OH lease Rules that prescribe future rules arguably unenforceable

RECENTLY, questions have arisen whether Westsea can make rules regarding the parking of uninsured vehicles in lessee's parking stalls. Such rules are not included in the lease or in the Rules themselves. However, Westsea presumably would rely on two references, Article 4.11 and Rule 35, in the lease that might give them the authority to make new rules that are not otherwise in the lease or the Rules.

In my opinion, for reasons discussed, there is a very strong argument that these provisions are void for uncertainty and unenforceable. 

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Article 4.11 

To observe and perform the rules and regulations forming Schedule "B" hereto and such further reasonable rules and regulations as the Lessor may from time to time adopt and of which written notice shall have been given to the Lessee.

Rule #35

Parking of vehicle of Lessees only shall be permitted and in such location and on such terms as the Lessor from time to time may prescribe.

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One of the basic principles of contracts is certainty, and these kinds of clauses have been held unenforceable. An excellent recent case on this from the BC Court of Appeal is 585582 BC Ltd v. Anderson 2015 BCCA 261.

The court referred to another case that closely parallels Westsea's rule to "prescribe rules"...

[24]        Another instructive case is Sekretov and City of Toronto (Re), 1973 CanLII 712 (ON CA), [1973] 2 O.R. 161, 33 D.L.R. (3d) 257 (C.A.).  The restrictive covenant in that case provided that the owner of the land burdened by the covenant “shall not use the lands herein for any other purpose than that provided by resolution of [the Municipal] Council”.  The Ontario Court of Appeal upheld the ruling of the trial judge that the restrictive covenant was invalid on the ground the covenant did not specify the land intended to be benefitted by it.

[25]        In addition, the Court held that the covenant lacked certainty.  The reasoning of Mr. Justice Schroeder on behalf of the Court was as follows at 168:

… The covenant as expressed in the transfer is thus susceptible of the interpretation that the use to which the land may or may not be put must depend upon the whim of Council to be expressed in a resolution or resolutions to be passed at some future time or times as occasion may require.  I cannot think of anything more uncertain and more indefinite than such a provision…  Where such vagueness and uncertainty exists in a restrictive covenant imposed on a servient tenement the covenant cannot be enforced.  I cannot avoid coming to the conclusion that the covenant sought to be imposed in this form is altogether too vague and indefinite to be enforceable against a successor in title to the purchaser of the lands in question.

[26]        In the present case, the covenant prohibits the rental of a unit to the public unless it is done in accordance with the “Rental Pool Management Agreement”, defined as an agreement between the owner of the unit and the rental manager setting out the terms by which the rental manager will manage the unit and make it available for rental use.  The form of the agreement is not attached to the covenant, nor is it incorporated by reference into the covenant.  Indeed, the agreement did not even exist at the time of the creation of the covenant.  Rather, it is an agreement that must be negotiated between each owner of a strata lot and the rental manager.

[27]        There is no certainty with respect to the terms of the Rental Pool Management Agreement and, as a result, there is a lack of certainty in the covenant itself.  By looking at the covenant registered against a unit, a successor in title to the unit cannot determine the terms by which the unit may be rented to the public....This is similar to Sekretov in the sense that the use of an owner’s unit can be affected by the whim of the rental manager expressed at some future time. 

[emphasis mine]

It is apparent to me that Article 4.11 and Rule 35 contain just this kind of arbitrary rule-making authority at Westsea's whim expressed at some future time, and in my view these provisions would likely be held unenforceable by a court. 

I should note that this may not apply for those who have recently purchased suites and who have been given notice of the new rule, if the new purchaser has agreed to it, in which case a collateral contract is formed.  

[Nothing in here should be construed as legal advice, and the opinion expressed here is my own].