Muirfield Land Corp. (Re), 2011 ABQB 495

Court of Queen ’ s Bench of Alberta Citation: Muirfield Land Corp. (Re), 2011 ABQB 495 Date: 20110802 Docket: 1101 04042 Registry: Calgary In the Matter of the Land Titles Act , being

Chapter L-4 of the Revised Statutes of Alberta, 2000, as amended, and In the Matter of Instrument Number 101 031 080 Between: Muirfield Land Corp. Applicant - and - All Parties Dominant to the Restrictive Covenant referred to in Instrument Number 101 031 080 Respondents _______________________________________________________ Reasons for Judgment of J.T. Prowse, Q.C. Master in Chambers

_______________________________________________________ Application to modify a restrictive covenant [ 1 ] There is a golf course and surrounding residential development located near Lyalta, Alberta. It was developed by Muirfield Land Corp.(“Muirfield Land”). [ 2 ] Prospective purchasers of residential lots in the development were promised certain golfing privileges which would accrue to them as homeowners. Those privileges were documented by a restrictive covenant registered against title to the golf course and against the titles to the residential lots.

Now Muirfield Land wishes to modify that restrictive covenant by altering the nature of the golfing privileges provided to homeowners. 43 out of the existing 45 homeowners have agreed to the modification to the restrictive covenant, but 2 dissenting homeowners refuse to consent to the changes. [ 3 ] Muirfield Land therefore applies for an order modifying the restrictive covenant without the consent of the 2 dissenters.

The court ’s jurisdiction to modify a restrictive covenant [ 4 ] The court is given authority to modify a restrictive covenant, but only if the applicant can satisfy the court that the modification will “be beneficial to the persons principally interested in the enforcement of the condition or covenant ... and the modification ... is in the public interest.” [see section 48(4) of the Land Titles Act, which I will refer to as the “Act”].

Summary of conclusion [ 5 ] I am dismissing the application to modify the existing restrictive covenant. Firstly, even though the existing document is entitled ‘restrictive covenant’, in my view it does not qualify as the type of restrictive covenant which can be modified under section 48(4) of the Act. Secondly, I do not consider the proposed amendments, in themselves, to be beneficial to the homeowners or in the public interest.

Golfing privileges initially promised to the homeowners [ 6 ] It was always contemplated that, in addition to homeowners, there would be two other categories of golfers using the golf course, namely, equity members and public players. The homeowners were promised benefits not available to equity members and public players. [ 7 ] Equity members were required to purchase an equity membership and pay annual dues. Homeowners were required to do neither.

Equity members were able to book tee times before they became available to the public, and so there would be times when tee times could be fully booked in advance, and members of the public would not be able to golf at those time. Homeowners were protected from this prospect because 1/3 of the tee times in prime time were reserved for homeowners (in priority to equity members and the public). [ 8 ] Public players could play, during times which had not been pre-booked by homeowners or equity members, by paying green fees per round of golf.

Homeowners likewise had to pay green fees per round of golf, but they were promised green fees at 1/3 of the cost of green fees charged to public players.

Golfing privileges set out in the existing restrictive covenant [9] Some time after acquiring title to their lots, a restrictive covenant was registered against the golf course in favour of the adjacentlots. All the homeowners did not approve the wording of this restrictive covenant in advance. The parties to the restrictive covenantwere Muirfield Land, the owner of the golf course, and the homeowners’ association.

When some of the owners learned of theparticulars of the golfing privileges contained in the restrictive covenant, they concluded that those privileges were inferior to theprivileges they had been promised when they purchased their lots. For example, the restrictive covenant did not grant the homeownersthe right to play a round of golf upon paying 1/3 of the green fees charged to public players. The homeowners’ association sent a letterof complaint to Muirfield Land, and discussions ensued.

The proposed modifications to the restrictive covenant [10] Ultimately a settlement, including a modified restrictive covenant, was proposed and 43 out of the 45 homeowners approvedthe settlement. The proposed restrictive covenant still lacks the reduced green fees which some homeowners say they were promised.

In addition, the proposed restrictive covenant now removes the homeowners pre-booking privileges (for 1/3 of the prime tee times)recognized in the existing restrictive covenant. [11] Why have 43 of the 45 homeowners agreed to the proposed restrictive covenant when it does not contain the pre-bookingprivileges and reduced green fees initially promised? Quite simply, as an inducement to settle, all 45 homeowners have been offeredfree equity memberships. In return they must agree to the modified restrictive covenant and to release any claims that they are notreceiving the golfing privileges initially promised.

It is in order to accommodate the homeowners’ new free equity memberships that themodified restrictive covenant permits an increase in the number of equity memberships from 250 to 302. [12] Why are the dissenters not willing to go along with the inducement and take the free equity membership? The answer is that,while the homeowner need not purchase the equity membership, the homeowner must still pay annual dues in order to exercise theprivileges of an equity member.

Unless someone intends to golf many times a year, and spread the annual dues over numerous rounds ofgolf, the obligation to pay annual dues can be onerous. Compromise not possible [13] The court inquired whether this dispute could be avoided by leaving the present restrictive covenant on the two lots owned bythe dissenters, and modifying the restrictive covenant on the other 43 lots. Unfortunately this is not a viable solution. The presentrestrictive covenant allows only 250 equity memberships. The modified restrictive covenant allows 302 equity memberships.

Theexisting restrictive covenant and the proposed modified restrictive covenant are inconsistent cannot co-exist. Is the existing restrictive covenant a ‘restrictive covenant’ which can be modified pursuant to section 48(4) of the Land Titles Act? [14] The court’s power to modify a restrictive covenant is found in

section 48 of the Act, which begins as follows (emphasis added): 48(1) There may be registered as annexed to any land ..., for the benefit of any other land ..., a condition or covenant that the land ... isnot to be built on, or is to be or not be used in any particular manner, or any other condition or covenant running with or capable of beinglegally annexed to the land [15] In my view, the language quoted above, and particularly the underlined portion, confirms that

section 48 is meant to deal withconditions or covenants which run with or are capable of being legally annexed to land. It is only such conditions or covenants that canbe modified under section 48(4) of the Act. [16] In Aquadel Golf Course Ltd. v. Lindell Beach Holiday Resort Ltd., 2009 BCCA 5 , 2009 CarswellBC 39, 75 R.P.R. (4th) 201, 306 D.L.R. (4th) 744, the British Columbia Court of Appeal discussed whether certain covenants were restrictive covenants

running with that land, including: (1) not to use the land for any purpose other than a golf course; (2) to maintain the golf course to an acceptable standard; and (3) to give certain persons preferential green fees while using the golf course. The court noted that, to run with the land, a covenant must be negative in substance and constitute a burden on the covenantor’s land analogous to an easement. Further, the court noted that no personal or affirmative covenant requiring the expenditure of money or the doing of some act can, apart from statute, be made to run with the land.

They concluded that the three covenants listed above imposed positive obligations on the owner of the golf course, and were not negative in substance. Accordingly, they held that the covenants did not run with the land. [ 17 ] For the same reasons, I conclude that the restrictive covenant in question is not a covenant which runs with or is capable of being annexed to the lands in question. Accordingly I have no authority to modify this covenant pursuant to section 48(4) of the Act.

In case I am mistaken in that conclusion, I will consider whether, under section 48(4) of the Act, the proposed modification is beneficial to the persons principally interested in the enforcement of the covenant, and whether the modification is in the public interest.

Is the proposed modification beneficial and in the public interest? [ 18 ] Muirfield Land has the onus of satisfying the court that the modification to the restrictive covenant is beneficial to the persons principally interested in its enforcement, and is in the public interest. [ 19 ] Great deference will be given to the wishes of a party possessing the benefit of a restrictive covenant, and the court will resist taking a patriarchal attitude in overruling such a party’s wish to leave the covenant as is: see Potts v McCann , 2002 ABQB 734 , 2002 CarswellAlta 989, 2 R.P.R. (4 th ) 134, 5 Alta.

L.R. (4 th ) 269, 325 A.R. 137. [ 20 ] On the other hand, the fact that section 48(4) of the Act allows the court to modify a restrictive covenant implies that there must be some circumstances where it is warranted to overrule the wishes of a dissenting party. Do such circumstances exist in this case? [ 21 ] In my view, it is not possible to conclude, from simply comparing the existing restrictive covenant to the modified restrictive covenant, that the modified restrictive covenant is beneficial to the homeowners in question.

Some homeowners might prefer the modified benefits, others might not. [ 22 ] It is only by referring to the settlement involving free equity memberships that Muirfield Land can put forward a credible argument that the settlement, including the modified restrictive covenant, is beneficial to the homeowners as a whole. Muirfield Land’s best argument is that the proposed settlement will avoid the expense and uncertainty of litigation, and 43 of 45 homeowners have accepted it.

If the dissenters succeed in preventing the modification to the restrictive covenant, then the settlement will collapse, and the 43 assenters will be forced back into the state of uncertainty which prevailed earlier. Thus, it may be argued, the modification to the restrictive covenant is beneficial to the homeowners, who are the persons principally interested in the enforcement of the restrictive covenant.

To the extent that it avoids litigation, and prevents the homeowners from being thrust into further conflict with the developer and each other, it can be argued to be in the public interest. [ 23 ] I believe that the court’s function under section 48(4) of the Act is to look at the existing restrictive covenant and to compare it to the proposed restrictive covenant. There is nothing in that comparison to lead me to the conclusion that the modifications are in the interest of the homeowners and in the public interest. Some of the homeowners may prefer the modifications and others may not.

There is no authority to look at the overall settlement, and to adjudicate whether the settlement is in the interest of the homeowners and in the public interest. Section 48(4) of the Act, in my view, restricts me to a review of the existing restrictive covenant and the proposed modifications to it. [ 24 ] Therefore, Muirfield Land has not met the onus of persuading me that those modifications, standing alone, are in the interest of the homeowners and in the public interest.

For this reason, and due to my earlier conclusion that section 48(4) of the Act does not apply to the covenant in question, I am dismissing Muirfield Land’s application. Costs [ 25 ] If the parties cannot agree as to costs they can approach me to

schedule a hearing in that regard.

Heard on the 29 th day of June, 2011. Dated at the City of Calgary, Alberta this 2 nd day of August, 2011. J.T. Prowse, Q.C. M.C.C.Q.B.A. Appearances: Derek Nash Demiantschuk Milley Burke & Hoffinger LLP for the Applicant Ryan F. Roy, Q.C. Pittman MacIsaac Roy LLP for the Respondent Vanessa Philpott Richard Ross Respondent