CITATION: Planet Energy (Ontario) Corp. v. Ontario Energy Board, 2020 ONSC 598
DIVISIONAL COURT FILE NO.: 670/18 DATE: 20200131
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Swinton, Pattillo and Ramsay JJ.
BETWEEN:
PLANET ENERGY (ONTARIO) CORP.
Appellant
– and –
ONTARIO ENERGY BOARD
Respondent
Glenn Zacher and Alexandra Matic, for the Appellant
Andrea Gonsalves and Justin Safayeni, for the Respondent
HEARD at Toronto: January 9, 2020
Swinton J.
Overview
[1] Planet Energy (Ontario) Corp. (the “appellant”) appeals from a decision of the Ontario Energy Board (the “Board”) dated September 20, 2018, which found that the appellant had contravened provisions of the Energy Consumer Protection Act, 2010, S.O. 2010, c. 8 (the “ECPA”), O. Reg. 389/10 (General), and the Board’s Electricity Retailer Code of Conduct; ordered it to pay an administrative penalty of $155,000; and ordered that 26 electricity contracts be declared void and refunds be made to the affected customers.
[2] In this appeal, the appellant argues that the Board had no jurisdiction to impose the administrative penalty because of a time limitation in s. 112.5(2) of the Ontario Energy Board Act, 1998, S.O. 1998, c. 15 (the “OEBA”), and that the Board made errors of law in finding misconduct and in determining that the administrative penalty should be ordered.
[3] For the reasons that follow, I would dismiss the appeal.
Factual Background
[4] The appellant is licensed by the Board to sell fixed term contracts for natural gas and electricity to commercial and residential customers. From 2009 to 2016, the appellant marketed its products through a multi-level marketing company, All Communications Network of Canada Co. (“ACN”). ACN markets various products, including contracts for energy, telephone and internet services, through “independent business owner” (“IBO”) representatives, who introduce products to their “warm network” of family, friends and acquaintances. IBOs were supposed to inform potential customers of the benefits of the appellant’s products and then leave it to the customer to visit the appellant’s website to actually sign up for the appellant’s products.
[5] The Board commenced an investigation into the marketing of the appellant’s products after receiving two customer complaints in January 2016. These complaints related to two IBOs – Jim MacArthur and Kayvan Nahid. Following an investigation carried out by Board appointed investigators, the Board issued a Notice of Intention to Make an Order for Compliance in February, 2017 in accordance with s. 112.2(2) of the OEBA. That provision requires the Board to give written notice of its intention to make an order that a person pay an administrative penalty pursuant to s. 112.5. In its notice, the Board advised that it would be considering the imposition of an administrative penalty.
[6] The appellant requested a hearing, which took place over the course of five days in November 2017 followed by a day of oral argument in January 2018.
[7] The Board issued its decision on September 20, 2018. It found that the appellant was responsible at law for the conduct of the two IBOs and rejected the appellant’s argument that the customers’ agreements were “internet agreements” – that is, agreements entered into by the customers themselves over the internet.
[8] The Board found a number of allegations were made out against the appellant. It found Mr. MacArthur’s evidence was credible. It relied on the evidence of the two IBOs and a customer of Mr. McArthur’s, Robert Hawkins, and found that the two IBOs had personally enrolled electricity customers in the appellant’s electricity program, rather than leaving it to the customers to enroll themselves on line. This was contrary to the ECPA regulation.
[9] The Board found that several allegations of non-compliance were proven:
• The two IBOs provided false, misleading or incomplete information to consumers. In contravention of the ECPA regulation, they failed to advise prospective electricity customers of the global adjustment that would appear on their bills or other additional charges, and failed to provide the Board price comparison and the disclosure statement or contract prior to enrollment.
• Second, the appellant’s training manual, its failure to provide other training, and the on line and unmonitored test resulted in a training regime that was “seriously deficient” and in contravention of the Electricity Retailer Code of Conduct.
• Third, the two IBOs did not comply with business card and identification badge requirements, nor provide a disclosure statement, the price comparison or a text-based copy of the contract before the consumer entered the contract. Furthermore, the appellant failed to make verification calls to consumers enrolled by the two IBOs, in accordance with a Board-approved script.
• Fourth, the appellant sought to impose an improper cancellation fee on one customer, R.A.
[10] The Board then imposed an administrative penalty of $155,000. Of this amount, $100,000 was for the contraventions relating to the training and testing program, while $50,000 was for contraventions relating to providing false, misleading or incomplete information to consumers, failing to wear an identification badge and to provide a business card, failing to provide required documentation and obtain required signatures, and failure to conduct contract verification. Finally, $5,000 was for providing customer R.A. with incorrect cancellation information.
The Appeal
[11] The appellant has appealed to the Divisional Court pursuant to s. 33 of the OEBA, which permits an appeal from an order of the Board “only on a question of law or jurisdiction.”
[12] Given that the Legislature has granted a right to appeal on a question of law or jurisdiction, the standard of review in this case is correctness (Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 at para. 37).
The Issues
[13] The appellant argues
that the Board had no jurisdiction to order an administrative penalty because the order was made outside the limitation period in s. 112.5(2) of the OEBA;
that the Board misapprehended the appellant’s position and disregarded relevant evidence in its assessment of the alleged contraventions by the two IBOs related to marketing and contract enrollment; and
that the Board made findings and inferences respecting systemic deficiencies in the appellant’s training and testing in the absence of any allegations of systemic deficiencies in the Notice of Intention.
The limitation period issue
[14] Subsection 112.5(2) of the OEBA places a time limitation on the imposition of an administrative penalty pursuant to s. 112.5(1). It states:
The Board shall not make an order under subsection (1) in respect of a contravention later than two years after the later of,
(a) the day the contravention occurred; and
(b) the day on which evidence of the contravention first came to the attention of the Board.
[15] The appellant argues that evidence of the contraventions first came to the attention of the Board during the investigation that took place between between March and June of 2016. Accordingly, the Board was required to impose any administrative penalty by June 2018. However, the Board reserved its decision until September 20, 2018, with the result that the limitation period had run while the decision was under reserve, and the Board had no authority to impose the administrative penalty.
[16] This argument was never raised before the Board. Indeed, it was first raised in the context of a request for an adjournment of the hearing of this appeal, first scheduled to be heard by the Divisional Court in September, 2019. The request for an adjournment was granted, and the parties then filed new facta and authorities addressing the limitation issue.
[17] The Board argues that this Court should exercise its discretion to refuse to determine the limitation issue, given that it was never raised before the Board and is raised for the first time on appeal. The Board relies on Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654. This was an application for judicial review in which the Supreme Court of Canada discussed when it is appropriate for a reviewing court to address an issue that was not before the administrative tribunal. The Board argues that the reasoning is applicable in the present case, even though this is an appeal rather than an application for judicial review.
[18] In Alberta (Information and Privacy Commissioner), the Supreme Court stated that a reviewing court has the discretion to address a new issue raised on judicial review. However, the Court observed that the discretion will generally not be exercised in favour of hearing argument on that issue if the issue could have been raised before the tribunal and was not raised (at para. 23).
[19] The Supreme Court discussed the rationales for this rule. First, given that the Legislature has designated the tribunal to be the decision maker of first instance, the courts should respect the legislative choice (at para. 24). Where the issue relates to the tribunal’s specialized functions, the Court should not ignore the benefit of the having tribunal’s views on the issue. Second, the Court notes that there can be prejudice to the opposing party if it has not had an opportunity to present evidence on this issue, and the reviewing court does not have an adequate evidentiary record (at para. 26).
[20] Courts hearing appeals have also stated that they have the discretion to refuse to hear argument on an issue not raised at first instance (Rowan v. Ontario Securities Commission, 2012 ONCA 208 at paras. 70-71, 77, a case dealing with an appeal from the Ontario Securities Commission). In the civil case of Kaiman v. Graham, 2009 ONCA 77, the Court of Appeal stated (at para. 18):
The burden is on the appellant to persuade the appellate court that “all the facts necessary to address the point are before the court as fully as if the issue had been raised at trial” …
[21] The appellant reasonably points out that it could not have raised the issue of the limitation period before the Board at the time of the initial hearing, which ended in January, 2018. At that time, it did not know when the decision on an administrative penalty would be made, and the limitation period had not yet run. Counsel submits that the Board usually issues its decisions within two months, and so there was no reason to raise the limitation period issue.
[22] I note that the appellant’s expectation about the time for rendering a decision is based on the Board’s performance standards for resolving rate applications. The proceeding before the Board in this case was an enforcement proceeding, not a rate hearing, and the performance standards do not apply.
[23] In my view, the Court should exercise its discretion to refuse to determine the limitation issue, as the appellant could have and should have raised this limitation issue before the Board. The Board’s counsel submits that the appellant could have contacted the Board to inquire when a decision would be issued, alerting it to the limitation issue before the period had run. Alternatively, the appellant could have invoked the Board’s power to reconsider its decision. Such a request must be made within 20 days of the decision in accordance with the review motion process in the Board’s Rules of Practice and Procedure for Enforcement Proceedings.
[24] The appellant submits that it was not bound to seek a reconsideration, given that it has a statutory right of appeal. The Board concedes that an appellant is not required to seek reconsideration before it can appeal (see Alberta Power Ltd. v. Alberta (Public Utilities Board), 1990 ABCA 33 at paras. 7-8).
[25] However, in the circumstances of this case, reconsideration should have been sought. It is not appropriate for this Court to determine the proper interpretation of s. 112.5(2) and its application here without first having the Board’s determination of this issue.
[26] The appellant argues that the interpretation of the limitation provision raises a pure question of law, and so it is appropriate for this Court to determine the issue, given that the standard of review with respect to the Board’s interpretation of the OEBA is correctness. There are two problems with this argument. First, it ignores the fact that the Board is an expert and highly specialized tribunal that can assist the Court in the exercise of statutory interpretation by providing context and a consideration of the impact of various interpretations. Second, the interpretation and application of s. 112.5(2) is not a pure question of law, since a finding of fact must be made as to when the Board first had the evidence of a contravention.
[27] The utility of the Board providing its interpretation of the section becomes evident when one considers the wording of s. 112.5(2) in the context of the legislation as a whole. Section 112.5(2) is an unusual provision, and its interpretation has never been considered by the Board. Most limitation provisions provide a date by which a proceeding must be commenced. In contrast, s. 112.5(2) provides what one might call a sunset provision: it prevents the Board from imposing an administrative penalty two years after the “evidence” of a contravention comes to the Board’s attention. The interpretation of this provision will affect the Board’s compliance and enforcement process.
[28] According to the modern principle of statutory interpretation, the words of a statute must be read in their entire context, in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament (Bell ExpressVu Limited Partnership v. Rex, 2002 SCC 42, [2002] 2 S.C.R. 559 at para. 26). In the present case, there are difficult issues that arise in the interpretation of the provision which would benefit from the assistance of the Board. For example, what is the meaning of “Board”? Is it the Board members appointed by Order-in-Council, in accordance with s.4.1(1) and (2) of the OEBA? The appellant argues that the Board includes the inspectors appointed by the Board, arguing that they act as delegates. However, s. 112.2(2) requires that the “Board” decide whether to give notice of an intention to levy an administrative penalty. That suggests a different meaning from the inspectors who gather information. Moreover, inspectors have a duty to notify the Board of all matters he or she thinks relevant to Board proceedings or possible future proceedings (s. 109).
[29] A further difficulty is the meaning of “evidence”. When the inspectors’ powers are set out in the Act, reference is made to the gathering of documents, records and information. It is noteworthy that the word “evidence” is used in s. 112.5(1), suggesting that this is something different than the information gathered by the inspectors.
[30] There are policy considerations that also come to bear in the interpretation of the Act. Limitation periods are imposed in part to provide an incentive to the regulator to avoid delay and to provide finality. However, if the appellant’s interpretation is correct, there is a possibility that those accused of misconduct will drag out enforcement proceedings to avoid a penalty, or that delay will occur in the most complex cases. This would seem to undermine the public protection purpose of administrative penalties.
[31] While the Court will ultimately review the interpretation of the Act on a standard of correctness, respect for the specialized function of the Board still remains important. One of the important messages in Vavilov is the need for the courts to respect the institutional design chosen by the Legislature when it has established an administrative tribunal (at para. 36). In the present case, the Court would be greatly assisted with its interpretive task if it had the assistance of the Board’s interpretation respecting the words of the Act, the general scheme of the Act and the policy objectives behind the provision.
[32] That brings me to the argument that the application of s. 112.5(2) raises a pure question of law. I disagree. In order to determine whether the limitation period has run, the Court would have to make findings of fact as to when the “evidence” first came to the “Board’s” attention. The appellants argue that the Board knew of the evidence by the end of June 2016, given the state of the investigation. Board counsel argues that a good proxy for the date the Board knew about the evidence was at the time it made the decision that there was sufficient evidence to issue a Notice of Intention in February, 2017. Alternatively, the Board argues that on the record, the investigation was not completed by the end of June 2016, because there were ongoing interactions between the inspectors and witnesses, including finalizing witness statements, that continued until January 2017. Accordingly, the limitation period had not run, according to the Board.
[33] Although the appellant argues that this Court can make the necessary findings from the transcripts, it is not appropriate for us to do so. The Board enforcement staff might well have led different evidence concerning the investigation and reporting to the Board had they been alerted to the fact that the limitation period would be in issue in this proceeding.
[34] Given all of these concerns, it is not in the interests of justice that the Court exercise its discretion to deal with the limitation issue, as it was not raised before the Board.
The alleged misapprehension of evidence
[35] The appellant takes issue with the following statement of the Board, found in a section of the reasons dealing with the credibility of Mr. MacArthur (at p. 6):
The OEB accepts the evidence of J.M. and his customer R.H., that J.M. entered into contracts on customers’ behalf. This evidence was not specifically challenged by Planet Energy as Planet Energy took the position that the contracts were internet contracts, an argument the OEB has rejected in this decision.
[36] The appellant argues that the Board has misapprehended its position, because it did challenge the allegation that the two IBOs’ method of operating was to directly enroll customers on line on their behalf.
[37] This ground of appeal does not raise an error of law or jurisdiction. Essentially, the appellant is taking issue with the Board’s credibility findings. The Board knew that Mr. MacArthur and his customer Mr. Hawkins gave different versions of events at different times, but they believed their evidence that Mr. MacArthur did enroll customers on line. There was also evidence from Mr. Nahid that he enrolled customers on line.
[38] The Board was entitled to make the finding that customers were enrolled by the two IBOs and the customers were not entering internet contracts. The Board justified its credibility finding. There is no error of law here.
[39] Moreover, there is no error in the sentence quoted above stating that the appellant did not “specifically challenge” the evidence of Mr. MacArthur and Mr. Hawkins. The appellant did not lead evidence to directly challenge the evidence of Mr. MacArthur and Mr. Nahid about their sales and enrollment practices.
[40] The appellant argues that in determining that the appellant failed to make verification calls, it was unfair of the Board not to consider the evidence of the calls that were made to some customers in which the customers said that they had enrolled themselves. I disagree. Those calls were characterized by the Board as quality assurance calls, not the verification calls mandated by s. 15 of the ECPA. The Board had the evidence of the two IBOs and the customer, Mr. Hawkins, which it accepted. The Board was entitled to ignore the quality assurance calls in considering whether the misconduct alleged had been proven.
[41] The fact that those calls were made might be relevant to the determination of the penalty, if the Board were satisfied that there was due diligence that should affect the penalty. However, they are not evidence that contradicts the evidence the Board accepted of the actions of the two IBOs. The appellant has demonstrated no error of law respecting the treatment of the evidence, and I would not give effect to this ground of appeal.
The administrative penalty assessment
[42] The appellant argues that the Board erred in assessing the $100,000 component of the administrative penalty on the basis of a finding of systemic deficiencies in testing and training. However, the allegations before the Board related to the conduct of only two IBOs, and the Board enforcement staff did not allege systemic deficiencies. The appellant relies on a quotation from the Board’s reasons, where it said,
The inadequacy of Planet Energy’s training materials and test invigilation procedures creates a real risk of harm to consumers. An improperly trained salesperson is prone to provide misleading information to consumers.
[43] However, the appellant has not included the complete quotation from the Board’s reasons. When the reasons are read as a whole, it is clear that the Board was speaking of the training and testing of the two IBOs when discussing the administrative penalty. The last sentence in the paragraph partially quoted above actually continues, as follows:
An improperly trained salesperson is prone to provide misleading information to consumers, and the evidence in this case is that J.M. and K.N. did so. Indeed the other allegations in this case can largely be traced to the inadequacies in the training and testing program. (emphasis added)
[44] The Board concluded that the inadequate training of the two IBOs lay at the heart of the case, leading the two to provide misleading information to customers and creating a real risk of harm to those customers. The quantum of the administrative penalty respecting the training and testing contravention reflects the Board’s view of the gravity of this contravention.
[45] The appellant has not shown any error of law or jurisdiction with respect to the determination of the component of the administrative penalty related to inadequacies of training and testing.
Conclusion
[46] Accordingly, the appeal is dismissed. There is no order as to costs.
Swinton J.
I agree _______________________________
Pattillo J.
I agree _______________________________
Ramsay J.
Released: January 31, 2020
CITATION: Planet Energy (Ontario) Corp. v. Ontario Energy Board, 2020 ONSC 598
DIVISIONAL COURT FILE NO.: 670/18 DATE: 20200131
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Swinton, Pattillo and Ramsay JJ.
BETWEEN:
PLANET ENERGY (ONTARIO) CORP.
Appellant
– and –
ONTARIO ENERGY BOARD
Respondent
REASONS FOR JUDGMENT
Swinton J.
Released: January 31, 2020