wpd Sumac Ridge Wind Incorporated v. Corporation of the City of Kawartha Lakes

[Indexed as: wpd Sumac Ridge Wind Inc. v. Kawartha Lakes (City)]

Ontario Reports

Court of Appeal for Ontario,

Rouleau, G.J. Epstein and Benotto JJ.A.

June 22, 2016

132 O.R. (3d) 529 | 2016 ONCA 496

Case Summary

Municipal law — Highways — Province issuing renewable energy approval to applicant for wind turbine project — Approval providing for use of unopened municipal road allowance for access to project — City passing resolution that any request by applicant for use of road to access and support wind turbine project be refused — Renewal energy approval being positive entitlement — Divisional Court not erring in finding that resolution frustrated legislative purpose of approval and that city acted in bad faith — Divisional Court not erring in quashing resolution and ordering city to consider in good faith applicant's requests to use road.

The province issued a renewable energy approval to the applicant to build, operate and retire five industrial wind turbines in the city. The approval provided for the use of an unopened municipal road allowance (Wild Turkey Road) to [page530] access the project. The applicant undertook to pay for the upgrading, operation and retiring of the road. The city was opposed to the wind turbine project. It passed a resolution that any request by the applicant for use of the unopened portion of Wild Turkey Road for access and/or vehicular traffic to support the proposed wind turbine project be refused. The applicant applied successfully for judicial review. The Divisional Court quashed the resolution and ordered the city to consider in good faith the applicant's requests to use Wild Turkey Road. The city appealed.

Held, the appeal should be dismissed.

The approval was not merely permissive; rather, it was a positive entitlement. If the applicant could not use Wild Turkey Road, the wind turbine project could not be built without re-engaging in the renewable energy approval process. The Divisional Court did not err in finding that the resolution frustrated the legislative purpose of the approval. Section 14 of the Municipal Act, 2001, S.O. 2001, c. 25 therefore applied to prevent the city from using its authority over roads to prevent the project from going ahead simply because it disagreed with the project. The Divisional Court did not err in quashing the resolution. The order directing the city to reconsider in good faith the upgrading and use of Wild Turkey Road was not an order in the nature of mandamus. There was no finding that the city could not refuse the applicant's request. To the contrary, the Divisional Court's reasons explained that the city retained jurisdiction to negotiate over legitimate considerations such as indemnity, liability and decommissioning costs, so long as it did so in good faith. Requiring the city to act in good faith was not mandamus, but rather a statement of an established principle of law.

Given the history of the city's dealings with the applicant and its attitude towards the project, the Divisional Court did not err in finding that the city acted in bad faith by exercising its jurisdiction over roads for an improper purpose, that is, to frustrate the approval and prevent wind energy projects from being constructed within its jurisdiction.

Alberta (Attorney General) v. Moloney, [2015] 3 S.C.R. 327, [2015] S.C.J. No. 51, 2015 SCC 51, 476 N.R. 318, 85 M.V.R. (6th) 37, 2015EXP-3202, J.E. 2015-1777, EYB 2015-258559, [2015] 12 W.W.R. 1, 29 C.B.R. (6th) 173, 22 Alta. L.R. (6th) 287, 391 D.L.R. (4th) 189, 606 A.R. 123, 259 A.C.W.S. (3d) 20, apld

Law Society of British Columbia v. Mangat, [2001] 3 S.C.R. 113, [2001] S.C.J. No. 66, 2001 SCC 67, 205 D.L.R. (4th) 577, 276 N.R. 339, [2002] 2 W.W.R. 201, 157 B.C.A.C. 161, 96 B.C.L.R. (3d) 1, 16 Imm. L.R. (3d) 1, J.E. 2001-1945, REJB 2001-26158, 108 A.C.W.S. (3d) 914, consd

Other cases referred to

Apotex Inc. v. Canada (Attorney General), 1994 CanLII 47 (SCC), [1994] 3 S.C.R. 1100, [1994] S.C.J. No. 113, 176 N.R. 1, 29 Admin. L.R. (2d) 1, 59 C.P.R. (3d) 82, 52 A.C.W.S. (3d) 178, affg 1993 CanLII 3004 (FCA), [1993] F.C.J. No. 1098, [1994] 1 F.C. 742, 162 N.R. 177, 18 Admin. L.R. (2d) 122, 51 C.P.R. (3d) 339, 44 A.C.W.S. (3d) 349 (C.A.); Cash Converters Canada Inc. v. Oshawa (City) (2007), 86 O.R. (3d) 401, [2007] O.J. No. 2613, 2007 ONCA 502, 226 O.A.C. 104, 35 M.P.L.R. (4th) 161, 67 Admin. L.R. (4th) 103, 158 A.C.W.S. (3d) 1003; Croplife Canada v. Toronto (City) (2005), 2005 CanLII 15709 (ON CA), 75 O.R. (3d) 357, [2005] O.J. No. 1896, 254 D.L.R. (4th) 40, 198 O.A.C. 35, 14 C.E.L.R. (3d) 207, 10 M.P.L.R. (4th) 1, 139 A.C.W.S. (3d) 368 (C.A.); Grosvenor v. East Luther Grand Valley (Township) (2007), 84 O.R. (3d) 346, [2007] O.J. No. 241, 2007 ONCA 55, 278 D.L.R. (4th) 483, 219 O.A.C. 381, 32 M.P.L.R. (4th) 1, 154 A.C.W.S. (3d) 959; H.G. Winton Ltd. v. North York (Borough) (1978), 1978 CanLII 1566 (ON SC), 20 O.R. (2d) 737, [1978] O.J. No. 3488, 88 D.L.R. (3d) 733, 6 M.P.L.R. 1, [1978] 2 A.C.W.S. 384 (Div. Ct.); [page531] Husky Oil Operations Ltd. v. M.N.R., 1995 CanLII 69 (SCC), [1995] 3 S.C.R. 453, [1995] S.C.J. No. 77, 128 D.L.R. (4th) 1, 188 N.R. 1, [1995] 10 W.W.R. 161, J.E. 95-1945, 137 Sask. R. 81, 35 C.B.R. (3d) 1, 24 C.L.R. (2d) 131, 58 A.C.W.S. (3d) 182; Rogers Communications Inc. v. Châteauguay (City), [2016] S.C.J. No. 23, 2016 SCC 23, 2016EXP-1919, J.E. 2016-1063, EYB 2016-266900, 117 L.C.R. 215, 49 M.P.L.R. (5th) 1, 397 D.L.R. (4th) 611, 266 A.C.W.S. (3d) 390

Statutes referred to

Environmental Protection Act, R.S.O. 1990, c. E.19 [as am.], ss. 3(1), 5 [as am.], Part V.0.1 [as am.], ss. 47.2(1), 47.5(1)

Green Energy Act, 2009, S.O. 2009, c. 12, Sch. A [as am.]

Green Energy and Green Economy Act, 2009, S.O. 2009, c. 12

Immigration Act, R.S.C. 1985, c. I-2 [rep.], ss. 30, 68(2), 69(1), 80.1(4)

Municipal Act, 2001, S.O. 2001, c. 25, s. 14 [as am.], (1)(b), (2) [as am.]

Rules and regulations referred to

Renewable Energy Approvals under Part V.0.1 of the Act, O. Reg. 359/09 [as am.]

Authorities referred to

Ontario, Legislative Assembly, Official Report of Debates (Hansard), 39th Parl., 1st Sess., No. 112 (February 23, 2009)

Rogers, Ian MacF., The Law of Canadian Municipal Corporations, loose-leaf (2014-Rel. 5), 2nd ed. (Toronto: Carswell, 1988)

APPEAL from the order of the Divisional Court (Sachs, Harvison Young and D.K. Gray JJ.), [2015] O.J. No. 4288, 2015 ONSC 4164, 43 M.P.L.R. (5th) 91 (Div. Ct.) quashing resolution CR2014-279 and directing the Corporation of the City of Kawartha Lakes to consider and decide wpd Sumac Ridge Wind Incorporated's applications in good faith.

Clifford I. Cole and Konstantine Stavrakos, for appellant.

Andrew Faith, Andrew Max and Emma Carver, for respondent.

The judgment of the court was delivered by

ROULEAU J.A.: —

A. Overview

[1] This appeal concerns the interaction of municipal jurisdiction over roads, renewable energy approvals under the Environmental Protection Act, R.S.O. 1990, c. E.19 and provincial paramountcy over municipal legislative enactments, codified in s. 14 of the Municipal Act, 2001, S.O. 2001, c. 25. Namely, does provincial paramountcy limit a municipality's authority over one of its unopened municipal road allowances when the province issues a renewable energy approval for a wind turbine project that provides for the use of that same road? [page532]

[2] The appellant, the Corporation of the City of Kawartha Lakes (the "city"), argues that the Divisional Court erred in concluding that it does. It submits that its resolution to refuse any requests by the respondent, wpd Sumac Ridge Wind Incorporated ("Sumac Ridge"), to use an unopened municipal road allowance within its jurisdiction did not frustrate the purpose of the renewable energy approval obtained by Sumac Ridge for a wind turbine project that provided for use of that same road. It also argues that the Divisional Court erred in ordering mandamus, and made palpable and overriding errors in finding, based on its past conduct with the respondent, that it passed the resolution in bad faith.

[3] For the reasons that follow, I would dismiss the appeal.

B. Facts

[4] Sumac Ridge initiated a renewable energy project to build, operate and retire five industrial wind turbines in the city. As required by the Environmental Protection Act, it applied to the Ministry of the Environment, now the Ministry of the Environment and Climate Change, for a renewable energy approval authorizing the project.

[5] Sumac Ridge's application for a renewable energy approval consisted of comprehensive plans and studies required by the Environmental Protection Act and regulations made under that Act. The application included maps of the project setting out necessary roads for construction and operation of the turbines at their exact sites. Sumac Ridge proposed to locate the facility on privately owned lands, but planned to build its main access road on an unopened municipal road allowance, Wild Turkey Road.

[6] The proposal contemplated widening an unopened portion of Wild Turkey Road by about one metre and levelling its surface to allow for the delivery of the wind turbines. Sumac Ridge undertook to pay for the upgrading, operation and retiring of the road.

[7] The regulation governing the approval of renewable energy projects, O. Reg. 359/09, requires the preparation of several reports. Those reports include a design and operations report, a consultation report, a project description report, a construction plan report and a decommissioning plan report.

[8] Two of these reports are of particular relevance to the issues raised in this appeal. The first is the consultation report, which summarizes, among other things, the applicant's communications with the public and the local municipality and how any concerns of the municipality have been considered. The second is [page533] the design and operations report, which sets out a site plan of the project, including maps of roads, utility corridors and rights of way situated within 300 metres of the facility. Those reports demonstrate the extent to which the ministry takes into account all aspects of the proposed project -- including municipal concerns and the placement of access routes -- when issuing a renewable energy approval.

[9] Beyond the consultation required by the regulation, Sumac Ridge undertook early attempts to engage the city in the approval process for Wild Turkey Road.

[10] It first approached the city about access routes, including Wild Turkey Road, in March 2011. Sumac Ridge was seeking a meeting to undertake the steps required to "obtain the required municipal approvals". The city voiced no concerns about Wild Turkey Road or any of the proposed access routes. Rather than agree to an informal consultation about the needed municipal approvals, the city responded that it would not engage with Sumac Ridge outside of the formal renewable energy approval process.

[11] In January 2012, Sumac Ridge again sought a meeting with the city to discuss various reports that it had provided to the city. In its response, the city questioned the purpose of the proposed meeting given that it was not "prescribed in the REA process, and not required prior to scheduling your public open house". The city indicated that, instead, it would follow the renewable energy approval regime's prescribed municipal consultation process.

[12] On March 14, 2012, Sumac Ridge repeated its request for a meeting with the city before completing its final layout of the project and before the final public meeting. As Sumac Ridge explained, the meeting was to address the permit process and assist in finalizing the project's layout. It sought to discuss road upgrades, including the documents required for necessary approvals. It advised that the meeting would help it to decide if any amendments to the project application were warranted.

[13] The city ultimately agreed to schedule a meeting for June 7, 2012. This was only 12 days before the final public meeting after which Sumac Ridge could not amend its proposal. At that meeting, the city simply advised that the use and upgrading of Wild Turkey Road would require the city's approval, something Sumac Ridge already knew. The city, however, did not raise any specific objection to the use or upgrading of the road.

[14] The final public meeting was held on June 19, 2012. On June 28, 2012, Sumac Ridge submitted its application for a renewable energy approval, to be determined by a director appointed under the Environmental Protection Act, s. 5. [page534]

[15] On March 11, 2013, the city provided its response to the project as part of the municipal consultation process required by the regulation. The response contained no objection to the use or upgrading of Wild Turkey Road, despite the express invitation in the municipal consultation form, Part B, s. 5.2, to do so.

[16] Outside of the prescribed renewable energy approval process, however, the city was making it clear that it opposed wind turbine projects, including the Sumac Ridge project. On March 26, 2013, the city passed resolutions stating that it was not a "willing host" for wind projects and seeking recommendations for legal options if the province approved the Sumac Ridge project. This followed two earlier resolutions expressing the city's objection and concern: the first, in February 2012, in which it asked the provincial government to impose a moratorium on approvals of industrial wind turbines pending further study on their impact on human health; and the second, in February 2013, in which it called on the provincial government to reject the Sumac Ridge project.

[17] On May 31, 2013, while still awaiting the province's approval of its proposal, Sumac Ridge wrote to the city to request the formal commencement of the application process for Wild Turkey Road. In response, the city passed a resolution that read in part:

THAT council confirms the application from WPD . . . for permits relating to Gray Road and Wild Turkey Road . . . are premature and directs the City's legal counsel to advise the applicant accordingly; and

THAT that staff be directed to advise WPD . . . that any action not authorized by the municipality on Gray Road and Wild Turkey Road shall be seen as trespassing under the Trespass to Property Act and authorities will be contacted to enforce.

[18] The city also advised Sumac Ridge that a municipal class environmental assessment, a planning study not mandated by the renewable energy approval process, would have to be prepared for the proposed use of Wild Turkey Road. Sumac Ridge agreed to undertake the study at its own expense in order to comply with the city's request.

[19] The director issued a renewable energy approval to Sumac Ridge (the "Sumac Ridge approval") on December 11, 2013. That approval was for five wind turbines to be placed at specific coordinates and for "on-site access roads". The Sumac Ridge approval set out the following:

[Sumac Ridge] shall construct, install, use, operate, maintain and retire the Facility in accordance with the terms and conditions of this Approval and the Application and in accordance with the following schedules attached hereto: [page535]

Schedule A -- Facility Description

Schedule B -- Coordinates of the Equipment and Noise Specifications

[20] The project therefore had to be built as approved. The Sumac Ridge approval covers all access roads, including Wild Turkey Road. No alternate placement of access roads is provided for. The city acknowledges that if Sumac Ridge cannot use Wild Turkey Road, the project cannot be built without reengaging in the renewable energy approval process.

[21] Third parties appealed the director's decision to issue the Sumac Ridge approval to the Environmental Review Tribunal. That appeal was ultimately dismissed.

[22] On March 25, 2014, before Sumac Ridge had even completed the municipal class environmental assessment report requested by the city, city council passed resolution CR2014-279, which is the resolution subject to the frustration of purpose claim. It resolved the following:

THAT any request by [Sumac Ridge] and/or future successors for use of the unopened portion of Wild Turkey Road for property access and/or vehicular traffic to support proposed wind turbine development be refused.

[23] In September 2014, Sumac Ridge completed its municipal class environmental assessment studies. The final report contained a detailed analysis of existing environmental conditions at the project location. It evaluated the proposed upgrades to Wild Turkey Road by comparing it to seven other options, including the option of not constructing the project. The option of using Wild Turkey Road as approved by the Sumac Ridge approval received the best overall score.

[24] The city did not alter its position after receiving the municipal class environmental assessment. The city discarded it on the basis that it provided no information of any value for council's consideration. The city's expert witness described the municipal class environmental assessment as biased and the worst one he had ever seen.

[25] Through November and December 2014, Sumac Ridge and the city exchanged correspondence. Sumac Ridge sought to negotiate terms of an agreement to allow Wild Turkey Road to be upgraded as provided in the Sumac Ridge approval. It offered to pay for the construction, operation and retiring of the road. In January 2015, the city responded that it remained opposed to Sumac Ridge's use of the road. No vehicular access and entrance to unopened and unassumed portions of Wild Turkey Road would be granted, nor would the city grant any approvals to upgrade it.

[26] Sumac Ridge then brought an application for judicial review to the Divisional Court, which was heard on April 23, 2015. [page536]

C. The Decision of the Divisional Court

[27] The Divisional Court granted the application. It quashed the city's resolution barring access to Wild Turkey Road and ordered the city to consider and decide Sumac Ridge's applications in good faith.

[28] At paras. 41 and 43, it described the nature and purpose of renewable energy approvals as follows:

[T]he particular purpose of the [Sumac Ridge Approval] is to authorize the "construction, installation, operation, use and retiring of [the] Class 4" Sumac Ridge Wind Project. This approval furthers the overall policy goals underlying the [Green Energy Act] regime, as described in East Durham Wind at para. 37:

The [Green Energy Act] provides a complete regime for carrying out the government's policy in this regard. It features an economic incentive for project developers (the [Feed-in Tariff] program); a comprehensive approval process to scrutinize the potential effects of each project on the health of humans, plants and animals and to identify any conditions that might be necessary to account for local conditions (the [renewable energy approval]); and an appeal process for [renewable energy approvals] that utilizes a specialized tribunal (the [Environmental Review Tribunal]) and the oversight of the courts on questions of law. To maintain this streamlined system the ability of municipalities to restrict renewable energy development through various powers under the Planning Act and the Municipal Act has been curtailed.

The [Sumac Ridge approval] approves the project as it was presented in [Sumac Ridge's] application. It is not merely an abstract approval in principle. It is a detailed and specific approval granted after an extensive and comprehensive process including consultation with the City. The [Sumac Ridge approval] approves five [industrial wind turbines] at specified coordinates, as well as "on-site access roads" in accordance with the Application submitted by the company.

[29] It then went on to conclude, at para. 52, that "because the [Sumac Ridge approval] contemplated the use of [Wild Turkey Road] as the artery of the project, the resolution purporting to refuse [Sumac Ridge] any use of [Wild Turkey Road] frustrates the purpose of the [Sumac Ridge approval] and must be quashed".¹

[30] The Divisional Court also held that the city's decision to refuse to allow Sumac Ridge's use of Wild Turkey Road was made in bad faith. The Divisional Court was of the view that, in [page537] making its decision, the city [at para. 57] "was not exercising or attempting to exercise any legitimate jurisdiction over the use of the roads". Rather, it was seeking "to accomplish indirectly that which the City had been unable to achieve directly through the [renewable energy approval] process: to stop the Sumac Ridge [industrial wind turbine] project".

[31] The Divisional Court inferred this intention based on, among other things, the way the city dealt with Sumac Ridge's request to access and upgrade Wild Turkey Road, and its failure to raise any concern regarding Sumac Ridge's proposed use of Wild Turkey Road until after the renewable energy approval process had been completed.

[32] The Divisional Court concluded that the appropriate remedy was to quash the city's resolution and require the city to do the following [at para. 76]:

a. to consider and decide in good faith [Sumac Ridge]'s applications to allow for the upgrading and use of [Wild Turkey Road]; and

b. to consider and decide in good faith [Sumac Ridge]'s applications for any municipal permits necessary for the expeditious construction and operation of [Sumac Ridge's] project.

D. Issues

[33] The city raises three grounds of appeal, arguing that the Divisional Court erred as follows:

(i) by finding that the city's resolution frustrated the legislative purpose of the Sumac Ridge approval;

(ii) in making an order in the nature of mandamus requiring the city to consider and grant Sumac Ridge's application without applying the test for mandamus; and

(iii) by finding that the city's resolution was made in bad faith.

E. Analysis

(1) Did the Divisional Court err in finding that the city's resolution frustrated the legislative purpose of the Sumac Ridge approval?

[34] The city argues that a renewable energy approval is simply a permissive instrument intended to secure environmental compliance if a renewable energy project is built. It submits that it is not a positive entitlement. It does not, as suggested by the Divisional Court, authorize the project and constitute a finding that the project furthers the policy goals underlying the Green Energy and Green Economy Act, 2009, S.O. 2009, c. 12. Nor does [page538] it provide that the project can proceed without regard to municipal concerns.

[35] In the city's submission, the Divisional Court erred in attributing a broader purpose to the renewable energy approval process. This led to its erroneous conclusion that the municipality's exercise of its exclusive jurisdiction over roads to restrict access to Wild Turkey Road frustrated the purpose of the Sumac Ridge approval. There is, in the city's view, no conflict -- in this case, the principles of paramountcy cannot be applied to prevent the municipality from exercising its exclusive jurisdiction over its roads.

[36] For the reasons that follow, I would not give effect to this ground of appeal. I will first set out the doctrine of paramountcy and the governing test for frustration of purpose. Then I will review the evidence and statutory provisions to determine the purpose of renewable energy approvals. Finally, I will explain why the City's resolution preventing Sumac Ridge's access to Wild Turkey Road frustrates the purpose of the Sumac Ridge approval.

(a) The doctrine of paramountcy and the governing test for frustration of purpose

[37] A cardinal rule of municipal law is that "all by-laws are subject to the general law of the realm and are subordinate to it", and that "any by-laws which are repugnant to or inconsistent with general provincial legislation are void and of no effect, or else superseded to the extent that the legislature has acted": Ian MacF. Rogers, Q.C., The Law of Canadian Municipal Corporations, loose-leaf (2014-Rel. 5), 2nd ed. (Toronto: Carswell, 1988), at para. 63.16 (citations omitted).

[38] This principle has been codified in s. 14 of the Municipal Act, which provides as follows:

14(1) A by-law is without effect to the extent of any conflict with,

(a) a provincial or federal Act or a regulation made under such an Act; or

(b) an instrument of a legislative nature, including an order, licence or approval, made or issued under a provincial or federal Act or regulation.

Same

(2) Without restricting the generality of subsection (1), there is a conflict between a by-law of a municipality and an Act, regulation or instrument described in that subsection if the by-law frustrates the purpose of the Act, regulation or instrument. [page539]

[39] To determine whether municipal and provincial legislative enactments conflict, this court has endorsed applying the paramountcy doctrine governing conflicts between federal and provincial legislation: Croplife Canada v. Toronto (City) (2005), 2005 CanLII 15709 (ON CA), 75 O.R. (3d) 357, [2005] O.J. No. 1896 (C.A.), at para. 63; Cash Converters Canada Inc. v. Oshawa (City) (2007), 86 O.R. (3d) 401, [2007] O.J. No. 2613, 2007 ONCA 502, at para. 32.

[40] Whether a true conflict exists between federal and provincial legislative enactments has been the subject of considerable jurisprudence. It was most recently discussed in Alberta (Attorney General) v. Moloney, [2015] 3 S.C.R. 327, [2015] S.C.J. No. 51, 2015 SCC 51.

[41] In that case, the Supreme Court of Canada set out the following analytical framework:

(i) As a preliminary question, it must be determined whether both laws are validly enacted. If one is invalid, then no conflict can exist: Moloney, at para. 17; see, also, Rogers Communications Inc. v. Châteauguay (City), [2016] S.C.J. No. 23, 2016 SCC 23, at paras. 34-39.

(ii) If both laws are independently valid, the court must then examine whether the laws' concurrent operation results in a conflict under either branch of the paramountcy test. The two branches are (1) operational conflict -- "there is an operational conflict because it is impossible to comply with both laws"; or (2) frustration of purpose -- when, "although it is possible to comply with both laws, the operation of the provincial law frustrates the purpose of the federal enactment": Moloney, at para. 18.

(iii) If conflict is found, the inferior law remains in force but is inoperative to the extent it conflicts with the superior law: Moloney, at para. 29.

[42] The party alleging the conflict bears the burden of proving conflict: Moloney, at para. 27. When examining conflict, it is the effect of the inferior law, and not its purpose that is the focus of the paramountcy analysis: Moloney, at para. 28; Husky Oil Operations Ltd. v. M.N.R., 1995 CanLII 69 (SCC), [1995] 3 S.C.R. 453, [1995] S.C.J. No. 77, at para. 39. That being said, an intention to interfere with the superior government's purpose may call into question the legitimacy of the inferior law: Moloney, at para. 28; Husky Oil, at paras. 39, 44-45.

[43] In this case, the parties went straight to the second branch of the paramountcy test -- frustration of purpose -- [page540] which the Divisional Court applied to conclude that the city's resolution was in conflict with the Sumac Ridge approval and, therefore, invalid. Although the application could have been disposed of on the basis of the court's finding of bad faith, given the nature of this dispute, it was, and is, in the interests of justice to determine whether the resolution frustrated the purpose of the Sumac Ridge approval.

[44] In Moloney, the court cautioned that the standard for establishing frustration of purpose is high. It identified, at para. 26, that the following situations would generally not lead to a conflict: "For instance, duplicative federal and provincial provisions will generally not conflict. Nor will a conflict arise where a provincial law is more restrictive than a federal law" (citations omitted).

[45] The court went on to explain that "[t]he application of a more restrictive provincial law may, however, frustrate the federal purpose if the federal law, instead of being merely permissive, provides for a positive entitlement" (citations omitted).

[46] The Supreme Court cited Law Society (British Columbia) v. Mangat, [2001] 3 S.C.R. 113, [2001] S.C.J. No. 66, 2001 SCC 67 as providing an example of a federal law that created a positive entitlement, rather than being merely permissive, and which was thus frustrated by a more restrictive provincial law.

[47] In Mangat, the issue was whether provincial legislation preventing non-lawyers from charging a fee to represent persons at Immigration Review Board hearings conflicted with federal legislation, namely, ss. 30 and 69(1) of the Immigration Act, R.S.C. 1985, c. I-2. Section 30 provided that every person before the adjudication tribunal had the right to retain and be represented by "a barrister or solicitor or other counsel" and was to be given a reasonable opportunity to "obtain such counsel at the person's own expense". Section 69(1) provided that before the refugee division the person "may, at that person's own expense, be represented by a barrister or solicitor or other counsel".

[48] In finding that the provincial legislation conflicted with those federal legislative provisions, the Supreme Court applied the modern approach to statutory interpretation to determine the federal purpose. It looked beyond the specific provisions at issue and considered the legislative scheme as a whole, how similar and related acts governed representatives before federal tribunals, and reviewed an Ontario legislative report that highlighted the benefits of non-lawyer representatives.

[49] Ultimately, and relying heavily on ss. 68(2) and 80.1(4) of the Immigration Act -- which called for proceedings to be as informal and expeditious as the circumstances and fairness [page541] permit -- the court found that in enacting the provisions at issue, Parliament "was pursuing the legitimate objective of establishing an informal, accessible (in financial, cultural and linguistic terms), and expeditious process": Mangat, at para. 72. The provisions were not simply permissive. They provided a positive entitlement for non-lawyers to represent participants at hearings. Provincial legislation forbidding non-lawyers from charging a fee at the adjudicative and refugee divisions was accordingly held to be of no effect.

(b) The purpose of the renewable energy approval

[50] A renewable energy approval is an "instrument of a legislative nature" as contemplated by s. 14(1)(b) of the Municipal Act. As a result, if the city's by-law "frustrates the purpose of the . . . instrument" the by-law is without effect: Municipal Act, s. 14(2).

[51] The correct characterization of the renewable energy approval's purpose is, therefore, central to the appeal. Is the renewable energy approval simply permissive -- a determination that the project would not harm the environment, as argued by the city? Or is it, as Sumac Ridge maintains, a positive entitlement -- the product of an extensive regulatory process aimed at facilitating and encouraging the development of green energy projects?

[52] The city's submissions on this point focused on ss. 3(1) and 47.2(1) of the Environmental Protection Act. Subsection 3(1) of the Environmental Protection Act establishes the purpose of the Act: "The purpose of this Act is to provide for the protection and conservation of the natural environment." Further, Part V.0.1 of the Environmental Protection Act, which created and governs the renewable energy approval process, reaffirms that purpose, at s. 47.2(1): "The purpose of this Part is to provide for the protection and conservation of the environment."

[53] In other words, the city submits that the issuance of a renewable energy approval is akin to an environmental clearance certificate, which confirms that proceeding with the project will not harm the environment. It does not, as the Divisional Court found, "authorize" or "approve" the project as presented.

[54] The city also points out that provincial documentation explaining the renewable energy approval process specifically provides for applicants' having to obtain necessary permits and authorizations, such as a road use agreement.

[55] If municipal permits for road use were contemplated by the legislative framework, then, in the city's submission, the issuance of a renewable energy approval does not limit the city's ability to assess Sumac Ridge's request to access Wild Turkey Road as it would any other request. If, acting in good faith, the [page542] city concluded that the project was not in its interest, it could refuse to allow access to the road.

[56] This lends further support to their position that a municipality is at liberty to exercise its jurisdiction over its roads without it being found to be interfering or conflicting with the legislative purpose of the renewable energy approval. Had the Divisional Court properly understood the purpose of the renewable energy approval, the city submits, it would have found that no conflict exists between the approval and the municipality's decision to exercise its statutory authority over its roads.

[57] Such an interpretation, the city argues, is consistent with the Supreme Court of Canada's admonition in Moloney, at para. 27, to apply the doctrine of paramountcy with restraint. As the court explained, "It is presumed that Parliament intends its laws to coexist with provincial laws. Absent a genuine inconsistency, courts will favour an interpretation of the federal legislation that allows the concurrent operation of both laws" [citations omitted].

[58] I disagree with the city's submissions. The overall purpose of "Part V.0.1 -- Renewable Energy" of the Environmental Protection Act -- "to provide for the protection and conservation of the environment" -- is a broad one. That purpose is not limited to preventing projects that may harm the environment. Understood in its greater legislative context, the renewable energy approval is a part of a larger scheme that aims to promote that purpose by encouraging and facilitating renewable energy projects.

[59] That larger scheme was put in place by the Green Energy and Green Economy Act. That Act enacted the Green Energy Act, 2009, S.O. 2009, c. 12, Sch. A, and amended several statutes, which included adding Part V.0.1 to the Environmental Protection Act, and establishing an economic incentive for renewable energy project developers, the feed-in tariff program.

[60] During the first reading of the bill that ultimately became the Green Energy and Green Economy Act, the Minister of Energy and Infrastructure highlighted the objectives of the Act: Ontario, Legislative Assembly, Official Report of Debates (Hansard), 39th Parl., 1st Sess., No. 112 (February 23, 2009), at 4951-52. There, he explained the following:

[The Act] has two equally important thrusts: first, making it easier to bring renewable energy projects to life, and secondly, creating a culture of conservation, one where we go about our daily lives using less energy[.]

If passed, the Act would ensure that new green power doesn't get tripped up in all kinds of red tape, but instead that new renewable generation would be [page543] built and flowing into the system faster, complete with service-time guarantees on our processes.

[S]o long as all necessary documentation is successfully completed, permits would be issued within a six-month service window. My ministry would emerge with new capabilities and new leadership to support the facilitation of renewable energy projects.

[61] The minister's statements are reflected in the preamble of the Green Energy Act. That preamble provides that the government "is committed to fostering the growth of renewable energy projects, which use cleaner sources of energy, and to removing barriers to and promoting opportunities for renewable energy projects".

[62] The purpose of the Green Energy and Green Economy Act, therefore, was to encourage and actively facilitate the development of renewable energy projects, including wind projects. It created a framework for the province's approval of these projects.

[63] As noted earlier, the renewable energy approval is the product of the regime that the Green Energy and Green Economy Act put in place. It cannot, as a result, be interpreted as nothing more than a clearance certificate or finding that the project will not harm the environment.

[64] Even a cursory review of the comprehensive regulation enacted under the Environmental Protection Act demonstrates that a renewable energy approval is much more than this. That regulation, O. Reg. 359/09, puts in place a much broader process to assess the desirability of the project, including consultation with the public, municipalities, local authorities and aboriginal communities.

[65] The Sumac Ridge approval itself imposes terms and conditions on noise, water management, monitoring natural heritage, traffic management planning, archaeological resources, establishing a community liaison committee, operations and maintenance, record keeping, notification of complaints, changes of ownership and aboriginal consultation.

[66] Municipal concerns are clearly addressed as part of the process. The regulation requires the preparation of reports that outline the project and the impact on the public and the municipality, including roads surrounding the project. These reports are provided to the local municipality as part of the consultation. They explicitly seek municipal input on the proposed project's impact on municipal roads and infrastructure.

[67] Significantly, the project is only approved if, after consideration of all of the relevant factors, including municipal [page544] concerns, the director is of the opinion that the project is "in the public interest": Environmental Protection Act, s. 47.5(1).

[68] Therefore, the issuance of a renewable energy approval is not simply an assessment that the project would not harm the environment. With the object of the Green Energy and Green Economy Act in mind, a renewable energy approval is the authorization and approval of a project consistent with the legislative's objective of encouraging the development of green energy, which in turn contributes towards the objectives of protecting and conserving the environment. It is a positive entitlement, and not merely permissive.

[69] In addition, the legislative scheme demonstrates the legislature's intention to put the decision as to whether a renewable energy project is in the public interest in the hands of the director. It is not open to a municipality to conclude otherwise.

[70] Section 14 of the Municipal Act applies, therefore, to prevent a municipality from using its authority over roads to prevent an approved project from going ahead for being against its interests and, in effect, thwarting the provincial purpose.

[71] To the extent that municipal permits are required, the only concerns a municipality can advance are reasonable considerations such as costs, indemnification and liability, and only so long as it does so in good faith. Permits may not be refused simply because the municipality disagrees with the overall project.

(c) Did the city's resolution frustrate the purpose of the Sumac Ridge approval?

[72] The city's resolution prevents Sumac Ridge from using or accessing Wild Turkey Road. No alternatives to using that road were provided for in Sumac Ridge's application and none are specified in the Sumac Ridge approval. The city concedes that without the ability to use Wild Turkey Road, the project, as contemplated by the Sumac Ridge approval, cannot be built or operated.

[73] Because the project cannot be built, as approved, without the ability to use Wild Turkey Road, the city's resolution blocking Sumac Ridge's access to that road makes compliance with its approval impossible.

[74] The purpose of that approval -- to authorize a renewable energy project of the type fostered by the Green Energy and Green Economy Act, and to place the decision as to whether it is in the public interest in the hands of the director -- has been frustrated by the city's purported exercise of its jurisdiction over roads. [page545]

(2) Mandamus

[75] The city submits that the Divisional Court's order -- directing the city to reconsider in good faith the upgrading and use of Wild Turkey Road -- is an order in the nature of mandamus. Before making such an order, it argues, the Divisional Court ought to have applied the test for mandamus. The city goes on to explain that the Divisional Court's order does more than direct reconsideration; it directs the result of what is a municipality's discretionary decision-making power. That is because, it claims, the Divisional Court found that the city could not refuse Sumac Ridge's request.

[76] According to the city, the relevant aspects of that test, set out in Apotex Inc. v. Canada (Attorney General), 1993 CanLII 3004 (FCA), [1993] F.C.J. No. 1098, [1994] 1 F.C. 742 (C.A.), at pp. 766-67 F.C., affd by 1994 CanLII 47 (SCC), [1994] 3 S.C.R. 1100, [1994] S.C.J. No. 113, are as follows:

(i) there must be a public legal duty to act;

(ii) the duty must be owed to the applicant;

(iii) there must be a clear right to the performance of that duty; and

(iv) if the decision is discretionary, mandamus is unavailable where the decision-making power is unqualified, absolute, permissive or unfettered.

[77] The city maintains that, had the Divisional Court applied the test, it would have concluded that it could not be satisfied in this case. That is because

(i) the city was under no public legal duty to alter Wild Turkey Road;

(ii) the city did not owe such a duty to Sumac Ridge;

(iii) Sumac Ridge did not have a clear right to the performance of such a duty; and

(iv) the city's decision-making authority is discretionary, unqualified, permissive and unfettered.

[78] The Divisional Court's order, it therefore concludes, ought not to have been made.

[79] I would not give effect to this submission. The Divisional Court's order is not an order of mandamus directing the result of a municipality's discretionary decision-making power. [page546]

[80] There was no finding that the city could not refuse Sumac Ridge's request. To the contrary, the Divisional Court's reasons explained that the city retains jurisdiction to negotiate over legitimate considerations such as indemnity, liability and decommissioning costs, so long as it does so in good faith.

[81] The order does not require the city to alter or open Wild Turkey Road. The order's effect is to merely prohibit the city from continuing to frustrate the Sumac Ridge approval and act in bad faith. Requiring the city to act in good faith is not mandamus, but rather a statement of an established principle of law.

[82] The city's resolution prohibiting Sumac Ridge from using Wild Turkey Road was invalidated by the Divisional Court's order for frustrating the purpose of the Sumac Ridge approval. It follows then that Sumac Ridge can once again apply to use Wild Turkey Road. Clearly, a refusal to even consider such an application would equally frustrate the Sumac Ridge approval. In these circumstances, the city cannot reasonably take the position that, in exercising its jurisdiction over roads, it is permitted to refuse to even consider applications.

(3) Did the Divisional Court err in finding that the city's resolution was made in bad faith?

[83] The city submits that, in finding that the city acted in bad faith, the Divisional Court committed palpable and overriding errors. Specifically, the city argues that it made three errors:

(i) it failed to show deference to the city's decision;

(ii) it ignored unchallenged city evidence that it did not intend to thwart the project, but rather was concerned with traffic network policy; and

(iii) it improperly concluded that the city could not consider whether the project was for a purpose in the municipality's interest when deciding whether to grant a public municipal asset for a commercial project's private use without compensation.

[84] In the city's submission, the Divisional Court improperly inferred bad faith, despite the fact that municipalities have broad discretion in exercising their regulatory powers. When such broad discretion exists, the city argues that courts should not find bad faith unless there is no other rational conclusion. As there was evidence in the record from which the court could conclude that the city's actions were motivated for reasons other [page547] than bad faith, the Divisional Court committed a palpable and overriding error.

[85] In my view, the Divisional Court did not err in concluding that the city had acted in bad faith.

[86] In Grosvenor v. East Luther Grand Valley (Township) (2007), 84 O.R. (3d) 346, [2007] O.J. No. 241, 2007 ONCA 55, this court considered what constitutes bad faith on the part of a municipality. It endorsed [at para. 44] the following statement of Robins J. in H.G. Winton Ltd. v. North York (Borough) (1978), 1978 CanLII 1566 (ON SC), 20 O.R. (2d) 737, [1978] O.J. No. 3488 (Div. Ct.) [at p. 744 O.R.]:

To say that Council acted in what is characterized in law as "bad faith" is not to imply or suggest any wrongdoing or personal advantage on the part of any of its members. But it is to say, in the factual situation of this case, that Council acted unreasonably and arbitrarily and without the degree of fairness, openness, and impartiality required of a municipal government.

(Emphasis in original; citation omitted)

[87] The Divisional Court found that the city had acted in bad faith by exercising its jurisdiction over roads for an improper purpose, that is, to frustrate the Sumac Ridge approval and prevent wind energy projects from being constructed within its jurisdiction. This was an inference it was entitled to draw based on the record before it, including the following evidence:

the city rebuffed Sumac Ridge's efforts to discuss Wild Turkey Road;

the city did not express any objections to the use and upgrading of Wild Turkey Road before the completion of the renewable energy approval process;

the city's arguments for refusing to allow the use of Wild Turkey Road changed;

city staff's report to council, which formed the basis for the resolution, supports the inference that the city was motivated by its opposition to the project;

the city passed the impugned resolution before the municipal class environmental assessment -- which it had explicitly promised to consider in making its decision -- was complete;

the city only chose to object to the use of Wild Turkey Road after the window for addressing these purported concerns had passed and Sumac Ridge was locked into its renewable energy approval that depended on the use of Wild Turkey Road. [page548]

[88] Contrary to the city's submission, the Divisional Court did not commit any reviewable error. It carefully examined the totality of the evidence before it and its conclusion is entitled to deference.

F. Conclusion

[89] In my view, the appeal ought to be dismissed.

[90] As per the agreement of counsel, Sumac Ridge, as the successful party, is entitled to its costs fixed in the amount of $30,000, inclusive of applicable taxes and disbursements.

Appeal dismissed.

Notes

1 As I will set out later, and as provided under the Municipal Act, s. 14, the proper remedy for frustration of purpose is to declare that the inferior law is of no force or effect to the extent of the conflict. Given the Divisional Court's conclusion on bad faith, however, quashing the resolution was an appropriate remedy.

End of Document