Real Estate Law Blog

In OSED Howe Street Vancouver Leaseholds Inc. v. FS Property Inc., 2020 BCSC 1066, the BC Supreme Court issued an interim injunction to prevent an owner from swinging a construction crane over its neighbour’s property outside of previously agreed upon hours.

The decision provides a useful exposé of what factors the court will consider in determining the appropriate legal remedies for unauthorized crane swings in the context of a dense urban environment.

What were the facts?

OSED Howe Street Vancouver Leaseholds Inc. (OSED) is the holder of a long term lease of “The Exchange” building located at the northwest corner of Howe Street and West Pender Street, in downtown Vancouver. The Exchange is certified LEED Platinum, is Vancouver’s first LEED Platinum Heritage Conversion and Canada’s eighth largest LEED Platinum Building, and is comprised of retail, hotel, and office space.

FS Property Inc. (FSP) owns the neighbouring lot to the west of The Exchange, which it is in the process of developing for the purposes of a 13-storey hotel.

FSP requires a crane to complete construction of its hotel and, in early 2020, it was determined that a portion of that crane (namely, a heavy, structural component known as the counter-jib) would encroach the air space over the fourth floor terrace area of The Exchange.

The parties entered into a written agreement, whereby OSED permitted FSP to operate and move the crane through its air space between certain prescribed hours set out in the agreement.

On March 11, 2020, FSP advised OSED that the licensed hours were too restrictive and asked for OSED to permit the operation of the crane over the terrace without restriction. One day later, FSP began operating the crane through OSED’s air space without regard to the licensed hours and without OSED’s consent.

OSED brought an application for an interim injunction to prevent FSP from operating the crane through its air space.

What were the legal issues?

Broadly speaking, the main questions before the Court were:

• Was the unauthorized crane swing properly characterized as a trespass or nuisance?

• If OSED put forward a meritorious case that a trespass had occurred, was it then automatically entitled to an injunction?

What was the decision, and how does it change the law?

On Question #1, the Court considered the existing case law in B.C. and in other provinces across Canada, and concluded that “a construction crane which enters the air space of another property is trespassing upon that air space.”

In reaching this conclusion, the Court specifically referred to its earlier ruling in Janda Group Holdings Inc. v. Concost Management Inc., 2016 BCSC 1503 (Janda). The Court suggested that the decision in Janda, where an unauthorized crane swing was determined to be a nuisance rather than a trespass, was not a “helpful” precedent that should be relied on.

This shift away from Janda is meaningful because trespass (unlike nuisance) is actionable without proof of damage. What remains to be seen is how B.C. Courts will address the inconsistent analysis between this decision and Janda in the future, given that both were issued by the same level of Court.

On Question #2, the Court found that “while injunctive relief is strongly favoured in a case of trespass, that relief is not absolute.” In other words, the Court stopped short of confirming that owners have, in all circumstances, the ability to prevent neighbours from swinging cranes into their airspace.

Instead, the Court found it appropriate to apply the “RJR-MacDonald analysis” (which the parties agreed was the applicable legal test for awarding pre-trial injunctions).[i]

In applying that test, the Court focused on the legitimate interest of OSED in protecting the use of the terrace portion of The Exchange, including that without specific hours where tenants could have access to the terrace uninterrupted by a crane counterweight passing overhead, tenants would be inhibited in accessing the terrace. The use of the terrace was promised to OSED’s tenants as a feature of their leases, and was also a feature that supported the LEED Platinum designation of The Exchange (by providing improved health and productivity benefit for tenants). Accordingly, the Court found that the unfettered swinging of the crane over the terrace could cause OSED not only reputational harm, but also potentially problems with the building’s LEED-certified status.

FSP argued that the operation of the crane was compliant with governmental requirements and therefore safe, and that strict compliance with the restrictive hours in the parties’ written agreement would have significant economic consequences (in the magnitude of approximately $1,500,000 in overtime).

Ultimately, after applying each leg of the RJR-MacDonald test to the facts, the Court ruled that OSED was entitled to an interim injunction which restricted FSP to the prescribed hours the parties had earlier agreed on.

The Court also confirmed, in obiter, that “in modern society, neighbours in dense neighbourhoods must engage in give and take to accommodate construction, including the use of overhead cranes.”

What are the takeaways?

In our view, the main takeaways from this decision are that:

• Agreements relating to crane swing rights need to be carefully negotiated based on the physical compatibility of the works with existing and future improvements, and with careful consideration of the economics of strict performance.

• The Court has suggested that the unauthorized use of airspace for crane swing purposes is generally an outright trespass that gives rise to a presumptive right to injunctive relief.

• The Court stopped short of confirming that an injunction will be available whenever a crane swing trespass has occurred. Although an injunction will be “strongly favoured”, the Court indicated that it was most appropriate to consider each case on its own facts and, among other things, balance the interest of the parties and consider whether they had treated each other fairly to accommodate construction.

In this case, it was determined that a reasonable prior negotiation had occurred, and that FSP’s economic concerns did not override OSED’s presumptive right to an injunction.

• In a dispute regarding unauthorized crane swings, both parties must be prepared to support or rebut the elements of the RJR-MacDonald analysis, regardless of whether the claim is made in trespass or nuisance.

_{[i] RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 SCR 311 (RJR-MacDonald) was a decision of the Supreme Court of Canada which established a three-part test to be used for applications for interlocutory (i.e. pre-trial) injunctions. Under this test, the applicant must demonstrate that 1) it has raised a serious question to be tried, 2) it will suffer irreparable harm, and 3) the balance of convenience favours the issuance of an injunction.}