COURT OF APPEAL FOR ONTARIO
CITATION: Iroquois Falls Power Corporation v. Ontario Electricity Financial Corporation, 2016 ONCA 616
DATE: 20160805
DOCKET: M46751 (C60286, C60287, C60288, C60289, C60290, C60291)
Gillese J.A. (In Chambers)
BETWEEN
C60286
Iroquois Falls Power Corporation
C60287
Cochrane Power Corporation
C60288
N-R Power and Energy Corporation, Algonquin Power (Long Sault) Partnership and N-R Power Partnership
C60289
Kirkland Lake Power Corporation
C60290
Lake Superior Power Limited Partnership, Beaver Power Corporation, Carmichael Limited Partnership and Algonquin Power (Nagamami) Limited Partnership
C60291
Cardinal Power of Canada, L.P. and MPT Hydro L.P.
Applicants (Respondents/Responding Parties)
and
Ontario Electricity Financial Corporation
Respondent (Appellant/Moving Party)
J.D. Timothy Pinos and Emily Larose, for the appellant/moving party
James D.G. Douglas, for the respondents/responding parties Iroquois Falls Power Corporation, Cochrane Power Corporation, N-R Power and Energy Corporation, Algonquin Power (Long Sault) Partnership and N-R Power Partnership and Kirkland Lake Power Corporation
Crawford Smith and Nick Kennedy, for the respondents/responding parties Lake Superior Power Limited Partnership, Beaver Power Corporation, Carmichael Limited Partnership and Algonquin Power (Nagamami) Limited Partnership
Glenn Zacher, for the respondents/responding parties Cardinal Power of Canada, L.P. and MPT Hydro L.P.
Heard: July 28, 2016
ENDORSEMENT
[1] Ontario Electricity Financial Corporation (“OEFC”) is a Crown agency whose objects include managing the former Ontario Hydro’s non-utility generator contracts. OEFC brings this motion to stay those parts of the judgments of Wilton-Siegel J. dated March 12, 2015 (the “Judgments”) requiring it to pay approximately $160 million[^1] to the responding parties, pending the outcome of its application for leave to appeal to the Supreme Court of Canada and, if leave is granted, a determination on the merits.
OVERVIEW
[2] The responding parties to this motion are privately-owned non-utility generators (“NUGs”) who entered into power purchase agreements with the former Ontario Hydro between 1989 and 1994, amended by term sheets executed by the parties between 2002 and 2008 (“PPAs”).
[3] When Ontario Hydro was restructured in 1999, OEFC became Ontario Hydro’s successor on the PPAs.
[4] On January 1, 2011, Ontario Regulation 398/10 (the “Regulation”) came into force. After the Regulation came into force, OEFC relied on it to amend the formula it used to calculate the payments it made to the NUGs (the “New Formula”).
[5] The New Formula resulted in decreased payments to the NUGs. The NUGs commenced six separate applications, which were heard together, alleging that the New Formula breached the PPAs. In their applications, the NUGs asked for orders requiring OEFC to resume making payments in accordance with the way in which they had been calculated before the Regulation came into force (the “Go-Forward Payments”) and requiring OEFC to pay them the difference between what they had been paid during the relevant period and what they would have been paid had OEFC not paid according to the New Formula (the “Retroactive Payments”).
[6] Wilton-Siegel J. heard the applications and found that the New Formula did not comply with the PPAs. In the Judgments, he granted the applications and ordered OEFC to make both the Go-Forward Payments and the Retroactive Payments.
[7] OEFC appealed to this court.
[8] On April 19, 2016, in a unanimous decision written by Doherty J.A., this court dismissed OEFC’s appeal (the “CA Judgment”).
[9] OEFC has made the Go-Forward Payments in accordance with the Judgments since they were rendered. The Retroactive Payments were automatically stayed until the CA Judgment was released.
[10] On June 20, 2016, OEFC filed an application for leave to appeal the CA Judgment to the Supreme Court of Canada. In its leave application, OEFC proposes to raise the following two issues on appeal:
What is the test for determining when a judge at first instance has impermissibly decided a matter on the basis of a “new issue” and what are the procedural consequences thereof?
How are the rules respecting the implication of contractual terms to be made consistent with the general principles of contractual interpretation and, if appropriate, the new approach to the implication of terms in other jurisdictions?
[11] In the motion presently before the court, OEFC seeks an order staying those portions of the Judgments that oblige it to make the Retroactive Payments, pending the determination of its leave application and, if leave is granted, a determination on its appeal. Alternatively, it asks for an order staying those portions of the Judgments that oblige it to make the Retroactive Payments to Cochrane Power Corporation, Lake Superior Power Limited Partnership, and Cardinal Power of Canada L.P.
[12] The NUGs oppose the stay motion.
[13] For the reasons that follow, the motion is dismissed.
THE TEST FOR A STAY
[14] The test for a stay pending appeal, including a motion for leave to appeal to the Supreme Court of Canada, is well-established. For OEFC to obtain a stay pending the outcome of its leave application, it must establish the following:
a) there is a serious issue to be adjudicated on its proposed appeal;
b) it will suffer irreparable harm if the stay is not granted; and
c) the balance of convenience favours granting the stay.
[15] These three components are interrelated in that the overriding question is whether the moving party has shown that it is in the interests of justice that the court grant a stay: see BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust, 2011 ONCA 620, 283 O.A.C. 321, at para. 16.
1. SERIOUS ISSUE – THE MERITS OF THE LEAVE MOTION
[16] Ordinarily, the threshold for demonstrating a serious issue to be tried is low. However, for a stay motion pending leave to appeal to the Supreme Court, when considering the serious issue component of the test, the court must take into account the stringent leave requirements imposed by the Supreme Court Act, R.S.C. 1985, c. S-26. As Laskin J.A. explained at para. 18 of BTR:
[T]he criteria for granting leave to appeal to the Supreme Court of Canada adds another layer to this component of the test. Under s. 40(1) of the [Supreme Court Act], the Supreme Court of Canada typically grants leave to appeal only in cases of public or national importance. Thus, a provincial appellate court judge hearing a motion for stay pending leave to appeal to the Supreme Court of Canada must take account of the stringent leave requirements in the Supreme Court Act. [Citations omitted.]
[17] Thus, I must make a preliminary assessment of the merit of the leave application, taking into consideration the stringent leave requirements in the Supreme Court Act. Having made that assessment, in my view, there is little likelihood that the Supreme Court will grant OEFC leave to appeal. I reach this conclusion for two reasons.
[18] First, the judgments have little or no precedential value. Wilton-Siegel J.’s interpretation of the PPAs, and the CA Judgment affirming his interpretation, have little or no precedential value because of the highly fact-specific nature of the interpretative exercise. Doherty J.A. recognized this in his reasons for the CA Judgment saying, at para. 99:
It is difficult to imagine an exercise in contractual interpretation that would be more fact-specific than the one called for here. Similarly, it is difficult to imagine a product of that interpretative process that could have less precedential value.
[19] Second, this court considered and rejected the two issues that OEFC raised in its leave application, finding that they did not arise on the facts of this case. In other words, the issues are hypothetical. This, too, makes it very unlikely that leave will be granted: Henry S. Brown, Supreme Court of Canada Practice 2016 (Toronto: Carswell, 2016), at p. 14.
[20] The first issue raised on OEFC’s leave application is based on its assertion that Wilton-Siegel J. impermissibly decided the applications on a fundamentally different basis than that advanced by the NUGs on the applications and argued by the parties at the hearing. This court rejected that submission, expressly finding that Wilton-Siegel J. did not decide the applications on the basis of a new issue. In paras. 65-69 of his reasons, Doherty J.A. states that the “battle lines were clearly drawn before the application judge”, nothing in the applications judge’s reasons suggest that he failed to appreciate the parties’ positions or that he saw the essentials of their dispute differently than the parties, and the alleged new issue “tracked the competing positions of the parties”.
[21] The second issue raised in OEFC’s leave application is based on its assertion that Wilton-Siegel J. implied a contractual term into the PPAs. Again, that issue was raised before this court and rejected. Doherty J.A. explained, at para. 118 of his reasons, that rather than implying a term, Wilton-Siegel J. had interpreted the language in the PPAs in light of the context in which those words were used by the parties. That is, what OEFC characterized as implying a contractual term was simply Wilton-Siegel J. engaging in contractual interpretation as mandated by the Supreme Court’s recent judgment in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633.
[22] As the issues raised on the leave application are highly fact dependent, appear to be hypothetical, and are likely to be of little interest to others beyond the litigants, it is unlikely that the Supreme Court will grant leave.
2. IRREPARABLE HARM
[23] OEFC says that irreparable harm of two sorts will result if the stay is not granted.
[24] First, OEFC submits that making the Retroactive Payments will have a significant impact on the electricity ratepayers of Ontario. It contends that making the Retroactive Payments would necessitate a rate adjustment in the very month they were paid. This would pass significant costs onto ratepayers, particularly industrial customers. Further, if OEFC obtains leave and is ultimately successful on appeal, OEFC submits that the adjustments for monies overpaid will be difficult to calculate and/or repayment might not put individual ratepayers back into the position they would have been but for the making of the Retroactive Payments.
[25] Second, OEFC submits that if the stay is not granted and it is ultimately successful on appeal, it might be unable to recover the Retroactive Payments from the NUGs. It would have to pursue each NUG and OEFC says there is no assurance that the NUGs would be able to repay the funds received by way of the Retroactive Payments. The prospect of non-recovery, OEFC argues, is particularly significant in respect of the 3 PPAs that have already expired. (The expired PPAs are with Cochrane Power Corporation, Lake Superior Power Limited Partnership, and Cardinal Power of Canada L.P.) Given that there is no ongoing commercial relationship between it and those 3 NUGs, the Retroactive Payment could not be recovered through set off.
[26] I accept neither submission.
[27] The record does not satisfy me that the full amount of the Retroactive Payments must come from electricity ratepayers in Ontario nor that if the amount of the Retroactive Payments is collected from electricity ratepayers that it must be done in a single month. I have no doubt that unique challenges might arise if recovery takes place and if the Retroactive Payments have been funded by the Ontario ratepayers. However, as I have indicated, on the record, I am not satisfied that the payments must come from the ratepayers. Nor am I satisfied that if they do, OEFC would be unable to manage a fair rebate process.
[28] OEFC’s submission that recovery of the Retroactive Payments is uncertain (should that come to pass) also fails. OEFC effectively admits that it could recover, through set off, from those NUGs with whom it has an ongoing contractual relationship. As for the three NUGs in respect of which the PPAs have already expired, on the record before the court, OEFC’s assertion of repayment risk is nothing more than speculation. The NUGs are sophisticated commercial entities whose well-established owners have long histories of doing business in Ontario and, absent evidence to the contrary, there is no reason to expect that they would not repay any Retroactive Payments if OEFC is granted leave and succeeds on appeal.
3. BALANCE OF CONVENIENCE
[29] OEFC says that it has shown that it will suffer harm if the stay is not granted and that the responding parties have led no evidence of any harm they will suffer if the stay is granted. In any event, OEFC says, any harm that the NUGs might suffer can be remedied through payment of interest on the amounts owing. Thus, OEFC submits, the balance of convenience is in its favour.
[30] As I have already explained, OEFC has not established that it will suffer irreparable harm if the stay is not granted. Therefore, even if I accept that the NUGs will not suffer non-compensable harm, it matters not. It is OEFC’s burden to establish that it will suffer greater harm if the stay is not granted and it has failed to discharge that burden.
DISPOSITION
[31] It will be evident from the foregoing reasons that I do not view a stay to be necessary in the interests of justice. The motion is dismissed.
[32] The parties have assured me that they can resolve the matter of costs among themselves. Accordingly, I make no order as to costs.
“E.E. Gillese J.A.”
[^1]: This is the responding parties’ preliminary figure. On OEFC’s preliminary calculation, the payments total just under $180 million.