kornfeld v. intrawest corporation et al., 2005 bcsc 162

IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation: Kornfeld v. Intrawest Corporation et al., 2005 BCSC 162

Date: 20050204 Docket: S044213

Registry: Vancouver

Between:

Robert Barry Kornfeld, Carol Edna Kornfeld, Stephen Bradley MacDonald and Verna Lei MacDonald

Plaintiffs

And:

Intrawest Corporation, Whistler Mountain Resort Limited Partnership,

Exclusive Resorts WH1, LLC, Exclusive Resorts WH2, LLC, Exclusive Resorts WH3, LLC, and Exclusive Resorts WH4 LLC

Defendants

Before: The Honourable Madam Justice Boyd

Reasons for Judgment

(In Chambers)

Counsel for the Plaintiffs: C.J. AndisonR. Warburton (Articled Student)

Counsel for the Defendants, Intrawest Corporation and Whistler Mountain Resort Limited Partnership:

R. Sewell, Q.C.and S. Griffin

Counsel for the Defendants, Exclusive Resorts WH1, LLC, Exclusive Resorts WH2, LLC, Exclusive Resorts WH3, LLC, and Exclusive Resorts WH4, LLC:

J.Z. Ahmad

Date and Place of Hearing: December 16, 2004Vancouver, B.C.

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Kornfeld v. Intrawest Corporation et al.

Introduction:

[1] The plaintiffs have applied for judgment pursuant to Rule 18A on certain

limited issues, seeking declarations and injunctions relating to alleged breaches of a

statutory building scheme registered against lands in a residential development

known as “Kadenwood” in the Whistler Resort municipality.

Background Facts:

[2] Kadenwood is a phased residential bare land strata development. The

defendant, Whistler Mountain Resort Limited Partnership (“WMRLP”) is the

owner/developer of the Kadenwood lands. The defendant, Intrawest Corporation, is

the general partner of WMRLP and held the Kadenwood lands, and continues to

hold Phases 3 and 4 of those lands, as the registered owner and bare trustee on

behalf of WMRLP. Collectively, the WMRLP and Intrawest Corporation are referred

to here as the “Intrawest Group”.

[3] The Kadenwood lands were first marketed for sale in the fall of 2001. In its

Disclosure Statement in relation to Kadenwood dated October 18, 2001, the

Intrawest Group disclosed its plan to subdivide the lands in accordance with the

proposed Form P (Strata Property Act) Phase Strata Plan declaration attached as

Exhibit B to the Disclosure Statement. The Form P sets out Intrawest Group’s plan

to develop Kadenwood as a four phase, 60 lot bare lot strata development with 19

strata lots in Phase 1, 21 strata lots in Phase 2, 10 strata lots in Phase 3 and 10

strata lots in Phase 4.

[4] Regarding the phasing of the development, Paragraph 2.3 of the Disclosure

Statement provides:

… The Lots being offered pursuant to this Disclosure Statement comprise the 19 Lots in the first phase (“Phase 1”) of the Development…. As described in section 5 below, the Developer may, in accordance with the Strata Property Act, elect not to proceed with any or all of the future phases of the Development or amend the Form P, including amending the Form P to change the proposed

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phasing or to change the number of lots in any phase or the ultimate Development.

[5] Intrawest Group’s promotional brochure regarding Kadenwood, which was

provided to the plaintiffs, describes the development as “a rare and privileged

enclave”, “a majestic ski-inn/hideaway that provides the ultimate in mountain

privacy”; “the highest residential property in one of the world’s most spectacular ski

destinations”; a neighbourhood development that “ensure its owners an unique

sense of separation and security”; a neighbourhood with design guidelines that

ensure “roadways that secure privacy”; a “thoughtfully planned ski-inn/ski-out trails”

and a neighbourhood where “the homes at Kadenwood would be in a class seldom

equal to the world”.

[6] The plaintiffs say they relied upon the fact that in the Disclosure Statement

the Intrawest Group appeared to indicate the only permitted usage for the

Kadenwood lots was “residential/family lots”. Further, the Disclosure Statement

provided that all of the Kadenwood lands would be subject to a statutory building

scheme created by Intrawest Group (“the Building Scheme”). The Building Scheme

which was eventually registered against the lands contains restrictions on what

types of structures can be built. Under the heading “Building Design Guidelines”,

Appendix B to the Building Scheme provides that:

The intent of these guidelines is to maintain a high standard of building appearance, to enhance views from the lots and of the subdivision, protect solar exposure, minimize environmental and visual impact of built elements and generally ensure the quality of development of a prestigious residential enclave… (my emphasis)

[7] In January 2002, the plaintiffs entered into contracts with the WMRLP to

purchase strata lots number 16 and 17 within Phase 1 for purchase prices of

$1.65 M and $1.95 M respectively.

[8] On June 4, 2002, the Intrawest Group completed the subdivision of Phase 1

into 19 bare land residential strata lots and two weeks later the plaintiffs became the

registered owners of Lots 16 and 17.

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[9] By approximately mid-December 2002, Phase 2 of the Kadenwoods lands

was subdivided by the Intrawest Group into 21 bare strata lots. That portion of the

Kadenwood lands set aside for the development of Phase 3 and 4 remained

undivided (the “Remainder Parcel”). As of March 2004, the Intrawest Group had not

completed the sale of any of the lots in Phase 2.

[10] In March 2004, the Intrawest Group wrote to all of the Phase 1 purchasers

advising that it no longer intended to proceed with the development of Phase 4 as

previously planned. Rather it intended to enter into a venture with the Four Seasons

Resort and build eleven homes in the Phase 4 portion, which properties would be

operated as a Four Seasons Residence Club. The homes were to be fractionally

owned and managed by Four Seasons. All Phase 1 owners were invited to an

information meeting on March 20, 2004.

[11] The plaintiffs attended that meeting with other Phase 1 owners. At the

meeting various representatives of the Intrawest Group described the intended

venture in greater detail. More specifically, they advised that the Intrawest Group

intended to remove from the existing strata the 10 lots which were originally planned

to comprise Phase 4 and develop them as part of a separate fractional ownership

strata complete with a commercial check-in facility to be managed by the Four

Seasons.

[12] Details of the planned project include the following:

● Intrawest Group intends to construct eleven houses on the Phase 4 lands;

● Each of the eleven houses will be the same size (approximately 3500 square feet);

● Consistent with a theme for the entire fractionally ownership community, each of the eleven houses will be the same or similar in design and appearance;

● Intrawest Group intends to sell one-tenth fractional ownership interest in each house (ie. each specific house will have 10

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owners, and each owner will have the right to occupy his/her house for five-non consecutive one-week intervals each year);

● the fractional ownership project will be managed by Four Season Ltd.;

● there will be a sign advertising the Four Seasons project at the entrance to the Phase 4 lands;

● the project will be operated under the Four Seasons’ tradename as part of the Four Season Residences Club;

● the Four Seasons project will include an on-site facility for servicing owners of the eleven houses (“the Reception Centre”); the Reception Centre will be built on what is now being called Lot 1 of a new strata;

● the Reception Centre will be approximately 1400 square feet in size and will comprise the lowest level of one of the eleven houses to be built;

● the Reception Centre will include a check-in desk and a staff office from which the Four Seasons project will be managed; and

● the Reception Centre will include several extra parking spaces and will serve as a hub for shuffling Four Seasons project occupants to the Health Spa in the newly-opened Four Seasons Hotel in Whistler.

[13] The plaintiffs attended a second informational meeting on May 8, 2004. At

that meeting a Mr. Morley of the Intrawest Group “acknowledged that whatever

Intrawest did in connection with the planned Four Seasons project in Phase 4 will

have to comply with the requirements of the Building Scheme… because the

Building Scheme was registered as a charged against all lots and lands within

Kadenwood, including the lands (yet to be subdivided set aside for Phase 4”). See

paragraph 20, Affidavit of Stephen MacDonald sworn November 18, 2004.

[14] On July 30, 2004, the Intrawest Group submitted to the Kadenwood strata lot

owners a Notice of Election Not to Proceed-Phase Strata Development. In this

document the Intrawest Group provides notice, pursuant to section 325 of the Strata

Property Act, of its election not to proceed with Phase 4 of the Phased Strata Plan

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Development within Strata Plan LMS 4695, as declared on the amended Form P –

Phase Strata Plan Declaration filed in the Land Title Office on December 12, 2002.

The Notice of Election Not to Proceed includes a new Amended Form P Phase

Strata Plan Declaration which now describes Kadenwood as being developed in only

three phases. The Phase 4 lands are not included in this latest Amended Form P.

[15] On or about July 30, 2004, the Intrawest Group filed an application for

rezoning of Lot 1 in Phase 4 with the Resort Municipality of Whistler. While

Intrawest proposes that the zoning for the other ten homes remain the same (RTA-

11), it has submitted that the zoning regarding Lot 1 be amended so as to allow for

the creation of an 130 square metres “amenity building” at the bottom of the

proposed Lot 1 home, for the servicing of the surrounding eleven homes. To this

point, the rezoning application has not been approved.

Claim for Rescission:

[16] At the outset of this hearing, counsel for the Intrawest Group raised a

preliminary objection that it was inappropriate for the plaintiffs to maintain their claim

for rescission of the contracts, as set out in the Statement of Claim, while

simultaneously pursuing this application for judgment for the declarations and

injunctive relief. After some discussion, the plaintiffs’ counsel confirmed his clients

had elected to abandon the rescission claim and that the action was now limited to

an action for damages for breach of contract, based upon the defendants’

misrepresentations which the plaintiffs say they relied upon in proceeding with the

purchases of the subject properties.

Plaintiffs’ Position:

[17] The plaintiffs say they purchased Lots 16 and 17 in reliance on the Intrawest

Group’s descriptions and representations of Kadenwood, and specifically the

representation that Kadenwood would be an exclusive “residential neighbourhood

enclave”. They say that the Intrawest Group’s new plans for Kadenwood contravene

the use represented in the promotional materials and the Disclosure Statement, as

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well as the restrictions covenanted in the Building Scheme. Accordingly they seek

declarations and orders permanently restraining and enjoining: (1) the construction

and use of the Reception Centre and/or any commercial structure or facility; (2) the

construction of identical or similar houses; (3) the construction of any structure that

is not a detached dwelling; (4) the erection of any commercial signage; and (5) the

marketing and/or sale of fractional or other non-residential ownership interest.

Defendants' Position:

[18] The Intrawest Group takes the position it had the power to exempt the lands

in Phase 4 from the Building Scheme, which power it says it brought to the attention

of the plaintiffs in the original materials. The Intrawest Group says it properly

exercised that power consistent with its stated right and stated intention and that

accordingly, the lands in respect of which the plaintiffs’ injunction is sought are not

subject to the Building Scheme. In any event, the Intrawest Group says the

proposed development does not violate any negative covenant contained in the

Building Scheme. In these circumstances, it says there is no basis upon which the

plaintiffs are entitled to the declarations or the injunctive relief sought.

Issues:

1. Does the Intrawest Group have the power to exempt the Phase 4 Kadenwood lands from the application of the Building Scheme in question? If so, has that power been properly exercised?

2. If the answer to (1) is no, is the proposed Phase 4 development contrary to the provisions of the Building Scheme?

3. If the answer to (2) is no, is the proposed Phase 4 development contrary to the applicable zoning bylaw?

Relevant Provisions of Documents provided to Plaintiffs:

Disclosure Statement:

2.1 The lots offered for sale by the Developer pursuant to this Disclosure Statement are certain residential bare land strata

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building lots (the “Lots”) in a development (the “Development known as Kadenwood”) at Whistler, British Columbia:

2.2 Subdivision of the Lands

The Lands are to be subdivided to create the Lots in stages, as follows:

(a) The Lands will be subdivided in accordance with a proposed subdivision plan (the “Subdivision Plan”) substantially in the form attached as Exhibit A to this Disclosure Statement to create “Lot 1” and “Lot 2”, as shown thereon. Lot 1 will be transferred to Resort Municipality of Whistler (the “Municipality”) for use as a park, expected to be known as “Big Timbers Park”. Lot 2 will be retained by the Developer for the carrying out of the Development.

(b) Lot 2 will be subdivided to create the Lots. Following the registration of the bare land strata plan(s) for the Development, it is expected that the Lots will be legally described as follows:

Resort Municipality of Whistler Strata Lots 1 to 19 District Lot 7798 Group 1, New Westminster District Strata Plan LMS____________

The strata plan number will be assigned when the bare land strata plan for phase 1 of the Development (the “Phase 1 Strata Plan”) is described in the Land Title Office.

…

2.3 Phasing of the Development

The Development is a phased development under the Strata Property Act (British Columbia). The phasing of the Development presently contemplated by the Developer is shown on the proposed Form P (Strata Property Act) Phased Strata Plan Declaration attached as Exhibit B. The Lots being offered pursuant to this Disclosure Statement comprise the 19 Lots in the first phase (“Phase 1”) of the Development. A reduced copy of the draft Phase 1 Strata Plan is attached as Exhibit C. As described in section 5.1 below, the Developer may, in accordance with the Strata Property Act, elect not to

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proceed with any or all of the future phases of the Development or amend the Form P, including amending the Form P to change the proposed phasing or to change the number of lots in any phase or the ultimate Development.

…

5.1 Phasing of the Development

A phased strata development is a development which is proposed to be completed in separate parts and all completed parts become one strata corporation upon the registration of the strata plan for each phase. An approved Form P (Strata Property Act) Phased Strata Plan Declaration under Part 13 of the Strata Property Act is required for a phased strata plan development. A copy of the proposed Form P, which is to be tendered for registration in the Land Title Office concurrently with the Phase 1 Strata Plan, is attached as Exhibit B to this Disclosure Statement.

The Form P describes important aspects of the Development. The approximate location and area of each phase of the Development, as presently proposed by the Developer, are set out in the sketch plan attached to the proposed Form P attached as Exhibit B.

As shown on the Form P, if and when the Developer proceeds with the phasing of the Development as presently contemplated and completes Phases 1, 2, 3 and 4, the Development will be completed as follows:

Phase Number of Bare Land Strata Lots

Phase 1 19 Lots Phase 2 21 Lots Phase 3 10 Lots Phase 4 10 Lots

Total: 60 Lots

The Developer may, in accordance with any requirements under the Strata Property Act, amend the Form P, including amending the Form P to change the proposed phasing or to change the number of lots in any phase or the ultimate Development and may elect not to proceed with future phases of the Development upon compliance with section 235 of the Strata Property Act.

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6.1 Zoning and Development Approval

(a) The zoning applicable to the Lots is RTA11 (Residential/Tourist Accommodation 11), in which the following uses are permitted and all other uses are prohibited:

- detached dwelling;

- auxiliary residential dwelling unit, provided it is contained within the principal residential building or within an auxiliary building which includes parking use, and further provided it is not occupied except as employee housing (see section 6.6 below);

- park and underground; and

- auxiliary uses

Detached dwellings in the RTA11 zone may be used for temporary accommodation of not more than 8 guests during periods when such dwellings are not occupied for residential use.

A copy of the Municipality’s RTA11 zoning provisions is attached as Exhibit H. This is provided for convenience of reference only and proposed purchasers are advised to contact the Municipality to obtain information as to all of the Municipality’s restrictions and requirements applicable to construction on the Lots.

(b) As described in section 2.4 above, the Municipality has issued to the Developer tentative subdivisions approval in respect of the Subdivision Plan and the bare land strata plan.

(c) The Developer will comply with all building restrictions, zoning regulations and other restrictions and requirements in connection with the subdivision and servicing of the Lots and all road construction relating thereto.

(d) Construction of any improvements made on the Lots by or on behalf of the owners of the Lots will be subject to the zoning applicable to the Lots, the other bylaws, rules, regulations and other requirements of the Municipality and any other applicable authority and the encumbrances registered against title, including the Statutory Building

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Scheme and Design Guidelines referred to in section 6.4, and the bylaws of the Strata Corporation. The owners of the Lots will be responsible for obtaining all necessary permits and approvals and all costs and fees associated therewith.

…

6.4 Statutory Building Scheme

The Developer intends to cause a statutory building scheme (the “Statutory Building Scheme”), substantially in the form attached as Exhibit I to this Disclosure Statement, to be registered against the title to the Lots prior to the completion of the sale of any Lot. The Statutory Building Scheme will contain restrictions applicable to construction on the Lots including, without limitation:

(a) a restrictions on construction of improvements on each Lot to the portion of the Lot which is within a defined building envelope area, as set out on the building site plan for the Lot, which is to be attached as Appendix A to the Statutory Building Scheme, and copies of which building site plans are to be provided to purchasers of the Lots on or before the execution of their contracts of purchase and sale for the Lots;

(b) a requirement that all improvements on the Lots comply with the design guidelines established by the Developer for the Development (the “Design Guidelines”) and attached as Appendix B to the Statutory Building Scheme and the site development guidelines attached as Appendix C to the Statutory Building Scheme;

(c) a requirement that all building plans for improvements on the Lots be approved by the Developer in accordance with the approval process set out therein; and

(d) a prohibition on clearing, excavation and construction on the Lots except in compliance with the provisions of the Statutory Building Scheme,

all as more particularly set out in Exhibit I.

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Prior to commencement of construction of any improvements on the Lots, plans and specifications must be submitted to the Developer (or other designate as is identified by the Developer) for approval pursuant to the Statutory Building Scheme and such plans and specifications will be required to comply with the Design Guidelines. The Statutory Building Scheme establishes the procedure for plan approval and requirements for such matters as building height, exterior colour and finishes, roof materials and treatments, landscaping, fencing, parking, driveways, building siting, lot clearing, tree cutting and the like.

6.5 Construction by Purchasers

The purchasers of the Lots are responsible to review the bylaws, rules, regulations and other requirements of the Municipality and any other applicable authority with respect to the requirements for the approval of any construction proposed by the purchasers on the Lots, and the Developer will be under no obligation to the purchasers in connection therewith ….

7.1 State of Title

(a) Registered Owner

Intrawest Corporation is the registered owner of the Lands, as nominee, agent and bare trustee for the Developer. As such, Intrawest Corporation is authorized to enter into contracts of purchase and sale and to transfer title to the Lots to purchasers.

Kadenwood Statutory Building Scheme:

We, INTRAWEST CORPORATION… declare that:

(1) We are the registered owner in fee simple of the following land (hereinafter called the “Lots”).

(2) We hereby create a building scheme relating to the Lots.

(3) A sale of any of the Lots is subject to the restrictions enumerated in the schedule attached or annexed hereto.

(4) The restrictions shall be for the benefit of all the Lots.

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Kadenwood Statutory Building Scheme- Schedule of Restrictions:

1. Definitions:

(b) “Building Scheme” means this statutory building scheme, including the Form 35 (Land Title Act) above, this Schedule of Restrictions and each Appendix hereto.

…

(h) “Develop” means to change the use of any land or Improvement, or to carry out any development, construction, engineering or other operations……and “Development” has a corresponding meaning.

(k) “Lot” means the lots described as the “Lots” on the Form 35 (Land Title Act) above and any lot or other legal parcel into which such lots may be subdivided…… including, without limitation, the Remainder Parcel and any lot or strata lot created within the Remainder Parcel…

2. Restriction on Improvements – Approval of Plans and Specifications. No Lot may be Developed and no Lot Owner will carry out or permit to be carried out any Improvement or Development in respect of any Lot unless:

(a) prior thereto:

(i) the Lot Owner submits to the Administrator and the Coordinating Architect the Plans and Specifications in respect of the proposed Improvement or Development in accordance with this Building Scheme;

(ii) the Administrator has issued a written approval of the Plans and Specifications in accordance with this Building Scheme; and

(iii) the Municipality has issued any building permit or other required approval in connection therewith;

(b) such Improvement or Development is carried in accordance with the Plans and Specifications approved by the Administrator in accordance with this Building Scheme and the Lot Owner complies with all provisions of this Building Scheme; and

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(c) such Improvement or Development is carried out in compliance with all applicable laws, ordinances, rules, regulations and orders of the Municipality and any other applicable governmental or regulatory authority.

…

5. Administrator’s Review of Plans and Specifications.

(a) The Administrator will review and consider any Plans and Specifications submitted to the Administrator in a reasonably timely manner and either approve of or reject such Plans and Specifications and provide the Lot Owners with written notice thereof. If the Administrator rejects any Plans and Specifications, the Administrator will provide the Lot Owner with written reasons for such rejection.

…

(e) The Administrator will have the full authority to determine, in the absolute discretion of the Administrator, whether or not to approve any Plans and Specifications, and in connection therewith the Administrator may waive or relax any of the requirements set out in this Building Scheme, including those set out in any Appendix hereto, provided always that the Administrator will act in good faith and will not act arbitrarily or with manifest unreasonableness.

…

8. Alterations, Maintenance and Repairs. No material altercation to or modification, maintenance or repair of any Improvement will be carried out unless Plans and Specifications are submitted to and approved by the Administrator in accordance with this Building Scheme and unless the Lot Owners complies with all other provisions of this Building Scheme in respect thereof as if it was a new Improvement.

9. Appointment of Management Committee as Administrator: The Developer will assign its rights, interests and functions as Administrator to a Management Committee elected by the Lot Owners in accordance with this section 9 to act as the Administrator.

…

16. Discretion to Grant Exemption. The Administrator reserves the right to exempt any Lot or Lots which have not been disposed of by Intrawest

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Corporation at the time the exemption takes effect from all or any of the restrictions and benefits herein.

Intrawest Group’s power to exempt?

[19] Based on the language of the Declaration of Building Scheme, I find the

Building Scheme, including the Schedule of Restrictions, was intended to apply to all

of the Kadenwood lands, including the remaining Phase 4 lands. The narrow issue

is whether the Intrawest Group may successfully avoid the application of same, by

virtue of the exercise of its purported right to exempt those lands from the Scheme,

which right is set in s. 16 of the Building Scheme.

[20] While I have set out the relevant provision above, I will repeat it here.

Section 16 of the Building Scheme, entitled Discretion to Grant Exemption, provides:

The Administrator reserves the right to exempt any Lot or Lots which have have not been disposed of by Intrawest Corporation at the time the exemption takes effect from all or any of the restrictions or benefits herein.

[21] Section 220 of the Land Title Act, which governs building schemes, provides

at subsection 3:

From the date of endorsement, the restrictions created by the declaration of building scheme run with and bind all the land affected and every part of it without further registration, but subject to this section…., render

(a) the owner,

(b) each purchaser, lessee and sublessee of all or part of the land,

(c) each successor in title, future purchase, lessee and sublessee of the land subject to the restrictions and confer on them the benefits of the building scheme, unless in the declaration of building scheme the owner in fee simple….expressly reserves the right to exempt that part of the land remaining undisposed of at the time the exemption takes effect from all or any of the restrictions and benefits.

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[22] Intrawest says that on December 8, 2004, it exempted the remaining parcel,

which includes the Four Season Lands, from all the restrictions contained in the

Building Scheme, and that accordingly the plaintiffs’ claims for declaratory and

injunctive relief must fail.

[23] As I understand it, in response, the plaintiffs take several positions: (1) that

the exemption clause contained in the Building Scheme does not include a power to

change the use of any remaining lots in any of the phases of development, contrary

to that articulated in the Building Scheme; (2) that the exemption clause does not

comply with the requirements of s. 220(3) of the Land Title Act since it is contained

in the Schedule of Restrictions rather than in the Declarations of Building Scheme;

(3) that the right to exempt, which is reserved to the Administrator, WMRLP, cannot

be relied on since WMRLP is not an “owner” within the meaning of s. 220 of the

Land Title Act; (4) that the lands in question had already been “disposed of” or

“dealt with “ as of the date of the execution of the notice of exemption and

accordingly the notice did not comply with the deadline set out in both the statute

and the Building Scheme and finally (5) even if s. 16 of the Building Scheme is

enforceable, the Administrator has not exercised its discretion properly and in

accordance with the principles which govern it.

[24] In my view, neither the second nor the fourth submissions have any merit.

Both submissions rely on strained interpretations of the Building Scheme.

[25] As to the plaintiffs’ second submission regarding WMRLP’s inability to cast

itself as an “owner” capable of executing a notice of exemption, I reject this

submission. WMRLP is the owner-developer of Kadenwood. WMRLP’s general

partner is Intrawest Corporation. Legal title to the Kadenwood land is held by

WMRLP’s general partner Intrawest as nominee, agent and bare trustee for and on

behalf of WMRLP. Under partnership law, there is no distinction to be drawn

between the rights and actions of a partner and the partnership itself with respect to

the partnership property. Thus the fact that WMRLP is the “Administrator” under the

Building Scheme and that title is held by its general partner Intrawest, in trust and as

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agent for WMRLP, is irrelevant. WMRLP and Intrawest are partners. WMRLP can

act only through Intrawest. Just as only Intrawest can hold title to the lands, only

Intrawest can exercise WMRLP’s rights under the Building Scheme. Accordingly the

plaintiffs’ submission cannot stand.

[26] In my view the true focus of the plaintiffs’ submission is reflected in the first

and fifth arguments raised above.

[27] The thrust of the plaintiffs’ position is that Intrawest’s recent exercise of its

purported right to exempt the Phase 4 lands from the application of the Building

Scheme is of no force or effect since this provision merely reserves to Intrawest, as

the developer, the right to amend the Phased Strata Plan Declaration so as to

change the proposed phasing, to change the number of lots in each phase or to

elect not to proceed with future phases. The plaintiffs submit that nowhere in the

Disclosure Statement did the Intrawest Group reserve to itself the right to change the

“use” of any of the lots in any subsequent phase of development of the Kadenwood

lands. The plaintiffs note that such a limiting interpretation of Intrawest’s rights is

consistent with s. 235 of the Strata Property Act which allows a developer to

amend a strata plan declaration in order to make those same three types of

changes.

[28] The plaintiffs note that the Building Scheme includes both the Schedule of

Restrictions, as well as an Appendix to the Scheme. Paragraph 2(b) of the

Schedule of Restrictions provides that no Kadenwood lot may be improved or

developed unless such “improvement or development is carried out in accordance

with …this Building scheme and the Lot Owner complies with all provisions of this

Building Scheme.” Likewise para 2(c) of the Schedule of Restrictions provides that

no Kadenwood lot may be improved or developed unless “(s)uch improvement or

development is carried out in compliance with all applicable law, ordinances…and

orders of the Municipality….”

[29] Since the term “Develop” is defined in the Building Scheme to mean “change

the use of any land,” and the term “Development” is defined to have “a

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corresponding meaning”, the plaintiffs submit it follows that in requiring, at para 1(h)

of the Building Scheme, that any “change in use of any (Kadenwood ) land “ must be

carried out in compliance with the Building Scheme, it must be inferred that on its

face, the Building Scheme imposes legal constraints on any “development”,

including the use of the Kadenwood lands.

[30] In interpreting the provisions of the Building Scheme, the plaintiffs submit the

Court ought to adopt an objective construction standard, such that the meaning of

the scheme should be derived both from the words used in the Building Scheme

document itself as well as the surrounding circumstances, viewed from the

perspective of an ordinarily reasonable purchaser. The general purpose of the

scheme will be an important factor in considering “the surrounding circumstances”.

(417489 B.C. Ltd. v. Scana Holdings Ltd., Unreported decision, June 6, 1997,

Vancouver Registry No. C965422).

[31] Here, given the representations contained in Intrawest’s general plan of

development, the promotional materials and the Disclosure statement, the plaintiffs

submit that any objective construction of the Building Scheme requires a protection

of the interests of the Kadenwood purchasers by limiting and restricting the

development of the Kadenwood lands to “residential” uses.

[32] The plaintiffs submit the facts in the case at bar are indeed like those

considered by the court in Scana Holdings (supra). There the Court held that the

construction of the defendant company’s tourist pension in a small Whistler

subdivision contravened the statutory building scheme registered against the lots

within that subdivision.

[33] In my view the Scana decision is distinguishable from the circumstances in

the case at bar: (1) there was a s. 219 covenant in Scana which prohibited the

construction of anything other than a detached simple family dwelling unit (which

covenant was required and agreed to as a condition of obtaining subdivision

approval); (2) the applicable zoning was single family; and (3) the building scheme

contained a specific statement that it was the object of the scheme to develop a

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residential neighbourhood. All of these elements were considered by the Court in

reaching the conclusion the scheme was intended to regulate use.

[34] In the case at bar, I reject the notion that the “power to exempt” contained at

para. 16 of the Building Scheme is limited to allowing the developer to elect to

change the proposed phasing, to change the number of lots in each phase, or to

elect not to proceed with any particular phase of development. If this was so, then

the once the first lot was sold, all of the four phases of the proposed development

would be cast in stone, making any future development subject to the equivalent of a

permanent user restriction on the land. In my view, such an interpretation of the

Building Scheme would be in conflict with the express rights of the developer

contained in the Disclosure Statement, as well as the provisions of s. 235 of the

Strata Property Act.

[35] The Disclosure Statement clearly gives notice to the Purchaser that the

Development may not necessarily include all four phases and that any phase may

be removed (para. 2.3) (para. 5.1). Further the Disclosure Statement provides at

para. 6.1 that the Development is zoned RTA-11 (Residential Tourist

Accommodation), which in itself permits temporary accommodation of not more than

8 guests, which is not RS (single family) zoning. Finally the Disclosure Statement

provides at para. 6.4 that the Statutory Building Scheme will contain restrictions

applicable to the “construction” on the Lots. There are no restrictions noted relating

to the use of those lands.

[36] Nor is there any provision in s. 235 of the Strata Property Act which limits a

developer’s right to elect not to proceed with the next phase of development. Once

the notice of election is filed with the Registrar of land Titles, the registrar “must”

remove the Phased Strata Plan Declaration notation from the title to the strata lots

and from the title to the remainder parcel (s. 235(2)).

[37] Further, as I noted earlier, the power to exempt the lands from the Building

Scheme is expressly recognized in s. 220 of the Land Title Act which contemplates

the exemption of the lots within a Statutory Building Scheme from any or all

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provisions of the Building Scheme. I note parenthetically that such a power to

exempt was at least acknowledged and supported in dicta by Bauman J. in 417489

B.C. Ltd. v. Scana Holding Ltd. (1997) 14 R.P.R. (3d) 231 (B.C.S.C.).

[38] In the alternative, accepting that the Intrawest Group has the right to exempt

the lands from the Building Scheme, the plaintiffs submit that nevertheless Intrawest

is bound to exercise such a right in good faith and with “objectively manifest

reasonableness”. The plaintiffs rely on s. 5(e) of the Building Scheme which

specifically provides that the Administrator has the authority to waive or relax any of

the requirements set out in the Building Scheme, “provided always that the

Administrator will act in good faith and will not act arbitrarily or with manifest

unreasonableness.”

[39] Quite apart from the provisions of the Building Scheme, the plaintiffs also rely

on various authorities to support the contention that the owner/developer must not

act in bad faith, but rather must act as the guardian or law enforcer for the benefit of

all owners to ensure compliance with the building scheme (Murphy v. Columere

Park Developments 2000 BCSC 573, 2 C.L.R. (3d) 307 (B.C.S.C.); Sullco Inc. v.

Cara Glen Estates Ltd. (1999) B.C.J. No. 882 (B.C.S.C.); Hemani v. British

Properties Ltd. (1992) 7 B.C.L.R. (2d) 91).

[40] The plaintiffs say that the Intrawest’s attempt to abrogate the Building

Scheme so as to allow for non-residential uses is directly contrary to the general

plan of development. In purporting to exempt the Remainder Parcel from the

Building Scheme’s restrictions, the plaintiffs says that the Intrawest Group has acted

unreasonably and inconsistent with the objectives of the Building Scheme and not in

furtherance of the Building Scheme.

[41] I am not persuaded the plaintiffs’ submissions have any merit.

[42] The Intrawest Group’s election to exempt a portion of the lands from the

Building Scheme is not a decision to “waive or relax” the requirements of the

Building Scheme. Nor is the Intrawest Group’s election to exempt analogous to the

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impugned actions of the owner/developers in the authorities cited by the plaintiffs

where the actions were said to be beyond the powers assigned to the owner/

developer in the Building Scheme. To the contrary, by making its election to exempt

in this case, the Intrawest Group is doing that which it specifically advised in the

Building Scheme it might do—that is take the Phase 4 lands out of the Building

Scheme.

[43] While the plaintiffs say that the exercise of such an election in itself is

evidence of bad faith on Intrawest’s part, I am unable to conclude, at least on the

basis of the evidence now before the Court, that there is any evidence to support

this allegation. Contrary to the plaintiffs’ allegations, Mr. Morley of Intrawest insists

that the proposed Four Seasons development will be of high quality and that it will

facilitate the construction of a private gondola for persons within the Kadenwood

subdivision. Nor is there any strong evidence presently before the Court that this

change in plan regarding Phase 4 will necessarily have any adverse effect on the

values of the subject properties. Thus, in my view, at least to this point, the

allegation of bad faith has not been proven and must remain to be addressed further

at trial.

Conclusion:

[44] Since I have found that the Intrawest Group had the power to exercise its

right to exempt the lands in issue from the Building Scheme, it is unnecessary to

address the balance of the issues set out earlier- that is whether the proposed

development of the Phase 4 lands is contrary to the provisions of the Building

Scheme, and even if it is not (by virtue of the lands being exempted from the

Building Scheme), whether the proposed development is nevertheless contrary to

the zoning by-law in place.

[45] I acknowledge that even having found that Intrawest Corporation has properly

exercised the power to exempt the lands, there may nevertheless remain some

argument that the proposed development is in breach of the applicable zoning by-

law. In my view, however, it would be premature to address such a complaint at this

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time. First, the Administrator has not yet made any decision in respect of the review

of the Plans. Secondly, as I understand it, the issue of compliance with the zoning

by-law remains before the Resort Municipality for decision.

[46] Accordingly, I dismiss the plaintiffs' application for judgment pursuant to

Rule 18A on the limited issues before the Court. The action will proceed to trial.

Intrawest is entitled to the costs of this application in the cause.

“M.E. Boyd, J.” The Honourable Madam Justice M.E. Boyd

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