The previous chapters have outlined a number of the tools currently available in British Columbia for protecting private land, along with some of the difficulties in using these tools for that purpose. The current options are not adequate to meet today's need to preserve land for conservation purposes. New options are required.
It is recognized that it is already possible in British Columbia to grant a section 215 environmental covenant, that is, a covenant under section 215 of the Land Title Act for the purpose of preserving land in its natural state. It is also possible to grant a covenant or easement under the Heritage Conservation Act. However, these statutory instruments must be granted in favour of a government body. This seriously restricts their use. The new land preservation tool advocated in this report, a conservation covenant, would have a much broader application.
This chapter outlines the law reform necessary to create a new statutory tool for British Columbia that resembles the conservation easement widely used in the United States. It includes discussion on the following topics:
There are complex and subtle legal differences between covenants and easements under the common law and equitable rules. However, these differences become largely irrelevant when a statute creates a new legal instrument, as is recommended in this report. For a number of reasons, some arbitrary, this report favours the use of the term "conservation covenant."
In many cases the legal obligations being imposed will resemble a restrictive covenant more than an easement. Frequently, the interest being created will be hybrid, with elements of both easements and restrictive covenants.
As discussed earlier, recent law reform work in other jurisdictions has called for fundamental changes to the law on easements and covenants. Some have argued in favour of abolishing the terms easement and covenant and using the term land obligation instead. However, even if such sweeping law reform does not occur in British Columbia, change is needed to facilitate land conservation for environmental purposes. Therefore, it is recommended that legislation be passed to create a new form of land obligation, known as a conservation covenant.
Recommendation 1: The British Columbia government should enact legislation enabling private landowners to grant conservation covenants voluntarily in favour of conservation groups qualified as holders of such interests, so that the land subject to the conservation covenant is preserved for purposes permissible under the legislation and as specified in the conservation covenant.
There are a number of issues that need to be addressed in the development of conservation covenant legislation for British Columbia. The discussion below examines and makes recommendations on the following key issues which must be addressed in law reform:
One of the most important policy decisions to be made is who should be qualified to hold conservation covenants. Allowing private organizations to be holders will make this a much more flexible land preservation tool. However, the issue of who may hold a conservation covenant is particularly sensitive if tax incentives are adopted to encourage their use. Since tax incentives involve public subsidy through foregone tax revenues, the government
These policy objectives may be achieved by limiting qualified holders to certain quasi-governmental entities or to well-established conservation organizations. Limiting qualified holders is intended to ensure that only organizations with both a genuine commitment to land conservation and the expertise to carry through with that commitment hold conservation covenants. It also lessens the likelihood that sham transactions will be effected through organizations set up for that purpose alone.
However, the legislation in British Columbia should not too narrowly restrict who may hold a conservation covenant, and may not need to be as restrictive as some legislation in the United States. Many land conservation initiatives are grassroots efforts. Local citizens who are familiar with regional land conservation needs -- and who are frequently in the best position to act appropriately -- often work together to conserve a particular piece of property. [[Footnote: (46) -- 46. This feature of United States private land conservation efforts is evident from a perusal of the Land Trust Exchange's 1989 National Directory of Conservation Land Trusts (Alexandria, Virginia: Land Trust Exchange, 1989). Land trusts -- which are usually not-for-profit corporations -- are a common vehicle for holding and enforcing conservation easements in the United States. The 1989 directory indicates that there is a decidedly local flavour to each of the listed trusts, of which there are many. See The Land Trust Alliance, Starting A Land Trust: A Guide To Forming A Land Conservation Organization (Alexandria, Virginia: The Land Trust Alliance, 1990) ["Starting A Land Trust"] at 1 and at 25-30. The subject of land trusts and their usefulness in British Columbia merits a study of its own, and will be undertaken by the West Coast Environmental Law Research Foundation in the future.]] Restricting qualified holders to larger -- and therefore often national -- organizations risks losing valuable local knowledge. It may also discourage participation of local volunteers, whose services often will be necessary to monitor and enforce a conservation covenant properly.
Another related issue is whether it should be possible for an individual, an unincorporated association or a common law charitable trust, that is otherwise a qualified holder, to hold a conservation covenant. While it was argued above that government control in this matter should be minimal, only incorporated entities should be permitted to hold conservation covenants.
This would limit holders to societies incorporated under the Society Act or registered under that Act as extra-provincially incorporated not-for-profit corporations.
There are good reasons for such a limitation. First, it would give better assurance, if not certainty, that specific minimum standards are adhered to in the operation and government of every conservation covenant holder. There is no comparable statutory regulation of the individual behaviour or the affairs of either an unincorporated association or a common law charitable trust. [For example, section 56 of the Society Act stipulates that a society must hold a general meeting of its members at least once every year after the first year of its existence.
Section 6 provides minimum standards for bylaws, which must be observed by every society. Parts 4 and 5 provide detailed financial and auditing requirements.
Second, an incorporated society is an entity with an independent perpetual existence and the powers and capacity of a natural person. This feature gives it great flexibility in conducting its affairs and insulates its members from personal liability for obligations incurred by the society. Neither a common law charitable trust nor an unincorporated association enjoy these benefits. This statement must be qualified in the case of charitable trusts. Since such trusts are not subject to the rule against perpetuities, they may have a perpetual existence. Moreover, the doctrine of cy pres ensures that where a charitable trust fails, the next closest charitable purpose will be pursued using the assets of the failed trust. For an authoritative discussion of charitable trusts, see D.W.M. Waters, Law of Trusts In Canada, 2d ed. (Toronto: Carswell, 1984) at 501 ff.
For these reasons, the UCEA approach should be considered for British Columbia. That approach should be adapted slightly, since there is no need for the conservation covenant legislation itself to deal with income tax consequences. Section 1(2) of the UCEA defines a "holder" as a charity "the purposes or powers of which include" the purposes for which a conservation easement may be granted under the UCEA. The British Columbia legislation could follow this approach and provide that a qualified holder must be a not-for-profit entity, one of the constitutional purposes of which is to achieve any of the purposes for which a conservation covenant may be granted.
The legislation should address the situation where a conservation covenant holder becomes moribund and ceases to exist. Although incorporated societies have a perpetual existence, that existence depends on the diligence of the individuals who run the society. For example, if statutorily required information filings are not made, the society may be dissolved by the government agency responsible for overseeing its compliance with statutory requirements.
This problem can be addressed by providing that upon the dissolution of a society or not-for-profit corporation holding a conservation covenant, the conservation covenant is transferred to another incorporated society or not-for-profit corporation eligible to hold a conservation covenant, with the consent of the new holder.
Recommendation 2: The legislation should provide that any incorporated society or other not-for-profit corporation, whose constitution provides that
is qualified to hold a conservation covenant.
Some jurisdictions require government review or approval prior to the creation of a conservation covenant or before any tax benefits may be obtained.
California's Open-Space Easement Act of 1974 is an example of this type of control. Section 51080 of that statute provides that an open-space easement may be created only where the local government has adopted an open-space plan. Sections 51083 to 51085 provide that the local government must review and approve a proposed open-space easement before its grantor becomes eligible for property tax benefits available under the Act.
There is a serious risk that control of this kind will stifle private sector use of conservation covenants. Therefore, it is recommended that this approach not be followed in British Columbia.
Recommendation 3: The conservation covenant legislation should not require that a conservation covenant must be reviewed and approved by a government body before it is valid and may be registered on title to a property.
Both judge-made and statute law allow several grounds for holding an existing covenant affecting land invalid or unenforceable. If these rules were applied to conservation covenants, they would threaten the usefulness of these tools for land preservation. Therefore, the legislation should provide that the existing rules not apply to conservation covenants. To illustrate the reasons for this, the common law and statutory rules are outlined briefly below.
The relevant common law rules are as follows:
The third of these rules is probably the most important in relation to conservation covenants.
In some cases the ongoing validity of a covenant is governed by statute. In British Columbia, section 31 of the Property Law Act gives the Supreme Court of British Columbia the power to modify or cancel a covenant or easement on being satisfied that the application is not premature in the circumstances, and that
The Property Law Act provides further that the court may order that compensation be paid to anyone suffering damage as a consequence of the order. The court is also required to "direct inquiries to a municipality or other public authority" and to give notice by "advertisement or otherwise" to those who appear entitled to the benefit of the charge.
If these common law and Property Law Act rules were to apply to conservation covenants, they would negate the purpose of conservation covenants, particularly when the objective is to preserve a parcel of land forever.
The reasons are as follows:
The rules set out in section 31 of the Property Law Act reflect the 19th century policy of precluding dead hand control of land. In the 19th century various mortmain statutes were enacted, aimed at preventing enduring control over land by those long dead. At the time, the demand for land placed pressure on government to ensure that large blocks of land could not be removed from human use or development by conveyancers' ingenuity.
While there may be a need for controls of this nature in some circumstances, the policy of preservation chosen by a landowner should prevail over the policy promoting free marketability of land. Any concern that large amounts of land will be frozen in time by conservation covenants to which the Property Law Act does not apply is probably exaggerated. Given the extent and pace of development in British Columbia, it is plain that only a small amount of land in this province will be subject to preservation or conservation of some sort. Since our green spaces are disappearing rapidly, especially on the urban fringe, there is broad recognition that we must use innovative tools if we are to preserve that land.
For these reasons, the provisions of the Property Law Act should not apply to conservation covenants. While this could create tension between long-term protection of conservation covenants and the desire not to freeze land from human use, most of our land base is and will remain open and suited to development of one kind or another. Conservation covenants will be most widely used by private property owners to voluntarily preserve those small but environmentally valuable pieces of privately owned green space, which cannot be protected through existing mechanisms.
Recommendation 4: The conservation covenant legislation should provide that the existing common law and Property Law Act rules regarding the abandonment, termination, discharge or extinguishment of easements or covenants do not apply to conservation covenants.
There may be situations, however, in which it is desirable to be able to modify or discharge a conservation covenant in order to achieve the intention of the grantor. For example, a conservation covenant that is granted for the purpose of protecting a particular rare plant species may need to be modified or substituted if some natural occurrence alters the location where this species is found. However, the ability to modify or discharge a conservation covenant should be based on the original purposes of the conservation covenant and the intention of the grantor, rather than other societal purposes. The state is always able to rely on its powers of expropriation in situations where the land is needed for other purposes.
The California Society Act of 1974 provides an interesting example of how another legislature has tried to deal with this issue. Section 51090 of that Act provides that an "open-space easement" may be "terminated only by ... nonrenewal, or ... abandonment." An open-space easement may be abandoned or allowed to lapse only if it is approved by resolution of the "governing body of the county or city" in which the land is located. The statute restricts the ability of the governing body to permit abandonment or lapsing of the open-space easement. Section 51090 of that California statute says that approval may be given only if the governing body finds:
The California approach is closely linked with regulatory land use planning processes. The Act requires that the matter be referred to the local planning authority, which must hold a public hearing on the matter and then report to the governing body, which must also then hold a public hearing on the issue. Finally, the landowner who wishes to remove the open-space easement must pay an abandonment fee equal to half of the "abandonment valuation" of the property, which is set at one quarter of the market value of the land as if it were free of the open-space easement.
The conservation covenant legislation for British Columbia will need to address modification and discharge since, as discussed earlier, the common law rules and the rules for modification and discharge found in the Property Law Act are inappropriate in the context of conservation covenants. The rules set out in the California statute provide a useful model for consideration.
The rules developed for British Columbia should provide that a conservation covenant may be terminated only where it would no longer serve the conservation purposes articulated in the conservation covenant. In addition, modification should be permitted only in circumstances where the modifications are not contrary to the original spirit of the conservation covenant.
The courts should be permitted to modify or discharge a conservation covenant on application by the holder, the owner or any other party that the court considers has a sufficient interest in the conservation covenant. The conservation covenant holder and other affected parties should have the opportunity to argue against the proposed modification or discharge.
Recommendation 5: The conservation covenant legislation should provide that a court may modify or discharge a conservation covenant upon application by a holder, an owner or any other party the court determines has a sufficient interest, in circumstances where
The existing legal rules on what purposes may be fulfilled by easements or covenants present significant obstacles in using these tools to preserve land for environmental purposes. The courts have viewed covenants and easements as instruments designed to accommodate the use of land by humans for human purposes. While it is possible to argue that preservation of land from any human development is a human use of land, if that is what its owner wishes to do, there is reason to be concerned that even today our courts might decide otherwise.
The common law rules on easements and covenants are supported by a judicial policy which permitted title to land to be affected only by restrictions which serve human uses of land. Even the range of human uses which could form the subject of a burden on title is limited. It is not clear that the courts today would favour applying these rules to situations where a landowner wished to place restrictions on private property to prevent human development of the land. This uncertainty is one of the central reasons that conservation covenant law reform is required in British Columbia. The risk that a judge will find a conservation covenant invalid seriously inhibits those who might wish to create such interests under the existing law.
The legislation therefore must clearly state the purposes that may be fulfilled by a conservation covenant. This is the approach taken in the model United States statute, the UCEA. [[Footnote: Section 1 of the UCEA defines a conservation easement as "a non-possessory interest of a holder in real property imposing limitations or affirmative obligations, the purposes of which include retaining or protecting natural, scenic or open-space values of real property, assuring its availability for agricultural, forest, recreational, or open-space use, protecting or maintaining or enhancing air or water quality, or preserving the historical, architectural, archaeological or cultural aspects of real property."]] It provides that a conservation easement may be used, among other things, to
This list is not exhaustive, since the definition states that the purposes of a conservation easement "include" the ones listed. While the list names many useful conservation purposes, it may not be extensive enough to meet local needs in British Columbia.
Although detailed lists in legislation can create problems of interpretation and application, a carefully drafted non-exhaustive list similar to that in the UCEA would serve as an express guide to users.
Recommendation 6: The legislation should contain a non-exhaustive list of conservation purposes which may be served by a conservation covenant. It should be permissible to create a conservation covenant the purposes of which can include the protection, preservation, conservation, maintenance, enhancement or restoration of
The legislation should provide expressly that a landowner may grant a conservation covenant only in writing, consistent with the Law and Equity Act [[Footnote: (62) -- 62. R.S.B.C. 1979, c. 224, s. 54 [the "Law and Equity Act"].]] requirement that interests in land be in writing.
The legislation should provide that a conservation covenant is a non-possessory interest in land which may contain
This would make it clear that a conservation covenant may have any of the elements now found in positive or restrictive covenants or easements, thus ensuring considerable flexibility in designing obligations appropriate to the preservation needs of each situation.
The legislation also should provide that certain ancillary obligations and powers may be included in a conservation covenant which, when they are included in the document, are valid and bind successor owners.
One example is the right of access to the land for monitoring purposes. At least one American model conservation easement includes rights of access and inspection in the easement document. However, even if these rights were expressly included in the easement document, a recalcitrant successor landowner could argue that the right of access is merely a personal obligation on the part of the landowner who granted the obligation, rather than an obligation that runs with title to the land and binds the successor landowner. Therefore, the legislation should make it clear that this obligation binds successor owners.
Some have argued that the legislation should go even further and provide that certain ancillary obligations are automatically included in every conservation covenant and therefore always bind successor owners.
If the right of access were one such ancillary obligation, every conservation covenant would automatically include the right of access for monitoring. This approach was taken in New York. Section 6 of Title 3 of New York's Environmental Conservation Law provides that the holder of a conservation easement ... may enter and inspect the property burdened by a conservation easement in a reasonable manner and at reasonable times to assure compliance with the restriction.
However, the conservation covenant is attractive largely because it is voluntary and affirms the value and primacy of private property rights. Therefore, if these supplementary obligations are mandatory, they may inhibit the use of the conservation covenant. Accordingly, the conservation covenant legislation in British Columbia should provide that these supplementary obligations and rights are valid and bind successor owners if created in the covenant, but that they are not required to be in the covenant. This will allow landowners and conservation groups to agree on which ones should be included in any particular case.
The legislation should provide that the following obligations and powers are valid and bind successor owners if created in the covenant:
The legislation should give parties the option of creating either:
One of the goals of the legislation is to permit the greatest possible flexibility in preserving private land. If tax benefits are to flow from creation of a conservation covenant, the government may wish to stipulate in taxation legislation a minimum duration for conservation covenants.
[[Footnote: For example, section 51081 of the California Open-Space Easement Act of 1974 provides that an "open-space easement" under the Act "shall run for a term of not less than 10 years." Paragraph 6 of section 49-0306 of the New York Act requires the government to "promulgate regulations establishing . . . the minimum term for a conservation easement."]] Apart from the need to protect the integrity of any tax incentive regime -- a need which is best met through tax laws and not conservation covenant legislation -- the legislation should allow the greatest possible flexibility regarding the duration of conservation covenants.
Recommendation 7: The legislation should provide that a conservation covenant is a non-possessory interest in land, created in writing, that is either perpetual or of fixed duration and which may contain
Our present law requires that covenants or easements must be shown to benefit land adjacent to the land subject to the covenant or easement before the interest binds subsequent owners of the land subject to the covenant or easement. The current rule is a serious obstacle to the use of conservation covenants in British Columbia. The utility of conservation covenants can be assured only if the requirement that a covenant or easement must benefit adjacent land does not apply to a conservation covenant.
Recommendation 8: The legislation should provide expressly that a conservation covenant may be granted and held whether or not it benefits land other than the land which it burdens.
Rules to govern when subsequent owners are bound by a conservation covenant must be explicit, in part because the existing legal rules governing covenants are so complex.
The common law rules applied by our courts provide that the burden of either a restrictive or positive covenant cannot run with title to the burdened land. In other words, at common law a covenant on land will bind the owner who created the covenant, but will not bind subsequent owners. To serve conservation purposes, the reform legislation must provide expressly that a conservation covenant binds later owners of the land subject to the conservation covenant, whether the conservation covenant imposes positive or negative obligations.
The rules of equity applied by our courts provide that a covenant will bind later owners of the land, but only if
Recommendations 7 and 8 eliminate the first three equitable rules governing when subsequent landowners will be bound. The fourth equitable requirement -- that the covenant must demonstrate an intention to bind the burdened land and run with it -- can be dealt with by providing in the legislation that a conservation covenant is conclusively presumed to run with title to the land and to bind successors in title.
Recommendation 9: The legislation should provide that a conservation covenant is presumed to run with title to the land and to bind subsequent owners of the land, whether or not such an intention may be gathered from the instrument.
While it is relatively uncontroversial to argue that successors to the granting landowner should be bound by the conservation covenant, it is not as clear that the burden of a positive conservation covenant should also bind those with a lesser interest in the burdened land. [[Footnote: It is important to note that a conservation covenant will not bind a prior interest holder, such as a prior mortgagee, unless a priority agreement is obtained from the prior interest holder and is registered on title to the land together with the conservation covenant.]] This is an important issue that will affect the popularity of the conservation covenant for land preservation.
The Ontario Report recommends that those with a limited interest in land should be bound only by negative land obligations and not by positive land obligations. The authors of the Ontario Report state that only those persons with "a sufficiently substantial interest in the servient land" should be subject to positive land obligations. It is not clear what constitutes a "limited" or "substantial" interest in the view of the authors of the Ontario Report, since they did not define those terms.
In reforming British Columbia law, it will be necessary to set out clearly who will be, and who will not be, bound by positive obligations in a conservation covenant. The following is suggested:
As for negative obligations in a conservation covenant, anyone with an interest of any kind, subsequent to the conservation covenant, or who is in possession of the burdened land should be subject to negative obligations. Such obligations generally do not require the expenditure of money, although they may do so indirectly in some cases. The main thrust of a negative obligation is to require that land not be used in a specified way or that access to land be permitted.
While these types of obligations will often have some impact on the value of land, or its utility to even the holder of an insignificant interest in it, they are generally of a much less onerous nature and should bind everyone with a subsequent interest in the land or in possession of the land.
Recommendation 10: The legislation should provide that positive obligations in a conservation covenant bind
The legislation should provide that restrictive obligations in a conservation covenant bind
Another issue to consider is whether every party that is bound to observe a conservation covenant should be liable at law for breach by another of that obligation. Raising this issue presupposes a distinction between
This is a distinction accepted in the Ontario Report, but not necessarily accepted in United States conservation easement legislation. [[Footnote: For example, section 49-035 of the New York Act provides that a conservation easement "is enforceable against the owner of the burdened property." This does not expressly limit the right of enforcement, but may be interpreted to do so. Similarly, section 3 of Michigan's Conservation and Historic Preservation Easement Act, 399.251, Michigan Compiled Laws (Annotated), West Publishing Co. [the "Michigan Act"], provides that a conservation easement is "enforceable against the owner of the land or body of water subject to the easement." End of Footnote]]
Possession of and control over land burdened by a conservation covenant is important to observance of that obligation. A restrictive obligation in a conservation covenant -- for example, not to alter prime grassland habitat in any way -- cannot realistically be observed by anyone other than the possessor of the land. On the other hand, if land is burdened by a positive obligation in a conservation covenant -- for example, to spend money to restore wetland habitat -- possession of the land is not crucial. Anyone who owns an interest which subjects that person to the conservation covenant can perform the obligation. [[Footnote: This assumes there is a right of access to the land in favour of those not in possession of it, so they can enter the land and perform the positive obligation if the person in possession fails to do so.]] The question is whether this distinction is sufficiently important to warrant treating liability for breach of restrictive and positive obligation in conservation covenants differently.
It is argued in the Ontario Report that different treatment should be given to positive and restrictive obligations in conservation covenants. The Ontario Report points out that, since a restrictive obligation requires that something not be done, it is difficult to see why anyone other than the person who actually acted in contravention of that prohibition should be liable.
Ordinarily only those who are in possession of the land are in a position to breach a restrictive obligation. However, there are cases where someone other than the possessor of the land, such as a trespasser, has breached a restrictive obligation. To deal with both situations, the rule should be that only someone who personally breached a restrictive obligation - or allowed it to occur -- should be liable.
A positive obligation requires that something be done and almost always entails the expenditure of money or money's worth on the land. Since possession of the land is not essential, interest holders who are bound by a positive obligation should be liable for its breach, whether or not they are in possession of the burdened land, if they personally breached the obligation. Even if a number of interest holders are jointly bound by a positive obligation, if there is a breach of that obligation, all will be in breach and all should be liable. [[Footnote: It will be necessary to consider whether the liability of interest holders for breaches of a positive obligation in a conservation covenant, which requires the expenditure of money, should be joint and several as regards the person who has the right to enforce the conservation covenant. If so, the law of restitution will provide a right of contribution to any interest holder who has made good on the obligation. For a discussion of the relevant restitutionary principles, see P.D. Maddaugh & J.D. McCamus, The Law of Restitution (Toronto: Canada Law Book, 1990) at 187-203.]]
Recommendation 11: The conservation covenant legislation should provide that anyone who is bound by a conservation covenant who breaches or permits a breach of an obligation in a conservation covenant is liable for the breach.
Normally, a person who undertakes an obligation by way of an agreement is bound by it until the person to whom the obligation is owed releases that person from liability, unless the parties provide otherwise in the agreement. [[Footnote: For example, a lessee who has assigned the leasehold interest or sub-leased the premises remains liable for breaches of the lease unless the lessor has released the lessee from further liability for such breaches. See Anger & Honsberger, supra, note 11 at 259 ff.]] In current British Columbia legal practice it is not unusual for instruments creating land obligations to provide that the obligor is released from liability as soon as the obligor ceases to own any interest in the land. [[Footnote: Author's personal observation. It is also not uncommon for this type of release to operate prospectively only to the extent of the interest disposed of by the obligor landowner. Thus, an owner who sells a one half interest in the fee simple title to a parcel of land will remain liable in respect of the one half interest he or she retains. End of Footnote]] Moreover, section 215 of the Land Title Act contains a similar provision regarding landowner liability for breaches of a covenant granted under that section.
Conservation covenant legislation should provide that a landowner is released from liability under the conservation covenant upon the disposition of his or her interest in the burdened land, to the extent of the interest which has been disposed of by the landowner, subject to an express agreement to the contrary.
The parties should be able to expressly provide in the conservation covenant that the obligor remains liable even if he or she disposes of all interest in the land. This option will permit the parties in effect to arrange for a guarantee of performance of the conservation covenant. This will provide flexibility, especially in situations where the conservation covenant has been purchased and not donated. It will also be useful where the conservation covenant exists for a limited number of years. In such cases, the landowner may be willing to assume the risk of liability for an appropriate payment or for no payment at all. The legislation should allow such arrangements to be made.
Recommendation 12: The legislation should provide that
Easements may be enforced by an injunction or damages. [[Footnote: See Anger & Honsberger, at 969-970. The law also recognizes a form of self-help. The owner of the dominant tenement may remedy a wrongful interference with an easement by taking steps to abate it. Any action taken to abate a nuisance must be reasonable; certain other conditions apply where it is necessary to enter the servient tenement. ]] Since it is equity which allows the burden of a restrictive covenant to bind subsequent owners of the land, only equitable relief is available to remedy its breach. This allows for enforcement by injunction. Damages are a common law remedy and traditionally have not been available.
In the interests of both certainty and flexibility, conservation covenant legislation should provide that a conservation covenant may be enforced by action in the Supreme Court of British Columbia and that all equitable and common law remedies are available for its breach or threatened breach.
In the case of positive obligations in a conservation covenant, injunctive relief would involve the court ordering compliance with an obligation to do something. However, our courts traditionally have declined to make an order requiring specific performance of a contractual obligation where it would entail personal service. It could be argued that enforcement of a positive obligation in a conservation covenant -- for example, where the landowner is required to engage someone to do some work on the land -- entails such personal service, perhaps indirectly.
For this reason, the legislation should provide that a court is empowered to order compliance with a positive obligation in a conservation covenant, despite any rule of law or equity to the contrary.
Recommendation 13: The legislation should provide that a conservation covenant is enforceable by action in the Supreme Court of British Columbia and that all of the common law and equitable remedies are available to remedy its breach. The legislation should further provide that a court may order compliance with a positive obligation in a conservation covenant, despite any rule of law or equity to the contrary.
The UCEA contains a back-up enforcement mechanism which should be considered in developing British Columbia's legislation. Section 3 of the UCEA provides that "[a]n action affecting a conservation easement may be brought by ... a person having a third-party right of enforcement." Section 1(3) of the UCEA defines a third-party right of enforcement as a right provided in a conservation easement to enforce any of its terms granted to a governmental body, charitable corporation, charitable association, or charitable trust, which, although eligible to be a holder, is not a holder.
Following are some of the arguments in favour of including such a mechanism in the British Columbia legislation and some of the issues that should be considered.
Giving a third party the right to enforce a conservation covenant offers greater assurance that the conservation covenant will be enforced. The actual holder of the conservation covenant might not enforce it according to its terms for a number of reasons. For example, lack of expertise, human resources or money, or all three things, may disable a conservation organization, leaving the conservation covenants it holds unenforced. In rare cases there may be collusion between a landowner and the holder of a conservation covenant, leading to inappropriate compromise on enforcement or a complete lack of enforcement.
In addition, where a government agency is the holder, the landowner may wish to have the right to grant a right of enforcement to a non-governmental organization. By doing so, the landowner will have added assurance that political agendas -- for example, relating to land development -- will not affect enforcement of the conservation covenant against his or her successors in title.
There would be no additional cost to government in creation of third party rights of enforcement. The legislation need only provide that a conservation covenant may include a third party right of enforcement granted to an entity which is qualified to be a holder. The legislation also would have to make it clear that the holder of such a right of enforcement has the standing and all of the rights of the holder as regards enforcement and remedies. Section 27(3) of the Heritage Conservation Act is an example of a comparable provision.
Designing a conservation covenant which grants a third party the right of enforcement may lead to management problems or conflicts between the holder and the third party enforcer. Therefore, the decision to include a third party enforcer should be left to the parties, on a case by case basis. It should not be a mandatory requirement that every conservation covenant must include a third party enforcer.
If a conservation organization qualifies to be a holder, it should be able to hold a third party right of enforcement. Therefore, the criteria applied to determine if an organization qualifies to be a holder of a conservation covenant also should be applied to determine if it qualifies to be a third party enforcer.
The legislation should provide that upon the dissolution of a third party enforcer, the right of third party enforcement may be transferred to another incorporated society or not-for-profit corporation eligible to hold a conservation covenant, with the consent of that party.
The legislation should make it clear that the proposed third party enforcer must first consent to creation of the enforcement right. This will ensure that enforcers are self-selected and therefore more likely to be committed to that role.
There may be cases where the third party enforcer and the actual holder of the conservation covenant cannot agree on the need to enforce the interest. The potential for conflict of this kind would be diminished by providing in the legislation that, despite the terms of any conservation covenant, a third party right of enforcement may be exercised only where the holder of the conservation covenant has failed to take and continue steps to enforce the conservation covenant within 60 days after notice to do so is given by the third party. Consideration also should be given to allowing the third party to enforce the conservation covenant in an emergency without giving notice.
Recommendation 14: The legislation should provide that a conservation covenant may grant a third party right of enforcement to an entity otherwise qualified to be the holder of a conservation covenant.
British Columbia law does not permit assignment of the benefit or the burden of an easement. Although an easement is an interest in land, it cannot exist in gross, that is, it cannot exist unless there is other land which it benefits. Law reform recommended in this report would allow conservation covenants to exist as property interests in gross. Therefore, assignment of conservation covenants could not be dealt with adequately by the common law rules on assignment in British Columbia.
Section 2(a) of the UCEA provides that "a conservation easement may be ... assigned ... in the same manner as other easements." This provision follows from recognition in many states that an easement can exist in gross and therefore can be assigned.
Some other American statutes expressly deal with this issue as well. For example, section 6(2) of the Michigan Act provides that a conservation easement "may be assigned to a governmental or other legal entity." [[Footnote: It is interesting that section 6(3) of the Michigan Act is more restrictive in relation to historic preservation easements. That section provides that such an easement "may be assigned to a governmental or other legal entity whose purposes include" historic preservation purposes.]] Section 3 of the New York Act provides that a conservation easement may "be held only by a public body or not-for-profit conservation organization."
In British Columbia, section 27 of the Heritage Conservation Act provides that a heritage conservation covenant may be assigned by the Province, the British Columbia Heritage Trust or a local government "to any person". This provision does not restrict assignment to qualified entities. Despite this domestic precedent, a restriction similar to that in the New York Act is desirable in British Columbia's conservation covenant legislation. To allow unrestricted assignment would be inconsistent with Recommendation 2, which would restrict initial holders to certain qualified entities.
There may be some concern that such a restriction on assignment is an unwarranted intrusion on property rights. It might be argued that a landowner has an interest in allowing free assignment by the initial holder of the conservation covenant. However, restriction of assignees to qualified holders is likely to offer a broad choice of potential assignees. The public interest in ensuring that only qualified entities hold such interests justifies such a minimal incursion on free alienation of property interests. In the Restatement of the Law of Property (Servitudes) it was stated that the social utility of devoting property to conservation, historic preservation and charitable purposes is strong enough to justify severe restraints on alienation that are reasonably necessary or convenient to assure that the property will be used to carry out the intended purpose. [[Footnote: Tentative Draft No. 2 (Philadelphia: American Law Institute, April 5, 1991) at 61. This observation also carries weight regarding what grounds, if any, should be used to vary or discharge a conservation covenant. See the discussion above in this chapter.]]
This passage provides support for the argument that such a statutory restraint is desirable.
Recommendation 15: The legislation should provide that it is permissible for the holder of a conservation covenant to assign it, but only to another entity qualified to hold a conservation covenant.
The above recommendations would effect the main legal changes necessary to enable conservation covenants to be used in British Columbia. Nonetheless, the legislative reforms also should eliminate as much uncertainty as possible regarding the application of existing legal rules on covenants and easements to conservation covenants. To do so, the legislation should expressly stipulate the particular common law and equitable rules that will not apply to conservation covenants.
Recommendation 16: The legislation should stipulate that the following common law and equitable rules do not apply to conservation covenants, namely any rule that
Traditionally, the law has been hostile to any property interest, which is not held by someone within a reasonable time after its creation. The law sought to eliminate the possibility that a property right could be created that would only be enjoyed at some remote time in the future, thus being in limbo for a long time. The law encouraged liquidity of property rights, by forcing them to be possessed and enjoyed within a reasonable time after their creation.
A legal rule was developed which invalidates any right or interest, which is not vested in, or held by, someone within a specified time. This judge-made rule, known as the modern rule against perpetuities, was very complex. In essence, the rule was that a right or interest was invalid if it might vest in someone only on the happening of a remote contingency. Due to the drastic effect some think this rule could have on conservation covenants, it is necessary to examine it in some detail.
The British Columbia Perpetuity Act [[Footnote: R.S.B.C. 1979, c. 321 [the "Perpetuity Act"].]] was enacted in 1975 to codify and modify the rule against perpetuities. Section 2 of the Perpetuity Act provides that the common law rule continues in force. Other sections of the Perpetuity Act, however, modify the rule significantly. For example, although the common law version of the rule would invalidate unvested yet long duration interests at the outset, the legislation now adopts a wait-and-see approach. Section 4 provides that a "disposition creating a contingent interest in property" is not "void as violating the rule against perpetuities by reason only of the fact that there is a possibility of the interest vesting beyond the perpetuity period."
Sections 18 and 19 deal specifically with easements and "other similar interests." Section 18, the title of which is "commercial transactions", provides that in the case of an option or other contractual right under which an interest in property may be acquired for valuable consideration, the perpetuity period is 80 years from the date of the creation of the option or contractual right ... [emphasis added].
The section goes on to provide that where "an interest in property could arise more than 80 years after the creation of the option or contractual right," the option or right is "void after the expiration of 80 years." Section 18(2) provides that the 80 year validity rule laid down by section 18(1) applies to "future ... easements and restrictive covenants."
Section 19 provides that in "the case of the grant of an easement, profit a prendre or other similar interest" not referred to in section 18, other rules apply. Section 19 further provides that any easement or "other similar disposition" to which the rule against perpetuities "may be applicable" is subject to special rules. First, the perpetuity period is 80 years, as is the case under the Act with other interests. Second, the validity or invalidity of the interest is to "be determined by actual events within the 80 year period." Last, the interest "is only void for remoteness if and to the extent that it fails to acquire the characteristics of a present exercisable right ... within the 80 year period."
The rules in section 19 do not apply to any provision in a will or a trust created other than by will.
Some people may be concerned that conservation covenants will be vulnerable to attack because they are perpetual and therefore violate the rule against perpetuities as modified by the Perpetuity Act. This concern is unnecessary so long as a transaction involves the immediate vesting of a conservation covenant. In other words, so long as a landowner immediately grants a conservation covenant to a holder, the rule will not apply.
The present grant of a conservation covenant means the interest is vested and is not subject to the rule. As is noted in Anger & Honsberger, [s]ince the rule against perpetuities is a rule against remoteness of vesting and has no concern with how long an estate or interest lasts, present interests which are vested in some person are not objectionable on any ground of perpetuity regardless of the fact that they may last for an indefinite time. Consequently, the rule does not apply to vested interests, including easements and profits a prendre, rent charges, and similar interests lasting indefinitely, and restrictive covenants and conditions running with the land, for they are so annexed to the land as to create something in the nature of an interest in the land. [[Footnote: See also the well known case of London and South Western Ry. Co. v. Gomm (1882), 20 Ch. D. 562 (C.A.) at 583.]]
The situation would differ, of course, if the landowner merely granted the holder an option to acquire a conservation covenant at some future time. In that case the rule against perpetuities would apply, since there would be no conservation covenant until the option was exercised. Similarly, if a document contained a conservation covenant but stipulated that it was to come into being only on the happening of a future event, such as the sale of the land by the owner, the rule would apply. In those situations the conservation covenant would fail if the event did not occur within the 80 year period set out in the Act.