Court File and Parties

Court File No.: CV-21-60340 Date: May 12, 2023 Superior Court of Justice - Ontario

Re: James L. Garrett, Plaintiff And: Niagara-on-the-Lake Sailing Club, Defendant

Before: MacNeil J.

Counsel: A. Turner and K. Morris – Lawyer for the Plaintiff/Responding Party A. Mannell – Lawyer for the Defendant/Moving Party

Heard: November 18, 2022 (via Zoom videoconference)

Reasons for Decision

Overview

[1] The dispute between the parties stems from the decision of the Defendant, Niagara-on-the-Lake Sailing Club (“NOLSC” or “the Club”), to change the summer dockage rates it charges those who rent slips at its marina. The Plaintiff, James L. Garrett (“Mr. Garrett”), is a holder of a slip priority note. He alleges that NOLSC is not fulfilling its legal obligation, to which it agreed prior to the 1979 boating season, to charge a 20% higher rate to renters who are non-slip priority note holders. Mr. Garrett has sued for damages for breach of the summer dockage fees agreement, various declarations and specific performance.

[2] By this motion, NOLSC seeks summary judgment dismissing Mr. Garrett’s action.

[3] The parties filed comprehensive affidavits in support of their respective positions. Cross-examinations were held and transcripts filed.

Background

NOLSC

[4] NOLSC is a not-for-profit social club that was formed in 1964 and incorporated in 1967. Its mission is to carry on for its members, without the purpose of gain, a sailing club and to promote among NOLSC’s members and others an interest in sailing. It is governed by a board of directors comprised of thirteen volunteers (12 directors and one ex-officio director, being the Past-Commodore), all of whom are NOLSC members (“the Board”).

[5] NOLSC has operated out of the Gillingham Yacht Basin (“the Basin”), located at the mouth of the Niagara River in Niagara-on-the-Lake, Ontario, since 1964. On December 29, 1978, NOLSC purchased the Basin from Gillingham Limited and has been its sole owner since that time.

[6] NOLSC provides recreational boating facilities, boater and boating services, and boating programs. Its services include boat mooring rentals, winter boat storage services, marine fuel, waste disposal services, and a launch ramp.

[7] As of the hearing date, NOLSC had 75 active members, 40 joint active members, and 43 associate members; it also rented mooring slips to 43 non-members and winter storage facilities to 74 non-members.

[8] All active and associate members are charged annual membership dues, regardless of whether the member is mooring a boat in the Basin during that year. Annual membership dues are established by resolution of the Board and confirmed by a majority of active members at a members’ meeting. Since at least 1977, NOLSC has also charged initiation fees to new active members.

[9] NOLSC generally operates in a manner by which its revenue is intended to cover its operating expenses and anticipated capital expenses. Its main source of revenue is generated from the payment of summer dockage fees and winter storage fees by both members and non-members who moor boats in the Basin’s slips during the summer months and store boats on the Basin’s land in the winter months.

[10] The summer dockage fees and winter storage fees are calculated based on a price which is applied to the size of the boat being moored or stored. The fees for summer dockage and winter storage are set by the Board at its sole discretion. Each year, the Board votes to either maintain the previous year’s fees or to increase fees, depending on NOLSC’s anticipated revenue requirements.

[11] NOLSC is currently governed by its General By-law No. 1, which was adopted on November 17, 1988. It provides, in part:

a. The directors may administer NOLSC’s affairs in all things and make or cause to be made for the Club in its name, any kind of contract which the Club may lawfully enter into and, generally, may exercise all such other powers and do such other acts and things as the Club is by its charter or otherwise authorized to exercise or do (section 8).

b. Dues for each year shall be established by resolution of the board of directors confirmed by a majority of the Active Members present at a meeting of the members for that purpose (section 18).

c. A quorum for the transaction of business at any meeting of members shall consist of not less than 25% of the Active Members present in person or represented by proxy, provided that in no case can any meeting be held unless there are two Active Members present in person (section 22).

The Purchase of the Basin

[12] The purchase of the Basin was dependent on NOLSC raising sufficient funds for the down payment and on the vendor, Gillingham Limited, providing NOLSC with a vendor-takeback mortgage.

[13] To raise the down payment funds, in or around Fall 1978, NOLSC sent correspondence “to all of the persons who presently have rented slips in the past season” consisting of a one-page cover letter followed by a two-page letter (“the Offer Letters”). Both letters were signed by a member of the Board at the time, Richard Kelly (“Mr. Kelly”). The Offer Letters stated, in part:

a. NOLSC had entered into a contract to purchase the Basin.

b. All persons who had rented slips in the 1978 season had a right to purchase a slip priority on the terms and conditions set out in the enclosed two-page letter until December 8, 1978.

c. To purchase a slip priority from the Club meant “that you will have the right in perpetuity, to rent from the club the agreed upon slip at whatever current rents are set from year to year by the club”.

d. Slips for which no slip priority has been purchased “will be available for rent on a yearly basis at a rate of rental higher than that charged to the owners of slip priorities and with no assurance of continued availability in the future”.

e. The slip priority fee was $1,800.00 to be paid on or before December 8, 1978.

f. The use of a slip would be subject to the rules and regulations of the marina as published by the Club from time to time.

g. Annual rental fees would be based on the size of the boat being moored in the slip.

h. If confirmation was not received that a recipient required their slip in the coming year, along with the slip priority fee payment, it would “be assumed that you do not require a slip priority and after that date you will be treated as one of the general public, eligible only to purchase a slip on a first come, first served basis”.

i. The purchase by the NOLSC of the Basin was conditional on it obtaining satisfactory financial support. If the required amount was not raised, the recipients’ payments would be refunded.

[14] There were 155 slip priorities purchased in or around late 1978 and early 1979. Out of the 155 slip priorities sold, 133 were purchased by members and 22 were purchased by non-members.

[15] Mr. Garrett was a non-member who purchased a slip priority. He submitted his cheque to NOLSC for $1,800.00 on November 24, 1978. He also applied for associate membership at the Club around that time.

[16] NOLSC raised sufficient funds through the slip priorities sale for the down payment and was able to complete the purchase of the Basin.

After the Purchase of the Basin

[17] After the Basin’s purchase on December 29, 1978, the Board had a number of discussions to finalize details concerning the slip priority agreement, including the setting of mooring fees, and the issuing of a promissory note to those individuals who had purchased the slip priorities (“the Slip Priority Purchasers”). The actions taken by the Board in these regards are described in various Board minutes and in correspondence sent and received by the Board in early 1979, including the following:

a. By correspondence, dated January 9, 1979, from George A. Hinterhoeller, Marina Operation Committee (“Mr. Hinterhoeller”) and Donald H. Campbell, Dock Allocation Committee (“Mr. Campbell”), the Slip Priority Purchasers were advised of anticipated fees. It read:

The purchase of the Gillingham Yacht Basin by the Niagara-on-the-Lake Sailing Club, has now been finalized. The Board of Directors would like to thank you for making this possible.

Please help us by returning the attached form at your earliest convenience so that we can proceed with the establishment of a dock plan.

Mooring and winter storage fees will be calculated on a square foot basis, rather than length alone, a method we find more equitable. The approximate fee for summer mooring will be $2.50/sq. ft., final price will be established upon receipt of the information sheet.

The basin will be operated at or near cost, and much of the organizational work will be done on a voluntary, non-profit basis.

Your assistance and input to help our venture would be much appreciated.

b. Another letter, also dated January 9, 1979, was sent from Mr. Hinterhoeller and Mr. Campbell to individuals who had not purchased a slip priority. That letter stated, in part:

Since you have not purchased a slip priority, we would be interested to know whether you wish to moor and store your boat at the basin. We would like to accommodate you if at all possible.

Fees from now on will be calculated on a square foot basis. Summer moorings for 1979 will be:

Length x Beam x Approximately $3.00/sq. ft. (Final price to be established.)

Please let us have the attached application form at your earliest convenience, so that we can try to fill your needs.

c. The Minutes of the Board’s meeting held on January 10, 1979 indicate, in part:

L. Garrett will discuss with our solicitor, D. MacFarlane, that it is the Directors’ wish that the immediate family of deceased slip priority holders have the right to maintain their slip priority.

A motion was presented by D. Minor and seconded by D. Campbell, that the Commodore, with assistance from our solicitor, will change the wording of the non-transferability clause to prevent families being forced out of their slips upon the death of the slip priority holder. This motion was passed.

K. Miller moved that slip priorities be ceased at number 143 until April 1, 1979. D. Minor seconded this motion which was passed.

The mooring fees were discussed at length. Don Campbell will attempt to rework his proposal for mooring fees.

d. In a letter to Mr. Kelly, dated January 17, 1979, Duncan M. MacFarlane, the lawyer who was working with the Board, enclosed a draft of the promissory note to be issued by NOLSC to the Slip Priority Purchasers, writing in part:

Of necessity, the slip priority promissory note has to be faily [sic] lengthy and if there are any other terms and conditions which I have not discussed with Lionel, yourself or Dave Flemming and which you want included in the note, I ask that you resolve what they should be at tonight’s meeting and advise me and we shall put it in ‘legalese’.

e. At its meeting held on January 17, 1979, the Board approved its summer dockage fees formula for 1979. The Minutes of that meeting read, in part:

The General Meeting slated for January 19, 1979 will be followed by another meeting (possibly Wednesday, January 31, 1979) for all slip priority holders.

A report concerning summer dockage fees was distributed to the directors by D. Campbell. Don explained the report to the directors present. Don also went over his income-expense projection.

It was moved by D. Grayson, seconded by R. Kelly that D. Campbell’s report be presented at the General Meeting on Friday, January 19, 1979, as discussed at the January 17, 1979 Directors’ Meeting, at which it was adopted that costs for summer mooring will follow the formula L-5 feet X $27.50/ft. for priority holders and L-5 feet X $33.00/ft. for rentals. This motion was passed.

f. Correspondence dated January 25, 1979 was sent by Lionel Garrett, Commodore, addressed to the boaters. It provided a status update, stating, in part:

As you know, there has been little communication from the Niagara-on-the-Lake Sailing Club to the holders of slip priorities since their purchase. Particularly, there has been a delay in providing formal recognition of their purchase and no general description of the status of the purchase of the marina, as well as the plans for operation in 1979. Most of you are aware of the causes of these delays and the directors appreciate your patience.

Last Friday, January 19th, we had a Niagara-on-the-Lake Sailing Club meeting where these matters were discussed and we plan a similar meeting for non-members and any members of the club who missed the first meeting.

Therefore, we would like to invite you to attend a meeting to be held on FRIDAY, FEBRUARY 9TH, 1979 – 7:30 P.M., at the NIAGARA LEGION, KING STREET, NIAGARA-ON-THE-LAKE. The agenda for the meeting will include:

• operational plans for 1979
• a report of the financial status of the purchase
• slip assignment and fee assessment
• the relationship of the marina to club activities. [Emphasis in original.]

g. The Minutes of the Board meeting held January 31, 1979 include the following paragraphs regarding the slip priority promissory note and redemption of the slip priorities:

The draft of the certificate for priority holders prepared by D. MacFarlane was discussed. The first part of the discussion was whether the note should be secured or unsecured. Motion by D. Grayson and seconded by D. Flemming that the Club move in the direction of giving slip priority holders an unsecured note. Motion passed.

Discussion was lengthy on whether to stipulate specific figures concerning appreciation of the slip priority note. It was decided that the certificate should just indicate that it is the intent of the Club to be as fair as possible with redemption of slip priorities. It was decided that redemption values will be set on a yearly basis. The Club will redeem up to 5 priority certificates every six months, and they will be redeemed in order of notice. It was recommended that it be made clear that the slip must be rented and used by the priority holder. Any non-priority renters will be guaranteed the use of that slip for that season. A $100.00 deposit will be required by February 15th, with the balance of the summer mooring fee due at launching or by April 15th, at the latest. If the balance is not paid by April 15th, the deposit is forfeited and your slip may be rented to someone else.

[18] On or about February 15, 1979, a newspaper article about NOLSC titled “Sale of docks frozen, some moorings for rent” was published. It read, in part:

Approximately 100 members belong to the local club which finalized the purchase of the former Gillingham Yacht Basin early this year. The project was financed through the sale of docking facilities with boaters purchasing “priority” docking rights at a cost of $1800. The purchase guarantees mooring rights within the basin and a reduced seasonal charge. …

At present it is expected that 30 to 35 moorings will be available for rent on a yearly basis in 1979. Mr. [Lionel] Garrett noted annual charges will be slightly above last season’s rates “because of the inflationary spiral”. The charge has been set at $27.50 per linear foot for priority boaters and $33 per foot for seasonal rental docks. Rentals will be based on tenure at the basin and will not be based on club membership.

The annual charges identified in the article reflect those adopted at the January 17, 1979 meeting of the Board.

[19] In or around the end of March 1979, NOLSC issued its promissory note, called a Slip Priority Note, to each individual who had purchased a slip priority (“the SPN”). The front of the SPN contains the following language:

Niagara-on-the-Lake Sailing Club hereby acknowledges receipt from ____________________ the sum of _______________ in payment for one Slip Priority Right at the N.O.L.S.C. marina. On or after the 31st day of December, 1981, the Club promises to pay to the above-named the said sum without interest on three months notice in writing to the club and in accordance with the terms and conditions contained on the reverse side.

[20] The reverse side of the SPN sets out the following seven terms and conditions:

1. The Club reserves the right not to redeem more than five slip priorities in any given six month period. Any priority notes awaiting redemption shall thereafter be redeemed in order of receipt by the Club. Redemption terminates the right of the holder of this note to any further slip priority.

2. This note must be presented with the application for redemption.

3. Although the promise to pay by the Club is without interest, in the event of an appreciation in value of the slip priority at the time of actual redemption, the Club presently intends to share in such appreciation in a manner to be determined from time to time by the directors of the Club.

4. This slip priority is personal to the person named, and is not assignable, provided however that in the event of the death or permanent incapacity of the person named, his personal representative may transfer the slip priority to the appropriate heir at law of the person named, but the priority shall not be further assignable.

5. The location of the slip is at the discretion of the Club and is based on availability. The holder of the slip priority must own the boat moored in the slip.

6. The slip for which this priority is given must be rented by the person named for the next sailing season on or before the 15th day of February in any given year. If not so rented by the person named and the fees therefore paid in full by April 15th or as required by the marina rules from time to time, the rights of the person named to use of slip of that sailing season are waived and the Club reserves to itself the right to rent that slip for the season to any other person, provided that such “sublet” arrangement by the Club will in any event not extend beyond that sailing season.

7. The use of the slip for which this priority is given is subject to payment of the fees and the rules and regulations of the marina as established by the Club from time to time.

[21] Mr. Garrett was issued SPN No. 046 on March 30, 1979 in relation to his $1,800.00 payment.

Dockage Fees Charged

[22] A spreadsheet titled “NOLSC Summer Dockage Rates”, as filed by NOLSC [1], shows that starting in the 1979 season and continuing through to 2019 – with the exception of the years 1983-1985 and 2001-2003 for which information was not able to be located – the Slip Priority Purchasers consistently paid summer dockage fees for their boats based on rates that were essentially 20% lower than the summer dockage fees paid by members who had not purchased slip priorities.

[23] Things changed in the Fall of 2019. At the September 9, 2019 meeting of the Board, a motion was carried “to reduce the percentage given to Slip priority holders” and instead give them “3% of their initial investment credited off their docking fees if they have a boat in the water” to be effective the next summer (“the 3% Motion”). Ron Critchley, Commodore, subsequently sent correspondence dated September 27, 2019 to the Slip Priority Purchasers advising them of the change. It read:

Upon review of the Slip Priority Notes “Terms and Conditions”, item #3, the Board has agreed to set a 3% dockage discount on the original investment. Present bank rates are 1.75%.

[24] As of September 27, 2019, there were 59 SPNs outstanding of the 155 originally issued. Of those 59 SPN holders, 21 were active members.

[25] A request to rescind the 3% Motion was considered by the Board at its meeting of January 13, 2020. The Board voted against recission of the 3% Motion. However, the Board proposed to permit SPN holders to partially redeem 15% to 25% of the value of their SPN annually towards summer dockage fees. SPN holders who decided to participate in this option would continue to receive a discount on summer dockage fees equivalent to 3% of the remaining balance of their SPN, until their SPN is fully redeemed.

[26] Based on the 3% Motion, for 2020 and 2021, Mr. Garrett was no longer charged summer dockage fees at a rate 20% lower than non-Slip Priority Purchasers. Instead, he received a credit towards his summer dockage fees in the amount of $54.00, being 3% of the $1,800.00 value of his SPN. Mr. Garrett refused to accept this credit and commenced the within action on August 23, 2021. In his Statement of Claim, he alleges, among other things, that NOLSC has charged him the sum of $880.93 in summer dockage fees in contravention of the terms of the parties’ agreement.

[27] Pleadings are closed and the parties have exchanged their Affidavits of Documents.

Issues

[28] The following issues are to be determined on this motion:

(a) Is this an appropriate case to grant summary judgment?

(b) Is there a basis upon which the court may intervene in NOLSC’s affairs as a not-for-profit organization?

(c) Does an agreement exist between the parties which requires NOLSC to charge higher summer dockage fees to non-Slip Priority Purchasers?

(d) If so, has NOLSC breached that agreement?

(e) If so, should specific performance be ordered?

(f) In the alternative, is NOLSC estopped from changing the 20% rate differential?

Analysis

(a) Is this an appropriate case to grant summary judgment?

Position of NOLSC

[29] NOLSC submits that summary judgment is appropriate in this case and that entitlement to the relief sought in the statement of claim can be fully determined by a review of the documents in the parties’ possession and attached to the affidavits. As the parties have exchanged affidavits of documents, all historical documents pertaining to the litigation would be produced by now. NOLSC is not aware of any individuals who would be able to provide first-hand oral evidence concerning the matters in dispute in the within proceeding which would be more probative or relevant than the documents already produced. The parties will benefit from the court’s final determination on the question of whether the SPN gives rise to a right in perpetuity for non-SPN holders to pay summer dockage fees that are 20% higher than the summer dockage fees charged to SPN holders.

Position of Mr. Garrett

[30] It is Mr. Garrett’s position that summary judgment is not appropriate in this matter because there is contradictory affidavit evidence before the court on the central factual dispute. In such circumstances, credibility cannot be determined by reference to the documentary evidence only and oral evidence or a trial is required to ensure a fair adjudication.

Discussion

[31] In Frame v. Watt, 2016 ONSC 718 (Ont. S.C.J.), at paras. 25-30, Henderson, J. summarized the law on Rule 20 summary judgment motions as follows:

25 Rule 20.04(2)(a) provides that the court shall grant summary judgment if the court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

26 Rule 20.04(2.1) and (2.2) provide the motions judge with additional powers that may be used to determine whether there is a genuine issue that requires a trial.

27 It is trite law that on a Rule 20 motion a judge must take a hard look at the evidence to determine whether or not there is a genuine issue for trial. Further, the onus of establishing that there is no genuine issue for trial is on the moving party. See the case of 1061590 Ontario Ltd. v. Ontario Jockey Club (1995), 21 O.R. (3d) 547 (Ont. C.A.) at para. 35.

28 In the case of Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, the Supreme Court of Canada established a two-step approach to Rule 20 motions. In the first step, the motions judge is to take a hard look at the evidence to determine whether there is a genuine issue requiring a trial. If there is no genuine issue for trial, summary judgment will be granted.

29 In the second step of the process, a motions judge shall consider the evidence submitted by the parties, and may exercise the additional powers of weighing the evidence, evaluating credibility, and drawing reasonable inferences as set out in Rule 20.04(2.1) to determine whether there is a genuine issue, unless it is in the interest of justice for such powers to be exercised only at a trial. See Hryniak at paras. 49-52.

30 The use of the additional powers available on a motion for summary judgment will not be against the interest of justice if they will lead to a fair and just result and will serve the goals of timeliness, affordability, and proportionality in light of the litigation as a whole. See Hryniak at para. 66.

[32] There will be no genuine issue requiring a trial when the judge is able to reach a fair and just determination based on the merits on a summary judgment motion. This is the case when the process: (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to those facts, and (3) is a proportionate, more expeditious, and less expensive means to achieve a just result than going to trial: Hryniak, at para. 49.

[33] On a motion for summary judgment, the court is entitled to assume that the record contains all the evidence that the parties would present if the matter proceeded to trial and that each party has “put their best foot forward” with respect to the existence or non-existence of material issues to be tried. The judge may make inferences of fact based on the undisputed facts before the court, as long as the inferences are strongly supported by the facts: see Canada (Attorney General) v. Lameman, 2008 SCC 14, at para. 11; Galal v. Hale, 2018 ONSC 5502, at para. 14; Georges v. Nahri, 2016 ONSC 2294, at para. 19.

[34] Rule 20.02(2) provides that, in response to affidavit material or other evidence supporting a motion for summary judgment, a responding party must set out, in affidavit material or other evidence, specific facts showing that there is a genuine issue requiring a trial.

[35] Here, the parties’ dispute relates primarily to how the evidence should be interpreted and what the legal conclusions should be. Based on the issues and the evidence before the court, I am satisfied that there is no genuine issue requiring a trial in this case. The evidence presented on the motion is sufficient to have a full appreciation of the issues and to permit the necessary findings of fact and credibility to be made. Accordingly, I find that summary judgment is appropriate in the circumstances of this case.

(b) Is there a basis upon which the court may intervene in NOLSC’s affairs as a not-for-profit organization?

Position of NOLSC

[36] NOLSC submits that Mr. Garrett is essentially seeking a judicial review of NOLSC’s September 9, 2019 decision to modify the “discount” provided to SPN holders via the 3% Motion. It relies on Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral v. Aga, 2021 SCC 22 in this regard. In Ethiopian, the Supreme Court of Canada confirmed that “there is no free-standing right to procedural fairness with respect to decisions taken by voluntary associations”: see paras. 30-31.

[37] NOLSC argues that the impugned decision on the rate differential to be provided to SPN holders was made pursuant to the Board’s authority under General Bylaw No. 1 to manage NOLSC’s affairs which includes setting rates for the services it provides to members, such as summer dockage fees. Under the terms and conditions of the SPN, NOLSC is not required to offer SPN holders a financial benefit and the Board has the exclusive right to determine if and how it wishes to share in any appreciation in value of the SPN.

[38] NOLSC contends that the court does not have jurisdiction to issue declaratory relief requiring it to charge members who are not SPN holders summer dockage fees which are 20% higher. Mr. Garrett has no legal right to such a discount and granting such relief would amount to the court’s intervention in NOLSC’s affairs contrary to the direction provided by the Supreme Court of Canada in Ethiopian.

Position of Mr. Garrett

[39] Mr. Garrett submits that the Supreme Court of Canada in Ethiopian, at para. 29, recognized that courts do have jurisdiction to intervene in the affairs of a voluntary association where a legal right is affected, and that “[t]he legal rights which can ground jurisdiction include private rights – rights in property, contract, tort or unjust enrichment – and statutory causes of action.” Mr. Garrett argues that he is seeking the “vindication of a legal right” since the relief he seeks in the action flows from NOLSC’s breach of the agreement between the parties regarding the slip priorities.

Discussion

[40] I am satisfied that Mr. Garrett is seeking enforcement of a legal right. Unlike the five plaintiffs who were church members expelled from the congregation of the Ethiopian Orthodox Tewahedo Church of Canada St. Mary Cathedral and who brought an action against the church and its senior leaders seeking a declaration that their expulsion was null and void, Mr. Garrett’s claim is not based on his membership in a voluntary association per se. It is based on an offer made by NOLSC that was accepted by Mr. Garrett and for which he gave consideration in the form of a $1,800.00 payment. In my view, the parties’ conduct in this regard was such that a reasonable person would conclude that they intended to enter into legal relations: Ethiopian, at paras. 36-37 and 46. Since Mr. Garrett is suing on a contract, the court has jurisdiction over the proceeding.

(c) Does an agreement exist between the parties which requires NOLSC to charge higher summer dockage fees to non-Slip Priority Purchasers?

Position of NOLSC

[41] It is the position of NOLSC that there is no agreement between the parties which would give rise to the relief sought by Mr. Garrett. While there is mention in one of the letters circulated in late 1978 of a discount on summer dockage fees, such a term was not included in the terms and conditions found on the back of the SPN issued to Mr. Garrett. NOLSC contends that imputing such a term would result in deviating from the words used in the SPN such that a new agreement would be created.

[42] NOLSC submits that the Board has the authority and discretion to decide on any discount or credit to be provided to the Slip Priority Purchasers. In this regard, it relies on the fact that the Board determined the initial 20% rate differential without any input or consent from the Slip Priority Purchasers; that Term #3 of the SPN explicitly contemplates that any appreciation in the value of the SPN may be shared with the SPN holder “in a manner to be determined from time to time by the directors of the Club”; and that Term #7 of the SPN provides that the use of the slip for which the SPN is given “is subject to payment of the fees … as established by the Club from time to time”.

[43] In passing the 3% Motion, the Board was concerned with ensuring that NOLSC’s operating costs were equitably distributed amongst NOLSC’s members. The discount that SPN holders enjoyed from 1979 to 2019 was significant and resulted in an incredible return on the initial investment of $1,800.00. The discount offered to SPN holders was something implemented by SPN holders for SPN holders and remained in place over the years because the Board was controlled by SPN holders who had an interest in preserving the discount.

Position of Mr. Garrett

[44] Mr. Garrett contends that the conditions of contract formation are present in this case. The Offer Letters sent to prospective purchasers provided that slips for which a priority was not purchased would be rented on a yearly basis at a rate of rental higher than that charged to the owners of slip priorities. The Slip Priority Purchasers accepted the NOLSC’s offer in November-December 1978 based on the terms and conditions communicated to them in the Offer Letters. At the time of the offer and acceptance, the information the parties relied on included that there would be a rate differential. The rate differential was an express term offered by NOLSC as an inducement to purchase a slip priority. The 20% value of that rate differential was shortly thereafter determined and applied by the Board, and was clearly understood by the parties to be a term of the contract as evidenced by the course of conduct of the parties for 40 years.

Discussion

[45] The protection of reasonable expectations is the main purpose of the common law of contracts. As discussed by Howard J. in Harris Brothers Ltd. v. Mud Creek Capital Corp., 2023 ONSC 644 (Ont. S.C.J.), at paras. 64-67 (footnotes omitted):

64 In my view, it is instructive to recall at the outset the primary purpose of contract law. To my mind, there are few better statements of the principal function of the law of contracts than that succinctly put by Prof. Stephen M. Waddams, who wrote that: “[t]he principal function of the law of contracts is to protect reasonable expectations.”

65 To the same effect is the opening title appearing on page 1 of the Corbin on Contracts text, which proclaims: “The Main Purpose of Contract Law Is the Realization of Reasonable Expectations Induced by Promises.”

66 The same point has been judicially recognized by the Supreme Court of Canada, most recently in its 2020 decision in Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, where the court held that the correct analytical approach to pre-incorporation contracts must be guided by the common law’s long adherence to the objective theory of contract formation. Citing Prof. Waddams and others, the Supreme Court in Strata Plan, at para. 23 observed that:

Parties’ reasonable expectations are an interest which is generally protected in the common law of contracts: J. D. McCamus, The Law of Contracts (2nd ed. 2012), at pp. 32-33; S. M. Waddams, The Law of Contract (7th ed. 2017), at §§141 and 148.

67 Later in Strata Plan, at para. 31, the court held that:

The subjective approach taken in Northumberland Avenue Hotel Co., Re and Bagot Pneumatic Tyre Co. is anomalous, because parties’ reasonable expectations are generally protected in the common law of contracts: McCamus, at pp. 32-33; Waddams, at §§141 and 148. This general rule means that “a subjective mutual consensus is neither necessary nor sufficient for the creation of an enforceable contract” and that “a person may be bound by contractual obligations that she did not intend (subjectively) to assume”: Waddams, at §§92 and 146. At common law, the risk arising from one party’s reasonable reliance on the existence of an agreement is allocated to the party whose conduct gave rise to a reasonable expectation that a contract between the parties would be legally binding.

[46] The test for finding that a contract exists at common law is objective, and the offer, acceptance, consideration and terms may be inferred from the parties’ conduct and from the surrounding circumstances: see Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29 (S.C.C.), at para. 37.

[47] An enforceable contract can arise as a result of the language or conduct of the parties showing an intention to form a legal relationship. As the court in Access Container Inc. v. The Container Guy Ltd., 2020 SKQB 314 (Sask. Q.B.), at paras. 10-11, explained:

10 The law is clear. For a legally enforceable contract to come into existence there must be agreement on the essential terms of the contract. Except where required by Statute of Frauds, 1677, 29 Cha II, c 3 (UK) (including the common law’s incorporation of the Statute of Frauds, 1677, 29 Cha II, c 3 (UK)) writing is not required for a contract to come into existence. Contracts can be created by oral agreement of the parties and essential terms thereof can be inferred from the conduct of the parties.

11 G.H.L. Fridman, The Law of Contract in Canada, 6th ed., (Toronto: Carswell, 2011), an acknowledged authoritative text on the law of contract, states the following:

a. On the intention to contract at page 27:

A contract can only arise if there is the animus contrahendi between the parties. “The creation of a contract requires an intention on both parties to do so”. The intent to create contractual relations is a fundamental criterion of contract formation. Without the expressed or implicit intention that a contract should emerge as a result of the language or conduct of the alleged parties, no contractual obligations can be said to exist and be capable of enforcement. Hence the offer that is made must be an offer to contract involving the creation of legal relations. As it was put by Sheppard J.A. in Arding v. Buckton (1956), 6 DLR (2d) 586 (BC CA),

a contract may be implied only when the conduct of the parties indicates that they are proceeding on the basis of some legal relation so that the function of the Court is merely to find as a fact that relation with its attendant obligations and rights which the parties have so indicated by implication but have failed to express.

While this is essentially an issue of fact, there are indications that certain parties may be less prone to entering into legal contractual relations than others.

b. On the test for agreement and the concept of consensus ad idem at pages 14 and 15:

An alleged agreement, however reached, orally, in a document purporting to be a contract or in a letter of intent, must be clearly manifested, expressly or by implication. An inward intent will not suffice. “The law judges of the intention of a person”, said Sirois J. of Saskatchewan in Gutheil v. Caledonia No. 99 R.M. (1964), 48 DLR (2d) 628, “by his outward expression only and it judges of an agreement between two persons exclusively from those expressions of their intentions, which are communicated between them”. Hence the requisite agreement may be established by the conduct of the parties subsequent to the alleged contract.

Constantly reiterated in the judgments is the idea that the test of agreement for legal purposes is whether parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. The law is concerned not with the parties’ intentions but with their manifested intentions. It is not what an individual party believed or understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether a reasonable man in the situation of that party would have believed and understood that the other party was consenting to the identical terms. As Fraser C.J.A. said in Ron Ghitter Property Consultants Ltd. v. Beaver Lumber Co. (2003), 17 Alta LR (4th) 243:

the parties will be found to have reached a meeting of the minds, in other words be ad idem, where it is clear to the objective reasonable bystander, in light of all the material facts, that the parties intended to contract and the essential terms of that contract can be determined with a reasonable degree of certainty.

[48] In interpreting contracts, effect must be given to the intention of the parties based on the words they have used. If the words have a plain meaning, they should be given that meaning. The Supreme Court of Canada has directed that a contract is to be read “as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. … The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature of the relationship created by the agreement.” Evidence of surrounding circumstances “should consist only of objective evidence of the background facts at the time of the execution of the contract … that is, knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting”: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (S.C.C.), at paras. 47, 48, 57 and 58.

[49] Courts will find a binding contract if the parties acted as if they thought they had one, and subsequent conduct reinforcing a conclusion that there was a binding contract can be relied upon: see Calvan Consolidated Oil & Gas Co. v. Manning, [1959] S.C.R. 253 (S.C.C.); and Canada Square Corp. et al. v. VS Services Ltd. et al. (1982), 34 O.R. (2d) 250 (Ont. C.A.).

[50] Thus, the two questions to be answered are: (i) did the parties, on an objective standard, intend to contract? and (ii) can the terms of that contract be determined with a reasonable degree of certainty?

[51] With respect to the first of these questions, I am satisfied that NOLSC and Mr. Garrett, on an objective standard, intended to contract with each other. The Offer Letters sent in the Fall of 1978 to prospective purchasers of slip priority rights, including Mr. Garrett, containing the terms and conditions of the NOLSC’s offer in exchange for payment of $1,800.00, and Mr. Garrett’s payment of the $1,800.00, and NOLSC’s purchase of the Basin with a down payment that was realized by pooling Mr. Garrett’s $1,800.00 with the payments of other purchasers of the slip priorities, are clear indicators of this intention.

[52] With respect to the second question, I am satisfied that the terms of the parties’ contract can be determined with a reasonable degree of certainty by reference to the Offer Letters and to the final refinements made to the Offer Letters’ terms and conditions by the Board in early 1979 before the issuance of the SPN. Based on the record before me, I find those contract terms to be follows:

a. Purchasers of a slip priority will have the right, in perpetuity, to rent from NOLSC the agreed upon slip at whatever current rents are set from year to year by NOLSC;

b. Slips for which no slip priority has been purchased will be available for rent on a yearly basis at a rate of rental 20% higher than that charged to the owners of slip priorities and with no assurance of continued availability in the future;

c. Annual rental fees will be based on the size of the boat being moored in the slip;

d. The slip priority fee paid will be refunded when the holder advises NOLSC, on three months’ notice, that the slip is no longer required. This refund will be made without interest. If notice is given before December 31, 1981, the refund may not, in the discretion of NOLSC, be made until after that time;

e. The slip priority is personal to the person named and is not assignable provided, however, that in the event of the death or permanent incapacity of the person named, his/her personal representative may transfer the slip priority to the appropriate heir at law of the person named but the priority shall not be further assignable;

f. The slip for which the priority is purchased must be rented for a given sailing season, otherwise NOLSC reserves to itself the right to rent that slip for the year to another person, terminable on two months’ notice, and to retain all rentals derived from that arrangement. This “subletting” of the slip can only be done by NOLSC, but in no case will the slip be committed beyond that sailing season; and,

g. The use of the slip for which the priority is given is subject to payment of the fees and the rules and regulations of the marina as established by NOLSC from time to time (“the Slip Priority Agreement”).

[53] The Offer Letters expressly offered a rate differential as a term of the agreement; at the time of the offer, however, the ratio was not yet known but was a detail to be finalized. As a result of the urgency in having to raise the down payment funds, it is not surprising that some of the details of NOLSC’s agreement with the Slip Priority Purchasers still had to be worked out after NOLSC had completed the purchase of the Basin in late December 1978. Given the context of NOLSC as a voluntary organization, it was reasonable for those making the $1,800.00 payments to trust that the particulars of the rate differential term would be resolved in short order. And that is what happened as the Board adopted the 20% ratio at its meetings held in January 1979. The fact that bringing the contract to precise specificity occurred after the offer and acceptance of the Offer Letters does not destroy the legal effect of the initial agreement reached between the parties.

[54] In my view, a reasonable person observing the parties would believe and understand that the terms of the Offer Letters and the Board’s refinement of details affecting certain of those terms prior to the issuance of the SPNs in March 1979 were a “package deal” and comprised the terms to which both parties were consenting based on their outward expression. The parties’ conduct supports a finding in this regard, including:

a. Following the January 1979 Board meetings in which NOLSC decided on the 20% rate differential, the NOLSC did charge non-Slip Priority Purchasers a per square foot rate for summer dockage fees that was 20% higher than the rate charged to Slip Priority Purchasers.

b. In early 1979, the NOLSC conveyed information to the public, via newspaper articles, about the slip priority right arrangement including the rate differential of 20%.

c. The 20% rate differential was charged for summer dockage fees for the period spanning 1979 to 2019.

[55] In light of the 40 years that the 20% rate differential was charged in relation to summer dockage fees, I find that it came to be the reasonable expectation of the Slip Priority Purchasers. This reasonable expectation has been acknowledged over the years by NOLSC, for instance:

a. In the March 1988 edition of NOLSC’s newsletter, The Mainsheet, which reads, in part:

Slip Priority Redemptions

The Board of Directors of N.O.L.S.C. has adopted and maintains a policy of redeeming slip priorities to a maximum of 5 per annum, on receipt of written request of a slip priority holder. Under the present circumstances, the Board of Directors feel the club is not in a position to accelerate the redemption of slip priorities without increasing the annual moorage fees.

The benefits to an active member who is also a slip priority holder is that he/she pays 20% less moorage fee than an active member who does not hold a slip priority note. Or put another way, active members who do not hold a slip priority, pay 20% more moorage fees than an active member with a slip priority note. Needless to say, we are asked by many members if they can acquire a slip priority note, however, to date, the policy of the Board of Directors has been to decline the re-issuing of slip priority notes due to the stated reason above.

b. In the February 1990 edition of NOLSC’s newsletter, The Mainsheet, which reads, in part:

SLIP PRIORITY NOTES Some Facts and Figures

11. A member with no SPN pays 20% more for summer dockage than a member with the same boat who has an SPN. Precisely why this is so, was not, by the time of writing, determined. Some, who were on the Board in 1978 and later, suggest this preferential rate came to be offered as an additional incentive to purchase an SPN, since no interest on the investment was being promised. It was suggested that paragraph 3 of the Terms and Conditions might be the basis for the reduced rate but the same past Board members indicate paragraph 3 was intended only to allow for a sharing of the appreciation in value at the time of redemption.

12. A non member with an SPN pays the same for slip rental as a member without an SPN.

13. A non member without an SPN pays 20% more for slip rental than a member without an SPN, or a non member with an SPN.

14. There is no variation in storage rates for members with or without an SPN. Non members pay more.

c. And in the Board’s January 9, 1995 Minutes, the following is indicated:

UNFINISHED BUSINESS

• Lloyd Schoenhals discussed the possibility of setting new discounts given for slip priority holders, noting that those with smaller boats receive a lesser benefit than those with larger boats. Presently slip priority holders receive a 20% discount.

[56] The parties’ behaviour reflects an objective understanding and meeting of the minds that the 20% rate differential for summer dockage fees was a term of the Slip Priority Agreement: see M.S. v. I.S., 2021 ONSC 3715 (Ont. S.C.J.), at paras. 85-88 and 100; and Victoria Order of Nurses for Canada v. Greater Hamilton Wellness Foundation, 2011 ONSC 5684 (Ont. S.C.J.), at paras. 89-90.

[57] I reject NOLSC’s argument that it is the terms and conditions set out on the reverse of the SPN that constitute the terms of the parties’ agreement. The SPN is a promissory note issued by NOLSC to the SPN holders. This is clear on its face. There is nothing in the evidence to establish that it was meant to encapsulate all of the terms and conditions that make up the entirety of the legal relationship between the Slip Priority Purchasers and NOLSC. The SPN is a simple promise to pay the identified sum without interest on three months’ notice in writing to NOLSC and in accordance with the terms and conditions written on the back of the note.

[58] NOLSC also purports to tie the rate charged to SPN holders to Term #3 on the back of the SPN. The evidence satisfies me that Term #3 is not connected to the 20% rate differential term, rather it relates to the potential for recognition of an appreciation in the slip priority’s value as of the date of redemption only. Mr. Garrett has not redeemed his slip priority note so there is no appreciation to be valued at this point in time.

[59] On the whole of the evidence, I find that the parties had a clear understanding that a term of their agreement was that non-Slip Priority Purchasers would be charged a 20% higher rental rate for summer dockage than Slip Priority Purchasers. To accept NOLSC’s interpretation would effectively give no meaning to the words found in the Offer Letters stating that “[s]lips for which no slip priority have been purchased will be available for rent on a yearly basis at a rate of rental higher than that charged to the owners of slip priorities” or to the Board’s conduct in charging a rate differential of 20% for 40 years for the rental of its slips.

[60] I conclude that an agreement exists between the parties which requires NOLSC to charge 20% higher summer dockage fees to non-Slip Priority Purchasers.

(d) If so, has NOLSC breached that agreement?

Position of NOLSC

[61] NOLSC submits that it has not breached its agreement with Mr. Garrett on the basis that, even if Mr. Garrett purchased a slip priority note based on a representation concerning a discount in the 1978 letter, he cannot claim that he purchased a slip priority in order to receive a 20% rate differential on summer dockage fees because such a percentage was not mentioned prior to him submitting his payment of $1,800.00 to NOLSC.

[62] In the alternative, NOLSC submits that, if the court finds that there is an agreement between the parties requiring it to charge higher summer dockage fees to those who are not SPN holders, it is satisfying this obligation by providing the credit equal to 3% of the value of the outstanding balance of the SPN to all SPN holders who are active members with boats moored in the Basin. Therefore, Mr. Garrett has no cause of action and the claim ought to be dismissed.

Position of Mr. Garrett

[63] It is Mr. Garrett’s position that NOLSC has breached the Slip Priority Agreement by unilaterally ending the 20% rate differential and instead providing a 3% credit on the SPN’s value. He argues that NOLSC cannot unilaterally alter the terms of the Slip Priority Agreement without fresh consideration. While fresh consideration is not necessary when parties to a contract both agree to vary its terms, here the SPN holders did not agree. Therefore, NOLSC is precluded from varying the terms of the Slip Priority Agreement: see Rosas v. Toca, 2018 BCCA 191 (B.C.C.A.), at para. 4.

[64] Mr. Garrett submits that, since the value to him of the 20% rate differential ($880.93 in summer dockage fees for 2020 and 2021) is greater than the 3% credit that NOLSC is currently providing to him ($54.00), the Slip Priority Agreement has been breached and he has suffered damage.

Discussion

[65] In my view, NOLSC did not have authority to unilaterally alter the terms of the Slip Priority Agreement. If this court implied a term of unilateral amendment in favour of NOLSC, it would effectively be amending the contract. While NOLSC can determine its fees, I find that the 20% rate differential is a different thing than the summer dockage fee to be charged per square foot, as established by NOLSC on an annual basis. The rate differential is not a fee but rather is a formula that applies to calculate the amounts owing by the Slip Priority Purchasers for summer dockage. The 3% credit offered by NOLSC in lieu of the 20% rate differential is not commensurate in either value or benefit and so cannot be found to be an acceptable replacement.

[66] NOLSC gained an advantage by receiving payments from the Slip Priority Purchasers thereby enabling it to raise the needed down payment to purchase the Basin. The $1,800.00 payment from Mr. Garrett was in exchange for the slip priority right and the terms and conditions that attached to it. It would be unfair for NOLSC to gain the advantage of purchasing the Basin and owning it long-term only to then move to terminate one of the essential terms promised to the Slip Priority Purchasers. NOLSC is trying to back out of the deal it made but keep the benefit of owning the Basin which was only made possible by the Slip Priority Purchasers’ payments.

[67] I conclude that NOLSC breached the parties’ agreement by passing and implementing the 3% Motion.

(e) If so, should specific performance be ordered?

[68] In addition to seeking damages in the amount of the summer dockage fees charged to him in contravention of the Slip Priority Agreement, Mr. Garrett also seeks specific performance of the 20% rate differential term.

[69] Section 99 of the Courts of Justice Act, R.S.O. 1990, c. C.43 provides that a court with jurisdiction to grant an injunction or order specific performance can award damages in addition to, or in substitution for, the injunction or specific performance.

[70] The court in I.M.P. Group Ltd. v. Dobbin, [2008] O.J. No. 3572, 2008 CarswellOnt 5381 (Ont. S.C.J.) explained the purpose of a remedy in the contractual context as follows, at para. 136:

The goal of remedies for breach of contract is, so far as possible, to put the plaintiff in the position it would have been in had the contract been performed. This can be achieved by awarding the injured party compensatory damages, or by ordering the defaulting party to perform its obligation. Specific performance is a discretionary remedy, so whether it will be awarded or not very much depends on the facts and circumstances of each case.

[71] The availability of specific performance was discussed in Sharpe, R.J., Injunctions and Specific Performance (2nd ed.) at ¶ 9:1:

In many cases, injunctive relief will be appropriate as the specific remedy for breach of contract. Where a party has by contract undertaken not to do something, specific performance of that obligation is achieved by enjoining its breach. Where specific performance is sought of a positive obligation, the plaintiff must establish that the ordinary remedy of damages would be inadequate. In the case of negative obligations, however, the courts have more readily granted injunctive relief. Reference is almost invariably made to the dictum of Lord Cairns L.C. in Doherty v. Allman (1878), 3 App. Cas. 709 (H.L.):

If parties, for valuable consideration, with their eyes open, contract that a particular thing shall not be done, all that a Court of Equity has to do is to say, by way of injunction, that which the parties have already said by way of covenant, that the thing shall not be done; and in such case the injunction does nothing more than give the sanction of the process of the Court to that which already is the contract between the parties. It is not then a question of the balance of convenience or inconvenience, or of the amount of damage or injury — it is the specific performance, by the Court, of that negative bargain which the parties have made, with their eyes open, between themselves.

[72] I am satisfied that, in this case, damages for NOLSC’s breach of contract would not be a complete or adequate remedy since damages cannot be quantified with any certainty at this point in time. The slip priority right is “in perpetuity” and it can be transferred to an heir once. I understand this to mean then that it could potentially continue for the lifetime of Mr. Garrett and the lifetime of his heir unless the SPN is redeemed, and there is no way of calculating how long that duration will end up being.

[73] Accordingly, specific performance of the Slip Priority Agreement, which includes the 20% rate differential, should also be granted in the circumstances.

(f) In the alternative, is NOLSC estopped from changing the 20% rate differential?

[74] In view of the above conclusion that the 20% rate differential is an enforceable term of the contract between the parties, it is not necessary to address this alternative argument.

Conclusion

[75] While the power to grant summary judgment is typically exercised in favour of the party bringing the motion, it is open to the court under rules 20.04(2) and (4) to grant summary judgment in favour of the responding party, even if that party did not bring a motion requesting such relief: see Manulife Bank of Canada v. Conlin, [1996] 3 S.C.R. 415, 1996 CarswellOnt 3941 (S.C.C.), at paras. 1 and 71.

[76] Based on all of the foregoing, given the evidence, the factual matrix and the law, summary judgment is granted in favour of Mr. Garrett against NOLSC.

Disposition

[77] In the circumstances, I order as follows:

a. a declaration is made that NOLSC breached its contract with Mr. Garrett by unilaterally altering the terms of the Slip Priority Agreement and eliminating the summer dockage fee 20% rate differential;

b. a declaration is made that the terms of the Slip Priority Agreement entitle Mr. Garrett to a summer dockage fee rate differential which is calculated by charging members who are non-Slip Priority Purchasers 20% more than the Slip Priority Purchasers;

c. a declaration is made that the slip priority rights granted to Mr. Garrett by the Slip Priority Agreement are granted “in perpetuity” and can be transferred to his heir once;

d. a declaration is made that the Board cannot unilaterally alter the terms of the Slip Priority Agreement;

e. damages shall be paid to Mr. Garrett by NOLSC in the amount of $880.93 plus the amount of any summer dockage fees charged to Mr. Garrett in contravention of the Slip Priority Agreement for 2022 and 2023, plus prejudgment and postjudgment interest on that total amount in accordance with the Courts of Justice Act; and,

f. Mr. Garrett shall have specific performance of the Slip Priority Agreement, including the 20% rate differential term.

Costs

[78] Mr. Garrett has been successful and is presumptively entitled to his costs of this motion. If the parties are unable to resolve the issue of costs, written submissions may be delivered as follows:

a. By June 2nd, 2023, Mr. Garrett shall serve and file his written costs submissions, not to exceed three pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers; and

b. NOLSC shall serve and file its responding costs submissions of no more than three pages, double-spaced, together with a draft bill of costs and copies of any pertinent offers, by June 16th, 2023; and

c. Mr. Garrett’s reply submissions, if any, are to be served and filed by June 23rd, 2023 and are not to exceed two pages.

d. If no submissions are received by June 23rd, 2023, the parties will be deemed to have resolved the issue of the costs and costs will not be determined by me.

MacNEIL J.

Released: May 12, 2023

[1] See Exhibit “A” to the Supplementary Affidavit of Charlotte Urquhart, sworn August 18, 2022, found in the Defendant’s Third Supplementary Motion Record.