BELLEVILLE COURT FILE NO.: CV-17-231 DATE: 2018/07/03 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Alliance to Protect Prince Edward County Applicant – and – Independent Electricity System Operator and WPD White Pines Wind Incorporated Respondents

Counsel: Eric Gillespie, for the Applicant Alan Mark for the Respondent Independent Electricity System Operator Patrick Duffy for the Respondent White Pines Wind Incorporated

HEARD: January 29, 2018 at Belleville

REASONS FOR DECISION

KERSHMAN J.

Overview

1The Alliance to Protect Prince Edward County (“APPEC”) seeks a declaration that the Feed-In-Tariff Contract (“FIT Contract”) made between the Independent Electricity System Operator (“IESO”) and WPD White Pines Wind Incorporated (“White Pines”) related to the White Pines Wind Project (“the Project”) is null and void on the grounds that White Pines did not comply with the contractual requirement to deliver 75% of the Project’s contracted capacity (“Contracted Capacity”).

Factual Background

2The Applicant, APPEC, is an incorporated association in the Province of Ontario that opposes the development of industrial wind projects in Prince Edward County.

3The Respondent, IESO, is a not-for-profit corporation responsible for the real time operation of the electricity grid and long-term planning, procurement and conservation efforts in Ontario.

4The Respondent, White Pines, is an incorporated company in Ontario engaging in the business of wind power development. It is a participant and supplier as defined in the FIT Contract under the FIT program and is the contracting party to the FIT Contract with IESO.

5In January 2005, the Ontario Power Authority (“OPA”) was established. As a corporation without shared capital, it was established under the Electricity Act, 1998, S.O. 1998, c. 15, Sched. A (“Electricity Act”), and was the entity responsible for power system planning and the procurement of new power generation in Ontario. Effective January 1, 2015, the predecessor IESO and OPA were amalgamated and continued as IESO. Concurrent with the amalgamation, the OPA’s mandate became part of the IESO’s mandate. IESO and OPA will be used interchangeably throughout this decision.

6The FIT program is a procurement program administered by the OPA. The contract with White Pines was originally for 27 wind turbines located in Prince Edward County.

7APPEC is not an applicant, participant or supplier under the FIT program.

FIT Program

8In 2009, the Ontario government tasked the OPA with the development and administration of the FIT Program to increase capacity of renewable energy supply from resources including wind, water power, bio-energy and solar. “FIT” stands for “feed-in-tariff”, meaning eligible proponents get paid according to a specified price schedule.

9The FIT program and OPA’s role were mandated by the Minister of Energy in a directive issued pursuant to ss. 25.32 and 25.35 of the Electricity Act. However, as stipulated by the Electricity Act, the IESO is not an agent of the Crown for any purpose.

10The FIT program was a standard offer procurement. A set of standardized rules were developed, as amended from time to time, to govern it (“the FIT Rules”). The FIT Rules set out the eligibility criteria in order to obtain a FIT Contract. Standardized FIT Contracts and Definitions were developed and adopted (“the FIT Contract and Definitions”). Copies of the FIT Rules and the FIT Contract and Definitions were made publicly available by the IESO, which has been the case since the inception of the FIT program.

White Pines FIT Contract

11White Pines submitted an application under the FIT program version 1.3.0 for an on-shore wind facility with a nameplate capacity of 60 megawatts, to be located in Prince Edward County on the lands described in the application.

12On May 4, 2010, IESO issued a contract offer notice, including a completed FIT Contract cover page incorporating the standard terms, to White Pines. White Pines returned the signed FIT Contract cover page to the OPA within ten business days and the White Pines FIT Contract thereupon became enforceable.

FIT Contract Amendment Request

13Under the FIT Contract, a supplier had the right to seek certain amendments to its project as well as to request certain extensions of time to complete the project. IESO also had various rights, including the right to consent to such requests as well as the right to terminate the FIT Contract in the case of certain events. Such contractual rights included the right of the supplier (including White Pines) to request IESO’s consent to changes to its facility, including the facility specifications (s. 2.1(b) of the FIT Contract).

14Under the FIT Contract, the supplier also had the right, upon notice, to make certain changes unilaterally to its facilities capacity (s. 2.1(c) of the FIT Contract).

15Therefore, as a supplier works through the various steps required under the FIT Contract, the IESO may receive requests for various things. IESO has published on its website the forms the suppliers are required to complete and submit in making these requests (“Prescribed Forms”). The Prescribed Forms are updated and amended from time to time. In addition, and to the extent any updates or other amendments are made to the FIT program generally, the IESO also makes this information available on its website.

Termination Rights Under the FIT Contract

16Section 2.4(a) of the FIT Contract permits the IESO in its sole and absolute discretion to terminate a FIT Contract before a Notice to Proceed is issued.

17The IESO also granted certain other termination rights under the FIT Contract, in s. 9.

18On August 2, 2011 the Minister of Energy issued a directive to the OPA to allow suppliers to the FIT Contract to obtain a waiver of the OPA’s termination rights under s. 2.4(a) (“Ministerial Directive”). This Ministerial Directive was published on the OPA’s website and was the subject of public announcements.

19On September 8, 2011, White Pines elected and the IESO agreed to waive the IESO’s termination rights under s. 2.4(a) pursuant to the Ministerial Directive.

20In order for the Project to proceed, one of White Pines’ contractual obligations was to obtain all necessary environmental approvals, including under the Environmental Protection Act, R.S.O. 1990, c. E.19. On July 16, 2015, White Pines received a Renewal Energy Approval (“REA”) from the Ministry of the Environment and Climate Change (“MOECC”) for a class 4 wind facility with 27 turbines, two transformer stations, underground electrical cabling, distribution lines and associated infrastructure to be located in Prince Edward County.

21APPEC, among others, appealed the MOECC’s REA decision to the Environmental Review Tribunal (“ERT”). By virtue of the appeal and because a decision by the ERT may take longer than six months and in recognition that it was preferable from a community perspective that construction activities did not proceed during the appeal process, the IESO publicly offered suppliers (including White Pines) extension agreements upon the commencement of an appeal by objectors of an REA project to the ERT. This offer was posted to the OPA website and remains available on the IESO website. Under these extension agreements, the proponent agrees not to construct during the appeal and the IESO agrees to adjust the project timelines for a period sufficient to permit completion of the appeal process and subsequent completion of the project.

22IESO received such a request from White Pines in connection with APPEC’s REA Appeal and agreed to extend White Pines’ deadline to achieve the Commercial Operation Date under s. 9.1(j) of the FIT Contract.

23On April 26, 2017, the ERT determined that the REA should be amended to, inter alia, remove 18 turbines from the Project thereby reducing the size of the Project from 60 megawatts to 18.45 megawatts (the “ERT Decision”). Section 2.1(c) of the FIT Contract stated that a Supplier could, on a single occasion, elect to reduce the Contract Capacity to a lower amount by giving notice to the OPA, provided that such lower amount is no less than 75% of the original Contract Capacity.

24IESO received a request from White Pines, dated July 12, 2017, for its consent to lower the FIT Contract capacity to 18.45 megawatts in recognition of the ERT’s decision. Included in its request, White Pines also sought a change to the Project connection point, which would allow White Pines to connect to the local distribution system. IESO considered and consented to the request.

Issues:

25The issues on the Application are as follows:

1. Should the original Application be allowed for the purpose of this hearing or should the Amended Application be relied upon?
2. Should an injunction be granted restraining any further work by White Pines associated with the Project pending this decision?
3. Did IESO violate the doctrine of legitimate expectations by failing to follow the contractual process that it publicly disclosed?
4. Did IESO make negligent representations by publishing misleading and inaccurate information? a) Element #1: Special Relationship b) Element #2: Untrue, Inaccurate or Misleading Representation c) Element #3: IESO acted negligently in making this statement d) Element #4: Reasonable reliance by APPEC e) Element #5: Detriment in the sense that damages resulted

Issue #1: Should the original Application be allowed for the purpose of this hearing or should the Amended Application be relied upon?

APPEC’s Position:

26APPEC had prepared, but did not issue, an Amended Application that sought two additional items of relief.

27At the hearing of the Application, it was argued that the Amended Application should not be allowed and that the additional claims for relief should not be dealt with by the court.

28APPEC argued that since the materials in relation to the Amended Application were set out in the Walsh Affidavit #2 and he was cross-examined on those, the Amended Application should be allowed. In addition, all parties argued the issues related to the Amended Application in their Factums.

Respondents’ Position:

29The Respondents argued that the Amended Application had not been issued and served and therefore should not be allowed.

Analysis

30All parties have argued, in their Factums, the issues that were raised in the Amended Application.

31Therefore, the Court finds that notwithstanding that the Amended Application had not been issued, all sides were prepared to argue the issues in relation to the Amended Application. Therefore, pursuant to Rules 1.04(1) and (1.1), 2.01 and 2.03 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, the Amended Application is allowed.

Issue #2: Should an injunction be granted restraining any further work by White Pines associated with the Project pending this decision?

32In its Amended Application materials, the Applicant sought an injunction restraining any further work by White Pines associated with the Project in Prince Edward County. At the hearing of the matter, the Applicant indicated that it was not seeking an injunction at this point in time and did not want a ruling in relation to the injunction.

33The Respondents acknowledged that the issue of the injunction was not argued at this time.

Analysis

34The Court finds that the injunctive relief sought will not be dealt with in this decision.

Issue #3: Did IESO violate the doctrine of legitimate expectations by failing to follow the contractual process that it publicly disclosed?

APPEC’s Position:

35APPEC relies on the doctrine of legitimate expectations to argue that the Respondents should be held to their word and enforce the FIT Contract that was made available to the public. In short, APPEC argues that the Project should be terminated.

36APPEC relies on the definition of legitimate expectations as laid out in the case of Old St. Bonafice Residents Association Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170.

37The Court at p. 1204 says:

The principle [of legitimate expectation] is simply an extension of the rules of natural justice and procedural fairness. It affords a party affected by the decision of a public official an opportunity to make representations in circumstances in which there otherwise would be no such opportunity. The court supplies the omission where, based on the conduct of the public official, a party has been led to believe that his or her rights would not be affected without consultation.

38APPEC goes onto argue that the doctrine was revisited by the Supreme Court of Canada in Canada (Attorney General) v. Mavi, 2011 SCC 30, at paras. 68-69, which read:

[68] Where a government official makes representations within the scope of his or her authority to an individual about an administrative process that the government will follow, and the representations said to give rise to the legitimate expectations are clear, unambiguous and unqualified, the government may be held to its word, provided the representations are procedural in nature and do not conflict with the decision maker’s statutory duty. Proof of reliance is not a requisite. …

[69] … Generally speaking, government representations will be considered sufficiently precise for purposes of the doctrine of legitimate expectations if, had they been made in the context of a private law contract, they would be sufficiently certain to be capable of enforcement.

39APPEC argues that there can be no doubt that APPEC had a legitimate expectation of IESO’s process related to their contract with White Pines and, more specifically, the Project’s Contract Capacity and Termination clauses. By publishing the FIT Contract on its website, the IESO made clear representations to the public, and particularly to those members of local communities impacted by the FIT Program.

40APPEC argues that the FIT Contract related to an administrative process and laid out the very rules for terminating a contract with a supplier. They argue that the terms were clear, unambiguous and unqualified. In addition, they argue that the representations cannot possibly conflict with the IESO’s mandate or statutory duties, as the FIT Contract actually reflected the IESO’s responsibilities under the FIT Program.

41APPEC argues that the IESO is comprised of “public officials” and that the doctrine of legitimate expectations governs the conduct of “public officials”.

42APPEC argues that the IESO must deal fairly with people and that this principle must be considered in the test for legitimate expectations. APPEC argues that the conduct of the IESO clearly fell below the standard of fair dealing.

Respondent’s Position:

IESO’s Position:

43IESO argues that, as a preliminary matter, the doctrine of legitimate expectations does not apply to this situation because the doctrine forms part of the duty of procedural fairness and does not give rise to either substantive or contractual rights. It does give rise to certain procedural rights, but only in those circumstances where the doctrine is applicable: Reference Re: Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, at p. 557; Skypower CL 1 LP v. Ontario (Minister of Energy), 2012 ONSC 4979 (Div. Ct.), at para. 64; Genex Communications Inc. v. Canada (Attorney General), 2005 FCA 283, at para. 191.

44IESO argues that at most the doctrine would require it to follow a proper process before making a decision. It says that APPEC must show that IESO made a representation to APPEC concerning an administrative process that IESO would follow with respect to the White Pines FIT Contract, and that such representation was clear, unambiguous and unqualified. IESO says that APPEC cannot satisfy this test.

45IESO then argues that even if it could be found to apply, the test from Mavi has not been met because:

a. Mavi requires that a specific representation be made by a public official, which was not present here. It argues that representations to the general public through the publication of a standard form contract do not give rise to the requirement that the public be consulted about decisions made under a contract; and, b. the Skypower case confirmed that the Minister of Energy’s statements about the FIT Program were of general application and were not directed specifically to the Applicants. They were not “clear, unambiguous and unqualified” as required by the doctrine (para. 63).

46IESO argues that absent a specific representation by IESO to APPEC, IESO and White Pines are free to proceed under the FIT Contract by whatever interpretations they choose and to amend their contract howsoever they choose.

White Pines’ Position:

47White Pines argues that APPEC is using a novel argument in an attempt to use the doctrine of legitimate expectations to enforce a contract between two parties. It argues that even if the doctrine applied in the circumstances, it can only be used to give rise to procedural rights and cannot be used to create substantive rights: Skypower, at para. 64.

48White Pines argues that APPEC is using the doctrine of legitimate expectations to create a right to enforce the substantive position of the FIT Contract against another party. It argues that the doctrine has never been used in this fashion in Canada.

49White Pines argues that the doctrine requires a specific representation to be made by a public official, and that did not occur in this case.

50The mere publication of the standard form of the FIT Contract by IESO cannot be said to give rise to a requirement that the public has to be consulted about the decision made under the Contract or dictate the outcome of those decisions.

Analysis:

51APPEC argues that the doctrine of legitimate expectations requires the Respondents to be held to their word and enforce the FIT Contract that was made available to the public on its website.

52The doctrine of legitimate expectations was reviewed by the Divisional Court in the case of Skypower. Nordheimer J. at paras. 62-64 states the following:

[62] Turning then to the ground of legitimate expectations, it is perhaps useful to begin with a definition of what the principle of legitimate expectations involves. The principle was set out in Canada (Attorney General) v. Mavi, 2011 SCC 30 , [2011] 2 S.C.R. 504 where Binnie J. said, at para. 68:

Where a government official makes representations within the scope of his or her authority to an individual about an administrative process that the government will follow, and the representations said to give rise to the legitimate expectations are clear, unambiguous and unqualified, the government may be held to its word, provided the representations are procedural in nature and do not conflict with the decision maker’s statutory duty.

[63] Once again, I find little to which the applicants can point that would constitute a representation that is “clear, unambiguous and unqualified”. The statements to which the applicants do refer that were made by Ministers Smitherman and Duguid do not, on their face, amount to representations that are unambiguous and unqualified. They are also not directed specifically to the applicants. Rather, they were statements of general application. In addition, the statements were clearly made in relation to the FIT Program itself and have to be read with, and understood in the context of, the detailed requirements and conditions of that program to which I have made reference above. Read in context, the applicants could not reasonably assert a legitimate expectation based on these statements that the criteria for the FIT Program or the process under it would not change.

[64] Further, the doctrine of legitimate expectations forms part of the duty of fairness and gives rise to procedural rights. This is made clear in Mavi. The doctrine itself does not give rise to substantive or contractual rights. At most, it requires the Government to follow a proper process before making a decision.

53Procedural rights are defined in Black’s Law Dictionary, 10th ed. as: “A right that derives from legal or administrative procedure; a right that helps in the protection or enforcement of a substantive right”.

54Procedural rights are the rights that are required to fulfill the duty of fairness in a given set of circumstances. The precise nature of these rights and content of procedural fairness varies with the circumstances and the legislative and administrative context. In the case of Baker v. Canada (Minister of Citizenship & Immigration), [1999] 2 S.C.R. 817, the Court at para. 22 states:

[T]he purpose of the participatory rights contained within the duty of procedural fairness is to ensure that administrative decisions are made using a fair and open procedure, appropriate to the decision being made and its statutory, institutional, and social context, with an opportunity for those affected by the decision to put forward their views and evidence fully and have them considered by the decision-maker.

55Substantive rights, in contrast, are defined in Black’s Law Dictionary, 10th ed. as: “a right that can be protected or enforced by law; a right of substance rather than form”.

56Substantive rights are outside the procedural domain captured by the doctrine of legitimate expectations: Baker, at para. 26. Substantive rights are those rights associated with the substantive outcome or the substance of the decision reached, as opposed to the procedure used to reach that decision.

57The doctrine of legitimate expectations cannot be used to create substantive rights. The doctrine can only be used to enforce procedural rights. The Court does not see how the doctrine creates any substantive or contractual rights that would allow APPEC to interfere with a contract between two parties that have complied with the terms of the ERT Decision.

58A review of the Contract makes it clear that the Respondents were entitled to contract as they did and that any changes requested by APPEC would amount to substantive rights outside the scope of the doctrine of legitimate expectations.

59The Court has reviewed version 1.3.0 of the Contract and notes the following paragraphs:

1.9 Entire Agreement

(a) This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter of this Agreement. There are no warranties, conditions or representations (including any that may be implied by statute) and there are no agreements in connection with the subject matter of this Agreement, except as specifically set forth or referred to in this Agreement. No reliance is placed on any warranty, representation, opinion, advice or assertion of fact made by a Party to this Agreement, or its Representatives, to the other Party to this Agreement, or its Representatives, except to the extent that the same has been reduced to writing and included as a term of this Agreement.

(b) Where this Agreement explicitly incorporates by reference any definitions set out in the FIT Rules, such reference shall be to the FIT Rules in effect on the Contract Date.

1.10 Waiver, Amendment

Except as expressly provided in this Agreement, no waiver of any provision of this Agreement shall be binding unless executed in writing by the Party to be bound thereby and no amendment of any provision of this Agreement shall be binding unless executed in writing by both Parties to this Agreement. No waiver of any provision of this Agreement shall constitute a waiver of any other provision nor shall any waiver of any provision of this Agreement constitute a continuing waiver or operate as a waiver of, or estoppel with respect to, any subsequent failure to comply, unless otherwise expressly provided.

15.4 Binding Agreement

Except as otherwise set out in this Agreement, this Agreement shall not confer upon any other Person, except the Parties and their respective successors and permitted assigns, any rights, interests, obligations or remedies under this Agreement. This Agreement and all of the provisions of this Agreement shall be binding upon and shall enure to the benefit of the Parties and their respective successors and permitted assigns.

Paragraph 1.9 Entire Agreement:

60Paragraph 1.9 specifically states that the Contract is the entire agreement between the parties. The parties listed are IESO and White Pines. APPEC is clearly not a party to the agreement. It is not a successor or an assign of either of these parties. Lastly, it is not a representative of either party. Rather, it is a stranger to the Contract.

61The Court does not see how APPEC has any legitimate right or claim to insert itself into a contract or agreement which it is not part of.

Paragraph 1.10 Waiver, Amendment:

62Paragraph 1.10 deals with the issue of amendments to the Contract. Amendments to the contract are binding if signed by both parties. After the ERT released its decision, the Respondents collectively chose to amend the Contract which, in fact, they did. The amendments are allowed in accordance with the Contract.

63According to the evidence, the Court finds that both Respondents followed the appropriate requirements and took the appropriate steps to create and approve the amendments to the Contract, which allowed White Pines to operate the facility in accordance with the ERT Decision.

64The Court finds that there was nothing to stop the Respondents from amending the Contract to bring it into line with the ERT Decision.

65Based on the ERT Decision, the Respondents recognized that they could not proceed with the original contract. They chose to engage in negotiations to amend the Contract based on the ERT Decision. The revised contract did not conflict with the ERT Decision.

66The amendments to the FIT Contract were completed after the ERT Decision and as a result of that decision.

67The Court is not prepared to interfere with the Contract, which was willingly entered into, negotiated and renegotiated by the Respondents.

68The Court finds that the Contract was properly amended and signed by the parties in accordance with the terms of the FIT Contract and the FIT Rules.

Paragraph 15.4 Binding Agreement:

69Paragraph 15.4 specifically sets out that the Contract is between IESO and White Pines. The Contract does not confer any rights, interests, obligations or other remedies under the agreement on any other persons except the parties and their respective successors and permitted assigns.

70It is clear that APPEC is neither a party to nor a respective successor or permitted assigned to this contract. Therefore, on that basis alone, the Court does not see how APPEC has any standing to interfere with the Contract.

71In this case, the Contract Capacity and Termination clauses specifically set out what was required for the project to go forward.

72At the same time, there were other provisions in the FIT Contract that were set out on the website and that were in play at the same time, such as the Contract Capacity and Termination clauses.

73The Court finds that the Contract must be looked at as a whole; it is not appropriate to look at the parts that one party agrees should apply, while ignoring other parts.

74An administrative process existed to terminate a contract with a supplier.

75At the same time, there were other provisions that would allow the contracting parties to amend the Contract and still be within the scope of the FIT Rules and the FIT Contract.

76The terms for terminating the Contract were clear.

77The Court finds that the proper process was used by IESO when it made the decision to amend the Contract to comply with the ERT Decision. The FIT Contract provided provisions to do so. The Contracting Parties followed the terms of the FIT Contract.

78The FIT Rules 1.0 apply in this case. At para. 54 of Skypower, Nordheimer J. says as follows:

[54] Among other reasons for so concluding [that the applicants must have been aware that government policies can change] are the contents of the FIT Rules 1.0 themselves. Those rules give the OPA an almost unlimited discretion in how the FIT Program will be run. Among others, the FIT Rules 1.0 contained provisions that provided that:

(a) the OPA could amend the FIT Program and Rules in response to ministerial directions, changes in laws, or significant changes in the market place (section 10.1(a));

(b) the OPA had the right to cancel or suspend all or any part of the FIT Program (section 12.2.(d));

(c) the OPA had the right at its sole discretion to reject any application, even one properly completed (section 12.2(c));

(d) the OPA can make changes to the FIT Rules, Contracts, Price Schedules including substantial changes, suspension, or termination of the Program without liability (section 12.2 (g)), and;

(e) changes to the Rules may apply with respect to existing Applications, (sections 10.2(c) and 12.2(g)).

79Therefore, the FIT Rules give the OPA/IESO an almost unlimited discretion on how the FIT Program will run.

80Section 12.2(g) of the FIT Rules says that the OPA/IESO can make any changes to the FIT Rules, the form of the FIT Contract, the price schedule or the FIT Program, including substantial changes or a suspension or termination of the Program, without any liability on the applicant suppliers or prospective applicant suppliers.

81Furthermore, paragraph 10.1(a) of the FIT Rules allows the OPA/IESO to amend the FIT Program, the FIT Rules and the form of the FIT Contract at two year intervals.

82These provisions allow the OPA/IESO to make any amendment outside of the scheduled program review in response to ministerial directions, changes in laws and regulations, significant changes in market conditions or other circumstances as required.

83The Court interprets this to mean that the OPA/IESO could make changes as it saw fit and without any requirement to seek direction from members of the public or from any other persons who might be interested but who are not be a party to the Contract.

84The Court agrees with Nordheimer J.’s reasoning at para. 69 where he says:

[69] … The fluid nature of the FIT Rules, as evidenced by the myriad of provisions (some of which are referred to above) that allowed the OPA almost unlimited discretion in terms of when and in what manner the review process would unfold, undermines any contention that persons making applications acquired rights in the process of the nature that the applicants now assert.

85This Court finds that the FIT Rules are such that the IESO has an unlimited discretion, particularly based on the wording of the Contract, to amend the Contract in order to comply with any existing or new requirements. The requirements in this case were set out in the ERT Decision that would allow only 9 wind turbines with a capacity of 18.45 megawatts.

86The ability of the IESO to amend the FIT Rules to comply with the requirement of ERT decision is allowable under the FIT Rules and the FIT Contract.

87In addition, the Court finds that the publication of the FIT Contract was not a specific, unambiguous representation made by a public official, as required in Mavi. Rather, it was a pro forma contract to be used by the parties if they were going to consider entering into such a contract.

88The Court does not see how a version of a contract set out on a website can be considered the final version of a contract between two parties. The contract on the website is the pro forma of a potential contract and does not meet the test in Mavi of being a clear, unambiguous and unqualified representation of what the terms of the final contract would be.

89Every contractual situation is different and parties are free to negotiate what the final terms of a contract will be.

90To suggest that a non-party can rely on a pro forma contract that is uploaded to a website as being the final terms of the contract between the parties is not reasonable or realistic.

91The Court finds that the issues in this case involve substantive rights and not procedural rights and, therefore, the doctrine of legitimate expectations does not apply.

Issue #4: Did IESO make negligent representations by publishing misleading and inaccurate information?

APPEC’s Position:

92APPEC argues that by publishing misleading and inaccurate information, the IESO has made negligent misrepresentations that should result in the Project being terminated.

93APPEC relies on the case of Queen v. Cognos Inc., [1993] 1 S.C.R. 87. At p. 110, the Supreme Court of Canada defines the five elements of the tort of negligent misrepresentation:

The required elements for a successful Hedley Byrne claim have been stated in many authorities, sometimes in varying forms. The decisions of this Court cited above suggest five general requirements: (1) there must be a duty of care based on a “special relationship” between the representor and the representee; (2) the representation in question must be untrue, inaccurate, or misleading; (3) the representor must have acted negligently in making said misrepresentation; (4) the representee must have relied, in a reasonable manner, on said negligent misrepresentation; and (5) the reliance must have been detrimental to the representee in the sense that damages resulted.

Respondents’ Position:

94The Respondents argue that the IESO did not make any negligent misrepresentations. They argue that APPEC is not able to satisfy any of the requirements set out by the Supreme Court of Canada in Queen v. Cognos. The Respondents argue that the elements of negligent misrepresentation are not found in the present case.

95The arguments of the parties and analysis follow.

Element #1: Special Relationship

APPEC’s Position:

96APPEC relies on the case of Lakefield (Village) v. Black (1998), 41 O.R. (3d) 741 (C.A.). It argues that a “special relationship” can be found even where a representation is made to the public at large and not specifically to the wronged party (in this case, APPEC).

97At p. 748 of Lakefield, the Court found that:

Lakefield ought reasonably to have foreseen that Black would rely on its representation. Lakefield made the representation based on its special knowledge of the circumstances and as a formal response to permit evaluation of a request for approval of a plan to subdivide this property. It ought to have foreseen that its representation would be relied on by someone seeking to effect that very subdivision, particularly where its representation was reflected in the draft plan approval which resulted from the representation.

98APPEC argues that IESO also ought to have reasonably foreseen that local residents, impacted by the FIT Contracts in their community, would rely on IESO’s public representations regarding those contracts.

99In addition, since APPEC was also involved in a legal dispute at the ERT with White Pines, IESO knew or ought to have known that APPEC had a unique interest in the matter, beyond that of other members of the public.

100APPEC also argues that IESO’s representations to the public were inaccurate and misleading because IESO published a contract that laid out the very specific terms regarding the Contract Capacity and Termination. They argue that there was no evidence that the IESO Contract, available to the public, was incomplete and/or subject to such wholesale extraordinary amendments so as to completely change the terms known to the public.

Respondents’ Position:

IESO’s Position:

101IESO points out that there are two stages to the “special relationship” inquiry, which are as follows:

a. Does the relationship form part of an established category, and, if not, is there sufficient proximity and foreseeability to establish a duty of care? b. If a duty can be established, are there any public policy reasons to negate the findings of a prima facie duty of care?

Edwards v. Law Society of Upper Canada, 2001 SCC 80, at paras. 8-10. Taylor v. Canada (Attorney General), 2012 ONCA 479, at para. 72.

102The Respondents argue that there is no special relationship between IESO and APPEC because the IESO’s publication of the standard form contract on its website was not sufficient to create a special relationship between IESO and APPEC.

103The IESO argues that there was absolutely no evidence that it did anything that could give rise to such a special relationship. IESO argues that the mere publication of a standard form FIT Contract on its website as part of a standard offer program was not sufficient to establish that special relationship.

104IESO’s public role does not mean that it inherently assumes a general duty of care to every member of the public. IESO was tasked to provide contracts to eligible FIT Program applicants subject to conditions. In doing so, however, IESO did not assume a general duty care to every member of the public. Therefore, there was no special relationship between APPEC and IESO and, furthermore, IESO had no duty of care to APPEC.

105IESO also argues that even if a prima facie duty of care could be found, it would negated by public policy concerns at the second stage. IESO argues that under the Applicant’s theory, every public official ipso facto has a special relationship with every member of the public, which is clearly contrary to the very foundation and purpose of this test set out by the Supreme Court of Canada.

Analysis:

106The Court does not find that there is any evidence of a special relationship between APPEC and the IESO or between members of the public and the IESO.

107The evidence is that the IESO published a version of the draft FIT Contract online. The draft FIT Contract was not the actual contract entered into between the parties. Rather, it was a standard form contract to be used by potential suppliers and the IESO.

108All contracts actually entered into between a supplier and IESO had to be negotiated, prepared and signed by the parties.

109APPEC relies on the case of Lakefield (Village) v. Black to argue that a “special relationship can be found even where a representation is not made directly to the wronged party”.

110In the Lakefield case, the representation was made by a municipality as a formal response to a permit evaluation of a request for approval of a plan to subdivide the property in question. In that case, the Court held that it was foreseeable to a municipality that its statement would be relied upon by someone seeking to effect that very subdivision, and that the class of persons who had relied upon the representation was strictly limited.

111The present case can be distinguished from the Lakefield case in that the IESO’s public role did not inherently assume a general duty of care to each member of the public or to APPEC as part of a strictly limited class of persons.

112The Court does not see how there is a “special relationship” between APPEC and the IESO. A draft contract uploaded to the IESO’s website is for interested persons to view. Only eligible FIT Program applicants can come forward to be suppliers under the proposed FIT Contract. APPEC was not an eligible FIT Program applicant nor a potential applicant.

113The only potential duty of care created by this draft contract would be to eligible FIT Program applicants, not to APPEC or members of the public. To view it as such as APPEC suggests would be unrealistic and unreasonable.

114Mr. Cecchini, the Manager, Contract Management in the Legal Resources and Corporate Governance Division of the IESO, provided an affidavit in which he stated that the standard offer procurement model was used to provide uniformity across the FIT Program’s application and contract offer process for a wide range of energy suppliers.

115In the Court’s view, the FIT Contract, FIT Rules, and the ancillary documents were the foundation for a standardized procurement model intended to reduce time, expense and make the process more efficient. The Court does not find anything wrong with that.

116The Court also does not find anything wrong with the FIT Contract. That contract is between an applicant FIT supplier and the IESO, not between APPEC and the IESO.

117While copies of the FIT Rules, Fit Contract and FIT Definitions are made available on the website, the Court does not see how making these items available to the public creates a special relationship between the public and/or APPEC and the IESO. These documents were made available so that potential suppliers could see what the contract and rules were in advance of taking the time, expense and decision-making as to whether to apply to become a supplier.

118Members of the public have the right to view the pro forma documents, however the Court does not find on the facts of this case that the public or APPEC can rely on a standard form of contract as being the final version of any contract entered into between a potential supplier and the IESO. That would be going too far.

119In the Court’s view, the special relationship would be as between a supplier applicant and IESO. It would not extend to APPEC or a member of the public.

120Furthermore, as laid out by Mr. Cecchini in his Affidavit at para. 13,

To maintain the integrity of the FIT Program, the OPA (and now the IESO) must treat applicants and suppliers fairly and in a principled fashion. The FIT Rules establishes principle in s. 1.1 as follows:

“the fundamental objective of the FIT program in conjunction with the Green Energy and Green Economy Act, 2009, is to facilitate the increased development of Renewable Generating Facilities of varying sizes, technologies and configurations via a standardized, open and fair process (Emphasis added)”.

121As stated by Mr. Cecchini, the intention was to treat applicant suppliers fairly and in a principled fashion. The Court does not see that this treatment extends to APPEC or members of the public.

122The Court agrees with the position taken by the IESO that the FIT Contract is as between IESO and White Pines. The Court does not find that there are any contractual, legislative or regulatory instruments that grant other persons any rights or standing under the FIT Contract.

123Mr. Cecchini’s Affidavit at para. 26 said that while the standard FIT Contract, FIT Rules and the prescribed forms are made available to the public on the IESO website, the specific details of a particular supplier’s FIT Contract and any other requirements are not disclosed to anyone except as permitted by the terms of the FIT Contract. To the Court, this means that the terms of the FIT Contract were confidential.

124When IESO issued the contract offer notice, including the completed FIT Contract page, it was not posted to the IESO website. Nor was it posted after it was accepted by White Pines.

125While the standard blank viewable form was included on the website, once completed forms were provided, they were not uploaded to the website because they were confidential matters between the parties.

126The Court finds that the handling of contracts in a confidential manner is commercially reasonable, particularly as it relates to a private contract between parties.

127Contract confidentiality allows parties to negotiate without having anybody look over their shoulders, whether they be competitors, suppliers, members of the public, or anyone else.

128The right to negotiate a contract confidentially is a cornerstone of the ability to contract.

129There are other public policy concerns that militate against finding a duty of care between the Respondents and APPEC. IESO and White Pines made the amendments to the Contract after the 30-day appeal period for the ERT had expired. There is no reason or reasonable expectation to believe that APPEC would then have had to have been consulted on the proposed amendments to the Contract. If this were the case, there would be endless public consultations on matters that would result in chaos, delayed projects, cost overruns and uncertainty between contracting parties. This would lead to an environment where it would be very difficult to negotiate any type of contract and, therefore, stymie progress going forward, whether in this situation or any other situation involving a body like the IESO.

130The Court finds that Element 1 has not been proven. Therefore, the Court finds that there is no need to deal with Elements 2, 3, 4 and 5.

131Notwithstanding this finding, the Court finds that APPEC’s reliance on any representation in the FIT Contract was not reasonable and was based on incorrect assumptions and an incorrect reading of its terms.

132Section 2.1(b) of the FIT Contract reads, in part, as follows:

The Supplier shall at no time after the date of this Agreement modify, vary or amend in any material respect any of the features or specifications of the Contract Facility or the Facility as outlined in the Application or the FIT Contract Cover Page (including for greater certainty, the site) or make any changes to the Facility’s status as a Registered Facility (a “Contract Facility Amendment”), without first notifying the OPA in writing and obtaining the OPA’s consent in writing which consent shall not be unreasonably withheld.

133Section 2.1(c) reads in part as follows:

Notwithstanding Section 2.1(b), prior to the Supplier delivering its NTP Request pursuant to Section 2.4, the Supplier may, on a single occasion, elect to reduce the Contract Capacity to a lower amount by giving notice to the OPA, provided that such lower amount is no less than 75% of the original Contract Capacity. If the Supplier provides such notice, the Contract Capacity shall be reduced to the lower amount. The OPA shall have no obligation to consent to a request to alter the Contract Capacity other than as set out in this Section 2.1(c). Any such reduction in Contract Capacity shall only affect the amount of Completion and Performance Security that is required to be provided to the OPA after the date of the request for such reduction.

134These two paragraphs of the FIT Contract clearly state that any change, modification or amendment to any material respects of the Contract Facility or the Facility as outlined in the Application could not be made without first notifying the IESO in writing and obtaining their written consent. The evidence before the Court is that the notification was given by White Pines to IESO and that written consent was obtained.

135Furthermore, the evidence is that one of those changes could be the reduction of the Contract Capacity to an amount below 75% of the original Contract Capacity.

136The evidence was that White Pines did request a Facilities change, which was approved of by the IESO.

137The wording of paragraphs 2.1(b) and (c) of the FIT Contract is contained in the online version of the sample contract for all to see, including APPEC.

138By reading the online version of the sample contract, anyone, including APPEC, would be able to deduce that any applicant, including White Pines, could seek to reduce the Contract Capacity below the 75% level. APPEC chose not to do anything about that, particularly once it found out about the reduction in the Contract Capacity. Even though the ERT Decision appeal period expired, APPEC chose not to bring a motion to extend the time for filing of an appeal of the ERT Decision.

139One of the assumptions made by APPEC is set out in the Walsh Affidavit at paragraph 13 – that with only 9 turbines, White Pines could not satisfy the Capacity Clause and IESO’s only option was to cancel the contract. Based on the provisions of the FIT Contract, including paragraphs 2.1(b) and (c), that assumption was erroneous.

140The ERT Decision of April 20, 2017 altered the decision of the Director by amending the REA with respect to the Project. The ERT Decision did not say that no wind turbines could be built. Rather, the ERT Decision reduced the number of turbines from 27 to 9 and reduced the size of the capacity from 60 megawatts to 18.45 megawatts.

141This was a clear sign that if White Pines could construct a Project of 18.45 megawatts with only 9 turbines, the Project could go ahead, which it did.

142APPEC should have been alive to the fact that the ERT’s reduction of the number of turbines from 27 to 9 did not automatically mean that the Contract was at an end. The Contract made provision at various paragraphs, including paragraphs 2.1(b) and (c), to renegotiate the contract terms between the parties, which was done. These provisions were on the website for all to view.

143APPEC mistakenly assumed that once the Project was reduced in size and the Contract Capacity was reduced in size in accordance with the ERT Decision, the Project was dead. That assumption was incorrect.

144That APPEC chose not to appeal the ERT Decision and not to seek leave to extend the time to appeal is a conscious choice made by it, with resulting consequences.

Conclusion

145For the reasons set out above, the Court finds that the relief claimed at the hearing of the Application fails and that part of the Application is dismissed.

Costs

146The Respondents were successful on the Application. The parties shall be allowed 14 days to resolve the issue of costs. If they are unable to do so, they shall contact the trial coordinator and obtain a date and time to argue the issue of costs. Each party will have 15 minutes to argue the issue of costs. Costs Outlines and any Rule 49 Offers to Settle shall be provided five days prior to the hearing of the costs argument. If counsel is from out of town, that counsel can appear by phone if they wish.

147Order to issue accordingly.