This article, from law firm Duhaimi Law, is authored by Christime J. Duhaime
$2 billion green energy public misfeasance case is allowed to proceed and the remedy for political decisions may indeed be in the courtroom and not the ballot box after all.
The Court of Appeal for Ontario has ruled that a prospective wind farm firm, Trillium Power Wind Corporation (“Trillium“), may proceed on its $2 billion litigation against the Ontario government over Ontario’s decision to impose a moratorium on the installation of offshore wind farms in that province. The win is a narrow one.
Trillium sued the Ministry of Natural Resources, the Ministry of Energy and the Ministry of the Environment (collectively, the “Ministries“) on numerous grounds including breach of contract, unjust enrichment, expropriation, negligent misrepresentation, misfeasance in public office and economic harm. The Court ruled that Trillium could proceed only on the claim of misfeasance in public office. And in rendering its decision, the Court for the second time, drew attention to Trillium’s confused and prolix pleadings and struck the entire Statement of Claim, allowing Trillium a chance to undertake a complete re-write of the pleadings in support of the remaining claim of public office misfeasance.
The facts of the case are as follows. Trillium found what it believed to be an ideal location for an offshore wind farm in Ontario near Main Duck Island in Lake Ontario (the “Site“).
Lake Ontario is Crown property, the ownership and use thereof which is governed by overlapping international, federal, provincial and municipal laws and unresolved claims of aboriginal rights. In order to build a wind facility in Ontario on Crown land, a proponent must obtain certain regulatory approvals which take years to obtain by virtue of the fact that such approvals require engagement with affected stakeholders and multiple government agencies at various levels, and the conclusion of a favourable environmental risk assessment. The process is expensive and time consuming. Subsequent to the environmental risk assessment, an applicant must then negotiate a long-term lease for use of the Crown land and enter into a contract to connect to the power grid and supply energy.
In 2004, Trillium applied for permission with the Ontario Ministry of Natural Resources (“MNR“) to lease the Site for a wind facility. In 2005, the MNR informed Trillium in writing that it was the applicant of record for the Site. Trillium believed that its status as the applicant of record meant that it had acquired certain legal rights, namely a contractual right to supply wind power subject to meeting certain conditions precedent.
Almost a year later, the MNR announced a first moratorium on offshore wind farm development in the province to evaluate the social and environmental impacts of offshore wind energy. A year later, the first moratorium was lifted. A year later, Trillium was reinstated as the applicant of record in respect of the Site. There were two phases involved to proceed as an applicant of record – firstly, a three-year wind farm test period, and secondly, an environmental risk assessment which could lead to the development of a wind farm if requisite approvals were obtained. The application of record status merely conferred on Trillium the right to conduct tests in respect of a prospective offshore wind facility.
In February 2011, the MRN announced another moratorium (the “Moratorium“) on offshore wind energy, cancelling offshore wind leases which included the Site.
The Superior Court of Justice Decision
In September 2011, Trillium sued the Ministries over the Moratorium, claiming, inter alia, that its “property rights were confiscated”, presumably meaning the Crown land under Lake Ontario, seeking $2.25 billion in damages for various legal claims described above, including misfeasance of public office by the then Premier of Ontario, the Minister of Energy, the Minister of Natural Resources and the Minister of the Environment. The alleged misfeasance was described as the decision to “place political expediency… over the public interest in green energy” and to issue a press release announcing the Moratorium knowing it would “destroy” financing Trillium was in the process of obtaining. With respect to the alleged breach of contract claim, Trillium’s position was that its applicant of record status was a “contract” which was breached by the Ministries, and that the Ministries intended to inflict economic harm on Trillium by imposing the Moratorium. It also alleged that the Ministries effectively expropriated its asset and property (namely, its applicant of record letter which Trillium believed was “property”, an “asset” and a “contract”) without compensation.
The Crown applied to the Court to have the action dismissed, or in the alternative, to have the claims struck on several grounds, including that there was no reasonable cause of action, there were no facts pleaded to support any of the claims, the claims were vexatious, and, in any event, the Ministries were protected by Crown immunity.
Justice Goldstein, the motions judge hearing the case, noted several defects in respect of Trillium’s pleadings, namely:
- The claim was confusing;
- The torts were difficult to understand;
- The position that in law, an “asset” was the same as “property”;
- The claims were internally inconsistent and prolix;
- The documents contradicted the facts alleged;
- Much of the pleadings were hyperbole or irrelevant, or both; and
- They alleged the Ministries breached several laws that have nothing to do with wind farms, namely the Green Energy Act, 2009, S.O. 2009 c. 12 and the Ontario Water Resources Act, R.S.O. 1990, O.40.
The Court dismissed the entire claim without allowing Trillium the right to amend its pleadings. It made no findings with respect to the issue of the vexatiousness of the allegations and held as follows with respect to the other claims:
- Intentional infliction of economic harm – this claim was dismissed because the requisite element, malice, was not sufficiently pleaded;
- Misfeasance in office – this claim was dismissed as having no chance of success because the allegations amounted to bare assertions based on mere assumptions and speculation without any facts connecting the Ministers implicated to the alleged misconduct;
- Negligent misrepresentation – this claim was dismissed because the decision to impose the Moratorium (or to refuse a wind farm permit or deny regulatory approval) is a policy decision that can be changed in accordance with public interest and thus while there is a duty of care in respect of green energy and wind farms to the public as a whole, there is no private law duty of care to a corporation or person and nor were there any facts to establish a special relationship existed between the parties. The Court noted that the type of policy decision made over the Moratorium is precisely the type that is protected from litigation and the remedy for such decisions “is found in the ballot box, not the courtroom”;
- Taking without compensation – this claim was dismissed and on this point, the Court noted that the letter informing Trillium that it was the applicant of record was neither an asset, property or, as also asserted, a contract and, parenthetically, that something in law cannot be both property and a contract – the applicant of record letter was merely a right to enter into a regulatory process. And, in any event, Trillium failed to plead an essential element of the tort, namely that if there was property involved, it was transferred from Trillium to the Ministries for its own use; and
- Breach of contract – this claim was dismissed because there were no facts to establish an offer, acceptance and consideration between the parties and more importantly, that an essential element of breach of contract is the existence of an actual contract – in this case, there was no contract and the applicant of record letter was not, as asserted, a contract.
The Court of Appeal for Ontario
Trillium appealed the decision to the Court of Appeal for Ontario. It summarily refused the appeal on all grounds except the tort of misfeasance.
With respect to misfeasance in public office tort, the Court of Appeal held that it could proceed only on the narrow allegation that the government’s decision to cancel the wind farm program in Ontario was specifically targeted at Trillium in order to cripple its financial capacity.
The Court of Appeal set aside the dismissal because, procedurally, the Rules of Court require that once a claimant, such as Trillium, asserts a claim for bad faith in the context of misfeasance in public office, and assuming the claim is at least plausible on the facts alleged, the lower court must accept those facts as true unless patently unreasonable. The facts as alleged by Trillium were not patently unreasonable and therefore, the claim was dismissed by the motions judge without justification.
Political core policy decisions are immune from review by the court for tort actions except if they are irrational or made in bad faith. The Court of Appeal held that neither was the case here. Policy decisions made on the basis of political expediency are part and parcel of the policy making process and there is nothing unlawful or in the nature of bad faith about a government taking into account public response to matters and reacting accordingly.
Therefore, Trillium was permitted to pursue its claim of misfeasance in public office but only to the extent that the decision in respect of the Moratorium was not made for political purposes but rather was made to specifically injure Trillium.
Perhaps the remedy for political decisions is indeed to be found in the courtroom, and not the ballot box after all. At least in Ontario.
Given the disorganized state of the pleadings, the entire Statement of Claim was struck and Trillium was permitted 30 days to prepare, serve and file an amended Statement of Claim.
Filed Under: Financing, News, Policy