The B.C Supreme Court recently released its judgment in the case of Atco Lumber Ltd. v. Kootenay Boundary (Regional District), 2014 BCSC 524, and the Court’s decision should prompt every local government in the province to examine its standard statutory right of way documents.
The Regional District expropriated a pair of rights of way, one for a water line, and one for the use of an access road. The case turned mainly on the Court’s interpretation of certain clauses in the access right of way.
The Court noted the principle, well-established in law, that an easement cannot impose positive covenants on the owner of the servient lands. In other words, an easement cannot require the owner of the servient lands to do something (as opposed to refraining from doing something) or, perhaps more to the point, spend money. Statutory rights of way are a form of easement, so the principle applies to them with equal force.
The Court held that the right of way in question was invalid because it contained a number of positive covenants. Those covenants, some of which are very standard fare in right of way documents, include the following:
- That the owner must not build on or obstruct the right of way;
- That the owner must indemnify the Regional District for damages resulting from the owner’s breach of the agreement;
- A “further assurances” clause, providing that the owner “shall execute all further documents and agreements whatsoever required for the better assuring to the Grantee of the statutory rights of way hereby granted”;
- Clauses giving the Regional District the right, but not the obligation, to maintain the access road;
- A clause allowing the Regional District to remedy a breach by the owner, and to add the cost of doing so to the owner’s property taxes.
We take no issue with the Court’s disapproval of the indemnity clause, and the “self-help” clause that would allow cost recovery through property taxes. Both of those clauses could require the payment of money by the owner, something a right of way cannot do.
However, we are surprised at the Court’s characterization of the other clauses as positive covenants. With respect to the covenant not to obstruct, the problem was that a gate already existed, and the Court decided that this meant the owner would have to remove it, rendering the covenant a positive one. It is perhaps a case of bad facts making bad law, because it is difficult to reconcile the notion of this being a positive covenant with the reality that every word of it is directed towards things the owner will refrain from doing. This sort of clause is a necessary component of most, if not all rights of way.
When it came to the question of road maintenance, the Court held that since the Regional District would not be obligated to maintain the road, and since there was no clause in the agreement expressly relieving the owner of maintenance obligations, the agreement implied a positive obligation on the owner in that regard. We disagree with this conclusion, but the solution may be to include wording expressly relieving the owner of any maintenance obligations.
Similarly, we disagree that the “further assurances” clause, another staple of the statutory right of way (and many other agreements), constitutes a positive covenant. The answer here may be to include language that any future actions required of the owner under this clause would be at the local government’s expense.
Unless and until this decision is subject to further judicial consideration, the Court’s decision stands and may be binding in similar fact situations. As such, it may be necessary to modify or delete similar provisions in all rights of way to avoid similar results.
While it may be possible to distinguish this decision in future cases based on its unique set of facts, we recommend that all local governments review their standard statutory right of way documents. If those precedents contain clauses similar to those found problematic in this case, legal advice should be sought.