Superior Court of Justice - Ontario

COURT FILE NO.: CV-20-636488

DATE: 2022-11-03

RE: Lizard Creek Power Inc., Plaintiff

AND:

Her Majesty the Queen in Right of Ontario, Minister of Natural Resources and Forestry (Ontario), John Yakbuski, Monique Rolf von Den Baumen-Clark, Marty Blake, Derek Goertz, Richard Pyrce, Robert Schryburt, Erin Nixon, Ministry of Energy (Ontario), Greg Rickford and Independent Electricity System Operator, Defendants

BEFORE: W.D. Black J.

COUNSEL: R. Douglas Elliott and Tim Phelan, for the Plaintiff

Christopher Andrew Wayland, Eunice Machado and Joanna Chan, for Her Majesty the Queen in Right of Ontario

Alan Mark and Melanie Ouanounou, for Independent Electricity System Operator

HEARD: April 28 and 29, 2022

ENDORSEMENT

Overview

[1] The plaintiff, Lizard Creek Power Inc. (“LCPI”), moves to strike out numerous paragraphs of the defence of Her Majesty the Queen in Right of Ontario (“HMQ”) on the basis of res judicata or in the alternative, abuse of process. The plaintiff alleges that HMQ is seeking to contradict and re-litigate a prior decision made by the Mining and Lands Tribunal (“MLT”) dated July 18, 2019 (the “MLT Decision”).

[2] As against Independent Electricity System Operator (“IESO”), the precise relief sought in this motion is somewhat less clear, but it is apparent that LCPI seeks to have IESO bound by the MLT Decision and to compel IESO to continue to treat as valid and subsisting a “Feed in Tariff” Contract (“FIT Contract”) between IESO’s predecessor Ontario Power Authority (“OPA”) and LCPI.

LCPI Sought Approval for a Hydroelectric Dam Under LRIA

[3] LCPI sought HMQ’s approval to build a hydroelectric dam at a specific site at Lizard Creek in the District of Algoma in Northern Ontario.

[4] The relevant approvals process is governed by the Lakes and Rivers Improvement Act, R.S.O. 1990, c. L.3 (“LRIA”).

The Approval Process and MLT Decision at Issue

[5] Pursuant to s. 14 of the LRIA, any person seeking to construct a dam must obtain various approvals. The onus is on the proponent to obtain all required information, conduct adequate studies, and submit that information in a manner that meets the statutory and regulatory requirements to HMQ’s satisfaction.

[6] For example, an application for a location approval must include, in addition to other items:

(a) A diagram showing the proposed location of the dam, any area to be flooded and the land or lands of persons other than the applicant that may be affected by the flooding; and

(b) A statement showing the purpose, type and size of the dam, whether the dam will be temporary or permanent, the quantity of water to be held, and the rate of flow of water that may be diverted.

[7] The Minister of Northern Development, Mines, Natural Resources and Forestry (“MNRF” or “the Minister”) may also require that a proponent provide any additional information that the MNRF considers pertinent. MNRF also issues guidance documents clarifying the requirements for LRIA applications.

[8] Pursuant to s. 14(7) of the LRIA, MNRF may refuse to grant location approval if of the opinion that the construction of the dam at the proposed location would be inconsistent with the purposes set out in s. 2 of the LRIA.

[9] When the Minister intends to refuse an application for location approval, the Minister must give the proponent notice under s. 11(1) of the LRIA. The person receiving such notice may request an inquiry under s. 11(3), and the Minister then causes an inquiry to be held pursuant to s. 11(4). As happened in this case, that inquiry is conducted by Inquiry Officers at the MLT.

[10] The nature and consequences of this inquiry, and specifically the MLT Decision, are at the heart of the motions before me.

[11] In connection with its application for location approval to build a dam at Lizard Creek, LCPI sought to comply with the regulatory process for the approval of its dam to supply “green” energy (an HMQ-initiated program).

[12] In December of 2017, after LCPI had spent many years and hundreds of thousands of dollars in its effort at compliance, MNRF refused to grant location approval and issued a Notice of Intention to Refuse Location Approval (“NIRLA”). As was its right under s. 11(3) of the LRIA, LCPI requested an inquiry before the MLT. The MLT ultimately concluded that HMQ’s refusal to grant location approval was not “fair, sound and/or reasonably necessary” to achieve the purposes of the LRIA.

[13] More specifically, the MLT addressed various procedural issues and three substantive issues. The substantive issues included: (1) whether certain upstream water level impacts had been properly identified; (2) whether potential upstream biological impacts had been adequately identified; and (3) whether LCPI’s consultation with the affected Indigenous community had been adequate. In the MLT’s opinion, all three requirements had been met (albeit the second only subject to LCPI conducting an “elevation survey”). Accordingly, the MLT recommended that MNRF grant location approval, on certain conditions.

[14] In terms of timing, LCPI’s request for an inquiry before the MLT was made on December 21, 2017 (and related to the state of LCPI’s approvals application as of that date). The inquiry took place over the course of eight days in December of 2018. The MLT Decision was issued on July 18, 2019.

What the MLT Reviewed and Determined

[15] HMQ emphasizes that the MLT reviewed the application as it stood at the time of the MLT inquiry, rather than the full record of LCPI’s efforts and materials throughout the regulatory process, including various exchanges between LCPI and MNRF.

[16] HMQ also maintains that it is important to note what the MLT inquiry did not address. LCPI had asked the MLT to:

(a) Recommend that the “Minister ensure that none of the persons who were involved in the decision to issue the NIRLA should participate in decisions regarding the further approval of the Project, to avoid an appearance of bias”;

(b) “[M]ake a finding that the delays in this Project from 2013 to the present were caused by MNRF and not LCPI”;

(c) Recommend that the Minister should ask the Ministry of Energy to extend the time to complete the project “to compensate for the delays by MNRF since 2013”; and

(d) Recommend that the Minister compensate LCPI for the costs of the hearing and occasioned by the alleged delay.

[17] HMQ points out that the MLT refused to make any such findings or recommendations, noting that it had no jurisdiction to do so. The MLT said:

“The mandate and role of the Inquiry Officers under the LRIA is set out at s. 11(10):

to inquire as to whether the refusal of approval or the proposed order is fair, sound, and reasonably necessary to achieve the purposes of the LRIA. The focus of the Inquiry is the decision to refuse location approval. On a plain reading of the legislative provision, s. 11(10) confines an inquiry to the question of only whether or not the decision to refuse the approval is fair, sound and reasonably necessary to achieve the purposes of the LRIA. Therefore the Inquiry Officers agree with MNRF that they do not possess the jurisdiction to make [the recommendations] requested by LCPI.”

[18] Similarly, the MLT declined to recommend that the MNRF pay LCPI’s costs, again noting that such a recommendation was “also beyond their jurisdiction”.

Dispute Over the Effect of the MLT Decision

[19] I will step back to survey the landscape on which the motion before me plays out.

[20] HMQ says that the MLT Decision was properly limited to assessing the state of LCPI’s application in the form it was in as of 2017. Thus, it says that the MLT could not have considered whether earlier incarnations of LCPI’s application were adequate and should have been approved. The MLT did not assess the issue of alleged bias on the part of MNRF personnel; nor did it determine whether there was undue delay on the part of the MNRF and if so, whether such delay resulted from negligence or misfeasance by HMQ or was in fact caused by LCPI. HMQ argues that these issues did not arise and in any event were outside MLT’s jurisdiction to adjudicate.

[21] Beyond that, HMQ says that the alleged “decision” of the MLT was in reality a report to MNRF containing recommendations that MNRF was at liberty, at its sole discretion, to accept in whole or in part or to reject entirely. The MLT Decision, HMQ maintains, was not a “final decision” that could give rise to res judicata.

[22] LCPI, for its part, argues that given the MLT’s power to make findings of fact, the determinations by MLT are binding. It argues that the MLT’s ultimate conclusion — that the proposed refusal by MNRF was not fair, sound or reasonably necessary to achieve the purposes of the LRIA — encompasses the entire history of dealings between LCPI and MNRF with respect to the proposed dam and precludes further litigation of issues arising in that setting.

LCPI’s Attack on HMQ’s Defence and HMQ’s General Response

[23] Against that backdrop, I turn to the provisions of HMQ’s statement of defence that LCPI seeks to strike.

[24] By way of overarching explanation and justification for the contents of its defence, HMQ observes that in the statement of claim, LCPI focuses on delay. HMQ characterizes the claim as follows:

“[LCPI] alleges, in essence, that MNRF took too long to consider its various applications, that the delay was caused by negligence or by misfeasance, and that it was as a result of that delay that LCPI could not meet the deadline set out in its Feed‑In-Tariff (“FIT”) contract.”

[25] In my view, this characterization of the claim is generally apt. LCPI’s claim is peppered with specific allegations of conduct by MNRF and its employees that LCPI alleges lacked diligence, was undertaken in bad faith, and resulted in numerous delays, causing LCPI to miss deadlines.

[26] For example, paragraph 116 of LCPI’s statement of claim, which is fairly representative of many of LCPI’s allegations, claims that LCPI suffered damages “as a direct result of MNRF and its employees’ negligence and delays that resulted from bad faith…and failure to take reasonable care in assessing LCPI’s project”.

[27] “In short”, says HMQ, “the claim is not based on the simple allegation that the Minister should have granted location approval in 2017, or that he should not have imposed the conditions that he did in 2019. It is based on how Ministry personnel responded to LCPI’s applications over the course of many years — and specifically upon whether or not they acted with due diligence and without undue delay”. HMQ notes, further, that “the inquiry officers [the MLT] did not address any of those issues”.

[28] HMQ’s position is that its statement of defence fairly and factually responds to the many allegations forming the essence of LCPI’s claim that MNRF acted negligently and in bad faith, thereby causing extensive and unwarranted delays. In essence, HMQ’s defence is that MNRF personnel acted in good faith and exercised due diligence throughout the process. Moreover, HMQ pleads that MNRF cannot be faulted in law for “failing” to “follow” the MLT Decision because the Minister was fully entitled to act as he did pursuant to s. 11(14) of the LRIA.

The Impugned Paragraphs of HMQ’s Defence

[29] The materials filed by LCPI on the motion indicated that it sought to strike paragraphs 5, 12, 13-18, 22-24 and 37-43 of HMQ’s statement of defence.

[30] Before and during argument, LCPI’s counsel relinquished its attack on some of the subject paragraphs. For example, while all of paragraphs 13-18 were among the original list of paragraphs LCPI sought to strike, in argument it pursued only paragraphs 14 and (perhaps) 18 from this section of the statement of defence.

[31] Inasmuch as there are a manageable number of paragraphs in play, I will deal with them below. The exercise of reviewing the individual paragraphs in context is instructive in relation to the overarching legal arguments, which I will address later. In some cases I will address some of these paragraphs out of order so as to place them in their proper context.

Analysis of Impugned Paragraphs

A. Paragraph 14

[32] Paragraph 14 of HMQ’s defence says:

“CCL had previously worked on constructing dams. However, neither CCL, LCPI, nor Roberts had any experience as a proponent seeking all of the necessary approvals to build a hydroelectric project.”

[33] As I understand LCPI’s submission, it argues that, since LCPI had engaged experts to assist it in the approvals process, and since the MLT found that HMQ’s refusal to grant location approval was not fair, sound and/or reasonably necessary to achieve the purposes of the LRIA, the proposition about LCPI and Roberts’ lack of experience on hydroelectric projects is somehow at odds with and/or seeks to undermine the MLT’s findings.

[34] I do not agree. I read paragraph 14 as simply stating that the proponents lacked experience, and that their lack of experience (as it plays out more particularly in other paragraphs of the defence) contributed to the delays experienced in the approvals process. Whether the proponents in fact lacked relevant experience and whether this contributed to any delays remains to be determined at trial. However, I see nothing improper about the allegation, particularly in the context of responding to a claim in which the plaintiff clearly attributes the delay to the conduct of the defendants.

B. Paragraph 18

[35] Although the attack on paragraph 18 remains in LCPI’s factum, LCPI did not appear to pursue it in argument. To the extent paragraph 18 remains under attack, I would reject that attack. The paragraph says:

“On July 2, 2009, MNRF provided the plaintiff with formal AOR [Applicant of Record] status.”

[36] I can only conceive of this as a statement of historical fact relevant to the narrative.

C. Paragraph 22

[37] LCPI abandoned in argument the request to strike paragraph 22. It emphasized that it does not accept the contents of that paragraph (and certain other paragraphs it elected not to pursue) as true, but agrees that the paragraph does not subvert the MLT’s findings.

D. Paragraph 23

[38] Paragraph 23 reads as follows:

“By December 2009, the plaintiff’s Project Description was no longer consistent with the original POD [plan of development] the plaintiff had submitted to obtain AOR status. Specifically, the new project description no longer cited Lillie Lakes as being impacted by the dam. MNRF requested an explanation for the difference, including why the data the plaintiff relied on had changed and why previously identified water bodies were no longer considered. This issue would become significant later in the approvals process, as the plaintiff never resolved the change to MNRF’s satisfaction.”

[39] LCPI clarified in argument that it only takes issue with the last sentence of paragraph 23. More specifically, LCPI argues that the MLT decision shows that MNRF was wrong in never being satisfied with LCPI’s explanations for the change.

[40] LCPI may well demonstrate at trial that MNRF got it wrong on this issue in terms of the state of the application as of 2017. The paragraphs of the MLT Decision that LCPI references in support of its position suggest that in the opinion of these MLT Inquiry Officers the remaining MNRF concerns were misplaced, at least as of 2017-2018. Even so, the passage in issue fairly reflects MNRF’s position on that issue during the approvals process.

[41] Moreover, the impugned paragraph encompasses more than a suggestion that MNRF had concerns as of 2017. On its face it relates to a change in LCPI’s project description in 2009 as well as a change at that time in the data on which LCPI relied. Paragraph 23 suggests that this change became significant at some unspecified point later in the approvals process and was never resolved to MNRF’s satisfaction.

[42] Again, the opinion of the MLT appears to have differed from that of the MNRF as of the MLT hearing in 2018. That said, in the context of allegations about delay and a dispute about responsibility for that delay, the pleading that LCPI changed its position about certain impacts of the project and the data on which it relied nine years before the MLT hearing is not simply a conclusion apparently at odds with the MLT’s opinion. Rather, it also provides a possible explanation for snags in the approvals process.

[43] LCPI’s stated fear on this motion is that, by asserting positions at odds with the MLT opinions articulated in the MLT Decision, HMQ’s pleading will require relitigating issues already decided — LCPI says finally — by the MLT. However, having alleged that HMQ/MNRF unreasonably and negligently delayed the entire approvals process, LCPI’s pleading necessarily requires an answer from HMQ with respect to the alleged delays. LCPI cannot make broad allegations about the approval process, and then say that HMQ’s response is necessarily limited to the status and merits of the application as of 2017 and must be struck if HMQ alleges any conclusions at odds with the MLT Decision.

[44] The MLT Decision expressly does not deal with issues of delay nor the state of LCPI’s application at any point prior to the hearing in 2017. By alleging overall delay on the part of HMQ, LCPI’s claim not only opens the door to, but requires, a response to those allegations. Returning to paragraph 23, it is clear and explicit that the MLT did not consider the alleged change in LCPI’s application in 2009, nor how that change or HMQ’s reaction to it caused a delay in the approval process.

E. Paragraph 24

[45] Paragraph 24 of HMQ’s defence says:

“In May 2010, the plaintiff submitted a preliminary draft of the EA [Environmental Assessment] report for MNRF’s review. On July 9, 2010, MNRF provided feedback on the plaintiff’s draft EA report. MNRF staff identified significant issues, in particular with respect to the flow information, mapping of the headpond, and the Zone of Influence (“ZOI”). The ZOI is the area where changes to the magnitude, timing, frequency, and duration of water levels may impact the physical, chemical and biological characteristics of an ecosystem.”

[46] In arguing that paragraph 24 should be struck, LCPI points to certain paragraphs of the MLT Decision that discuss hydrology, hydraulic modeling, and water levels. LCPI reiterates the MLT’s overall view (as articulated in paragraph 124 of its Decision) “that the intended refusal of the Application is not fair, sound and reasonably necessary to achieve the purposes of the LRIA”.

[47] HMQ’s response is that paragraph 24 includes the fact that HMQ provided feedback to the plaintiff on particular issues with the EA report as of July 9, 2010. It notes, fairly in my view, that the MLT Decision relates to the contents of the application as of 2017 and does not speak to the state of LCPI’s application in July of 2010.

[48] Again, in the context of responding to a claim that alleges HMQ unreasonably and negligently held up the process throughout, I do not see how HMQ can be precluded from asserting facts about events during that process. There may be evidence at trial about whether the feedback MNRF provided to LCPI about its EA report in 2010 was reasonable. However, the fact that the MLT reached certain conclusions about the state of LCPI’s application seven years later has no bearing on, and expressly does not address, the reasonableness of the 2010 feedback to which paragraph 24 refers.

F. Paragraphs 37-38

[49] Paragraphs 37 and 38 of HMQ’s statement of defence state:

“37. In October of 2013, the plaintiff submitted its first Application for Location Approval. In November 2013, MNRF met with the plaintiff and its consultants to discuss MNRF’s preliminary review of the application. The application submission was incomplete for various reasons, including missing survey and hydrological data. This and other information was required to satisfy the Minister that the construction of the dam at the proposed location would coincide with the purposes of the LRIA.

38. At that time, MNRF could have refused the application pursuant to s. 14(7) of the LRIA. Instead, and in an effort to continue to assist this new proponent, MNRF elected not to issue a final determination but to request further information, as it may do pursuant to s. 14(4) of the LRIA.”

[50] HMQ argues that, again, paragraphs 37-38 of its defence do not contradict the MLT Decision. The MLT generally found the information to be sufficient for the purposes of the LRIA as at the time of the hearing. In the impugned paragraphs, HMQ is merely pleading details of the timeline on which MNRF received various iterations of LCPI’s approval applications and MNRF’s position and requests for additional information at specified times.

[51] In effect, HMQ argues, LCPI is taking the position that the adequacy of LCPI’s earlier versions of its proposal and the materials on which it relied from time to time are irrelevant because the MLT found that the application before it in 2018 was sufficient. However, LCPI nonetheless impugns HMQ’s conduct throughout the process and blames it for the delay, which means that the decisions HMQ made throughout this timeline, including its responses to the LCPI application and the materials on which it relied at various points, have been put in issue and are relevant in response.

[52] I agree. LCPI cannot have its cake and eat it too. If it wishes to allege that HMQ unreasonably delayed the approvals process, it cannot preclude HMQ from explaining its actions at various junctures in that process.

G. Paragraph 39

[53] In paragraph 39 of its defence, HMQ says:

“The plaintiff submitted a second application for Location Approval in December 2015. That application was again incomplete for many of the same reasons. Again, MNRF elected to request additional information, instead of refusing the application.”

[54] This paragraph does not purport to contradict or undermine the MLT Decision. Rather, it simply recounts events during the earlier course of the approvals process — events expressly not considered in the MLT Decision but potentially relevant to LCPI’s allegations of delay.

H. Paragraph 40

[55] To similar effect, paragraph 40 of HMQ’s defence says:

“The plaintiff submitted its third application for Location Approval on May 30, 2017. On this occasion the plaintiff requested that the Minister either approve of or refuse its application. Despite having provided its ‘final’ application, the plaintiff continued to submit further documents and information for MNRF’s review up to the time the decision was made to refuse approval.”

[56] Again I cannot read this paragraph as anything other than a factual account of relevant events in the chronology. I do not see how the fact that LCPI’s third application was submitted on May 30, 2017 and that LCPI continued to submit documents and information thereafter (even if not accepted as fact at this stage) contradicts anything in the MLT Decision. On the other hand, I can readily see how it is relevant to the issues of alleged delay and misfeasance on the part of MNRF.

I. Paragraphs 41-42

[57] Paragraphs 41-42 state:

“41. In its third Location Approval application, the plaintiff still failed to address MNRF’s concerns about the plaintiff’s underlying survey and hydrology data. In particular, the plaintiff had not obtained new survey data, and instead continued to rely on the existing flawed data in revisions to its Location Approval application. Accordingly, the plaintiff’s Location Approval application failed to contain an adequate assessment of the potential impacts of the project and did not contain data the Minister required to be satisfied that the project coincided with the purposes of the LRIA.

42. From November 2013 to December 2017, MNRF dedicated a significant amount of time and effort through in-person meetings, phone calls, written feedback, and comments to advise the plaintiff of the outstanding information required to complete its Location Approval application. Despite MNRF’s efforts, the plaintiff failed to provide proper survey and hydrology data and other information required to satisfy the Minister that the construction of the dam at the proposed location would coincide with the purposes of the LRIA.”

[58] HMQ argues that these paragraphs speak to MNRF’s state of mind in assessing the plaintiff’s multiple location approval applications and underline the efforts of MNRF staff to help LCPI satisfy the requirements for location approval. More specifically, these paragraphs mention the assessments, information and data that the plaintiff failed to provide at MNRF’s request.

[59] On their face, these two paragraphs do relate to LCPI’s primary concern that, by contradicting the MLT’s findings, HMQ is seeking to relitigate matters that the MLT has already put to rest.

[60] Leaving aside the argument about the appropriate characterization and effect of the MLT’s conclusions, to which I will come below, it is not clear that the MLT made findings clearly at odds with these two paragraphs in particular.

[61] Paragraphs 59, 61, 63, 71 and 73-75 of the MLT Decision, which are among the paragraphs LCPI says are being undermined and contradicted by paragraphs 41-42 of HMQ’s defence, fall short of an unequivocal conclusion that LCPI’s application was satisfactory on these fronts. Rather, these paragraphs of the MLT Decision in part provide the genesis of the subsequent requirement for conditions attaching to the approval.

[62] While apparently concluding that overall the materials in LCPI’s application were sufficient to overcome MNRF’s proposed refusal, MLT was clearly also concerned about shortcomings in these aspects of the application.

[63] For example, in paragraphs 61 and 63 of its decision, the MLT said:

“61. In the view of the Inquiry Officers, there has not been a thorough and thoughtful assessment of LCPI’s hydraulic model due to the parties wrangling over the above-noted issues instead of cooperating on a proper review. As a result, this aspect of the Project regulatory review has not been properly accomplished.

63. …[I]n the Inquiry Officers’ view, LCPI did not adequately acknowledge that the water level in the upper lakes was an integral part of the Project design, even though the fluctuation of water levels in the upper lakes due to the Project was predicted to be within the natural range of fluctuation of these lakes, nor did LCPI appropriately delineate the eten of the upper lakes, although this flaw did not affect the hydraulic model results.”

[64] The MLT went on to opine that the potential impacts of the water levels upstream had been sufficiently identified to ensure the Project would achieve the purposes of the LRIA. However, the MLT qualified its opinion as follows in paragraph 75 of the decision:

“However, as has been described earlier, a peer review of the hydraulic model has not been undertaken to date. The Inquiry Officers, therefore, recommend that the Minister include conditions in that regard, as set out further in paragraph 125 below. The Inquiry Officers recommend that the hydraulic model be updated with the water level data that has been collected since the last model iteration and a peer review be conducted prior to the Plans and Specifications stage.”

[65] The MLT Decision on these points is not an unequivocal endorsement of LCPI’s application. Against this backdrop, HMQ’s stated concerns in paragraphs 41-42 of the defence cannot be seen as an unwarranted contradiction of immutable findings. Clearly the MLT had certain reservations about these items, leading to its recommendation of conditions.

J. Paragraph 43

[66] Finally, in paragraph 43 of the defence, HMQ states:

“On December 16, 2017, MNRF issued its Notice of Intention to Refuse Location Approval. In its Notice, MNRF outlined its reasons for refusing Location Approval, including that the Location Approval application failed to properly show the areas to be flooded, that the plaintiff submitted inconsistent data during the EA and Location Approval stages, and that insufficient hydrological data was provided to demonstrate that construction of the project at the proposed location would coincide with the purposes of the LRIA.”

[67] Again, I do not read this paragraph as anything more than a statement of the timing of the NIRLA and a summary of the reasons as to why the Minister intended to refuse location approval.

K. Paragraphs 5 and 12

[68] Paragraph 5 reads:

“As will be set out in greater detail below, the principal reason that the plaintiff was unable to obtain approvals necessary to construct its intended project was its lack of experience in the field of hydroelectric projects and its inability or refusal to provide the kind of information required for a successful approvals process.”

[69] HMQ argues that in the context of allegations of delay and misfeasance, it is fair and reasonable to assert that the plaintiff’s lack of experience in this domain caused or contributed to delay, and that some of that delay resulted from the plaintiff’s failure to provide necessary information during the course of the approvals process. I agree.

[70] Further, while the MLT ultimately found that the information submitted by the plaintiff was sufficient, as of 2017, to recommend Location Approval, the MLT nonetheless recommended that the Minister include conditions in the approval, requiring the plaintiff to provide a peer review of the hydraulic model and an elevation survey of the natural reservoir. MNRF had previously requested this information and LCPI had not provided it. In my view, pleading those events is fair and reasonable in responding to allegations of delay and negligence.

[71] Paragraph 12 of HMQ’s defence says:

“Unfortunately, and despite extensive efforts by MNRF staff to guide the plaintiff through the approvals process, the plaintiff’s inexperience led to difficulties at every stage of the process. The plaintiff was unable or unwilling to adequately respond to and address MNRF questions and concerns. This failure resulted in MNRF having to review multiple iterations of the same documents, which often contained the same deficiencies as well as conflicting and/or erroneous information.”

[72] Again, in my view, this paragraph is fairly read as describing HMQ’s explanation and position as to delays throughout the process, and states alleged facts responding to the claims that it unduly and inappropriately delayed the process.

[73] In this regard, paragraph 58 of the MLT Decision says:

“The Inquiry Officers have undertaken a comprehensive and thorough review of the evidence, including the extensive technical reports, and submissions provided by LCPI and MNRF during the hearing process, in order to come to the findings on Sub-issue 2. The Inquiry Officers find that a significant obstacle in the interactions between the parties has been many instances of unclear reporting and communication, apparent in the extensive correspondence provided.”

[74] Paragraph 60 of the MLT Decision continues:

“LCPI takes the position that its approach was appropriate and scientifically defensible; however, LCPI was not able to effectively communicate the validity of its approach in a manner that could easily be reviewed by MNRF from a regulatory perspective, bringing the parties to this hearing.”

[75] Given these observations, the impugned paragraph of HMQ’s pleading not only sets out HMQ’s response to the allegations of undue delay, but it does not seem at odds with the MLT Inquiry Officers’ findings on this front.

Conclusion on Impugned Paragraphs

[76] For the reasons set out above, with respect to the impugned paragraphs of HMQ’s defence that remained at issue before me, I find there is no convincing basis to strike any of them. While, as LCPI argues, the dispute about the exchange and sufficiency of information at various points in the approvals process may elongate the trial, that is a predictable byproduct of LCPI’s allegations of delay and negligence against HMQ. In my view LCPI cannot reasonably complain about that.

No Basis for Res Judicata or Abuse of Process

[77] In light of these conclusions, I need not delve deeply into LCPI’s argument that HMQ’s pleading is impermissible on the basis of res judicata and/or abuse of process. As a factual matter, I have found that the impugned pleadings should not be struck, largely because they respond to LCPI’s allegations of delay and misfeasance and because they relate, for the most part, to junctures during the course of the approvals process as opposed to the state of LCPI’s application before the MLT. Having found that those paragraphs do not contradict findings of the MLT, there is no basis for me to conclude that they run afoul of res judicata or constitute an abuse of process, since the fundamental premise required for the operation of those doctrines is therefore lacking.

MLT Decision Not a Final Decision

[78] While these findings dispose of the motion as against HMQ, I should also note that in my view, the MLT Decision is not in fact a “final decision” for purposes of a res judicata or issue estoppel analysis in any event.

[79] In order to be a final judicial decision, the decision must dispose, once and for all, of the question being decided (Donald J. Lange, The Doctrine of Res Judicata in Canada, 5th ed. (Toronto: LexisNexis Canada, 2021)).

[80] Conversely, a decision which defers the final decision to another decision-maker is not a final decision for the purpose of issue estoppel (Richmond Hill Naturalists v. Corsica Developments Inc., 2013 ONSC 7894, at paragraphs 35-36).

[81] HMQ maintains that the Inquiry Officers who sat on the MLT do not have final decision-making powers. Section 11(11) of the LRIA provides that after conducting an inquiry, the Inquiry Officers are to “report to the Minister” setting out their findings of fact, opinions on the merits and recommendations. The Minister is then to “consider” the report. Having done so, under subsection 11(14) “in the case of a request for approval”, the Minister may “grant the approval requested or a modified version of it or refuse to grant the approval”.

[82] Thus, only the Minister is empowered to decide on the approval. The Inquiry Officers are entitled to make recommendations that the Minister is to consider. The Minister then has discretion to accept the recommendations in whole or in part or to reject them.

[83] The decision of the Divisional Court in Richmond Hill Naturalists provides considerable support for HMQ’s position that the MLT Decision was not a final judicial decision. In that case, the Conservation Review Board (“CRB”) made findings about the cultural heritage value of a particular piece of land. Its views were found not to be final or binding at a subsequent Ontario Municipal Board (“OMB”) hearing on the issue of whether to reduce the amount of land designated for cultural heritage protection.

[84] After hearing evidence, the CRB was statutorily required to issue a report “setting out findings of fact”, which could include non-binding recommendations. Once the report was completed, the town had the statutory discretion to pass a by-law or to withdraw its Notice of Intention to Designate. The town’s decision, not the CRB’s report, was deemed “final” under the Ontario Heritage Act, R.S.O. 1990, c. O.18.

[85] In the context of a developer application to the town and a subsequent appeal to the OMB, the OMB found that the CRB is “not a decision-making body, but only a reporting and recommending body” and that its determinations are “not binding on the OMB”.

[86] Seeking leave to appeal before the Divisional Court, the moving party made many of the same arguments that LCPI makes on this motion. They argued that the CRB had made a final determination of the boundaries of the cultural heritage landscape, that the OMB failed to give consideration to the CRB’s factual findings and decision, and that the OMB’s decision was therefore an abuse of process and issue estoppel applied.

[87] The Divisional Court found that the CRB’s recommendation was neither judicial nor final, and refused to apply issue estoppel. The Court wrote, at paragraph 35:

“…On the issue of whether the CRB recommendation was judicial, I note that the hearing before the CRB was adversarial and took place over seven days. A number of witnesses were called and documents produced. However, the culmination of the hearing was a written report which was sent to the Town’s counsel setting out findings and recommendations about whether the property should be designated a cultural heritage landscape. The role played by the CRB was advisory only. The recommendation was considered by council which passed the by-law designating the cultural heritage landscape. The Town could have accepted or rejected the recommendation of the CRB. The recommendation was not final.”

[88] In my view, this decision, based on a nearly identical statutory scheme allowing an advisory body to make recommendations that are neither final nor binding on the ultimate decision-maker, is highly persuasive in the situation before me. I find that the MLT Decision is not a final or binding decision.

Argument that Findings of Fact Nonetheless Binding

[89] LCPI argues that notwithstanding this statutory structure (pursuant to which, it agrees, the Minister may disregard the MLT’s recommendations), the Minister is nonetheless bound by the MLT’s findings of fact.

[90] In this regard, I note that LCPI cites no authority directly on point, and that in Richmond Hill Naturalists the CRB, like the MLT in the case before me, was tasked with finding facts. Despite that function, it is clear from Richmond Hill Naturalists that OMB was not bound by the CRB’s factual findings and could accept or reject those aspects of the CRB decision as well.

[91] Richmond Hill Naturalists is also instructive in determining the nature of the hearings before the respective tribunals. The Divisional Court found that, although both the CRB and the OMB had considered whether the property ought to be culturally protected, the two administrative bodies had different goals: the first, to conserve cultural heritage landscapes, and the second, to achieve good land use planning.

[92] In the case before me, it was outside the scope of the MLT’s jurisdiction, as the MLT expressly found, to make findings of fact on the issue of delay. There is therefore no reasonable expectation that the MLT’s non-binding report and recommendations, dealing with a different issue, would be determinative of this civil action for damages.

The Motion as Against IESO

[93] I turn to the aspect of the motion as against IESO.

[94] LCPI alleges that IESO improperly refused to extend and/or amend LCPI’s FIT Contract when it failed to meet the prescribed Commercial Operation Date, even though the delays were caused by MNRF.

[95] LCPI says that IESO had stated it would assess any additional information provided by LCPI after the MLT had rendered its decision. However, IESO failed to give the MLT Decision sufficient consideration, and although IESO had the power to extend the FIT Contract, it refused to do so.

[96] LCPI alleges that IESO was at all material times acting under the direction of HMQ and the Ministry of Energy and continues to act in concert with HMQ.

[97] Finally, LCPI notes that pursuant to ss. 11(7) and 11(8) of the LRIA, “any person whom the inquiry officer determines has a direct interest and should be added as a party” can be added as a party to an MLT hearing. LCPI alleges that IESO had a direct interest in the MLT hearing in question (as a result of being a party to the FIT Contract with LCPI). Since IESO made no attempt to be added as a party, it is bound by the MLT Decision. Since the MLT Decision confirmed that location approval ought to have been granted earlier, IESO’s refusal to extend the Commercial Operation Date amounts to rejecting the MLT Decision when it was bound to follow it.

[98] In my view, there are some significant problems with this theory of liability as against IESO. More importantly, while LCPI can pursue these allegations at trial, it is not clear to me how they fit within the confines of this motion and what relief LCPI seeks from IESO. Other than passing references to the notion that IESO should be “bound” by the MLT Decision, there is virtually no elucidation in LCPI’s materials of the relief sought from IESO in this motion.

IESO’s Responses

[99] In response, IESO notes that the main potential issue in this case — the cause or reason for any delay in the plaintiff obtaining location approval — was not an issue before the MLT. As set out above, I agree with that observation.

[100] Second, IESO maintains that it was not a party to the MLT Proceeding, had no interest in those proceedings, and is not an agent or privy of HMQ. Therefore, IESO is not bound by the MLT Decision in any fashion, let alone in a fashion relevant to this motion.

[101] IESO has no responsibility over either the environmental approvals process or the licensing process under the LRIA. It says that it is named as a party in this case because in April of 2010 the OPA entered into a FIT Contract with LCPI. Under the FIT Contract, LCPI was obliged to bring its facility into commercial operation by April 22, 2018 (referred to above as the Commercial Operation Date).

[102] The FIT Contract expressly provides that the project proponent is solely responsible for obtaining all necessary site and environmental approvals. The parties to the FIT Contract are not partners nor joint venturers, and IESO has no right or ability to participate in or influence the plaintiff’s applications for the required approvals. In fact, the IESO has no any authority under any legislation with respect to the approvals in issue before the MLT.

[103] And while the IESO acknowledges that the Minister has general authority to issue directives in respect of the FIT program, there is no evidence to suggest that the Minister issued any directive with respect to the plaintiff’s FIT Contract in particular, including with respect to the MLT Proceeding.

[104] IESO points out, compellingly in my opinion, that despite the plaintiff being given the opportunity to identify additional participants that it thought had a direct interest in the MLT Proceeding, and despite in fact identifying one such participant (the Ontario Windpower Association), at no point did the plaintiff, MNRF, or the Inquiry Officers of the MLT suggest that IESO should be either a party or even a witness to the MLT Proceeding.

[105] The purpose of the MLT Proceeding was to determine “whether the intended refusal of location approval was fair, sound and reasonable”. IESO notes that it is not its practice to be engaged in a project’s approvals process, as the supplier (here LCPI) bears the exclusive responsibility under the FIT Contract to obtain all necessary approvals. IESO has no expertise or knowledge relevant to the question of whether it was reasonable for the Minister to refuse to grant location approval.

[106] In short, IESO had no interest in the MLT Proceeding, and no one suggested that it did at the relevant time.

[107] As noted, LCPI takes no issue with IESO’s statement of defence. LCPI also acknowledges in its factum that IESO is not challenging the findings of the MLT.

[108] The relief LCPI seeks against IESO is a declaration — as IESO puts it, “in the air and for no apparent purpose at this stage of proceedings” — that the MLT Decision is binding on IESO. IESO argues that there is no authority in the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for such a motion and that LCPI’s motion as against IESO should be struck on that basis alone.

[109] In terms of the necessary foundation for an argument based on res judicata or abuse of process, IESO maintains that this case is not at all like the typical example in which a party has a sufficient interest and should have participated in an earlier proceeding, but instead chose to lie in wait and let another party take up the battle on its behalf (see, for example, Bank of Montreal v. Mitchell (1997), 1997 12306 (ON SC), 143 D.L.R. (4th) 697 (S.C.), aff’d 1997 14484 (ON CA), 151 D.L.R. (4th) 574 (C.A.)). Here, there was no suggestion at the relevant time, nor is there any basis to suggest now, that IESO had a direct interest in the MLT Proceeding or ought to have participated in it.

[110] Furthermore, in order for a party to a subsequent proceeding to be found to be a privy of a party in the earlier proceeding, the same question must be involved in both proceedings. In this case the subject of the MLT Proceeding was whether the MNRF’s refusal to grant location approval was fair and reasonable. The subject of the claim in which LCPI brings its motion is whether IESO breached the FIT Contract or acted in bad faith in denying the plaintiff’s force majeure claim and terminating the FIT Contract. This question, IESO argues, is “entirely different and was expressly outside of the MLT’s jurisdiction”.

[111] This characterization of the circumstances, raised by IESO relative to the requirement of privity for purposes of res judicata, also addresses any potential concerns about abuse of process.

[112] The plaintiff has not sought to strike any portions of IESO’s defence as being an attempt to relitigate the issues raised at the MLT Proceeding. Given the different issues raised in the MLT Proceeding and this claim, IESO cannot be said to be re-litigating a claim which has already been determined. Accordingly, the policy rationale underlying the doctrine of abuse of process — that there should be an end to litigation and no party should be twice vexed by the same cause — has no application to IESO and its defence here.

Conclusions on Motion Against IESO

[113] In the circumstances, the motion as against IESO is also dismissed.

Costs

[114] Given the outcome, HMQ and IESO are entitled to their costs of this motion.

[115] It does not appear that any party has filed a costs outline. I direct the parties to attempt to resolve the issue of costs. If they are unable to do so within 20 days from the date of this decision, HMQ and IESO may provide written submissions, not to exceed three pages in length and together with their respective costs outlines, within seven days thereafter. LCPI may provide responding submissions, not to exceed five pages in length (since it may be dealing with two different sets of costs) within ten days after receiving those submissions.

[116] I wish to thank counsel for the thorough and professional way in which this motion was presented and argued.

W.D. Black J.

Date: November 3, 2022