Oromocto v. Steinberg's Ltd., [1968] N.B. Law News No. 73 (CA)

• Judge: Bridges, C.J.N.B., Ritchie and Limerick, JJ.A.
• Court: Court of Appeal (New Brunswick)
• Case Date: May 08, 1968
• Jurisdiction: New Brunswick
• Citations: [1968] N.B. Law News No. 73 (CA)

Oromocto v. Steinberg's Ltd., [1968] N.B. Law News No. 73 (CA)

MLB Law News

Town of Oromocto and Oromocto Development Corporation v. Steinberg's Limited

Indexed As: Oromocto (Town) et al. v. Steinberg's Ltd.

New Brunswick Supreme Court

Appeal Division

Bridges, C.J.N.B., Ritchie and Limerick, JJ.A.

May 8, 1968.

Summary:

Contract - Ultra Vires Doctrine - Monopolies and Restraint - Declatory Judgment Rules of Court - O. 25, R. 5 - Judicature Act, sec. 76 - Appeal allowed with costs on fourth column and declaration made by learned trial judge in favour of Pls. set aside. Pls. sought a declaration. They are not bound by their agreements whereby no other store of the type similar to that of Steinberg's would be permitted in that part of the Town known as the Shopping Center. Respondent alleged that the agreements

(1) are ultra vires of the Town,

(2) are contrary to public policy and void,

(3) are void as violating the rules against perpetuities,

(4) create a virtual monopoly and are ultra vires of the Town,

(5) ultra vires inasmuch as they were adopted by resolution and not by-law,

(6) are beyond the powers of the Corporation,

(7) are ultra vires not having been approved by the Board,

(8) are void being in restraint of trade.

Pursuant to Order 25, rule 5 and section 76 of the Judicature Act the Supreme Court of New Brunswick has the authority to make declaratory judgments and the court was satisfied that this was a suitable case in which to make a declaration as to the rights of the parties. Court stated,

"If there be any authority in the Town to make restrictive covenants binding on itself in relation to the use of its real property, it can only be derived from the Statute creating the Town as a municipal corporation. The authority to enter into restrictive covenants is most unusual for a town to have."

"The Town of Oromocto is, however, a most unusual Town and the terms of its incorporating act are most unusual, including the right to control the zoning and use of land lying outside of the town boundary and which is not subject to taxation in the town."

Section 42 of the incorporating act reads as follows:

"42. The Board may subdivide, re-arrange and deal with land and other property purchased, expropriated or otherwise acquired by the Town under this Act as if the Town were a private owner, and may sell, lease or otherwise dispose of the same to such person or persons on such terms and conditions and subject to such building and other restrictions or easements as the Board may require or deem advisable."

Court stated,

"The expression "private owner" must be interpreted as a private individual or privately owned company as distinguished from a publicly owned company or municipal corporation."

"Private owners can, unquestionably, enter into any agreement not forbidden by law or illegal in its nature and can agree to restrictive covenants relating to land owned by themselves which covenants, even though they may not run with the land, are binding on the covenantor and enforceable against him by injunction, in damages or otherwise."

Therefore, the agreement between the Appellant and Respondent is intra vires of the Town.

Court held the agreement was an exclusive franchise granted in respect of a limited geographical area and since the terms and circumstances of granting the same are reasonable, it is not objectionable nor against public policy. See Nordenfelt v. Maxim Nordenfelt Co., 1894, A.C. 535 at p. 565 and Connors Bros. Ltd. v. Connors, 1940, 4 All E.R. p. 179. The Court stated,

"The restrictive covenant is not contained in the deed, but is in the nature of a personal covenant, contained in a supplementary contract and does not run with the land. The rule against perpetuities does not apply to a personal covenant.

"The respondent contends the agreement between the Corporation and the Appellant is invalid by reason of the legislation which requires the acts of the Corporation to be approved by the Board of Commissioners and that the agreement was not so approved. There is no merit in this proposal as the Board in December, 1957, just prior to the agreement, approved and ratified by resolution an agreement with the Appellant that it would "operate the only Supermarket in the Shopping Centre and in the Town of Oromocto". The Corporation in entering into the written agreement was merely carrying out an agreement already approved and ratified by the Town, not initiating a new contract.

"The Respondent in its objection to the agreement on the ground that the Town approved and accepted the offer of the Appellant by resolution and not by by-law relies on section 19 of the Act, which relates to the adopting by by-law of an area plan, plan of development lines and a control scheme. This agreement, however, was not entered into under the authority of section 19 but of section 42.

"A municipal corporation may act by by-law or resolution at its option unless a provision of the incorporating act requires that a specific authority can only be exercised by by-law. Section 42, which constitutes the authority for a restrictive covenant on the part of the Town does not require the formality of a by-law and leaves it open to the Town to act by resolution."

Counsel:

J.C. McNair, for the plaintiff/respondent;

Hanson, Gilbert & Hashey, for the defendant/appellant, Steinberg's Limited.

This appeal was heard before Bridges, C.J.N.B., Ritchie and Limerick, JJ.A., of the New Brunswick Supreme Court, Appeal Division, who delivered the following decision on May 8, 1968.