Encumbrances on title to a real property can significantly affect the fair market value and use that can be made of a property. For example, a restrictive covenant may restrict the characteristics of improvements which can be made and easements can make sections of a property largely useless to its owner.

Encumbrances like restrictive covenants and easements generally are initially registered with a clear purpose and are registered as part of an exchange of promises and commitments by various parties involved in the development and/or subdivision of neighbouring properties. There are often reciprocal encumbrances providing mutual benefits to landowners and which facilitate cohesive and efficient neighbourhood development and utilities servicing.

When encumbrances no longer serve their purpose and/or too significantly burden a property, landowners will often look to cancel the encumbrance. If cooperation is not being provided for such cancellation or seeking consent has become prohibitively difficult, a landowner may need to turn to the Court for assistance. This was the case in the recent decision of Britannia Oceanfront Developments Corporation v Adriatic Investments Canada Ltd., 2021 BCSC 2636 (CanLII).

In the case, the Petitioner, Britannia, sought the cancellation a utilities easement burdening its property. Through a foreclosure, various sales and development of surrounding lands, Britannia argued that:

• its property was ready for and had received permissions for substantial development;
• the original property benefitting from the easement had been subdivided up into approximately 200 individual properties with about the same number of owners; and
• the now ~200 properties now entitled to the benefit of the easement were effectively serviced through utilities put in place as part of the subdivision process of the original parent property.

By consent, whether the easement should be cancelled in respect of Crown owned land was set aside for another day.

Britannia’s petition was brought further to s. 35 of the Property Law Act which provides that the Supreme Court may modify or cancel, among other things, easements, were it is satisfied that the application is not premature in the circumstances and any of the following are made out:

1. because of changes in the character of the land, the neighbourhood or other circumstances, the registered charge or interest is obsolete,
2. the reasonable use of the land will be impeded, without practical benefit to others, if the registered charge or interest is not modified or cancelled,
3. the persons who are or have been entitled to the benefit of the registered charge or interest have expressly or impliedly agreed to it being modified or cancelled,
4. modification or cancellation will not injure the person entitled to the benefit of the registered charge or interest, or
5. the registered instrument is invalid, unenforceable or has expired, and its registration should be cancelled.

The Court in its analysis first found that the petition was not premature given that Britannia’s property was ripe for redevelopment and the easement remained the primary obstacle to same.

The Court decided to determine the matter on s. 35(b), being an impediment to land without practical use to others. The Court reviewed law that found that a minimal benefit was not sufficient to establish a practical benefit. None of the ~200 owners entitled to the easement expressed what benefit the easement might still provide to them. The evidence before the Court was that the ~200 owners’ properties received utilities services through means other than the easement. Britannia’s otherwise permitted development of its land was being significantly impeded without apparent benefit to the parties presently entitled to the easement.

The Court therefore found that s. 35(b) of the Property Law Act had been met and ordered the cancellation of the easement in respect of the ~200 owners. The Court did note that s. 35(c) arguments may have held some merit in that no opposition to the petition to discharge the easement had been received. It also notes that s. 35(d) arguments held some merit in that there was no evidence of any apparent harm risked to the ~200 owners by the cancellation of the easement.

Britannia Oceanfront Developments Corporation v Adriatic Investments Canada Ltd. highlights that encumbrances on title are not permanent. If they are no longer providing their intended benefit, they can be cancelled or removed. S. 35 of the Property Law Act is available for the Court to step in and modify or cancel encumbrances where consent for modification or removal is impractical to obtain or is otherwise unreasonably refused. There are several potential grounds on which to base a s. 35 application and whether s. 35 applies is a highly fact specific analysis. A strong s. 35 application will be clearly articulated, well-supported and should be able to be presented concisely and convincingly.

Britannia Oceanfront Developments Corporation v Adriatic Investments Canada Ltd. also serves as a reminder that parties benefitting from an encumbrance on another property can be put in a position of “use it or lose it”. Failing to make full or any use of the intended benefit of an encumbrance puts that encumbrance at risk of modification or cancellation.