Graywood Investments Ltd. v. Ontario (Energy Board), 2005 CanLII 2717 (ON SCDC)

COURT FILE NO.: 724/02

DATE: 20050203

ONTARIO SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LANE, PITT and MOLLOY JJ.

B E T W E E N:

GRAYWOOD INVESTMENTS LIMITED Applicant

• and -

ONTARIO ENERGY BOARD and TORONTO HYDRO-ELECTRIC SYSTEM LIMITED Respondents

Robert J. Howe and David S. Cherepacha for the Applicant

F.J.C. Newbould, Q.C. for the Respondent, Toronto Hydro-Electric System Limited

M. Philip Tunley for the Respondent, Ontario Energy Board

HEARD: November 15, 2004

Pitt J. (Dissenting):

1This is an application for judicial review of a decision of the respondent, Ontario Energy Board (OEB) holding that the subject subdivision was "a project that was the subject of an agreement" entered into by Graywood Investments Limited (Graywood) and Toronto Hydro-Electric System Limited (Toronto Hydro) before November 1, 2000.

2I have read the reasons for judgment of my colleagues. I have no disagreement with their analysis of procedural fairness, judicial review or standard of review. However, I disagree with their conclusion that the decision of the respondent was either incorrect or unreasonable for the reasons that follow.

3The undisputed evidence before the OEB was that Toronto Hydro (up to November 1, 2000) the sole supplier of electricity, and Graywood in its capacity as the developer of real property known as Warden Avenue Hydro Corridor Residential Subdivision, had discussions about the supply of electricity for the project, commencing in November 1999.

4On July 14, 2000, the OEB approved and published the Distribution System Code (the "Code"), the object of which was to end Toronto Hydro's electrical monopoly.

5On September 29, 2000, s. 1.7 of the Code was amended as follows:

This Code comes into force on the day subsection 26(1) of the Electricity Act comes into force with the following exception.

All of Chapter 3, Connections and Expansions and Subsection 6.2.3. of Section 6.2, Responsibilities to Generators come into force on September 29, 2000. These provisions do not apply to projects that are the subject of an agreement entered into before November 1, 2000.

6By June 27, 2000, Toronto Hydro had already completed and forwarded to Graywood a design for the underground electrical system for the project, which was duly paid for by Graywood.

7It is not disputed that as of November 1, 2000, there was no legally enforceable agreement between the parties for the installation of the underground electrical distribution system for the project.

THE PROCESS

8The dispute is rendered more complicated than it needs be because when Toronto Hydro advised Graywood in July 2000 that the Warden Avenue project was considered to be subject to an agreement prior to November 1, 2000 and, therefore, was required to have its installation done by Hydro, Graywood filed a complaint to the OEB alleging that Toronto Hydro was in breach of its licence by virtue of the position it had taken with respect to its installation rights.

9The OEB refused to accede to the request of Graywood, taking the view that the Warden project was, in fact"subject to an agreement". The OEB's decision was issued in the form of a letter to Graywood's counsel. The relevant portions of which are as follows:

Based on the information provided, the Board finds that an implied agreement had been entered into prior to November 1, 2000.

The Board finds that in past industry practice, there is often no formal offer to connect and associated written connection agreement between parties on a specific. The evidence demonstrates that Graywood had agreed to Toronto Hydro undertaking preliminary design work with respect to the Project. The evidence further demonstrates that Toronto Hydro had been included in the Project for approximately a year prior to November 1, 2000 and that Graywood was committed to the Project as municipal servicing had commenced prior to October of 2000.

Further, the Board finds that no unfairness has resulted as clearly the Graywood Project was costed on past industry practice.

The Board finds that Toronto Hydro is not required to comply with the requirements of Chapter 3 of the Code for this Project. Therefore the Board finds that Toronto Hydro is not in breach of its licence and the Board will not issue a notice of its intention to issue a compliance order under subsection 75 (2) of the Act.

I have produced these portions of the letter because the applicant has treated it as evidence of the unreasonableness of the OEB's position.

10I respectfully disagree with the applicant for the following reasons:

STANDARD OF REVIEW

11An application of the pragmatic and functional approach mandated by Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, reveals:

Privative Clause: The Act does not contain a privative clause. There is a statutory right of appeal only upon a question of law or jurisdiction.

Expertise: As per this court in Consumers' Gas Co. v. Ontario Energy Board, [2001] O.J. No. 5024, the OEB has a "high level of expertise". The OEBA provides the OEB with exclusive jurisdiction to hear and determine all questions of law and fact, and its decisions on fact are not open to review.

Purpose of the OEBA: The purpose of the OEBA is to maintain just and reasonable rates with respect to electricity.

Nature of the Problem: The nature of the problem in this case is whether the Project was subject to an agreement entered into before November 1, 2000, within the meaning of s. 1.7 of the Code.

In my view, the standard of review ought to be reasonableness.

ANALYSIS

12I agree with the respondent's view that the question whether the project was subject to an agreement entered into before November 1, 2000 within the meaning of s. 1.7 of the Code is more appropriately viewed as a question of mixed fact and law, and that the OEB's decision on that issue must be afforded a high degree of deference. The "law" component of that issue is the interpretation of the provisions of the Code, as they relate to the proper management of a major transition from monopoly to competition under the OEB Act, rather than general contractual principles. The determination is "fact-intensive", and involves an assessment of specialized facts and relationships, which are at the core of the OEB's exclusive jurisdiction. See Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, at para. 41; Dr. Q. v. College of Physicians and Surgeons of B.C., 2003 SCC 19, [2003] 1 S.C.R. 226 at p. 240.

Frankly, if the question were as the appellant has formulated it, there would really be no issue. Contractual rights are protected unless the legislative language purporting to infringe them is explicit and unambiguous.

13There was evidence to support the OEB's view that the project was subject to an agreement, not the least of which was the existence of an agreement for the design work. Nothing in the Code suggests that an agreement must mean an "agreement for installation".

14It is useful, in my view, to recognize that s. 1.7 of the Code was amended to establish a "cut-off date" for ending the monopoly and introducing competition. The use of the expression "projects that were subject to an agreement" gave the OEB the flexibility to divide projects into different categories based on the stage of development in terms of the relationship with Toronto Hydro.

15The object of the exercise in which the OEB was engaged was not to make legal determinations on whether a certain "implied agreement" (to use the imprecise term used by the OEB) had become a full blown enforceable agreement. It was rather to determine whether the Warden Avenue project was one of those projects that was already subject to an agreement i.e. whether it was to be governed by the old regime or the new regime. Toronto Hydro had been involved with the project for at least nine months prior to the announcement; the project would have been budgeted on the basis that Toronto Hydro, the only supplier of electricity, would have been the installer and supplier. There was an executed agreement with respect to design, and much discussion about the installation had already taken place. It would have been the expectation of the parties and in their contemplation, at least up to the date of the announcement of the new regime in July 2000, that the installation would have been done by Toronto Hydro.

16In making a determination on the reasonableness of such a decision, it seems to me imperative to consider the practical implications of the decision urged upon the court by the appellants. No developer, who had not signed a contract by November 1, 2000 would consider itself bound by the requirements of the old regime once the announcement of the new regime was made. Accordingly, whatever ruse or subterfuge that would postpone the final execution to a date beyond November 1, 2000 would likely be attempted if a postponement were perceived to produce an advantage to the developer. Effectively, the whole concept of a transitional period (from July to November) would be rendered academic. The new regime would have effectively begun on the date of the announcement. As I adumbrated earlier, developers with enforceable agreements would not, in any event, have been affected by changes in the policies of the OEB. It would have been unnecessary to refer to them in the new Code. Clearly the stipulation of a transition period was designed to deal in a fair manner with developers in the grey area.

17The construction of written instruments:

12-046 Law and Fact. The construction of written instruments is a question of mixed law and fact. The expression "construction" as applied to a document includes two things, first, the meaning of the words; and, secondly, their legal effect, or the effect which is to be given to them. Construction becomes a question of law a soon as the true meaning of the words in which an instrument as been expressed and the surrounding circumstances, if any, have been ascertained as facts. However, the meaning of an ordinary English word, of technical or commercial terms and of latent ambiguities, and the discovery of the surrounding circumstances (when they are relevant) are questions of fact.

Casurina Limited Partnership v. Rio Algom Ltd., [2004] O.J. No. 177 at para. 34, citing Perry v. Telus Corp. (2002), 2002 BCCA 135, 164 B.C.A.C. 152 at para. 14 referring to H.G. Beal, ed. Chitty on Contracts 28 ed. (London: Sweet & Maxwell, 1998) at paras. 12-043 and 12-046.

18It was at a minimum, eminently reasonable for the OAB to interpret "projects subject to an agreement" in the manner that it did.

DISPOSITION

19I would dismiss the application.

Pitt J.