2006 BCSC 1410 Kosub et al v. Cultus Lake Park Board

Before: The Honourable Mr. Justice S.R. Romilly

Reasons for Judgment

Counsel for the Plaintiffs	H. William Veenstra
Counsel for the Defendant	James H. Goulden Holman Wang
Date and Place of Hearing:	August 30, 2006
	Vancouver, B.C.

A. Nature of Application

[1] This is an application by the plaintiffs for an interlocutory injunction to prevent the defendant from taking possession of a building located on Main Beach in Cultus Lake Park pending the determination of the plaintiffs’ leasehold rights therein.

[2] For the reasons stated below the plaintiffs’ application is denied.

B. Background

[3] The plaintiffs are father and son who leased and operated Main Beach Boat Rentals beginning in 2002. Although the facility was initially leased under the name of the father, Alex Kosub, I understand that the son, Geoffrey Kosub (“Mr. Kosub”), has been responsible for the day-to-day operation of the facility. According to the defendant, the business has not been in operation since 2005.

(a) Cultus Lake Park

[4] Main Beach Boat Rentals is located near the entrance to Cultus Lake Park. Cultus Lake Park is a 640 acre park located south of Chilliwack. It contains approximately 500 single-family homes and approximately 20 businesses. It has approximately 1,000 seasonal and full-time residents, and attracts more than one million visitors a year. Cultus Lake Park is governed by the Cultus Lake Park Board (“the Board”), pursuant to the Cultus Lake Park Act, S.B.C. 1932, c. 63. This statute was not consolidated in any of the Revised Statutes of British Columbia. The Board is the defendant in this matter.

[5] The Board is described in the statute as “a body politic and corporate” (s. 4), and is currently comprised of five representatives of the District of Chilliwack and two representatives of Cultus Lake Park residents (s. 4).

[6] The Board has the power to pass “by-laws for the use, regulation, protection and management of the park” (s. 12). The Board also has the power to lease property, grant concessions and licenses, construct and maintain a waterworks system, buy and distribute electricity, and to “construct, operate and maintain in the park such improvements, buildings, equipment, facilities, conveniences, amusements, and businesses as the Board considers conducive to the more convenient use of the park by the public and to make charges in respect thereof” (s. 14).

[7] Notwithstanding the creation of the Board, legal title to the park lands remains vested in the District of Chilliwack. There is one title for the entire park, which is held in trust by the District. The District cannot sell the lands, and the lands must be used only for park purposes. Accordingly, land at Cultus Lake is dealt with exclusively by lease rather than by fee simple transfer. The Board sets annual rent and maintains the lease registry. All leases are reviewed individually by the Board, which meets twice monthly.

[8] The Board employs a manager to help administer the park. From May, 1996 until November, 2003, Malcolm Shanks (“Mr. Shanks”) was employed as Manager. After the termination of Shanks’ employment, Grant Sanborn (“Mr. Sanborn”), who was Chair of the Park Board, became Acting Manager. Scott Coulson (“Mr. Coulson”) was hired and began work as Manager and Chief Administrative Officer in April, 2004, but left the job in November, 2004. He was replaced by Mr. Sanborn on an acting basis. In March, 2005, the Board hired Colleen Bawn as Manager. She remained in this position until December, 2005. Mr. Coulson was rehired in January, 2006, and remained in that position at the time this application was filed.

(b) Main Beach Boat Rentals

[9] Leases for business properties in Cultus Lake Park are granted for a maximum term of five years. In this case, the plaintiffs took over the lease for Main Beach Boat Rentals on March 8, 2002. This lease was set to run out on December 31, 2005, but contained an option, exercisable by the lessee on 90 days notice prior to the expiration of the lease, to renew for three further terms of five years apiece.

[10] According to Mr. Shanks, prior to 2002 the Main Beach Boat Rental business was run from an old, run-down shack that had been there for nearly 30 years and was, in the view of many involved in the Board, an eyesore. The shack was located very close to the lake, such that at high water it was within about four feet of the lake. That shack is referred to as the “existing facility”.

[11] Both parties acknowledge that previous lessees had suggested the Board demolish the existing facility and build a better facility. The Board was broadly amenable to these plans. However, there is no explicit agreement for reconstruction contained within the lease signed on March 8, 2002.

(c) Disputed Claims

[12] As noted by the Supreme Court of Canada in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, [1994] S.C.J. No. 17 at p. 338 (cited to S.C.R.) (“RJR-MacDonald”), a prolonged examination of the merits of a case is inadvisable when deciding an interlocutory injunction. I will therefore confine my review of facts to only those that I see are relevant to the present application.

[13] There is a dispute between the parties over when an agreement to develop the facilities came into being over the next several years. The plaintiffs assert that although it does not appear in writing, both Mr. Kosub and the Board acted in accordance with an agreement from an early point in their relationship. The defendant does not refer to an agreement, but notes that the lease does not contain terms governing construction of a new facility, and that the Board gave Mr. Kosub construction permission on March 20, 2003.

[14] The plaintiffs assert that Mr. Kosub upgraded the facilities during the spring of 2002 after consulting with Mr. Shanks, and without obtaining a building permit. The plaintiffs further point to periodic informal communications between Mr. Kosub, Mr. Shanks and the Board Chair at the time, Ruth Midzain, discussing prospects for building a new facility. In November, 2002, as a result of a municipal election, most of the Board members, including the Chair, were replaced. The plaintiffs communicated with the Board and with Mr. Shanks to obtain approval for the position of the new building and to obtain building parts for a new facility before March 20, 2003.

[15] After March 20, 2003, the characterization of the relevant facts is highly contested. It is clear, however, that by September 30, 2004, the existing facility had been demolished, at the insistence of the Board.

[16] According to the plaintiffs, communications between the Board and Mr. Kosub became more difficult: Mr. Kosub would consult Mr. Shanks and receive one opinion, only to later receive an opposite opinion from Mr. Sanborn; the Board appeared unaware that Mr. Shanks was advising Mr. Kosub on issues of permission; and Mr. Kosub later had difficulty obtaining reliable direction, due to employee changes or other administrative factors.

[17] According to the defendant, the plaintiffs repeatedly failed to provide architectural documents for the new facility, despite repeated requests to do so. Further, the defendant alleges that the plaintiffs engaged in construction of the new facility without having obtained a building permit and defied the Board by constructing a caretaker/residential suite without having obtained approval to do so.

[18] By either account, the relationship between the two parties discloses a litany of miscommunications over the last several years.

[19] From the evidence adduced on this application I am satisfied that the plaintiffs made significant efforts to comply with the directions of the defendant in the construction of the new facility. I also find that they were frustrated in their attempts to complete the new facility because of the conflicting instructions that they received from various representatives of the defendant. This was due in part to the constant changes in responsible Board members and senior staff. Since 2002, the Board has seen four different individuals assume the role of Manager or Acting Manager, some on multiple occasions.

[20] Between March, 2003 and the end of 2005, Mr. Kosub continued work to construct a new facility, though his relations with the Board seemed to remain precarious and were often confounded by poor communications. Mr. Kosub retained a number of individuals to help with the construction; the Board also retained staff and a building technician who monitored Mr. Kosub’s progress. On or about January 17, 2005, the Board posted a Stop Work Order and a No Occupancy Order on the new facility, which was still under construction. On January 24, 2005, the Board Chair gave Mr. Kosub verbal permission to complete at least some further work, but the Stop Work Order remained in effect. A new Stop Work Order and No Occupancy Order was posted on the new facility on May 20, 2005.

[21] Nevertheless, from the evidence adduced on this application I am satisfied that the new facility is 85 percent complete and that the plaintiffs have expended over $250,000.00 to date on the renovation of this new facility.

[22] On December 31, 2005, the lease expired. The plaintiffs had not given any notice to renew the lease. Following the terms of the lease, Alex Kosub was deemed to be a lessee on a month-to-month basis.

[23] On June 30, 2006, Mr. Kosub submitted a lease payment for the property to the Board offices. The cheque was not accepted by the Board, and was returned on June 30, 2006. That same day, the Board gave notice to the plaintiffs that the lease would be terminated effective July 31, 2006, and that the Board would be resuming possession of the property on August 1, 2006.

[24] These, in sketch outline, are the facts which have given rise to the present application.

C. The Law

(a) Test for an Injunction

[25] The plaintiffs seek an interlocutory injunction restraining the defendant from taking possession of the new facility, interfering with the plaintiffs’ possession of the new facility, or otherwise taking any steps to terminate the plaintiffs’ leasehold rights in respect of the new facility.

[26] The three-part test to be applied in an application for an injunction was outlined in RJR-MacDonald at p. 334:

First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

[27] Both the applicants and the respondent submit that the test for an interlocutory injunction that should be followed by this Court is the test outlined in RJR-MacDonald. I note in passing that the test in British Columbia has been variously adopted as the three-pronged test from RJR-MacDonald and as the two-pronged test as outlined in British Columbia (Attorney General) v. Wale (1986), 9 B.C.L.R. (2d) 333, 120 N.R. 212 (B.C.C.A.) (“Wale”). While this issue may be technically unresolved, these dichotomous approaches will likely lead to the same practical effect, as recently noted by Smith J.A. in Expert Travel Financial Security (E.T.F.S.) Inc. v. BMS Harris and Dixon Insurance Brokers Ltd. (2005), 249 D.L.R. (4th) 367, 2005 BCCA 5 at para. 54.

[28] The first thing that I have to decide is therefore whether there is a serious question to be tried.

(i) Is There a Serious Question to Be Tried?

[29] The defendant submits that the plaintiffs are unable to meet the first stage of the injunction test, namely demonstrating a serious question to be tried. On the question of the legal right to possession, they draw my attention to the fact that the law is settled that the terms of a lease must be strictly complied with. The House of Lords affirmed this principle in Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439 (H.L.), a case which involved the lease of land. In the words of Lord O’Hagan at p. 448:

Your Lordships have no power to relieve against the effect of a forfeiture such as was legally established by the verdict of the jury in this case, merely on the ground that it has pressed hardly on the [lessee]. They entered into a covenant: and if they have failed to fulfil their undertaking they must abide the results, however onerous.

[30] The defendant also draws my attention to Pierce v. Empey, [1939] S.C.R. 247, [1939] 4 D.L.R. 672 at p. 252 (cited to S.C.R.), where the Supreme Court of Canada held that compliance with the terms of agreements with respect to land must be strict:

It is well settled that a plaintiff invoking the aid of the court for the enforcement of an option for the sale of the land must show that the terms of the option as to time and otherwise have been strictly observed. The owner incurs no obligation to sell unless the conditions precedent are fulfilled.

[31] This passage from Pierce v. Empey has been cited with approval by Oppal J. in Singh v. Three King's Head Inn (1999), 26 R.P.R. (3d) 144, [1999] B.C.J. No. 1811 at para. 16 (S.C.), with respect to an option to renew a lease.

[32] I have no quarrel with the law as enunciated by the defendant. However, the situation is not as cut-and-dried as the defendant would have it seem. The history of disputed claims and miscommunications between the parties, and the plaintiffs’ ongoing construction efforts, make it difficult to discern the current contractual relationships between the parties. Given that the serious question branch of the RJR-MacDonald test (at p. 337) posits a low bar, I have no difficulty in deciding that the plaintiffs have hurdled it.

[33] On the question of equitable right to possession, the defendant claims that there is no evidence that the plaintiffs made diligent efforts to comply with the terms of the lease, nor that the Board’s conduct could have suggested anything but strict compliance with the lease terms. Again, I cannot agree with the defendant, for similar reasons as above. The plaintiffs have raised serious questions to be tried in respect of their alternative claims in proprietary estoppel, unjust enrichment and for relief from forfeiture.

[34] The onus on the plaintiffs to demonstrate a serious question to be tried, even if low, can only be met with some real evidence. I am satisfied that that onus has been met by the plaintiffs in this case.

(ii) Irreparable Harm

[35] Irreparable harm is usually described as harm that cannot be adequately compensated in damages. It relates to the nature of the harm suffered, not to the degree of the harm suffered. In RJR-MacDonald, the Supreme Court of Canada held at p. 341:

At this stage the only issue to be decided is whether a refusal to grant relief could so adversely affect the applicants' own interests that the harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.

“Irreparable” refers to the nature of the harm suffered rather than its magnitude. It is harm which either cannot be quantified in monetary terms or which cannot be cured, usually because one party cannot collect damages from the other.

[36] Evidence of irreparable harm must be clear and not speculative: Apotex Inc. v. Imperial Chemical Industries PLC (1989), 27 C.P.R. (3d) 345 at p. 351 (F.C.A.) (“Apotex”).

[37] In Wale at p. 345, McLachlin J.A. (as she then was) said:

In most cases, an interlocutory injunction should not be granted unless there is doubt whether damages would be an adequate remedy in the event the applicant succeeds at trial... If damages will be an adequate remedy, and if it appears that the alleged offender can pay them, the court is generally not justified in giving one party his remedy to the detriment of the other before the issues have been tried.

[38] In the present case, the defendant submits that the plaintiffs’ loss of the use, occupation or possession of the property could be compensated by way of monetary damages if the eventual decision on the merits favours the plaintiffs. Moreover, the Board’s ability to pay damages is not at issue.

[39] The defendant further submits that damages due to lost sales are usually quantifiable, and, therefore, are not considered irreparable: Apotex at p. 346.

[40] Difficulty in calculating business losses does not necessarily render a harm suffered irreparable. In Music Waves Productions Ltd. v. WIC Television Ltd., [1997] B.C.J. No. 2240, (1997) 74 A.C.W.S. (3d) 673 at para. 10 (S.C.), Lowry J. said the following with respect to the assessment of irreparable harm:

[D]ifficulty in assessing damages does not render a harm suffered necessarily irreparable. Business losses such as losses based on uncertain future revenues and losses that are even less easily defined such as losses attributable to impaired reputation, though difficult to assess with precision, are nonetheless frequently assessed and made the subject of awards in commercial cases.

[41] The defendant submits that Main Beach Boat Rentals is a small business which has a narrow scope of operation, and which caters to a captive market, namely tourists in Cultus Lake. In the circumstances of this case, there is nothing to suggest that any business losses that the plaintiffs might claim would be difficult to quantify or compensate for by way of monetary damages. The defendant further submits that with respect to the plaintiffs’ claim that they have incurred out-of-pocket expenses in partially constructing the new facility, such damages are easily quantifiable and compensable by way of monetary damages. The Board submits that in light of these considerations, the Board’s resumption of possession of the property would not cause irreparable harm to the plaintiffs.

[42] While there is some authority to support a claim that emotional and psychological stress can constitute irreparable harm, Edgar v. Kitasoo Band Council, [2003] 2 C.N.L.R. 124, 2003 FCT 166 at para. 35 (F.C.T.D.), I am of the opinion that the nature of that stress must be considerable: on the order of separation from loved ones or community. I am not convinced that the plaintiffs’ claims regarding the importance of a “special connection” to the Cultus Lake area rise to this necessary level.

[43] In Wellington (Rural Municipality No. 97) v. Ligtermoet, [2003] 3 W.W.R. 339, 2002 SKQB 474 at para. 44, rev’d. on other grounds [2003] 10 W.W.R. 191, 2003 SKCA 48, the Saskatchewan Court of Queen’s Bench held that loss of particular land rights constituted irreparable harm. However, in that case, the plaintiff was specifically barred from seeking damages from the municipality by operation of statute, and the land itself had been owned by the plaintiff’s family for decades. The case at bar is clearly distinguishable from that situation.

[44] In R. Baker Fisheries Ltd. v. Widrig (1998), 168 N.S.R. (2d) 378, 80 A.C.W.S. (3d) 495 (N.S.C.A.), the Nova Scotia Court of Appeal considered an application for stay of proceedings pending appeal, based on the loss of a clam fishing licence by the applicant. Even though loss of a licence pending appeal would leave the plaintiff without work, the Court held that the applicant failed to show irreparable harm as required. Noting the highly contextual nature of irreparable harm, the Court held that any harm suffered by the applicant could likely be compensated by the respondents. Moreover, the Court observed that the plaintiff would likely be able to mitigate his losses, or should have been able to, if he had acted reasonably.

[45] In the present case, the plaintiffs have not persuaded me that, on a balance of probabilities, any losses they have suffered cannot be compensated adequately through damages.

(iii) Balance of Convenience

[46] In Canadian Broadcasting Corp. (CBC) v. C.K.P.G. Television Ltd., (1992), 64 B.C.L.R. (2d) 96, [1992] B.C.J. No. 247 at p. 102 (cited to B.C.L.R.) (C.A.) (“CBC”), the British Columbia Court of Appeal set out a list of the factors that might be considered in assessing the balance of convenience, including the following:

(a) The adequacy of damages as a remedy for the applicant if the injunction is not granted, and for the respondent if the injunction is granted;

(b) The likelihood that if damages are finally awarded they will be paid;

(d) The strength of the applicant’s case;

(e) Any factors affecting the public interest;

(f) Which of the parties has acted to alter the balance of their relationship and so affect the status quo; and

(g) Other factors affecting the balance of justice and convenience.

[47] In assessing the balance of convenience, a court should not regard each factor separately in a “checklist” fashion. Instead, all relevant factors should be considered at one time in a unified context and the court should reach a “single overall conclusion about where the balance of convenience lies”: CBC at p. 103.

[48] In my view, no side clearly outweighs the other in this balancing. As already discussed, I am not persuaded that the plaintiffs face irreparable harm. Neither would the defendant face irreparable harm if the injunction was granted. While I am of the view that the plaintiffs are seeking to preserve the status quo in the relationship between the two parties, I also conclude that the nature of that relationship has changed markedly since 2005. The broader question of who was the first mover in changing the balance of this relationship is difficult to pry apart. Both parties seem to be, or have offered undertakings to the effect that they are, able to pay any damages that may ultimately be awarded. In sum, by considering the factors suggested in CBC in a holistic and interrelated sense, the balance of convenience in this case cannot justify the granting of an interlocutory injunction.

D. Conclusion

[49] The plaintiffs have persuaded me that there is a serious issue to be tried, but not that they will suffer irreparable harm if an interlocutory injunction is not granted. The balance of convenience in this case does not lead me to believe that granting an injunction would be just in these circumstances.

[50] Based on the reasons above, I therefore dismiss the application.

“S.R. Romilly, J.”
The Honourable Mr. Justice S.R. Romilly

Citation:	*Kosub et al. v. Cultus Lake Park Board,*
	2006 BCSC 1410