COURT FILE NO.: CV-17-579431

DATE: 20210308

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: GRASSHOPPER SOLAR CORPORATION Plaintiff

AND:

NEIL PALMER and MICHAELE HALL Defendants

BEFORE: Mr. Justice Chalmers

COUNSEL: P. Chand and R. Stubbs, for the Plaintiff/Moving Party

N. Palmer, Self-Represented for the Defendants

HEARD: February 26, 2021, by videoconference

ENDORSEMENT

OVERVIEW

[1] Grasshopper Solar Corporation (“GSC”) operates a solar energy business. It leases space on residential rooftops to install Solar Generating Equipment (“SGE”). The energy generated from the SGE becomes part of the Independent Electrical System Operator (“IESO”), Feed-in Tariff Program (the “microFIT Program”). The electricity produced by the SGE is paid for by the Local Distribution Company (“LDC”). On August 9, 2021, GSC entered into a 20-year Solar Development Lease Agreement (“SDL”) with Neil Palmer and Michaele Hall (the “Defendants”). GSC installed 8.50kW SGE on the roof of the Defendants’ home on November 6, 2013. GSC received the payments from the LDC for the electricity produced by the SGE. GSC paid rent to the Defendants in the amount of $700 a year.

[2] Paragraph 35 of the SDL provides that the Defendants consent to the registration of the SDL and a security interest in the SGE on the title to their property. On December 13, 2013, GSC registered a Notice of Lease on title to the Defendants’ property. On October 7, 2015, GSC registered a Notice of Security Interest on title.

[3] In the spring of 2016, the Defendants wished to refinance their property. Pursuant to paragraph 15 of the SDL, GSC was required to maintain insurance which included the Defendants as additional insureds. During the refinancing arrangements, the mortgagee required proof that the SGE was insured. The Certificate of Insurance provided by GSC did not include the names of the Defendants. When this was brought to the attention of GSC, it provided a Certificate of Insurance that named the Defendants for the period from April 21, 2015 to April 21, 2016.

[4] The mortgagee also required the Notice of Lease and Security Interest registered on title by GSC to be postponed. GSC agreed to the postponement. In April 2016, Anton Jelic of GSC executed an Acknowledgement and Direction to allow for the registration of the postponement. The Defendants retained lawyer, Jacqueline Knowles with respect to the refinancing. She registered the postponement on title on April 6, 2016. She submitted a fee for services rendered in the amount of $1,482.87 inclusive of her fee, HST and disbursement. A portion of her fee was with respect to the registration of the postponement.

[5] On April 13, 2016, the Defendants met with Mr. Jelic to discuss the payment of the fees incurred to register the postponement. Mr. Jelic stated that there was no obligation on GSC to pay this fee and it refused to do so. On April 14, 2016, Mr. Palmer wrote to GSC and gave notice that they are seeking payment of a portion of Ms. Knowles’ fees in the amount $300 plus the registration fee of $149.44, which they say was the cost to register the postponement of the Notice of Lease and Security Interest. The Defendants stated that the amount was to be paid within five days failing which they will take the position that the SDL is immediately cancelled. By letter dated April 14, 2016, counsel for GSC confirmed that it will not reimburse the Defendants for the registration fee. Counsel also advised that the Defendants would be in material breach of the SDL if they improperly terminated the contract.

[6] On November 2, 2015, the Defendants sent an e-mail to GSC and stated that they are terminating the SDL as a result of the failure of GSC to pay the cost to register the postponement. The Defendants advised that they have seized all rights to the SGE and the revenues. The Defendants contacted the LDC and instructed it to redirect the monthly revenue payments to them. In an answer to an undertaking made on his cross-examination, Mr. Palmer advised that the sum of $30,700.68 from the LDC has been received by the Defendants since April 2016. The Defendants remain in possession of the SGE and continue to collect the amounts paid by the LDC.

[7] The Statement of Claim was issued on July 21, 2017. GSC claims damages in the amount of $100,000 for the Defendants’ termination of the SDL. In the alternative, GSC claims damages of $41,754.86 for the continued loss of revenue since April 2016. The Defendants delivered their Statement of Defence and Counterclaim on August 25, 2017. The Defendants seek an order vacating the Notice of Lease and Notice of Security Interest registered on title. The Defendants also seek an order declaring that the Defendants are entitled to all right, title and interest in the SGE and to the monthly microFIT revenue payments. Finally, the Defendants claim damages in the amount of $50 a day from April 6, 2016 to the present.

[8] GSC brings this motion for summary judgment declaring that the SDL is valid and binding and an order granting judgment against the Defendants in the amount of $100,000 for breach of the SDL. For the reasons set out below, I grant judgment in favour of the Plaintiff. I order a reference to determine the amount of damages and pre-judgment interest to which GSC is entitled.

THE ISSUES

[9] The issues to be determined on the motion are as follows:

a. Is this an appropriate case for summary judgment?

b. Was there a breach of the SDL? and

c. If so, what damages flow from the breach?

ANALYSIS

a. Is this an appropriate case for summary judgment?

[10] This action involves the interpretation of the SDL. It is the position of both parties that given the amounts in issue the most expeditious and just determination of the action is by summary judgment.

[11] Although both parties agree to have the claim determined by summary judgment, I must be satisfied that summary judgment is appropriate: Rules of Civil Procedure, R. 20.04(2)(b). In determining whether summary judgment is appropriate, I must consider the entire evidentiary record and the framework set out in Hryniak v. Mauldin, 2014 SCC 7, at para. 81-84. The analytic approach set out in Hryniak is summarized as follows:

a. The motion judge is to first determine if there is a genuine issue requiring a trial based only on the evidence on the motion, without resorting to the enhanced fact-finding powers under R. 20.04(2.1); and

b. If there appears to be a genuine issue requiring a trial, the motion judge must determine if the need for a trial could be avoided by using the enhanced powers under R. 20.04(2.1), which allows the judge to weigh evidence, evaluate the credibility of a deponent and draw any reasonable inference from the evidence: Royal Bank of Canada v. 1643937 Ontario Inc., 2021 ONCA 98, at para. 24.

[12] The overarching rule is that summary judgment will be appropriate only if it allows for a fair process that results in a just adjudication on the merits: Royal Bank of Canada v. 1643937 Ontario Inc., at para. 25.

[13] The issue to be determined on this motion requires an interpretation of the SDL. There are no disputed facts or issues of credibility. I am of the view that the written record is sufficient to allow me to make the necessary findings of fact with the certainty required by Hyrniak. I conclude that this is an appropriate case to be determined by summary judgment.

b. Was there a breach of the SDL?

[14] The relationship of the parties is governed by the SDL. In interpreting the SDL, I begin with the text of the written agreement: Coventree v. Lloyd’s Syndicate 1221 (Millennium Syndicate), 2012 ONCA 34, at para. 16.

[15] GSC argues that there is no ambiguity or uncertainty with respect to the SDL. At paragraph 35, the landlord (the Defendants) consents to the registration of the Notice of the SDL and Notice of Security Interest with respect to the SGE, on the title of the Defendants’ property. The SDL does not provide that GSC is obligated to provide a postponement of its registered interests. There is no provision in the SDL that if GSC agrees to postpone its interest, it is required to pay for the cost of registering the postponement.

[16] The Defendants state that in executing the Acknowledge and Direction, Mr. Jelic agreed on behalf of GSC to pay the cost to register the postponement. The Acknowledgement does not include a provision that GSC will pay for the cost to register the postponement. The Defendants argue that the SDL is a net lease and that all costs associated with the operation of the SGE are to be paid by GSC. The Defendants refer to paragraph 6 of the SDL which provides that GSC is responsible for all fees, costs, and administrative tasks in connection with complying with the microFIT contract and LDC standard form connection agreement. The Defendants also rely on paragraph 14 of the SDL which provides that GSC is responsible for all costs and expenses with respect to the maintenance of the SGE.

[17] Both parties rely on paragraph 16 of the SDL, which provides that each party shall indemnify the other with respect to all expenses and costs, including reasonable legal fees arising directly or indirectly out of the indemnifying party’s material breach of any obligation of the SDL and/or arising out of the indemnifying party’s negligence. The Defendants argue that as a result of GSC’s registration of the SDL and Security Interest, they were put to the expense of registering the postponement and therefore claims indemnification of this amount. GSC takes the position that the fees were incurred because the Defendants wanted to refinance the property and not as a result of any negligence or willful breach of any obligation by GSC.

[18] I am of the view that GSC is not required to pay for the cost incurred by the Defendants to register the postponement. The postponement was at the request of the Defendants to allow for the refinancing of their property. It did not arise out of the compliance with the microFIT or LDC contract and was not related to the maintenance of the SGE. It was solely for the benefit of the Defendants. The SDL provides that GSC may register the SDL and Security Interest in the SGE on the title of the Defendants’ property. In registering its interest, GSC did not breach the SDL. There is no suggestion that GSC acted negligently. There is no basis for the Defendants to make a claim for indemnity pursuant to paragraph 16 of the SDL.

[19] The SDL does not specifically provide that there is an obligation on GSC to pay for the cost of registering the postponement. Paragraph 10 of the SDL provides that any obligation which is not expressly stated to be the responsibility of GSC shall be deemed to be the obligation of the Defendants.

[20] Although GSC is not responsible for the cost to register the postponement, Mr. Palmer advised in argument that sometime after November 2, 2016, GSC forwarded a cheque in the amount of $527.00, to reimburse the Defendants for the cost of registration, plus interest.

[21] In April 2016, the Defendants contacted the LDC and instructed it to redirect the monthly revenue payments to them. There was no basis for the Defendants to do so. GSC was not in breach of any term of the SDL. Even if GSC was in breach of the SDL, there is nothing in the SDL which permits the Defendants to redirect the payments to them. They have collected the payments since April 2016, without any legal justification. The Defendants continued to collect the payments even after GSC paid the registration fees. I find the Defendants are in breach of the SDL. GSC is entitled to summary judgment against the Defendants.

c. What damages flow from the breach?

[22] In the Statement of Claim, GSC seeks damages for the breach of the SDL in the amount of $100,000. In the alternative, GSC claims damages of $41,754.86 for the continued loss of revenue since April 2016. Appendix B to the SDL sets out a complicated formula for the calculation of the indexed contract price. In argument, counsel for GSC states that the damages owing to GSC as a result of the termination of the SDL are to be determined by this formula. There was no evidence put forward with respect to the calculation of the damages. Also, there was no evidence filed by GSC with respect to the amount the Defendants received from the LDC since April 2016. The only evidence in this regard was in an answer to an undertaking made by Mr. Palmer during his cross-examination that $30,700.68 was received from the LDC since April 2016.

[23] I am of the view that the Defendants did not have the right to divert the amounts payable by the LDC. GSC is entitled to payment of all amounts received by the Defendants from April 2016 to the present. Unfortunately, there is insufficient evidence on the motion before me to determine the amount of damages payable to GSC. Pursuant to R. 20.04(5), I grant summary judgment in favour of GSC and order a reference to determine the amount of damages and the calculation of pre-judgment interest. I remain seized with respect to the reference.

DISPOSITION

[24] I grant the following:

a. A Declaration that the SDL is valid and binding on the parties;

b. A Declaration that the Notice of Lease dated December 13, 2013 and registered on the title of 33 Louvain Drive, Brampton, L6P 1W7 is valid and binding;

c. A Declaration that the Notice of Security Interest dated October 7, 2015 and registered on the title of 33 Louvain Drive, Brampton, L6P 1W7 is valid and binding;

d. An Order granting summary judgment in favour of GSC; and

e. An Order that the issue of the amount of damages and pre-judgment interest to which GSC is entitled, shall be determined on a reference.

[25] GSC is successful on the motion and is presumptively entitled to its costs. If the parties are unable to agree on costs, GSC may deliver written costs submissions of no more than three pages in length excluding bill of costs and caselaw within 14 days of the date of this endorsement. The Defendants may deliver written submissions in response on the same basis within 14 days of receiving GSC’s costs submissions.

DATE: March 8, 2021