Sharing today’s update from the Kanata Greenspace Protection Coalition regarding today’s appeal dismissal by the Supreme Court of Canada:
Today’s update is focused on the Supreme Court of Canada (SCC) decision released this morning. We want to take a moment to ensure you understand where we are today as a result of the decision and our next steps. Rest assured, We continue to fight an unrelenting battle to stop ClubLink/Minto/Richcraft from developing the green heart of our community
The SCC dismissed the City of Ottawa’s application for leave to appeal the Ontario Court of Appeal decisions regarding two clauses within the 40% Agreement (40PA). The decision was provided without reasons or explanation, in a manner fully consistent with its usual process.
Litigators for the KGPC, Alyssa Tomkins of Gowling WLG and Charles Daoust of David | Sauvé LLP offer the following comments on the decision:
“This fight is far from over. Though the Supreme Court has refused leave to appeal, the matter is still proceeding before Justice Labrosse. We trust that the remainder of the 40% Agreement will be preserved by the court. The Coalition also has its own application regarding the restrictive covenants that has been launched in parallel. We will be doubling our efforts to ensure that ClubLink is held to its obligations and that Kanata’s beloved greenspace is left intact.”
What is next?
First off, let’s step back to 2021 when the Court of Appeal remanded the case to the Superior Court leaving to it the determination of one main issue – does the Court of Appeal’s decision to render invalid and unenforceable s. 5(4) of the 1981 Agreement (ClubLink shall convey the golf course to the City if it desires to discontinue the golf course function without finding another operator) along with s. 9 (if the land is no longer used as greenspace, ClubLink is to reconvey it to the City at no cost) affect the validity or enforceability of the balance of the 1981 Agreement? We have shared several documents from all three parties with you since then and review their key content below.
ClubLink’s position is ‘yes’ stating that the doctrine of severability (by which offending provisions of an agreement can be removed or “severed” in the Court while keeping the remaining agreement intact) does not apply here. In fact, ClubLink’s broad position is that these two provisions were essential to the contract and the underlying bargain so that, with their fall, the entire contract (which they see to be the set of contracts including the 1988 Agreement) falls.
In response, the Coalition argues that even if the Court did find illegality (or invalidity and unenforceability), it can only arise in the performance of the contract, not its formation. We argue that any illegality contemplated in this case would go only to contract formation and not performance. The contract can then be enforced without breaching the Perpetuities Act and, the original intention and bargain between the first parties (Campeau and the City of Kanata) could still be respected and maintained.
To the ClubLink position on severance above, we argue in the alternative that severance should apply to ensure the central bargain regarding the 40% principle remains intact and, in that process, a unilateral windfall profit in ClubLink’s favour (not envisioned by the original parties, Campeau and the City of Kanata) would be avoided.
The Coalition also raised a new argument: ClubLink would be estopped from seeking to have the ClubLink Assumption Agreement declared null and void. Our argument here has 3 prongs: 1) that the parties’ dealings, here Campeau and City of Kanata, were mistaken at law, i.e. that the 40% Agreement in its entirety would be enforceable and would operate in perpetuity; 2) that members of the Coalition have acted on this shared assumption and altered their legal position when purchasing their homes close to greenspace; and 3) that the members of the Coalition, as successor homeowners in the interest of Campeau, would stand to lose the benefit of 40% greenspace which was guaranteed (detrimental reliance).
The City submits that the agreements are actually “perpetual” contracts that do not run afoul of the Perpetuities Act. Their position is that, per the wording of the Act’s provisions, the 1981 Agreement (of which parts were declared void) was never contrary to the rule against perpetuities, as it was presumptively valid until becoming void for remoteness at the expiry of the perpetuity period. The City, therefore, contends that the balance of the 1981 Agreement remains enforceable after the removal of the two void provisions. Given this position, the City states the doctrine of severance (used by the courts to cure a contract’s illegality) has no applicability here since the contract was not illegal, to begin with. The City relies on the juridical difference between contractual terms which are “void” and those which are unenforceable as contrary to statute (“statutory illegality”). For the City, voiding the two provisions by operation of the Act ends the analysis; there is no further need to apply the doctrine of severance.
In reply to the Coalition’s submission, ClubLink suggests that the severance of the “golf course” provisions would not reverse the entire 40% bargain, as it would leave all other parks, open space buffers and natural environmental areas and walkway links intact. While ClubLink did fuss over our estoppel argument describing it as an unfair and impermissible attempt to broaden the scope of the City’s application, it failed to address the arguments themselves. It further ignores the issue that it is a successor in title and interest to both Campeau and Imasco and also ignores the Coalition’s principled distinction on contract illegality going to performance rather than formation.
In reply to the City’s arguments, ClubLink continues in a similar vein suggesting the distinction the City draws between “voidness” and “unenforceability” is but an illusion. It further attempts to distinguish the case law invoked in support of the City’s thesis that the contracts in question are perpetual stating that the City’s approach eliminates any possibility of evolving land use. ClubLink further surprises by taking the position that the rule against perpetuities, notwithstanding the Perpetuities Act, remains a common law rule of public policy, rather than a statutory prohibition and ironically states that it “would be free to continue operating the golf course if it chose to do so” (paragraph 19 of ClubLink’s reply). Our team was left to conclude that ClubLink’s underlying argument appears perched on a purported obligation to operate a golf course in perpetuity, a requirement we believe is well beyond what the agreements contemplate or intend.
Our team will now begin detailed preparation to return to Superior Court as an intervenor for the reserved September 13 and 14 dates where the arguments will be put before Justice Labrosse for his determination. Remember too, the KGPC also has an application versus ClubLink specific to two Restrictive Covenants that we continue to pursue in the courts.