Restrictive covenants

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Restrictive covenants are interests in land registrable as charges under the Land Registry Act R.S.B.C. (1960) C.208. We are specifically concerned here with those restrictive covenants based on racial considerations. The legislatures of Manitoba, Ontario and Saskatchewan have passed specific laws to make void all covenants involving race, creed, colour, nationality, ancestry or place of origin. Unfortunately, B.C.’s legislature has not taken similar steps. The result is that there still remain in B.C. covenants involving racial considerations, even though they are no longer considered enforceable.

The B.C. Civil Liberties Association’s position on the problem of restrictive covenants involving racial considerations is that they should be dealt with in the following manner:

  1. All persons involved in the sale of property should be acquainted with the void nature of such covenants, so that all purchasers and prospective purchasers will be correctly informed.
  2. The Government of British Columbia should be approached to legislate on the matter:
    • All restrictive covenants involving a consideration of race should be retroactively removed.
    • A provincial Bill of Rights should guarantee the basic property rights of all citizens.
    • A tribunal should be appointed, structured and empowered to deal with questions pertaining to land registry, with allowance of appeal to the Courts.

Restrictive covenants position paper

Restrictive covenants are interests in land registerable as charges under the Land Registry Act R.S.B.C. (1960) C.208. Not all covenants submitted for registration are accepted as the Registrar is allowed some discretion under the Act. Total restraints have never been accepted as valid because of conflict with the granting of land in fee-simple. However, the registration of limited restraints, such as racial restrictions is to a large degree an arbitrary decision of the Registrar, with few statutory guidelines. Sections 142(1) and 165 of the Act provide that “a good safe-holding and marketable title in fee-simple” must be established by those applying for registration. The tragedy of the present situation lies in the invalidity of many covenants currently registered in British Columbia. Restrictive covenants concerning race are typical of these “nuisance charges”. They remain in register from past entries even though they are considered unenforceable. The Registrar has not felt empowered to revise existing registrations. Thus the responsibility of determining validity and removing such covenants has bean ultimately left to the courts.

The courts have not, however, dealt firmly with the issue of racial restrictions. A markedly creative judgment, concerning restrictive covenants registered against Ontario property, was issued in Drummond Wren (1985) 0.R.778. A restrictive covenant, providing that “land not to be sold to Jews, or to persons of objectionable nationality”, was held to be void as (1) contrary to public policy, (2) a restraint upon alienation (3) for uncertainty. As the registration of real property is a matter of provincial jurisdiction, the application of this decision to British Columbia is not automatic.

Unfortunately the Supreme Court of Canada did not fully adopt the reasoning of the former case in Noble and Wolfe v Alley at al. (1951) S.C R. 64. In this case a restrictive covenant provided that a summer resort property conveyed in 1933 should be bound until August 1, 1962…” shall never be sold, assigned, transferred, leased to, and shall never be occupied or used by any person of the Jewish, Hebrew, Semitic, Negro or coloured race or blood, it being the intention to restrict the ownership, use, occupation and enjoyment to persons of the white or Caucasian race not excluded by this clause”. Avoiding the issue of public policy the court struck out the covenant as void because: (1) it did not touch or concern the land within the meaning of the doctrine of Tulk v. Moxhay (1848) 5O E.R.937; (2) there was nothing in the clause to enable a court to say whether a proposed purchaser was within the prohibited classes, therefore it was void for uncertainty. The Supreme Court of Canada’s decision stops well short of guaranteeing civil rights by total disallowance of racial restraints. If is possible that a restrictible covenant regarding race could still be enforceable if it ware brought within the rule of Tulk v. Moxhay or if it where brought within the rules of privity of contract, provided further that it was more certain in its definition of race, it would appear that such a covenant would escape the rule of Noble and Wolfe.

To give full effect to the decision several provinces enacted specific legislation. Ontario passed the Conveyancing and Law of Property ActR.S.O. 1950 C.68 s. 21.

…every covenant made after the 24th day of March, 1950, which but for this section would be annexed to run with land and which restricts the sale, ownership, occupation or use of land because of the race, creed, colour or nationality, ancestry or place of origin of any person shall be void and of no effect.

Similar provisions have been legislated in Manitoba with the Law of Property Act R.S.M. 1954, C. 138 s. 7. Saskatchewan has covered the problem with the Bill of Rights Act R.S.S. 1953, C. 345 ss. 10, 16.

In British Columbia much faith has been placed upon the unrecorded decision of Hunter C.J.B.C. in Chambers, 1911. Without stating reasons, he held that the alienation of property on the basis of racial considerations was inoperative and, further, should not be entered in the registrar. While referred to by provincial Registrars, the case has not been deemed sufficient authority for removing all covenants involving racial considerations.

As pointed out by H.S. Robinson, former Registrar of Titles in Vancouver:

…in my opinion, this decision established that there so called racial restrictions never were, were not in 1911, and have not been from that date to the present worth the paper on which they were or are written.

Land Registry practise in all offices follows that decision. I suppose in the Vancouver Land Registration District alone, there are a dozen areas in which such restraints have been sought to be established. I know that there are thousands and thousands of deeds on deposit here, all purporting to create such a limited restraint. But one would suppose from the fact that there has never been a single case where a Registrar of Titles in this Province has called for evidence that a grantee is not of Jewish, Chinese, or Negro blood etc., that it would be evident to everyone that these attempted restraints have always been considered and treated as void.”

In a directive to staff, the position of the Vancouver Land Registry is further clarified: “In future if a deed comes in containing these restraints, and no others, then the restrictions will be treated as void, and no mention will be made of them on the back of the title. This is our present practice.

If the deed contains racial restraints amongst good restrictions, e.g. building restrictions, the position is the same; the racial restraint is void, the building restrictions good. In this case, in endorsing the building restriction under section 149, care should be taken to show that it is only the building restriction and not the racial restraint we are registering.

In the case of racial restraints that are all ready endorsed on the title, the examiner must determine if these are the only restraints in the deed. If so, they will be dropped totally as they come of for consideration.

If the registered restriction deals with other registrable restrictions as well as a void restraint, care must be taken to alter the wording in carrying the endorsement forward, in order to make clear that we are not registering the un-registrable racial restraint.

While the Registrar’s actions have been in keeping with decisions by the courts, there appears to be no express provision delegating such specific powers to the Registrar outside of protecting indefeasibility of title. This is indicated further by a second directive that concerned Crown grants, in particular the University Endowment Lands:

Prior to March 30th, 1950, however, we have registered quite a few grants of land in District Lot 140, these grants containing as classes 1(e) a racial restraint. I am not prepared to state, even in the absence of enabling legislation, that the Crown cannot create a valid restraint on alienation. As a consequence, no investigation of these restrictions already registered is necessary and these covenants will be carried forward unchanged by the examiner.

A ready argument is advanced that the law of British Columbia has not operated to cause any hardship because of racial restraints. Obviously few cases which are the result of racial restrictions have been documented.

However, they do exist on the register and they have been presented on indentures. If these covenants are indeed unenforceable, why do they remain a statement that is registered and readily presentable to the eyes of laypeople?

One wonders what would happen if a purchaser, holding an indenture with racial restrictions endorsed thereon, were to approach a mortgage company for funds to construct an apartment building intended for persons contravening the racial qualification? It would appear that even if the clause were considered null and void, it would require court procedure for its removal.

In Britain, the Law of Property Act and Lands Tribunal Act provide a statutory procedure to decide whether a restrictive covenant exists and whether it is enforceableiv. There are provisions for hearings, discharge or modification, and appeals that eliminate the difficulties encountered in British Columbia. Ontario has also enacted similar provisions to provide a definite method of discharging restrictive covenantsv. These two legislatures have recognized the inadequacy of relying on old equity cases to resolve the conflict of restrictive covenants in modern society.

The British Columbia legislature has been content to rely on the present system, which offers only one avenue of relief–the discretion of the Court. One must assume that this attitude is based on the premise that action is only required by those who seek to enforce a restrictive covenant. It follows that all those restrictive covenants that are probably invalid, but have never been declared invalid may still be registered, but ultimately ignored. Similarly those restrictive covenants that are valid may also be ignored until some action is brought to enforce them. This places both covenanter and his or her assigns, and covenantee and his or her assigns, in very difficult positions. The former is seldom certain whether he or she is bound by a covenant but submits to it anyway because of the inherent difficulty of obtaining a ruling. The latter is forced to apply for an order enforcing covenants that are obviously enforceable. Every person who seeks to enforce, discharge or modify a covenant must go through the same cumbersome procedure even when the results seem obvious.

Britain and Ontario have seen the need to provide several avenues of relief from restrictive covenants; unfortunately the British Columbia legislature had failed to see this need, or had preferred to ignore it. There should be a tribunal that has the authority to hear applications for enforcement, release or modification, and a provision for appeal to the existing Courts. This would establish a definite procedure, at minimal expense to the applicant, and at the same time prevent the tribunal from exercising excessive arbitrary authority.

We humbly submit that the problem of restrictive covenants involving racial considerations should be dealt with in the following manner:

  1. All persons involved in the sale of property should be acquainted with the void nature of such covenants, so that all purchasers and prospective purchasers will be correctly.
  2. The Government of British Columbia should be approached to legislate on the matter:
    • All restrictive covenants involving a consideration of race should be retroactively removed.
    • A provincial Bill of Rights should guarantee the basic property rights of all citizens.
    • A tribunal should be appointed, structured and empowered to deal with questions pertaining to land registry, with allowance of appeal to the Courts.

i “Limited Restraints on Alienation”. The Advocate (1950), 250 at 251.

ii Memo to Staff. Racial Restraints on Alienation. November 23, 1950.

iii “Racial Restraints on Alienation” #64 (2) December 9, 1950.

iv Law of Property Act 1925, 15 Geo. c. 20, s. 84 (2(1); Lands Tribunal Act 1949, 12 & 13 Geo. 6 c. 42.

v Conveyancing and Law of Property Act, Ont. Rev. St t. c 68(61), as amended by 1952 Stat. Ont. c 12 Abbott, 18 & of T. Faculty of Law Rev. 141.