PDF version: Do Covenants to Compensate for Designation as an Historical Resource Run with the Land?
Case considered: Equitable Trust Company v Lougheed Block Inc, 2013 ABQB 209.
The foreclosure proceedings taken with respect to the historic Lougheed Building at 604 – 1 Street S.W. in Calgary have generated a number of legal controversies. I have previously blogged on interest issues in the “Perennial Problem of Section 8 of the Interest Act” and on security deposits matters in “Who Bears the Loss for Converted Security Deposits?” This latest judgment — a decision of Mr. Justice Paul R. Jeffrey — concerns compensation paid by the City of Calgary for the decrease in the value of the building when it was designated an “historical resource” under the Historical Resources Act, RSA 2000, c H-9. A Lougheed Building Rehabilitation Incentive Agreement dated September 2006 provided that total compensation would be $3,400,000 and it would be paid in fourteen annual installments of $227,000 each and a final fifteenth payment of $222,000. The question was who was to receive the balance of the annual installments. Would it be The Lougheed Block Inc (LBI), the owner of the building who entered into the Incentives Agreement with the City and did the required rehabilitation work? Or would it be 604 – 1st Street S.W. Inc (604), the purchaser on the judicial sale after LBI defaulted on their mortgage with Equitable Trust Company and Equitable Trust foreclosed. The outcome depended on the answers to one property issue and one (far less interesting) contract issue.