restrictive covenants – controlling land use through ......restrictive covenants are often used by...
TRANSCRIPT
By-LawFall 2018
Restrictive Covenants – Controlling Land Use Through Private Instruments ............................................P 1 - 2
Managing Troublesome Contractors in the Tendering Process .................................................................P 2 - 3
Facebook, Local Elections, and Bribery – A Case of Dried Meat Gone Bad.....................................................P 4
Union Organizing: Developments from Recent Changes in the Labour Relations Code .................................P 5
Some Certainty in Uncertain Times: Liability for Employers under the OHSA ................................................P 6
Wait a Minute! Section 208 and Records Retention .......................................................................................P 7
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Restrictive Covenants – Controlling Land Use Through Private InstrumentsBy Kelsey Becker Brookes and Jeffrey Daniels
Restrictive covenants are often used by municipalities as a condition for granting a development permit or by developers in order to prevent certain activities that may diminish the value of a property.
A covenant is a promise to do or abstain from doing something.1 Positive covenants require a person to take some proactive action in order to comply, while negative covenants restrict a person from engaging in certain activities. The distinction is important when it comes to land use and development. Positive covenants are a personal obligation and will not bind subsequent owners whereas negative, or restrictive covenants, can attach to land indefinitely.
Restrictive covenants are commonly used by development
1 Anne Warner La Forest, Anger & Honsberger Law of Real Property, 3d ed, (Toronto: Thomson Reuters) at 16.10
authorities, developers and landowners to ensure land is developed in a manner that maintains or enhances the value of neighboring properties. Typical restrictive covenants include restrictions on the types of dwellings that can be constructed, minimum setbacks, height and location of structures, and can even restrict the type and colour of permissible building materials. If properly drafted and registered, restrictive covenants run with the land, meaning all subsequent purchasers will be bound by the same restrictions as the original covenantor.
Historically, restrictive covenants were used when a single person owned adjacent properties and wanted to control their use. As a condition on the sale to a new purchaser, the owner required the purchaser to promise the property would not be developed in a way that would diminish the value of the adjacent property. If the purchaser breached the covenant, the original owner was entitled to a remedy, often in the form of an injunction requiring the purchaser to bring the property back into compliance with the covenant. On occasion, the use of restrictive covenants extended beyond restrictions on development and sought to prohibit a class of people from acquiring land. For example, in the celebrated 1945 decision of Re Drummond Wren, the Ontario Supreme Court declared a restrictive covenant that prevented the sale of land “to Jews or persons of objectionable nationality” to be invalid because it offended public policy.2
To ensure a covenant is enforceable and runs with the land, four requirements must be met:
1. The covenant must be a negative obligation, meaning it prevents a certain activity;
2. There must be a servient tenement (property that is subject to the restriction) and a dominant tenement (property that benefits from the restriction) identified in the covenant;
3. The covenant must “touch or concern” the land, meaning the restriction must benefit or enhance the value of the dominant tenement in some way; and
2 Bruce Ziff, Jeremy de Beer, Douglas C. Harris & Margaret E. McCallum, A Property Law Reader: Cases, Questions, and Commentary, 3d ed (Toronto: Carswell, 2012) at 800
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4. The covenant must be attached to the land, which is often best accomplished by registering the covenant by way of caveat on title to the burdened land.
If a restrictive covenant does not meet all of the above requirements it will only be considered a personal obligation and will be unenforceable when the land is sold or transferred to a new owner. Furthermore, if a covenant uses vague or ambiguous language, such that there exists no objective standard to determine whether a breach has occurred, it will be unenforceable.3
In addition to their natural person powers, municipalities have a statutory power under the Municipal Government Act (“MGA”) to register a restrictive covenant in specific circumstances.4 The MGA defines restrictive covenant as “a condition or covenant under which land, or any specified portion of land, is not to be built on, or is to be or not to be used in a particular manner, or any other condition or covenant running with or capable of being legally annexed to land.”5
A municipality may register a caveat “in respect of any restrictive covenant granted by the registered owner of a parcel of the land to the municipality for the benefit of land that is under the direction, control and management of the municipality whether or not the municipality has been issued a certificate of title to that land.”6 This means a municipality can require a landowner to grant the municipality a restrictive covenant as a condition of subdivision approval or a development permit. Once validly registered, the restrictive covenant will run with the land and can only be discharged by the municipality or by a court order.
Provided the covenant is appropriately registered, and sufficiently identifies the areas of restricted development and the obligations imposed on landowners, it will be enforceable against the current and all future landowners. Because the value of a covenant lies in adhering to its restrictions, the starting point for breach of a restrictive covenant is a court-ordered injunction which can require the violator to move or demolish a structure that is in violation of the covenant.7
The Land Titles Act permits a court to modify or discharge a restrictive covenant if an applicant establishes sufficient evidence that the modification or discharge will be beneficial to the party principally benefitting from the covenant or if the covenant conflicts with the provisions of a land use bylaw or statutory plan and is in the public interest.
3 Amar Developments Ltd. v Jaswal, 2016 ABQB 636 [Amar Developments]
4 Municipal Government Act, RSA 2000 c M-26 [“MGA”]
5 MGA at 651.1(1)
6 MGA at 651.1(2)
7 Amar Developments at 66
Managing Troublesome Contractors in the Tendering ProcessBy Sean Ward and Benjamin Ferland
Although procuring goods and services by way of public tenders is nothing new for municipalities, municipal calls for tenders have become more common with the advent of trade agreements. Domestically, agreements such as the New West Partnership Trade Agreement and the Canadian Free Trade Agreement now require municipalities to utilize the tendering process for most procurements of goods and services over $75,000 and construction projects over $200,000. Given the relatively modest amounts required to trigger this obligation, municipalities likely find themselves issuing public calls for tenders more often. Foreign trade agreements such as the Canada Europe Free Trade Agreement may have similar implications.
Unfortunately, a more frequent use of the tendering process brings with it the increased chance of receiving bids from “troublesome” contractors, i.e. those contractors known for their sharp practices, shoddy workmanship, incessant delays and cost overruns. Outside the tendering process, municipalities generally avoid such operators just as any other actor in the marketplace – by simply refusing to retain them. However, such avoidance is more complicated within the tendering process, due to obligations arising under trade agreements and within the law of contract law itself.
The Canadian law of tendering has evolved such that a public call for tenders on a project constitutes a binding offer to contract, and the successful bid an irrevocable acceptance of that offer. Upon acceptance of the successful bid, an enforceable contract is formed between the caller and the successful bidder (known to courts and lawyers as “Contract A”), wherein the parties are bound to enter into a second contract to carry out the project itself (known as “Contract B”). Put differently, the terms of a call for tender are contractual terms for Contract A. In the absence of due care, a
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loosely-worded call for tenders could see a municipality roped into accepting bids from contractors already known for their dishonesty or poor performance, and therefore bound to enter a Contract B with them, simply because the contractor’s bid came in lowest or was otherwise unwittingly defined as the “best” offer according to the terms of the call (i.e. Contract A).
It is well known among solicitors that carefully drafted tender calls, with clearly stipulated criteria by which a successful bid (if any) will be determined, are necessary to guard against the possibility of being cornered into accepting the “successful bid” of a notoriously troublesome contractor. Indeed, many municipalities have, in conjunction with their solicitors, developed detailed privilege clauses, point systems, and other provisions to be included in their calls for tenders to help ensure the municipality is free to determine the best bid according to the criteria that are most in line with their priorities and concerns.
While well-drafted tender calls help guard against troublesome contractors during a particular tendering process, a recent Ontario decision1 confirms that well-drafted procurement policies can legitimately and preemptively bar troublesome contractors from submitting tenders in the first place. However, the case also illustrates that the effectiveness of these policies is dependent upon the municipality’s fair and transparent application of them.
The municipality in this case passed a procurement policy and procedures bylaw containing several criteria by which troublesome contractors might be disqualified from bidding on city tenders. Among other things, the bylaw permitted the municipality to reject (or exclude) bids from contractors on the basis of:
a) involvement in litigation or threat of litigation with the city, its officials, officers, or employees;
b) a documented history of poor or non-performance of contracts;
c) abusive behavior towards city employees or their agents; or
d) other circumstances indicating the likelihood of increased staff time and legal costs.
Where a contractor met one or more of these criteria, the bylaw permitted the municipality to preemptively bar it from bidding on city tenders for a specified period of time.
Having awarded the contractor in this case tens of millions of dollars in bids over a span of more than forty years, the municipality (in conjunction with its solicitors) concluded that the contractor’s conduct over time brought it within the bylaw’s criteria for disqualification, and decided to bar the contractor from bidding on city projects for a period of four years. The city communicated its decision to the contractor by way of letter, citing three primary reasons. First, the contractor had initiated a lawsuit against the municipality, claiming
1 Interpaving Limited v City of Greater Sudbury, 2018 ONSC 3005.
over $230,000.00 in relation to five separate contracts or projects. Second, the contractor had been subject to numerous orders under Ontario’s Occupational Health and Safety legislation, including one involving a pedestrian fatality. Third, the letter cited “a significant history of abusive behavior and threatening conduct” on the part of the contractor towards municipal employees.
The municipality met with the contractor on two separate occasions to hear its objections to the decision, even inviting a formal written request for reconsideration. Nevertheless, the municipality remained unconvinced by the contractor’s submissions and declined to vary the terms of its original decision. Dissatisfied, the contractor initiated a judicial review of both the bylaw itself and the municipality’s implementation of it.
Two important lessons concerning the effectiveness of procurement policies emerge from the court’s decision. First, the bylaw was validly enacted and did not contravene the municipality’s obligations under the Canadian Free Trade Agreement. In other words, the municipality had the authority to preemptively bar troublesome contractors (as defined by the criteria in the bylaw) from participating in its future projects. Second, is that such decisions on the part of municipalities will only be upheld if they fulfill the municipality’s obligations of transparency and fairness.
The court held that the municipality’s initial decision to bar the contractor was unreasonable, insofar as the municipality failed to provide the contractor with notice that it was considering taking such action, and therefore denied it any opportunity to respond or be heard in relation to such a decision. Nevertheless, the court concluded that because it allowed the contractor to submit its request for reconsideration, and gave proper consideration to those submissions before reaching a final conclusion, the municipality had cured any failure to follow a fair process. As a result, the court dismissed the contractor’s challenge and upheld the disbarment.
This case offers strong support for the proposition that municipalities are entitled to protect the public interest by barring troublesome contractors from participating in its tendering processes. However, the case also makes clear that such decisions must be made in accordance with the municipality’s duty of fairness. Generally, fulfilling this duty will require prior notice that a decision is to be made, and the opportunity for the contractor to make submissions of some kind, to be considered in the decision-makers’ deliberation.
There’s no doubt the tendering process involves the risk of being roped into contracts with troublesome contractors, and that greater utilization of tender calls increases these risks. However, municipalities can significantly mitigate their exposure by (a) ensuring calls for tenders accurately reflect their intentions and priorities for the project being bid on, and (b) establishing and implementing procurement policy bylaws that allow them to avoid known troublemakers. Municipalities, as with all tender callers, do well to remember that an ounce (or two) of prevention is worth a pound of litigation cure.
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Facebook, Local Elections, and Bribery – A Case of Dried Meat Gone BadBy Kelsey Becker Brookes and Lauren Chalaturnyk
Bribery evokes thoughts of covert exchanges of cash in smoky back rooms. In reality, however, allegations of bribery can arise in seemingly trivial situations and have the potential for serious consequences.
Under section 116(a)(i) of the Local Authorities Election Act (the “Act”), an individual commits bribery if they, or someone acting on their behalf, directly or indirectly:
gives, lends or agrees to give or lend or offers or promises money or valuable consideration, or gives or procures or agrees to give or procure or offers or promises an office, place or employment to or for an elector or to or for a person on behalf of an elector or any person, in order to induce an elector or a person to vote or to refrain from voting at an election.
There are other scenarios in which bribery may exist, but this is the simplest form of bribery under the Act.
If a person is found guilty of bribery under the Act, they are subject to a number of mandatory penalties, including immediate removal from their council seat and a prohibition on running in the next two general elections. Additionally, they could face a fine of up to $5000 or imprisonment for up to two years.
Allegations of bribery under the Act are rare. Until this year, only one other case involving bribery had been heard by the Courts in Alberta.1 The most recent Alberta case involving bribery is the case of Gullion v Gottfried.2
In that case, Mr. Gullion accused Mr. Gottfried of bribery under section 116(a)(i) of the Act. The basis for this allegation was the following post on Facebook made by Mr. Gottfried the morning prior to the opening of the polls for the 2017 local election:
“Cant wait for this day to be over so i know the fate of my future. Hoping for the best for our community and people get in for the right reasons.....On a funny note Glen Gullion said a bag of dry meat for everyone who votes for me today lol have a good day everyone!”
Mr. Gullion read this post and characterized Mr. Gottfried’s offer of dried meat as a bribe.
Because bribery allegations under the Act are so rare, there were several issues for the Court to consider before deciding whether Mr. Gottfried had committed bribery. The first issue was how far Mr. Gullion would have to go to prove his case against Mr. Gottfried. The Court decided Mr. Gullion would have to prove his case almost beyond a reasonable doubt. Effectively, the Court could only find Mr. Gottfried guilty of bribery if it had little to no doubt that his Facebook post amounted to bribery under the Act.
The second issue was whether Mr. Gottfried had to have a “guilty mind” when he made the Facebook post. Counsel for Mr. Gottfried argued that because the Act stated the bribe had to be offered “to induce an elector to vote,” Mr. Gottfried had to have intended to induce an elector to vote for him. The Court agreed with counsel for Mr. Gottfried and decided the Facebook post was clearly intended as a joke. Therefore, Mr. Gottfried did not intend to induce an elector to vote for him. Because Mr. Gottfried did not intend his Facebook post to be a bribe, he was found not guilty of bribery under the Act.
While Mr. Gottfried was successful, this case demonstrates the serious consequences social media posts can have during local elections. So, if you are running for elected office, remember – even the most trivial comments on social media about offering something valuable in exchange for votes can result in allegations of bribery.
1 Babiuk v Chrapko, 1993 CanLII 7051 (AB QB)
2 2018 ABQB 531
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Union Organizing: Developments from Recent Changes in the Labour Relations CodeBy Anthony Purgas
Effective September 1, 2017, the Provincial government proclaimed into force the Fair and Family-friendly Workplaces Act 1 that contained, among many other things, changes to the Labour Relations Code that gave the Labour Relations Board the power to automatically certify a union.
In a recent case, the Board exercised this new remedy for the first time since the changes came into force. In UFCW, Local 401 and Widewaters Calgary Hotel Management Co., ULC, Re,2 a group of employees of a hotel management company, which operated the Hilton Garden Inn in Calgary, were attempting to organize a union.
The employer terminated the employment of one of the volunteer employee organizers. The employee had a short term of service and had been late numerous times, including six days in one month. The Labour Board found the employer failed to follow its progressive discipline policy and had incomplete evidence regarding the employee’s alleged lates. As a result, the Board found that the employer had not met its burden to provide a reasonable explanation for the dismissal except to hurt the Union’s certification drive.
As a result of this finding, the Board then considered the appropriate remedy. The Board found that the Union did not have more than 40% support and that there was little evidence of any “chilling effect”. Despite the lack of evidence on this issue, the Board still found that the employer’s actions rendered it impossible for employees to freely express their wishes with respect to whether or not they wish to be unionized. Therefore, despite the lack of evidence of employee support for a union, the Board ordered that the Union be certified, which means that the employees did not get to vote or even show support for the Union.
In light of the Board’s interpretation of this new legislation, we encourage municipalities to get advice and take caution if they learn of a union contacting their employees or otherwise engaging on a certification drive. We’ve provided some generally accepted “cans” and “cannots”, although context can change the appropriateness of some activities.
1 2017 SA c. 9
2 [2018] Alta. L.R.B.R. 260
Cans and Cannots During a Union Certification Application:
CAN
1) Tell employees they should exercise their own free will and it is their choice whether they want to join the Union.
2) Inform employees they have a right of free speech and they may express their feelings about the Union if they choose to do so without fear of being sanctioned.
3) Tell employees about the wages and benefits they receive from the employer and how that compares with other employers.
4) Tell employees that all terms and conditions of employment promised by the Union will have to be negotiated between the Union and employer and spelt out in a collective agreement.
5) Tell employees that if the Union is certified the employer will be required to deal with the Union and not with individual employees.
CANNOT
1) Ask employees if they belong to a union or have been talking to a union.
2) Intimidate, coerce or pressure employees into not joining the Union.
3) Fire, discipline or layoff employees because they have an interest in or are joining the Union.
4) Ask employees if they are going to vote for or against the Union.
5) State definitively what the terms and conditions of employment would be if the Union came in.
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Some Certainty in Uncertain Times: Liability for Employers under the OHSABy Matthew Woodley and Victoria Merritt
Municipalities should be aware of Alberta’s new Occupational Health and Safety Act (“OHSA”) and corresponding amendments to the Code and Regulations. The changes include increased obligations in relation to work site health and safety committees, an expanded definition of “workplace hazards” to include harassment and violence (and a requirement to adapt policies to address these), enhanced workers’ rights, expanded roles and responsibilities for supervisors and service providers, and new reporting requirements for ‘near misses’ and injuries.
In the wake of all this change, employers may inadvertently breach the OHSA, particularly when it comes to the psychological or social well-being of their workers. Workplace harassment and bullying may now lead to a charge under the OHSA.
Municipalities can take some comfort from a recent Court of Appeal decision that clarifies the Crown’s obligations when prosecuting employers for alleged OHSA violations. The decision, R v Precision Diversified Oilfield Services Corp1 emerged from the tragic death of an employee who was struck by drilling equipment while working on an oil rig and suffered a fatal head injury.
The employer was charged with two offences under the OHSA, one of which was that it had breached its general duty to ensure the health and safety of employees. OHSA charges are “strict liability” offences, meaning that all the Crown has to prove is the actus reus (the guilty act). Unlike true criminal offences, the intent of the employer is irrelevant under the OHSA.
Prior to this decision, some cases had held that the guilty act for a breach of the employer’s general duty was proven simply by virtue of the fact that an accident or injury had occurred. In other words, the mere fact that there had been a workplace injury was enough to satisfy the Crown’s burden to establish the actus reus. The majority of the Court of Appeal rejected that approach.
The Court of Appeal confirmed that the Crown must find ‘something more’ than the mere fact of an accident or injury; specifically, the Crown must show that the employer failed to address unsafe conditions where it was reasonably practicable for it to do so.
In the Precision Drilling case, the Court concluded that the Crown had established the physical components of the general duty
1 2018 ABCA 273
offence by proving that the injury had resulted from some part of the drilling equipment which had struck the worker when torque from the drillstring was released. The Crown was not able to point to the exact cause of the accident, but it was able to establish that the only possible causes of the workplace incident were safety-related, and within the control of the employer.
When trying to prove a breach of the employer’s general duty, the Crown must establish, beyond a reasonable doubt, that:
1. the worker was engaged in the work of the employer;
2. the worker’s health or safety was threatened or compromised (i.e. an unsafe condition); and
3. it was reasonably practicable for the employer to address the unsafe condition through efforts that the employer failed to undertake.
Only once the Crown establishes the above elements does the employer have to establish a due diligence defence. The employer must show that it took all reasonably practicable steps to ensure the safety and health of the employee, or that the employer was operating under a reasonable mistake of fact. The duty on the employers is “not one of perfection” – an employer cannot be held at fault if the danger was not reasonably foreseeable. These factors will be important in assessing liability in cases where the allegations relate to psychological harm caused to workers.
The Court of Appeal also emphasized that the employer needs to know and understand the case against it, and that the Crown must provide sufficient direction to the employer as to the circumstances of the alleged breach. In other words, it should be apparent to the employer what it is being accused of. Ultimately, the matter was sent back to trial for an unrelated issue.
Given the importance of the decision in requiring ‘something more’ from the Crown, it may be appealed to the Supreme Court of Canada. For now, the decision provides some certainty in relation to the burden of proof where an employer is charged under the OHSA. Municipalities should seek assistance if issues regarding OHS arise, including concerns with workplace harassment or bullying.
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Wait a Minute! Section 208 and Records RetentionBy Daina Young
Section 208(1)(a) of the Municipal Government Act requires a municipality’s chief administrative officer to ensure that minutes of each council meeting:
(i) are recorded in the English language without note or comment,
(ii) include the names of the councillors present at the council meeting,
(iii) are given to council for adoption at a subsequent council meeting, and
(iv) are recorded in the manner and to the extent required under section 230(6) when a public hearing is held.
The requirement for council meeting minutes to be recorded “without note or comment” can have implications if a council decision is challenged or otherwise subject to review. The process for challenges to the validity of a municipal resolution or bylaw is for an application “for judicial review” to be filed with the Court of Queen’s Bench of Alberta. The materials that are considered by the Court during a judicial review application are limited to the minutes of the council meeting or meetings in question and the materials that were put before Council in the agenda package prepared by administration or otherwise put to council during the course of the council meeting.
Due to the requirement for the minutes of council meetings to be recorded “without note or comment”, the minutes of a council meeting will not typically disclose the surrounding circumstances or considerations for making its decision. Although a council decision is not subject to review solely on the basis that it was unreasonable, the information that was provided to Council at the time of adopting a particular motion or bylaw may be relevant when responding to allegations that a municipal council was acting in bad faith or otherwise outside of the authority granted to it under the Municipal Government Act.
For these reasons, it is important that municipalities take steps to ensure that the contents of an agenda package and any other information put before Council during the course of a council meeting are properly recorded and retained by the municipality. The best practice would be for municipalities to retain these documents permanently.
Allan Farmer780.497.3360
Albert Lavergne780.497.3310
Matthew Woodley780.497.3307
Anthony Purgas780.497.3391
Sheila McNaughtan, Q.C.780.497.3362
Jeremy Taitinger780.497.3317
Tamara Korassa780.497.3326
Randy McCreary780.497.3348
Nick Parker780.497.3342
Mark Hildebrand780.497.3316
Breanne Schwanak780.497.3356
Marco Poretti780.497.3325
Kelsey Becker Brookes780.497.3304
Sean Ward780.497.3334
Carol Zukiwski780.497.3350
Shauna Finlay780.497.3302
Daina Young780.497.3309
Heidi Besuijen780.497.3327
Greg Weber780.497.3315
Mikkel Arnston780.497.3324
Tess Layton780.497.3305
Suite 3200 Manulife Place10180 - 101 Street
Edmonton, AB T5J 3W8
Ph: 780.425.9510Toll Free: 1.800.661.7673
www.rmrf.com
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OUR MUNICIPAL TEAM
By-Law is published periodically by Reynolds Mirth Richards & Farmer LLP. It is intended to provide comments on recent legal developments and issues of general
interest. It is not intended to give legal advice. You should seek legal advice on matters of
concern to you.
Peter Buijs780.497.3311
Victoria Merritt780.497.3328
Jack Kent780.497.3373
Michael Swanberg780.497.3353
Benjamin Ferland780.497.3349
Jeffrey Daniels780.497.3351
James McTague780.497.3367
Lauren Chalaturnyk780.497.3352