The British Columbia Supreme Court's recent decision in Atco Lumber Ltd. v. Kootenay Boundary
(Regional District) has raised questions about the
validity of statutory rights of way (SRWs) that aim to impose
positive obligations on property owners. The Atco
decision is particularly important to municipalities, public
utilities and other entities that regularly rely on the benefit of
SRWs in order to operate their undertakings.
An SRW is a right in the nature of an easement that is available
to certain authorized entities pursuant to the Land Title Act (LTA). SRWs are
generally used by government agencies to permit access over private
lands for the purposes of facilitating the construction and/or
maintenance of public works.
In this decision, the Court considered the legal principles
underpinning SRWs in the context of a proposed expropriation by the
Regional District. Specifically, the Regional District sought
to expropriate 2 separate SRWs over portions of Atco's lands
for the following purposes:
for the operation and maintenance of an existing water utility
for access and egress over an existing private access road.
Only the access road SRW was at issue in this case. Atco argued
amongst other things, that the Regional District's
expropriation of the access road SRW was not valid, and sought to
have the expropriation set aside on the basis that, the agreement
establishing the SRW imposed impermissible obligations on Atco as a
Common Law Requirements
The Court found that in order for a valid SRW to be created it
must comply with the common law rules relating to easements, except
for the rule requiring that there be both a dominant tenement and
servient tenement, which is not applicable to SRWs pursuant to the
One of the established common law rules relating to easements is
that they must be negative in nature, meaning that an easement must
not impose an obligation on the owner of the servient tenement to
do anything (rather than refraining from doing something).
Atco's argument was that the Regional District's form of
SRW Agreement obligated the property owner to undertake certain
positive actions, and was therefore invalid.
Ruling of the Supreme Court
After examining the applicable SRW agreement, the Court held
that the Regional District's access road SRW was invalid
because it attempted to impose the following terms and
requiring Atco to indemnify the Regional District from any and all
causes of action arising out of any act by Atco on the access road
and any breach by Atco of any provisions of the SRW agreement;
requiring Atco to pay as additional property taxes any amount
incurred by the Regional District to correct a default of the SRW
Agreement by Atco;
prohibiting Atco from obstructing the access road whatsoever;
requiring Atco to execute all other required documents and
agreements relating to the SRW; and
giving the Regional District the right, but not the obligation, to
improve and maintain the access road.
The above clauses in the SRW agreement were all found to impose
positive obligations on Atco, either on their own or in combination
with other clauses. On that basis, the Court concluded
that the Regional District's access road SRW was invalid and
had the expropriation set aside.
Analysis and Recommendation
While some of the impugned clauses in the Regional
District's SRW agreement were plainly positive covenants, such
as the obligation to indemnify the Regional District, others were
less clearly positive in nature. Take for instance the
proviso in the SRW agreement that Atco must not obstruct the access
road. On its face this is a negative obligation, but the
Court held that it was a positive covenant because it would require
Atco to remove or leave open an existing gate on the road, and
therefore take a positive step.
In light of the Court's broad characterization of what
constitutes a positive obligation for the purposes of an SRW, we
suggest that all entities relying on SRWs review their standard
form of agreement to determine if potentially problematic positive
covenants are included. If so, then legal advice should be
obtained to evaluate the available solutions and alternatives to
ensure that the objectives of a given SRW are achieved.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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