A recent decision of the BC Supreme Court demonstrates the
difficulty of obtaining an order under Section 35 of the Property Law Act. The case will be of
particular interest to developers who intend to rely on the Section
as part of their development plans. Section 35 grants the Court
authority to cancel or modify certain types of charges including
easements, statutory rights of way, and restrictive covenants in a
variety of circumstances, including when:
cancellation would not injure the chargeholder;
the charge is invalid or unenforceable; and
the chargeholder has expressly or impliedly agreed to the
cancellation of the charge.
In Natura Developments Ltd. v Ladysmith
(Town), Natura Developments Ltd. (the
"Developer") acquired a parcel that was encumbered by a
Section 219 Restrictive Covenant (the "Covenant") in
favour of the Town of Ladysmith. The Covenant prohibited
development of the parcel except with approval from Ladysmith and
outlined a specific review process for obtaining approval. The
Developer's proposal for a 27 townhouse development was
rejected by Ladysmith, which preferred to see a smaller scale
The Developer applied to have the Covenant cancelled under
Section 35 of the Property Law Act. The Developer
argued that cancellation of the Covenant would not injure Ladysmith
because, absent the Covenant, Ladysmith had the ability to limit
density through the zoning and development permitting process. The
Court rejected this argument, holding that "[t]he processes
provided under the [C]ovenant differ from those otherwise available
to Ladysmith both in function and form. Furthermore,
Ladysmith's zoning and permit powers relate to its ability to
regulate land use generally, rather than specifically in relation
to the property."
In rejecting the Developer's application, the Court reviewed
the caselaw considering this provision. In the relatively rare
circumstances where courts have cancelled charges, the applicant
presented facts that very closely mirror the circumstances
contemplated by Section 35. Short of that, courts have shown
themselves reluctant to exercise their power under this
The takeaways from this case are two-fold. Firstly, it shows the
importance of retaining a lawyer to prepare a title report as part
of routine due diligence. This is a critical step in identifying
potential roadblocks to development plans. Secondly, the case
serves as a cautionary tale for those who intend to rely on Section
35 of the Property Law Act. Developers should
view it as a last resort, as the courts have only applied it in
very narrow circumstances.
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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