COURT FILE NO.: 17-2857
DATE: 20190806
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
Lone Oak Properties Ltd.
K. Boersma for the Applicant
Applicant
- and -
Clayton Baillie and Wilma Baillie
M. Chapman, for the Respondents
Respondents
HEARD: March 26, 2019
Templeton J.
Reasons for Ruling
Background
[1] In September 2016, the Respondents purchased a vacant lot municipally known as 168 Fisher Avenue, Atwood, Ontario. The property was subject to a Restrictive Covenant (“the Covenant”) which included the following provisions:
• No building shall be erected on the land other than one detached private dwelling house, such dwelling to be suitable for the use of and to be used by a single family only, together with one private garage forming part of the said house and suitable only for the use of the occupants of the said house. Any outbuildings ancillary to the dwelling must be approved by the Developer. Said building to be erected on the lot in accordance with the terms, specifications and conditions:
• The “Developer” shall mean Lone Oak Properties Ltd.
• These covenants and restrictions run with the land and are in place for a period of twenty years from September 15, 1999.
• Not more than one driveway shall be constructed on any lot. All driveways shall be asphalt or concrete. No gravel driveway shall be permitted except during construction of a residence on the lot.
• The Developer may agree to vary, alter, amend or remove any of the foregoing conditions in respect of these or any other lands on the said plan so long as such variations, alterations, amendments or removal is not, in the opinion of the Developer, a substantial deviation from the general nature of the foregoing conditions.
[2] The Respondent, Clayton Baillie (“Baillie”) wished to build a shed and he knew that he required the approval of the Applicant to do so. He hired a builder and the shed was constructed in 2017.
[3] It is the position of the Applicant that the shed was built without the requisite approval. It is the position of the Respondents that they had obtained the approval necessary for their construction of the shed.
[4] The Applicant seeks to have the shed removed from the Respondents’ property.
The Evidence
[5] The Applicant (“Lone Oak”) is owned and operated by Russel Danbrook (“Danbrook”).
[6] Danbrook had purchased a farm and subsequently developed it into twenty-four residential lots known as the Atwood subdivision. A further lot has been retained by Lone Oak.
[7] The Respondents’ property is located in this subdivision.
[8] The Restrictive Covenant which is referred to above provides Lone Oak with the sole discretion to vary the restrictions. The Covenant runs with the land and is set to expire on September 15, 2019.
[9] From time to time, Lone Oak has allowed Danbrook and/or other property owners in the subdivision to do the following:
(a) construct sheds;
(b) maintain gravel driveways;
(c) clad the exterior walls of the homes with stucco rather than stone or brick veneer.
[10] Danbrook agreed under cross-examination that Lone Oak has no formal process for requesting or approving variances to the restrictions contained in the Covenant.
[11] As indicated above, Baillie knew that he needed Danbrook’s approval for the shed. He hired a builder identified as Jonathan Frey to build both their home and the shed. Baillie was looking for a shed that was 50 feet by 30 feet. It was agreed that Mr. Frey would obtain the necessary approval.
[12] It is Danbrook’s evidence that in the Spring 2017, he was approached by John Frey who indicated that he had been retained by Baillie to build a shed on the Respondents’ property. The shed would be 48 feet by 24 feet in size. Danbrook approved the construction of a shed this size which was to be located behind the house along the bush.
[13] In December 2016, Baillie obtained a permit for the construction of a shed 50 feet by 30 feet. The permit included the construction of a mezzanine.
[14] Due to the death of his son in the Spring 2017, Baillie needed a larger shed to store personal belongings that had been left in their son’s care. Baillie contacted the municipality and obtained an amended permit that allowed for the construction of a shed 60 feet by 30 feet without a mezzanine on their property. Baillie then contacted John Frey and Peter Klasen (“Klasen”) to obtain quotes for the build. Klasen was retained.
[15] On June 21, 2017, Klasen commenced pouring the foundations. A third contractor, Peter Neufeld (“Neufeld”), however, was retained by Baillie and assumed responsibility for construction of the shed on or about July 31, 2017.
[16] It is Baillie’s evidence that he learned from Neufeld that Danbrook visited their property a number of times during construction of the shed and did not complain or report any concern about its size.
[17] On or about September 6, 2017, however, Danbrook approached Baillie directly and requested that the size of the shed be decreased. The shed had been substantially completed by that time. Baillie asked Neufeld to stop construction.
[18] It is Danbrook’s evidence that at no time did Baillie or his contractors seek approval for the construction of a shed this size. It was when the size of the shed became apparent to him that he spoke to Baillie and told him that if he made the shed smaller, he would approve the construction.
[19] It is Neufeld’s evidence that Danbrook spoke to him on the first day he commenced work at the site, namely, July 31, 2017 and discussed the shed with him. It is his evidence that at no time did Danbrook indicate any size or location restrictions at that time. Further, Danbrook was regularly at the neighbouring property during the course of construction and would have had a clear unobstructed view of the build. As Danbrook worked next door, he crossed the property line to view the shed on multiple occasions and commented that construction appeared to be going well.
[20] Danbrook denies Neufeld’s assertions.
[21] It is Frey’s evidence that he spoke to Danbrook about building a shed on Baillie’s property while preparing a quote to Baillie for the construction of a shed. He believes that he discussed building size at 48 feet by 24 feet.
[22] It is also Frey’s evidence that Danbrook neither refused nor approved the construction of a shed during this conversation. It was his assumption that once Baillie was provided with the quote for the construction, Baillie would obtain the necessary approval from Danbrook.
[23] Danbrook acknowledges that he has agreed to some variations to the restriction in the Covenant regarding driveways including Baillie’s and his own, however, he has “been firm on the major restrictive covenants such as house size, site plan and grading plans”
[24] Danbrook complains that:
(a) he did not approve the construction of a shed that is 60 feet x 30 feet in size;
(b) he has approved the construction of sheds on three other properties (including his own) the sizes of which are 24 feet by 20 feet with respect to his own and 20 feet by 12 feet with respect to the other two sheds. The size of Baillie’s shed is inconsistent with these;
(c) the size of the shed affects the appearance of the neighbourhood; and
(d) the size of the shed establishes a precedent which if permitted to remain in violation of the Covenant, may force Danbrook to consent to the construction of other ancillary buildings of a commercial and/or agricultural size in the Atwood subdivision which, in turn, could impact property values.
The Law
[25] The Court has held that “A restrictive covenant involves a relationship where one property is subject to restrictions for the benefit of another property. As this relationship, by its very nature, interferes with the free use of land, restrictive covenants are strictly interpreted.” Re Girard (2007), 61 R.P.R. (4th) 288.
[26] It is also settled law that restrictive covenants must be precise in terms, and if they are vague and indefinite in meaning they will not be enforced. Noble et al. v. Alley, 1950 CanLII 13 (SCC), [1951] S.C.R. 64.
[27] This relationship, by its nature, interferes with the free use of land and is the reason why such agreements are strictly interpreted.
[28] A building scheme, however, involves a community of interests.
[29] Under a “building scheme”, all owners share similar burdens and enjoy benefits relating to limitations on property use. To prove the existence of a “building scheme”, it must be shown that both the applicant and the respondent derive title under a common vendor; prior to selling the lands, the vendor had laid out the estate, including the lands purchased by both the applicant and respondent, for sale in lots subject to restrictions intended to be imposed on all the lots that are consistent with the general scheme of development; the restrictions were intended for the benefit of all the lots intended to be sold; and both the applicant and the respondent or their predecessors in title, purchased their lots from the common vendor on the basis that the restrictions were to enure for the benefit of the other lots included in the general scheme.
[30] I adopt the comments of Bell J. in Chapadeau v. Devlin, 2018 ONSC 6456 that the interpretation of a restrictive covenant that is part of a building scheme must take into account the building scheme’s community of interests, recognizing the burdens imposed upon and the benefits shared by all owners in the community, and considering the building scheme as a whole. Creston Moly Corp. v. Sattva Capital Corp., [2015] 2 S.C.R. 633.
[31] In Sekretov v. Toronto (City), 1973 CanLII 712 (ON CA), [1973] 2 O.R. 161 (C.A.), a restrictive covenant was said to run with land conveyed by the municipality to a resident. The covenant was imposed partly by means of a deed transferring the land and partly by a resolution of the municipal council passed almost a month after the date of the conveyance. The Court of Appeal held that the restrictive covenant in the deed was ambiguous and therefore invalid. The Court of Appeal also found that the covenant was vague and uncertain and should not be enforced. The uncertainty arose because the covenant in the transfer could be interpreted as providing that the use to which the land might or might not be put must depend upon the “whim of Council” to be expressed in a resolution to be passed at some future date. As the Court of Appeal put it, “I cannot think of anything more uncertain and more indefinite than such a provision if, by the covenant, the municipal corporation purported to reserve to itself the right to dictate and control by resolution the uses which could be made of the subject land”.
Analysis
[32] The restrictions in the Covenant set out in the transfer are subject entirely to the discretion of the Developer with respect to scope and enforcement. In my view, it is significant that the Covenant does not provide (a) any description of the process with respect to how the approval of the Developer is to be obtained; or, (b) more importantly, any certainty to the property owner or the other property owners as to the factors applied in the exercise of the Developer’s discretion.
[33] In this case, the lack of a defined approval process contributed directly to misinformation, miscommunication and misunderstanding that is evident in this case.
[34] Further, the restrictions as expressed in the transfer are entirely susceptible to the whim or personal assessment of the Developer to be expressed as the Court in Sekretov v. Toronto (City) wrote, “at some future time or times as occasion may require”.
[35] Danbrook maintained under examination that Lone Oak has every right to waive or vary each of the restrictions contained in the Covenant. I agree.
[36] But in this regard, I also adopt and apply to these factual circumstances, the opinion of the Court of Appeal, “I cannot think of anything more uncertain and more indefinite than such a provision if, by the covenant, the [Developer] purported to reserve to itself the right to dictate and control by [approval] the uses which could be made of the subject land.”
[37] In the case before me, when the Developer reserved to itself the unfettered right to waive or modify restrictions with respect to any lot in the Atwood subdivision, those restrictions cannot and do not constitute a building scheme which is now enforceable. See Re Lankin 1951 CarswellOnt 333.
[38] Given the right in the Covenant for the Developer to exercise its discretion with respect to all of the identified restrictions without any obligatory reference to a defined threshold or description concerning the exercise of that discretion, there is no verifiable or demonstrated intention from the Developer to impose the restrictions in connection with a “general scheme of development”. As in Re Lankin, the Developer, in the case at bar, is able to waive the restrictions at any time with respect to any particular lot.
[39] It may be argued that the phrase “a substantial deviation from the general nature of the foregoing conditions” limits the discretion of the Developer. However, even in this case, the Developer has the sole discretion to determine (a) whether the intended activity is a deviation from the restrictions; and, (b) if the intended activity is a deviation, whether such deviation is “substantial” in nature.
[40] There is evidence before me that the Developer has previously and on more than one occasion, exercised its discretion with respect to the construction of outbuildings and the surface of driveways. The covenant offers the adjoining owners, therefore, no assurance that this discretion will be exercised equally, reasonably, consistently or even that the covenant will continue to protect them in such circumstances.
[41] The vagueness and uncertainty that exists therefore in this particular covenant which is imposed upon a servient tenement, renders it a covenant that cannot be enforced. The uncertainty arises because the covenant may be interpreted as providing that the use to which the land might or might not be put depends upon the whim of the Developer. In other words, on the facts before me, I cannot avoid coming to the conclusion that the lack of specificity in this covenant with respect to the criteria for the exercise of the Developer’s discretion either in favour of or refusal of the proposal renders it unenforceable.
[42] Even if I were wrong in this regard, it is my view that the facts of this case require the judicial exercise of fairness and reliance on equity for the following reasons.
[43] I am satisfied that Baillie has gone to great expense to successfully ensure that the shed is in keeping with the aesthetic characteristics of the neighbourhood. On the basis of the photographic evidence before me, it is not as may be colloquially described, an “eyesore”. I am also satisfied that the shed does not negatively impact either the look or, given the lack of probative expert evidence in this regard, the value of the surrounding properties in the neighbourhood.
[44] In my view, I am unable to place much weight, if any, on the evidence of the complaints alleged by Danbrook. Firstly, Mr. Kuepfer has indicated that he did not complain to Danbrook about Baillie’s shed. Secondly, the fact of complaints does little, if anything, to advance the position of Danbrook or Baillie regarding the appropriate disposition in the context of the legal argument regarding the covenant and the exercise of Danbrook’s discretion.
[45] Further, there is no evidence before me other than personal opinion that permission for this shed will create a precedence for other or future property owners in this area. In any event, as of at least October 1 of this year, a property owner will be entitled to build an ancillary building of his/her own design and size subject to Municipal by-laws and approval.
[46] I also agree with Baillie’s submissions that the original purpose of the restriction regarding ancillary buildings is now obsolete. Under cross-examination, Danbrook indicted that when the subdivision was first built, the properties required the installation of septic systems as a result of which the individual lots were at least a half-acre in size in most cases. An ancillary building of Baillie’s size could not be accommodated because of the weeper beds. Sewers have since been installed, however, and the area on each lot is green space.
Conclusion
[47] For all of the foregoing reasons, the Applicant’s request that the shed located on Lot 15, Plan 565, North Perth be removed is dismissed.
[48] The parties may make brief submissions in writing with respect to costs within 60 days.
“Justice L. Templeton”
Justice L. Templeton
Released: August 6, 2019
COURT FILE NO.: 17-2857
DATE: 20190806
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Lone Oak Properties Ltd.
Applicant
- and –
Clayton Baillie and Wilma Baillie
Respondents
REASONS FOR ruling
Templeton J.
Released: August 6, 2019