Sharing an update from the City Solicitor following today’s ruling by the Ontario Court of Appeal:
Earlier this morning, the Ontario Court of Appeal released its decision granting ClubLink’s appeal of the Superior Court ruling with respect to the validity of certain provisions of the “40% Percent Agreement” in respect of the Kanata Lakes Golf and Country Club. A copy of the Court of Appeal’s decision is attached.
Specifically, the Court of Appeal decided that two sections of the Agreement are unenforceable:
- Section 5(4), which gives the City the right to demand reconveyance if ClubLink stops operating the golf course.
- Section 9, which provides for a further reconveyance if the City acquires the land and then stops using it for recreation and natural environment purposes.
The Court concluded that these sections create interests in the land. Because the interests are contingent on events that did not occur within 21 years, they are void based on the legal rule against perpetuities.
Based on the Court’s decision, the City would no longer have a right to demand reconveyance of the land if ClubLink stops using it for a golf course; however, the Court did not invalidate any other sections of the 40% Agreement (as requested by ClubLink), or any other agreement relating to the golf course. That means that, as of today and pending further rulings:
- ClubLink still has an obligation to operate the golf course in perpetuity (section 5(1) of the 40% Percent Agreement).
- The City still has a right of first refusal if ClubLink tries to sell the golf course (section 5(3) of the 40% Percent Agreement).
- If ClubLink does sell the golf course, it must ensure that the new owner enters into an agreement to preserve the golf course in perpetuity.
The Court of Appeal did suggest that its decision “may” impact other sections of relevant agreements and that the indicated parties should either reach a consensus on those effects or, failing agreement, remit the issues to Justice Labrosse for a decision.
In view of the importance of this decision to the City and the novel legal issues raised, I will be directing the City’s external legal counsel to seek leave to appeal the Court of Appeal’s ruling, to the Supreme Court of Canada, in the coming days.