Capital Solar Power v. Ontario Power Authority, 2015 ONSC 2116
CITATION: Capital Solar Power v. Ontario Power Authority, 2015 ONSC 2116
COURT FILE NO.: CV-13-59225
DATE: 20150401
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Capital Solar Power Corporation, Plaintiff
AND
The Ontario Power Authority, Defendant
BEFORE: Mr. Justice Timothy Minnema
COUNSEL: Geoffrey Hall, for the Plaintiff Lisa La Horey, for the Defendant
HEARD: January 20, 2015
ENDORSEMENT
MINNEMA, J.
Nature of the Hearing/Issue
[1] This was a motion by the defendant the Ontario Power Authority (“OPA”) to strike the statement of claim of the plaintiff Capital Solar Power Corporation (“Capital Solar”) and end this action.
[2] The parties agreed that the sole issue to be determined was whether Capital Solar’s claim for misfeasance in public office discloses a reasonable cause of action.
Law: Motion to Strike
[3] The motion is brought pursuant to Rule 21.01(1)(b) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended (“Rules”), which says that “[a] party may move before a judge … (b) to strike out a pleading on the ground that it discloses no reasonable cause of action or defence.” As to the test and process, these were recently summarized in Trillium Power Wind Corp. v. Ontario (Ministry of Natural Resources), 2013 ONCA 683, [2013] O.J. No. 5117 (C.A.) as follows:
30 The analytical framework for assessing whether to strike out a pleading on the ground that it discloses no reasonable cause of action under Rule 21.01(1)(b) of the Rules of Civil Procedure, is set out by Paul M. Perell and John W. Morden in The Law of Civil Procedure in Ontario, 1st ed. (Markham: LexisNexis Canada Inc., 2010), at p. 445:
The following principles apply to a Rule 21 motion to strike a pleading for failing to disclose a reasonable cause of action or defence: (a) the material facts pleaded must be deemed to be proven or true, except to the extent that the alleged facts are patently ridiculous or incapable of proof; (b) the claim incorporates by reference any document pleaded and the court is entitled to read and rely on the terms of such documents as if they were fully quoted in the pleadings; (c) novelty of the cause of action is of no concern at this stage of the proceeding; (d) the statement of claim must be read generously to allow for drafting deficiencies; and (e) if the claim has some chance of success, it must be permitted to proceed.
31 The test is not in dispute: the claim will only be dismissed where it is "plain and obvious" that it has no reasonable prospect of success: Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959; Imperial Tobacco, at paras. 17-19; Taylor v. Canada (Attorney General), 2012 ONCA 479, 111 O.R. (3d) 161 at para 22. While the court must accept as true the material facts as pleaded, this obligation does not extend to bald conclusory statements of fact, unsupported by material facts.
Facts
[4] The following are the background facts from the statement of claim and the documents pleaded.
[5] The OPA is a corporation owned by the Province of Ontario and performs public functions as set out in the Electricity Act, 1998, S.O. 1998, c. 15. Its objects include ensuring adequate energy supply for Ontario, in part by using renewable energy sources. It acts in accordance with directions from the Minister of Energy (“Minister”).
[6] In 2009 the OPA was directed by the Minister to develop fee-in tariff (“FIT”) programs to procure energy. The “microFIT” program was designed to encourage homeowners, farmers, small businesses and institutions to develop small renewable energy generation projects. Project owners were to be paid a fixed price for the electricity they produce, with the prices being set to recover costs as well as earn a reasonable return over a 20-year contract.
[7] The OPA established rules for the program, which governed the administration and operations. It amended the rules from time to time. Under those rules individuals could apply for a contract to supply energy to the grid and “[i]f the OPA determines that an Application meets the microFIT Program eligibility requirements then the OPA will issue the Applicant a Conditional Offer of microFIT Contract.”
[8] As to the price, the microFIT Rules, version 1.6, indicated that:
“13. The Contract Price for the microFIT Project will correspond to the FIT Price Schedule in effect for the relevant technology on the date of the Conditional Offer of the microFIT Contract.”
[9] The rules for changing the price and program were contained in an earlier version of the rules, unchanged in Version 1.6, at Section 7 as follows:
“7 a) The OPA intends to review and amend as necessary the microFIT Program, the microFIT Rules, and the FIT Price Schedule and the Eligible Participant Schedule at periodic intervals (“Scheduled Program Review”). The OPA may make an amendment outside of a Scheduled Program Review in response to ministerial directives, changes in laws and regulations, significant changes in market conditions or other circumstances as required.
b) Notice of any amendment as a result of a Scheduled Program Review will be posted on the microFIT Program website at least 90 days before the effective date of the amendment. Notice of any amendment that is not as a result of a Scheduled Program Review will be posted by the OPA on the microFIT website before the effective date of such amendment, as circumstances may permit.
c) Any amendment to the microFIT Program, the microFIT Rules and microFIT Contract will not affect existing microFIT Contracts and will not affect Applicants that have a Conditional Offer of microFIT Contract at the time notice of an amendment is given … ”
[10] The plaintiff was incorporated to develop and sell solar energy pursuant to the microFIT program. Its customers were applicants under the program, but it was not an applicant. In September of 2011 it expended vast sums of money and labour-power recruiting microFIT customers, and approximately 275 of its customers applied for the microFIT program that month. About 175 of them obtained an ‘offer to connect’ from a Local Distribution Company (“LDC”), and the LDC notified the OPA of their offer. That is noted because section 3.2 of the microFIT Rules in effect at that the time indicated that the OPA will not issue a Conditional Offer of a microFIT Contract unless the LDC has issued the offer to connect.
[11] On October 31, 2011, the OPA announced that it would be reviewing the microFIT Program, new prices and rules would be developed, and that “MicroFIT applications that were submitted after August 31 … will be subject to the new microFIT Rules and pricing schedule.” On April 5, 2012 the Minister gave a new direction to the OPA and the solar roof-top price that previously had been 80.2 cents per kilowatt hour was reduced to 54.9 cents per kilowatt hour effective August 31, 2011. Partly as a result of the retroactively reduced price, the plaintiff lost all its customers including the 175 that received offers to connect. It lost any potential profit associated with these customers and the significant resources it expended to recruit them were wasted. As a result, it laid-off all its employees in July 2012.
Law: Misfeasance in Public Office
[12] The plaintiff sued the OPA based on misfeasance in public office. The leading case is Odhavji Estate v. Woodhouse, 2003 SCC 69. Like here, it involved a motion to strike out claims on the ground that they disclosed no reasonable cause of action. At para. 32 the court set out the constituent elements of the tort as follows:
… the tort of misfeasance in public office is an intentional tort whose distinguishing elements are twofold: (i) deliberate unlawful conduct in the exercise of public functions; and (ii) awareness that the conduct is unlawful and likely to injure the plaintiff. Alongside deliberate unlawful conduct and the requisite knowledge, a plaintiff must also prove the other requirements common to all torts. More specifically, the plaintiff must prove that the tortious conduct was the legal cause of his or her injuries, and that the injuries suffered are compensable in tort law.
Analysis
Preliminary Issue
[13] Misfeasance in public office is an “intentional tort” requiring “deliberate” unlawful conduct and requisite “knowledge”. One of the main questions in this analysis, then, is whether the defendant is correct in its position that the claim must be struck because the identity of the individuals whose actions, on behalf of OPA, were said to constitute an abuse of public office have not been pleaded. It relied on Adventure Tours Inc. v. St. John’s Port Authority, 2011 FCA 198 at paras. 44 and 45 and Skypower CL 1 LP and Others v. Ontario Power & HMQ, 2014 ONSC 6950 at para. 52. However, the plaintiff produced Georgian Glen Developments Ltd. v. Barrie (City), 2005 CanLII 31997 (ON SC) at para. 11 and Saskatchewan Power Corporation v. Swift Current (City), 2007 SKCA 27 at para. 29. These essentially hold that the identity of the individuals at the OPA is a matter of evidence, and not an essential element of the tort.
[14] With equivocal extra-provincial decisions and two contrary Ontario cases of the same court level, it is not plain and obvious to me that that on this critical preliminary issue the claim has no reasonable prospect of success.
First Constituent Element: Deliberate Unlawful Conduct
[15] The Amended Statement of Claim alleges that “the OPA was fully aware that the Plaintiff had in its possession, 175 applicants with an “Offer to Connect” and as a result could move forward with a roof-top microFIT system under the price of 80.2 cents/kWh” but that the OPA “retroactively reduced the price it would pay” without following its own required process or rules, thereby excluding those applicants.
[16] The applications were made in September 2011, the announcement of a review that would be retroactive to August 2011 was made by the OPA in October 2011, the new rates were announced by the Minister in April 2012, and, as previously indicated by the OPA, they were retroactive to August 2011. The OPA’s own rule 7(b) quoted above says “Notice of any amendment … will be posted by the OPA on the microFIT website before the effective date of such amendment …”
[17] The pleadings therefore allege that the OPA amended the microFIT program “without lawful authority” and that the changes were “illegal.” In my view the plaintiff has pled that the steps taken by the OPA were deliberate and unlawful.
Second Constituent Element: Requisite Knowledge
[18] As noted above, the Amended Statement of Claim alleges that the OPA was fully aware the plaintiff had 175 applicants. It further alleges that “the OPA knew, or was wilfully blind to the fact that, this action would injure the Plaintiff.” The allegation that the defendant knew that its backdating the operation of the new rules would injure the plaintiff satisfies the pleading requirement that the alleged misconduct was likely to injure the plaintiff. So does the allegation that the defendant was subjectively reckless or willfully blind to the possibility that harm to the plaintiff was a likely consequence of the alleged misconduct. See Odhavji at para. 38 in support of both findings.
Requirements Common to all Torts
[19] Along with disputing the above three points, the defendant’s two remaining main arguments in support of its motion to strike were: (1) there is no causality in that the OPA did not make the changes, rather the Minister did, and (2) there is no nexus between the parties.
Causality: OPA v. Minister
[20] There is no dispute that the OPA acts under direction of the Minister. The defendant argues that its announcing in October of 2011 that there would be changes to the pricing of the microFIT program retroactive to August 2011 is a “red herring”; it is irrelevant. The important point, it says, was that the Minister determined in April of 2012 that the prices would be lowered effective August 31, 2011. As the defendant follows directives from the Minister, the plaintiff’s beef is therefore with the Minister, not with the OPA.
[21] The defendant went further and argued that a complaint against the Minister, namely that it did not follow the required process, is properly one for judicial review, not a tort claim. In such a proceeding the plaintiff can only lose. It relied heavily on the decision in Skypower CL 1 LP v. Ministry of Energy (Ontario), 2012 ONSC 4979 (Div. Ct.), where plaintiffs in an application against the Minister for judicial review in similar circumstances were unsuccessful. In my view, I am only looking at the narrow question of whether this specific pleading should be struck. Whether the plaintiff had another option against the Minister that it could have pursued, and whether it would have been be viable, is not before me.
[22] The plaintiff pleads that the OPA has rules for itself that govern this sector and unlawfully did not follow them. The OPA’s argument is that when the Minister makes a decision it, the OPA, can disregard those rules. Interestingly, while the Divisional Court in the Skypower case noted that the plaintiffs there had to be aware that government initiatives such as the FIT program could be changed at any time and that this was a risk they assumed, it added in para. 82 that the OPA was “duty bound” to apply the FIT rules. It is not plain and obvious to me that because of the interplay between the OPA and the Minister the rules now mean nothing, and that the conduct of the OPA did not cause the injuries claimed.
Required Nexus
[23] The defendant argued that the plaintiff has no standing to sue as the “required nexus” between the parties does not exist. It relied only on L.C. v. Alberta, [2014] A.J. No. 334 (AB QB). That case found that there were no duties owed by the Crown to grandparents and siblings in a child protection case, as the contest was between parents and the Crown, and the Crown’s primary duty was to act in the best interests of children. The court held that grandparents’ and siblings’ legal rights were not affected by the child protection proceedings, and they did not gain rights by virtue of their being grandparents and siblings. While I agree with the result in that case, I do not see how it transfers to the case before me. The court in Odhavji at para. 29 noted that liability attaches to a public officer who demonstrates a conscious disregard for the interests of those who will be affected by the misconduct in question and that “[t]his establishes the required nexus between the parties.” It is not plain and obvious to me that this claim should be struck on that basis.
Decision
[24] In summary then, I borrow the following wording from Iacobucci J. of the Supreme Court of Canada in Odhavji at para. 42 adapted to this case:
If the facts are taken as pleaded, it is not plain and obvious that the actions for misfeasance in a public office against the defendant… must fail. The plaintiff… may well face an uphill battle, but … should not be deprived of the opportunity to prove each of the constituent elements of the tort.
[25] The motion to strike the statement of claim is therefore dismissed. If the parties cannot agree on costs, I will accept brief written submissions within twenty days.
Mr. Justice Timothy Minnema
Date: April 1, 2014
CITATION: Capital Solar Power v. Ontario Power Authority, 2015 ONSC 2116
COURT FILE NO.: CV-13-59225
DATE: 20150401
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Capital Solar Power
Plaintiff
– and –
The Ontario Power Authority
Defendant
BEFORE: Mr. Justice Timothy Minnema
COUNSEL: Geoffrey Hall, for the Plaintiff Lisa La Horey, for the Defendant
ENDORSEMENT
Mr. Justice Timothy Minnema
Released: April 1, 2015