In a recent article, Jacob Gehlen wrote about the decision in Smith v Clearwater, where the BC Supreme Court exercised its discretion under section 35 of the Property Law Act (the “PLA”) to cancel a restrictive covenant prohibiting multi-family development. Recent court decisions have addressed several similar matters, including DBKS Homes Ltd. v Taylor, 2025 BCSC 1202, where the Court used that same statutory discretion to alter a building scheme by removing a restriction on the density of a dwelling house.

Both decisions seemingly broaden the court’s discretion under section 35 of the PLA, providing avenues to modify long-standing property restrictions for purposes such as facilitating denser development.

Background

In this case, DKBS Homes ltd. (“DKBS”) owned property in a residential area of Nanaimo and planned to develop it by constructing a fourplex. The property was part of a larger subdivision subject to a building scheme registered in 1977 on all lots, which required that the property only be used for one single-family private residential dwelling (the “Building Scheme”). DKBS filed a Petition against all homeowners in the subdivision, seeking to cancel or modify the Building Scheme under section 35 of the PLA.

The City of Nanaimo recently amended its Zoning Bylaw to increase the permitted density on properties within its Three and Four Unit Residential (R5) Zone. DKBS’s property was located within this zone. Accordingly, all it needed to do in order to move forward with this development was to remove the Building Scheme from the title or modify it to permit the intended use.

The Court’s Decision

DKBS’s primary argument was that the wording of the Building Scheme, specifically that which restricted use of the property “for not more than one family”, was inherently vague and unenforceable. DKBS argued that because the term “family” is not defined, and could possibly include extended family, adopted family, or non-traditional family structures, it was not a clear term and therefore too vague to be enforceable.

The Court agreed with DKBS that the term “family” in the Building Scheme was inherently vague and uncertain. The Court found that while it was plausible that this referred to the ordinary meaning of a “single-family dwelling”, the Building Scheme did not use that specific wording; and more importantly, this was not the only plausible interpretation of “family” in the context of the Building Scheme.

The Court determined that the appropriate remedy was to remove the vague terminology from the Building Scheme, rather than cancelling it entirely. The Court reasoned that removing the vague terminology was necessary to ensure that lingering unenforceable wording would not deceive future owners. The Court also found that, even if removing the impugned language might alter the character of the neighbourhood, there was no compelling reason to weigh against granting the modification.

Takeaways for Local Governments

Similar to the outcome in Smith v Clearwater, this case reinforces that where a local government has enacted land use bylaws to support increased residential density, the Court may consider those bylaws when managing issues related to restrictive covenants. While the Court affirmed that bylaws do not override restrictive covenants, the Court did not use its discretion to preserve neighbourhood character, likely because the City of Nanaimo’s zoning for the property supported the result.

Overall, both Smith v Clearwater and DBKS Homes Ltd. v Taylor suggest that local governments should not be deterred from amending land use bylaws to support increased density simply because of the presence of restrictive covenants. In the context of growing political pressure to address the housing crisis, facilitating higher density remains a key tool in promoting residential development, and such bylaws can strengthen a developer’s application to cancel or modify restrictive covenants under section 35 of the PLA.