Court File and Parties
COURT FILE NO.: 19- 81809 DATE: 2023/10/13 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
CITY OF OTTAWA Applicant – and – CLUBLINK CORPORATION ULC Respondent – and – KANATA GREENSPACE PROTECTION COALITION Intervener
Counsel: Kirsten T. Crain, Emma Blanchard, and Laura E. Robinson, for the Applicant Matthew P. Gottlieb, Crawford G. Smith, John Carlo Mastrangelo, and Mark R. Flowers, for the Respondent Alyssa Tomkins, and Charles R. Daoust, for the Intervener
HEARD: September 13, 14, and 21, 2022
REASONS FOR DECISION – INOPERATIVE PROVISIONS
LABROSSE J.
Background
[1] In 1981, Campeau Corporation (“Campeau”) and the City of Kanata (“Kanata”) entered into an agreement for the development of the Marchwood Lakeside Community (the “1981 Agreement”). That agreement called for the development to maintain forty percent (40%) of the development area as recreation and open space. Within that open space area, a golf course was a permitted use. The 1981 Agreement provided that a golf course would be operated in perpetuity, subject to other provisions of the Agreement. That golf course became the Kanata Lakes Golf and Country Club and would be situated on what was known as the golf course lands.
[2] As the development moved forward, Campeau and Kanata entered into three other agreements:
a) The 1985 Golf Club Agreement;
b) The 1988 40% Agreement;
c) The 1988 Golf Club Agreement.
[3] Ownership of the golf course lands changed over the decades. Genstar Development Company Eastern Ltd. (“Genstar”) purchased the golf course lands from Campeau in 1989. Genstar then amalgamated with and became Imasco Enterprises Inc. (“Imasco”). Finally, in 1996, Imasco sold its interests in the golf course lands to Clublink Capital Corporation, which later became Clublink Corporation ULC. That same year, Imasco, Clublink, and Kanata entered into the Clublink Assumption Agreement (the “Assumption Agreement”).
[4] In December 2018, ClubLink announced that it was pursuing options for alternative use of the golf course lands.
[5] In 2019, the City of Ottawa commenced this Application seeking the following relief:
a) a declaration that ClubLink’s obligations in s. 3 of the Assumption Agreement and the underlying 40% Agreement remain valid and enforceable;
b) an order that ClubLink withdraw its planning applications, or convey the golf course lands to the City of Ottawa at no cost; and
c) a declaration that if the City accepts a conveyance of those lands, it is not obliged to operate them as a golf course pursuant to ss. 7 and 9 of the 1981 Agreement and ss. 10 and 11 of the Assumption Agreement.
[6] ClubLink opposed the City’s relief because, among other things, the 1981 Agreement created contingent conveyance obligations respecting the subject lands that (a) violated the rule against perpetuities, and (b) could not be severed from the balance of Campeau’s agreements with Kanata.
[7] This court held that the rule against perpetuities did not apply, and concluded that the 1981 Agreement continues to be a valid and binding contract (the “Application Decision”). [^1]
[8] In November 2019, the Court of Appeal for Ontario allowed ClubLink’s appeal and held that ss. 5(4) and 9 create contingent property interests that are void for perpetuities. But the Court of Appeal declined to consider Clublink’s request to declare all or part of the 1981 Agreement void as the invalid provisions could not be otherwise severed. Instead, it ordered that, absent agreement between the parties, this court would determine whether any other provisions of the 1981 Agreement, the 1985 Golf Club Agreement, the 1988 40% Agreement, the 1988 Golf Club Agreement, and the Assumption Agreement (the “Related Contracts”) are affected by the invalidity and unenforceability of ss. 5(4) and 9 of the 1981 Agreement (the “Appeal Decision”). [^2]
[9] The parties did not agree on the impact of the Court of Appeal’s decision on the provisions of these other agreements and have returned before this court to argue what is, if any, the impact of the Appeal Decision on the Related Contracts.
Jurisdiction and Context
[10] When this court published the Application Decision and the resulting costs decision, it had spent its jurisdiction resulting from the Notice of Application. Accordingly, the only jurisdiction currently attributed to this court would be that which was provided to it in the Appeal Decision and potentially, but to a lesser extent, from the resulting order of the Court of Appeal taken out by the parties. I say to a lesser extent given that the order of the Court of Appeal is a document drafted by the parties, usually submitted on consent, and then signed by the registrar of the Court of Appeal. It is not a further adjudication by the panel hearing the appeal and as such the jurisdiction of this court must come principally from the Appeal Decision.
[11] The Order of the Court of Appeal states in part:
THIS COURT FURTHER ORDERS that sections 5(4) and 9 of the agreement between Campeau Corporation and the City of Kanata, dated May 26, 1981, are void and unenforceable.
THIS COURT FURTHER ORDERS that, if the parties cannot agree, the Application Judge should determine the issue of whether any other provision(s) of the agreements between Campeau Corporation and the City of Kanata—dated May 26,1981; June 10, 1985; December 20, 1988; and December 29, 1988—or the agreement between Imasco Enterprises Inc., Clublink Capital Corporation and the Corporation of the City of Kanata dated November 1,1996, is affected by Paragraph 2 of this Order.
[12] To understand exactly what the Court of Appeal decided in the Appeal Decision and what it allowed to return to the application judge, the court reproduces the following relevant paragraphs from the Appeal Decision:
[53] Here, to ascertain the parties’ intentions, it is necessary to read all the Agreements. The City submits that the December 20, 1988 Agreement was concluded at a different time and for a different purpose. However, the subsequent agreements were expressly contemplated in the 1981 Agreement and the four agreements, read together, give effect to the parties’ intentions. Moreover, ClubLink assumed the rights and obligations of its predecessors not simply under the 1981 Agreement but under all the Agreements.
[56] The Agreements formed a development contract that allowed Campeau to develop its own land but subject to certain limits to further the City’s public policies, most notably, the 40% principle.
[66] ClubLink renews here the argument that if the rule against perpetuities applies, then ss. 5(4) and 9 cannot be severed from the 1981 Agreement and all or part of the 1981 Agreement fails. As noted in para. 146 of his reasons, the application judge did not consider this issue given his conclusion that the 1981 Agreement continues to be valid and enforceable.
[67] ClubLink argues that ss. 5(4) and 9 are integral to the 1981 Agreement and that severing ss. 5(4) and 9 from the balance of the contract fundamentally changes the 1981 Agreement with the result that ClubLink would be saddled with a perpetual obligation to run a golf course (or find a buyer willing to do the same) with no escape mechanism. According to ClubLink, there is no evidence the parties would have agreed to this bargain. ClubLink submits that severance is therefore inappropriate and, as a result, the appropriate remedy is to void the 1981 Agreement in whole, or, alternatively, all the provisions related to the golf course lands.
[69] First, ClubLink did not identify which provisions of the 1981 Agreement are so interrelated to ss. 5(4) and 9 and the void contingent interests in land that they must necessarily be inoperative. Further, there is no basis to void myriad other provisions in the 1981 Agreement that are unrelated to the golf course and that have already been performed.
[70] Moreover, the focus of the submissions before this court was on the validity and enforceability of ss. 5(4) and 9 of the 1981 Agreement. We do not have the benefit of the application judge’s findings on the larger question raised by ClubLink. And, in my opinion, the determination that ss. 5(4) and 9 of the 1981 Agreement are void and unenforceable may affect provisions of not simply the 1981 Agreement but also the 1985 and 1988 Agreements, as well as the Assumption Agreement. In my view, if the parties cannot agree, this larger question should be remitted to the application judge for determination.
[13] In addition to the findings of the Court of Appeal in respect of the rule against perpetuities, the Court of Appeal made reference to the Related Contracts and the related contracts principle. Where it is intended that each agreement form part of a larger composite whole, assistance in the interpretation of any particular agreement may be drawn from the related agreements. [^3] Accordingly, they must read in light of each other to achieve interpretive accuracy and give effect to the parties’ intentions.
[14] Furthermore, both parties relied on a number of findings of this court in the Application Decision which characterize the nature of the development scheme related to the 40% principle:
[5] The early agreements were between the former landowner, Campeau Corporation (“Campeau”), and the former local municipality, Kanata. The initial intent was to allow for the development of Campeau’s lands, while ensuring that 40% of the area remained as open space. Within that open space would be a golf course, to be operated in perpetuity, subject to certain alternative scenarios.
[77] I turn first to s. 5(4) of the 1981 Agreement which requires Campeau to convey the Golf Course Lands to Kanata if it desires to discontinue the operation of the golf course. When interpreting s. 5(4), the context must be considered. This provision is clearly an alternative option should the principal objective of operating a golf course in perpetuity be discontinued by Campeau. It is a mechanism which prevents the lands from falling into a vacuum of uncertainty, should Campeau discontinue the operation of the golf course. Thus, even when the section is considered in isolation, the true intention is to allow the City to take over the Golf Course Lands and maintain the 40% open space requirement.
[78] The same can be said for s. 9 of the 1981 Agreement which requires Kanata to reconvey lands to Campeau should Kanata no longer wish to use a portion of the land set aside for open space for recreation and natural environment purposes. The intent here is to identify the limited circumstance where Kanata must reconvey part of the lands back to Campeau. Otherwise, Kanata retains ownership of the land conveyed under s. 5(4). This provision provides a mechanism for the use of the land to evolve beyond the open space purpose. However, the intention behind s. 9 is clearly for this provision only to apply (a) if Campeau discontinues the Golf Course and conveys the Golf Course Lands to Kanata and (b) if Kanata were no longer to maintain a part of the open space lands as open space for recreation and natural environment.
Position of the Parties
[15] The most interesting part of the argument advanced by Clublink and the City is that neither requests severance and both allege that the other is effectively requesting severance. The City alleges that ClubLink is effectively requesting that this court applies the “blue pencil” approach to severance beyond ss. 5(4) and 9 of the 1981 Agreement to strike out any other section that relates to the golf course. [^4]
[16] ClubLink advances that in seeking for the Related Contracts to be maintained, the City is effectively requesting to sever ss. 5(4) and 9 of the 1981 Agreement and maintain the rest.
[17] ClubLink argues that each of the Related Contracts must be declared invalid as a result of the Appeal Decision, namely that ss. 5(4) and 9 of the 1981 Agreement are void and unenforceable. ClubLink argues against the applicability of the doctrine of severance as those sections cannot be excised from the agreements governing the golf course without fundamentally altering the bargain reached between the parties in the 1980s. The result is that the Related Contracts are not enforceable to the extent that they apply to the golf course lands.
[18] Alternatively, ClubLink provides its interpretation of the direction of the Court of Appeal and that all provisions in the Related Contracts that deal with the golf course must also be declared void because they are part of one package which dealt with the ownership rights of the golf course and are integrally related to each other. The Related Contracts are so interconnected with and tainted by the unenforceability of ss. 5(4) and 9 of the 1981 Agreement that any provision related to the golf course must be declared inoperative.
[19] The City argues that as a result of the Court of Appeal’s determination that ss. 5(4) and 9 are void and unenforceable, there is no further step required by this court. It was a narrow finding that does not affect the remaining provisions of the Related Contracts. This is because that finding simply means that those provisions in the 1981 Agreement are no longer enforceable and they are not actionable. Otherwise, the bargain as reached between the parties is maintained and there is no need to address enforceability.
[20] The City argues that severance is only applicable in the case of illegality and that it is only meant to cure a bargain that is found to be illegal. Although the Court of Appeal opened the door in the Appeal Decision for the matter to be sent back to this court, the City argues that the Court of Appeal did not authorize any type of procedure which would be equivalent to the blue pencil test known under the law of severance. There is no mechanism for this court to start declaring various provisions of the Related Contracts as being unenforceable beyond the specific sections dealt with by the Court of Appeal.
[21] In addition, the City argues that the remaining provisions of the Related Contracts maintain the agreement between the parties and any steps taken by this court in line with the ClubLink proposal would amount to rewriting the contract, something that courts have frowned upon for many years.
[22] Ultimately, the City advances that if ClubLink seeks to change anything related to the operation of the golf course, it must either utilize the remaining provisions of the Related Contracts or seek to negotiate new terms with the City.
[23] As for the Coalition, it argues that what ClubLink is really seeking is either severance or rectification and that ClubLink should have brought its own application seeking either of these remedies. The Coalition’s factum argues in favour of severance in this case to the extent that severing ss. 5(4) and 9 of the 1981 Agreement keeps the bargain at the root of the agreements intact, as the operation of a golf course is but one of several means by which ClubLink or its successors can honour their commitment to preserving open space.
[24] In argument, the Coalition went even further and indicated that it did not object to severing all the provisions that related to the golf course provided that the overarching obligation to maintain the 40% principle remained intact. To do otherwise would result in ClubLink being unjustly enriched at the detriment of the Coalition's members if the golf course lands can be redeveloped without maintaining 40% of the total lands as open space.
[25] The Coalition also advanced the notion of estoppel by convention and argued that ClubLink is estopped from contesting the validity and enforceability of the Related Contracts establishing the 40% principle.
Jurisdiction
[26] I highlight the main points relating to my jurisdiction that guide my decision-making process:
a) The Court of Appeal found that the Related Contracts are related contracts which must be read in light of each other to achieve interpretive accuracy and give effect to the party's intentions.
b) The 40% principle was an important contractual feature that allowed Campeau to advance the development of property and further the Kanata’s public policies.
c) When the agreements are read and interpreted as a whole and in the context of the factual matrix, the provisions of ss. 5(4) and 9 were intended to restrict or fetter the use that could be made of 40% of the property to further the City's open space development policy.
d) The Court of Appeal concluded that there was no basis to void myriad other provisions that are unrelated to the golf course and that have already been performed.
e) The determination that ss. 5(4) and 9 of the 1981 Agreement are void and unenforceable may affect provisions of not simply the 1981 Agreement. This is the larger question that must be remitted to the application judge for determination.
[27] What this court interprets from the Court of Appeal’s comments is that, clearly, the Court of Appeal did not agree with ClubLink’s initial position that the Related Contracts must all be voided as the default position under the law of severance. Also, there is no need to disturb obligations that have already been performed, including the 40% principle which was incorporated in many other development agreements.
[28] One thing is clear from the direction of the Court of Appeal: provisions in the Related Contracts that apply to the conveyances contemplated by ss. 5(4) and 9 of the 1981 Agreement would clearly also be void and unenforceable as they simply restate the contingent interests that have been voided in the Appeal Decision. However, the do-nothing approach advanced by the City is certainly not in line with the direction of the Court of Appeal.
Severability
[29] The argument before this court dealt primarily with the applicability of the law of severance. As previously stated, both ClubLink and the City alleged that the opposing party was improperly relying on severance and encouraged the court not to change the terms of the bargain or to rewrite the Related Contracts for the parties. The Coalition claims that the void provisions, along with the other provisions relating to the golf course, can be severed as long as the requirement for 40% open space remains.
[30] The law of severance has no place in this decision. While there may be an open debate as to whether severance applies solely to illegal contracts as argued by the City or if severance also applies to provisions which have been declared void and unenforceable by statute, this is not a debate that the Court of Appeal directed this court resolve. The jurisdiction of this court must be focussed on paras. 69 and 70 of the Appeal Decision, which direct this court to identify which provisions of the Related Contracts are so interrelated to ss. 5(4) and 9 and the void contingent interests in land that they must necessarily be inoperative.
Estoppel by Convention
[31] As part of its submission following the referral of this matter back to the application judge, the Coalition has raised the issue of estoppel by convention and seeks for this court to apply the law as established by the Supreme Court of Canada in Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53. ClubLink objects to raising this argument at this point of the proceedings, and also states that the estoppel argument fails.
[32] Furthermore, the Coalition has raised the argument that ClubLink was effectively seeking rectification and that I should consider that issue.
[33] I have no jurisdiction for entertaining new arguments from the parties that go beyond the limited jurisdiction afforded to me by the Court of Appeal. The jurisdiction of this court is limited to determining which provisions of the Related Contracts are so interrelated to ss. 5(4) and 9 of the 1981 Agreement that they must necessarily be inoperative.
[34] To suggest at this point that ClubLink is estopped from making the arguments that the Court of Appeal stated should be made to the application judge flies in the face of that direction.
[35] Furthermore, although ClubLink has made the primary argument that each of the remaining Related Contracts should be declared inoperative, that was not the preliminary view of the Court of Appeal and it is not the view of this court. The proper process is to consider the relevant provisions of the Related Contracts that ClubLink claims are interrelated to ss. 5(4) and 9.
[36] Finally, the Coalition has not demonstrated that it has met the three-part test from Ryan v. Moore, being (1) mutual assumption, (2) detrimental reliance, and (3) that it is unjust to allow one of the parties to resile from the mutual assumption. Firstly, there was never a mutual assumption that the 40% would be maintained forever. To the contrary, the Related Contracts included provisions to allow for the golf course lands to be redeveloped and deemed to still be part of the 40% open space requirement. Next, there can be no detrimental reliance when the Related Contracts always allowed for a path to discontinue the golf course operation and more than one path to redevelop the lands. Simply put, estoppel by convention is not made out in these circumstances.
Referral by Court of Appeal
[37] In interpreting the direction of the Court of Appeal relating to other provisions of the Related Contracts that may be affected by the determination that ss. 5(4) and 9 of the 1981 Agreement are void and unenforceable, I am of the view that this court must consider the original intent of the parties and the manner in which the Related Contracts were meant to evolve. The court must also seek to maintain, to the extent possible, the bargain of the parties and the impact on other agreements, while taking into consideration that the path to redevelopment of the lands has changed significantly.
[38] ClubLink has included as part of its factum copies of the Related Contracts that have been red-lined to identify which provisions of those contracts are so interrelated to ss. 5(4) and 9 of the 1981 Agreement that they must be declared inoperative. Essentially, ClubLink has indicated all provisions that deal with the golf course or the golf course lands.
[39] I am of the view that I must deal with each of those paragraphs individually. ClubLink’s proposed red-line changes to the Related Contracts are attached as Schedule “A” to this decision (body of the related contracts only). There are 15 provisions in question, listed as follows:
a) Sections 3, 3(a), 4, 5, 9, and 10 (in part) of the 1981 Agreement;
b) Section 3 of the 1985 Golf Club Agreement;
c) Sections 2, 5, and 6(d) of the 1988 40% Agreement;
d) Section 4 of the 1988 Golf Club Agreement; and
e) Sections 5, 7, 10, and 11 of the Assumption Agreement.
[40] The analysis returns to the words of the Court of Appeal whereby this court must consider which provisions of the Related Contracts are so interrelated to ss. 5(4) and 9 and the void contingent interests in land that they must necessarily be inoperative. This does not in my view mean any provision that is related to the golf course. There must be an interrelated link to the void contingent interest.
[41] Next, this court must remind itself of the nature of the void contingent interest.
[42] In s. 5(4), Campeau had the right to decide to discontinue the operation of a golf course after seeking another person to acquire or operate it, and it would then be obligated to convey the golf course lands to the City at no cost. The City would then be obligated to operate the land as a golf course.
[43] In s. 9, after the provisions of s. 5(4) were fulfilled, if the City, as owner, proposed to cease to use land for recreation and natural environmental purposes, the City was required to reconvey those lands to Campeau at no cost.
The Interrelated Link
[44] As determined in the Application Decision, I am of the view that the sections of the 1981 Agreement were negotiated and arrived at to allow for the City to give effect to its policies (notably the 40% principle) and to allow for a process of evolution for the lands in question. That evolution involved the operation of the golf course by Campeau, by the City, or by a third-party operator. Furthermore, it allowed for Campeau to sell the lands to a third-party operator, transfer the lands to the City, or redevelop the lands. It was never the intent of the parties that a golf course would be operated on the golf course lands in perpetuity without Campeau having specific rights to effect change.
[45] I disagree with the City in its argument that change can still now be affected with the right of first refusal in s. 5(3) of the 1981 Agreement, by ClubLink giving the land to the City, or by attempting to renegotiate with the City for a possible redevelopment. These are not options that, in my view, maintain the intent and purpose of the Related Contracts.
[46] It was neither the intent nor the effect of the Related Contracts to create a permanent and unconditional obligation on Campeau or its successors to operate a golf course in perpetuity. While that language is used in s. 5(1) of the 1981 Agreement, it was certainly not the intent when the remaining provisions of s. 5 and then s. 9 of that Agreement are put into play.
[47] As identified in the Application Decision, the 1981 Agreement represented a series of integrally related provisions that provided for not only the establishment of the 40% open space principle, but also the establishment of a golf course use over an important portion of that 40% open space area. The 1981 Agreement was meant to allow the area of the golf course lands to evolve over time beyond its intended original ownership and use as a golf course. It was also to ensure that if the golf course lands were ever redeveloped, Campeau or its successors would have the first opportunity to do so.
[48] Both ss. 5(4) and 9 of the 1981 Agreement are the essential provisions for the evolution and potential redevelopment of the golf course lands. The impact of determining that those sections are void and unenforceable fundamentally changes the bargain that the parties had negotiated. As a result, there is a profound effect on various provisions of the Related Contracts which form part of the anticipated evolution of the golf course lands. Failing to recognize this effect would require that the golf course lands remain a golf course in perpetuity and without the essential path to development which could be triggered by ClubLink’s decision to discontinue the golf course use.
[49] Given that ss. 5(4) and 9 of the 1981 Agreement created contingent interests in land that had not vested during the perpetuity period, the finding that they are void closes the door on the intended path for the evolution of the land which was negotiated by the parties.
[50] It is under that understanding that I consider the specific provisions raised from the Related Contracts.
Specific Provisions in Question
1981 Agreement
Section 5
[51] Starting with s. 5 of the 1981 Agreement, this provision is essentially tied to the evolution of the lands as identified by the parties. Sections 5(4) and 9 are the provisions that give effect to the redevelopment path by firstly allowing for discontinuance of the golf course operation, the possible transfer of the lands to the City for the continued operation of the golf course, the possible redevelopment of the lands under s. 5(5), or the return of the lands to Campeau when no longer used for recreation and natural environment.
[52] The obligation to maintain the golf course use in perpetuity in s. 5(1) was never a stand-alone obligation that could have been binding on Campeau and its successors indefinitely. The provisions identified by the City during the original application as integral “off-ramps” to the perpetual operation of the golf course are integrally linked together and operate as a whole. One cannot extricate ss. 5(4) and 9 of the 1981 Agreement while maintaining the structure of provisions that allowed for the perpetual operation of a golf course in the context of the ongoing evolution of the golf course lands.
[53] The 1981 Agreement was not an agreement to operate a golf course in perpetuity and this is contrasted by other agreements which have been acknowledged by the courts as creating perpetual obligations. [^6] The 1981 Agreement clearly identified that the golf course lands would be operated by Campeau as a golf course in perpetuity, but this was subject to various other provisions of the 1981 Agreement which allowed for a discontinuance of that use. Importantly, the Related Contracts provided for redevelopment and the 40% principle being deemed to be maintained.
[54] With s. 5(4) of the 1981 Agreement now being void an unenforceable, there is no provision in any of the Related Contracts allowing ClubLink to discontinue the operation of the golf course. The right to discontinue was an essential mechanism which allowed Campeau to commence the process of evolution and possible redevelopment of the golf course lands. Without it, the only way Campeau gets out of the operation of a golf course is if it sells to a third party who would also be saddled with the same obligations to operate in perpetuity.
[55] This was not a narrow path to redevelopment as described during argument. This was an essential path allowing for evolution of the golf course lands that ensured that if, at the end of the line, the lands were eventually redeveloped, Campeau or its successors would have the first opportunity to do so. If s. 5(1) remains operative, the result transforms the 1981 Agreement into a perpetual agreement to operate a golf course which cannot be discontinued. This is a fundamental change to the 1981 Agreement which is directly linked to s. 5(4) having been declared void. Section 5(1) and the obligation to operate a golf course in perpetuity is therefore inoperative.
[56] Section 5(2) allows for Campeau to sell the golf course provided that a new owner agrees to operate a golf course in perpetuity. This section is intimately linked to the obligation to operate a golf course in perpetuity without a right to discontinue. Section 5(2) is necessarily inoperative for the same reasons as s. 5(1).
[57] Section 5(3) is the right of first refusal. This section allowed Campeau to receive an offer to purchase and allow Kanata to purchase on the same terms and conditions. However, this section is still linked to s. 5(2), which only allows Campeau to sell upon an undertaking by the purchaser to operate a golf course in perpetuity. This would also have applied under s. 5(3) as Kanata could only exercise the right of first refusal on the same terms and conditions. Kanata would have been saddled with the same perpetual obligation that was required in any sale agreement. Section 5(3) must also be declared inoperative as it is tainted with the same obligation to operate in perpetuity.
[58] To complete s. 5 of the 1981 Agreement, the ability to discontinue the operation of the golf course allowed Campeau to redevelop the lands in accordance with the Planning Act, R.S.O. 1990, c. P.13 under s. 5(5) in the event that the City did not accept the conveyance under s. 5(4). Interestingly, this section includes the words notwithstanding anything to the contrary contained in this agreement [emphasis added]. Those words necessarily exclude the 40% principle and confirm that it was the intention that if the golf course lands were redeveloped under s. 5(5), those lands would not be subject to the 40% open space requirement. This notion was further confirmed in s. 11 of the Assumption Agreement. The only restriction was that a redevelopment of the golf course lands had to be done in accordance with the Planning Act. Section 5(5) is an integral part of the path to redevelopment and is inoperative as a result of the declaration that s. 5(4) is void.
Section 4
[59] Section 4 of the 1981 Agreement is simply a provision that requires the parties to agree on the location of the golf course lands. This obligation has been fulfilled and formed part of the establishment of a golf course as it existed back then and as was further particularized in the 1988 Golf Club Agreement. This provision is not impacted by the determination that ss. 5(4) and 9 are void for perpetuities. It is not an ongoing obligation that conflicts with s. 5 of the 1981 Agreement.
Sections 3 and 10
[60] I turn now to ss. 3 and 10 of the 1981 Agreement, which confirm the principle that approximately 40% of the total development area shall be left as open space for recreation and natural environmental purposes. These are two of the myriad of other provisions referred to at para. 69 of the Appeal Decision that have already been performed and the obligations of which continue to form part of numerous other valid agreements. Also, the 40% principle and the 1988 40% Agreement are registered on title of every residential lot in Kanata Lakes. Their application goes well beyond the golf course lands and they have been incorporated in numerous development agreements. There is no basis to declare every provision that relates to the golf course lands inoperative nor every provision that relates to the 40% principle.
[61] However, as highlighted under s. 5(5), and as shall later be seen in s. 11 of the Assumption Agreement, the 40% principle was not meant to apply to a redevelopment of the golf course lands that complies with the Planning Act. Accordingly, the text struck out in ClubLink’s proposed red-line changes to ss. 3 and 10 of the 1981 Agreement (attached as Schedule “A”) is inoperative, but only to the extent that the text would apply to a redevelopment by Campeau or its successors. Otherwise, those provisions remain in effect to the extent that they impact other lands beyond the golf course lands.
1985 Golf Club Agreement
Section 3
[62] The 1985 Golf Club Agreement identifies the location, size, and standards for Campeau’s golf course under s. 5 of the 1981 Agreement. It references the broader arrangement between the parties: that Kanata and Campeau have agreed that the Kanata Golf Course shall be improved and expanded in conjunction with the development by Campeau of the Marchwood-Lakeside Lands.
[63] Section 3 of the 1985 Golf Club Agreement is another provision that relates to the golf course but it is not affected by the determination that ss. 5(4) and 9 of the 1981 Agreement are void.
[64] This provision relates to the manner that the golf course will be operated both during the golf season and during the winter season. It is not a stand-alone obligation to operate the golf course or make the lands available for community use in the winter in perpetuity. It continues to apply for so long as the operation of the golf course continues. This provision is not affected by the Appeal Decision.
1988 40% Agreement
Section 2
[65] The 1988 40% Agreement is an amendment to the 1981 Agreement that removes excess lands from its ambit, and ensures that the obligations under the 1981 Agreement are binding on successors in title of Campeau. It is also registered on title to every residential lot in Kanata Lakes [^8].
[66] This is another provision that has application beyond the golf course lands and which has been performed in other development agreements touching upon the total development area. There is no basis to declare it void and potentially impact those other agreements. However, insofar as this provision seeks to have the 40% principle apply to the golf course lands after that use is discontinued, it must necessarily be declared inoperative.
Section 5
[67] Section 5 of the 1988 40% Agreement essentially restates the obligation set out in s. 5(2) of the 1981 Agreement to require assumption agreements by future purchasers but applies it to the totality of the “Current Lands” (excluding the sale of individual lots or blocks). The Current Lands are legally described in Schedule “A” to the 1988 40% Agreement. The Current Lands go beyond the golf course lands. This is another provision that is directly affected by the Appeal Decision, but only insofar as it relates to the golf course lands. It is therefore declared inoperative to the extent that it relates to the golf course lands.
Section 6(d)
[68] Similar to s. 3 of the 1985 Golf Club Agreement, s. 6(d) of the 1988 40% Agreement creates obligations during the continued operation of the golf course. It does not extend beyond that and would no longer apply to the golf course lands after the golf course use has been discontinued. This provision remains operative.
1988 Golf Club Agreement
Section 4
[69] The 1988 Golf Club Agreement is an amendment to the 1985 Golf Club Agreement that similarly excludes “excess lands” and ensures that the obligations under the Golf Club Agreement in respect of the Current Lands are binding on Campeau’s successors in title.
[70] Once again, this is a restatement of s. 5(2) of the 1981 Agreement and has a similar fate. It is directly affected by the Appeal Decision. This section is intimately linked to the obligation to operate a golf course in perpetuity without a right to discontinue. Section 4 of the 1988 40% Agreement is necessarily inoperative.
Assumption Agreement
Section 5
[71] The purpose of the Assumption Agreement is for ClubLink to assume all of Campeau’s right, title, interest, and obligations under the 1981 Agreement and the Golf Club Agreement, in a manner compliant with the City’s right of first refusal.
[72] Section 5 of the Assumption Agreement restates the validity of s. 5(3) of the 1981 Agreement and confirms that the right of first refusal continues to apply. I have already determined that s. 5(3) of the 1981 Agreement is inoperative as it is tainted by the obligation to operate in perpetuity, this section suffers from the same issue. Section 5 of the Assumption Agreement is inoperative.
Section 7
[73] This provision is simply a confirmation of obligations as at the date of entering into the Assumption Agreement. It could also continue to apply for as long as the 1981 Agreement is in effect and portions of that agreement will continue to apply beyond the discontinuance of the golf course use. It applies to ongoing obligations, to the extent that they have not been otherwise declared inoperative.
Section 10
[74] Section 10 of the Assumption Agreement is a restatement of the City’s obligation to reconvey under s. 9 of the 1981 Agreement and, in such an event, creates an obligation to convey to Imasco. As s. 9 of the 1981 Agreement is void and unenforceable, s. 10 of the Assumption Agreement is directly affected and as such is inoperative.
Section 11
[75] Section 11 of the Assumption Agreement restates the 40% principle from s. 3 of the 1981 Agreement and that the golf course lands continue to form part of the 40% space for recreation and natural environmental purposes. This decision has confirmed that the 40% principle is inoperative to the extent that it would apply to a redevelopment of the golf course lands. It remains otherwise in effect. The same applies to the first sentence of s. 11 of the Assumption Agreement.
[76] However, s. 5(5) of the 1981 Agreement is relevant when considering the intent of the parties. That section confirms that the golf course lands can be redeveloped under the Planning Act, notwithstanding anything to the contrary (which would include the 40% principle.) Section 11 of the Assumption Agreement adopts this same principle in the case of a change of use done with the agreement of the City.
[77] I am of the view that s. 11 of the Assumption Agreement contemplates that the golf course lands will be deemed part of the 40% principle provided that a change of use meets the requirements of the Planning Act. The fact that the City never dealt with the ClubLink development proposal (which was submitted to the City and ultimately approved by the Ontario Land Tribunal) supports this conclusion. The City did not make a decision on ClubLink’s development application in time and the authority to make that decision was then appealed to the Ontario Land Tribunal. [^9]
[78] As part of the Planning Act approval process, ClubLink’s applications were appealed to the Ontario Land Tribunal without the City deciding whether it agreed to the change of use proposal within the timeframe set out in the Planning Act. Accordingly, it would only make sense to interpret s. 11 of the Assumption Agreement as including a situation where a development proposal that changes the use of the golf course lands is ultimately approved pursuant to the Planning Act.
[79] Section 11 of the Assumption Agreement clearly contemplates that a potential change in use as part of ClubLink exercising its contingent interest in land under s. 9 of the 1981 Agreement would have allowed for the redevelopment of the golf course lands without offending the 40% principle. Clearly, this is a very real and negotiated term of the contingent interest in land that existed at the time the Assumption Agreement was signed.
[80] Although the Assumption Agreement was only between three parties, the 40% principle was incorporated in several other development agreements and those development agreements continue to apply. Accordingly, the second sentence of para. 11 is an important provision to acknowledge that the redevelopment of the golf course lands with the agreement of the City or in accordance with the Planning Act does not otherwise impact the 40% principle as those lands are deemed to continue to be included as part of the 40% principle.
[81] I would therefore maintain the second sentence of s. 11 of the Assumption Agreement with the confirmation that this provision does not restrict the redevelopment of the golf course lands done in accordance with the Planning Act. However, in the event that my interpretation of the second sentence of para. 11 is incorrect, that second sentence would still otherwise be inoperative as it is intimately linked to ClubLink’s right to redevelop if the lands were returned to ClubLink under the contingent interest in land found in s. 9 of the 1981 Agreement.
Conclusion
[82] The findings of this court in this decision should allow for the parties to identify how the Related Contracts are affected by the Appeal Decision. If there is a dispute on how to interpret the findings in this decision, the parties may write to me to resolve the dispute. Otherwise, the parties can forward a draft order incorporating the terms of this decision.
Costs
[83] If the parties are unable to agree on the issue of costs, they may make written submissions on costs. Any party seeking an order for costs will have 30 days from the date of this decision to serve and file its written submissions, and a party against whom a request for costs has been made will have 30 days thereafter to respond. Those submissions will not exceed three pages in length (excluding attachments) and will comply with Rule 4 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.
Justice Marc R. Labrosse Released: October 13, 2023
[^1]: City of Ottawa v. ClubLink Corporation ULC, 2021 ONSC 1298. [^2]: Ottawa (City) v. ClubLink Corporation ULC, 2021 ONCA 847, 159 O.R. (3d) 255. [^3]: 3869130 Canada Inc. v. I.C.B. Distribution Inc., 2008 ONCA 396, 45 B.L.R. (4th) 1, at para. 33. [^4]: 2176693 Ontario Ltd. v. Cora Franchise Group Inc., 2015 ONCA 152, 383 D.L.R. (4th) 361, at para. 36. [^5]: Ryan v. Moore, 2005 SCC 38, [2005] 2 S.C.R. 53. [^6]: Conseil Scolaire Catholique Franco-Nord v. Nipissing Ouest (Municipalité), 2021 ONCA 544, 158 O.R. (3d) 332; Thunder Bay (City) v. Canadian National Railway Company, 2018 ONCA 517, 424 D.L.R. (4th) 588. [^8]: Application Record, p. 1707. [^9]: ClubLink Corporation ULC v. Ottawa (City), at para. 1.