Lobstick River Resort Corporate History

THE CORPORATE HISTORY OF LOBSTICK RIVER RESORT LIMITED

  • The development of the resort took place between 1975 and 1977 by Lobstick Resorts Ltd.  Norm Trouth was the President of this Company, and the Project Manager.  The development and creation of the lots occurred in two phases.  Phase I was the North end of the Resort (Blocks 1,2,3 & 4) and Phase II was the South end (Blocks 5,6 & 7).  Each lot was given as separate title and the balance of the six quarter sections became the common land (784 acres).  Lobstick Resorts Ltd drew up Restrictive Covenants, which were registered on each lot in the name of Lobstick Resorts Ltd.  This basically imposed development restrictions and other sanctions on the lots.
  • Lobstick Resorts Ltd. also created a separate operating company called Lobstick Utility Ltd.  Initially the purpose of this Company was to provide services to the lots, according to the Restrictive Covenants.  However, the purpose seems broader in the by-laws that were used to establish the Company.  (Hold the common land, collect fees, establishes fees, etc.)
  • It was Lobstick Resorts Ltd. intention to turn the common lands and Lobstick Utility Ltd. over to the lot owners once the east side of the Lobstick River was developed. This was stated in letters to lot owners, who when purchasing their lots raised that question.
  • Lots were being sold from about 1977 on.
  • Some lots were sold by Lobstick Resorts Ltd. and there were a number of auctions.  Generally, lot sales were slow.  It was not unusual, however, to hear of people paying $9,000 or more for their lots.
  • No one was paying much attention to the common land.  One of the neighbouring farmers had arrangements with Lobstick Resorts Ltd. to use some of the land for grazing, but otherwise there was not much activity in the Resort.
  • In late 1986 a couple of lot owners found out that the common land had recently been offered for Tax Sale.  Inquiries were made and fortunately none of the common lands was sold.  As a matter of interest, at that point there were 4 permanent residences and about three families that were regularly at their places on weekends.
  • Early in 1987 two or three lot owners, using a copy of the Tax Roll, organized a meeting of as many lot owners as could be contacted.  This meeting had a good turnout.  A plan of action was decided and there was lots of positive discussion about the future of the Resort.  It was decided that an Association of the lot owners should be formed and this was done under the Alberta Societies Act.  The Company was called the Lobstick Lot Owners Association.
  • Under legal advice, caveats were placed on the common land.  A letter was then written to Lobstick  Resorts Ltd. demanding to know why the common land had been put in jeopardy by not paying taxes and why it was not being managed properly.
  • Lobstick Resorts Ltd. did pay the back taxes after some negotiations.  Their excuse was that they did not think anyone had any interest in the common land or the Resort.  The lot sales were not going well and they were obviously walking away from the Resort.
  • Later in 1987, the titles for the common land and Lobstick Utility Ltd. were turned over to the Board of Directors of the Lobstick Lot Owners Association.  Some legal advice was obtained and searches were done to ensure that the lot owners were not taking over an encumbered company.
  • In the spring of 1988 the first Annual General Meeting of the lot owners occurred.  Again there was a good turnout and some fundamental decisions were made about how we would operate.

Some of the things that were decided at the meeting were:

  1. A fee by which operational money was obtained.  The first fee was $25.00.
  2. A pledge to get all the lot owners possible involved in the Company.
  3. A method of voting.
  4. A fee for pasturing horses (pasturing of horses has since been temporarily disallowed )
  5. The dis-association of Lobstick Lot Owners Association and the continuance of the newly acquired Lobstick Utility Ltd.
  6. Arrange a transfer of the Restrictive Covenant against each lot from Lobstick Resorts Ltd. to Lobstick Utility Ltd.
  7. A Board of Directors.
  • For the next couple of years the Company operated using the “good neighbour” policy.  The Board tried hard not to impose any more rules than were absolutely necessary.  But as time went on some problems became apparent.
  • The Restrictive Covenant could not be transferred on the individual lot titles from Lobstick Resorts Ltd., to Lobstick Utility Ltd. even though an agreement had been obtained that assigned the rights to Lobstick Utility Ltd.  This meant there was not a proper tie between the lots and Lobstick Utility Ltd. Lot owners and their agents could not get information about the company, the status of their lots, etc.  Also, Lobstick Utility Ltd. could not properly enforce the Restrictive Covenants.  Fees could not be properly collected to run the Company.  It was not clear if membership could be enforced.
  • An investor had bought the remaining lots that Lobstick Resorts Ltd. held and due to his attitude it became a concern if the lot owners could maintain control of Lobstick Utility Ltd. and the common land.
  • At the 1990 Annual General Meeting, these issues were discussed at length.  It was decided by the shareholders to retain a lawyer and have the Company structure reviewed and put in proper order.  The Board was to select a lawyer to commence this task.
  • The section of a lawyer was done by first interviewing two Edmonton law firms, and conferring with the Law Society about a law firm with the proper experience to do this work.  Martin Prentice was on the short list and it was decided to proceed with him, because of similar involvement with Drayton Valley Golf Club and that the fact he practices in the area.
  • After some review of the Lobstick Utility Ltd. structure, its by-laws and the Restrictive Covenant, Martin Prentice recommended that the most effective was to deal with the situation was to form a new not-for-profit company under Part 9 of the Companies Act.
  • Changing the old covenants required a Court Order and unanimous consent to the changes from the shareholders which was considered impossible to achieve.  Therefore the proposed new Company would carry a new Restrictive Covenant.
  • During the winter of 1990-91 a special committee was established to work with M. Prentice to draft a new covenant and it was felt an encumbrance would also be necessary to clearly deal with an annual fee.
  • The Notice to all lot owners for 1991 annual General Meeting was issued by M. Prentice and attached was the draft Restrictive Covenant and encumbrance and also a special resolution.  This special resolution would need unanimous consent of those present at the meeting.
  • There was a large turnout for this meeting because lot owners were starting to take notice of the problems more seriously when they got the letter from Martin Prentice.
  • The resolution received three descending votes at the meeting, but it received a condition that it would be passed if the Board could obtain consent of the three descending votes.  The Restrictive Covenant and Encumbrance were voted favorably with minor changes required.  A new committee, under the guidance of M. Prentice, was formed to draft a memorandum of Association and the Articles of Association for the new Company.
  • One main condition to be noted that you must be a lot owner in Lobstick Resort to be a shareholder in the new Company.
  • During 1991-1992 a name for the new company was decided by the Board – Lobstick River Resort Limited.
  • At the 1992 Annual General Meeting the Board had managed to obtain unanimous consent to the resolution.  The special committee had a new Memorandum of Association and new Articles of Association prepared and these had been distributed to the lot owners prior to the meeting. The Memorandum and Articles were approved with some changes.  This cleared the way for the registration of the new Company with M. Prentice handled.
  • From 1992 to 1995 a considerable effort to get as many lot owners as possible to become shareholders took place by the Board, and many of the long time lot owners.  Not effort has been made to force lot owners to become shareholders.  Because of this the main focus of Lobstick River Resort Ltd. is to manage the common lands on behalf of the shareholders.  The Restrictive Covenants will also provide some control and protection for the shareholders regarding the development and upkeep of the individual lots.  The advantage of being a shareholder in Lobstick River Resort Ltd. is:
  1. It gives a lot owner a vote and say in the management of the common land
  2. The share allows privileges to use the common land for recreational purposes which may include but not limited to hiking, cross-country skiing, hunting, grazing of horses, snowmobiling, quadding etc.
  3. A share increases the market value of a shareholders lot
  • While the main purpose of the common land is for recreational purposes, the shareholders are granted some conditional land use agreements for grazing and crops to obtain revenue that off-sets the operating expenses.
  • At the 1995 Annual General Meeting the Board reported that it had documents signed and registered for 53 lots, and it considered its work complete.  There are 109 titles lots in Lobstick Resort.  Less than 6 are owned by the investor previously mentioned.  The investor is not a shareholder in Lobstick River Resort Limited.
  • According to the Articles of Association, new lot owners will be offered a one-time opportunity to become a shareholder.  If they decline all privileges for the common land will be subsequently denied.  If the opportunity is accepted the lot owner will enjoy the privileges of the company.  An initial fee will be required if the lot is not paid up and in good standing.  The fee is tied to the value of the company.
  • A plan is attached which shows the common land.
  • All the work to this date has been done by Boards and Committees elected by the shareholders of the Company.  This work has been done voluntarily and represents countless hours and dedication by these people.

                 -Updated December 2009

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