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SU injunction fails, university to seize control of MacHall

By Melanie Woods and Scott Strasser, October 7 2016 —

An injunction application from the University of Calgary Students’ Union to maintain control and operation of MacHall has failed, a Court of Queen’s Bench judge ruled Oct. 7.

With the ruling, U of C administration will take control of the operation of the building and collect revenue from rent cheques from MacHall tenants for the duration of the ongoing lawsuit over its ownership.  There will be a seven-day transition to transfer over control of the building, which ends Oct. 17.

“The University of Calgary respects the decision of the court to allow the university to assume management of MacHall while the Students’ Union’s legal action against the university regarding ownership of MacHall proceeds,” the U of C wrote in a statement. “The university is disappointed that the SU’s public response to the court’s decision repeats numerous statements that the SU has been making on this matter over many months. The court decision is very clear.”

The SU and the university have been in a legal dispute over who owns MacHall since last fall, when closed-door negotiations over a new operating agreement broke down.

The SU believes they are the 55 per cent majority co-owners of MacHall, as stated in the original 1969 building agreement. They also claim to have invested nearly $20 million into the building since it was built.

Conversely, U of C administration points to the 1999 License of Occupation, Operation and Management Agreement (LOOMA) — as well as ownership of the land MacHall is situated on — as justification for their ownership claims.

The SU went public with the ownership dispute in early October of last year. With neither side able to come to an agreement, the SU filed a statement of claim for majority ownership of the building on Oct. 21 2015.

The 1999 LOOMA was set to expire on Dec. 9, 2015. The university initially stated plans to assume control of MacHall’s operation once the agreement expired in a letter to the SU in late November 2015. However, on the eve of a planned injunction hearing the two sides agreed to enter closed-door mediation.

After months of extensions, mediation talks broke down in April and the SU refiled their injunction request. The two sides went to court twice this spring.

Following the second hearing on June 3, Justice Kim D. Nixon — the Court of Queen’s Bench judge who presided over the MacHall injunction application — said her decision would be finalized by late June. She later delayed her verdict until mid to late July but did not come to a decision until now.

With the ruling, the university will collect revenue generated by rent cheques from MacHall tenants — which the SU estimates to be $1.9 million annually — for the duration of the ongoing lawsuit.

“We are disappointed in the ruling,” SU president Stephan Guscott said. “The university sought to terminate the operating agreement four years before the end of its term, and this injunction would have prevented that from happening.”

Guscott claims “students will feel the negative impacts to important SU services, programs, and advocacy” with the shift in operation.

“In losing $1.9 million, or 15 per cent of our operating revenue, as a non-profit organization that funnels all the money it makes towards students through program services and advocacy, I don’t know how that wouldn’t impact our organization,” Guscott said.

Guscott couldn’t say whether the SU will need to increase its fees or cut programs as a result of the loss of revenue.

“We’re evaluating the options we have right now. If it came to that it would come through council. It would be public and we would reach out to students,” he said.

According to the university, the only thing that will change under the court’s ruling is to whom third-party tenants of the building pay their rent.

“The university is committed to working with the SU to continue to support student programs and services in Mac Hall through the utilization of net proceeds received from third-party tenants,” the U of C stated.

In the spring, U of C vice-president finance and services Linda Dalgetty wrote a sworn affidavit on behalf of the U of C Board of Governors that the university would not evict the SU from MacHall if the injunction application did not pass. Dalgetty’s affidavit also stated the university would allocate revenue generated from third-party MacHall tenants back to SU programs.

“The university remains committed to ensuring that our students are not affected and the campus community should see no change in services and programs offered through MacHall as a result of the decision,” the U of C statement said.

The injunction was just the first step in the legal process. In May, Guscott estimated the legal dispute will likely last for several years.



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