



COURT OF APPEAL FOR ONTARIO

CITATION: Iroquois Falls Power Corporation v. Ontario
    Electricity Financial Corporation, 2016 ONCA 616

DATE: 20160805

DOCKET: M46751 (C60286, C60287, C60288, C60289, C60290, C60291)

Gillese J.A. (In Chambers)

BETWEEN

C60286

Iroquois Falls Power Corporation

C60287

Cochrane Power
    Corporation

C60288

N-R Power and Energy
    Corporation, Algonquin Power (Long Sault) Partnership and N-R Power Partnership

C60289

Kirkland Lake Power
    Corporation

C60290

Lake Superior Power
    Limited Partnership, Beaver Power Corporation, Carmichael Limited Partnership
    and Algonquin Power (Nagamami) Limited Partnership

C60291

Cardinal Power of
    Canada, L.P. and MPT Hydro L.P.

Applicants (Respondents/Responding Parties)

and

Ontario Electricity Financial Corporation

Respondent (Appellant/Moving Party)

J.D. Timothy Pinos and Emily Larose, for the appellant/moving
    party

James D.G. Douglas, for the respondents/responding parties
    Iroquois Falls Power Corporation, Cochrane Power Corporation, N-R Power and
    Energy Corporation, Algonquin Power (Long Sault) Partnership and N-R Power
    Partnership and Kirkland Lake Power Corporation

Crawford Smith and Nick Kennedy, for the respondents/responding parties
    Lake Superior Power Limited Partnership, Beaver Power Corporation, Carmichael
    Limited Partnership and Algonquin Power (Nagamami) Limited Partnership

Glenn Zacher, for the respondents/responding parties
    Cardinal Power of Canada, L.P. and MPT Hydro L.P.

Heard: July 28, 2016

ENDORSEMENT

[1]

Ontario Electricity Financial Corporation (OEFC) is a Crown agency
    whose objects include managing the former Ontario Hydros non-utility generator
    contracts.  OEFC brings this motion to stay those parts of the judgments of
    Wilton-Siegel J. dated March 12, 2015 (the Judgments) requiring it to pay
    approximately $160 million
[1]
to the responding parties, pending the outcome of its application for leave to
    appeal to the Supreme Court of Canada and, if leave is granted, a determination
    on the merits.

OVERVIEW

[2]

The responding parties to this motion are privately-owned non-utility
    generators (NUGs) who entered into power purchase agreements with the former
    Ontario Hydro between 1989 and 1994, amended by term sheets executed by the
    parties between 2002 and 2008 (PPAs).

[3]

When Ontario Hydro was restructured in 1999, OEFC became Ontario Hydros
    successor on the PPAs.

[4]

On January 1, 2011, Ontario Regulation 398/10 (the Regulation) came
    into force. After the Regulation came into force, OEFC relied on it to amend
    the formula it used to calculate the payments it made to the NUGs (the New Formula).

[5]

The New Formula resulted in decreased payments to the NUGs.  The NUGs
    commenced six separate applications, which were heard together, alleging that
    the New Formula breached the PPAs.  In their applications, the NUGs asked for orders
    requiring OEFC to resume making payments in accordance with the way in which
    they had been calculated before the Regulation came into force (the Go-Forward
    Payments) and requiring OEFC to pay them the difference between what they had
    been paid during the relevant period and what they would have been paid had
    OEFC not paid according to the New Formula (the Retroactive Payments).

[6]

Wilton-Siegel J. heard the applications and found that the New Formula did
    not comply with the PPAs. In the Judgments, he granted the applications and ordered
    OEFC to make both the Go-Forward Payments and the Retroactive Payments.

[7]

OEFC appealed to this court.

[8]

On April 19, 2016, in a unanimous decision written by Doherty J.A., this
    court dismissed OEFCs appeal (the CA Judgment).

[9]

OEFC has made the Go-Forward Payments in accordance with the Judgments
    since they were rendered.  The Retroactive Payments were automatically stayed
    until the CA Judgment was released.

[10]

On June 20, 2016, OEFC filed an application for leave to appeal the CA Judgment
    to the Supreme Court of Canada. In its leave application, OEFC proposes to raise
    the following two issues on appeal:

1. What is
    the test for determining when a judge at first instance has impermissibly
    decided a matter on the basis of a new issue and what are the procedural
    consequences thereof?

2.  How are
    the rules respecting the implication of contractual terms to be made consistent
    with the general principles of contractual interpretation and, if appropriate,
    the new approach to the implication of terms in other jurisdictions?

[11]

In the motion presently before the court, OEFC seeks an order staying those
    portions of the Judgments that oblige it to make the Retroactive Payments,
    pending the determination of its leave application and, if leave is granted, a
    determination on its appeal.   Alternatively, it asks for an order staying those
    portions of the Judgments that oblige it to make the Retroactive Payments to
    Cochrane Power Corporation, Lake Superior Power Limited Partnership, and
    Cardinal Power of Canada L.P.

[12]

The NUGs oppose the stay motion.

[13]

For the reasons that follow, the motion is dismissed.

THE TEST FOR A STAY


[14]

The test for a stay pending appeal, including a motion for leave to
    appeal to the Supreme Court of Canada, is well-established.  For OEFC to obtain
    a stay pending the outcome of its leave application, it must establish the
    following:

a)

there is a
    serious issue to be adjudicated on its proposed appeal;

b)

it will suffer
    irreparable harm if the stay is not granted; and

c)

the balance of
    convenience favours granting the stay.

[15]

These three components are interrelated in that the overriding question
    is whether the moving party has shown that it is in the interests of justice
    that the court grant a stay: see
BTR Global Opportunity Trading Ltd. v. RBC
    Dexia Investor Services Trust
, 2011 ONCA 620, 283 O.A.C. 321, at para. 16.

1.      SERIOUS ISSUE  THE MERITS OF THE LEAVE
    MOTION

[16]

Ordinarily, the threshold for demonstrating a serious issue to be tried
    is low.  However, for a stay motion pending leave to appeal to the Supreme
    Court, when considering the serious issue component of the test, the court must
    take into account the stringent leave requirements imposed by the
Supreme
    Court Act,
R.S.C. 1985, c. S-26
. 
    As Laskin J.A. explained at para. 18 of
BTR
:

[T]he criteria for granting leave to appeal to the Supreme
    Court of Canada adds another layer to this component of the test. Under s.
    40(1) of the [
Supreme Court Act
]
,
    the Supreme Court of Canada typically grants leave to appeal only in cases of
    public or national importance. Thus, a provincial appellate court judge hearing
    a motion for stay pending leave to appeal to the Supreme Court of Canada must
    take account of the stringent leave requirements in the
Supreme Court Act
.
     [Citations omitted.]

[17]

Thus, I must make a preliminary assessment of the merit of the leave application,
    taking into consideration the stringent leave requirements in the
Supreme
    Court Act
.  Having made that
    assessment,
in my view, there is little likelihood that the Supreme
    Court will grant OEFC leave to appeal. I reach this conclusion for two
    reasons.

[18]

First, the judgments have little or no precedential value.  Wilton-Siegel
    J.s interpretation of the PPAs, and the CA Judgment affirming his
    interpretation, have little or no precedential value because of the highly
    fact-specific nature of the interpretative exercise.  Doherty J.A. recognized
    this in his reasons for the CA Judgment saying, at para. 99:

It is difficult to imagine an exercise in contractual
    interpretation that would be more fact-specific than the one called for here. 
    Similarly, it is difficult to imagine a product of that interpretative process
    that could have less precedential value.

[19]

Second, this court considered and rejected the two issues that OEFC
    raised in its leave application, finding that they did not arise on the facts
    of this case.  In other words, the issues are hypothetical.  This, too, makes
    it very unlikely that leave will be granted: Henry S. Brown,
Supreme Court
    of Canada Practice 2016
(Toronto: Carswell, 2016), at p. 14.

[20]

The first issue raised on OEFCs leave application is based on its
    assertion that Wilton-Siegel J. impermissibly decided the applications on a
    fundamentally different basis than that advanced by the NUGs on the
    applications and argued by the parties at the hearing.  This court rejected
    that submission, expressly finding that Wilton-Siegel J. did not decide the
    applications on the basis of a new issue.  In paras. 65-69 of his reasons,
    Doherty J.A. states that the battle lines were clearly drawn before the
    application judge, nothing in the applications judges reasons suggest that he
    failed to appreciate the parties positions or that he saw the essentials of
    their dispute differently than the parties, and the alleged new issue tracked
    the competing positions of the parties.

[21]

The second issue raised in OEFCs leave application is based on its assertion
    that Wilton-Siegel J. implied a contractual term into the PPAs.  Again, that
    issue was raised before this court and rejected.  Doherty J.A. explained, at
    para. 118 of his reasons, that rather than implying a term, Wilton-Siegel J.
    had interpreted the language in the PPAs in light of the context in which those
    words were used by the parties.  That is, what OEFC characterized as implying a
    contractual term was simply Wilton-Siegel J. engaging in contractual interpretation
    as mandated by the Supreme Courts recent judgment in
Sattva Capital Corp.
    v. Creston Moly Corp.,
2014 SCC 53,
    [2014] 2 S.C.R. 633
.

[22]

As the issues raised on the leave application are highly fact dependent,
    appear to be hypothetical, and are likely to be of little interest to others
    beyond the litigants, it is unlikely that the Supreme Court will grant leave.

2.       IRREPARABLE HARM

[23]

OEFC says that irreparable harm of two sorts will result if the stay is
    not granted.

[24]

First, OEFC submits that making the Retroactive Payments will have a
    significant impact on the electricity ratepayers of Ontario.  It contends that
    making the Retroactive Payments would necessitate a rate adjustment in the very
    month they were paid.  This would pass significant costs onto ratepayers,
    particularly industrial customers.  Further, if OEFC obtains leave and is ultimately
    successful on appeal, OEFC submits that the adjustments for monies overpaid
    will be difficult to calculate and/or repayment might not put individual
    ratepayers back into the position they would have been but for the making of
    the Retroactive Payments.

[25]

Second, OEFC submits that if the stay is not granted and it is ultimately
    successful on appeal, it might be unable to recover the Retroactive Payments
    from the NUGs. It would have to pursue each NUG and OEFC says there is no
    assurance that the NUGs would be able to repay the funds received by way of the
    Retroactive Payments.  The prospect of non-recovery, OEFC argues, is
    particularly significant in respect of the 3 PPAs that have already expired.  (The
    expired PPAs are with Cochrane Power Corporation, Lake Superior Power Limited
    Partnership, and Cardinal Power of Canada L.P.)  Given that there is no ongoing
    commercial relationship between it and those 3 NUGs, the Retroactive Payment
    could not be recovered through set off.

[26]

I accept neither submission.

[27]

The record does not satisfy me that the full amount of the Retroactive
    Payments must come from electricity ratepayers in Ontario nor that if the amount
    of the Retroactive Payments is collected from electricity ratepayers that it
    must be done in a single month.  I have no doubt that unique challenges might
    arise if recovery takes place and if the Retroactive Payments have been funded
    by the Ontario ratepayers.  However, as I have indicated, on the record, I am
    not satisfied that the payments must come from the ratepayers.  Nor am I
    satisfied that if they do, OEFC would be unable to manage a fair rebate
    process.

[28]

OEFCs submission that recovery of the Retroactive Payments is uncertain
    (should that come to pass) also fails.  OEFC effectively admits that it could
    recover, through set off, from those NUGs with whom it has an ongoing
    contractual relationship.  As for the three NUGs in respect of which the PPAs
    have already expired, on the record before the court, OEFCs assertion of
    repayment risk is nothing more than speculation.  The NUGs are sophisticated
    commercial entities whose well-established owners have long histories of doing
    business in Ontario and, absent evidence to the contrary, there is no reason to
    expect that they would not repay any Retroactive Payments if OEFC is granted
    leave and succeeds on appeal.

3.
BALANCE OF CONVENIENCE

[29]

OEFC says that it has shown that it will suffer harm if the stay is not
    granted and that the responding parties have led no evidence of any harm they
    will suffer if the stay is granted.  In any event, OEFC says, any harm that the
    NUGs might suffer can be remedied through payment of interest on the amounts
    owing.  Thus, OEFC submits, the balance of convenience is in its favour.

[30]

As I have already explained, OEFC has not established that it will
    suffer irreparable harm if the stay is not granted.  Therefore, even if I
    accept that the NUGs will not suffer non-compensable harm, it matters not.  It
    is OEFCs burden to establish that it will suffer greater harm if the stay is
    not granted and it has failed to discharge that burden.

DISPOSITION

[31]

It will be evident from the foregoing reasons that I do not view a stay
    to be necessary in the interests of justice.  The motion is dismissed.

[32]

The parties have assured me that they can resolve the matter of costs
    among themselves. Accordingly, I make no order as to costs.

E.E.
    Gillese J.A.





[1]

This is the responding parties preliminary figure.  On OEFCs
    preliminary calculation, the payments total just under $180 million.


