Restrictive covenants frequently shape the development landscape across British Columbia. They are often registered against title decades earlier and can significantly limit what property owners are permitted to build or how land may be used. When market conditions change, or municipal policies evolve, owners sometimes seek to have these covenants cancelled under s. 35 of the Property Law Act.
In Wozniak v. North Vancouver (District), the Supreme Court of British Columbia considered whether a long-standing “no-build” covenant registered against a property in Indian Arm should be discharged. The petitioner argued that the covenant had become obsolete and no longer served a practical purpose. The Court disagreed and dismissed the petition.
This decision provides important guidance for property owners, developers, and municipalities on the high threshold required to cancel a restrictive covenant under s. 35 of the Property Law Act.
A Subdivision Approved on Condition of a No-Build Covenant
The property at issue was created in 1995 through a subdivision of a larger waterfront lot in Indian Arm. The District of North Vancouver had refused the original subdivision application because it conflicted with municipal policy limiting development in the area.
The owner then proposed a compromise: the subdivision would be permitted only if a restrictive covenant was registered against the newly created lot prohibiting permanent residential development. The covenant required that the land be used solely for short-duration recreational purposes and prohibited the construction of permanent structures.
The District approved the subdivision on that condition. The covenant was registered and expressly stated that it would run with the land.
Years later, the petitioner purchased the vacant lot with full knowledge of the covenant. She later sought to build a single-family residence and applied to have the covenant cancelled under s. 35 of the Property Law Act.
Section 35 of the Property Law Act
Section 35 allows the Supreme Court of British Columbia to cancel or modify a covenant if certain conditions are met. The applicant must establish one of the following:
- The covenant has become obsolete;
- It impedes reasonable use of the land without practical benefit to others;
- The beneficiaries consent;
- Cancellation would not injure the beneficiary; or
- The covenant is invalid or expired.
The subsections are disjunctive, meaning only one ground must be established. However, courts apply a strict, context-specific analysis.
In this case, the petitioner relied on three grounds, each of which was rejected by the Court:
- The covenant had become obsolete;
- It impeded reasonable use without practical benefit;
Was the Covenant “Obsolete”?
To succeed under s. 35(2)(a), the petitioner had to demonstrate that the covenant was no longer useful or served no continuing purpose.
She argued that municipal policy had changed since 1995. The original policy expressly sought to restrict development in Indian Arm. A later policy adopted different language and allowed “appropriate development” on existing lots. She contended that this shift rendered the covenant unnecessary.
The Court disagreed. Although the wording of the municipal policy had evolved, its underlying objective remained the same: limiting densification in Indian Arm and directing growth toward urban containment areas. The covenant continued to serve its original purpose of preventing residential development on a lot that would not have been created without that restriction.
Importantly, the Court emphasized that obsolescence requires more than showing that policies have been modernized. A covenant becomes obsolete only when its original protective purpose has been effectively abandoned. That had not occurred.
Had the Character of the Neighbourhood Changed?
The petitioner also argued that Indian Arm had changed significantly since 1995. She pointed to new homes, larger residences replacing cabins, and the presence of some secondary suites.
The Court found the evidence insufficient. While some modernization had occurred, the area’s essential rural character remained. No evidence established that new buildable lots had been created through subdivision contrary to municipal policy. The District had consistently refused applications that would increase density.
The Court stressed that even substantial neighbourhood change does not automatically render a covenant obsolete if its original purpose can still be fulfilled. Here, the covenant’s purpose (controlling density) remained intact and relevant.
Did the Covenant Impede Reasonable Use Without Practical Benefit?
Under s. 35(2)(b), the Court must determine whether the covenant impedes reasonable use of the land without practical benefit to others.
The District conceded that constructing a single-family home would be a reasonable use under the applicable zoning. However, the analysis did not end there. The key question was whether the covenant provided a practical benefit to the District or others.
The Court held that it did. The ability to limit density in a rural, hazard-prone area was more than a minimal benefit. Indian Arm presents significant challenges, including limited infrastructure, wildfire risk, and geotechnical concerns. The covenant ensured that the District received the “quid pro quo” for approving the subdivision in 1995.
The Court also confirmed that modern zoning and planning tools do not, in themselves, render covenants redundant. A restrictive covenant operates differently from zoning bylaws and can provide site-specific protections that zoning alone may not achieve. Because the covenant continued to provide practical benefits beyond de minimis, this ground failed.
Would Cancellation Injure the District?
Under s. 35(2)(d), cancellation must not injure the party entitled to the benefit of the covenant. “Injury” requires more than the mere loss of a legal right, but where the deprivation has meaningful consequences, injury will be found.
The Court concluded that cancelling the covenant would deprive the District of the benefit it secured in exchange for permitting the subdivision. That impairment had been contemplated from the outset.
The petitioner argued that the District had not identified a specific project that depended on the property remaining vacant. The Court rejected that framing. Municipal planning objectives, density control, and wildfire mitigation constituted legitimate and ongoing interests. Accordingly, cancellation would injure the District.
Meridian Law Group: Modern Property Dispute Lawyers Serving Clients in Vancouver & Across B.C.
Restrictive covenants can significantly affect development rights, property value, and long-term planning strategies. Whether you are seeking to cancel a covenant, defend one, or assess development risk before purchase, experienced litigation counsel is essential.
The property dispute lawyers at Meridian Law Group regularly act in complex real estate disputes, covenant cancellation applications, and municipal litigation under the Property Law Act. The firm provides strategic, evidence-driven representation focused on practical outcomes. To discuss your property dispute or development challenge, please contact the firm online or call (604) 687-2277.
