Russell v Ryan, 2016 ABQB 526

Court of Queen’s Bench of Alberta Citation: Russell v Ryan, 2016 ABQB 526 Date: 20160922 Docket: 1603 03015 Registry: Edmonton Between: Robert Torence Russell and Shirley Lynne Russell Applicants/Cross-Respondents - and - Robert Ryan, Kim Lissoway, Nelson Hauer and Gina Hommy Respondents/Cross-Applicants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice J.H.

Goss _______________________________________________________ I Introduction [ 1 ] The Applicants apply for an Order pursuant to s. 48 (4) of the Land Titles Act , RSA 2000, c L-4 directing the Registrar of Titles, Land Titles Office, to discharge restrictive covenant No. 892 189 568 (the Restrictive Covenant) from title to Plan 152 2133, Block 1, Lots 131, 132 and 133 (the Applicants’ Lands). The application is brought on the grounds that the Restrictive Covenant does not run with the land, and conflicts with the provisions of a land use bylaw.

[ 2 ] The Respondents seek a declaration that they have standing to enforce the terms of the Restrictive Covenant and for a permanent injunction enjoining the Applicants from constructing or developing any home, dwelling or building on the lands or using the lands for those purposes. II Facts [ 3 ] On June 15, 1989, an agreement was reached between Richmond Hill Golf Club Ltd. and Wedgewood Developments Ltd. involving an exchange of properties (the Agreement).

As part of the Agreement, Wedgewood Developments agreed to develop, at its expense, a nine hole golf course on lands transferred to Richmond Golf Club (the Golf Club Lands).

The Agreement also provided that all obligations of Richmond Golf Course would cease and determine if the nine holes had not been completed within five years of the date of execution of the agreement. [ 4 ] Pursuant to the Agreement, Richmond Golf Course agreed to allow Wedgewood Developments to file a covenant restricting development of the Golf Club Lands to be used solely as a golf course once the nine holes were completed. [ 5 ] On August 2, l989, Wedgewood Developments registered the Restrictive Covenant against the title to the Golf Club Lands which provided, in part: This covenant is attached to the said lands aforesaid in anticipation of transfer of the said lands to Richmond Hill Golf Club Ltd., a non- profit corporation, for development and use as a golf course in order to enhance and benefit the general enjoyment and value of the lands set out in

Schedule "A" hereto which are to be developed as a residential subdivision. The covenants and conditions attached to the said lands are that they will be developed only for use as a golf course and for no other use (including ancillary golf course use such as club house, pro shop or parking lot) whereby the enhancement in value and enjoyment by the owners from time to time of the lands set out in

Schedule "A" may be diminished. The covenants and restrictions herein imposed shall run with the land and enure to the benefit of the undersigned, being the registered owner in fee simple of the said lands as well as the owner of the lands set out in

Schedule "A" and every purchaser or transferee of the undersigned of the lands set out in

Schedule "A" hereto, their respective heirs, administrators, executors, successors and assigns for the period of time above stipulated. [ 6 ] Wedgewood did not proceed with the development of a nine hole golf course on the subject lands by June 15, 1994, the end of the five year period stipulated in the Agreement. Reports had been prepared in 1993 and 1994 by G.P.E.C.

Consulting Ltd. and Omni- McCann Consultants Ltd. pointing out geotechnical problems which would make the development of a golf course financially and environmentally unfeasible. [ 7 ] Wedgewood Developments and Richmond Golf Course entered into an amending agreement dated June 18, 1994 (the Amending Agreement) whereby Wedgewood Developments paid Richmond Golf Course a sum of money in exchange for relief from its original obligation to build a golf course on the lands.

The Amending Agreement provided in part that Richmond Golf Course's current intention was to complete three and a half fairways as well as to construct the balance of the nine holes originally contemplated but the current intention, according to the Amending Agreement, was in no manner whatsoever a guarantee by Richmond Golf Course that it would complete those fairways or the balance of the nine holes. [ 8 ] A golf course has never been constructed on the Golf Club Lands. [ 9 ] The Respondents own properties listed in

Schedule A of the Restrictive Covenant. The Respondents’ properties are located next to the lands which were to be developed into a golf course. The Restrictive Covenant is registered against each of the Respondents' titles. [ 10 ] The property owned by Hommy was transferred into her name on October 30, 2000. [ 11 ] The property owned by Ryan was transferred into his name as joint tenant on January 14, 2003. [ 12 ] In June 2003, the County of Grande Prairie No. 1 adopted its current land use bylaw after a public hearing.

The bylaw changed the zoning in the Wedgewood area from CR-DC to reflect the housing and lot styles either already developed or in the process of being developed. No objections were raised during the process to the change in zoning. The County made the zoning change in consultation with Wedgewood Developments which confirmed that a golf course would not be proceeding. As a result, the lands previously designated for a golf course are now zoned as Rural Residential (RR-I).

A golf course is not a listed use under the RR-I zoning. [ 13 ] The transfer of Plan 892 1880, Block 1, Lot 30 to Hauer was registered in 2005. [ 14 ] In 2006, the Applicants purchased Lot 74, Block 1, Plan 892 1992 and Lot 107, Block 2, Plan 972 0901 (the Applicants’ Lands) from Richmond Golf Course. The Applicants’ Lands are part of the Golf Club Lands. [ 15 ] The Lissoways purchased a bare lot in July 2006 and completed their home in 2007. [ 16 ] On March 18, 2015, the County and the Applicants entered into a Memorandum of Agreement permitting development of lands including the Applicants' Lands.

The County approved the Applicants' plan of subdivision. Subdivision Plan 152 134 978 was registered on May 7, 2015. As a result, the Applicants are registered owners of Plan 152 2133, Block 1, Lots 131, 132 and 133. Basic water, sewer and electrical services were installed for these lands by November 1, 2015 in accordance with the Memorandum of Agreement.

[17] The balance of the Golf Club Lands subject to the Restrictive Covenant has either been transferred to the County and zoned asMunicipal Reserve (MR), or remains as undeveloped land along Bear Creek. The Applicants state that those parcels will not be subject toany development by them. Prior to transfer of some of the Golf Club Lands to the County as MR, the Applicants were responsible formaintaining that those lands.

The Applicants had proposed to transfer the undeveloped portion of the Golf Club Lands along Bear Creekto the County as an environmental reserve, but were informed by the County that it would not accept that portion of the Golf Club Landsbecause of infringement on the use of that land by some Wedgewood residents. III Issues [18] The Court must address the following issues: 1. Does the Restrictive Covenant run with the land? 2. Does the Restrictive Covenant conflict with a bylaw? 3. Do the Respondents have standing to enforce the terms of the Restrictive Covenant? 4.

Are the Respondents entitled to a permanent injunction? IV Land Titles Act [19]

Section 48 of the Land Titles Act, RSA 2000, c L-4 provides in part: 48(4) The first owner, and every transferee … is deemed to be affected with notice of the condition or covenant, and to be bound by it ifit 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, onproof to the satisfaction of the court that the modification will be beneficial to the persons principally interest in the enforcement of thecondition or covenant or that the condition or covenant conflicts with the provisions of a land use bylaw or statutory plan under

Part 17of the Municipal Government Act, and the modification or discharge is in the public interest.

(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 thecovenant or condition on account of its nature, or of the manner in which it is expressed, would not otherwise be annexed to or run withthe land.

V Law [20] In Kolias v Condominium Plan 309 CDC, 2008 ABCA 379, [2008] AJ No 1251 at para 10, the Court held that the LandTitles Act preserves the common law respecting restrictive covenants. [21] V DiCastri, in Registration of Title to Land (Carswell, 1987-) at 10-3 to 10-5, lists the conditions required for a covenant torun with land as enunciated in various cases.

One of those conditions is that the covenant must be negative in substance and constitute aburden on the covenantor's land analogous to an easement; no personal or affirmative covenant requiring the expenditure of money or thedoing of some act runs with the land. [22] In Potts v McCann, 2002 ABQB 734, [2002] AJ No 999, cited with approval in Kolias, Slatter J. (as he then was) held at para30 that s. 48(5) of the Land Titles Act preserves, indirectly, the common law referring, as an example, to the principle that the covenantmust be negative in nature. [23] DiCastri’s list of conditions has been adopted in subsequent case law including Westbank Holdings Ltd v Westgate ShoppingCentre Ltd, 2001 BCCA 268, [2001] BCJ No 852 at para 16, and Aquadel Golf Course Limited v Lindell Beach Holiday Resort Ltd,2009 BCCA 5, [2009] BCJ No 22 at para 11. [24] A restrictive covenant is to be construed strictly and the parties' intention to create one must be shown in clear andunambiguous language: Aquadel at para 11.

The Court will not extend it on the ground of presumed intention: Nylar Foods Ltd vRoman Catholic Episcopal Corp Prince Rupert (1988), (BC CA), 48 DLR (4th) 175 at 176, [1988] BCJ No 307(CA), citing RC Brown, The Law Relating to Covenants Running with Land, (London: Sweet and Maxwell, 1907) at 126. [25] A restrictive covenant is an agreement or contract. Courts are to take a practical, common-sense approach to the

interpretationof a contract to determine the intent of the parties and the scope of their understanding; to do so, a court must read it as a whole, givingthe words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the timeof formation of the contract: Sattva Capital Corp v Creston Moly Corp, 2014 SCC 53 at para 47, [2014] 2 SCR 633. [26] Any ambiguity about whether a restrictive covenant should apply to prevent the construction of a dwelling house on a newlot, or should not do so, ought to be resolved in favour of the free use of the land: Noble v Alley, (SCC), [1951] SCR 64,[1950] SCJ No 34, citing Anderson v Dickie (1915), 84 LJPC 219 at 227. [27] Restrictive covenants intended to preserve the character of land to be laid out and used in a particular way will not be enforcedif the land has already been laid out or used so that its preservation as intended is no longer possible: Knight v Simmonds, [1896] 2 Ch294 at 297-98. [28] Public and private restrictions on the use of land can co-exist, except when compliance with mandatory requirements in a land

use bylaw necessitates non-compliance with a private restrictive covenant: Tanti v Gruden , 1999 ABCA 150 at para 7 , 74 Alta LR (3d) 110. VI Positions of the Parties A Applicants’ Position [ 29 ] The Applicants argue that the Restrictive Covenant entered into between Wedgewood Developments and Richmond Golf Course was personal as between those entities and contemplated that positive steps would be taken to construct a golf course.

As a result, notwithstanding its express wording, it did not run with the land and it is invalid and unenforceable against the Applicants. [ 30 ] The Applicants note that the County passed its current zoning bylaw prior to some Applicants’ purchase of their lands. The others would have had an opportunity to voice objections about prospective rezoning. No objection was made at a public meeting in 2003. The bylaw does not provide for a golf course as a permitted use.

The County has approved the Applicants’ plan of subdivision and the Applicants have complied with the requirement in the Memorandum of Agreement to complete the basic services by November 1, 2015. Therefore, the covenant now conflicts with the provisions of the land use bylaw and its discharge is in the public interest. [ 31 ] The Applicants further argue that the injunctive relief should be refused as the object of the covenant – construction of the golf course – could no longer be attained by the time the Applicants acquired their lands.

The character of the neighborhood has changed and an injunction would prevent the Applicants from proceeding with an approved development or sale of the lots for residential housing. There is no evidence that the development would result in any diminution in the value of the Respondents’ lands. B Respondents’ Position [ 32 ] The Respondents state that when purchasing their property, they believed that the Golf Lands would remain green space. They opine that development of the land will diminish the value of their properties. [ 33 ] They note that the Restrictive Covenant states that it runs with the land.

They argue that it specifically limits the development potential for use as a golf course and for no other purpose. It is therefore negative in nature, not positive. It does not require a golf course to be built. It prevents development for any purpose other than as a golf course; it can either be developed as a golf course or, alternatively, the land can be left as undeveloped green space.

The Restrictive Covenant contains no clause stating that it ceased to have any effect if a golf course was not completed. [ 34 ] The Respondents further argue that in determining whether the covenant is personal, the Court must take into consideration the private Agreement between Richmond Golf Club and Wedgewood Developments, which does not form part of the Restrictive Covenant and was not registered as part of the Restrictive Covenant.

The Respondents submit that the Applicants are attempting to have the Agreement read into the wording of the Restrictive Covenant whereas the language of a restrictive covenant must be able to be interpreted on its own. Extrinsic evidence is only admissible where there is an ambiguity in the document and there is no ambiguity in the Restrictive Covenant. [ 35 ] Finally, they submit that the Restrictive Covenant does not force the Applicants to violate a bylaw; they are permitted to build, but are not required to do so.

They argue that the Applicants are attempting to rely on a change in the character of the neighbourhood when the Applicants themselves are the ones creating the change. VII Analysis A Does the Restrictive Covenant run with the land? [ 36 ] The Restrictive Covenant in question provides that the lands would be developed only for use as a golf course and for no other use whereby the enhancement in value and enjoyment by the owners from time to time of the lands listed in

Schedule “A” might be diminished. [ 37 ] The Court in Aquadel dealt with an agreement containing three covenants: (1) not to use the land for any purpose other than as a golf course; (2) to maintain the golf course to an acceptable standard; and (3) to give certain persons a preferential rate for use of the golf course. [ 38 ] In the first instance, the judge determined that although the second and third covenants imposed positive obligations on the covenantor, the first part of the Agreement was severable and was negative in substance. The Court of Appeal disagreed.

It held that although the first part of the Agreement used negative language, the covenant was positive in substance. It required the property to be used only as a golf course, with related facilities, and as the location for two residences. There was nothing in the language of the agreement, or in the surrounding circumstances, to suggest that no use of the lands (other than as a location for two residences) was intended; the only sensible

interpretation of the first paragraph is that the parties intended the lands to be used as a golf course, and only as a golf course. The Court of Appeal noted that the further covenants to maintain a golf course on the land, to keep it in repair, and to give preferential rates to certain golfers, were consistent with, and only with, the obligation to use the land as a golf course.

If the first paragraph could allow the land to return to wilderness, the remaining paragraphs would be meaningless and unenforceable. [ 39 ] The Restrictive Covenant in this case contemplates that the land will be developed for use as a golf course. Whereas the language in Aquadel was negative ( will not use the land for any purpose other than as a golf course), the wording in this case is clearly

positive in substance in this respect: it imposes a positive obligation to develop the lands as a golf course. [ 40 ] However, the Restrictive Covenant in this case contemplates not only that the land will be developed for use as a golf course, but also that it will be developed for no other use which might diminish the enhancement in value and enjoyment by the owners of the listed lands.

Assuming that this is a negative covenant, and is severable from the positive wording, the question arises as to what uses might diminish the enhancement in value and enjoyment by the owners of the listed lands. [ 41 ] In Podwin v Gondziola , 2004 SKQB 225 , [2004] SJ No 362, neighbours applied for an injunction against builders of a dwelling on the basis of a restriction prohibiting the planting of trees or placing of other objects which would “unreasonably obstruct” another’s view of the river.

Hrabinsky J. held that the restrictive covenant was likely unenforceable due to ambiguity and uncertainty, citing cases which held the restrictions to be too vague or uncertain, for example “which shall injure, prejudice, affect or destroy the natural aspect and condition of the land”, and “located in such a way as to block the view to the lake”. [ 42 ] In my view, it would be virtually impossible to determine with any certainty what development of the land, within the range of developments possible under the current bylaw, might “diminish the enhancement in value and enjoyment” by the owners of the

Schedule A lands. The answer would necessarily depend to some extent on the purely subjective views of those owners. I find that even if this were severable, it would be unenforceable as it is too vague and uncertain. [ 43 ] The Respondents distinguish Aquadel on the ground that the entire Agreement in this case was not registered as part of the Restrictive Covenant as it was in Aquadel . In my view, the Restrictive Covenant must be read in a manner consistent with the surrounding circumstances known to the parties at the time of formation of the contract: Sattva at para 47.

In any event, I find that the language of the Restrictive Covenant itself leads to the result; resort to the Agreement is not required. [ 44 ] The fact that the Restrictive Covenant states that it will run with the land is of no consequence.

Pursuant to s. 48(5) of the Land Titles Act , 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. [ 45 ] I conclude that the Restrictive Covenant does not run with the lands. B Does the Restrictive Covenant conflict with a bylaw? [ 46 ] Given my conclusion on the first issue, it is unnecessary to address this issue.

C Do the Respondents have standing to enforce the terms of the Restrictive Covenant? D Are the Respondents entitled to a permanent injunction? [ 47 ] Assuming without deciding that the Respondents having standing, I find that they are not entitled to a permanent injunction. There is evidence that by 1994, well before the Applicants acquired their lands, it had been determined that the only certain object of the covenant – construction of the golf course – was not feasible.

VIII Conclusion [ 48 ] The application is granted. [ 49 ] There shall be an Order directing the Registrar of Titles, and Land Titles Office, to discharge Restrictive Covenant No. 892 189568 from the Title to the Applicants' lands, pursuant to s. 48(4) of the Land Titles Act , RSA 2000, c.L-4. [ 50 ] The cross-application is dismissed. IX Costs [ 51 ] If the parties are unable to agree on costs, they may speak to costs within 60 days of this decision. Heard on the 2 nd day of September, 2016. Dated at the City of Edmonton, Alberta this 22nd day of September, 2016.

J.H. Goss J.C.Q.B.A. Appearances: James T. Neilson, Q.C. Parlee McLaws LLP for the Applicants/Cross-Respondents Richard C.Secord Ackroyd LLP for the Respondents/Cross-Applicants