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Local governments can breathe a sigh of relief after the recent decision of the British Columbia Court of Appeal in Rai v Sechelt, 2021 BCCA 349.

Background

Multiple property owners brought an action against the District of Sechelt after they were ordered to evacuate their properties as a result of land subsidence and geotechnical instability. The property owners alleged that the District knew or ought to have known that the area was subject to subsidence and other geotechnical problems. They advanced multiple claims against the District and its approving officer, including negligent subdivision approval, negligent development permit approval, negligent issuance of building and occupancy permits and failure to warn the owners of geotechnical issues.

The concerned properties were encumbered by s. 219 covenants that released the District and its officers from any and all liability arising “from or in connection with the construction of any structures on the Lands or use of the Lands” … “including without limitation any subsidence, settling of any structure including any utility or road infrastructure, loss of slope stability, or any similar matter.” (emphasis added)

Prior to development in 2006, the District had required the developer to execute these s. 219 covenants as a condition of subdivision approval, after consultants identified seepage and slope stability as “issues of potential concern” in their initial assessment. The District also required the developer to provide the District with a comprehensive geotechnical report from a qualified professional confirming that the subject lands were “not subject to land slip, sinkholes or erosion”, which was to be appended to the s. 219 covenants and registered in the Land Title Office as a notice to all prospective buyers.

Lower Court Decision

The owners had successfully argued in the lower court that the s. 219 covenants did not operate to release the District and its officials against their claims. The chambers judge held that s. 219 of the Land Title Act (“LTA”) expressly refers to the inclusion in a covenant of an indemnity, but not a release. As a result, he found that the covenants registered on title as a condition of subdivision approval exceeded the scope of s. 219 authority.

The chambers judge went on to narrowly interpret these particular s. 219 covenants, and found that – on the facts of this case – the  release language did not apply to the claims advanced by the owners.

The issues before the Court of Appeal were:

1. Whether s. 219 of the LTA authorizes the inclusion of a release in a covenant; and
2. If so, whether the language in these particular s. 219 covenants released the District from the claims advanced by the owners.

Appellate Decision

The Court of Appeal found in favour of the District and its officials on both points. Section 219 of the LTA does authorize the inclusion of release language in covenants described in that section. Further, the specific release language here was broad enough to encompass the owners’ claims against the District.

On the first point, the Court held that section 219 of the LTA contemplates that local governments and their officials may allocate the risk associated with, among other things, subdivision approval, building approval and land or building uses, and provide for public notice through the use of a covenant that runs with the title and binds future owners. The broad wording of the section “contemplates management and allocation of risk, notice to the public, and the protection of the public purse”.

On the second point, the Court reiterated that releases are contracts, and as such, subject to the ordinary approach to contractual interpretation. The factual matrix (surrounding circumstances) – and not just the specific words of the release – must be taken into consideration when determining whether it applies to a given claim. Here, the chambers judge fell into error by narrowly interpreting the scope of the release contained in the s. 219 convents.

The Court found that the clear purpose of the release language was to mitigate risk to, and absolve the District from, any and all liability arising “from or in connection with the construction of any structures on the Lands or use of the Lands.” (emphasis added).

The claims of the respondents all arose from or were in connection with the construction of structures in the development or the use of development lands generally, including claims based on negligent subdivision approval, negligent development permit approval, negligent issuance of building and occupancy permits and failure to warn respondents of geotechnical issues. These were the precise types of damage, loss, claims and demands contemplated by the s. 219 covenants.

As a result, the Court held that the s. 219 covenants apply to release the District against the claims advanced by the owners.

Takeaway

Section 219 covenants are an invaluable tool for local governments to manage and allocate risk associated with subdivisions, construction and land or building uses that may be subject to future subsidence issues or other geotechnical concerns.

This case demonstrates the benefit of carefully drafted covenants containing release provisions broad enough to encompass all future claims arising from or in connection with all construction on and use of specified lands.

While the specific wording of the covenant remains crucial, the surrounding circumstances will also be taken into consideration, including the intent of the local government to mitigate risk of and absolve itself from a broad range of liability. To this end, appropriate policies and procedures governing the retention of project correspondence and related records can be of great assistance in the event a local government is required to demonstrate the “factual matrix” or intention of the parties when agreeing to a covenant that is later the subject of litigation.

Questions? Contact Denise McCabe, Casey Helgason, Kendra Murray or our Local Government Law Team.

Introduction

Fulton recently acted for the Regional District of North Okanagan (“RDNO”) in litigation concerning a dispute involving public lands and Provincial foreshore licenses. The resulting decision, which dismissed all claims against the RDNO, solidifies local governments’ discretionary decision-making authority regarding lands acquired for a public purpose.

Background

The plaintiffs were residential property owners in Vernon. The plaintiffs’ property was separated from Kalamalka Lake by a corridor of land that is now known as the “Okanagan Rail Trail.” At the time the plaintiffs purchased the property, the Kelowna Pacific Railway owned the Okanagan Rail Trail corridor. The plaintiffs had a crossing agreement with the Railway, which allowed them to access the foreshore of the Lake. The plaintiffs also obtained a foreshore license from the Province, which permitted them to construct and use a dock on the foreshore of the lake for a term of ten years.

The RDNO acquired the Okanagan Rail Trail corridor and converted it to public use. The Board resolved that it would not support any applications for private dock licenses on Kalamalka Lake. The plaintiffs attempted to renew their Provincial foreshore license and were told that the RDNO would not support their renewal application. In December 2017, the plaintiffs obtained legal counsel and wrote to the RDNO arguing that they were entitled to the RDNO’s support for their renewal application, citing the principle of proprietary estoppel. In April 2021, the Province notified the plaintiffs that their dock was in trespass.

Court’s Decision

The plaintiffs commenced this action at the Supreme Court of British Columbia in May 2021. They relied on the principle of proprietary estoppel and sought a declaratory easement along the Okanagan Rail Trail. The plaintiffs further argued that the RDNO had assured them that, despite any future acquisition of the Rail Trail corridor, it would support their application for renewal of the foreshore license.

The RDNO argued that the plaintiffs’ claims were statute barred: the applicable limitation period was two years and the latest that period would have begun running was the December 2017 letter from their lawyer. In the alternative, the RDNO submitted that the plaintiffs’ claim in proprietary estoppel must fail because they had not established that the RDNO had made any assurances to the plaintiffs. In the further alternative, the RDNO submitted that if an assurance was given, the plaintiffs’ reliance on that assurance was not reasonable.

The plaintiffs argued that the limitation period had not expired because the RDNO had never provided a definitive answer to their December 2017 letter. The Court rejected this argument and held that the plaintiffs were aware of the RDNO’s position in December 2017, and so the two-year limitation period ended in December 2019.

The Court went on to canvass the elements of proprietary estoppel, being: 1) an assurance from the RDNO; 2) reasonable reliance by the plaintiffs; and 3) the plaintiffs suffering a detriment as a result of their reliance. On the first element, the Court held that there was insufficient evidence to support the plaintiffs’ assertion that they had received assurances from the RDNO that it wouldsupport any future foreshore license renewal application. Rather, the plaintiffs’ evidence spoke only to their belief or understanding of an assurance. They had not proven that anyone with authority at the RDNO had actually made any specific statement to them.

On the second element, the Court held that any expectation by the plaintiffs of their continued use of the dock past the ten-year term of the license was unreasonable. Given that the Province, not the RDNO, is responsible for the granting of foreshore licenses, the assurance that the plaintiffs would retain entitlement to their dock was not something within the RDNO’s control. As a result, the Court held that the plaintiffs’ expectations were incapable of supporting a claim in proprietary estoppel.

In light of the Court’s earlier conclusions, the Court did not address the third element of proprietary estoppel. The plaintiffs’ claims were dismissed.

Takeaways

This decision helps to clarify the application of limitation periods and proprietary estoppel as against local governments.

The Court’s rejection of the plaintiffs’ limitation argument – that the limitation period had not yet started because the RDNO had never definitively closed the door on supporting their license renewal – will be welcomed by local governments. Had this argument succeeded, it would have prevented local governments from relying on limitation periods in many cases, since it is always possible for a future board or council to reconsider a previous decision.

As for proprietary estoppel, this decision underscores that local governments will rarely be liable for assurances given by individuals who lack the legal authority to bind them. Further, for reliance to be reasonable, the subject of the assurance must be within the control of the local government.

This case also further supports local governments’ discretionary decision-making authority regarding lands acquired for a public purpose.
When communicating with members of the public in contentious situations, the following tips can help to mitigate a local government’s risk:

• Consider seeking legal advice before committing to a position;
• Ensure to convey the local government’s position with utmost clarity, preferably in writing; and
• Ensure that staff do not make representations on topics that are properly matters for the local government’s board or council.

If you have questions, contact a member of our experienced Local Government Team.

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Introduction

BC Courts have previously confirmed that a property owner cannot be held liable in negligence for injuries sustained by a third party when a property owner fails to clear a sidewalk owned by the local government, even if the local government has a bylaw requiring the owner to clear the sidewalk.

However, local governments may still require that owners clear snow and ice from sidewalks in their bylaws, enforcing the requirement through ticketing.

Against this background, the British Columbia Supreme Court recently upheld a bylaw court decision dismissing the City of Vancouver’s charge against a resident for failing to remove snow and ice from his sidewalk. This decision underlines the need for clear drafting of bylaws to ensure enforceability.

Background

The accused was charged with failing to remove snow and ice from his sidewalk under section 76 of the City’s Street and Traffic By-Law No. 2849 (the “Bylaw”). The relevant Bylaw provision stated:

The owner or occupier of any parcel of real property shall, not later than 10:00 a.m. every day, remove snow and ice from any sidewalk adjacent to such parcel for a distance that coincides with the parcel’s property line and for the full width of the sidewalk. [emphasis added]

At trial, the Judicial Justice dismissed the charge.  The City appealed.

Trial Decision

At trial, the City’s witness testified that the City had received a complaint about snow on the accused’s sidewalk. The witness attended at the property and observed snow on the sidewalk.  Photographs tendered at trial indicated that some snow had been removed, but not all of it.

The Judicial Justice dismissed the charge, noting that the Bylaw required snow and ice to be “removed,” but did not require the sidewalk to be “perfectly clear.” As the photographs showed that some snow had been “removed”, the City had not proved its case.

Appeal Decision

On appeal, the City argued that the Judicial Justice had incorrectly interpreted the Bylaw by finding that the requirement to “remove” snow and ice did not require “all” snow and ice to be removed. The City argued that any interpretation that did not require all ice and snow be removed would render the Bylaw ambiguous and unenforceable.

The Court disagreed that the Bylaw required complete removal of snow, as the Bylaw did not require the “clearing of all snow and ice off a sidewalk”.  Accordingly, the appeal was dismissed.

Takeaways

This decision highlights the importance of using clear and unambiguous language in bylaw drafting. Bylaws that are capable of multiple interpretations may be unenforceable.

In light of this decision, local governments should review their snow removal bylaws and ensure that they include language that “all snow and ice be completely cleared”, or other unambiguous language.  This language should be similarly applied to other sidewalk clearing provisions, for example in relation to the accumulation of rubbish or dirt.

To mitigate the risks associated with ambiguous bylaws on an ongoing basis, local governments should:

• • retain counsel with experience in bylaw drafting to draft or review their bylaws;
  • use clear and unambiguous language in their bylaws; and
  • regularly review older bylaws and consider whether amendments are required.

Finally, to reduce liability that may befall the City due to slip-and-falls on snowy sidewalks, local governments may consider ticketing enforcement to ensure that property owners are proactive in completely clearing their sidewalks.

If you have questions, contact a member of our experienced Local Government Team.

DOWNLOAD ARTICLE PDF HERE

Todd Brothers Contracting Ltd. v. Algonquin Highlands (Township), 2015 ONCA 737

Introduction

On November 3, 2015 the Ontario Court of Appeal released Todd Brothers Contracting Ltd v. Algonquin Highlands (Township) 2015 ONCA 737. This decision dealt with the ability of the Township to rely on a waiver agreement with a tendering contractor that prohibited the contractor from seeking compensation from the Township in the event the project was cancelled. The case stands as a general reminder of the value of properly worded contractual terms in protecting local governments from liability and, specifically, obtaining a release in circumstances where the performance of a bid contract may be delayed or in jeopardy as the result of external factors.

Summary of Todd Brothers

Todd Brothers brought a claim for damages against the Township as a result of its alleged breach of a construction contract. In April 2009 the contractor had been the lowest bidder for a project involving the construction of a new runway and extension of the Haliburton-Stanhope Airport terminal. Shortly after the tender process closed, the Canadian Environmental Assessment Agency (CEAA) unexpectedly decided to review the project. As a result, Todd Brothers and the Township signed an agreement to extend the time for acceptance of its tender until July 15, 2009.

By late June 2009 the CEAA review was not yet complete so the Township decided to seek approval from the Ministry of Agriculture, Food and Municipal Affairs (OMAFRA) to complete the project in three phases. Breaking the project into phases partially obviated the need for CEAA approval. Todd Brothers agreed to the phasing of the project and, once again, to extend the timeline for acceptance of its tender bid.

In September 2009 the Township council passed a resolution accepting Todd Brothers’ tender according their bid, but subject to CEAA approval. However, no formal construction contract was actually entered into between the two parties.

Prior to the passing of this resolution Todd Brothers signed a “Compensation Waiver Acknowledgement” which provided that the Todd Brothers would: “…not seek any compensation for … work identified but not completed … in the event that the Township cannot proceed to any of the phases as a result of matters beyond the control of the Township of Algonquin Highlands, or delays resulting from the review being completed by the CEAA … any other public issues/concerns or the withdrawal of funding from applicable sources.”

The CEAA approved the project in December 2010. However, the newly elected Township council, whose members campaigned against the project, passed a resolution to defer the airport expansion until a further review was conducted.

In January 2011 the Ministry of Natural Resources (MNR) proposed a joint airport improvement project that, pursuant to the Township’s agreement with OMAFRA, it was required to consider. The Township decided to pursue this joint project as it was concerned that any other course of action would risk the loss of government funding for any airport improvements. It then relied on the waiver Todd Brothers signed to cancel the original project without paying the contractor any consideration. Todd Brothers then sued the Township for breach of contract.

Todd Brothers argued that there was no evidence of any “public issues/concerns”. However, the Court of Appeal recognized that there was significant public outcry with the project and the MNR’s proposal for a different, joint project were “public issues.” Further, there was a provision in the Township’s agreement with OMAFRA requiring it to notify the Ministry if any more cost effective opportunities arose. The court interpreted this to mean that this funding would be in jeopardy if the joint project was rejected – and this triggered the funding aspect of the waiver.

Both the motion judge in the original decision and the Court of Appeal agreed that the Township’s decision to pursue the joint project was permissible and its reliance on the waiver with Todd Brothers to cancel the original project was valid.

Implications for Local Governments

As between a local government and a contractor, when issuing tender documents or during the period between the close of tender and the acceptance of a bid and signing of a formal agreement, a broadly worded waiver agreement may be useful for limiting a local government’s liability to the preferred bidder in the event there are intervening issues with commencement of the project. The courts in Ontario have interpreted “public issues/concerns” broadly and are appreciative of the issues local governments face in terms of securing both public support and funding from higher levels of government.

By requiring a contractor to sign such a waiver a local government may be able to shield itself from contractual claims brought by a preferred bidder in the event commencement of a project becomes contingent on regulatory or funding approvals.