Michel Jetté

The appellant appealed a judgment regarding the interpretation of a contract for the provision of hydro-electric energy.

The Supreme Court of Canada dismissed the appeal as moot in light of its concurrent judgment in Newfoundland (Attorney General) v. Churchill Falls (Labrador) Corp.

The appeal concerned the constitutional validity of provincial legislation that repealed a statutory lease, revested water and water power rights in the province, vested hydro-electric works in the Crown, and limited compensation to creditors and shareholders.

The Court held that extrinsic evidence was admissible in constitutional cases to determine both the operation and effect of legislation and its true object and purpose, particularly where colourability was alleged.

Applying pith and substance analysis, the Court found the legislation was a colourable attempt to interfere with contractual rights to the delivery of power in Quebec under a long-term power contract.

Because those civil rights were situated outside Newfoundland, the legislation was ultra vires.

The appeal was allowed and the Act, taken as a whole, was held invalid.

The Supreme Court of Canada heard two appeals arising from a motion for a declaratory judgment filed by Hydro-Québec in the Superior Court of Quebec.

Hydro-Québec sought a declaration regarding its rights under a Power Contract with Churchill Falls, following an Order in Council by Newfoundland requiring Churchill Falls to supply it with power.

Newfoundland filed a declinatory exception, arguing the Quebec courts lacked jurisdiction over it, while Churchill Falls filed a motion to dismiss, arguing Hydro-Québec lacked sufficient interest and raising lis pendens.

The Court allowed Newfoundland's appeal, holding that the jurisdiction clause in the Power Contract did not bind Newfoundland, which was not a party to it.

The Court dismissed Churchill Falls' appeal, finding that Hydro-Québec had a real interest in resolving the genuine legal problem created by the threat to its contractual rights, and that there was no lis pendens with the proceedings in Newfoundland.