COURT OF APPEAL FOR ONTARIO DATE: 20230613 DOCKET: C70054
Feldman, Lauwers and Roberts JJ.A.
BETWEEN
Trillium Power Wind Corporation Plaintiff (Appellant)
and
His Majesty the King in right of the Province of Ontario, as represented by the Ministry of Natural Resources, the Ministry of the Environment, and the Ministry of Energy Defendants (Respondents)
David Milosevic, for the appellant Christopher Wayland, Eric Wagner and Roopa Mann, for the respondents
Heard: January 19, 2022
On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated October 15, 2021, with reasons reported at Trillium Power Wind Corp. v. Ontario, 2021 ONSC 6731.
Roberts J.A.:
[1] This appeal arises out of the abrupt cancellation by the Ontario government (“Ontario”) of its much-criticized wind power projects that it had promoted between 2009 and 2013. It is the timing of their cancellation and the corresponding impact of a wholesale governmental policy of documentary destruction, rather than the wisdom of Ontario’s wind power policies, that is in issue in these proceedings.
Background
[2] In response to Ontario’s promotion of its wind farm policies, the appellant applied for and proceeded a substantial way toward obtaining authorization to operate a wind farm in the Lake Ontario Lakebed near Main Duck Island in Prince Edward County. It had made a significant investment in performing the studies and other matters required in the approval process when, on February 11, 2011, without prior notice to the appellant, Ontario announced a halt or “moratorium” to its consideration of any offshore wind farm projects until such time as the environmental impact of such projects could be studied.
[3] Ontario’s announcement effectively terminated the appellant’s approval application. The announcement coincided with the closing of the appellant’s project financing, which consequently did not proceed.
[4] On May 19, 2011, by notice of proceeding against the Crown, the appellant commenced the present proceedings against Ontario, seeking damages for its failed wind farm project.
[5] In 2013, this court dismissed much of the appellant’s claim and pared it down to only the allegation of misfeasance in public office because Ontario allegedly timed its moratorium announcement to forestall the closing of the appellant’s project financing. [1]
[6] In 2015, the appellant amended its pleadings to include a claim of spoliation after it learned that Ontario had destroyed thousands of documents and other evidence allegedly related to internal government communications leading up to the moratorium.
[7] The parties brought competing summary judgment motions and the motion judge dismissed the appellant’s remaining causes of action, with costs to Ontario in the amount of $757,486.89.
Issues
[8] The appellant submits that the motion judge interpreted too narrowly the appellant’s allegations of misfeasance in public office and spoliation. With respect to the claim of misfeasance, it argues that the motion judge erred in concluding that there was no evidentiary basis to support the appellant’s claim that the February 11, 2011 public announcement was timed to injure the appellant. As for the claim for spoliation, the appellant says that the motion judge erred by misstating and misapplying the test for spoliation, as either a standalone tort or as an evidentiary finding.
Analysis
(i) Did the motion judge err in dismissing the appellant’s claim for misfeasance in public office?
[9] I see no error in the motion judge’s treatment of this issue based on the appellant’s pleadings and the evidentiary record before him. It was open to the motion judge to make the findings that he did.
[10] As the motion judge noted, following this court’s 2013 decision, the appellant’s misfeasance claim was limited to the allegations that Ontario’s “actions were targeted to stop [the appellant’s] offshore wind project before [its] financing was in place in order to deprive [it] of the resources to contest [Ontario’s] decision to cancel the wind projects”: Trillium Power Wind Corporation v. Ontario (Natural Resources), 2013 ONCA 683, 117 O.R. (3d) 721, at para. 56. The appellant amended its claim to plead that it provided a courtesy notice to Ontario on February 9, 2011 that it was set to close a significant financial investment by the end of day on February 11, 2011.
[11] On the motion, the appellant’s evidence given by its principal, John Kourtoff, was that on February 9, courtesy voicemail notices about the upcoming financing were left by Sandra Leffler, a lobbyist retained by the appellant, on the answering machines of two senior policy advisors – Sean Mullen in the Office of the Premier of Ontario and Andrew Mitchell in the Office of the Minister of Energy. However, the appellant’s evidence was based on Mr. Kourtoff’s “understanding” that Ms. Leffler had done this; Ms. Leffler did not provide evidence on the motion. Moreover, Messrs. Mullin and Mitchell deposed in responding affidavits on the motion that they never received any messages from Ms. Leffler regarding the closing of the appellant’s financing deal and the timing of that closing.
[12] As a result, the motion judge concluded, correctly in my view, that the appellant had “no evidence to counter the direct evidence of Mr. Mullin and Mr. Mitchell in support of [Ontario’s] position that the timing of the February 11, 2011 public announcement about offshore windfarm projects was coincidental”: Trillium Power Wind Corp. v. Ontario, 2021 ONSC 6731, at para. 38 (Trillium 2021). Further support for the conclusion that the timing of the announcement was coincidental came from the unchallenged evidence of other officials that the moratorium decision by the Environmental Minister and the timing of the announcement by the Office of the Premier were independently made prior to February 9 in January or early February 2011.
[13] On appeal, the appellant seeks to rely on an email dated January 27, 2011 from Rosalyn Lawrence to Eric Boysen and Ken Cain, all of the Ministry of the Environment, about a conversation with Mr. Kourtoff that reads: “[Mr. Kourtoff] will be finalizing his restructuring next week with an unnamed large Toronto based Canadian company who are real players in the field, but who were looking for a solid renewable energy company to back”. The appellant submits that this email demonstrates that the motion judge erred in concluding that there was no cogent evidence to support the appellant’s claim that Ontario’s deliberate timing of its announcement undermined its financing.
[14] I am not persuaded by the appellant’s submissions. First, as this email was not referenced or otherwise brought to the motion judge’s attention during the motion, it is hardly fair to fault the motion judge for not addressing it. More importantly, it would not have affected the outcome of the motion. The vague timing reference to “next week” is unhelpful to the appellant’s argument. In any event, the email does not undermine the direct evidence accepted by the motion judge that the individuals in charge of the timing of the announcement, who are not named in the email, had no knowledge of the timing of the appellant’s financing.
[15] Although not strictly necessary to do so in light of his disposition of the motion on the evidentiary record, the motion judge went on to consider whether the appellant’s narrow misfeasance claim had any chance of success, even if it had obtained funding. I see no basis to interfere with his conclusion that even if the funding had closed, the appellant could not prove that it would have succeeded in reversing Ontario’s moratorium decision, no matter how large its war chest [2]. Nor is there any error with his conclusion that the project was not economically feasible without the government funding program that was ended by the moratorium.
[16] Finally, as this court’s 2013 decision confirmed, the appellant could not contest the wisdom of Ontario’s wind farm policies, including its decision to cancel the program: Trillium Power Wind Corporation v. Ontario (Natural Resources), 2013 ONCA 683, 117 O.R. (3d) 721, at paras. 45-55. As a result, it could not compel Ontario to reverse the cancellation of the program, nor could it insist that Ontario continue to offer project funding. The appellant could therefore not prove that it suffered any damages. The motion judge’s conclusion that no amount of funding could accomplish what the appellant could not achieve in these proceedings is logical and unassailable.
[17] Accordingly, this ground of appeal fails.
(ii) Did the motion judge err in dismissing the appellant’s claim for spoliation?
[18] I agree that the appellant’s claim for spoliation should not have been dismissed on the basis of the motion judge’s conclusions that “no reasonable inference can be drawn that any documents were deleted or destroyed in an attempt to affect this litigation” and that “[a]ny presumption against [Ontario] due to its intentional destruction of records is rebutted by the evidence that demonstrates that the normal [Office of the Premier] record keeping practice at the relevant time was to purge email accounts for departing employees and to destroy mobile devices belonging to very senior [Office of the Premier] employees”: Trillium 2021, at paras. 52-53.
[19] Respectfully, the motion judge erred by taking an overly narrow view of this issue in light of the novelty of the appellant’s pleading, the undisputed facts, and the motion judge’s own findings in this case.
(a) Governing principles
[20] Spoliation arises out of the destruction of potentially relevant evidence. It "occurs where a party has intentionally destroyed evidence relevant to ongoing or contemplated litigation in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation”: McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, 440 A.R. 253, at para. 18.
[21] The motion judge correctly stated that “while spoliation as a self-standing cause of action is still open to question, Ontario courts have recognized spoliation as an evidentiary rule where there has been destruction of evidence by a party who reasonably anticipated litigation in which that evidence would play a part” and that this rule of evidence gives rise to a rebuttable presumption that the evidence destroyed would have been unfavourable to the party who destroyed it. He also rightly determined that he would not dismiss the spoliation claim at that stage on the basis that the cause of action is somewhat novel. While this court has not yet definitively resolved whether spoliation is a cause of action, it has permitted it to proceed to trial as a novel cause of action: Spasic Estate v. Imperial Tobacco Ltd. (2000), 49 O.R. (3d) 699 (C.A.), at paras. 12 and 22, leave to appeal refused, [2000] S.C.C.A. No. 547. It is unnecessary for the purposes of this appeal to resolve the issue.
[22] While a novel standalone cause of action, spoliation is not a novel issue. It arises out of a party’s breach of the well-established obligation to preserve and produce relevant documents in civil proceedings. The court’s intervention is required because spoliation undermines a fair trial process and interferes with the quest for the truth in judicial proceedings: Casbohm v. Winacott Spring Western Star Trucks, 2021 SKCA 21, at para. 36. As such, it amounts to an abuse of process.
[23] In St. Louis v. Canada (1896), 25 S.C.R. 649, at pp. 652-653, the Supreme Court established that the destruction of evidence carries a rebuttable presumption that “the evidence destroyed would have been unfavourable to the party who destroyed it”. The Court of Appeal of Alberta described the Supreme Court’s conclusion from St. Louis as follows, in McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, at para. 19:
Spoliation in law does not occur merely because evidence has been destroyed. Rather, it occurs where a party has intentionally destroyed evidence relevant to ongoing or contemplated litigation in circumstances where a reasonable inference can be drawn that the evidence was destroyed to affect the litigation. Once this is demonstrated, a presumption arises that the evidence would have been unfavourable to the party destroying it. This presumption is rebuttable by other evidence through which the alleged spoliator proves that his actions, although intentional, were not aimed at affecting the litigation, or through which the party either proves his case or repels the case against him.
[24] The court’s jurisdiction to grant remedies in response to spoliation springs from rules of civil procedure, its inherent power to control an abuse of its process, and its inherent discretion with respect to costs: McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, at para. 22. Remedies granted have mostly included but are not limited to the application of the adverse presumption referenced above in St. Louis, and costs: McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, at para. 29. Whether damages, including punitive damages, may be awarded if spoliation is treated as a standalone cause of action is an issue for another day and need not be resolved in this appeal: Armstrong v. Moore, 2020 ONCA 49, 15 R.P.R. (6th) 200, at para. 37.
(b) Principles applied
[25] Respectfully, the motion judge erred in dismissing the claim by holding that the evidentiary basis for the appellant’s claim was absent and by concluding that the unfavourable presumption against Ontario because of its destruction of documents was rebutted by the implementation of a government policy that the motion judge acknowledged was improper.
[26] First, there was an ample evidentiary basis to support spoliation by Ontario.
[27] Based on the motion judge’s own findings, there can be no question that the destruction in issue was deliberate and in accordance with an improper government policy. The motion judge found, based on an investigative report by the Information and Privacy Commission of Ontario, that the improper destruction of hand-held devices, emails and documents by the Premier’s Office under former Premier Dalton McGuinty was a notorious violation of record-keeping obligations and raised serious issues of political accountability.
[28] Moreover, there is no dispute that the impugned destruction occurred subsequent to the commencement of the appellant’s claim and concerned likely relevant documents in the possession of individuals who, as the motion judge found, were intimately involved in the relevant events and who were aware of the appellant’s claim. These individuals included Messrs. Mullin, Chris Morley, former Chief of Staff, and Jamison Steeve, among others, who were so engaged in the events giving rise to the wind farm moratorium and the appellant’s claim that they provided affidavits in support of Ontario’s summary judgment motion.
[29] The motion judge also discussed how the destruction of this evidence may have affected the litigation of this case, at para. 21:
The parties have engaged in documentary exchange, examinations for discovery, etc. During this time, it has become apparent that, among other things, the Ontario government is unable to locate and produce any emails from the email servers of any former [Office of the Premier] personnel. This lack of documentation is significant as [Office of the Premier] personnel were centrally involved in considering the offshore wind decisions in issue here, including both the decision to put a stop to offshore projects and the decision to announce that policy change on February 11, 2011.
[30] It is no answer to the appellant’s allegation of spoliation that Ontario’s right hand did not know what the left hand was doing. Ontario is a party to these proceedings and knew about the appellant’s claim prior to its destruction of documents, emails and devices. As a party to these proceedings, Ontario was required to preserve any potentially relevant documents in order to fulfill its disclosure obligations. Such documents included any potentially relevant emails, including those in the possession of departing employees who Ontario knew had relevant evidence – so relevant that Ontario put them forward as its own affiants in support of its motion for summary judgment. That these documents were potentially relevant to the issues in these proceedings is obvious from the gaps in the email exchanges that have been produced. Ontario’s deliberate destruction of evidence is clear.
[31] Importantly, whether Ontario’s intention was to destroy relevant evidence for use in simply this litigation or in all litigation is a distinction without a difference. As the motion judge referenced, it is a matter of public record that the subsequent inquiry into Ontario’s destruction policy in 2013 and related criminal proceedings against Mr. Morley’s successor as Chief of Staff demonstrated that the intention of the spoliators was to destroy any incriminating documents, at paras. 23-25:
It is a matter of public record that during the McGuinty period the practice within the [Office of the Premier] was for the email accounts of departed personnel to be “decommissioned” – i.e. deleted in their entirety. Furthermore, there is evidence that the handheld devices used by the [Office of the Premier] personnel at the time were, after their departures from the [Office of the Premier], either reset or, in the case of former Chief of Staff Morley, physically destroyed.
Evidence of this practice was canvassed before the Legislative Committee investigating the deletion of documents in the context of the McGuinty government’s gas plant cancellation: Standing Committee on Justice Policy, Legislative Assembly of Ontario, 2nd Sess., 40th Parl., June 18, 2013. It was likewise the subject of an investigative report by the Information and Privacy Commission of Ontario, which concluded that the email destruction practice was a violation of the Archives and Recordkeeping Act, 2006, SO 2006, c. 34 and raised serious issues of political accountability: IPC, Deleting Accountability: Records Management Practices of Political Staff, June 5, 2013, at 32.Most notably, the device destruction and email deletion policy was also thoroughly canvassed during the course of the criminal trial of Chris Morley’s successor as chief of staff, David Livingston. It was there described by the court in rather scathing terms as a “plan to eliminate sensitive and confidential work-related data…[which] amounted to a ‘scorched earth’ strategy, where information that could be potentially useful to adversaries, both within and outside of the Liberal Party, would be destroyed”: R. v. Livingston, 2018 ONCJ 25, at para 176. [Emphasis added.]
[32] The motion judge failed to look at the question of spoliation in the broader context of Ontario’s obligations to preserve and produce relevant documents. He therefore applied a very narrow construction to the meaning and effect of Ontario’s intentional destruction of evidence that Ontario knew it had to preserve and produce. Allowing Ontario to by-pass its clear documentary obligations in this way would amount to an abuse of process. Applying the correct analytical lens leads to the conclusion that spoliation occurred: there was a deliberate destruction of potentially relevant evidence from which the reasonable inference can be drawn that the destruction was done to affect litigation, including the present litigation.
[33] As a result, the motion judge’s dismissal of the spoliation claim must be set aside.
[34] The appellant submits that in the event that the motion judge’s dismissal of its spoliation claim is set aside, this court should remit the case to trial for a determination of the appropriate quantum of damages arising from the spoliation.
[35] I would not do so. The appellant’s spoliation claim is inextricably tied up with its misfeasance claim. The setting aside of the motion judge’s dismissal of the spoliation claim does not affect the dismissal of its claim for misfeasance in public office, including any claim for damages. Even if an adverse inference were drawn against Ontario that the destroyed evidence would have been unhelpful to its position in this litigation, the appellant could not have compelled Ontario to reverse its moratorium or fund its wind farm project and therefore suffered no damages, even if Ontario’s timing of the announcement of its moratorium had targeted the timing of the appellant’s financing. Moreover, the timing of the announcement even proved beneficial in that the appellant did not incur the cost of funding the cancelled project. As the appellant would not be able to demonstrate that it suffered any damages as a result of Ontario’s spoliation, there is no purpose in remitting it to the Superior Court for a trial on damages.
[36] This does not mean, however, that the appellant is left without any remedy flowing from Ontario’s deliberate spoliation. In my opinion, the circumstances of Ontario’s spoliation amount to an abuse of process: McDougall v. Black & Decker Canada Inc., 2008 ABCA 353, at paras. 22, 29. As such, the appropriate remedy is to deprive Ontario of its costs below and grant the appellant its costs of the appeal.
Disposition
[37] Accordingly, I would allow the appeal in part, set aside the motion judge’s dismissal of the appellant’s spoliation claim and award of costs, and grant the appellant its costs of the appeal.
[38] I would grant the appellant its costs of the appeal in the all-inclusive amount of $30,000.
Released: June 13, 2023 “K.F.” “L.B. Roberts J.A.” “I agree. K Feldman J.A.” “I agree. P Lauwers J.A.”
Notes
[1] Trillium Power Wind Corporation v. Ontario (Natural Resources), 2013 ONCA 683, 117 O.R. (3d) 721 (Trillium 2013)
[2] Moreover, there was no evidence that the lender would have advanced funds solely for use as a war chest rather than for the wind farm project for which the appellant obtained the funding.
