Perpetuities law may turn golf course lands into residential subdivision, if Ottawa’s lawyers lose $100,000-plus legal fight

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clublink development
A Google Maps view of the ClubLink development site

Ontario Construction News staff writer

The original agreement dates back to 1981 – and the provisions in it seem quite clear: An ongoing commitment between the city, developer and golf course owner to maintain 40 per cent of the land in the Kanata Lakes area as green space – which would on the surface clearly restrict subdivisions and additional building.

Now, as developers want to intensify the golf course lands, the city faces a legal bill of $100,000 or more as City Hall and the current golf course owner and two residential developers tangle with one of the more arcane aspects of Ontario law – the limits on perpetuities.

The original restrictive agreement was signed with the former City of Kanata, since amalgamated into the City of Ottawa, and the former developers of what became the Kanata Lakes Golf & Country Club.  ClubLink purchased the golf course in 1996.

Now ClubLink is partnering with residential builders Minto Communities and Richcarft Homes for a new development. The project hasn’t reached the subdivision approval stage, but the city expects a significant legal fight ahead.

In a memo to city council, Rick O’Connor, the city clerk and solicitor, writes that the among other things, the agreements:

  1. Create a right of first refusal in favour of the city upon receipt of an offer for the sale of the golf course. If this right is not exercised by the city, ClubLinks is obligated to ensure that the purchaser enters into an agreement with the municipality providing for the operation of the golf course in perpetuity;
  2. give the city the ability to acquire the golf course lands at no cost in the event that ClubLinks desires to discontinue the operation of the golf course and is unable to find another person to acquire or operate it. If this were to occur, it is possible the city may have to operate “or cause to be operated” the golf course;
  3. establish requirements for the construction, expansion and operation of the golf course and:
  4. provide for the re-conveyance of the Golf Course Lands (and other lands reserved for open space uses) to the original owner in the event that they ceased to be used for their intended purpose by the city.

“Based on communications from representatives from ClubLink, Minto and Richcraft, the city expects ClubLink to file applications for rezoning and subdivision of the Golf Course Lands in order to permit the redevelopment of the lands as a residential subdivision,” O’Connor wrote.

Based on the developers’ plans, the city believes that the they don’t think they are bound by the 1981 agreements. But how?

The answer relates to what is known as the “rule against perpetuities”, governed by the Perpetuities Act of Ontario.

This law most commonly applies in estate settlement situations, and essentially restricts limits on property transactions after 21 years after the death of the last surviving immediate heir to the estate.

“At its most fundamental essence, the rule dictates that certain equitable interests will become void if they are not exercised within 21 years from the date of their creation,” O’Connor writes. “It is possible that ClubLink will argue that the perpetuity period limitation applies and that the agreements are not enforceable against them.”

However, city staff sought out external legal advice, and determined “that there are reasonable grounds to conclude that the agreements are enforceable.”

So the matter will likely head to court if the developers apply for a subdivision and zoning amendment. This would require a one or two day court hearing, take six to seven months, and cost the city between $100,000 to $150,000 in legal fees.

“However, were the court to determine that there are significant facts at issue, then it may not be possible to proceed by way of application and the more fulsome court process involving discoveries, mediation and trial court (would) be required,” O’Connor says. “Were that case, then a much longer time period than six to seven months would be required.”

If the city wins, it will recover some of its legal costs – if it loses, the pain will be magnified, as ClubLink and the developers will collect a portion of their legal costs, as well as the court filing fees.

“Golf courses are struggling across the country, and particularly in saturated markets like Ottawa,” Robert Visetin, ClubLink’s senior vice-president of investments said in December statement when the developers announced their plans. “Ottawa is a vibrant, growing city and we believe there is an opportunity to better utilize this 70 hectares of land to meet the interests of the community.”

“This is a special opportunity to have such a significant piece of property inside the city’s urban boundary that can be designed to reflect the community’s needs – such as much needed new housing for families, and high quality public green spaces,” said Minto Communities Ottawa division president Brent Strachan.

In the same news release, Steve Grandmont, chief operating office of Richcraft Homes said: “As a long-time builder in Kanata, we know tis community well and appreciate that residents will want their values reflected in this plan. We’re going to work hard to get it right.”

The statement says that ClubLink, Minto Communities and Richcraft Homes will undertake a community engagement process to inform its land use plan for the property. “This process will be carried out in close collaboration with City of Ottawa officials to ensure the plan is supportive of the city’s priorities of liveability and smart growth.”

However, based on the city’s legal action expectations, the matter will be heading to court.

The Ottawa Citizen reports that residents in the Kanata Lakes and Beaverborook communities are leaning on the city to fight ClubLink’s development plan.

Kanata North Coun. Jenna Sudds says the proposed golf course redevelopment is a legal issue, not yet a planning one.

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