Judge sides with Earls in Main Street property case

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This article was published 27/10/2023 (741 days ago), so information in it may no longer be current.

If the City of Winnipeg wants to regain control of a downtown property it sold in 2012, it can expropriate it but can no longer delay its sale to a developer, a Manitoba judge has ruled.

In a 35-page written decision released Friday, Court of King’s Bench Justice Vic Toews said the city can’t expect to obtain 219 Main St. under an 11-year-old agreement — in which it could purchase the land back for the $690,000 it originally sold it for, minus 10 per cent if it was not developed by October 2015 — when the city itself caused years of delay.

Toews noted civic officials had been authorized to repurchase the property adjacent to the former Earls restaurant location in July 2012, but it had done nothing since that time.

“This dispute may have prevented further development of the property in any manner at all over the past 10 years,” the judge wrote. “In my opinion, while (documents) may demonstrate that the city had the financial authorization for the past decade to follow through with a demand for the transfer of the property from the titleholder, this on its own does not demonstrate a readiness or willingness to claim the property in a timely fashion.

“The onus is on the (city) to demonstrate that it is and always has been ready and willing to carry out the contract. The city, in this case, has failed to meet this onus.”

Jamie Kagan, who represented property owner Earls Kitchen and Bar in court, said his client feels vindicated by the decision.

“Earls is very pleased with the result,” Kagan said, noting the Vancouver-based company will now sell the property and use the proceeds to open another restaurant in the St. Vital neighbourhood.

“We can sell the land and the developer can develop a four-parcel spot… The goal was to invest money in downtown Winnipeg, which it has done at 300 Main (St.), but now they will reinvest the money into Winnipeg in St. Vital.”

A spokesman for Mayor Scott Gillingham said the mayor couldn’t yet comment because he hasn’t had a chance to review the decision with the city’s lawyers.

The city owned the lot at 219 Main St. but declared it surplus and sold it in 2012 to OGGI Investments Ltd.

Two years later, Earl’s Holdings (Main Street) Ltd. bought OGGI for $1 million and submitted a proposal for a new restaurant on the site, along with a new commercial space where the restaurant was then located.

The proposal was rejected by a city committee because the zoning bylaw had changed for all properties on Main Street to go from allowing single-storey buildings to a minimum of three storeys.

When Earls decided to move to 300 Main St., and wanted to sell its properties at 191 Main, 219 Main and another nearby lot for $1.2 million, it asked the city to remove the buy-back clause.

The city refused, and Earls went to court.

While the ruling is in Earls favour, the judge noted it doesn’t mean the city is powerless to regain the property.

“The city retains the ability to do so through the proper exercise of its powers of expropriation,” Toews said.

kevin.rollason@freepress.mb.ca