COURT FILE NO.: CV-21-1638 (Milton)
DATE: 20210728
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
BURLINGTON LIONS OPTIMIST MINOR HOCKEY ASSOCIATION
Applicant
and
MINOR HOCKEY ALLIANCE OF ONTARIO and CONACHER ATHLETICS CLUB o/a RAIDERS HOCKEY CLUB
Respondents
Alastair J. McNish, for the applicant
Jacob R. Damstra, for the respondent Minor Hockey Alliance of Ontario
R. Trent Morris, for the respondent Conacher Athletics Club
Heard: July 15, 2021, by video conference
Chown J.
REASONS FOR DECISION
[1] This is a motion for an interlocutory injunction in an application involving two minor hockey associations and their governing body. The applicant says the respondent governing body’s decision to re-allocate the right to operate certain minor hockey programs breaches a 2018 contract among the parties. The requested orders would in essence allow the applicant to maintain its “market share” (this is my phrase, not the parties’). The applicant says the decision has resulted in harm to its reputation and will result in insurmountable financial losses.
[2] Applying the test for an interlocutory injunction, I have concluded that the requested orders are not justified, and I dismiss the motion.
Background
[3] This application is the result of years-long tensions among the three minor hockey organizations offering programming in Burlington. They are:
a. The applicant the Burlington Lions Optimist Minor Hockey Association (“BLOMHA”);
b. The respondent the Raiders; and
c. The Burlington Eagles (which is not a party to this proceeding).
[4] BLOMHA and the Eagles have for many years both operated as “sanctioned” organizations, meaning they are ultimately governed by Hockey Canada.
[5] One of the affidavits describes Hockey Canada as “the self-governing body of amateur hockey in Canada.”
[6] The Ontario Hockey Federation (“OHF”) is a member of Hockey Canada and is a governing body that has jurisdiction over parts of Ontario.
[7] The respondent Minor Hockey Alliance of Ontario (“Alliance”) is a member of the OHF and is a governing body that has jurisdiction over multiple minor hockey associations in southern Ontario, including BLOMHA.
[8] The Ontario Minor Hockey Association (“OMHA”) is also a member of the OHF and is a governing body that also has jurisdiction over multiple minor hockey associations in Ontario, including the Eagles.
[9] For historical reasons which have not been made clear to me, geographically, the jurisdictions of the Alliance and the OMHA overlap.
[10] Until 2018, the Raiders were an independent league, and not sanctioned by Hockey Canada. I am referring to the Raiders by their current name. The Raiders were previously known as the Cougars. Ted Puccini is a director of the Raiders and is also a director of a for-profit arena or business called Wave Sports [A35, A78].[^1] The Raiders are now a not-for-profit corporation but the connection to private interests is an apparent cause of concern for the Eagles and BLOMHA [B-2-507, A38].
[11] On April 4, 2018 an agreement was reached whereby the Raiders joined the Alliance, placing the Raiders under the governance of the Alliance, the OHF and Hockey Canada. The following chart depicts the organizational structure of minor hockey in Burlington since the Raiders joined the Alliance.
The Agreement
[12] Prior to the April 4, 2018 agreement, the Raiders competed with BLOMHA and the Eagles for players. The agreement included a term that the Raiders would work in co-operation with BLOMHA to provide minor hockey programming in Burlington [B-2-27]. For the balance of the 2018-2019 season, Raiders players could participate in Hockey Canada sanctioned tournaments. Starting in the 2019-2020 season, the Raiders would be full members of the Alliance. The Raiders did not previously have geographic restrictions. Raiders players who were not residents of Burlington would be grandfathered and could continue to play for the Raiders.
The Addendum
[13] Among the parties, there was a shared recognition that duplicate programming did not serve their collective interests. The Alliance supported negotiations between BLOMHA and the Raiders over allocations of programming / teams in the hope of eliminating duplication [B-1-193].
[14] On August 29, 2018, the parties signed an Addendum to the April 4, 2018 agreement [B-2-38]. The parties agreed to allocate teams as follows:
a. BLOMHA (which formerly operated teams at all age levels in the following categories: house league, house league select, minor development, and AA/A) would discontinue offering AA/A but continue its other programming.
b. The Raiders (which formerly operated the equivalent of AA/A and other levels of rep hockey as well as house league hockey) would discontinue offering house league and would limit itself to 8 minor development teams in lower age levels but would offer AA/A programming, up to a maximum of 40 teams.
[15] This allocation was to apply to the 2019-2020 season.
Registrations Did not Materialize
[16] The expectation of all parties was that, more or less, BLOMHA’s AA/A players would register and qualify for the Raiders rep hockey program and that the Raiders’ house league players would register for BLOMHA’s house league program. However, this did not occur.
[17] For 2019-2020, the Raiders were only able to field 26 AA/A teams [A42]. They registered 50 fewer competitive players than the year before and had given up their entire compliment of house league players [B-2-11].
[18] Many of the Raiders 400 house league players did not join BLOMHA’s house league. BLOMHA had a net increase of only 150 players in house league [A42] and had given up its AA/A programming.
[19] One explanation for the reduced enrolment may be that some players went to the Eagles. However, the OHF produced figures in a December 19, 2020 email that showed a 22% decline in participants since 2014-2015, overall, in all three Burlington programs [B-1-551, B-1-602].
[20] Within the first months of the 2019-2020 season, BLOMHA began to see hints that the Raiders intended to run additional programming in 2020-2021 including additional minor development teams. BLOMHA obtained a legal opinion as to the effect of the Addendum. This opinion, dated January 22, 2020, said that an attempt to revise the number of teams allocated to the Raiders without the consent of BLOMHA would be a breach of the agreement [A182]. The opinion was shared with the Raiders and the Alliance. On behalf of the Raiders, Mr. Puccini replied almost immediately, “If needed, we are happy to provide a letter from our lawyer stating the agreement is non-binding and revocable.” The Raiders now characterize this email as notice of termination of the Addendum [B-1-597].
The Burlington Hockey Council
[21] The Alliance and the OMHA created “the Burlington Hockey Council” which held meetings in January and February of 2020 involving all three Burlington minor hockey associations, in the hope of reaching an amicable resolution for team allocations [B-1-551].
[22] On March 5, 2020, BLOMHA formally signalled its intention to apply to join the OMHA and leave the Alliance [B-1-550]. On the same date, the Eagles advised they were withdrawing from the Burlington Hockey Council. In an email, the Eagles wrote: “The Burlington Eagles will not participate in the Burlington Hockey Council. It is our understanding that BLOMHA has taken a similar position” [B-1-607].
OHF Ad Hoc Committee
[23] In August of 2020, the OHF formed an ad hoc committee “to enquire into the state of minor hockey in Burlington, Ontario and to make recommendations to the OHF Board with respect to the organization and delivery of minor hockey programing in Burlington going forward” [A294]. The committee members included two “outsider” representatives from the Northern Ontario Hockey Association and the Greater Toronto Hockey League, was well as a representative of the Alliance and a representative of the OMHA.
[24] The Raiders objected to the OMHA member on the ad hoc committee based on his prior advocacy for the Eagles [B-2-13, B-2-286].
[25] The ad hoc committee engaged in a consultation process that involved receiving submissions from BLOMHA, the Raiders, and the Eagles. The ad hoc committee completed its report on February 10, 2021 [A362]. Its report concluded, compellingly, that Burlington had too many rep teams for its population and registration. The ad hoc committee report also concluded that the effect of the agreement and Addendum:
has been to bring the [Raiders] into direct competition for players and resources with both the Eagles and BLOMHA. It is not surprising that friction has developed between the three sanctioned organizations, confusion has grown within the community and, because of the proliferation of teams at a time of declining enrolment, many players, to their detriment, both in terms of skill development and enjoyment, are playing out of skill level.
[26] The Raiders had been in competition for players when it was a non-sanctioned league, but the report points out that 299 Raiders house league players resided outside of Burlington.
[27] The ad hoc committee concluded that a mediated solution to team allocations was not possible and that it was “in the best interest of minor hockey delivery in Burlington” that competition between organizations should be eliminated “by creating, to the extent possible, separate silos with, except for house league, a fixed number of teams within each silo. The fixing of the number of teams within each silo is seen as an essential element to the removal of the destructive competition between organizations that presently exists” [A370].
[28] The ad hoc committee recommended that: the Eagles should operate rep hockey (AAA, AA and A – 32 teams); the Raiders should operate all minor development hockey (30 teams); and BLOMHA should operate all house league and select hockey in Burlington.
[29] Although not explicitly stated in the report, it appears the intent was that the new structure should be in place for the 2021-2022 season.
[30] The OHF invited feedback from Burlington’s three minor hockey associations, specifically directing that, “The feedback is to be provided with a focus on the customer (the player)” [A360].
[31] BLOMHA’s feedback was provided in a letter dated March 12, 2021 [A381]. It stated that the ad hoc committee “has not examined the financial effect nor the viability of the organizations, despite it being noted as its objective. There is no question that the proposal will have an adverse financial effect on BLOMHA and it will negatively impact current and future House League players.”
Recommendations of Ad Hoc Committee Were Not Accepted
[32] After consulting with BLOMHA and the Raiders, by letter dated March 22, 2021 [A414] the Alliance made submissions to the OHF that the ad hoc committee’s recommendations should not be implemented. It said the Addendum should be left in effect for the 2021-2022 season “but be terminated immediately thereafter as it is not sustainable or consistent with the views of ALLIANCE Hockey and the OHF Burlington Ad Hoc Committee’s recommendation that there are too many Rep and MD teams” [A415].
[33] Although it had signed the Addendum, in its March 22, 2021 letter to the OHF, the Alliance distanced itself from the Addendum, saying the Alliance:
did not facilitate nor have any direct discussions with either BLOMHA or the Jr Raiders in the contract or impact of the addendum on hockey in Burlington. ALLIANCE Hockey was required to sign the addendum as part of the original agreement, which was completed. … Reconsideration of the agreement and its addendum must be initiated. [A415]
[34] BLOMHA argues that with this language, the Alliance acknowledges the enforceability of the Addendum.
[35] A March 24, 2021 document on OHF letterhead states that the ad hoc committee’s recommendations would not be implemented for the 2021-2022 season; however, the document asks the Alliance and OMHA to agree to an allocation of teams that is similar to but modified from the ad hoc committee’s recommendations: 31 teams to the Eagles; 36 teams to the Raiders; and all house league and minor development programming to BLOMHA [A450].
The Alliance Decision of April 8, 2021
[36] The Alliance attempted to arrange a meeting with BLOMHA and the Raiders on March 29, 2021 [B-1-297]. Mr. Dawson, Executive director of BLOMHA, asked what the meeting would be about and received a reply that it would be to discuss, without prejudice, programming for the 2021-2022 season.
[37] Very shortly before the meeting, the Alliance circulated a document which the parties referred to as an agenda for the meeting [A458]. This document indicates that the purpose of the meeting:
is to come to agreement on the Number of Teams and Programming for the 2021-22 Season. The hope is that we can come up with an agreement tonight on the number of teams. Whether that is an addendum to the addendum or a new agreement we need to make things work. If we cannot Alliance Hockey will be forced to decide.
[38] In the document, the Alliance again distances itself from the Addendum:
The addendum between the Jr. Cougars/Raiders is an agreement between the two parties. As an addendum ALLIANCE Hockey was asked to sign and is required to sign as it is part of the original agreement between the two parties.
The position of ALLIANCE Hockey is that there was no input on the addendum, the ramifications as to the impact of Hockey in the community and more importantly the number of teams on an already saturated market.
[39] I do not know why the Alliance was making such effort to excuse itself for signing the Addendum. If the Alliance did not think the Addendum was good for hockey in Burlington it should not have signed it. In any event, the document then says:
• There is already to[o] many teams in the City of Burlington as proven in 2019-20 and the recent Adhoc committees indicates [sic].
• Hockey Canada Residency Regulations prohibit Jr Raiders from ever running 40 teams nor should they. [sic]
• Alliance Hockey cannot honor an agreement that legislates a new member to Hockey Canada out of Hockey. Every Hockey Player in Burlington should be under the Hockey Canada Umbrella.
• Prior to joining Hockey Canada the Wave, Jr Cougars ran the Original Six Hockey League. It was already happening in the City.
• If the Jr Raiders were to leave Hockey Canada and become Non-Sanctioned they would be running House League Hockey
• Providing Choice at House League for in the City has the potential to grow the game.
[40] I infer that the Alliance believed that a failure to change the allocations for 2021-2022 might result in the Raiders leaving the Alliance and becoming non-sanctioned again, with the implication that BLOMHA would face competition for house league players from an independent Raiders league.
[41] BLOMHA declined to attend the meeting. They were criticized for not attending but during argument there was a concession that, having had no opportunity to digest the “agenda” document or consult counsel, BLOMHA’s decision not to attend was understandable.
[42] In a lengthy letter dated March 30, 2021, Mr. Morris on behalf of the Raiders argued, among other things, that the Raiders had given “clear notice of its intention not to be bound by the Addendum” [B-2-474]. There is a significant element of advocacy to that statement because the notice is not as clear as Mr. Morris suggests. He is referring to the January 22, 2020 email of Mr. Puccini, discussed above, where Mr. Puccini said in response to BLOMHA’s lawyer’s letter, “If needed, we are happy to provide a letter from our lawyer stating the agreement is non-binding and revocable” [B-1-597]. The Alliance responded to Mr. Morris’s letter [B-1-371] and issued a document on March 30, 2021 [A481] which said:
It is evident that the current agreement and its addendum is dysfunctional and is affecting the delivery of hockey within the City of Burlington. With all Wave and Jr. Raiders Programming currently under the Hockey Canada umbrella, ALLIANCE Hockey will continue to work with the Ontario Hockey Federation and Hockey Canada to work towards a collective agreement however, if a collective agreement is not a possible outcome, ALLIANCE Hockey will be required to impose a decision.
[43] The document also contained the Alliance’s proposal for allocations for 2020-2021 which was:
a. The Raiders will operate all AA/A programing; 4 minor development teams at the youngest age levels; and 34 house league teams.
b. BLOMHA will operate 20 minor development teams (at all age levels); and “normal programming” for house league.
[44] On April 6, 2021, Mr. McNish wrote to the Alliance on behalf of BLOMHA stating that BLOMHA would not be “railroaded into accepting a proposal on extremely short notice” [A495]. The letter goes on to recognize that minor hockey programming in Burlington needs to be adjusted but that the deadlines imposed for discussion and approval were “impossibly short” and that the parties “have run out of time.” In other words, even BLOMHA agreed that there were too many rep teams in Burlington. However, the letter suggests that the 2019-2020 programming should be carried forward for one more year.
[45] Mr. McNish’s letter further states:
Please accept this letter as notice that, in the event the Alliance attempts to impose the “proposal” contained in the Number of Teams document on it, BLOMHA will be forced to initiate legal proceedings to enjoin the Alliance from doing so.
[46] On April 9, 2021, the Alliance issued a letter dated April 8, 2021 [A503] which stated, in part:
ALLIANCE Hockey maintains the position originally provided and outlined below along with the rationale:
ALLIANCE Hockey has determined that given the inability of the parties to reach an agreement on adding to the original addendum, changing, or agreeing to eliminate it, that we (the ALLIANCE) must act unilaterally for the benefit of hockey in Burlington. This determination is for the 2021-2022 season which provides the involved parties the opportunity to review, revise, and rework team numbers and their designation for subsequent seasons by December 1, 2022.
ALLIANCE Hockey is responsible for representing both BLOMHA and the Jr. Raiders and has maintained the position for the past two years that the addendum between BLOMHA and the Jr. Raiders is not good for hockey in the City of Burlington.
[47] I will refer to this letter as the Decision.
Best Interests of the Players
[48] I pause here to note that at least the Decision is focused on what is best for minor hockey in Burlington. The Alliance was clearly looking for a solution that would allow both organizations to survive and keep them both in the Alliance.
[49] It is not intuitive that competition among hockey organizations is a bad thing, or why three minor hockey organizations in Burlington are beneficial if there is no competition between them. However, under its policies Hockey Canada will sanction any participation in, or cooperation with, a non-sanctioned league [A82]. Hockey Canada encourages efforts to bring non-sanctioned leagues under its auspices [A37]. I infer that it is Hockey Canada’s view that non-sanctioned hockey is not in the best interests of the children who play hockey. Players in independent leagues are not permitted to participate in tournaments held by organizations which fall under the Hockey Canada umbrella, and may not have other opportunities that players in sanctioned leagues enjoy [A83]. Presumably that reality is in part why the Raiders wanted to enter the Hockey Canada umbrella by joining the Alliance. The Alliance shares Hockey Canada’s perspective and felt that it would be in the best interests of minor hockey in Burlington that the Raiders be part of the Alliance [B-1-548].
[50] Relative to BLOMHA and the Raiders, the Alliance has no “turf” to protect, and its interests align more closely with the overall best interests of minor hockey in Burlington.
[51] I say this without intending to suggest deference to the Decision, or to otherwise invoke the law of groups, which I will discuss below. Rather, I make this observation because, when assessing the evidence, it is reasonable to observe that the Alliance is in the position of an arbiter of a dispute and is the party most likely to act in the interest of the children of Burlington who play minor hockey.
Summary of Allocation Recommendations
[52] The following table depicts the pre-agreement team allocations and the various proposals for team allocations (with some simplification). I include this because it tends to show that the Decision was an effort to accommodate both BLOMHA and the Raiders.
Document
Allocations
BLOMHA
Raiders
Eagles
Pre-agreement
House league, select, minor development, rep AA/A
29 rep teams and 34 house league teams in 2017-2018
Competing
Addendum
House league, select, minor development. It would stop AA/A programming.
AA/A + 8 minor development teams in lower age levels. A maximum of 40 teams. It would stop house league.
Competing
Ad Hoc Committee Report
All house league and select
All minor development (30 teams)
All rep hockey (32 teams)
OHF March 24, 2021 “ask” [A450]
All house league, select, and 4 minor development teams
All other minor development hockey (36 teams)
31 rep teams
April 8, 2021 Decision
20 minor development teams, house league, select
AA/A teams, 4 minor development teams, and 34 house league teams (38 teams all together)
Competing
Analysis
[53] With this background, I will now consider the legal issues.
Should the Applicant Have Brought an Application for Judicial Review Instead of an Application under the CJA?
[54] A preliminary consideration is how the disagreement between the parties is most properly framed.
[55] BLOMHA characterizes this dispute as a breach of contract claim. Specifically, it says the termination of the August 2018 Addendum without reasonable notice was a breach of contract and it is entitled to remedies for breach of contract.
[56] The Raiders and the Alliance characterize the dispute as an attack on the Decision, over which the Alliance has exclusive jurisdiction and discretion under the terms of the constitution and bylaws of the Alliance, to which all parties agreed.
[57] The Raiders’ factum acknowledges the jurisdiction of the Superior Court under s. 6(2) of the Judicial Review Procedure Act. The Raiders and the Alliance did not press for the motion and application to be dismissed and brought again in the Divisional Court. However, they argue that the court should restrict itself to its judicial review powers and should review the Decision under the law of groups.
[58] Significant other issues flow from the determination of this issue, such as: whether the court should intervene; what standard of review applies; and whether the application should be dismissed or stayed because BLOMHA failed to exhaust its remedies by appealing the Decision under the Alliance’s appeal procedure.
[59] The Raiders have cited Naggar v. The Student Association at Durham College and UOIT, 2018 ONSC 1247 and several of the cases referred to in it. Those cases provide guidance on when and how a court should review the conduct and decisions of an association which has a governing body and its own decision making or dispute resolution procedures. However, none of the cases contain the feature of a side agreement among the parties, such as the Addendum. And, in Naggar, at para. 53, Justice Perell held that “The court has the jurisdiction to enforce the contractual rights between an association and [its] members and the contractual rights of the members between or among themselves.” Justice Perell has made similar comments very recently in Derenzis v. Johnson, 2021 ONSC 5136 at para. 58 to 62.
[60] A plaintiff or applicant generally has the right to frame its case as it sees fit, and it will be held to its decision. Here, BLOMHA has advanced a breach of contract case. It acknowledges that the Alliance had the right to make the Decision it made, but argues that the Alliance and the Raiders had contracted away this right, such that reasonable notice of termination of the Addendum was required before that right could be exercised. The focus of BLOMHA’s argument is not that the Alliance made the wrong decision, but that it did not have the right to make that decision without giving notice of termination of the Addendum.
[61] In my view, BLOMHA has the right to ask the court to interpret the Addendum. If the Alliance had the right to decide whether reasonable notice to terminate the Addendum was required before it could make the Decision, and, if so, how much notice was required, this would effectively be allowing the Alliance to decide its own cause. As such, it is not correct to treat this case as a judicial review application.
[62] If this was an application for judicial review, BLOMHA would not prevail. I would have found that there was no failure of natural justice, and the Decision was reasonably justified and entitled to deference. I cannot say whether I would have found that BLOMHA had adequate justification for declining to pursue its appeal rights, without further time to research and reflect on this question.
The Test for an Interlocutory Injunction
[63] In his text Injunctions and Specific Performance, Looseleaf Edition (Toronto: Thomson Reuters Canada Ltd., 2019), at para. 2.60 to 2.80, Justice Sharpe said:
The problem posed by interlocutory injunction applications may best be understood in terms of balancing the relative risks of granting or withholding the remedy before full adjudication of the legal rights at issue. These risks may be stated as follows. The plaintiff must show a risk that his or her rights will be destroyed by the defendant’s actions before the court has rendered its judgment at trial. The risk to the plaintiff is that if an immediate remedy is not granted, his or her rights will be so impaired by the time of trial and judgment that it will be simply too late to afford an adequate remedy.
Against this risk to the plaintiff must be balanced the risk of harm to the defendant, should the injunction be granted. This risk is inherent in awarding a remedy before judgment.
Ideally, the problem could be avoided or minimized by devising special procedures to provide for an immediate and final resolution on the merits. Inevitably, however, cases will arise where immediate and final resolution is not possible and the court will be saddled with the difficult task of balancing the risk of harm to the defendant, inherent in granting remedial relief before the merits of the dispute can be fully explored, against the risk that the plaintiff’s rights will be significantly impaired in the time awaiting the trial. [Footnotes omitted.]
[64] The test for granting an interlocutory injunction is succinctly stated in Morguard Residential v. Mandel, 2017 ONCA 177 at para. 17:
When deciding whether to grant a stay, generally, the courts are to apply the same three-stage test as they do when deciding whether to order an interlocutory injunction: RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, at p. 334. This test requires the court to:
make a preliminary assessment of the merits of the case to ensure that there is a serious question to be tried;
determine whether the moving party would suffer irreparable harm unless the stay were granted; and
determine which of the parties would suffer greater harm from the granting or refusal of the stay.
[65] A further passage from Injunctions and Specific Performance, supra, at para. 2.600, is important and instructive:
As already noted, there has been a significant retreat from the assertion that consideration of the merits should never play an important role. The seeming rigidity of the remaining items in the formula is also regrettable, and the direction given by Cyanamid and RJR-MacDonald should be seen as guidelines rather than firm rules. The terms “irreparable harm”, “status quo” and “balance of convenience” do not have a precise meaning. They are more properly seen as guides which take colour and definition in the circumstances of each case. More importantly, they ought not to be seen as separate, water-tight categories. These factors relate to each other, and strength on one part of the test ought to be permitted to compensate for weakness on another.
Serious Issue
The extent of the required review of the merits of the claim
[66] The first branch of the test for an injunction involves a consideration of the merits of the plaintiff’s or applicant’s case, and an assessment of whether there is a serious question to be tried.
What then are the indicators of “a serious question to be tried”? There are no specific requirements which must be met in order to satisfy this test. The threshold is a low one. The judge on the application must make a preliminary assessment of the merits of the case. …
Once satisfied that the application is neither vexatious nor frivolous, the motions judge should proceed to consider the second and third tests, even if of the opinion that the plaintiff is unlikely to succeed at trial. A prolonged examination of the merits is generally neither necessary nor desirable.
Two exceptions apply to the general rule that a judge should not engage in an extensive review of the merits. The first arises when the result of the interlocutory motion will in effect amount to a final determination of the action. This will be the case either when the right which the applicant seeks to protect can only be exercised immediately or not at all, or when the result of the application will impose such hardship on one party as to remove any potential benefit from proceeding to trial.
[RJR-MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 SCR 311at 337.]
[67] As Justice Sharpe has noted, there has been some retreat from this, and the three branches of the test are not watertight categories.
[68] In this case, the motion seeks interim and interlocutory injunctions which, collectively, would require that the parties operate for the 2021-2022 season with the team allocations set out in the Addendum. No permanent injunction is sought.
[69] The application seeks only the interim or interlocutory orders requested in the motion, as well as “A declaration that the Agreement is binding on the parties unless and until a party gives reasonable notice of termination, which notice period must be at least 12 months in light of the numerous third party commitments that must be made long in advance to operate minor hockey programming in Burlington, Ontario.” The application is styled as an application for an interpretation of rights under an agreement, and is brought under rule 14.05(3)(d). It is not a claim for damages.
[70] BLOMHA argues that the case falls within the fist exception referred to in RJR-MacDonald because the Decision will impose such hardship on it as to remove any potential benefit from proceeding with the application if the injunction is not granted. As will be seen, I do not accept that the Decision will result in the demise of BLOMHA. Nevertheless, I have thoroughly considered the evidence and have considered the merits of the case carefully. There is a serious issue, but when the question of irreparable harm and the balance of convenience are considered, the circumstances do not favour granting the injunction.
The Addendum did not specify its term
[71] A basic dispute between the parties is whether the allocation in the Addendum was intended to be for the 2019-2020 season only, or indefinite. Neither the April 4, 2018 agreement nor the Addendum specify a term.
[72] It is not contended that the allocation in the Addendum was to be permanent. In cross examination, Mr. Dawson acknowledged that there is variability from year to year in registrations, skill level, and competitiveness, so that allocations will change. Mr. Dawson further acknowledged that under the Alliance’s constitution and bylaws, it had jurisdiction to set the number and level of teams at each age group:
Q. Okay. So, I just want to go back to my initial question in this line, and maybe I will ask it this way. Rules 2 and 24 of Alliance’s rules and regulations give Alliance the jurisdiction to set the number and level of teams at each age group. Do you dispute that?
A. No, that is correct.
Q. Okay. And as we talked about, Alliance takes input and projections from member associations like BLOMHA about the number and level of teams at each age group for the upcoming season, right?
A. Correct.
Q. But ultimately, you acknowledge that it is Alliance’s responsibility to make that decision and change that, if necessary?
A. Yes, but it has never been changed, as far as I have been involved.
[73] The parties also appear to agree that as a contract of indefinite duration, with no specified term, reasonable notice was required before the Addendum could be terminated.
[74] In his March 30, 2021 letter [B-2-468], Mr. Morris on behalf of the Raiders took the position that, with respect to team allocations, “the Addendum is in the nature of an acknowledgment from each of the Raiders and BLOMHA as to what their reasonable expectations are in terms of being treated equitably given prevailing conditions.” He said that under the Addendum, “there are no mutual obligations between the Raiders and BLOMHA. The Addendum restricts the ability of the Raiders or BLOMHA to complain to the Alliance for deviations from the Agreement unless they are given reasonable notice of the changes.” The letter goes on to argue that the Addendum has been superseded by many events. It further argues that by submitting requests for additional teams to the Alliance, the Raiders signalled their intention that the Addendum is at an end. As already mentioned above, it also argues that the Raiders gave notice of termination in January of 2020. These arguments have considerable force.
[75] A preliminary assessment of the merits reveals that there are substantial and serious issues raised in the application. Again, and as I will discuss below, I do not accept that BLOMHA will face insurmountable losses, but there is a serious issue raised that BLOMHA may sustain significant damages because of a lack of proper notice regarding team allocations.
Irreparable Harm
[76] I will quote again from Justice Sharpe’s text, at para. 2.390:
An essential factor in determining the appropriateness of an interlocutory injunction is “irreparable harm”, a phrase familiar in equity jurisprudence. The remedies of Chancery were traditionally withheld, unless the plaintiff could show that the ordinary legal remedy in damages would be inappropriate or inadequate. In the context of preliminary injunctive relief, the phrase is given a more specific meaning, namely, that the plaintiff, before the trial, must show an immediate risk of harm that will occur before the case reaches trial and that cannot be compensated or remedied other than through the granting of an interlocutory injunction. The rationale for requiring the plaintiff to show irreparable harm is readily understood. If damages after trial will provide adequate compensation, and the defendant is in a position to pay them, then ordinarily there will be no justification in running the risk of an injunction pending the trial. [Footnotes omitted.]
Financial Harm
[77] BLOMHA argues that it will sustain insurmountable financial losses if the programming as agreed in the Addendum is not maintained for the upcoming season. Mr. Dawson lists the financial consequences to BLOMHA should the allocations for 2021-2022 remain as decided by the Alliance: lost registration and refunded registration revenue; expenses for uniforms that may have been incurred unnecessarily; costs associated with contracted ice rental commitments to the City of Burlington; the cost of breaking its lease; employee severance. He provides figures associated with some of these consequences. He states at the end of this list that, “In sum, the financial losses to BLOMHA will be insurmountable as a not-for-profit organization.” However, he provides no context for me to evaluate this statement.
[78] I do not know, for instance, the extent of BLOMHA’s current assets. Mr. Dawson was asked in his cross examination what cash reserves BLOMHA has, and he stated it was approximately $300,000. I have no context for this number either. He estimates the lost revenue from house league registration at $317,000 plus $20,400 per select team. However, I do not know what these losses would represent as a percentage of BLOMHA’s past revenues or anticipated revenues under the new allocations.
[79] Mr. Dawson says that under its Ice User Agreement with the City of Burlington, BLOMHA must purchase a minimum amount of ice time each year. He says, “As a result of the Alliance decision, BLOMHA will not require as much ice as it paid for the 2021-22 season and the minimum amount it is legally bound to pay for until 2025.” He provides a copy of the Ice User Agreement as well as a letter dated April 20, 2021 from the City as to the status of BLOMHA’s account [A519], but no context to allow me to assess what true losses BLOMHA will face because of its ice commitments, and no information about its potential ability to mitigate its losses.
[80] In an Executive Director’s Report to the BLOMHA board dated August 15, 2018, when BLOMHA was considering entering into the Addendum, Mr. Dawson analyzed the losses from eliminating six A teams and the benefits of adding an estimated 350 to 400 house league players. He concluded for BLOMHA’s board that, “It is obvious that we are not going to lose revenue by eliminating our A program for 2019-2020. Even if we had to take a hit of $25,000 in order to get the entire HL program in Burlington under BLOMHA it is worth it.” He was recommending the Addendum to the board.
[81] In BLOMHA’s March 12, 2021 submissions to the OHF in response to the recommendations of ad hoc committee, Mr. Dawson raised the same list of financial consequences that he raises in his affidavit, plus this one:
The MD [minor development] program offered by BLOMHA significantly subsidizes its House League fees and operational costs and makes hockey affordable to House League players. The approximately $60,000 BLOMHA makes in tryout fees, in addition to the approximately $30,000 from the MD tournament further subsidizes the House League program. Without MD hockey, BLOMHA will be forced to increase fees at a percentage that will be shocking to current families.
[82] Again, this was in response to the ad hoc committee’s proposal, which was to take all minor development programming away from BLOMHA and give it all to the Raiders. In contrast, the Decision leaves almost all minor development programming with BLOMHA – giving the Raiders four teams, the same amount that it was allocated under the Addendum.
[83] I have difficulty reconciling BLOMHA’s position with this evidence. Mr. Dawson suggested on March 12, 2021 that minor development is a money-maker that subsidizes house league. If BLOMHA is keeping all of the minor development it was allocated under the Addendum, but losing some of its house league teams (or rather, having to compete for house league players), it seems to me the dire financial consequences described by Mr. Dawson may be overblown.
[84] The evidence is not adequately detailed to permit me to confirm, even in a rough way, that the financial consequences for BLOMHA will be insurmountable.
[85] I should add that the financial consequences to BLOMHA were considered by the Alliance when it made the Decision. As already mentioned, apart from the consequences of losing the minor development programming, the list of financial consequences in Mr. Dawson’s affidavit includes the items listed in BLOMHA’s March 12, 2021 submission to the OHF. The Alliance was aware of BLOMHA’s claim of financial losses. The Decision seems to have responded to this concern by leaving minor development programming with BLOMHA for 2021-2022.
[86] Reasoning in the Decision specifically indicates that the Alliance considered the financial consequences. The Decision states:
BLOMHA has indicated that they will be impacted financially by the unilateral decision, however there was a more significant impact when the Jr. Raiders operated outside of Hockey Canada (and ALLIANCE Hockey) without membership measures in place [than] there would be if the Jr. Raiders were to operate as a non-sanctioned entity again.
[87] This is a strong point and suggests to me that the Decision represents an effort to balance competing interests to best serve the Burlington minor hockey community.
[88] Bearing in mind that hockey in Burlington is experiencing declining enrolment, it appears to me that the Alliance is attempting to make the best out of a bad situation.
Damages are quantifiable
[89] The list of financial consequences identified by Mr. Dawson in his affidavit are, generally, precisely measurable. If these damages are incurred, and if BLOMHA’s position that it did not receive reasonable notice is sustained at trial, it should be able to recover these losses as damages.
[90] No one has presented evidence that the respondents would not be able to pay these damages to BLOMHA if BLOMHA recovers damages.
Reputational Harm
[91] BLOMHA further argues that it has sustained reputational harm and loss of goodwill. Based on its efforts to follow the Addendum, it has told hockey families that they could not try out or register with the Raiders; however, when these families learn that other families have done so, this has the effect of families feeling as thought BLOMHA is dishonest and attempting to hinder their children from paying higher level hockey.
[92] With this order, any confusion over whether the Decision will apply for 2021-2022 should be resolved. Going forward, confusion should not be a cause of reputational harm to BLOMHA.
Conclusion re Irreparable Harm
[93] I am not satisfied by the evidence that the requested orders are necessary to prevent irreparable harm to BLOMHA. It appears that damages will be an adequate remedy if BLOMHA’s position is ultimately sustained.
Balance of Convenience
[94] Where the court finds that a claim of irreparable harm is lacking, it generally follows that the balance of convenience will weigh against the party seeking the injunction. “It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises”: American Cyanamid Co v. Ethicon Ltd., 1975 2598 (FC), [1975] A.C. 396 at 408 (H.L.).
[95] Mr. Dawson says in his affidavit that it is doubtful that maintaining the status quo of 2019-2020 allocations for one more year will cause damages to the Raiders, and even more doubtful that the Alliance would sustain any damages. He offers no support for this position. If the requested orders are granted, the Raiders will lose revenue that it would otherwise have earned from house league player registrations. If I were to grant the injunction, and if it turned out that the Raiders position is vindicated, the Raiders would have a claim for damages against BLOMHA.
[96] Mr. Puccini’s affidavit suggests that the Raiders operation will not be viable without house league hockey. Mr. Puccini provides no supporting evidence whatsoever for this, so I place little weight on this evidence. However, it stands to reason that, to a large extent, what one party earns in revenue will be at the expense of the other party’s potential revenue.
[97] In addition, if the Raiders return to being an independent league, the Alliance may indeed sustain losses.
[98] Overall, the balance of convenience does not favour BLOMHA’s position.
West Hill Minor Hockey Association v. Scarborough Hockey Association
[99] BLOMHA relies on West Hill Minor Hockey Association v. Scarborough Hockey Association, 2009 26609 (ON SC). There are many parallels in that case to the circumstances here. However, West Hill must be distinguished on its facts. The primary difference is seen in this finding of Justice MacDonnell:
In my opinion, the evidence is clear that if an injunction is not granted, West Hill will be put out of business with respect to its primary mandate to provide house league hockey for children in Scarborough, a mandate that it has fulfilled uninterrupted and with great success for some 55 years. That kind of harm is not susceptible to being remedied by an award of damages and in that sense it is irreparable.
[100] In contrast, I am not at all satisfied that BLOMHA will be put out of business by the Decision, or that the balance of convenience favours BLOMHA. I have found that damages would be an appropriate remedy if BLOMHA’s position is vindicated.
Disposition of Motion
[101] The motion is dismissed.
The Parties Seek a Determination of the Merits
[102] The parties agreed to jointly ask the court to decide the merits of the application as well as ruling on the injunction.
[103] With the denial of interlocutory relief, all that remains to be decided in the application is the request for a declaration. Again, that request is essentially for a declaration that the allocations set out in the Addendum are “binding on the parties unless and until a party gives reasonable notice of termination, which notice period must be at least 12 months…”
[104] The request for a declaration appears moot, except insofar as the declaration would support a claim for damages. Thus, although the declaration now seems unnecessary, the application should not be dismissed without an order that makes it clear that the dismissal does not create an issue estoppel regarding the interpretation of the Addendum.
[105] As indicated, there is currently no claim before the court for damages. The issues involved in a claim for damages would require an action to be commenced or the application would have to be converted to an action and amended.
[106] Bearing this in mind, the parties are asked to confer on next steps. The options include:
a. dismissal of the application with an order which preserves BLOMHA’s right to bring a claim for damages;
b. if BLOMHA considers that the declaration is not moot, proceeding with a hearing on the request for a declaration;
c. converting the application to an action;
d. discontinuance of the application; or, preferably,
e. resolution of the issues among the parties by way of a settlement.
[107] I ask Mr. McNish to consult with counsel and then write me to advise what next steps the parties wish to take. I am not seized of this matter but wish to make an order either terminating the application or setting it on a path to final resolution.
Costs
[108] If the parties require me to determine costs, I will do so after receiving written submissions. I will not set a page limit but would direct that the submissions shall be brief.
[109] If there is to be a damages claim, an option I would consider is fixing the costs and ordering that the costs of the motion be paid as directed by the trial judge. Submissions should address this possibility.
[110] The respondent’s submissions shall be delivered not later than August 9, 2021. The applicant’s submissions shall be delivered not later than August 16, 2021.
“Justice R. Chown”
Released: July 28, 2021
[^1]: The numbers in square brackets in this decision are references to the page numbers in CaseLines where the supporting evidence is found.