DATE: 20020704 DOCKET: C38122
COURT OF APPEAL FOR ONTARIO
O’CONNOR A.C.J.O., DOHERTY and ARMSTRONG JJ.A.
B E T W E E N :
Thomas C. Marshall, Q.C.,
BRIAN PAYNE, on his own behalf and on
Thomas G. Heintzman, Q.C.,
behalf of all members of
Sara Blake and
COMMUNICATIONS, ENERGY AND
Harry Underwood
PAPERWORKERS UNION OF CANADA
for the appellants
and JUDY DARCY on her own behalf and
on behalf of all members of CANADIAN
UNION OF PUBLIC EMPLOYEES
Sean Dewart,
L.A. Richmond and
Applicants/
Steven Shrybman
Respondents
for the respondents
- and -
Richard P. Stephenson
JAMES WILSON and HER MAJESTY
for the intervenor
THE QUEEN IN RIGHT OF ONTARIO
Respondents/
Appellants
- and -
DON MacKINNON on his own behalf and
Heard: June 19, 2002
on behalf of all members of the POWER
WORKERS’ UNION
Intervenor
On appeal from the judgment of Justice A.M. Gans dated April 19, 2002, reported at [2002] O.J. No. 1450.
BY THE COURT:
I
[1] The appellants (herein referred to as “Ontario”) appeal from the judgment of Gans J. dated April 19, 2002, wherein he granted the respondents standing to bring the application and made a declaration in the following terms:
This court declares that any sale of the common shares of Hydro One Inc. held in the name of Her Majesty in right of Ontario, whether pursuant to an initial public offering of common shares by way of a secondary offering, or otherwise, contravenes sub-section 48(1) of the Electricity Act, [1998,] S.O. 1998, c. 15, Sched. A.
[2] Ontario contends that the respondents, who have no personal interest in the litigation, should not have been granted “public interest” standing. Ontario further contends that properly construed, s. 48(1) of the Electricity Act does not preclude the sale of shares of Hydro One Inc. (“Hydro One”) by Her Majesty in right of Ontario.
[3] The respondents resist the appeal and contend that Gans J. was correct on both the standing question and the merits of the application.
[4] The intervenor is the president of a trade union that represents some 3,000 employees of Hydro One. He was granted leave to intervene as an added party in the proceedings before Gans J. and was granted leave to intervene on this appeal. He takes no position on the standing issue and supports Ontario’s position on the interpretation of s. 48(1) of the Electricity Act.
[5] Ontario launched this appeal on April 25, 2002. The appeal was ordered expedited and listed for hearing on June 19, 2002. Before the oral argument, counsel for the respondents wrote to the other parties and the court indicating that in their view events subsequent to the judgment of Gans J., including new legislation introduced by the government, had or would shortly render the appeal moot. The respondents sought the direction of the court. The Associate Chief Justice directed that the appeal should proceed as scheduled and that the parties should be prepared to address the mootness issue at the outset of the appeal.
[6] On June 19, 2002, the court heard full argument on the mootness issue. The respondents argued that the appeal was moot for reasons which I will outline below. Ontario, supported by the intervenor, submitted that the appeal was not moot as of the date of oral argument, but acknowledged that it would be moot if the legislation recently introduced by the government became law. As of June 19th, it was anticipated that the government would enact the pending legislation on or about June 27, 2002.
[7] The court elected to hear full argument on the merits and reserved on both the mootness issue and the merits of the appeal.[^1]
[8] On June 27, 2002, the government enacted Bill 58, the Reliable Energy and Consumer Protection Act, 2002, 3rd Sess., 37th Leg., Ontario, 2002, substantially amending the Electricity Act. We will refer to the amended Act as “Bill 58”. The Bill repeals Part IV of the Electricity Act, including s. 48(1) and replaces it with a new Part IV, which includes s. 49. Section 49 expressly authorizes the Minister of Environment and Energy, on behalf of Her Majesty in right of Ontario, to “dispose of and otherwise deal with” the shares of Hydro One Inc. For ease of reference, the former s. 48(1) and the new s. 49 are set out side by side below:
(1) The Lieutenant Governor in Council may cause two corporations to be incorporated under the Business Corporations Act and shares in those corporations may be acquired and held in the name of Her Majesty in right of Ontario by a member of the Executive Council designated by the Lieutenant Governor in Council.
(1) The Minister, on behalf of Her Majesty in right of Ontario, may acquire, hold, dispose of and otherwise deal with securities or debt obligations of, or any other interest in, Hydro One Inc. or any of its subsidiaries.
(2) The Minister, on behalf of Her Majesty in right of Ontario, may enter into any agreement or arrangement that the Minister considers necessary or incidental to the exercise of a power under subsection (1).
- II
The Mootness Issue
(a) Factual Background
[9] Prior to April 1, 1999, Ontario Hydro operated as a statutory corporation created under the Power Corporation Act, R.S.O. 1990, c. P.18. It provided the bulk of the generation and transmission facilities for electricity consumed in Ontario. It also regulated the electricity sector. With the enactment of the Energy Competition Act, S.O. 1998, c. 15, Ontario began to restructure the electricity industry in Ontario. The Electricity Act was a schedule to the Energy Competition Act. To achieve the restructuring, Ontario divided Ontario Hydro into five separate corporations. One of those corporations, referred to as the service corporation, was to own and operate electricity transmission and distribution systems in the province. It was to operate these systems through its subsidiaries. The service corporation became Hydro One.
[10] The Electricity Act and the reorganization of the affairs of Ontario Hydro took effect on April 1, 1999. As of March 28, 2002, all of the common shares of Hydro One were held in the name of Her Majesty in right of Ontario by James Wilson, the Minister of Energy, Science and Technology. On that date, Hydro One filed a preliminary prospectus with the Ontario Securities Commission indicating that Ontario would offer for sale to the public, by way of a secondary distribution, all or some of the common shares that it owned in Hydro One.
[11] By application dated April 8, 2002, the respondents, who have a long and public record of opposition to the privatization of “public” assets, commenced a proceeding in which they sought a declaration that s. 48(1) of the Electricity Act precluded any sale by Her Majesty in right of Ontario of common shares of Hydro One to the public. Section 48(1) is set out above, but for convenience is repeated immediately below:
- (1) The Lieutenant Governor in Council may cause two corporations to be incorporated under the Business Corporations Act and shares in those corporations may be acquired and held in the name of Her Majesty in right of Ontario by a member of the Executive Council designated by the Lieutenant Governor in Council.
[12] On April 19, 2002, Gans J. granted the relief sought by the respondents. His formal judgment is set out above in paragraph 1.
[13] Ontario appealed that judgment. The government also moved to effectively “overrule” the decision of Gans J. by way of amendments to the Electricity Act. Bill 58 was tabled on May 29, 2002. As indicated above, that Bill purports to repeal s. 48(1) and replace it with s. 49(1). The respondents acknowledge that under the terms of s. 49(1), the power of Her Majesty in the right of Ontario to sell shares in Hydro One to the public is clear. Bill 58 also changes many of the other provisions of the Electricity Act relied on by Gans J. to support his interpretation of s. 48(1) of the Electricity Act.
[14] In early June 2002, the government announced that it would not proceed with the public offering described in the preliminary prospectus. On June 17, 2002, that offering was formally withdrawn. Ontario is currently reconsidering its options with respect to the sale of shares in Hydro One to the public. The various options under consideration involve the sale or issuance of securities to entities other than Her Majesty in right of Ontario.
(b) Analysis
[15] An appeal is moot if a decision by the court will not resolve a live controversy affecting, or potentially affecting, the rights of the parties: Borowski v. Canada (Attorney-General) (1989), 1989 123 (SCC), 47 C.C.C. (3d) 1 at 9-12 (S.C.C.); New Brunswick (Minister of Health and Community Services) v. G.(J.), 1999 653 (SCC), [1999] 3 S.C.R. 46 at para. 41.
[16] The respondents contend that Ontario’s withdrawal of the initial public offering has removed the factual substratum of the appeal, and that the repeal of s. 48(1) combined with the enactment of s. 49 of Bill 58 has stripped the appeal of its legal foundation.
[17] Whatever the effect of the withdrawal of the initial public offering may be on the mootness of this appeal, Ontario concedes that the repeal of s. 48(1) and the enactment of the new legislation renders this appeal moot. We agree with that concession. The repeal of s. 48(1) removes the legal significance of the declaration made by Gans J. The wording of the new legislation removes the problem of statutory interpretation presented to Gans J. With the change in the statutory landscape, the judgment of Gans J. has no effect on the rights of Ontario. The respondents never had any personal rights at stake in this litigation. They concede that the terms of Bill 58 overcome their claim that Her Majesty in right of Ontario is statutorily prohibited from offering shares in Hydro One to the public.
[18] As a general rule, a court will not hear a moot appeal. However, it is well- established that a court may exercise its discretion in favour of hearing a moot appeal where the purposes underlying the general rule are outweighed by the interests served by a determination of the merits of the appeal. The party seeking to have a moot appeal determined on its merits (in this case, Ontario), bears the onus of convincing the court to make an exception to the general rule: Borowski v. Canada, supra, at pp. 13-17; Tamil Co-operative Homes Inc. v. Arulappah (2000), 2000 5726 (ON CA), 49 O.R. (3d) 566 at 571 (C.A.).
[19] In Borowski v. Canada, supra, Sopinka J. provided what has become in Canada, the classic analysis of the mootness doctrine and the approach to employ in deciding whether to hear a moot appeal. He described the underlying determination in deciding whether to hear a moot appeal at p. 13:
In formulating guidelines for the exercise of discretion in departing from a usual practice, it is instructive to examine its underlying rationalia. To the extent that a particular foundation for the practice is either absent or its presence tenuous, the reason for its enforcement disappears or diminishes.
[20] Sopinka J. identified three concerns that cause courts to generally refuse to reach the merits of a moot appeal. First, mootness can dampen, if not extinguish, the adversarial fires that are crucial to the effective operation of the litigation process. Second, judicial resources are limited and priority must go to real disputes having real consequences for the litigants. This concern is primarily institutional. The time and effort needed to hear and decide any given moot appeal will not overwhelm the system. However, an open door policy with respect to such appeals would significantly impact the effective allotment of limited judicial resources. Third, by hearing moot appeals, there is a risk that a court will step outside of its legitimate law-making role and intrude upon the role of the legislature.
[21] The first concern, relating to the absence of an adversarial relationship between the parties, is not present here. Although the appeal is moot, the parties remain very much at odds over the proper interpretation of s. 48(1) of the Electricity Act. As the oral arguments demonstrated, all parties remain very ready, willing and able to fully and vigorously advance and defend their respective positions.
[22] The second concern, resting on the improvident use of limited judicial resources, lies at the heart of the arguments advanced for and against hearing the merits of this appeal. The respondents contend that the judgment of Gans J. is based entirely on a consideration of the context and terms of a specific statute. They argue that the judgment decides only whether s. 48(1) of the Electricity Act precludes the sale of Hydro One shares to the public by Her Majesty in right of Ontario. They contend that as s. 48(1) has now been repealed and replaced by a provision which clearly authorizes the sale of Hydro One shares to the public, there is no longer any justification for the expenditure of further judicial resources on this case.
[23] Ontario takes a very different view. It argues that the reasons of Gans J. raise serious questions about the proper approach to the interpretation of statutes and to the power of the Crown to deal with its assets. The Crown argues that the reasons of Gans J., go far beyond s. 48(1) of the Electricity Act and that he made fundamental errors in his approach to the task of statutory interpretation and in his analysis of the Crown’s power to deal with its assets. The Crown submits that unless rectified by this court, the reasons of Gans J. have the potential to cause serious mischief in other cases involving the interpretation of statutes touching on the Crown’s power to deal with its assets. There are many such statutes.
[24] Before addressing these arguments directly, we observe that none of the circumstances justifying the hearing of a moot appeal described in the cases to which we were referred, exist in this case. This is not a case, like Vic Restaurant Inc. v. The City of Montreal, 1958 78 (SCC), [1959] S.C.R. 58, where there are other proceedings involving these parties which could be collaterally affected by the judgment under appeal. Nor is this a case, like M. v. H., 1999 686 (SCC), [1999] 2 S.C.R. 3 or Horsemen’s Benevolent & Protective Assn. v. Ontario Racing Commission (1997), 1997 1907 (ON CA), 37 O.R. (3d) 430 (C.A.), where there are other cases, either before the court or likely to come before the courts, involving other litigants where the issue decided on this application will have to be litigated. Nor is this a case, like Forget v. Quebec (Attorney General), 1988 51 (SCC), [1988] 2 S.C.R. 90, a case heavily relied on by Ontario, where the judgment under appeal places in doubt the legality of governmental action, other than the action in issue in the specific case, engaged in by the government in reliance on the challenged statutory authority. Finally, this is not a case like New Brunswick (Minister of Health and Community Services) v. G.(J.), supra, where the nature of the issue raised on appeal is such that it will almost always be rendered moot before the opportunity for appellate review arises.
[25] To the extent that prior cases provide guidance, this case is similar to Borowski v. Canada, supra. In Borowski, the appellant challenged the constitutionality of certain Criminal Code, R.S.C. 1985, c. C-46, provisions relating to abortion. He contended that the Criminal Code provisions contravened the foetus’ right to life under s. 7 of the Canadian Charter of Rights and Freedoms. The relevant sections of the Criminal Code were declared unconstitutional before the Supreme Court of Canada could hear Mr. Borowski’s appeal. Sopinka J., for the court, held that the appeal was moot. He then turned to the question of whether the court should exercise its discretion and hear the appeal despite its mootness. He said at p. 18:
Moreover, while [Borowski’s appeal] raises a question of great public importance, this is not a case in which it is in the public interest to address the merits in order to settle the state of the law. The appellant is asking for an interpretation of ss. 7 and 15 of the Canadian Charter of Rights and Freedoms at large. In a legislative context any rights of the foetus could be considered or at least balanced against the rights of women guaranteed by s. 7… . A pronouncement in favour of the appellant’s position that a foetus is protected by s. 7 from the date of conception would decide the issue out of its proper context. Doctors and hospitals would be left to speculate as to how to apply such a ruling consistently with a woman’s rights under s. 7.
[26] In Borowski, as in this case, the challenged legislation was no longer in effect when the appeal came on for argument. All that remained was an abstract question of law. Sopinka J. cautioned against deciding legal questions, even important ones, absent a proper factual and legal context.
[27] We turn now to the specific arguments outlined above. Ontario attempts to characterize this case as raising legal issues of general public importance. It claims that the decision of Gans J. creates uncertainty as to the legal principles applicable to those issues and that the public interest requires a decision from this court removing those uncertainties.
[28] We reject this characterization. The approach courts are to take when interpreting statutes is well settled: see Rizzo & Rizzo Shoes Ltd. (RE), 1998 837 (SCC), [1998] 1 S.C.R. 27 at 41; R. v. Gladue, 1999 679 (SCC), [1999] 1 S.C.R. 688 at 704; Francis v. Baker, 1999 659 (SCC), [1999] 3 S.C.R. 250 at 267. Nothing in the reasons of Gans J., that could be read as a departure from the approach announced in several recent decisions of the Supreme Court of Canada, could possibly create any uncertainty in the law.
[29] We are also satisfied that the reasons of Gans J. cannot be read as a general pronouncement on the rights of the Crown to deal with its assets. He purported to analyze a specific provision in a specific Act. He did so in the context of the entirety of that Act, the specific circumstances surrounding its enactment and the comments of the Minister responsible for that specific Act.
[30] Furthermore, we do not see how anything could be usefully said by this court about the Crown’s right to deal with its assets absent a specific factual, historical and statutory context. The many cases to which this court was referred in argument on the merits of the appeal demonstrate, beyond peradventure, that any attempt to pronounce on the Crown’s right to deal with its assets in the abstract would be at best unhelpful and at worst dangerous.
[31] The decision below decides only that s. 48(1) of the Electricity Act precludes the sale of Hydro One shares to the public. The formal judgment reflects the narrow ambit of that decision. Were this court to decide the merits of the appeal, it could only determine whether s. 48(1) has the effect found by Gans J. Subsequent events have rendered that determination irrelevant. We do not, of course, suggest that the question of whether Hydro One should be privatized is not an issue of great public importance. It is. That was not, however, the issue before Gans J. and it is not an issue that this court could properly address. That issue must be resolved in the political arena. Ontario has not convinced us that a decision on the merits of this appeal would be a provident use of judicial resources.
[32] The third concern identified by Sopinka J. in Borowski v. Canada, supra, the risk that by deciding a moot appeal, the court would step beyond its legitimate law-making powers, did not figure prominently in the arguments of either Ontario or the respondents. That consideration does, however, have some significance. The respondents and Ontario agree that Hydro One can be privatized under the terms of Bill 58. There remains a vigorous debate as to whether it should be privatized. That is, however, a political and not a legal debate. To the extent that some might perceive a decision on the merits of this appeal as favouring one side or the other of that debate, it could be seen as an improper judicial intervention in a political matter. The risk that such a decision would be so interpreted is probably small, however, it does lend some support to the contention that this court should not hear the merits of the appeal.
[33] We will address two additional arguments made by Ontario in its oral submissions. It was argued that the court should relax the considerations governing the hearing of moot appeals when it is the Crown that wishes to have the moot appeal heard on its merits. We reject this submission. While no doubt the kinds of issues litigated by the Crown will merit consideration, despite the mootness of an appeal, more often than issues normally raised in purely private litigation, the considerations for determining whether the court should hear a moot appeal remain the same. If those considerations do not warrant the hearing of a moot appeal, the mere fact that it is the Crown who wishes to have the merits addressed cannot tip the scales in favour of doing so. It is worth noting that the Crown, and the Crown alone, has the power to direct a reference: see Courts of Justice Act, R.S.O. 1990, c. C.43, s. 8.
[34] In reply, Mr. Heintzman, for Ontario, raised a new argument in support of the contention that the court should hear the appeal on its merits. He referred to s. 53.2 of Bill 58 which provides:
The Minister, on behalf of Her Majesty in right of Ontario, may acquire and hold shares of Ontario Power Generation Inc.
[35] Ontario Power Generation Inc., under Bill 58, will own the generation facilities formerly owned by Ontario Hydro. Mr. Heintzman submits that the same problem of interpretation raised here, could arise if Ontario elected to privatize Ontario Power Generation Inc.
[36] There are two problems with this submission. First, it is based on speculation. There is nothing in the record to suggest that the government has any intention of privatizing Ontario Power Generation Inc. Second, although the words “acquire and hold” appear both in s. 53.2 of Bill 58 and s. 48(1) of the Electricity Act, the contexts in which the two provisions appear are so different, that the interpretation of the words in s. 48(1) of the Electricity Act could not possibly control the interpretation of the same words in s. 53.2 of Bill 58. There are various provisions in Bill 58, not found in the Electricity Act, which would be germane to the interpretation of the words “acquire and hold” in s. 53.2. Indeed, this submission demonstrates the folly inherent in attempting to interpret a statutory provision in isolation and without regard to its context.
III
[37] The appeal is moot. The Crown has not satisfied us that the circumstances of this case warrant a departure from the general rule that the court should not hear moot appeals. We would dismiss the appeal as moot.
[38] The parties agreed in oral argument that if the appeal was dismissed as moot, the respondents should have their costs on a partial indemnity basis and only in relation to the mootness argument. If the parties cannot agree on those costs, they will provide written submissions by August 1, 2002. There shall be no costs for or against the intervenor.
RELEASED: “DD”
“July 4, 2002”
“Dennis O’Connor A.C.J.O.”
“Doherty J.A.”
“Robert P. Armstrong J.A.”
[^1]: There was no longer any urgency in the appeal as Ontario elected not to proceed with the proposed public offering of its Hydro One shares.