Case Comment – Howse v Calgary (City), 2023 ABCA 379

In Howse v Calgary (City), 2023 ABCA 379, the Alberta Court of Appeal (ABCA) confirmed that a restrictive covenant may be discharged if it is in conflict with a validly enacted bylaw and the discharge is in the public interest.

Background

For 75 years, many properties in the inner-city Calgary community of Banff Trail were encumbered by a restrictive covenant on title providing for maximum density limits and prohibiting commercial use of buildings on those lots. Recently, some property owners and developers have sought to build multi-storey mixed-use buildings in Banff Trail, and applied to the Court to discharge the restrictive covenant from those lands.

The appellants are residents of Banff Trail who opposed the discharge of the restrictive covenant.

In 2021, the City of Calgary passed multiple bylaws amending the Banff Trail Area Redevelopment Plan (the ARP), which dated back to 1986. These bylaws amended the ARP to impose minimum density requirements, limiting low-density development and re-designating certain properties as direct control districts. The City considered that the restrictive covenant was inconsistent with the long-term planning goals for densification of Banff Trail and the ARP.

Section 48(4) of the Land Titles Act, RSA 2000, c L-4 (LTA) provides the criteria for discharging a restrictive covenant:

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.

Pursuant to section 48(4), a restrictive covenant may be discharged when it is in conflict with a land use bylaw or a statutory plan, and discharging it is in the public interest.

Chambers Judge's decision

Justice Labrenz assessed the validity of the bylaws and applied s 48(4) of the LTA to determine whether the restrictive covenant should be discharged.

The chambers judge held that the City validly enacted the bylaws. Applying the statutory test, the chambers judge held that there was a conflict between the bylaws and the restrictive covenant such that compliance with both was impossible, and that discharging the restrictive covenant was in the public interest.

The chambers judge declined to discharge the restrictive covenant on lands affected by the ARP but not the bylaws, as there was no conflict.

Alberta Court of Appeal decision

The appellants argued that the City did not validly enact the bylaws. Specifically, they argued that the City acted outside of its statutory authority granted by the Municipal Government Act (the MGA) because it failed to balance private rights with the long-term public interest and therefore infringed upon individual rights more than was necessary.

The ABCA agreed with the chambers judge's analysis that City "Council was aware of the various rights and interests at play and that its balancing of those rights and interests was not unreasonable." The ABCA held that the City had not exceeded its authority in passing the bylaws.

The appellants further argued that discharging the restrictive covenant was not in the public interest. They argued that the chambers judge only relied on the fact of the enactment of the bylaws to satisfy the public interest portion of the test rather than considering the bylaws as just one factor.

The ABCA disagreed, finding that the chambers judge "said he had evidence beyond the mere fact of the bylaws and the [ARP] to demonstrate the public interest." The ABCA noted that the bylaws were the result of a lengthy planning and consultation process dating back to the ARP from 1986 with amendments over the years involving extensive public engagement. In the planning and consultation process, the City had highlighted the greater public interest of providing more housing opportunities in the inner city, with access to alternative transportation modes and a more efficient use of existing infrastructure.

The chambers judge noted that the applicant for discharge of a restrictive covenant does not have the show that the proposed development can only be performed in the specific location in question for the discharge to be in the public interest because this would essentially give the residents a veto over any development.

The ABCA found that the chambers judge did not err in finding that discharging the restrictive covenant was in the public interest. The chambers judge correctly analyzed the City's densification policies and objectives as being in the public interest, and that the process of further densification had taken place throughout many years with serious planning and consulting.

The appellants did not dispute that it was impossible to comply with both the bylaws and the restrictive covenant.

Having met both elements of the statutory test to discharge the restrictive covenant, the ABCA dismissed the appeal.

Takeaway

Canada faces increasing challenges to housing arising from cost and availability. Some municipalities, and especially the major cities, are seeking to tackle the problem with higher density housing near existing transportation and infrastructure.

This decision highlights how municipalities may enact bylaws to further density and affordability goals that may change the existing character of neighbourhoods, even when those neighbourhoods have restrictive covenants aimed at prior goals of low density.

If a validly enacted bylaw conflicts with a restrictive covenant, and it is in the public interest to do so, Courts may discharge restrictive covenants and clear the path to achieve new density goals.

Read the original article on GowlingWLG.com

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