COURT FILE NO.: CV-17-587425-00CL
DATE: 20180727
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
POTENTIA RENEWABLES INC.
Applicant
– and –
DELTRO ELECTRIC LTD.
Respondent
George Benchetrit and Michael Kril-Mascarin, for the Applicant
Michael C. Mazzuca and Fred A. Platt, for the Respondent
HEARD: April 30 and May 9, 2018
REASONS FOR DECISION
MR. JUSTICE T. Mcewen
[1] The applicant, Potentia Renewables Inc. (“Potentia”), seeks a declaration that the respondent, Deltro Electric Ltd. (“Deltro”), is indebted to it in the amount of $2,000,000.00 USD[^1]; judgment for that amount; and the appointment of BDO Canada Ltd. (“BDO”) as receiver of the property, assets, and undertakings of Deltro, with certain limited powers.
[2] The dispute between the parties stems from agreements they entered into with respect to the development of a ground-mount solar project in the Barbados (the “Barbados Project”).
[3] For the reasons below, I am granting the declaration that Deltro is indebted to Potentia for the amount of $2,000,000.00 and the resulting judgment. I am also, subject to the terms and conditions below, appointing a receiver over the property and assets and undertakings of Deltro.
OVERVIEW
[4] Potentia is an independent power producer focused on developing, owning and operating renewable energy facilities throughout the Americas. It has its head office in Toronto.
[5] Deltro, amongst other things, provides business development services with respect to renewable energy projects. Its head office is in Mississauga. As a part of the Barbados Project, Deltro incorporated Deltro Group Ltd. (“DGL”) to develop the Barbados Project.
[6] In 2014, Deltro began to explore expansion of its business into the Caribbean market. In May 2015 the Barbadian government expressed interest in accepting a proposal from Deltro with respect to the Barbados Project in Saint Michael, Barbados. The Barbados Project envisioned the creation of the ground-mount solar facility which would produce 24 MW of direct current (D/C) energy that would be converted into 20 MW of alternating current (A/C) of energy for consumer use.
[7] On May 15, 2016 Potentia and DGL entered into a letter agreement (the “LOI”). The LOI set out the essential elements of their agreement with respect to the Barbados Project. Essentially, DGL would seek the approval of the ground-mount solar facility, develop it, and Potentia would ultimately purchase the Barbados Project from DGL.
[8] Of note is the fact that, in 2016, Potentia and Deltro also entered into a number of agreements with respect to development of renewable energy projects in the Dominican Republic (the “DR Projects”). For reasons I will outline below, those projects are of relevance in this application, although this application only involves the Barbados Project.
[9] Paragraph 4 of the LOI set out the purchase price and various milestones for which payments would be made by Potentia to DGL. The relevant portions are as follows[^2]:
- Purchase Price.
Subject to the terms and assumptions set out in this Letter, to be confirmed by the Lenders' Independent Engineer, the Purchaser would receive an unlevered rate of return of its negotiated annual interest rate of third party non-recourse Project debt financing plus 400 basis points which is agreed not to exceed 12% per annum. The unlevered rate of return calculated on the term of the PPA, without any consideration of option extensions, will determine the total value of the SPV. It is further agreed that any and all amounts in excess of the final unlevered rate of return after consideration of the final constructed cost of the Project will be paid to Deltro for Deltro's interest in the SPV and the Project (“Purchase Price”). For greater certainty the calculation of the Purchaser's return shall be calculated net of any applicable local forecasted cash taxes payable by the SPV. The characterization of such payment shall be as determined by the parties and set out in the Binding Agreements (as defined below). The timing of payments shall be as follows:
i. $500,000 USD on signing of this Letter;
ii. $1.5 million USD on formal zoning and site approval from the Barbados Town and Country Planning;
iii. $1 million USD upon receiving a Generators license, with a legally binding prescribed electricity rate that the generator would receive for each kwh delivered to the Barbados electricity grid, from the Government of Barbados or entering into a PPA, whichever is earlier;
iv. 50% of the total Purchase Price (inclusive of the progress payments) on Financial Close; and
v. the balance of the Purchase Price on the Final Payment Date, meaning for greater certainty, the 15th business day after the Project's Commercial Operation Date is achieved and accepted by the Utility.
If Financial Close is not achieved within 12 (twelve) months following the date of execution and delivery of the Binding Agreements, then the Purchaser shall have the right to sell all of the acquired interest in the SPV back to Deltro for an amount equal to the progress payments, such that the parties shall be returned to the position they were in prior to the execution of this Letter. Deltro's obligation to repay the progress payments as provided above shall be secured in a manner acceptable to the Purchaser within commercially reasonable terms. [Emphasis Added]
[10] As can be seen from the above, the parties contemplated the execution of Binding Agreements. It is not disputed that the Binding Agreements were never executed. It is also not disputed that Financial Close was not achieved. This is of some importance because as can be seen from the emphasized portion of paragraph 4, if Financial Close was not achieved within 12 months following the delivery of the Binding Agreements then Potentia would have the right to sell all of its acquired interest in the Barbados Project back to Deltro for an amount equal to the aforementioned progress payments. Potentia rightfully does not base its claim in DGL’s failure to achieve Financial Close, but rather on later events described below.
[11] The first payment of $500,000.00 was advanced on May 30, 2016. Thereafter, a dispute arose between the parties as to whether DGL had received the necessary formal zoning and site approval from the Barbados Town and Country Planning Office (“BTCPO”) as required by subsection (ii) above which would generate the second payment of $1,500,000.00.
[12] In an effort to resolve the dispute as to whether formal zoning and site approval had been granted by the BTCPO for the Barbados Project, Potentia, Deltro and DGL, entered into another agreement (the “Amendment”) on November 15, 2016. The Amendment specifically identified the dispute between the parties.
[13] The Amendment also, amongst other things, contained the following relevant provisions:
Whereas the parties have not reached an agreement as to whether the final formal zoning and site approval has been granted by the Barbados Town and Country Planning Office for the Project, or any other Barbados governmental body that has the authority to grant the said approval, in accordance with the Town and Country Planning Act, Cap. 240 (Barbados) or any other applicable legislation (the “Final Approval”); nonetheless, Potentia has agreed to advance the Second Progress Payment to Deltro Electric pending the receipt of the Final Approval, the whole subject to the terms and conditions of this letter agreement.
Advance of Second Progress Payment. Subject to Deltro Electric’s acceptance of the terms and conditions of this letter agreement, which terms shall take precedence over the terms of the LOI with respect only to these matters, Potentia hereby agrees to advance to Deltro Electric the Second Progress Payment on the terms and conditions herein upon execution of this Letter and GSA (as defined below). On the date hereof, Deltro Electric shall provide to Potentia the wire transfer details of the bank account to which the Second Progress Payment is to be transferred.
Security. As security for the advance of the Second Progress Payment and as security for all its liability or indebtedness hereunder, Deltro Electric, has agreed to deliver prior to the date on which the advance of the Second Progress Payment is disbursed, a general security agreement (“GSA”) providing for a charge and security interest on the Collateral (as defined in the GSA).
Final Approval Obtained. If, within twelve (12) months from the date of disbursement (the “Term”), the Final Approval is granted by the Barbados Town and Country Planning Office or any other Barbados government body that has the authority to grant the Final Approval, the Second Progress Payment shall be kept by Deltro Electric and the security interest granted pursuant to the GSA shall be released by Potentia promptly thereafter.
Final Approval Not Obtained. If the Final Approval is not granted during the Term, Potentia shall have the right (but not the obligation) to demand full and immediate repayment of the Second Progress Payment by sending a twenty (20) business days written repayment notice to Deltro Electric. In addition to its repayment request right set out in this Section 6, Potentia shall have the right to setoff any other progress payments or any other payments that may have become due after the date hereof and withheld pursuant to Section 7 below up to and against the Second Progress Payment (including by way of setoff), the security interest granted pursuant to the GSA shall be released by Potentia promptly thereafter. [Emphasis Added]
[14] As can be seen from the above sections, the Amendment was to take precedence over the terms of the LOI with respect to the issue of Final Formal Zoning and Site Approval (the “Final Approval”). Deltro was to receive the Second Progress Payment of $1,500,000.00 and had to obtain Final Approval within 12 months.
[15] Further, and importantly, the clock was now ticking as the Amendment provided, as per paragraph 6, that if Final Approval was not obtained within 12 months Potentia could demand repayment of the Second Progress Payment. Also, of significance, is that Deltro, in paragraph 4, agreed to provide security for the advance of the Second Progress Payment for all of Deltro’s liability and indebtedness under the Amendment. As security, Deltro granted a general security interest over all of its assets in favour of Potentia by way of a General Security Agreement (the “GSA”).
[16] On November 15, 2016 Potentia and Deltro also executed the GSA which provided for the aforementioned charge and security over all of Deltro’s assets. As noted, the GSA was to be released if Final Approval was obtained or if full repayment of the Second Progress Payment was made by Deltro should Final Approval not be granted.
[17] Final Approval was defined in the Amendment and GSA as:
“… formal zoning and site approval… granted by the Barbados Town and Country Planning Office for the Project, or any other Barbados governmental body that has the authority to grant the said approval, in accordance with the Town and Country Planning Act, Cap. 240 (Barbados) or any other applicable legislation.”
[18] The Barbados Project as defined in the LOI, the Amendment, and the GSA continued to be a “24 MW(DC)/20 MW(AC) ground-mount solar project”.
[19] After entering the Amendment and GSA the relationship between the parties continued to deteriorate.
[20] On January 28, 2017 counsel for Deltro/DGL sent a letter to Potentia alleging that Potentia had repudiated a letter of intent dated July 28, 2016 between Potentia and Deltro concerning one of the DR Projects (the “DR LOI”).
[21] The letter stated in part:
We are hereby putting you on notice that Potentia has repudiated the Letter including but not limited to engaging in surreptitious communications and negotiations with respect to the Monte Plata Solar Project (located in the Dominican Republic) and without the knowledge or consent of Deltro. Such activity has been purposely and intentionally concealed from Deltro and motivated in order deprive and divest Deltro of its lawful entitlements and interests. Your conduct is very serious and has caused inter alia a serious breach of trust and confidence and accordingly impacted all projects and agreements between the parties. As a result, Deltro is no longer under any contractual or other obligation to sell, assign, transfer, notify or deliver any interests in any project under any agreement between the parties.
Potentia shall immediately refrain from taking any further steps of any kind with respect to any of the projects listed in Schedule A of the Letter as well as any projects or region under any other agreements between the parties, including the Barbados Solar Project (St. Michael).
[22] As can be seen from the above excerpt, Deltro took the position that it was no longer under any contractual or other obligation with respect to the Barbados Project, notwithstanding the fact that it did not take the position that Potentia had breached any of the agreements relating to the Barbados Project.
[23] Counsel who was acting for Potentia at the time responded on February 6, 2017 stating, amongst other things, that Potentia had not breached or repudiated the DR LOI. Potentia’s counsel further took the position that even if Potentia had breached the DR LOI there was no basis in law that would give Deltro the right to unilaterally terminate all of the existing contractual relationships with Potentia including those involving the Barbados Project.
[24] The letter went on to state that Potentia accepted Deltro’s repudiation of the Projects, including the Barbados Project and was treating the Barbados Project as being at an end. The letter also stated that the $2,000,000.00 that had been advanced pursuant to the LOI and the Amendment was now due and payable to Potentia by Deltro.
[25] The letter further stated that since Final Approval had yet not been obtained and since Deltro obviously did not intend to proceed to Final Approval, an event of default had occurred within the meaning of the GSA. The letter concluded by stating that if Deltro failed to pay the $2,000,000.00 within 20 business days, as per the Amendment, Potentia would take steps to enforce its security interest under the GSA which could include appointing a receiver and taking possession of Deltro’s collateral under the GSA.
[26] Thereafter, on March 27, 2017 Potentia issued a statement of claim against Deltro with respect to the Barbados Project only.
[27] On April 11, 2017, Deltro launched a lawsuit against Potentia with respect to only the DR Projects.
[28] Twelve months after the Amendment was entered into Potentia took the position that Final Approval as defined in the Agreements had not been achieved. In addition to its statement of claim, Potentia then brought this application seeking the declaration that Deltro is indebted to it in the amount of $2,000,000.00 along with judgment, the appointment of the receiver and other related relief in accordance with the terms of the LOI and the Amendment (collectively the “Agreements”).
ANALYSIS
[29] The dispute between the parties raises a number of issues and Deltro has raised a multitude of defences with respect to these issues.
[30] I will deal with each of the issues and the defences in turn below.
Is a trial of an action necessary?
[31] I do not believe a trial is required to deal with the issues raised in the application. Further, it is my view, that this application can properly be dealt with notwithstanding the existence of the two actions.
[32] Deltro submits that a trial of an action is required with respect to the issues surrounding the Barbados Project. In particular, Deltro submits that the issues with respect to the creation of the LOI, the issues concerning Final Approval and the issue of equitable set-off require a full evidentiary record and viva voce of evidence. I disagree. The parties have put before the court voluminous materials including hundreds of pages of cross-examination. Although some of the issues raised, as will be seen below, are complicated, I am of the view that they can be determined on the record before me.
[33] In some cases the parties have made decisions not to provide certain evidence. For example, Potentia did not produce affidavit evidence from some current and former executives who had knowledge of the matters important to this application. Similarly, Deltro chose not to produce affidavit evidence from individuals who had information as to whether Final Approval had been obtained and took no steps to examine those representatives, current and former, of Potentia that did not swear affidavits in this application.
[34] Those decisions, presumably tactical in nature, did not assist in determining the issues, but a suitable record exists. There are no significant credibility issues and the parties had every opportunity to address evidence concerning the factual issues in dispute.
Does this court have jurisdiction to hear this application?
[35] Deltro submits that there are two reasons for which I lack jurisdiction to hear this application. Neither has merit.
[36] First, Potentia previously brought a motion before Justice Hainey, the Team Lead for the Commercial List, to transfer both of the aforementioned actions that were commenced by way of statement of claim from the Civil List to the Commercial List. Justice Hainey allowed the transfer. Deltro submits that Potentia conceded in the transfer request that both actions were “inextricably linked”. Deltro therefore submits that Potentia is attempting to make “end run” around these two actions by pursuing this application and is estopped from pursuing this application after conceding that the two actions were linked.
[37] In this regard, Deltro submits that Potentia is seeking to inappropriately proceed with the application in priority to the other two actions.
[38] Deltro argues the doctrine of judicial estoppel therefore applies and Potentia is estopped from now singularly proceeding with the application concerning the Barbados Project when it previously took the position that the two actions involving the Barbados Project and the DR Projects were inextricably linked. Deltro also further submits that, based on what transpired, I lack jurisdiction to hear the application.
[39] I disagree. While I agree that it makes sense to have the two actions tried together since the parties are the same and the causes of action arise out of similar subject matter it must be kept in mind that they arise from different contracts as between the Barbados Project and the DR Projects. It must also be kept in mind that since the two statements of claims were issued the 12 months period during which Deltro was to obtain Final Approval has expired. Pursuant to the terms of the Amendment Potentia takes the position that it can now proceed to demand a refund and to appoint a receiver pursuant to the provisions of the Amendment and GSA. I agree with Potentia that there is nothing prohibiting it from doing so. If it was unsuccessful in this application, which it is not, the two actions would then proceed in the normal fashion. Nothing in Potentia’s approach to this litigation and the transfer to the Commercial List, in my view, estops it from proceeding with this application and it has not taken an inconsistent position. Further, there is no genuine issue concerning my jurisdiction in this regard.
[40] Second, Deltro submits that I do not have jurisdiction to appoint a receiver under s. 101 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”) or s. 243 of the Bankruptcy and Insolvency Act, R.S.C. 1985 c. B-3 (the “BIA”). Again, I disagree.
[41] Deltro conflates the concept of jurisdiction with the issue as to whether a receiver ought to be appointed in the circumstances of this case.
[42] In submitting that I do not have jurisdiction to appoint a receiver under s.101 of the CJA Deltro relies upon the decision in Royal Bank of Canada v. CFNDRS Inc., 2017 ONSC 7661. In that decision the court discussed the distinction between s. 101 of the CJA and s. 243 of the BIA.
[43] I respectfully disagree that this decision assists Deltro. Indeed, as shown in the reasoning of R.S.J. Morawetz in Business Development Bank of Canada v. 2197333 Ontario Inc., 2012 ONSC 965, an application for the appointment of a receiver can be brought by way of application pursuant to s. 101 of the CJA. R.S.J. Morawetz relied on earlier Court of Appeal authority in this regard.
[44] Deltro also takes the position that I cannot appoint a receiver pursuant to s. 243 of the BIA since Potentia has not established that Deltro is insolvent as required by s. 243(1)(a). I agree with Deltro that the record before me does not establish that Deltro meets the definition of an insolvent person. The evidence that Potentia relies upon has been disputed by Deltro and the evidence filed on the motion is not conclusive one way or the other. I am simply unable, based on the myriad of financial information and affidavit evidence filed, to determine this issue.
[45] In any event, based on the provisions of s. 101 of the CJA and the provisions of the GSA, I have the jurisdiction and ability to appoint a receiver in the appropriate circumstances.
[46] The question simply is whether this is an appropriate case.
[47] The jurisprudence supports such a conclusion. In United Savings Credit Union v. F & R Brokerage Inc., 2003 BCSC 640, the British Columbia Supreme Court held that where a mortgagor provided an express covenant agreeing with the appointment of receiver in the event of a default the court should not ordinarily interfere with the contract between the parties.
[48] Further, in Bank of Nova Scotia v. Freure Village on Clair Creek (1996), 1996 CanLII 8258 (ON SC), 40 C.B.R. (3d) 274 (Gen. Div.) (“Freure Village”) Justice Blair (as he then was) similarly noted the significance of a contractual right to a court appointed receiver in stating at para. 13:
While I accept the general notion that the appointment of a receiver is an extraordinary remedy, it seems to me that where the security instrument permits the appointment of a private receiver – and even contemplates, as this one does, the secured creditor seeking a court appointed receiver – and where the circumstances of default justify the appointment of a private receiver, the “extraordinary” nature of the remedy sought is less essential to the inquiry. Rather, the “just or convenient” question becomes one of the Court determining, in the exercise of its discretion, whether it is more in the interests of all concerned to have the receiver appointed by the Court or not. This, of course, involves an examination of all the circumstances which I have outlined earlier in this endorsement, including the potential costs, the relationship between the debtor and the creditors, the likelihood of maximizing the return on and preserving the subject property and the best way of facilitating the work and duties of the receiver-manager.
[49] Nothing in the CJA, or the BIA, for that matter, ousts the jurisdiction of this court to consider the issue as to whether a receiver ought to be appointed.
[50] Further, in any event, the GSA, signed by the parties, provides that a receiver may be appointed. In these cases it is up to the court to determine, in the exercise of its discretion, whether it is more in the interest of all concerned to have a receiver appointed. The relief is no longer considered to be extraordinary: Freure Village, at para. 13, and Textron Financial Canada Ltd. v. Chetwynd Motels Ltd., 2010 BCSC 477 [In Chambers], at para. 75.
[51] Based on the above, I have jurisdiction to hear the application.
Did DGL obtain Final Approval as required by the Amendment?
[52] DGL did not obtain the required Final Approval.
[53] One of the most contentious disputes between the parties is whether Final Approval was obtained as required by the Amendment. As noted, the Amendment required that Deltro obtain Final Approval within 12 months of the $1,500,000.00 being advanced.
[54] Final Approval is defined in the Amendment and GSA as, “the final formal zoning and site approval… granted by the Barbados Town and Country Planning Office for the Project, or other Barbados governmental body that has the authority to grant the set of approval, in accordance with the Town and Country Planning Act, CAP. 240 (Barbados) or any other applicable legislation.”
[55] At the outset I should note that the parties dispute who bears the burden of proof as to whether Final Approval was obtained. Deltro takes the position that Potentia bears the burden of proof since it is the applicant. Potentia submits that Deltro bears the burden of proof since it was the one that was charged with the responsibility of obtaining Final Approval.
[56] In my view, Deltro bears the burden of proof. That said, however, it is immaterial as the evidence falls far short of establishing that Final Approval was obtained, notwithstanding who bears the burden of proof.
[57] In support of its contention that Final Approval was obtained Deltro relies on the affidavits of its president, Mr. Del Mastro. In addition to his own statement that Final Approval was obtained, he relies upon a memorandum and three letters attached to his affidavit.
[58] In my view, this documentation falls well short of establishing that Final Approval was obtained.
[59] I will deal with the memorandum and each letter in turn.
The Chief Town Planner Memorandum dated October 21, 2016 (the “CTP memorandum”)
[60] The CTP memorandum was prepared specifically with respect to the Barbados Project. It is a lengthy 19 page document that provides an analysis of the application for the Barbados Project, the nature of the proposal, and other related information.
[61] A review of the CTP memorandum, however, demonstrates that it did not provide Final Approval.
[62] The CTP memorandum is addressed to the Prime Minister’s Office. The memorandum clearly states in the first sentence that Deltro’s application “is referred to the Minister for a decision in accordance with s. 18(1) of the Town and Country Planning Act”. Further, at page 16, paragraph 10, it is clear that the Chief Town Planner who prepared the memorandum is recommending permission for Final Approval, but that the Final Approval was subject to 19 conditions. At page 16 of the CTM memorandum the Chief Town Planner then went on to conclude that he was “recommending permission”. The Chief Town Planner went on to state that the matter is “referred accordingly”.
[63] Further, of significance, is that the CTP memorandum refers to permission being potentially granted for only a 10 MW solar farm and not the Barbados Project as defined between the parties as being a 20 MW solar project. Potentia agreed to invest in a 20 MW solar farm and never agreed to lower the scope of the project to a 10 MW solar farm[^3].
Letter of Michael Yearwood, dated May 10, 2017
[64] Mr. Yearwood, a Barbadian lawyer, wrote to Mr. Del Mastro on May 10, 2017 (over three months after Deltro’s lawyers wrote to Potentia advising that they were no longer under any contractual obligations with respect to the Barbados Project). The letter purports to provide an update concerning the Barbados Project. Although Deltro’s materials do not make clear Mr. Yearwood’s relationship to Deltro, it appears as though Mr. Yearwood was acting in some legal capacity for Mr. Del Mastro and/or Deltro and DGL.
[65] In any event, the letter, which is unattached to any affidavit, when addressing the issue of Final Approval states as follows:
Town and Country Planning completed their review of the application as of October 21, 2016, and sent notification that they had approved the application subject to conditions… There is nothing further required of Deltro in this regard, all requirements of the approval are satisfied… The approved land parcel at the Waterford site meets the full requirements for the 20 MW solar generation project as originally envisioned… [Emphasis Added].
[66] As can be seen from the plain wording of the above excerpt the application was still “subject to conditions”. In my view, this is not evidence of Final Approval. It is also consistent with the CTP memorandum which, approximately 6 months earlier, also noted that Final Approval was recommended subject to 19 conditions.
[67] Overall, however, the letter largely consistent of hearsay and falls far short of constituting evidence of Final Approval.
Letter of the Honourable David Eastwick, Minister of Agricultural, Food, Fisheries and Water Resource Management, dated May 11, 2017
[68] Although Minister Eastwick’s letter was promising, it did not constitute formal approval. It was also obtained after litigation began.
[69] In totality it reads as follows:
Following the approval from the Town and Country Development Planning Office, the public land required a modification to its designation to include renewable energy as a public purpose. That matter, which required consideration from the Cabinet, is being dealt with and I fully expect will be resolved very soon.
Keep in mind that an element of the planning approval was the consultation of all impacted departments and ministries, all of whom indicated their support for the project at Waterford. As such, there is no reason for any concern. I do understand that the processes and approvals related to the project have been taken quite some time, but they are all but completed. [Emphasis Added]
[70] First, it is not clear what role Minister Eastwick played in the Barbados Project given the fact that he is the Minister of Agriculture, Food and Fisheries and Water Resource Management. In any event, Minister Eastwick in his rather brief letter refers to “the approval from the Town and Country Development Planning Office”. It does not however elaborate on exactly what “approval” he is referring to. There is nothing in the letter to lead one to the conclusion that he is referring to the Final Approval.
[71] In any event, the letter goes on to discuss a modification to “public land” that was necessary and had not yet been resolved and, as a result, all of the “processes and approvals” are “all but completed”. In my view, even if it pertained to Final Approval of the Barbados Project this does not constitute evidence of a Final Approval and, conversely, BTCPO was still awaiting Final Approval from cabinet.
Letter of the Honourable Denis Lowe, Minister of Environment and Drainage, dated December 13, 2017
[72] This letter was prepared almost a year after Deltro advised Potentia that the contract concerning the Barbados Project was at an end, several months after both statements of claim were issued and shortly after this application was issued.
[73] In my view, this letter is also equivocal.
[74] Minister Lowe, who appears to be the Minister in charge, on the critical issue concerning Final Approval wrote as follows:
I am writing to confirm that I attended a dinner meeting at your invitation with representatives of DELTRO, as well as Mr. Fernando Joffre[^4] from Potentia Renewables on Thursday, October 26, 2016.
The meeting was convened to clarify and run through the remaining processes and approvals necessary to break ground on the 20 MW Solar Farm which DELTRO has been working to develop at the intersection of Waterford and ABC Highway in Barbados.
Mr. Joffre asked a number of pointed questions which I was happy to answer and I recalled him making it clear, that he was pleased to learn of the progress that had been made. Of specific interest to him was the approval from the Town and Country Planning Department, something I had made clear that the project had obtained as the Chief Town Planner had actually signed off on the project the previous week and sent notice to the Prime Minister of the approval.
This meeting followed a previous meeting that I had with the senior Potentia Renewable representatives, Messrs. Chris Asimakis and Jeff Jenner on April 8, 2016. During that meeting my colleague, the Minister of Energy, Senator Darcy Boyce, indicated very clearly that he supported the project and intended to sign-off on the necessary Generators License once Town and Country Planning had issued their approval. It was a good exchange that once again made clear that progress was made and underscored very broadly the government’s support, while describing and explaining the remaining processes and approvals necessary for the project. [Emphasis Added]
I trust this satisfies your request to confirm my meetings with representatives from Potentia as well as what was discussed and confirmed to them during these meetings.
[75] As can be seen from the second paragraph of the letter the meeting was convened five days after the CTP memorandum was prepared and the second paragraph of the letter seems to refer to that memorandum. At that time there was no Final Approval since, as noted, the CTP memorandum was subject to several conditions and dealt with a smaller solar farm.
[76] The letter also simply refers to a number of conversations that took place wherein Minister Lowe advises the representative of Potentia, Mr. Joffre, that the Chief Town Planner had signed off on the Project and sent notice to the Prime Minister for approval. This is clearly not what is stated in the CTP memorandum. There is also no evidence that in the five days between the time the CTP memorandum was prepared and the dinner meeting took place that Final Approval actually occurred and, given the contents of the CTP memorandum, it is impossible to draw such a conclusion. Also the letter is silent on the issue of the size of the project. The CTP memorandum, as noted, only referred to the smaller 10 MW solar project, not the 20 MW project contemplated by the parties.
[77] Simply put, the letter simply refers to a conversation and not Final Approval of a 20 MW solar project.
[78] The above three letters and CTP memorandum constitute essentially all of the evidence that the respondent was able to produce in support of Deltro’s position other than Mr. Del Mastro’s affidavit evidence which, simply states that Final Approval had been obtained without reference to any other documentation. When I asked counsel what further evidence Deltro would produce at trial, there was none proffered.
[79] In my view, the above documents contained in Mr. Del Mastro’s affidavit fall well short of establishing Final Approval had been obtained. The letters are inconsistent and equivocal. Deltro had plenty of time to produce cogent affidavit evidence or make efforts to provide viva voce evidence on this point. Instead, it chose to rely primarily upon a memorandum and three letters unsupported by accompanying affidavit evidence of the persons who prepared those documents[^5].
[80] In addition to the above, it is extremely significant that Deltro has been unable to, or has failed or refused to, produce any official documentation prepared by the government of the Barbados which provides for Final Approval. One would think that had Final Approval been achieved some sort of official document would have been prepared by a ministerial office or cabinet. No such document has been produced. Instead, Deltro relies upon the aforementioned CTP memorandum and correspondence which, for the reasons above, is not persuasive.
[81] Based on the above, there is no cogent evidence to support Deltro’s position that the BTCPO or other Barbados governmental body granted Final Approval. The conditional approval of the BTCPO for a 10 MW solar farm was subject to ministerial approval. The correspondence that followed is equivocal and unhelpful.
[82] It bears noting that Deltro submits that a trial is necessary to determine the issue of Final Approval.
[83] Deltro could have attempted to adduce evidence by way of affidavit from the authors of the correspondence but chose not to do so. It did not also attempt to have viva voce evidence available at the hearing of the application. It simply submitted that a trial was necessary.
[84] Last, I should note that both parties attempted to refer to online newspaper articles at the hearing of the application. I have not relied upon in these reasons. In my view, they are of no probative value. They were largely based on second and third hand information and innuendo.
Is Deltro obliged to repay the $2,000,000.00 pursuant to the terms of the LOI and the Amendment?
[85] Deltro is obliged to repay the $2,000,000.00.
[86] Deltro submits that it is under no obligation to repay either the $500,000.00 or $1,500,000.00 amounts advanced by Potentia.
[87] In support of its position it relies upon sections 7 and 12 of the LOI which provide as follows:
- Other Projects and Right of First Refusal.
The Purchaser and Deltro will work together in good faith to jointly develop solar assets, where the Purchaser will be the owner at commercial operation, in jurisdiction for Caricom member states and the Dominican Republic. In a situation where Deltro has independently of the Purchaser, developed a solar project and received a bona fide offer to purchase specific solar assets from a third party, Deltro shall grant the Purchaser a Right of First Refusal (“ROFR”) to match the offer and the Purchaser shall have 30 days to do so. If the Purchaser matches an offer for the acquisition of specific solar power assets on substantially the same terms and conditions, Deltro will be obligated to sell to the Purchaser. In the event that the Purchaser declines to match the bona fide third party offer and Deltro does not execute the contemplated sale within three (3) months on substantially the same terms as disclosed to the Purchaser ROFR in respect to the project shall be reinstated as jointly developed project.
In the event that the Project does not reach commercial operations, any milestone payments paid to Deltro by the Purchase towards the Project’s Purchase Price shall not be refunded by Deltro but may, at the Purchaser’s sole option, be credited against any payments due to Deltro by the Purchaser in relation to any other transaction between the Parties. [Emphasis Added]
- Terminations.
This Letter may be terminated:
a) by written notice of the Purchaser and Deltro;
b) by the Purchaser upon written notice to Deltro to the Expiry of the Exclusivety Period;
c) by Deltro upon within notice to the Purchaser at any time following the expiration of the Exclusivity Period; or
d) 5:00 pm (EST) 90 days from the date of this letter, unless extended by mutual agreement between the Parties;
provided, however, that the termination of this Letter shall not affect the liability of a party for breach of any of the provisions prior to the termination. Upon termination of this Letter, the parties shall have no further obligations hereunder, except for their obligations which under their terms shall survive any such termination. [Emphasis Added]
[88] First, with respect to the $1,500,000.00 payment, the LOI does not apply. As noted, the $1,500,000.00 payment is governed by paragraph 1 of the Amendment which states that the LOI is superseded by the terms of the Amendment with respect to the Second Progress Payment of $1,500,000.00.
[89] Further, if Final Approval is not obtained within 12 months from the time that the Second Progress Payment was made Potentia could demand repayment, failing which it could act upon the GSA.
[90] As I have found Deltro failed to obtain Final Approval and it has failed to repay the $1,500,000.00 as demanded by Potentia.
[91] This amount is therefore due and owing.
[92] The first payment of $500,000.00 was not subject to the Amendment and one must therefore look to the terms of the LOI to determine whether it is refundable. In my opinion it is.
[93] Deltro relies upon section 7 which states that if the Barbados Project does not reach commercial operations then the milestone payments are not refundable but may be credited to any other transactions between the parties. They also rely on section 12 which states that, if the LOI is terminated, Deltro would have no obligations to Potentia except obligations which under the terms of the LOI survive termination.
[94] In my view, these sections do not assist Deltro. First, as noted in paragraph 4, Potentia was entitled to a refund of the Progress Payments if Financial Close was not achieved. It was therefore contemplated by the LOI that Potentia was entitled to a refund of the monies advanced if Financial Close was not achieved within 12 months following the execution of the Binding Documents. As further noted, the Binding Documents were never prepared but when one reviews the overall intention of the LOI and the subsequent Amendment the logical conclusion of the overall thrust of the two agreements was that if the Barbados Project did not come to fruition Potentia was entitled to a refund of the advance payments. In my view, this was the intention of the parties as revealed by the plain, literal and ordinary meaning of the words considered in the context of the two agreements as a whole.
[95] As held in Creston Moly Corp. v. Sattva Corp., 2014 SCC 53, where Rothstein J.A. stated at para. 47:
The overriding concern is to determine “the intent of the parties and the scope of their understanding”… To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. [Citations Omitted].
[96] In addition, where two clauses seemingly contradict, La Forest and McLachlin JJ. stated at para. 9 of BG Checo International Ltd. v. British Columbia Hydro & Power Authority, 1993 CanLII 145 (SCC), [1993] 1 S.C.R. 12:
Where there are apparent inconsistencies between different terms of a contract, the court should attempt to find an interpretation which can reasonably give meaning to each of the terms in question. Only if an interpretation giving reasonable consistency to the terms in question cannot be found will the court rule one clause or the other ineffective: … In this process, the terms will, if reasonably possible, be reconciled by construing one term as a qualification of the other term: … A frequent result of this kind of analysis will be that general terms of a contract will be seen to be qualified by specific terms — or, to put it another way, where there is apparent conflict between a general term and a specific term, the terms may be reconciled by taking the parties to have intended the scope of the general term to not extend to the subject-matter of the specific term. [Citations Omitted]
[97] While there is no doubt that the wording of section 4 and section 7 are somewhat contradictory in that section 7 provides for no refunds (whereas section 4 specifically contemplates them) it is my view that section 7, by its wording, is limited to situations where there are other projects in place between the parties. Since, as noted below, Deltro has repudiated its obligations to Potentia, it is questionable whether there are any other projects in place which would trigger the operation of section 7. In any event, I find that the overall intention of the contract was to permit Potentia to recoup its investment in the case of Deltro’s non-performance. It cannot have been the intention of the parties to permit Deltro to keep Potentia’s money with no apparent remedy should Deltro decide to abandon their end of the bargain.
[98] Given the wording of paragraphs 4, 7 and 12 I conclude that it was the intention of the parties that Potentia could demand a refund of the monies advanced if the project was not concluded as per section 4 of the LOI and paragraph 6 of the Amendment. For the reasons noted, neither section 7 nor section 12 relieves Deltro from repaying the $2,000,000.00 advanced.
[99] Further, and in any event, as I will note below, it is my view that Deltro repudiated the agreements and therefore Potentia is entitled to repayment of the $2,000,000.00. In particular, I find that Deltro cannot disavow its obligations to Potentia and then turn around and attempt to invoke provisions from the very same contract it had just repudiated (see: Ebert v. Atoma International Inc., 1997 CarswellOnt 1478 (Gen. Div.), at para. 23 and Ivey v. Oakrun Farm Bakery Ltd., 2002 CarswellOnt 2522 (Sup. Ct.), at para. 28.). In other words, Deltro cannot accept Potentia’s money, repudiate the agreement, and then rely on a clause from the very same agreement as justification for keeping the money.
Did Deltro repudiate the Agreements with Potentia?
[100] As stated above, the answer is “yes”.
[101] Just two months after the Agreement and GSA had been executed, Deltro took the position that it was no longer under any contractual obligations to Potentia with respect to the Barbados Project. It did not allege any breaches committed by Potentia with respect to the Barbados Project but instead relied upon breaches concerning the DR LOI. It later took the position that it was also not obligated to return the $2,000,000.00 that it had obtained from Potentia with respect to the Barbados Project.
[102] It is important to note that, in the letter provided by Deltro’s counsel to Potentia on January 20, 2017, it simply alleged that Potentia had repudiated the DR LOI. It never alleged that Potentia repudiated any agreements concerning the Barbados Project, but simply stated that it was no longer obliged to honour any contractual or other obligations to Potentia, including the Barbados Project.
[103] It is also important to note that in the action commenced by Potentia against Deltro, Deltro in its statement of defence and counterclaim, in very general terms, without any particularity whatsoever, alleges that Potentia breached the Barbados Agreement. Tellingly, Deltro seeks no specific damages. These bald allegations are completely unsupported by any contemporaneous documentation prepared by the parties and, as noted, in the January 28, 2017 letter from counsel for Deltro/DGL to Potentia there are no allegations whatsoever that Potentia breached the Barbados Agreement. Rather that Deltro took the position that it was no longer obligated to perform under the Agreement concerning the Barbados Project given Potentia’s conduct with respect to the DR Projects.
[104] Deltro has also never attempted to resile from the position set out in the January 28, 2017 letter wherein it was stated that “Deltro is no longer under contractual or other obligation” to Potentia with respect to the Barbados Project.
[105] As previously noted, the solicitors acting for Potentia at the time responded to Deltro’s counsel advising in part as follows:
We are counsel for Potentia Renewables Inc. (formerly Potentia Solar Inc.) (“Potentia”).
We have received your letter dated January 28, 2017, in which you assert that Potentia has “repudiated” the Letter of Intent between the Potentia and Deltro Group dated July 28, 2016” (the “DR Letter Agreement”) and that as a result of that alleged repudiation. “Deltro is no longer under any contractual or other obligation to sell, assign, transfer, notify or delivery any interests in any project under any agreement between the parties”.
Potentia has not breached, let alone repudiated, the DR Letter Agreement or any other agreement with Deltro. Rather, Potentia has at all times conducted itself in good faith and in accordance with the terms of the agreements between the parties.
Even if Potentia had engaged in conduct that could amount to a breach of the DR Letter Agreement (which it did not), there is no basis at law on which such conduct could give Deltro the right to unilaterally terminate all existing contractual relationships with Potentia. Accordingly, by the positions taken in its letter dated January 28, 2017, Deltro, not Potentia, has now wrongfully repudiated the following existing contractual agreements between Potentia and Deltro:
• The letter agreement between Potentia Solar Inc. and Deltro Electric Inc. dated May 15, 2016 in respect of the ground-mount solar project in Barbados (the “Barbados Project”), as amended by the letter agreement dated November 15, 2016 providing for the advance by Potentia of a Second Progress Payment to Deltro (the “Barbados Letter Agreement”); and
• The DR Letter Agreement, and any other agreement in furtherance thereof or related thereto.
Potentia accepts Deltro’s repudiation, and will now treat these Agreements as being at an end. In the circumstances, our client has no obligation to provide the undertakings referred to in the first two paragraphs of page 2 of your letter, including because Potentia has the right to mitigate the damages caused by Deltro’s repudiation.
[106] Deltro’s counsel later responded by way of letter dated February 22, 2017 that Deltro had obtained Final Approval and asked for the GSA to be discharged. Potentia’s counsel refused, issued a statement of claim and demanded to inspect documents with respect to Deltro’s claim that it achieved Final Approval, which Deltro refused to produce.
[107] Potentia takes the position that Deltro repudiated the Agreements concerning the Barbados Project. Deltro, rather curiously, takes the position it was actually Potentia that repudiated the agreements. In my view, Deltro’s position is unsustainable in law.
[108] In these circumstances Deltro repudiated its Agreements with Potentia. Potentia, therefore, was entitled to accept the repudiation which it did. As of that time the parties were discharged from their prospective obligations under the contract, but the prospective obligations embodied in the contract is relevant for the assessment of damages.
[109] In this regard I rely upon the Supreme Court of Canada decision in Keneric Tractor Sales Ltd. v. Langille, 1987 CanLII 29 (SCC), [1987] 2 S.C.R. 440. In that decision the court held as follows:
In order to answer this question we must go back to first principles in the law of contract. If a party to a contract breaches a term of sufficient importance the other party has the right to treat the contract as terminated and consider himself discharged from any future obligations under it: Pigott Construction Co. v. W. J. Crowe Ltd. (1961), 1961 CanLII 23 (ON CA), 27 D.L.R. (2d) 258 (Ont. C.A.), at pp. 269‑72; Alkok v. Grymek, 1968 CanLII 10 (SCC), [1968] S.C.R. 452, at p. 456; Hongkong Fir Shipping Co. v. Kawasaki Kisen Kaisha Ltd., [1962] 2 Q.B. 26 (C.A.), per Diplock L.J., at pp. 65‑66, 71; Cehave N.V. v. Bremer Handelsgesellschaft m.b.H., the "Hansa Nord", [1976] Q.B. 44 (C.A.) An identical right arises where one party to a contract by words or conduct indicates to the other party that he does not intend to perform his contractual obligations. In the latter instance the first party is said to have repudiated the contract: see Sir W. R. Anson, Anson's Law of Contract (26th ed. by A. G. Guest), pp. 470‑84; G. C. Cheshire, C. H. S. Fifoot and M. P. Furmston, Law of Contract (11th ed. 1986), pp. 521‑33. The question at hand is whether the assessment of damages in a case of termination based on breach of a term of the contract should be any different from the assessment of damages in a case of termination based on repudiation.
The modern view is that when one party repudiates the contract and the other party accepts the repudiation the contract is at this point terminated or brought to an end. The contract is not, however, rescinded in the true legal sense, i.e., in the sense of being voided ab initio by some vitiating element. The parties are discharged of their prospective obligations under the contract as from the date of termination but the prospective obligations embodied in the contract are relevant to the assessment of damages: see Johnson v. Agnew, [1980] A.C. 367, [1979] 1 All E.R. 883 (H.L.), and Moschi v. Lep Air Services Ltd, [1973] A.C. 331, [1972] 2 All E.R. 393 (H.L.) Such is the law for contracts generally and it is this law which should apply equally to breaches of chattel leases.
[110] Based on the above, Deltro repudiated its Agreements with Potentia concerning the Barbados Project by way of its January 20, 2017 letter, which repudiation was accepted by Potentia as per its counsel’s letter dated February 22, 2017.
Is Potentia Entitled to Damages as a result of Deltro’s Failure to Obtain Final Approval and its Repudiation?
[111] Given Deltro’s failure to obtain Final Approval, its breach and repudiation of the Agreements, Potentia is entitled to damages of $2,000,000.00.
[112] This includes damages in the amount of $500,000.00 given the provisions of the LOI and Deltro’s repudiation.
[113] It also includes damages of $1,500,000.00 given the wording of the Amendment and given Deltro’s repudiation. Further, and in any event, based on the decision in Sattva, I am of the view that even if Financial Close had been achieved Potentia would still be entitled to a return of the $2,000,000.00 advanced to Deltro given the wording of the LOI and Amendment and the repudiation.
Is Deltro Entitled to Set-Off?
[114] Deltro is not entitled to set-off.
[115] Deltro concedes it is not entitled to legal set-off but submits that it is entitled to equitable set-off. In this regard Deltro submits that the proceedings commenced by Potentia with respect to the Barbados Project are connected to the DR LOI.
[116] In part, Deltro relies on the portion of paragraph 7 of the LOI which provides as follows:
In the event that the Project does not reach commercial operations, any milestone payments paid to Deltro by the Purchaser towards the Project’s Purchase Price shall not be refunded by Deltro but may, at the Purchaser’s sole option, be credited against any payments due to Deltro by the Purchaser in relation to any other transaction between the Parties.
[117] I do not accept that this creates the necessary linkage. While this portion of paragraph 7 does allow Potentia a credit of payments due between the parties in any other transaction (which would presumably include the DR LOI), it is a right that is afforded exclusively to Potentia. Neither the LOI nor the Amendment provides Deltro with any rights that would invoke any linkage between the two projects.
[118] The Court of Appeal summarized the principles applicable to equitable set-off in the case of Algoma Steel Inc. v. Union Gas Ltd. (2003), 2003 CanLII 30833 (ON CA), 63 O.R. (3d) 78 (C.A.) (“Algoma Steel”), as follows:
(a) The party relying on a set-off must show some equitable ground for being protected against the adversary’s demands.
(b) The equitable ground must go to the very root of the Plaintiff’s claim.
(c) A cross-claim must be so clearly connected with the demand of the plaintiff that it would be manifestly unjust to allow the plaintiff to enforce payment without taking into consideration the cross-claim.
(d) The Plaintiff’s claim and the cross-claim need not arise out of the same contract.
(e) Unliquidated claims are on the same footing as liquidated claims.
[119] Both the Court of Appeal in Algoma Steel and the Supreme Court of Canada in Telford v. Holt, 1987 CanLII 18 (SCC), [1987] 2 S.C.R. 193 referred with approval to the statement of Lord Denning, M. R. in Federal Commerce & Navigation Co. v. Molena Alpha Inc., [1978] 3 All E.R. 1066:
We have to ask ourselves: what should we do now so as to ensure fair dealing between the parties? … This question must be asked in each case as it arises for decision: and then, from case to case, we shall build up a series of precedents to guide those who come after us. But one thing is quite clear: it is not every cross-claim which can be deducted. It is only cross-claims that arise out of the same transaction or are closely connected with it. And it is only cross-claims which go directly to impeach the plaintiff’s demands, that is, so closely connected with his demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim.
[120] In Fasco Motors Ltd. v. General Refrigeration Inc., 1998 CarswellOnt 1827 (Gen. Div.) Justice Ground stated:
… it is settled law that a party may not maintain a set-off claim based upon rights it may have arising from a contract to purchase different goods, under a different contract, at a different time, from the same vendor.
[121] In Cuddy Food Products v. Puddy Bros. Ltd., 2002 CarswellOnt 2722 (Sup. Ct.), the plaintiff had moved for summary judgment for the price of goods sold and delivered. The defendant counterclaimed and claimed equitable set-off based on an alleged breach of another contract between the parties. In finding that equitable set-off was not available to the defendant, Justice Lane opined:
In my view there is no connection between these claims at all, beyond the identity of the parties. The claim of the defendant is based upon the 1999 agreement for the same of equipment to debone turkeys and release some of the product to the plaintiff. That agreement came to an end, for practical purposes, if not legal ones, with the termination/repudiation of it in November, 1999. The subsequent sales of chicken are not connected to that agreement. One may test this by asking, in Lord Denning’s phrase, whether the defendant’s claims about the deboning agreement “go directly to impeach” the plaintiff’s claim for the price of the goods. Clearly not; the two are totally separate matters.
[122] Deltro’s claim for damages in connection with the DR LOI is not remotely connected to the Barbados Project. I accept Potentia’s submissions that, pursuant to terms of the contract, the damages claimed by Deltro in the DR LOI involved different agreements between the parties and a different country. I can see no legal connection between the Barbados Project and the DR LOI except for section above which, as mentioned, provides no comfort to Deltro. As such, Deltro may not maintain a claim for set-off based on the rights that it might have arising from a different contract involving a different subject matter. There is no connection between the claims beyond the identity of the parties. In these circumstances, since they are two separate matters, equitable set-off is not allowed.
[123] It also bears noting that, with respect to the DR LOI, Deltro sought an interlocutory injunction against Potentia from having any further involvement in the Project primarily on the basis that Potentia misused confidential information provided by Deltro.
[124] Justice Belobaba in his reasons dated July 5, 2017 was critical of Deltro’s position. In his reasons he concluded that Deltro had failed to show a prima facie case, let alone a strong prima facie case. He observed that Potentia, if it used any confidential information, did so “precisely as intended” for due diligence and project evaluations. He further found that there was no “end run around Deltro” and significantly:
it appears that Deltro terminated its relationship with PRI Potentia at the 11th hour in large part because it was unhappy about the projected amount of the contingent fee that it would receive.[^6]
[125] Further, Deltro also has a counterclaim against Potentia in the action concerning the Barbados Project, which it relies upon in support of its assertions of equitable set-off. As previously stated, however, the counterclaim is a bald pleading and is devoid of any particularity and unsupported by contemporaneous documents. No specific damages or dollar amount is sought. In this case, I agree with the decision of Hennessy J. in Total Electrical Systems Inc. v. Collège Boréal d’Arts Appliqués & de Technologies, 2011 ONSC 4586 [“Total”], where the court found that a bald allegation of set-off does not provide an arguable defence to a summary disposition proceeding.
[126] While I appreciate that Total was determined in the context of a summary judgment, where the respondent has a positive obligation to put their best evidentiary foot forward, I find that the same principle applies in this context. It is Deltro that commenced the counterclaim and is now relying on it in support of their claim for equitable set-off. Despite this, they have provided no cogent evidence which can be used to support their allegations.
[127] Based on the above jurisprudence Deltro has not satisfied me that it has a cross-claim which can be deducted.
[128] Based on the all of the above, and the principles set out in Algoma Steel, Deltro is not entitled to equitable set-off.
[129] It bears noting that Deltro took the position at the application that a trial was necessary to determine whether it is entitled to equitable set-off. Deltro submits that when considering the issues of equitable set-off the first three principles set out in Algoma Steel also require a complete record involving viva voce evidence.
[130] I disagree. In my view, the pleadings adequately set out the basis for the Barbados Project and the DR LOI which I have concluded are separately and distinct and lack any tangible connection, particularly from Deltro’s prospective.
[131] Deltro could have provided all of its evidence in this regard by way of affidavit.
[132] As case management judge, I am of the view that there was sufficient record before me to determine the issues of Final Approval, repudiation and equitable set-off and my decision to do so is in keeping with the principles in set out in Hryniak v. Mauldin, 2014 SCC 7 where the court has urged trial judges to dispose of matters in the most expeditious and economical way possible (see also: BlackBerry Ltd. v. Marineau-Mes, 2014 ONSC 1790; Niro v. Caruso, 2015 ONSC 7446).
Should A Receiver Be Appointed Given The Above Findings?
[133] A receiver should be appointed subject to terms.
[134] Given the answer to the questions above, I am of the view that a receiver ought to be appointed where:
- Deltro willingly entered into a GSA over its assets.
- It failed to obtain Final Approval.
- It repudiated the Agreements.
- It has refused to repay any of the $2,000,000.00.
- It has never provided particulars of any claim it has against Potentia with respect to the Barbados Project.
[135] Deltro submits, however, that it is in no way insolvent and has adduced financial documentation in support of this claim.
[136] While I am skeptical of the strength of this documentation, particularly where many of its assets include intercompany loans which may be of a dubious nature given the fact that there are no financial statements or list of assets available for these related parties, Deltro should be provided with an opportunity to repay the $2,000,000.00 before a receiver is appointed.
[137] I am therefore making the following order in this regard:
i. No receivership will be appointed for 30 days to afford Deltro the opportunity to repay the $2,000,000.00;
ii. after 30 days an interim receiver will be appointed to run the business but not to interfere with the business. It will control receipts and disbursements for 30 days to determine if a sensible plan of repayment can be made;
iii. if after 30 days the interim receiver determines that Deltro is incapable of repayment with a reasonable timeline Potentia is entitled to the order sought to have a receiver appointed over the assets, properties and undertakings of Deltro to affect a sale.
[138] Deltro objects to BDO being appointed as receiver given the fact that the proposed partner at BDO indicated on his cross-examination that he had a personal relationship with one of the principles of Potentia and was currently engaged by Potentia to provide with advice.
[139] In these circumstances I agree with Deltro that another receiver ought to be appointed who would be viewed as completely impartial, disinterested and able to deal with the parties in a fair manner.
DISPOSITION
[140] Potentia is therefore entitled to the declaration it seeks that Deltro is indebted to it in the amount of $2,000,000.00 and is entitled to judgment and pre-judgment interest on that amount.
[141] A receiver will be appointed as per the terms above.
[142] Pre-judgment interest shall run at the rate of 12% per annum, to be calculated daily, as per section 2 of the Amendment.
[143] With respect to the $500,000.00 pre-judgment interest will run as per the provisions of the CJA.
[144] I can be spoken to with respect to the specific terms of the order.
[145] If the parties cannot agree on costs they are to provide me with written submissions not to exceed five pages, excluding the bill of costs.
[146] Brief submissions can be provided when the matter returns to settle the form of order.
Mr. Justice T. McEwen
Released: July 27, 2018
[^1]: All funds referred to in these Reasons are expressed in United States Dollars (USD). [^2]: Typographical errors are in the original text. [^3]: While it is true that the Barbados Project could be built in two phases of 10 MW each it is significant that there is no mention of overall approval for a 20 MW solar farm. [^4]: Mr. Joffre was a Senior Executive of Potentia responsible for Caribbean Projects. [^5]: Deltro did raise a number of other minor arguments, such as the fact it had ordered a generator. I have considered them but do not propose to deal with each in detail. [^6]: Endorsement of Justice Belobaba dated July 5, 2017. An appeal from this decision was dismissed on October 6, 2017.