Strathcona County v. Half Moon Lake Resort Ltd., 2013 ABQB 405

Court of Queen ’ s Bench of Alberta Citation: Strathcona County v. Half Moon Lake Resort Ltd., 2013 ABQB 405 Date: 20130717 Docket: 9903 22441, 1203 09399 Registry: Edmonton IN THE MATTER OF the Municipal Government Act , S.A. 1994, c. M-26.1 AND IN THE MATTER OF the Land Titles Act , R.S.A. 1980, c. L-5 AND IN THE MATTER OF the Lands within the South East Quarter of

Section 6, Township 52, Range 21, West of the Fourth Meridian, and within the Boundaries of Strathcona County Between: Docket: 9903 22441 Strathcona County Applicant/Respondent - and - Half Moon Lake Resort Ltd., Apple Auction Corporation operating a business under the firm name and style of Apple Auction Ltd., and Brian Lovig Respondents/Applicants - and - Armac Investments Ltd., Jack Purdy also known as John Purdy and John Kenneth Purdy, Registrar of Land Titles Respondents

And Between: Docket: 1203 09399 Registrar of Land Titles Applicant - and - Half Moon Lake Resort Ltd., Armac Investments Ltd., Jack Purdy also known as John Purdy, Strathcona County Respondents _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice Brian R. Burrows _______________________________________________________ [ 1 ] There are three applications.

They all arise out of a consent order granted in this action on January 15, 2002. [ 2 ] The first application, filed on May 31, 2012, in action 9903 22441, was brought by Half Moon Lake Resort Ltd. and seeks a declaration that certain changes proposed by Half Moon to a form of “ Campsite Rental Agreement ” , which was approved in the consent order, are not prohibited by the terms of that order.

As required by the consent order, Half Moon seeks a court order permitting it to enter campsite rental agreements with the changed provisions. [ 3 ] The second application, filed on June 13, 2012, also in action 9903 22441, was brought by Strathcona County seeking a declaration that leases of campsites granted by Half Moon Lake in a form that differs from the form which was approved in the consent order are invalid and that Half Moon, Armac Investments Ltd., Jack Purdy, and the Registrar of Land Titles are in contempt of court for failing to comply with the terms of the consent order. [ 4 ] The third application, filed on June 20, 2012, in action 1203 09399, was brought by the Registrar of Land Titles seeking directions as to the obligations imposed on the Registrar by the consent order. [ 5 ] The lengthy history of this litigation began in 1999.

Two of the original respondents, Apple Auction Corporation, operating a business under the firm name and style of Apple Auction Ltd., and Brian Lovig, are no longer involved. They have been replaced by Mr. Purdy and Armac Investments Ltd. [ 6 ] The same facts are in the background of all three applications.

[7] Half Moon Lake Resort is a 139 acre unsubdivided parcel of land abutting Half Moon Lake in Strathcona County. HalfMoon has created 216 campsites for recreational use on this parcel. The development of the campsites on the land and the building ofwashroom facilities in relation to the campsites were approved in development permits issued by Strathcona County in 1990, 1998 and2002. [8] In 1999 Half Moon serially attempted four methods of conveying title-like interests in individual campsites to purchasers.

Strathcona County successfully applied for orders prohibiting Half Moon from using each of the first three methods on the basis thatconveyance of campsites by each of the three methods amounted to unapproved subdivision of the title. The first and second methods,outright sale and perpetual lease, were held invalid by Agrios J. in June 1999 in an unreported decision.

The third method, a form of 35year lease, was declared invalid by Ritter J. in May 2000. [9] Ritter J.’s Reasons for Judgment in this Court and Hunt J.A.’s Reasons in the Court of Appeal, which upheld the decisionsof Agrios and Ritter JJ., set out the history of the litigation and relevant legal principles in helpful detail: (2000) 2000 ABQB 356 , 83 Alta LR (3d) 334, [2001] 1 WWR 727, 264 AR 189 (Alta Q.B.); (2001) 2001 ABCA 50 , 197 DLR (4th) 700,[2001] 6 WWR 611, 89 Alta LR (3d) 203, 281 AR 103 (Alta C.A.). [10] On October 30, 2001, Half Moon applied for permission to lease “an interest in the Lands” pursuant to the terms of a fourthform of instrument which was attached to its Notice of Motion.

Half Moon stated in its application that it had drafted the proposed formin order to comply with the requirements set out in the Court of Appeal decision relating to its previous attempts. [11] Half Moon’s application was resolved by a consent order.

On November 16, 2001, Strathcona County and the originalRespondents, Half Moon and Lovig, consented to an order which permitted the Respondents to lease campsites using a form of campsiterental agreement which was attached to the order. [12] The form of campsite rental agreement attached to the order was different from the form that had been attached to the noticeof motion in 4 respects.

None of the differences have significance to the issues in the applications before the Court except perhaps onedifference, detailed below, in the provision setting out the term of the rental agreement. [13] The consent order provided in part: UPON HEARING THE APPLICATIONS made on behalf of Half Moon Lake Resort and Brian Lovig; AND UPON HEARINGreferences from the Affidavits of Donald Phillips and Brian Lovig filed in this action; AND UPON noting the consent of counsel for theparties, IT IS HEREBY ORDERED THAT: 1.

The Respondents are permitted to lease an interest in the Lands pursuant to the terms of the Campsite Rental Agreement attachedhereto as

Schedule “A”. . . . 3. The Respondents are prohibited from selling or leasing any other interest in the Lands without prior Court Order upon notice tothe County. . . . 5. The Registrar of the North Alberta Land Registration District shall: (

a) except as follows not accept for registration any instrument that has the effect of transferring any interest in land respecting theLands without a prior court order authorizing the same. However, any instrument relating to the lease referred to in paragraphs 1 and 2above shall be accepted for registration; . . .

I have italicized words in paragraph 5(

a) which were changed in an amended consent order described below. Counsel for Half Moon and Lovig consented only to paragraphs 1 to 4 of this consent order. [ 14 ] The form of campsite rental agreement attached to the order contained this provision: 1. Term The term of this Agreement shall be for a period of Thirty-Five (35) years, more or less, expiring on August 31, 2037.

In the form of rental agreement attached to Half Moon ’ s notice of motion the date in this provision had been “ August 31, 2036 ” – 35 years after 2001, the year in which the notice of motion was filed. [ 15 ] In January 2002, Strathcona County, the original Respondents and Alberta Justice consented to an “ Amended and Restated Consent Order ” . This is the consent order to which all three current applications relate as mentioned at the commencement of these Reasons. The only changes were to the recitals and paragraph 5 of the order, both of which I set out below.

I have italicized the words that were different from the words in the original consent order: UPON HEARING THE APPLICATIONS made on behalf of Half Moon Lake Resort Ltd. and Brian Lovig; AND UPON HEARING references from the Affidavits of Donald Phillips and Brian Lovig filed in this action; AND UPON noting the consent of the counsel for the parties and the Registrar of the Titles; AND UPON being satisfied that

Part 17 of the Municipal Government Act does not apply in that the attached lease does not have the effect of subdividing a parcel of land; IT IS HEREBY ORDERED THAT : . . . 5. The Registrar of Titles shall: (

a) except as follows not accept for registration any instrument that has the effect of transferring any interest of the Registered Owner respecting the Lands without a prior court order or written consent of the County authorizing the same. However, any lease referred to in paragraphs 1 and 2 above shall only be accepted for registration if a Plan of Survey referencing the Plan in Paragraph 2 has been registered ; and (

b) register this Order against the Certificates of Title for the Lands, notwithstanding the requirements of s. 191 of the Alberta Land Titles Act, R.S.A. 2000, C. L-4 , formerly s. 180.1. The Order may be discharged upon further court order or a request from the County. [ 16 ] The form of campsite rental agreement attached to the January 2002 consent order was the same as the form attached to the November 2001 consent order.

It provided in paragraph 1 that, “ The term of this Agreement shall be for a period of Thirty-Five (35) years, more or less, expiring on August 31, 2037. ” [ 17 ] All parties agreed to a further consent order in February 2003. It increased the total number of campsites available for lease from 159 to 216. Strathcona County had issued a development permit authorizing this expansion to 216 campsites. [ 18 ] Of the 216 campsite areas available for rent, a total of 72 have current campsite rental agreements. Of these 72 rental agreements, 32 are in the form approved in the consent order.

In one case, a campsite rental agreement entered on April 29, 2004, the provision relating to the term has been amended to read, “ The term of this Agreement shall be for a period of Thirty-Five (35) years, more or less, expiring on August 31, 2039. ” The remaining 39 campsite rental agreements contain a renewal option provision which reads:

Providing that this lease is in good standing, the lessee shall have the option to renew this lease for two additional further periods of 35 years upon giving written notice one year before the expiration of the term of this lease and the second term. The lease rate shall be established by the Owner.

In some of the leases the renewal option provision is worded as follows: Provided that this lease is in good standing, the Lessee shall have the option to renew this lease for two (2) additional further periods of 35 years upon giving written notice one year before the expiration of the term of this lease and the second term.

The lease rate shall be by mutual agreement, failing which it is to be determined by arbitration under the Arbitration Act of Alberta. [ 19 ] The form of lease approved in the consent order did not contain a renewal option clause. [ 20 ] In 27 of the 39 campsite rental agreements with renewal option clauses, the lessee is Armac Investments Ltd. which has common management with Half Moon.

The lessees in the remaining 12 leases with renewal option clauses are individuals. [ 21 ] In the context of the second application listed at the start of these Reasons, Strathcona County submits that by entering the one lease with a different end date and the 39 leases with renewal option clauses without first obtaining court approval on notice to Strathcona County, Half Moon violated the consent order. [ 22 ] In the first application mentioned at the start of these Reasons, Half Moon seeks court approval of a form of campsite rental agreement where: a.

The term would be 35 years more or less expiring on August 31 of the year 35 years after the year in which the rental agreement is entered, and b.

A renewal option worded as follows: Option/Right of First Refusal to Re-Rent Provided that the Renter has strictly and continuously performed all of the Renter ’ s obligations under this Agreement and any renewal thereof, the Renter shall have the option/right of first refusal to re-rent the Campsite for two (2) additional further periods of Thirty-Five (35) years upon giving written notice to the Owner prior to the expiration of the term of this Agreement and the second term.

Any such re-rent of the Campsite for an additional term shall be on the same terms and conditions as this Agreement, save and except that the Rental Rate payable for the renewal term(

s) shall be negotiated between the Owner and the Renter based upon fair market rental value, and failing agreement in the matter shall be resolved in accordance with the Arbitration Act of Alberta, provided however that the Rental Rate payable by the Renter for any renewal term shall not in any event be greater than $____________________. This Option/Right of First Refusal to Re-Rent is contractual only and is not intended to bind or create an interest in land. [ 23 ] In the third application, the Registrar of Land Titles seeks:

a) directions as to whether the consent order imposed on the Registrar the obligation to ensure that campsite rental agreements submitted for registration complied with the consent order,

b) amendment of the consent order to remove that obligation if it was imposed, and

c) directions as to what the Registrar should do about campsite rental agreements which were registered though they did not comply with the order, if there are any. [ 24 ] Prior to the hearing of these applications, notice was given to third parties (the renters under campsite rental agreements) whose rights could be affected by the applications. The notice advised the parties served as to what they should do if they wished to participate in the applications.

I am advised that though some of the parties served replied to the notice, none indicated a desire to participate. [ 25 ] Access Capital Partners Inc. has a mortgage security interest against several rental agreements of which Armac Investments is the renter. It filed an affidavit and was represented by counsel at the application. The Issues [ 26 ] There are two issues central to the determination of all three applications. The first concerns the “ term ” provision in the form of rental agreement which was attached to the consent order.

In Strathcona ’ s application the issue in relation to that provision is whether it amounted to a breach of the consent order for Half Moon to enter the one lease which changed the words “ August 31, 2037" to “ August 31, 2039". In Half Moon ’ s application, the issue in relation to that provision is whether, in future, leases which change “ August 31, 2037" to a date 35 years after the year in which the lease is granted, should be permitted.

In the Registrar ’ s application, the issue is what to do about agreements registered in the past or submitted for registration in the future where the end date is 35 years after the year of entry into the agreement and not August 31, 2039. [ 27 ] The second issue is in relation to the renewal option provision. In Half Moon ’ s application, the issue is whether the Court should permit Half Moon to enter into leases containing the renewal option provision Half Moon proposes. In Strathcona ’ s application, it is whether the leases entered to date which contain a renewal option provision offend the consent order.

In the Registrar ’ s application, the issue is what to do about agreements registered in the past or submitted in the future that contain a renewal option provision. The Term Provision: 35 years, more or less, ending August 31, 2037 [ 28 ] As noted, the form approved in the consent order says that the agreement will have a term of “ 35 years, more or less, ending August 31, 2037". That wording makes clear sense for a lease entered in 2002, the year of the consent order. But for any lease entered after 2002 it does not.

Either the “ 35 years more or less ” or the “ August 31, 2037" cannot be accurate in a lease entered after 2002. For any lease entered after 2002, the wording of the provision defining the duration of the term of the lease is ambiguous. [ 29 ] Strathcona suggests that the words mean that all leases regardless of when entered will end no later than August 31, 2037. That

interpretation requires that the words “ 35 years more or less ” be ignored. No evidentiary or circumstantial justification for ignoring them exists. The ambiguity persists. [ 30 ] The affidavit evidence before the Court, as to the parties ’ intention at the time they agreed to the consent order approving the form of rental agreement attached to it, provides little assistance. [ 31 ] Affidavit materials filed with Half Moon ’ s notice of motion of October 30, 2001 exhibit correspondence between counsel for Half Moon and Strathcona which gives some insight into the dispute that was resolved by the consent order.

The correspondence indicates that one of several sticking points was the length of the lease, Strathcona taking the position that a 35 year lease was unacceptable. The correspondence does not, however, give any insight as to how the dispute came to be resolved.

The idea of a diminishing term and common expiry date – that though leases granted in 2002 would be for a 35 year term, leases in subsequent years would be for less than that, and that all leases would expire no later than August 31, 2037 – is not mentioned. [ 32 ] Strathcona submits that the following evidence contained in the April 2013 affidavit of one of its officers, who was not involved at the time of the consent order, is evidence as to Strathcona ’ s intention in 2001 when the inclusion of the words “ ending

August 31, 2037" in the lease was agreed to: Paragraph 1 of the form of Campsite Rental Agreement approved in the Consent Orders imposed a fixed end date for all Campsite Rental Agreements by stipulating that the term of the agreement expires on August 31, 2037.

Having a fixed end date for all Campsite Rental Agreements allows the Applicant an opportunity to evaluate, from a planning perspective, the continued suitability of the current arrangements on the Lands. [ 33 ] I note that this evidence does not say anything about Strathcona ’ s 2001 intention regarding the inclusion of “ ending August 31, 2037" in the form of agreement.

It does no more than suggest the effect the officer thinks those words have. [ 34 ] I find it difficult to accept that the ambiguous wording under consideration would have been chosen if in fact Strathcona intended a common ending date for all rental agreements. The ambiguous wording would certainly not communicate that intention to anyone else. There is certainly no suggestion in Strathcona ’ s officer ’ s evidence or anywhere else that the wording was chosen to express a mutual intention of both Half Moon and Strathcona. [ 35 ] The filed evidence is of little assistance in resolving the ambiguity.

Nevertheless, in my view, consideration of the circumstances surrounding the agreement between Half Moon and Strathcona which was memorialized in the consent order renders the parties ’ intention clear and removes the ambiguity. [ 36 ] In their decisions, both Ritter J. in this Court and Hunt J.A. in the Court of Appeal noted that Half Moon ’ s goal was to enter into long term leases of the campsites which gave to the lessees rights approaching as closely as possible those of a fee simple title holder without effecting an unapproved subdivision of the title.

Both decisions recognized that Half Moon had the right to achieve its goal. [ 37 ] Half Moon ’ s first three attempts to reach the goal failed. In Strathcona ’ s challenges to those attempts, the Courts identified the features of the instruments Half Moon had used in those attempts which crossed the line into subdivision. Half Moon and the County then agreed to a form of lease that the County acknowledged did not cross the line. [ 38 ] In my view, Strathcona acted reasonably in agreeing to the consent order and conceding that the form of campsite rental agreement attached to it did not constitute a sale.

The features of the previous form of campsite rental agreement which the Court of Appeal had held made the lease an instrument of subdivision had been removed. In particular, the Court of Appeal had held that under the previous form, Half Moon retained virtually no control over the land leased. All conventional lessor ’ s rights had been assigned to a Tenants ’ Association.

There was significant risk that Half Moon ’ s total relinquishment of control could give rise to enforcement problems for planning authorities during the term of the lease. [ 39 ] But the form of campsite rental agreement accepted by Strathcona in the consent order contained no reference to a Tenants ’ Association. Half Moon retained significant ongoing control over the land. Any improvement proposed by a lessee would require Half Moon ’ s approval. Half Moon itself would exclusively deal with Strathcona or any regulatory body if planning or other approval was required for a proposed improvement.

Half Moon itself, and not a Tenants ’ Association or the lessees in combination, would be responsible for enforcement of the agreement. [ 40 ] Assessing the previous form of rental agreement, the Court of Appeal had held that, “ Neither the lengthy term of the lease nor payment of the rent by way of lump sum, by themselves, would necessarily lead to the conclusion that the lease is really a sale. ” (para. 44) It was that Half Moon retained virtually no control over the lands, that was critical. In the form approved in the consent order, however, ongoing control had been retained by Half Moon.

The term was still lengthy and the rent was still to be paid at the start, but there was little prospect that the Court would find those characteristics rendered the lease in substance a sale when the Court of Appeal had not fixed on those features to so conclude when considering the previous form of agreement. [ 41 ] It was therefore, in my view, reasonable for the parties to resolve their dispute as they did. Their agreement and the form of lease was recorded in the consent order. [ 42 ] The only goal in reaching a resolution which was common to both the County and Half Moon was to establish a form of long

term lease that would not effect a subdivision. They clearly agreed that a lease with a term of 35 years and the other provisions of the form attached to the consent order was acceptable. They agreed that the 35 year term would not cause the lease to be in fact a sale. Such a lease would not constitute an unapproved subdivision. [ 43 ] The only mutual goal and intention of the parties to the consent order was achieved when the County agreed to be bound by the conclusion that a 35 year lease, in the context of the other terms in the approved form, would not effect a subdivision.

Strathcona ’ s acceptance of that conclusion cannot have depended on the lease commencing in 2002. That such a 35 year lease would not subdivide would have to be as accurate a conclusion for a 35 year lease starting in 2005 and ending in 2040 as it was for a 35 year lease starting in 2002 and ending in 2037.

Stating the end date of the rental agreement as August 31, 2037 was entirely superfluous to the parties ’ mutual goal and intention concerning avoiding subdivision. [ 44 ] I do not accept that anyone, including Strathcona , intended that there be a fixed end date for all leases so that Strathcona on that date could review such planning issues as might then exist. As noted, the County had issued development permits to Half Moon which permitted it to create 216 campsite areas on its land. There is no suggestion that Half Moon has not complied with the terms of the development permits in developing the land.

If Half Moon ’ s permission to develop its land was limited, the limitation would be stated in the development permit. This would include any limitation on the duration of the development permission, to the extent that Strathcona County ’ s land use bylaw provides for such limitation: Municipal Government Act , RSA 2000, c. M-26, s. 640(2)(c)(v).

Though the evidence states that development permits were issued to Half Moon, the permits themselves are not in evidence. [ 45 ] In my view, if Strathcona wanted to ensure that it would be in a position to review Half Moon ’ s development after 35 years, the proper method of so ensuring would be by conditions in the development permit, to the extent that such conditions are authorized by the bylaw governing development permits. Perhaps there were other means of accomplishing the same end. But any means used would have to involve clear communication to Half Moon that such a limitation was being imposed.

The ambiguous description of the term in the approved form of rental agreement falls far short of such clear communication. [ 46 ] In the context of Half Moon ’ s application, I am satisfied that a campsite rental agreement which differs from the form attached to the consent order only in that the term is described as 35 years, more or less, ending on August 31 of the 35 th year after the year in which the lease is granted, does not effect a subdivision of the title.

Exercising the authority granted by the parties in paragraph 3 of the consent order, I grant Half Moon leave to enter such campsite rental agreements. [ 47 ] In the context of Strathcona ’ s application, I am satisfied that the parties intended that the date in the provision setting out the term of the rental agreement would be August 31 of the 35 th year following the year in which the agreement was entered. It did not constitute a breach of the consent order for Half Moon to enter a rental agreement in 2004 which stated it was for a term of 35 years more or less ending on August 31, 2039.

Entry of that agreement did not constitute a breach of the consent order or contempt of court on the part of Half Moon, Armac or Purdy. Registering it did not constitute a breach of the consent order or contempt of court on the part of the Registrar of Land Titles. [ 48 ] In the context of the Registrar ’ s application, in light of the conclusions just stated, no specific direction is required. Later in these Reasons I will give directions concerning the Registrar ’ s ongoing role in relation to the registration of future campsite rental agreements.

Option to Renew: Two further terms of 35 years each [ 49 ] Strathcona ’ s position is that the renewal option provisions, both those actually used and proposed, have the effect of making the term of the lease, potentially at least, 105 years and that a lease of that duration effects a subdivision which requires prior approval. [ 50 ] Half Moon ’ s position is that the proposed renewal option provision is an entirely in personam contractual right and is not an interest in land. The option to renew would not run with the land and is therefore unobjectionable.

Further, given that Half Moon has the right to enter 35 year leases in the form approved in the consent order, it would, upon the expiry of one 35 year lease, have the right to enter another. The effect of the renewal option provision is simply to require Half Moon to continue to accept the same lessee rather than lease to someone else when the first or second 35 year term expires, if the original lessee wishes to continue as lessee. Half Moon notes that under the proposed renewal option, the lessee would be required to pay a new lump sum rental at the time of the renewal. In the

proposed renewal option provision, failing agreement as to the amount of the rent, it would be determined by arbitration. [51] I do not accept Half Moon’s position. In my view, the proposed provision would create a lease arrangement indistinguishablefrom a 105 year lease where the rent was payable every 35 years. In his decision Ritter J. observed that for natural persons, a verylengthy lease term is practically the same as a perpetual lease. Clearly the primary intention is that Half Moon’s lessees would beindividuals.

In my view, if the renewal option provision were permitted, the lease would effectively separate the campsite area leasedfrom the parcel of land for which title was issued. It would effect a subdivision. [52] I reject Half Moon’s submission that only features of the proposed instrument which amount to an interest in land are relevantin determining whether the lease effects a subdivision. In several previous cases, in assessing whether a lease effected a subdivision,Alberta Courts have focussed on the duration of the term of the lease as important to the issue.

A lease interest is no doubt an interest inland, but the duration of the term is not the feature that makes it an interest in land. Characteristics of the transaction, other than itscharacter as a conveyance of an interest in land, are clearly relevant, and indeed fundamental, in determining whether it effects asubdivision. [53] In Otan Developments Ltd. v. Kuropatwa (1978) (AB CA), 94 DLR (3d) 37 (Alta S.C.A.D.), MorrowJ.A. focussed on the 49 year term of the lease of a 1 acre portion of a 3.9 acre parcel in determining that it was, in the circumstances, anattempt to subdivide. He said (para. 30): . . .

But here, in my opinion, the position is almost akin to attempting to obtain the benefits of a subdivision under the guise of calling it alease but without having to within the foreseeable future comply with the applicable [subdivision] legislation. The whole purport,particularly with the term being placed at 49 years, could almost be termed colourable. In my view, therefore, the lease “may have theeffect of subdividing” the parcel so must be held to be bad. [54] In McDonald’s Restaurant of Canada Ltd. v. North Alberta (Registrar of Land Titles)

(1982) D.L.R. (3d) 203, Miller J.(later A.C.J.) of this Court considered the lease of a portion of a shopping centre parking lot intended to be used for a McDonald’sRestaurant. The term of the lease was to be 40 years with a 10 year renewal option. Miller J. (at para. 14) noted that the length of theterm was a feature which tended to support a finding that the lease effected a subdivision. He found, however, that there were bona fidecommercial reasons for the lengthy term and other features of the transaction which outweighed the conclusion which the length of theterm suggested. [55] In Robinson v.

Guthrie and Guthrie (1984) 1984 ABCA 68 , 6 DLR (4th) 256 (Alta C.A.) Stevenson J.A.considered a 99 year lease of a 10 acre portion of a titled quarter

section of land. The length of the term, the fact that the rent was paidby a single advance payment, and the fact that the lessee was required to pay half of the annual taxes on the land drove the conclusionthat the lease had the effect of subdividing the parcel. [56] In the present case, as I have concluded, the effect of the renewal option is to make the campsite rental agreements essentially105 year leases.

Rental is payable only every 35 years and, in the proposed renewal option clause, the determination of the amount ofthe second and third rental payments is not ultimately in the control of Half Moon – failing agreement it is determined by arbitration. The lease also requires the lessee to pay an annual pro-rata share of common area costs which are described as including property taxes. [57] In the context of Half Moon’s application, I decline to approve the proposed renewal option provision.

I direct that HalfMoon not include a renewal option provision in future campsite rental agreements. [58] In the context of Strathcona’s application the issue is whether the inclusion of a renewal option provision in the 39 campsiterental agreements offends the consent order and constitutes contempt of court on the part of Half Moon, Armac and Purdy and whetherthe registration of the agreements against the title constituted a breach of the consent order and contempt of court on the part of theRegistrar. [59] Half Moon argued that on a close parsing of the words of paragraphs 1 and 3 of the consent order, entering campsite rentalagreements which contained renewal options did not breach the order.

Paragraphs 1 and 3 of the consent order provide:

1. The Respondents [Half Moon] are permitted to lease an interest in the Lands pursuant to the terms of the Campsite Rental Agreement attached hereto as

Schedule “ A ” . . . . 3. The Respondents are prohibited from selling or leasing any other interest in the Lands without prior Court Order upon notice to the County. [ 60 ] Half Moon noted that the prohibition in paragraph 3 of the order is against selling or leasing an “ interest in the Lands ” . It argued that the inclusion of the renewal option provision in the 39 campsite leases did not offend this prohibition because the renewal option granted is contractual only. It is not an “ interest in the Lands ” . [ 61 ] I reject this submission. In my view, the prohibition was not limited as Half Moon submits.

The term of legal art used to refer to an interest which runs with the land in contrast to an interest which does not, is generally “ interest in land ” not “ interest in the Lands ” . Both terms were used in the original consent order (the latter in paragraphs 1 and 3, the former in paragraph 5). That something broader than that which is normally called an “ interest in land ” was actually intended is indicated by the fact that in the amended consent order, in paragraph 5, the term “ interest in land ” in the original order was replaced by “ interest of the Registered Owner respecting the Lands ” .

Whether or not the impugned renewal option was an “ interest in land ” is not therefore determinative. In my view the intended prohibition was of any provision not in the approved form which would arguably cause the rental agreement to effect a subdivision. In my view, the renewal option was such a provision and was prohibited. [ 62 ] Further, in the recital added to the amended consent order, the parties recorded their agreement that, “

Part 17 of the Municipal Government Act [the part which governs planning and development including subdivision] does not apply in that the attached lease does not have the effect of subdividing a parcel of land. ” The clear intention was that the attached form and only the attached form would be used, that there was no acknowledgement that any other form would not effect a subdivision, and that whether or not any other form did effect subdivision would require judicial assessment.

Half Moon clearly violated the order by entering campsite rental agreements with renewal option provisions without first obtaining a court order on notice to Strathcona. [ 63 ] I declare that the renewal option provisions contained in the campsite rental agreements entered since the date of the consent order are invalid. In that regard I note that the terms and conditions of the campsite rental agreements provide: 15. Every provision of this Agreement is intended to be severable.

If any term or provision contained in this Agreement is declared to be illegal or invalid for any reason whatsoever such illegality shall not affect the validity of the remainder of the Agreement. . . . I also note, as previously mentioned, that all of the lessees under campsite rental agreements containing renewal option provisions were given notice of this application, which included notice that the declaration I have granted was being sought, and the opportunity to participate.

None chose to do so. [ 64 ] In its application Strathcona sought an order imposing such penalty on Half Moon as a consequence of its contempt as the Court deemed appropriate. In its written brief it appears to suggest that an order for solicitor/client costs would be an appropriate penalty.

Nothing was said about penalty at the presentation of the application. [ 65 ] In my view the appropriate penalty is a fine of $1000 which I direct Half Moon pay to the Clerk of the Court by August 31, 2013. [ 66 ] I do not think solicitor/client costs are appropriate because Strathcona ’ s original allegation of contempt included allegations that many other differences between registered leases and the consent order form of lease amounted to contemptuous breaches of the order – see Exhibit P to the affidavit of Kevin Stone filed with the application.

Only two of these were pursued in the application as presented before me. Only one of those two was found to be a breach and contempt of the order.

[ 67 ] Strathcona sought declarations that Armac Investments Ltd., which has common management with Half Moon, and Jack Purdy, who is the principal of both corporations, were also in contempt of court for, in effect, facilitating Half Moon ’ s breach of the order and contempt. I cannot see that any purpose would be served by granting such a declaration. Neither Armac nor Mr. Purdy is a party to the litigation. Neither was involved at the time of the consent order. I accept that the human agency behind the conduct I have found to be in breach of the order was Mr.

Purdy, but the legal actor and the legal party that consented to the consent order subsequently breached was Half Moon. I decline to find Armac or Mr. Purdy in contempt. [ 68 ] As to the Registrar, counsel who appeared for the Registrar submitted that the consent order was unclear as to the obligation imposed upon the Registrar. The instructions given to the Registrar in the consent order were these: 5. The Registrar of Titles shall: (

a) except as follows not accept for registration any instrument that has the effect of transferring any interest of the Registered Owner respecting the Lands without a prior court order or written consent of the County authorizing the same. However, any lease referred to in paragraphs 1 and 2 above shall only be accepted for registration if a Plan of Survey referencing the Plan in Paragraph 2 has been registered; and (

b) register this Order against the Certificates of Title for the Lands, notwithstanding the requirements of s. 191 of the Alberta Land Titles Act, R.S.A. 2000, C. L-4 , formerly s. 180.1. The Order may be discharged upon further court order or a request from the County. [ 69 ] The instructions appeared to require the Registrar to determine whether an instrument submitted for registration had the effect of transferring an interest of the Registered Owner respecting the lands other than the interest transferred by the approved form. [ 70 ] There is evidence filed by Half Moon (the affidavit of Norman W.

Simons filed April 23, 2013) that when a campsite rental agreement containing a renewal option was first submitted for registration in May 2007 the Registrar rejected it. The rejection notice is exhibited. It said: This instrument is not registerable in its current form. It can be registered by way of caveat. [ 71 ] Mr. Simons swears: Shortly after this rejection I believe I attended upon Land Titles Office Examiner Gordon Hamilton who I recall was the Chief Examiner. We specifically reviewed the issue of the options to renew as shown in paragraph 8 of the Campsite Agreement. Mr.

Hamilton agreed that the option to renew did not constitute an interest in land and did not offend the Court Orders. Mr. Hamilton agreed to accept registration and I asked him for a letter confirming same, which was received. [ 72 ] Mr. Simons continues that the letter was sent back to the Land Titles Office with a renewed request for registration. He exhibits a copy of his letter to the Registrar which refers to the enclosed letter of Mr. Hamilton. Unfortunately, no copy of that letter was retained.

The Land Titles Office has not been able to find it. [ 73 ] I agree that the instructions to the Registrar contained in the consent order appeared to assign to the Registrar the task of judging whether an instrument offered for registration by Half Moon effected the transfer of an interest not conveyed in the approved form. The language used was capable of misinterpretation. Contrary to the

interpretation which I have concluded is accurate, it was possible to understand that the Registrar was required to judge whether an interest not in the approved form was an interest in land. It was possible for the Registrar to conclude that the renewal option was not an interest in land and that the campsite rental agreement containing it was registerable. I am satisfied that the Registrar was acting in good faith and within what he reasonably thought were the requirements of the consent order when he accepted the instrument for registration. No contempt has been shown.

[ 74 ] I observe that the Land Titles Act has many provisions that require the Registrar to form a judgment before acting. The possibility that the Registrar may make an error in exercising such judgment always exists. There is, however, no suggestion in the Land Titles Act that where the Registrar makes an error, he is in violation of the Act. I am doubtful, therefore, that the Registrar should ever be held in contempt when he makes an error in carrying out instructions contained in a court order like the consent order.

Indeed where someone believes the Registrar has made an error, the Land Titles Act in s. 184 provides a process for the issue to be referred to the Court. That process would have been available to Strathcona in this instance. [ 75 ] In my view, Strathcona ’ s application for a declaration that the Registrar was in contempt was poorly advised. The application served no purpose.

The remedy of a declaration that the campsite rental agreements containing option renewal clauses were invalid was entirely sufficient. [ 76 ] I dismiss Strathcona ’ s application for a declaration that the Registrar of Land Titles was in contempt of court.

The Registrar ’ s Application: Order to replace the Consent Order [ 77 ] As previously indicated, as I have found that the term in the agreed form of campsite rental agreement was 35 years ending on August 31 of the 35 th year following the date of the agreement, the Registrar will require no directions concerning the registration of agreements where the end date was not August 31, 2037. [ 78 ] Neither, in my view, does the Registrar require directions as to what to do about registered campsite rental agreements containing an option renewal clause. I have declared those clauses invalid.

The formal order should declare that the option renewal clauses are deemed severed from the agreement. The remaining terms of the agreement which are in the approved form are valid as is the registration of the instrument recording them. [ 79 ] The Registrar also sought directions as to his ongoing obligations. In my view, it is appropriate to require the Registrar to ensure that any campsite rental agreement is in the form approved in the court order.

It is not, however, appropriate to require the Registrar to assess the merits of any deviation from that exact form. [ 80 ] In my view, the wording of the order governing campsite rental agreements should be clarified. The obligations of the Registrar should be simplified. And express reference should be made to the process to be employed should a dispute involving the Registrar arises. [ 81 ] I therefore direct that the following order be substituted for the consent orders now in force.

ORDER On the Court ’ s own motion and in the context of applications made by Half Moon Lake Resort Ltd., and Strathcona County in Action 9903 22441 and by the Registrar of Land Titles in Action 1203 09399. And having found that existing Consent Orders granted in Action 9903 22441 which govern the granting and registration of Campsite Rental Agreements in relation to the Lands require clarification. It is hereby ordered: 1. In this order:

(a) “ Lands ” shall mean: All that portion of the southeast quarter of

Section six (6), Township fifty-two (52), Range twenty-one (21) west of the fourth meridian, not covered by any of the waters of Lake No. 1 and Lake No. 2 as shown on a plan of survey of the said township signed at Ottawa on the 13 th day of May, A.D. 1901 containing 56.3 hectares (139 acres) more or less, excepting thereout all mines and minerals. (b) “ Campsite Areas ” shall mean the 216 areas on the Lands comprised of: i. the 141 areas shown within Detail “ A ” as indicated on Survey Plan 022 4824 ii. the 57 areas shown within Detail “ B ” as indicated on Survey Plan 022 4824 iii. the 18 areas as approved by Strathcona County on October 1, 2002 abutting the easterly boundary of Detail “ A ” on Survey Plan 022 4824 all as depicted on

Schedule “ A ” to this Order. 2. Half Moon Lake Resort Ltd. which is the current registered owner of the Lands, and any subsequent registered owners of the Lands, may enter into Campsite Rental Agreements in respect of individual Campsite Areas in the form attached to this order as

Schedule “ B ” . 3. Any sale or lease of a Campsite Area not in the exact form of Campsite Rental Agreement attached to this order as

Schedule “ B ” shall be invalid. 4. The Registrar of Land Titles shall register a Campsite Rental Agreement in the exact form attached to this order as

Schedule “ B ” against the title to the Lands but shall not register any other instrument relating to a Campsite Area unless registration is authorized by further order. 5. If any party or any other interested person is dissatisfied with the determination of the Registrar of Land Titles made pursuant to this Order concerning the registration of any instrument relating to a Campsite Area, that party or other interested person may invoke the procedure set out in the Land Titles Act , RSA 2000, c. L-4, s. 184. 6.

The Registrar of Land Titles may refer any question arising in relation to the requirements of this order to the Court using the procedure set out in the Land Titles Act, RSA 2000, c. L-4, s. 185. 7. The Campsite Rental Agreement attached to this order as

Schedule “ B ” may be amended by further order sought on notice to Strathcona County. 8. The following Consent Orders are deemed replaced by this Order and to have ceased to be in force upon the entry of this Order:

a) The Consent Order of E. D. McCallum J. granted and entered on Friday, November 16, 2001 in Action 9903 22441,

b) The Amended and Restated Consent Order of R. P. Belzil J. granted and entered on Tuesday, January 15, 2002 in Action 9903 22441,

c) The Consent Order of A.T. Cooke J. granted and entered on Thursday, February 6, 2003 in Action 9903 22441. 9. The Registrar of Land Titles shall register this Order against the Certificate of Title for the Lands notwithstanding the requirements of s. 191 of the Land Titles Act, RSA 2000, c. L-4 . The orders listed in paragraph 8 of this Order shall be discharged from the title to the Lands. This Order may be discharged upon further order or a request to the Registrar from the County.

Schedule “ A ” to this order will be the document which is

Schedule “ A ” to the Consent Order of A.T. Cooke J.

Schedule “ B ” will be the Campsite Rental Agreement which is

Schedule “ A ” to the Consent Order of R.P. Belzil J. except that paragraph 1 shall be amended to read: 1. Term The term of this Agreement shall be for a period of Thirty-Five (35) years, more or less, expiring on August 31, ___________( this blank shall be filled with the year 35 years after the year the Campsite Rental Agreement is entered.) [ 82 ] It may be that counsel have suggestions for the improvement of the wording of this order. If so I invite them to contact my office to arrange a procedure for the suggestions to be advanced and assessed.

I intend the order set out above to be separate and in addition to the formal order arising from these Reasons. Costs [ 83 ] Both Half Moon and Strathcona have had some success in their respective applications and in opposing each other ’ s applications. Each shall bear their own costs. [ 84 ] The Registrar of Land Titles has successfully opposed Strathcona ’ s application. It is entitled to costs as against Strathcona. I fix those costs at $2500 plus disbursements. Heard on the 4 th day of June 2013. Dated at the City of Edmonton, Alberta this 17 th day of July 2013. Brian R. Burrows J.C.Q.B.A.

Appearances: A. R. Kosak for Strathcona County C. J. Taylor for Half Moon Lake Resort Ltd., Armac Investments Ltd., and Jack Purdy also known as John Purdy and John Kenneth Purdy S. J. MacDonald for the Registrar of Land Titles A. K. Maciag for Axcess Capital Partners Inc. The Respondents Apple Auction Corporation Operating a Business Under the Firm Name and Style of Apple Auction Ltd., and Brian Lovig did not participate in the application.