Restrictive Covenants: The Basic Ingredients
| Author | Bruce H. Ziff |
| Profession | Faculty of Law, University of Alberta |
| Pages | 293-331 |
Restrictive Covenants:
I.
INTRODUCTION
Broad
descriptions
of the law of
covenants running with land
are
never
flattering.
Almost
a
century
ago it was
observed that
"[t]here
is no
branch
of law so
technical
as
that
relating
to
covenants
running
with
the
land."1
Its
doctrines have been decried
as
"arbitrary
and
...
for the
most
part quite
illogical."2
Regrettably, those sentiments still ring
true,
per-
haps even more
so in
Canada than England, where
flexibility
has
occa-
sionally
prevailed over rigid adherence
to
technical doctrine.
Detailed
and
irrational
though
it may be, the law
governing
covenants
is not
uninteresting.
In
1945,
it was
decided
in the
celebrated
case
of Re
Drummond
Wren3
that
a
covenant that prohibited
the
sale
of
land
"to
Jews,
or to
persons
of
objectionable nationality" was, among
other things, void because
it was
contrary
to
public policy.
The
Globe
and
Professor
of
Law, University
of
Alberta.
Dewar
v.
Goodman,
[1908]
1
K.B.
94 at 106 per
Buckley
L.J.,
aff'd
[1909] A.C.
72
(H.L.).
Grant
v.
Edmondson,
[1931]
1 Ch. 1
(C.A.)
at 28 per
Romer L.J.
[1945] O.R.
778
(S.C.).
Five
members
of the
court concluded that
the
covenant
did not
comply with rules governing
the
running
of
burdens with land. Four
members
of the
court were
of the
view that
it was
void
for
uncertainty.
The
question
as to
whether
the
covenant contravened public policy
was not
decid-
ed
by the
court.
The
Basic Ingredients
Bruce
H.
Ziff
1
2
3
293
294
Bruce
H.
Ziff
Mail
applauded
the
decision/
and the
Toronto Star
reported that proper-
ties valued
at
about
$1
million
in
Hamilton could
be
affected
by
that rul-
ing.5
A few
years later
the
Ontario Court
of
Appeal upheld
a
covenant
prohibiting,
among other
things,
transfers
of
property
in a
cottage com-
munity
to
Jews, blacks,
or
persons
of
"coloured race
or
blood."6
Curiously,
the
Globe
and
Mail
also
endorsed
the
Court
of
Appeal
ruling,7
though that holding
was
ultimately reversed
by the
Supreme Court
of
Canada.8
These issues have receded into history,
but the
current
law
still
involves important social questions.
For
example,
the law of
covenants
allows private land rights
to
supplement (but
not
contravene) public
planning instruments.
In
this way, there
can be a
collision
of
private
and
public interests concerning
the
ways
our
cities should develop,
or
about
the
complexion
of the
neighbourhoods
in
which
we
might choose
to
live.
Nor
is the
law, with
all its
imperfections, unimportant
in
practice.
Covenants
running
with
freehold land have both
residential
and
com-
mercial
uses.
In a
residential setting they
are
used
to
create planned
communities.
Put
less politely, they
can
work
to
create economic ghet-
tos. Covenants
may be
used
to
control
the
types
of
homes that
are
built
or
to
preserve
the
area
as
purely residential (even where zoning allows
for
mixed uses).
One
common commercial
use
concerns
the
regulation
of
business competition within
a
development (such
as a
shopping cen-
tre).
A
sale
(or
lease)
to X Co.
might
be
accompanied
by a
covenant given
by the
grantor that
the
remaining lands will
not be
leased
or
sold
for
cer-
tain specified competing
purposes.
In
this paper
the
basic principles
and
policies governing
covenants9
running
with land will
be the
focus.10
This
is a
concept that arises
out of,
"Blow
to
Prejudice"
Globe
&
Mail
(2
November 1945)
6:
"The decision
...
was
on the
noblest level
of
jurisprudence."
"Says
$1,000,000
Affected
in
Hamilton Property"
Toronto Star
(1
November 1945)
1.
Re
Noble
&
Wolf,
[1949]
O.K.
503
(C.A.),
aff'g
[1948]
O.K.
579.
"Tolerance
and
Law"
Globe
&
Mail
(11
June 1949)
6: "In
this case,
it
cannot
be
seriously
claimed
that basic rights
to
shelter
are
being denied
by the
covenant."
Noble
v.
Alley,
[1951]
S.C.R.
64. See
further
J.
Walker,
"Race", Rights
and the Law
in the
Supreme Court
of
Canada
(Toronto
&
Waterloo: Osgoode Society
&
Wilfrid
Laurier
U.P., 1997)
ch.
4,
passim.
See
also
infra
note
34.
Strictly speaking,
a
covenant
is an
agreement under seal.
The
need
for a
seal
in
a
transfer
document
has
been eliminated
in
Ontario:
Land Registration
Reform
Act,
R.S.0.1990,
c.
L.4,
s. 13.
Moreover,
it
would seem that
a
simple agreement
would normally
be
enforced
in
equity.
See
generally D.L. Sabey
&
A.R. Everton,
The
Restrictive
Covenant
in the
Control
of
Land
Use
(Brookfield,
VT:
Ashgate Dartmouth,
1999);
G.L.
Newsom,
Preston
4
5
6
7
8
9
10
Restrictive
Covenants:
The
Basic
Ingredients
295
but is
separate
from,
the
idea
of
privity
of
contract. When
an
agreement
concerning land
use is
struck,
and the
original parties
to the
covenant
remain
on
title,
the law of
contract governs
and no
special real proper-
ty
rules
are
engaged. Likewise, where
a
landlord
and
tenant relation-
ship exists, there
is
privity
of
estate between
the
parties.
Different
rules
apply
to the
transmission
of
rights
and
obligations
in
that context.
The
rules
considered here
are
applicable even when
no
privity
of
contract
or
estate
is
present.
In
this
setting,
contractual
promises
can be
attached
to
the
land
and run
with that land into
the
hands
of new
owners. This
is
true
of
both
the
benefit
of a
promise
and its
corresponding burden.
There
is no
doubt that
the
rules epitomize
the
image
of
property
law
as a
jumbled mass
of
technicality. There
are
seemingly endless layers
of
detail
that
can be
imbricated. Consequently,
the
analysis below focuses
on
fundamentals
— the
basic ingredients
— and the
policies that under-
lie
the
rules. Attention
is
paid
to the
recent Canadian (especially Ontario)
developments. These signal both
the
contemporary uses
of the
doctrines,
as
well
as
topics
of
current concern.
As
will
be
seen,
among
these
is the
law
relating
to the
transfer
of
affirmative
or
positive obligations.
The
general policies that
inform
the law in
this area
are
straightfor-
ward
enough. Property
law as a
whole
is
supposed
to
promote eco-
nomic
efficiency
and
this
is
accomplished
in
part
by
permitting
and
facilitating
the
transfer
of
entitlements into
the
hands
of
those
who
value them most (value being equated with willingness
to
pay). Yet,
property
law
tries
to do
more
than
that.
It
seeks
to
promote freedom,
and to
facilitate
personal development. Cases such
as Re
Drummond
Wren
illustrate that
the law of
covenants
engages
other social values
(such
as
respect
for
human dignity
and
equality),
which
are
relevant
in
a
range
of
domains including property dealings.
At
the
level
at
which
the
rules considered below operate,
it is
some-
times
difficult
to
discern
just
how
these ends
are
being served.
A
covenant
under which
a
restriction
is
agreed
to can
increase
the
value
of
the
benefited land.
Yet the
restriction
can
diminish
the
market value
of
&
Newsom'sRestrictive
Covenants
Affecting
Freehold
Land,
9th ed.
(London: Sweet
&
Maxwell,
1998);
M.J.
Mossman
&
W.F. Flanagan,
eds.,
Property
Law:
Cases
and
Commentary
(Toronto: Emond Montgomery, 1998)
at
570/f;
B.
Ziff,
Principles
of
Property
Law,
3d ed.
(Toronto: Carswell,
2000)
at
358$
and C.
Harpum,
Megarry
&
Wade:
The Law
of
Real
Property,
6th ed.
(London: Sweet
&
Maxwell,
2000)
at c. 16.
Concerning fundamental policy considerations,
see L.
Berger,
"A
Policy
Analysis
of
Promises Respecting
the Use of
Land"
(1970)
55
Minn.
L.
Rev.
167.
For
reform
options,
see
Ontario
Law
Reform
Commission,
Report
on
Covenants
Affecting
Freehold
Land
(Toronto: A.G.
(Ont),
1989).
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