The Hot Springs Road Development Area Residents Association has lost its suit against the Yukon government.

On Friday, Yukon Supreme Court Justice Miriam Maisonville ruled against the residents association in the case regarding residential development by Takhini Hot Springs Ltd.

The suit asked that the case be reopened to add new evidence and have the government declared in contempt of court for not following a court ruling.

Last March, Justice Maisonville ruled that until conditions of community consultation, rezoning, and site plan approval are met, further development is prohibited on the property.

But the ruling has yet to be distilled into an order, and there is disagreement between the two parties over its meaning.

Shortly after the decision, construction continued on three single-family dwellings on one of the lots on the property. One of those homes changed designation to a “vacation accommodation unit” and later to “visitor and staff accommodation.”

A key issue in the disagreement is the number of residences that are permitted on each lot.

In 2012, the government permitted subdivision of the property into smaller lots with a maximum of two residences per lot, in accordance with a local area plan approved in 2002.

There was a special provision in the agreement that allowed the owner of contiguous lots to transfer development potential, or shift the number of residences permitted from one plot to another.

Under the agreement, changing the number of residences per lot is subject to community consultation, rezoning and site plan approval.

In 2015, the government amended the agreement, giving three lots a greater capacity of nine, three and five residences per lot. These changes did not involve consultation nor rezoning.

Stephen Walsh, the lawyer for the residents’ association, argued that under the March court ruling, construction and re-designation should not have continued without consultation or rezoning.

The public consultation process did not begin until more than three months after the decision, he added, during which time construction took place.

Walsh said government communication with Takhini Hot Springs about the three buildings amounted to collusion intended to circumvent the court decision.

And the government made a “somewhat ham-handed” attempt to legitimize the construction by changing the use of the third unit, but the nature of the building has not changed.

Walsh noted that Garry Umbrich, president of Takhini Hot Springs, told the Star in April that he hopes to ask for the third unit to be re-designated as a single-family dwelling to make it his permanent home.

“It’s clear that what we’re talking about here is a home,” said Walsh. “If it looks, walks and talks like a duck, it is a duck.”

But Mike Winstanley, representing the territorial government, argued that the court ruling did not prohibit construction altogether, just the use of the third structure as a single-family dwelling.

“We took great pains to make sure that did not happen,” he said.

He argued that the use of a building rather than its appearance is what denotes a designation.

And said there is no evidence that the third building is intended to be a single-family home, he added.

Winstanley explained the change in designation was a way to facilitate something under the law to prevent the owners of the lot from suffering undue harship.

“It wasn’t meant to deceive,” he said.

He noted that two of the homes had already been purchased, with one of the owners having sold their previous home. Umbrich decided to change the use of the third home in order to mitigate loss, he added.

Winstanley also explained that the delay in the public consultation process was to give lot owners in the planning stages time to decide future plans for their property.

Justice Maisonville found that Umbrich’s statement to the Star was hearsay evidence and did not meet the standard of proof required to find contempt of court.

She also said the order has to be settled in order for the parties to move forward, which should be handled through a judicial management conference.

The residents’ association launched another lawsuit early last month against the Takhini Hot Springs Owners Association, Resort Development Group, and the Yukon government.

It claims that the owners’ association is in breach of mandatory requirements under the Yukon Societies Act for not registering as an extra-territorial society.

It also asks the court to declare the subdivision agreement as void and order that a maximum of two residences are permitted on each lot.

It also seeks the removal of any residences in excess of two single-family dwellings per lot.

The government responded to the suit claiming that the owners’ association is exempt from the territorial act, as it is registered under federal legislation.

It says the claim should be adjudicated as a judicial review, as under the Area Development Act, the minister of Energy, Mines and Resources has exclusive jurisdiction to determine whether a person is in default of a regulation.