Georgian Windpower Corporation et al. v. Stelco Inc.

Georgian Windpower Corporation et al. v. Stelco Inc. [Indexed as: Georgian Windpower Corp. v. Stelco Inc.]

113 O.R. (3d) 81
2012 ONSC 3759

Ontario Superior Court of Justice,
Patillo J.

December 19, 2012

Contracts -- Enforceability -- Parties entering into memorandum of understanding ("MOU") which confirmed general principles pertaining to ongoing discussions with respect to development of wind energy project on defendant's land -- Parties subsequently entering into Agreement to Establish Land Lease Easement Agreement ("AELLEA") -- Both documents agreements to agree and not enforceable -- Documents nevertheless imposing certain binding obligations on parties -- Defendant liable for breaching termination clause in MOU and for failing to permit plaintiff to assess winds on defendant's land contrary to AELLEA.

Contracts -- Negotiation -- Agreement to use best efforts to negotiate not enforceable.

The parties entered into a memorandum of understanding (the "MOU") which confirmed the general principles pertaining to ongoing discussions with respect to the development of a wind energy project on the defendant's land. The MOU contained a termination clause which required the party seeking to terminate the agreement to give at least 60 days' notice. The parties subsequently entered into an Agreement to Establish a Land Lease Easement Agreement (the "AELLEA"). The defendant terminated both agreements. The plaintiff brought an action for damages for breach of contract, breach of fiduciary duty, breach of confidence and unjust enrichment.

Held, the action should be allowed in part.

The MOU and the AELLEA were both agreements to agree, and were therefore unenforceable. However, both documents imposed certain binding obligations on the parties. The defendant breached the termination clause in the MOU and its obligation under the AELLEA to permit the plaintiff access to its land to assess the wind. The plaintiff was entitled to damages in the amount of $1,000 for breach of the MOU and $74,000 for breach of the AELLEA.

Agreements in the MOU and the AELLEA to use best efforts to negotiate were unenforceable. There is no free-standing duty to negotiate in good faith in Canadian contract law. The use of the terms "good faith" and "best efforts" in the MOU and the AELLEA related to future negotiations between the parties and did not create any independent legal duty or obligation.

The parties were at all times dealing with each other at arm's length in a commercial context, and were equal in their bargaining power. The defendant did not owe the plaintiff a fiduciary duty. There was no evidence that the relationship between the parties was a partnership. Rather, the evidence was to the contrary. There was no evidence that the defendant ever used any confidential information provided to it by the plaintiff. Finally, there was no evidence that the defendant was enriched in any way during the course of its relationship with the plaintiff.

ACTION for damages for breach of contract, breach of fiduciary duty, breach of confidence and unjust enrichment.

Cases referred to
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Other cases referred to
Agribrands Purina Canada Inc. v. Kasamekas (2011), 106 O.R. (3d) 427, [2011] O.J. No. 2786, 2011 ONCA 460 , 334 D.L.R. (4th) 714, 203 A.C.W.S. (3d) 753, 86 C.C.L.T. (3d) 179, 87 B.L.R. (4th) 1;
Bawitko Investments Ltd. v. Kernels Popcorn Ltd., 1991 2734 (ON CA) , [1991] O.J. No. 495, 79 D.L.R. (4th) 97, 53 O.A.C. 314, 26 A.C.W.S. (3d) 350 (C.A.);
Cadbury Schweppes Inc. v. FBI Foods Ltd., 1999 705 (SCC) , [1999] 1 S.C.R. 142, [1999] S.C.J. No. 6, 167 D.L.R. (4th) 577, 235 N.R. 30, [1999] 5 W.W.R. 751, J.E. 99-317, 117 B.C.A.C. 161, 59 B.C.L.R. (3d) 1, 42 B.L.R. (2d) 159, 83 C.P.R. (3d) 289, 85 A.C.W.S. (3d) 166;
Cedar Group Inc. v. Stelco Inc., [1996] O.J. No. 3974, 66 A.C.W.S. (3d) 867 (C.A.) , affg [1995] O.J. No. 3998, 59 A.C.W.S. (3d) 1096 (Gen. Div.) ;
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Hamilton v. Open Window Bakery Ltd., [2004] 1 S.C.R. 303, 2004 SCC 9 , 235 D.L.R. (4th) 193, 316 N.R. 265, J.E. 2004-470, 184 O.A.C. 209, 40 B.L.R. (3d) 1, [2004] CLLC Â210-025, 128 A.C.W.S. (3d) 1111 ;
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Jaffer v. York University, [2010] O.J. No. 4252, 2010 ONCA 654 , 268 O.A.C. 338, 326 D.L.R. (4th) 148;
Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 34 (SCC) , [1989] 2 S.C.R. 574, [1989] S.C.J. No. 83, 61 D.L.R. (4th) 14, 101 N.R. 239, J.E. 89-1204, 36 O.A.C. 57, 44 B.L.R. 1, 26 C.P.R. (3d) 97, 35 E.T.R. 1, 6 R.P.R. (2d) 1, 16 A.C.W.S. (3d) 345;
Lysko v. Braley (2006), 2006 11846 (ON CA) , 79 O.R. (3d) 721, [2006] O.J. No. 1137, 212 O.A.C. 159, 146 A.C.W.S. (3d) 925 (C.A.);
Mannpar Enterprises Ltd. v. Canada, [1999] B.C.J. No. 850, 1999 BCCA 239 , 173 D.L.R. (4th) 243, 121 B.C.A.C. 275, 67 B.C.L.R. (3d) 64, 87 A.C.W.S. (3d) 673;
Transamerica Life Canada Inc. v. ING Canada Inc. (2003), 2003 9923 (ON CA) , 68 O.R. (3d) 457, [2003] O.J. No. 4656, 234 D.L.R. (4th) 367, 41 B.L.R. (3d) 1, [2004] I.L.R. I-4258, 127 A.C.W.S. (3d) 235 (C.A.);
United Gulf Developments Ltd. v. Iskandar, [2008] N.S.J. No. 317, 2008 NSCA 71 , 69 R.P.R. (4th) 176, 168 A.C.W.S. (3d) 309, 267 N.S.R. (2d) 318;
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Statutes referred to
Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 [as am.]
Partnerships Act, R.S.O. 1990, c. P.5, ss. 2 , 3 [as am.]

Authorities referred to
La Forest, Anne Warner, Anger and Honsberger Law of Real Property, 3rd ed., vol. 2 (Toronto: Canada Law Book, 2010)

William V. Sasso and Jacqueline A. Horvat, for plaintiffs.
Bryan Finlay, Q.C., Marie-Andree Vermette and Richard Ogden, for defendant.

PATTILLO J.: -- Introduction

[The remainder of the judgment text continues exactly as provided above.]