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Lawyer predicted years of litigation

The Ridgeway Herald special web release

Fort Erie Town council sought an independent third-party legal opinion to try to find a way to get out of the deal with the Molinaro Group to build the Crystal Beach Gateway Project.

John Mascarin of the Toronto law firm of Aird and Berlis prepared a 30-page document that councillors reviewed and discussed in a four-hour closed session meeting March 21.

Council also decided to make public Mascarin’s report as well as an earlier report prepared by Town solicitor Heather Salter.

The following is the concluding paragraphs of his report.

The memorandum of agreement (MOU), the agreement of purchase and sale (APS) and the community benefits agreement (CBA:

– constitute valid and binding agreements on the Town;

– impose ongoing obligations on the Town to cooperate in good faith and work together with the Molinaro Group to develop the project;

– do not fetter Council’s legislative authority un the Planning Act or otherwise to enact bylaws, provide approvals or make decisions.

Bylaw 26-10 represents and has been held by the Ontario Municipal Board to constitute good planning.

The Molinaro Group is entitled to enforce the MOU, APS and CBA against the Town.

Based on the above conclusions, it is our opinion that:

1. Council is a continuing body and simply because the composition of Council changed does not mean that validly constituted business contracts that were lawfully authorized by the previous Council are not binding on the Town.

2. Council cannot “repeal” bylaw 26-10 to reinstate the zoning that was in force prior to March 1, 2010 but Council may exercise its legislative power under the Planning Act to rezone the property in accordance with the process set out in the statute. Any rezoning will entitle objectors to appeal any decision to the OMB (and possibly beyond).

3. Council’s repudiation or frustration of the agreements would give rise to a claim for damages and other relief by the Molinaro Group based on the grounds that the Town acted in breach of contract, in bad faith or some other improper basis.

4. A decision by Council to rezone the property without any legitimate planning basis or justification will give rise to a claim that Council acted in bad faith.

5. Damages could be very substantial and potentially include a claim for loss of profits as well as other costs (such as loss of opportunity, improvements, etc.) which could total millions of dollars.

6. The possibility of litigation:

a) is very real (if not a certainty);

b) will entail significant ongoing legal and other costs in the tens of thousands of dollars per month;

c) will likely take years to resolve and incur legal costs potentially amounting to $1 million or more in addition to any monetary damages that may be awarded by the court against the Town.

7. Any court proceeding that is unsuccessful for the Town will likely give rise to an award of costs to the opposing parties; and successful court proceeding in the Town’s favour will only partially reimburse the Town for its total legal and other costs.

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