would have applied Rule 15.6 to substitute the former Rule for the new Rule, and allowed the new evidence to be heard. B. Law 1. Validity of Restrictive Covenant [ 29 ] A restrictive covenant is “an unusual type of contract, in that the burdens and benefits of the contract run with the land, and are enforceable by and against the particular owners of the land from time to time”: Potts v. McCann , 2002 ABQB 734 , 325 A.R. 137 at para. 14 .

The first step is to determine whether the restrictive covenant is indeed a valid restrictive covenant that runs with the land or is only a personal contract. [ 30 ] The requirements for an enforceable restrictive covenant are laid out in Crump v. Kernaham (1995), 1995 CanLII 9145 (AB KB) , 173 A.R. 123 (Q.B.), a decision of Rawlins J. First, there is a set of tests that must be met to ensure that the burden of the covenant has passed to the assignees of the original covenantor.

Rawlins J. stated at para. 10: In order for a covenant to be enforceable against an assignee of the original covenantor's land..., equity has traditionally demanded that three conditions be fulfilled: 1) the covenant must be negative in nature;

2) the covenant must be made for the protection of land retained by the covenantee or his assignees; 3) the burden of the covenant must have been intended to run with the covenantor's land. If any of these three conditions is not met, then the burden of the covenant will not run with the land. [ 31 ] The essence of the first requirement is that the covenant must prohibit. It does not matter whether the language itself is positive or negative.

For example, the covenant may not require the owner to build, but if the owner choses to build, the covenant may impose restrictions on how she or he will build: Crump at para 11 . [ 32 ] As regards the second requirement, the law requires the document to identify on its face the dominant tenement which benefits from the restriction on the servient tenement. However, in a building scheme all tenements are both dominant and servient tenements. See Kolias v.

Owners: Condominium Plan 309 CDC , 2008 ABCA 379 , 440 A.R. 389 at paras. 12-18 ; Crump at paras. 11, 16 . [ 33 ] The question considered under the third requirement is whether the burden of the covenant was intended to run with the covenantor's land, or to be a personal contract: Crump at para.11; Robert Megarry and H.W.R.

Wade, The Law of Real Property , 5 th ed. (London, England: Stevens & Sons,1984) at 778. [ 34 ] Slatter J. suggested in Potts that the existence of a building scheme may remove the need to independently prove the third condition, that is that the covenant was intended to run with the land, at para. 27: Where the four conditions in Elliston v. Reacher, supra, are met, then the covenants are capable of running with the land, and all of the owners from time to time may enforce and are subject to the covenants.

In effect, the satisfaction of these four conditions is sufficient to indicate an intention on the part of the vendor that the covenants would run with the land.

Some of the cases on building schemes appear to undertake a separate inquiry as to whether the instrument in question discloses an intention to have the covenants run with the land, although it is not entirely clear that this is a separate requirement if the Elliston test is met: see Seiffeddine, supra , at pp. 238-9. [ Seiffeddine is discussed below.] [ 35 ] Once it has been determined that the burden of the covenant passed to the assignee of the original covenantor, it must be determined whether the assignee of the original covenantee has the benefit of the covenant and is entitled to enforce it.

As regards this test, Rawlins J. stated in Crump , at para 18 : [L]et me now turn to the benefit of a validly constituted restrictive covenant at equity.

There are two requisites: 1) the covenant must touch and concern land of the covenantee or assignee; and 2) the benefit of the covenant must have passed to the covenantee or assignee in one of three ways: by annexation; by assignment; or under a scheme of development. [ 36 ] The first requirement means that the covenant must benefit the land, not only the covenantee: see Crump at para. 13 ; Megarry and Wade at 765. [ 37 ] The second requirement provides that the benefit of a restrictive covenant must have passed in one of the three ways listed: annexation, assignment, or under a scheme of development.

This branch of the test is met if it can be shown that the benefit of the covenant passed under a scheme of development, even without an expression of annexation: Crump at para. 14 .

2. The Requirements for a Scheme of Development [ 38 ] The requirements for a scheme of development have been laid out in the case of Elliston v. Reacher , [1908] 2 Ch. 374 , aff’d [1908] 2 Ch. 665 . It has been applied in Alberta in Crump , Potts and in Barker v. Palmer , 2005 ABQB 815 , 389 A.R. 10.

The test is stated in Elliston at 384: … it must be proved (1.) that both the plaintiffs and defendants derive title under a common vendor; (2.) that previously to selling the lands to which the plaintiffs and defendants are respectively entitled the vendor laid out his estate, or a defined portion thereof (including the lands purchased by the plaintiffs and defendants respectively), for sale in lots subject to restrictions intended to be imposed on all the lots, and which, though varying in details as to particular lots, are consistent and consistent only with some general scheme of development; (3.) that these restrictions were intended by the common vendor to be and were for the benefit of all the lots intended to be sold, whether or not they were also intended to be and were for the benefit of other land retained by the vendor; and (4.) that both the plaintiffs and the defendants, or their predecessors in title, purchased their lots from the common vendor upon the footing that the restrictions subject to which the purchases were made were to enure for the benefit of the other lots included in the general scheme whether or not they were also to enure for the benefit of other lands retained by the vendors. [ 39 ] Key to a building scheme is evidence of an intention that the purchasers should have rights against each other, despite not being in direct contractual relations.

Since Alberta has a Torrens system of title, once the obligation is recorded on title, the purchasers are deemed to have notice. See Crump at para. 17 . [ 40 ] In Seifeddine v. Hudson’s Bay Traders (1980), 1980 ABCA 29 (CanLII) , 22 A.R. 111 (C.A.), aff’g Seifeddine v. Hudson’s Bay Traders (1978), 1978 CanLII 754 (AB KB) , 16 A.R. 252 (T.D.) and Re Tornado Developments v. The Bay (1979), 1979 CanLII 1087 (AB KB) , 102 D.L.R. (3d) 633, 10 Alta.

L.R. (2d) 279 (Q.B.) [ Re Tornado Developments cited to D.L.R.], Morrow J.A. for the Court of Appeal defined the requirements for a building scheme as follows, at para. 18: In general, it seems to be established law that a scheme in the sense under discussion here can or does come into effect where an owner with a well-defined area of land deals with it in such a manner as to impose restrictive obligations as to its use on each portion as he disposes of it not only for his benefit but for his common purchasers inter se. [ 41 ] The lack of a well-defined area of land has been held to be fatal to the existence of a building scheme even if all other conditions have been met.

In Kirk v. Distacom Ventures Inc . (1996), 1996 CanLII 1442 (BC CA) , 81 B.C.A.C. 5, Williams J.A. stated at paras. 35-36: There has been no relaxation, however, of the requirement that the area of an alleged scheme be defined to a high degree of specificity. The author of Preston & Newsom’s Restrictive Covenants Affecting Freehold Land (8 th Ed.

London: Sweet & Maxwell, 1991) writes, at p. 53: The first essential of the scheme is therefore a defined area, since that alone can ‘identify the class of persons as between whom reciprocity of obligation is to exist.’ This first essential has been insisted upon without any exceptions at all, since the absence of a defined area would be wholly destructive of the essential concept of mutuality; no one could say with or to whom he had reciprocal obligations if the area of the scheme is unknown.

The requirement is, however, that the area shall be defined, not that it shall be defined by reference to a map, though that is usually the best way of doing so. The Privy Council recently had occasion to comment on this requirement in Emile Elias & Co. v. Pine Groves Ltd., [1993] 1 W.L.R. 305 . A five lot scheme was alleged in that case. It was not proven that the owners of lots 1 to 3 knew at the time of purchase that lot 5 was within the ambit of the scheme. The Board advised in these words, at p. 310: ...it is not sufficient that the common vendor has himself defined the area.

In order to create a valid building scheme, the purchasers of all the land within the area of the scheme must also know what that area is.

[ 42 ] Lieff J. reviewed the authorities extensively as to how precisely the area of a building scheme must be defined in the case of McGregor v. Boyd Builders , 1965 CanLII 339 (ON SC) , [1966] 1 O.R. 424 (H.C.J.), as the case was decided based on this very point. Lieff J. concluded at 442: The cases all point to one conclusion, that there must be a definite plan defining the area of land subject to the scheme and this area must be brought to the knowledge of the purchasers.

In my opinion, if reciprocal rights are going to be created, then the land which is to enjoy those reciprocal rights must be made clear. [ 43 ] Counsel for the Respondent referred me to Kolias for the proposition that extrinsic evidence is only admissible where the document references the area of the scheme in an ambiguous manner. In Kolias , Côté J.A. found that, where there was no description of the dominant tenement, extrinsic evidence was not admissible to identify it.

The Justice said, at paras. 20, 22: Having found that the dominant tenement could not be readily ascertained on the face of the documents, the chambers judge here held that extrinsic evidence was admissible to identify the dominant tenement, relying on Kirk v. Distacom Ventures (1996) 1996 CanLII 1442 (BC CA) , 81 B.C.A.C. 5, 4 R.P.R. (3d) 240 (C.A.). Kirk involved a restrictive covenant which included a description of the intended dominant tenement, but it was ambiguous.

The Court held admissible extrinsic evidence of surrounding circumstances existing at the time the covenant was made, in order to resolve that ambiguity. ... [E]ven if the law allowed extrinsic evidence to resolve ambiguous descriptions of dominant tenements, there is no such ambiguity here. This omission is not equivalent to an ambiguity. Ambiguity must exist in the language of the restrictive covenant as written. It cannot be created by the evidence sought to be adduced: Fridman, The Law of Contract in Canada 445-46 (5th ed. 2006).

The chambers judge, therefore, erred in law when he admitted extrinsic evidence to identify the dominant tenement in this case. [ 44 ] The Applicants sought to distinguish the case of Kolias on the point that it did not refer to a building scheme. This is true, but the British Columbia Court of Appeal case of Kirk referred to in Kolias extended that principle to building schemes. In Kirk , Williams J.A. stated at para 33: Class 3 in the Canadian Construction case, which includes building schemes and cognate arrangements, describes webs of mutually enforceable restrictive covenants.

Each of the lots in a common law building scheme is both dominant and servient with respect to each of the other lots. This means, of course, that the whole area of the scheme must be easily ascertainable from the conveyance instruments by which the purchasers take.

Whereas the enforceability of a class 2 covenant is contingent on the dominant land being sufficiently ascertainable, the enforceability of a class 3 covenant is contingent on the land benefiting from each covenant (the area of the scheme) being ascertainable from each covenant instrument . [emphasis added] [ 45 ] Kolias together with Kirk bring me to the conclusion that the contractual principle regarding extrinsic evidence applies to building scheme restrictive covenants. [ 46 ] In the decision of Furano v.

Montgomery , 2006 ABQB 230 , 398 A.R. 391, Hawco J. dealt with the issue of who should receive notice of an application to discharge a covenant under s. 48 of the Land Titles Act . There had been conflicting decisions in Alberta on the point. In Potts , Slatter J. held that notice was limited to those with a restrictive covenant under the same instrument number. In Potts , the area had multiple groups of houses, with one instrument number applying a particular restrictive covenant to all the houses in that group.

In contrast, in Re Fear , 2005 ABQB 104 , Master Laycock held that notice for a building scheme should include everyone in the defined area, as all those people had an interest in the covenant. Hawco J. preferred the reasoning in Potts because the restrictive covenant originated in contract, and only those who were parties to the agreement should have rights under it. C. Application

[ 47 ] This case turns on whether the lands in question are subject to a building scheme. [ 48 ] In canvassing the requirements stated in Elliston v. Reacher , I can find no building scheme. As to the first requirement, it is clear that the Applicants and the Respondent derive title from the City of Calgary, a common vendor. However, I find that the analysis falters at the second requirement. It is true that the land was laid out in lots subject to restrictions, and the evidence is that the restrictions were imposed on all the lots along Briar Crescent.

However, the problem is that the covenant instrument does not make any reference at all to the area of the alleged building scheme. Plan 1161 G.J. is referenced in the land transfers, but the evidence before the Court is that Plan 1161 G.J. extends far beyond Briar Crescent itself. Applying the rule that extrinsic evidence is only admissible where there is an ambiguity, and not where there is no reference at all to the ambit of the scheme, my analysis would stop here. [ 49 ] However, even allowing extrinsic evidence, I would not have been able to ascertain the ambit of the scheme.

The Applicants submit that they readily decided the scheme extended to all of Briar Crescent by doing a search of title, and finding that the covenants extended along the entire street. I find that this does not provide evidence that Briar Crescent was intended to be the defined area, nor that the purchasers understood it to be so. For example, it was the evidence of Dana Chittick that she conducted searches on the five properties south of the Chittick land.

Is the court somehow to assume that Dana Chittick would have known that the ambit of the building scheme was the whole of Briar Crescent from her five searches? [ 50 ] No attempt is made in the documents to indicate that the covenants form part of a building scheme, much less to define the ambit of such as scheme. The reciprocity of obligation needed to uphold contractual relations is missing in this case. While the extrinsic evidence may show that the covenants extend the length of Briar Crescent, it is only speculation to say the purchasers of these properties knew that was the bargain they entered into.

Is the Court to now tell Mr.

Lindner that he may not have known it at the time, but he had bound himself in a contract with all of Briar Crescent? [ 51 ] I find I must give effect to the objection of the Respondent that he cannot know with whom he shares the mutual obligations allegedly created by the restrictive covenant, and decline to find a building scheme. [ 52 ] In Seiffeddine , the document clearly defined the area of the building scheme, stating as summarized in para. 7: NOW THEREFORE the said THE GOVERNOR AND COMPANY OF ADVENTURERS OF ENGLAND TRADING INTO HUDSON’S BAY hereby annexes to the following lands, namely: all in the Hudson's Bay Reserve in the City of Edmonton, according to a plan thereof of record in the Land Titles Office for the North Alberta Land Registration District as Plan 7540 A.H. ...” [ 53 ] In Crump , the defined area was even clearer.

There, the document stated, as noted in para. 9: The lots hereinafter set out in the

Schedule shall be deemed to be a building scheme and the land use and building restrictions and conditions herein shall be deemed to be covenants running with the land and shall be binding on and enure to the benefit of all lots and owners of lots in the said Plans of Subdivision or in such subsequent plans of subdivision of the same area as may be hereafter filed, and such land use and building restrictions and conditions may be enforced by the owner of any such lot. [ 54 ] I include these examples as a contrast to the complete lack of language in the current case that would indicate either an intention to bind the purchasers inter se in a scheme of development, or the ambit of that scheme. [ 55 ] I am further supported in my

interpretation that this is a personal contract by clause #5. That clause states: 5. If any dispute or difference arises over the

interpretation of the covenants numbered 2 and 3 herein, such dispute or difference shall be referred back to the City Engineer of the City of Calgary whose decision shall be final. This clause allows the City Engineer to rule on a dispute without taking into account the interest of the neighbours, and therefore suggests that the purpose of the covenant is to protect the City.

[ 56 ] In Re Tornado Developments , approved of by the Court of Appeal in Seifeddine, there was a restriction in the covenant providing that “the site of and general design of the house shall be approved in writing by an officer of the Hudson’s Bay Company”: at 634. Cavanagh J. held that restriction was not a restriction running with the land. However, the clause was not fatal to the rest of the covenant, which was not discharged. The Court of Appeal did not discuss this point in the appeal, but upheld the trial judge.

The Applicants here argue that, similarly, the existence of this clause should not be fatal to the existence of the covenant. It is indeed not the basis of my decision, but the

interpretation of Cavanagh J. supports my

interpretation that this clause is not helpful to the Applicants. [ 57 ] I would like to briefly comment on an issue raised by the Applicants, being that I should decline to follow the recent law which lays down that only those holding under the same instrument number can have standing. In particular, the Applicants referred to Hawco J.’s decision in Furano , and Slatter J.’s decision in Potts . The Applicants argued that the requirement of a shared instrument number is a recent requirement.

While it may be that in a proper case, a building scheme could be found where there was not a shared instrument number, the heart of the decision in those cases goes not to instrument numbers but rather to the requirement that a defined area of mutual obligation exist before the court will find a restrictive covenant by way of a building scheme. In the fact situations in Furano and Potts , where multiple parties held under one instrument number, the instrument number is powerful evidence of the ambit of that particular contract.

However, in a situation as is found here, where every single party holds under a different instrument number, I do not rule out the possibility that a building scheme could be found despite the different instrument numbers if an area of mutual obligation had been defined in some other way. [ 58 ] Since I have found that the restrictive covenant is not a valid restrictive covenant that runs with the land, it is not necessary to consider whether the criteria under s.48(4) of the Land Titles Act to discharge a restrictive covenant have been met. The

section only applies where the restrictive covenant has been found to run with the land. [ 59 ] The application is denied and the order of Master Hanebury is upheld. [ 60 ] Costs may be addressed by appointment within 30 days hereof. Heard on the 9 th day of November, 2010. Dated at the City of Calgary, Alberta this 21 st day of December , 2010. A.M. Lutz J.C.Q.B.A. Appearances: Loran V. Halyn for the Respondent Gregory D.M. Stirling, Q.C.

For the Applicants