Should a Marina Provide a Refund on Prepaid Fees Due to Closure Because of Coronavirus?
The Law Will Likely Require At Least a Partial Refund of Prepaid Fees Due to Closure of Marinas; However, a Boater Should Carefully Consider How Hard to Push the Issue Lest the Marina Owner Withdraw the Opportunity to Return in the Future.
A Helpful Guide On How to Evalute Legal Positions Regarding Prepaid Slip Fees Involving Seasonal Marina Docking Contracts
After a long winter, or seemingly so for most boat owners who spent months dreaming of springtime, many with bets on the 'ice out' date for favourite lakes, and with excitement brewing for the short summertime fun of boating season, many are now greatly disappointed with launching delays brought on by marinas falling within the non-essential business closure mandates issued by the government. The closure mandates arise as an enforceable Order as prescribed by O. Reg. 82/20 to the Emergency Management and Civil Protection Act, R.S.O. 1990, c. E.9, and as was made effective on March 24 2020. As an unfortunate result, many boaters and owners of yachts are now growing quite concerned for the disappointment of a likely shortened boating season, perhaps even a fully lost season, as well as for the potential financial waste involving prepaid docking slip fees as are usually required to reserve a spot at a preferred marina.
Rights and Duties
It is common that boaters and yacht owners, as users of marina facilities will establish a long history at a specific marina facility and thereby make strong friendships with other boaters. Additionally, boaters tend to develop a fond familiarity with particular lakes and rivers, including the whereabouts of good fishing spots, sandbars for swimming, as well as taking keen notice and caution of dangerous rocks. Accordingly, many boat owners will want to continue a positive relationship with the owners and operators of the prefered marina. This desire to maintain good relations may result in a preference to let slid or forgo potentially strong legal rights. Accordingly, while focused specifically upon the contractual implications, the information herein should be evaluated with consideration for the practical application of pursuing certain rights. More simply said, boaters may need to wade to carefully so to avoid 'rocking the boat' too far and thereby breaking down currently healthy relationships with marina owners.
Privately Owned Property
Marina facilities are, generally, privately owned and operated. For many marina operations, the owner lives at, or near, the marina. Additionally, many marina operations are family businesses handed down through the generations. Accordingly, due to strong ties to the land, water, and the business, as well as rights prescribed within the Trespass to Property Act, R.S.O. 1990, c. T.21, the decision who to rent a docking slip to is a fully discretionary business decision subject only to mandates to refrain from using discriminatory measures if and when using discretion to decide who to provide marina services to.
Typically, boaters prepay, months in advance, for docking slip within a privately owned marina. Fees are generally calculated based on the length of boat, thus length of dockage required, as well as surcharges for special hookups such as electricity as well as user privileges for any special marina facilities or amenities. Prepaying, of at least a significant deposit, is required by the marina as space will be limited and advance booking assurances ensure that the marina is able to plan, budget, and prepare accordingly for the necessary operations. When these arrangements are made, often at the end of the prior season with perhaps a schedule for payments over the winter months, the marina, generally, grants a fresh lease as a contract providing for winterization and winter storage of the boat and the promise of a docking slip with access to, and use of, the marina facilities and amenities during the next boating season.
As the seasonal lease is a contract wherein marina operators agree to make certain dockage and facilities usage available in exchange for a fee (and usually various good conduct conditions will apply), the marina operator becomes legally obligated to make the dockage and facilities available or may otherwise be subjected to the risk of breach of contract litigation, among other legal issues. However, in the current situation, being the Covid19 Crisis, the inability of a marina operator to provide access and use of the marina facilities arises due a lawful Order by the government in response to a public health emergency. Accordingly, any inaccess to marina facilities results as a marina operator abiding by a legal mandate rather than as a result of any failure to perform as contractually agreed by the marina. Essentially, the hands of the marina operator are tied. The marina is forbidden from delivering, at least temporarily, what was promised within a contract.
When a contract becomes impossible to perform due to an outside force beyond the control of the parties to the contract, such as where a marina is unable to provide access due to a government mandated closure, the marina is without fault and therefore without a breach of the contract. Instead, the contract may be deemed frustrated as opposed to breached. Accordingly, the marina user, having prepaid for the benefits promised within the contract will be unable to successfully sue the marina for a breach of the contract.
Where a contract becomes frustrated due to unexpected and unforeseen circumstances beyond the control of the parties to the contract, the law may deem the contract as a nullity and the parties to the contract are relieved of obligations within the contract. This is stated within section 3 of the Frustrated Contracts Act, R.S.O. 1990, c. F.34 where it is said:
3 (1) The sums paid or payable to a party in pursuance of a contract before the parties were discharged,
(a) in the case of sums paid, are recoverable from the party as money received for the use of the party by whom the sums were paid; and
(b) in the case of sums payable, cease to be payable.
With the above said, rarely with a marina dockage slip lease is the entire contract an impossibility whereas parts of the agreement involve the winterizing and storage of the users boat; and accordingly, some storage and security benefits were already received from the marina. This concern for partially received benefits is addressed by sections 3(2),(3) of the Frustrated Contract Act wherein the party, such as a marina, having partially performed services, including incurring the expenses associated with those partially performed services, receives some protection against providing a complete refund for what may now be, or may become, a nullified contract. In other words, the marina user, having received partial benefit of security and storage of a boat over the winter season, and perhaps other benefits, would still owe the marina for the value of the partial services rendered regardless of whether the law considers the contract a nullity.
A marina user who prepaid a seasonal lease may want a refund, or partial refund, for a docking slip lease contract which is now, and become more so as the summer approaches and the start of boating season is delayed due to the government mandated closure of marina operations. As above, the marina user may hold legal rights that would warrant, and result in, a refund or partial refund if the issues were pushed forward; however, the marina owner ultimately holds the right to decide whether to enter into a future contract, such as whether to offer to renew a dockage lease for the 2021 season. Accordingly, a marina user with long-term memories and fondness of a particular marina may wish to tread carefully so to avoid damaging the relationship and thereby avoid the risk of needing to relocate to another, unfamiliar, marina.
Statutory Rights to Invoke Cancellation
In some circumstances, such as where a boat owner arranged winterizing and winter storage elsewhere from the marina; and accordingly, the marina is without rendering of any services to date and yet the boat owner prepaid docking slip fees and marina facilities access that is now delayed, and continues as delayed, the statutory provisions within section 26 of the Consumer Protection Act, 2002, S.O. 2002, Chapter 30, Schedule A, provide the consumer with a right to cancel the contract if the delivery of contracted services is delayed by thirty days or more. Specifically, the Consumer Protection Act, 2002 says:
26 (1) A consumer may cancel a future performance agreement at any time before delivery under the agreement or the commencement of performance under the agreement if the supplier,
(a) does not make delivery within 30 days after the delivery date specified in the agreement or an amended delivery date agreed to by the consumer in writing; or
(b) does not begin performance of his, her or its obligations within 30 days after the commencement date specified in the agreement or an amended commencement date agreed to by the consumer in writing.
It is noted that while we are still in April, and many marina docking slip contracts may state a later date, such as May 1st for docking slip services to commence, that the thirty (30) day delay date would therefore be May 31st. Whereas various marinas will have various agreements with various start dates, consumers will need to review these concerns on an individual basis. Furthermore, where a consumer does wish to cancel an agreement per the rights within the Consumer Protection Act, 2002, if any, there are very specific procedures including notice requirements that must be followed.
Mandated Closure Exception
Watercraft as Residence of Canadians
There are people who enjoy living without a permanent land-based residence and prefer to live year-round aboard large boats and yachts. This floating lifestyle often involves year-round docking at a marina without a more conventional home. For those who live aboard a boat as a 'floating residence' at a marina or similar facility, such is an exception to the mandate that non-essential businesses, such as general pleasure-use marina operations, remain closed per the mandated orders currently prescribed in accordance to the Emergency Management and Civil Protection Act. Accordingly, it appears that a permanent living arrangement aboard a boat docked at a marina is permitted.
The Covid19 Crisis is unprecedented and unprecedented legal issues are occuring. Exactly how the law will address these legal issues remains unclear. When disputes arise, by being proactive, maintaining respectful communication and compassionately appreciating that everyone is experiencing unexpected difficulties, the parties to contracts, such as marina docking slip leases, can best ensure that legal issues are avoided or minimized and that quality ongoing future focused relationships are maintained.