Court of Appeal for Ontario

Date: 2023-10-25 Docket: COA-23-CV-0228

Before: MacPherson, Lauwers and Copeland JJ.A.

Between:

The Toronto-Dominion Bank Applicant (Non-Party to the Appeal)

And:

Strathcona Energy FIT 2 LP, Strathcona Energy FIT 2 GP Inc., 1784 Capital Holdings LLC, 1784 Solar, LLC Appellants

And:

Curtis Chandler, Chandler Capital Management, LLC, The Jake MacLeod Family Trust, Bruce Chandler, Business Development Bank of Canada, Laurentian Bank of Canada, Shawanaga First Nation, Shawanaga Limited Partnership, SFN General Partner Inc., KW Powerlogic Inc. and King Wheeler Holdings Inc. Respondents

Counsel: Jeffrey Levine, for the appellants Seumas M. Woods and Imad Alame, for the respondents

Heard: October 23, 2023

On appeal from the order of Justice Peter J. Osborne of the Superior Court of Justice, dated January 31, 2023.

Reasons for Decision

[1] This litigation stems from the sale of shares in seven companies owned indirectly by Curtis Chandler, Bruce Chandler, Chandler Capital Management, LLC, and The Jake MacLeod Family Trust (“the respondents”). Six of the companies were under the control of Blackstone Solar Financial Holdings Ltd. and Blackstone Energy Solutions Inc. (collectively, the “Blackstone Companies”). 2397591 Ontario Inc. owned Hay Bay Solar LP.

[2] The Blackstone Companies and 2307591 Ontario Inc. held interests in a number of rooftop solar projects across Ontario that generate electricity into Ontario’s power grid under feed-in-tariff (“FIT”) contracts.

[3] In 2015, the respondents agreed to sell their shares in the Blackstone Companies and 2307591 Ontario Inc. to Lavender Glen Holdings Inc. (“Lavender Glen”), a company owned by Karl and Susanne Hollett, for $3.8 million. The terms were set out in a share purchase agreement, with most of the funds due after closing. To provide some assurance to the respondents, a share pledge agreement was signed, which prohibited Lavender Glen from entering into certain transactions without the respondents’ consent.

[4] In 2015, Lavender Glen reorganized and transferred the assets of the FIT entities and the Hay Bay Solar LP to Strathcona Energy FIT 2 LP, another limited partnership owned by the Holletts. This was done without the respondents’ knowledge or consent. As a result, Lavender Glen acquired direct ownership of the FIT 2 entities.

[5] The FIT 2 entities began to operate their rooftop solar projects.

[6] Lavender Glen stopped making payments to the respondents, eventually owing more than $2 million.

[7] Six of the FIT 2 entities banked with Toronto-Dominion Bank (“TD”). The seventh, Hay Bay, used the Bank of Montreal. TD interpleaded the money it held into court.

[8] The respondents brought a motion for judgment. Against the backdrop of “somewhat complicated” background facts, Gilmore J. distilled the issue as being “who will own the FIT 2 entities”. Although the appellants appeared at the hearing, Gilmore J. recorded that “they no longer wish to involve themselves in this proceeding and do not oppose the motion for judgment”. Gilmore J.’s Order, dated February 17, 2022, stated:

THIS COURT ORDERS that the Reorganization be set aside and unwound such that [Blackstone] shall directly own the interests in the FIT 2 Entities they held prior to the Reorganization.

[9] After this order was made, the appellants, which had not opposed the order, took the position that the Order applied to only the six entities previously controlled by the Blackstone Companies; it did not apply to Hay Bay. The respondents brought a motion seeking clarification on this issue.

[10] The motion judge, Osborne J., found in the respondents’ favour. He said:

The submission that the findings of oppression resulting in the order setting aside and unwinding the Reorganization applied so as to give effect to that unwinding to only six of the seven relevant FIT project entities, is entirely inconsistent with those findings and the context within which they were made. It is also consistent, in my view with the chronology of events and what it was that Gilmore J. determined to set aside.

[11] The appellants appeal this decision. The issue on appeal is whether Osborne J. erred in his interpretation of Gilmore J.’s summary judgment.

[12] In our view, Osborne J. did not err. He carefully reviewed the history of the parties’ relationships and the precise words of Gilmore J.’s judgment. His conclusion, namely, that it would make no sense to conclude that the unwinding of the Reorganization applied to only six of the seven entities – only those controlled by the Blackstone Companies - is entirely sound. In the end, the record and both Gilmore J.’s and Osborne J.’s analyses clearly support Osborne J.’s blunt conclusion:

There is no issue that at that time, the Blackstone Companies [as he defined them] included 591, the parent of Hay Bay. It is as simple as that. All of the Blackstone Companies were sold by the Chandler Respondents to Lavender Glen. None were carved out, and nor were there two or more Reorganizations at all, let alone multiple Reorganizations carried out in the summer and fall of 2015. There was one.

[13] The appeal is dismissed. The respondents are entitled to their costs of the appeal fixed at $18,000, inclusive of disbursements and HST.

“J.C. MacPherson J.A.”

“P. Lauwers J.A.”

“J. Copeland J.A.”