Parkdale Nifty Fifties Seniors Association v. Parkdale Community Association, 2011 ABQB 433

Court of Queen ’ s Bench of Alberta Citation: Parkdale Nifty Fifties Seniors Association v. Parkdale Community Association, 2011 ABQB 433 Date: 20110711 Docket: 1001 15686 Registry: Calgary Between: Parkdale Nifty Fifties Seniors Association Applicant - and - Parkdale Community Association and The City of Calgary Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice T.F.

McMahon _______________________________________________________ [ 1 ] This litigation is the culmination of an unfortunate dispute between two worthy community organizations, the Parkdale Nifty Fifties Seniors Association (“Nifty Fifties”) and the Parkdale Community Association (“PCA”). The City of Calgary (“the City”) as the landowner was also named as a Respondent but rather than mediate the dispute or remain passive it has chosen to become an active participant in the suit on one side to the detriment of the other. The action was begun by an Originating Notice of Motion but heard as a trial. Background

[ 2 ] In about 1980, the PCA presented a proposal to the City for a new community hall on lands it leased from the City. The proposal specifically encompassed an “autonomous” senior citizens area, which became known as Founders Hall. At that point, the community seniors were a distinct group within the PCA. [ 3 ] With various grants and matching funds, the project was built.

The PCA and the City entered into a further lease dated in 1982 for a period of 15 years from January 1, 1982 at a nominal rent. [ 4 ] In 1983, the community’s seniors group incorporated as a society under the name of Parkdale Nifty Fifties Social Club. Membership was open to Alberta residents aged 55 and older (later reduced to age 50).

A City employee described as a Senior Citizen’s Recreation Specialist witnessed all the documents and so the City had this knowledge from the outset. [ 5 ] The society’s name was later changed to the Parkdale Nifty Fifties Seniors Association. [ 6 ] The Nifty Fifties obtained their operating funds from modest membership dues, fund-raising activities, casino operations and the City’s Family and Community Support Services (“FCSS”) which is funded by the Province of Alberta and the City together. [ 7 ] Beginning in 1988, Nifty Fifties recognized the need for additional space.

They obtained permission to use proceeds from casino operations to build a capital account, along with their own fund-raising activities. A successful application for a matching grant was made by the Nifty Fifties to the Province’s Community Facility Enhancement Program. The combined funds gave them the approximate $325,000 required for the project. [ 8 ] The City duly issued a development permit in October 1991. That led to the involvement of Calgary Parks & Recreation which reviewed the proposed project. That department in September 1992 gave its approval.

Construction of the expansion was completed and the City issued an occupancy permit on December 24, 1993. [ 9 ] Before the expansion, the building consisted of: Area 1 - main building upstairs (Pierson Hall) Area 2 - main building basement primary (JJs Lounge) Area 3 - main building basement extra areas (several small rooms) Area 4 - side building north side (Founders Hall) [ 10 ] Founders Hall was the area devoted to the seniors group. [ 11 ] The expansion, called Area 5, was the side building south side (McGregor Hall and offices).

It consisted of 3,032 square feet. [ 12 ] Both areas 4 and 5 had entrances separate from areas 1, 2 and 3. There was no passage between areas 1, 2 and 3 and areas 4 and 5. It was described at trial as a duplex style of building.. There was a common wall, some common mechanical, electrical and parking. As a result, the PCA and the Nifty Fifties entered into an expense sharing agreement effective January 1, 1995. [ 13 ] On November 8, 1999, the City and the PCA entered into a new lease agreement for a 15-year term from January 1, 1997 to December 31, 2011.

The lease contains a qualified right of renewal for a further 15 years.

[ 14 ] The PCA and the Nifty Fifties seem to have co-existed, sharing common costs and cooperating on using one another’s space when the need arose, while the Nifty Fifties occupied the Founders Hall in the original building from 1983 to December 1993. That cooperative arrangement continued after the expansion was completed in December 1993 until mid-2005. This Dispute [ 15 ] The origins of this current dispute can be traced to a PCA Board Meeting attended by a City employee described as a Community Recreation Coordinator on June 21, 2005.

For reasons not apparent from the evidence, she raised a “concern” that the Nifty Fifties did not have a sub-lease with the PCA. That fact had not seemed to trouble either the PCA or the Nifty Fifties since the latter’s incorporation in 1983, nor since its occupation of the expansion area in December 1993. [ 16 ] The minutes of the PCA Board Meeting of June 21, 2005 were the most recent ones produced by the PCA. No Nifty Fifties Board Meeting minutes were produced for the period March 2005 to September 2009.

There was no evidence that any steps were taken after the “concern” expressed in June 2005 until an email of May 21, 2008 when the same City employee said she was “advising the community and the Nifty Fifties to hold off on their sub-lease for the time being”.

She added “I would go to bat for the Nifty Fifties if a new group was to emerge in place of the PCA and then would work with a new group to form a sub-lease or else make a new lease with the Nifty Fifties so they formed a new lease on the land on their own.” [ 17 ] The Nifty Fifties’ Board minutes in 2009 reflect apparent demands from the PCA for control of the entire complex. In April 2009, the PCA unilaterally solicited sub-lease offers on all parts of the building including those used by the Nifty Fifties.

The solicitation went to a wide variety of non-profit and community groups, including the Nifty Fifties. [ 18 ] The motivation appears to be that the PCA had lost money in six of the prior seven years. They needed revenue. The Nifty Fifties finances were not much better. Some negotiations were carried on between the two groups without success.

The Nifty Fifties appear to have been willing to execute a sub-lease from the PCA but on the same financial terms; that is, shared costs only and the right to retain any third party rentals that the Nifty Fifties could obtain on their space. [ 19 ] Matters came to a head when the PCA in May 2010 produced a rental policy which required the Nifty Fifties to surrender its space and all its rental revenues to the PCA. The PCA advised that they had made arrangements to change the locks on the Nifty Fifties front doors.

Fortunately that did not then occur. [ 20 ] Matters deteriorated further in September 2010 when the PCA again purported to give notice to a private enterprise called “Foothills Kumon” which had been renting space from the Nifty Fifties to the effect that their arrangement with the Nifty Fifties was invalid and they would be considered trespassers unless they made arrangements directly with the PCA. [ 21 ] The PCA also posted throughout the building, including in the Nifty Fifties areas, an “Important Notice” to all users requiring all to have a rental agreement with the PCA and advising that agreements with the Nifty Fifties would not necessarily be recognized by the PCA. [ 22 ] This action began shortly after.

The Nifty Fifties seek an injunction restraining the PCA from occupying areas 4 and 5 and from interfering with their tenants. They seek a declaration that they are entitled to continue to occupy the space on a cost-sharing basis only. As against the City, the Nifty Fifties seek approvals or permits necessary to remain in occupation of their space. Analysis [ 23 ] At the root of this contest is the compelling need of two non-profit community groups for revenue.

The disappearance of the former level of cooperation and common purpose may also be partially driven by the personalities now involved. [ 24 ] The PCA complains that only 25% of the current membership in the Nifty Fifties reside in Parkdale or adjacent communities. In reply, the Nifty Fifties argue that the vast majority of their members live in the northwest quadrant of the City of Calgary, that serving all Albertans was in their corporate mandate from the outset and that the City’s FCSS funding requires that their program be available to all citizens of Calgary.

[ 25 ] I am persuaded by the evidence that the expansion area was paid for through the efforts of the Nifty Fifties and its members. It is they who originated the plan, obtained donated architectural and engineering services, earned casino funds, applied for and obtained matching grants and injected what little money they had into the project. They saw the project through to completion and obtained an occupancy permit from the City. They have paid the expansion area operating costs and shared the common expenses since 1995.

All that has occurred with the knowledge and encouragement of both the PCA and the City. [ 26 ] The evidence is clear that all three parties knew and intended that both Founders Hall and the expansion area would be under the exclusive control of the Nifty Fifties: 1. In 1980, the PCA prepared a project description for its new building. It described what became known as Founders Hall as “an autonomous centre with its own kitchen, library and washrooms”. It said “special attention has been given to senior citizens and the handicapped. The senior citizens will have their own centre located on ground level ...” 2.

Contemporaneous with the completion of that construction and the City’s occupancy permit in February 1983, the seniors group in Parkdale incorporated into what is now the Nifty Fifties. 3.

When the Nifty Fifties were seeking funding for the expansion, they obtained from the PCA a “statement of ownership and control” dated March 11, 1985: STATEMENT OF OWNERSHIP AND CONTROL This will signify that any assets or facilities purchased with funds from a NEW HORIZONS contribution will remain the property of the group and the use of such assets or facilities will be under the direction and control of the seniors’ Board of Directors. Parkdale Nifty Fifties Social Club Name of Group 3512 - 5th Avenue N.W., Calgary Alberta Location [signature] Edith L.

Barkley - President, Parkdale Community Association Foundation Representative/Building Operator 4. The PCA by letter of January 31, 1990 to the Nifty Fifties said: Accordingly, the Board of Directors are prepared to authorize the expansion and application for Development and Building permits. This authorization is given with the mutual understanding that the Nifty 50’s will assume all costs of construction and fulfill all conditions of development as required by the City of Calgary. 5. On behalf of the City, the ward alderman wrote on May 24, 1990:

I am writing on behalf of the Parkdale Nifty 50’s Social Club regarding the expansion of their current facilities, located at 3512 - 5Avenue N.W. This organization is a very valuable asset to the community. It offers many services to seniors in the area. I fully support the efforts of theParkdale Nifty 50’s to expand its facilities to better accommodate its membership. 6.

The application for matching funds from the Community Facility Enhancement Program in 1991 recognized the City as thelandowner, the PCA as the lease holder and the facility as a “senior citizen’s drop-in and social centre” named the Parkdale Nifty FiftiesSocial Club. 7. Approval for the expansion was required from Calgary Parks & Recreation. Correspondence in 1992 shows that that department dealtwith the Nifty Fifties and considered the project to be theirs. That department also then encouraged the Nifty Fifties to look to hallrentals to cover operating costs.

By September 1992, Parks & Recreation had in writing given approval to the Nifty Fifties and theirproject. 8. In December 1993, the City gave an occupancy permit for the expansion area to the Nifty Fifties. 9. At the time that the City renewed its lease with the PCA in 1999, both parties had full knowledge of all of these facts and made nodemand then that the Nifty Fifties enter into either a sub-lease with the PCA or lease directly with the City. 10. The Nifty Fifties used the expansion area without interruption until April 2009, some 15 years, and area 4 even longer.

Estoppel [27] In response to the steps taken by the PCA to remove areas 4 and 5 from the use and control of the Nifty Fifties, the latterplead estoppel. They say that both the City and the PCA permitted and encouraged the Nifty Fifties to plan, develop, fund (directly orindirectly) and operate the expansion area on exclusive basis for at least 15 years without a formal lease or sub-lease, sharing commoncosts only. They argue that they used the Founders Hall on the same basis for even more years.

They further argue that they relied uponthese representations to their detriment in expending effort and money on the improvements and in establishing continuing programs forsome 340 seniors. [28] The equitable doctrine of estoppel has been discussed in recent cases cited by the Nifty Fifties: Short of an actual promise, if he, by his words or conduct, so behaves to lead another to believe that he will not insist on his strict legalrights – knowing or intending that the other will act on that belief – and he does so act, that again will raise an equity in favour of theother, and it is for a court of equity to say in what way the equity may be satisfied.

The cases show that this equity does not depend onagreement but on words or conduct ... Crabb v. Arun District Council [1975] 3 All E.R. 865, at 871 (C.A.) [29] The Ontario Court of Appeal in Eberts v. Carleton Condominium Corp. No. 396 , (ON CA), [2000] O.J.No. 3773, at para. 23 discussed proprietary estoppel as an exception to the general rule that estoppel does not give rise to a cause ofaction. The elements of proprietary estoppel are: 1. The owner of land induces, encourages or allows the claimant to believe that he has or will enjoy some right or benefit over theowner’s property

2. In reliance upon this belief, the claimant acts to his detriment to the knowledge of the owner, and 3. The owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.

The court went on to say: The relief which the court may give may be either negative, in the form of an order restraining O (the owner) from asserting his legal rights, or positive, by ordering O to either grant or convey to C (the claimant) some estate, right or interest in or over his land, to pay C appropriate compensation, or to act in some other way. [ 30 ] I conclude on the evidence that the PCA and the City induced and encouraged the Nifty Fifties to develop and use areas 4 and 5 exclusively for the purposes of their constituency. They were encouraged to look to rental revenue to offset operating costs.

They were told they would be solely responsible for construction costs and for their own operating expenses. They agreed to share in common costs.

The Nifty Fifties properly concluded that they could continue in occupation without a formal lease or sub-lease. [ 31 ] The evidence is that the City knowingly permitted the Nifty Fifties to build the expansion to their area without a lease from the City or a sub-lease from the PCA and to obtain operating funds through the FCSS to advance their programs on that basis. [ 32 ] Although one City employee raised the prospect of a lease or sub-lease in 2005, there was little evidence of any change in the arrangement until April 2009 when the PCA began to seek other users to add to its revenue base.

Until then, the Nifty Fifties had expended its own and arranged funds on capital and operating costs, continued its programs, and applied for and received funding from the City’s FCSS to continue its programs at least through to 2014. [ 33 ] They did so in reliance upon the reasonable belief that they would continue to use their space on the same basis as they had for years previously. [ 34 ] The evidence is that, driven by its own need for additional revenue, the PCA saw the Nifty Fifties space and the Nifty Fifties itself as a source of cash to fund their own operations.

This is not a case of the PCA growing in membership so as to need additional space for its own programs.

This is a case of an organization needing revenue and so needing more space to rent to third parties to gain that revenue. [ 35 ] A suggestion from both the City and the PCA that the arrangement had to be formalized for insurance or liability reasons does not explain the PCA’s insistence that rent be paid to them by the Nifty Fifties nor does it explain a confiscation by the PCA of rental revenues that the Nifty Fifties had arranged for their space. [ 36 ] It would be unconscionable to permit the PCA and the City to take advantage of the Nifty Fifties by seizing control of areas 4 and 5 in these circumstances and with this history.

The Lease [ 37 ] The PCA occupies the City lands pursuant to a lease carrying a term of 15 years ending December 31, 2011. The rental payable is a nominal $150 for the entire term. [ 38 ] The lease contains a renewal provision for a further 15 years provided that the PCA is not in default of the lease and agrees to abide by the then current governing policies of City Council regarding leases to community associations. Counsel for the City acknowledged that the PCA was not in default of the lease to this date. The only question raised was regarding the City’s public use

policy which requires the facility to be “open” to the public 50% of the time, or “providing the opportunity for 50% public participation”.

The policy description of public use makes it clear that use by the Nifty Fifties and its membership, as well as its occasional renters, qualifies in these terms. [ 39 ] The result then is that it appears likely, subject of course to the approval of City Council, that the lease will be renewed. [ 40 ] That is particularly so given that on March 21, 2011, the City entered into an agreement with the Nifty Fifties to continue providing funding to that organization through the City’s FCSS program through to December 31, 2013, with a City option to extend funding to April 30, 2014.

Funding for that program comes from both the City and the Province of Alberta. The Nifty Fifties have been in receipt of that funding annually for many years. Although the agreement does not specify a location where the Nifty Fifties shall operate, the address given is their current address. Thus on the one hand, the City supports the PCA in this litigation in its effort to seize control of the Nifty Fifties building space while on the other hand the City has committed to continued funding of the programs provided by the Nifty Fifties to Calgarians.

The agreement to continue funding the Nifty Fifties is a further clear representation from the City upon which the Nifty Fifties relied to develop and pursue its programs at this location. The evidence shows that they have no excess funds to begin paying rent to the PCA nor to finance a move to another location.

Section 609 [ 41 ] The City cites

section 609 of the Municipal Government Act , R.S.A. 2000, c-M-26: 609 No person can acquire an estate or interest in land owned by a municipality by adverse or unauthorized possession, occupation, enjoyment or use of the land. [ 42 ] The simple answer is that the Nifty Fifties use of their premises was neither adverse nor unauthorized. The factual history recited earlier makes that plain. The Nifty Fifties have not been in possession or use of the premises with the intent of excluding the City from its legal interest in title, nor its interest as lessor under the lease.

Quite the contrary, the Nifty Fifties have been in possession of their premises with the knowledge and consent of the City. Possession by consent is not adverse possession: Anger and Honsberger Law of Real Property , 3rd ed., vol. 2 (Aurora: Canada Law Book, 2010) at para. 29:60.50. [ 43 ] Thus

section 609 has no application to this case. Relief A. The PCA is estopped from denying the right of the Nifty Fifties to the use and the possession of areas 4 and 5 of the building on the same terms as existed before this litigation began. PCA is enjoined from interfering with that use and possession for the term of its lease with the City and any renewal thereof. B. The City is similarly estopped from denying the right of the Nifty Fifties to the use and possession of areas 4 and 5 of the building on the same terms as existed before this litigation began.

The City is enjoined from interfering with that use and possession for the balance of the term of the current lease, that is, to December 31, 2011, provided that the Nifty Fifties do not otherwise cause the PCA to be in default or in breach of the current lease. [ 44 ] I decline to extend this injunction against the City beyond the end of the current lease. There are simply too many variables. The City’s public use policy may change in a way that impacts upon the Nifty Fifties. City Council may determine to vary the terms of the renewed lease.

The City may offer a direct lease to the Nifty Fifties or facilitate an agreeable sub-lease between the PCA and the Nifty Fifties. Which if any of these events might occur is not now apparent. [ 45 ] I observe that it would in my view be unconscionable for the City to renew the lease with the PCA on terms and conditions that are less favourable to the Nifty Fifties than those terms upon which they have relied for years past and to the present time. However,

should that occur, the Nifty Fifties will then have to seek further relief on the facts as they then exist. Costs [ 46 ] The Nifty Fifties have been substantially successful so shall have costs jointly and severally against the PCA and the City of Calgary. Although this is primarily a dispute between the Nifty Fifties and the PCA, the City became an active litigant by filing a joint brief with the PCA and providing two counsel for the entire trial who joined in the cross-examination of the Nifty Fifties witnesses and the direct examination of the PCA witness. Costs will be on Column 2 of

Schedule C. Heard on the 20 th to the 24 th day of June, 2011. Dated at the City of Calgary, Alberta this 5 th day of July, 2011. T.F. McMahon J.C.Q.B.A. Appearances: Grant Vogeli and Fiana Bakshan Burnet, Duckworth & Palmer LLP for the Plaintiff S. Mark Zybutz Walsh Wilkins Creighton LLP for the Defendant Parkdale Community Association James T. Floyd and Colleen Sinclair City of Calgary, Law Department for the Defendant The City of Calgary