



COURT OF APPEAL FOR ONTARIO

CITATION: Alectra Utilities Corporation v. Solar Power
    Network Inc., 2019 ONCA 332

DATE: 20190424

DOCKET: M50366 (C65868)

Paciocco J.A. (Motion Judge)

BETWEEN

Alectra Utilities Corporation

Applicant (Respondent/Moving Party)

and

Solar Power Network Inc.

Respondent (Appellant/Responding Party)

Gavin MacKenzie and Brooke MacKenzie, for the moving
    party

Nathaniel Read-Ellis, for the responding party

Heard: April 23, 2019


[1]

Alectra Utilities Corporation (Alectra) intends to seek leave of the
    Supreme Court of Canada to appeal this courts decision of April 2, 2019,
Alectra
    Utilities Corporation v. Solar Power Network
, 2019 ONCA 254. Solar Power
    Network (SPN) is currently attempting to collect on the arbitrators damages
    award of almost $14,000,000 inclusive of costs and interest that was reinstated
    in that decision. Alectra is therefore applying, on an urgent basis, for a stay
    of the execution of the order of this court pending disposition of Alectras leave
    to appeal application.

[2]

For the reasons elaborated upon in this decision, I deny Alectras
    application. Simply put, while I am persuaded that Alectra can meet the serious
    question to be tried threshold, and that there is a foundation for finding that
    Alectra will suffer some irreparable harm if a stay is not ordered, it is not
    in the interests of justice to order the stay. The case in favour of the stay
    is not compelling, and the balance of convenience strongly favours its denial.

THE BACKGROUND FACTS

[3]

On October 5, 2015, Alectra, a municipally owned utilities company, and
    SPN, a renewable energy company, entered into a Purchasing and Management
    Agreement (the PAMA) relating to Feed in Tariff Program contracts (FIT
    contracts) awarded by the Government of Ontario. In simple terms, SPN would
    provide and operate solar projects on leased sites for each FIT contract
    secured. Alectra would provide the financing.

[4]

On June 29, 2016, 69 FIT contracts were awarded for the PAMA sites. On
    September 14, 2016, Alectra purported to terminate the partnership with respect
    to all 69 sites. There is some suggestion that this may have been done to
    pressure SPN into agreeing to sell its interest in the projects to Alectra.

[5]

SPN invoked the PAMAs arbitration clause, challenging Alectras decision
    to terminate. The arbitrator found that Alectra had not exercised its
    discretion to terminate the partnership in good faith, and awarded $12,337,655
    in damages for lost profits, plus interest and costs.

[6]

Alectra brought an application to set aside the arbitrators award,
    relying on s. 46(1)3 of the
Arbitration Act, 1991
, S.O. 1991, c. 17.
    Alectra claimed that the arbitrators damages award was beyond the scope of
    the agreement.

[7]

The application judge set aside the arbitrators decision. He found that
    although the arbitrator did not exceed his jurisdiction in concluding that the
    PAMA imposed an obligation to use good faith in terminating the partnership,
    the arbitrator lacked jurisdiction under the PAMA to award SPN damages for its
    loss of profits.

[8]

SPN appealed the application judges decision to this court. This court
    set aside the application judges order and reinstated the arbitrators award since
    the arbitrator did exactly what he was authorized to do by the terms of the
    arbitration agreement: he resolved the parties dispute concerning the alleged
    breach of their agreement and awarded damages. This court held that it was
    improper for the application judge to have interpreted the substantive
    provisions of the PAMA to determine whether the arbitrators decision to award
    damages for future lost profits was unreasonable or incorrect.

[9]

Alectra intends to seek leave to appeal this courts decision to the
    Supreme Court of Canada, but unless and until that leave application is
    determined in Alectras favour, SPN is entitled to enforce the reinstated
    arbitrators award. SPN fully intends to do so because it is under tremendous
    pressure from its creditors, and its current financial situation prevents it
    from competing for lucrative contracts under a new government program. Enforcing
    the arbitrators award will solve its financial woes. Alectra believes that if
    SPN is able to enforce the damages award before Alectras application for leave
    is determined, and Alectra obtains leave to appeal and succeeds in setting
    aside this courts decision, that success will prove to have been moot. Alectra
    will not be able to recover the money that SPN has collected, leaving SPN with
    an improper windfall. Alectra therefore seeks a stay of the enforcement of this
    courts order.

ANALYSIS

[10]

In
BTR Global Opportunity Trading Ltd. v. RBC Dexia Investor Services Trust
,
    2011 ONCA 620, 283 O.A.C. 321, at para. 16, the test in an application to
    impose a stay pending appeal was described by Laskin J.A.:

The moving party  must show that
    it has raised a serious issue to be adjudicated, that it will suffer
    irreparable harm if a stay is not granted, and that the balance of convenience
    favours a stay. These three components of the test are interrelated in the
    sense that the overriding question is whether the moving party has shown that
    it is in the interests of justice to grant a stay.

A.

Is there a Serious issue to be tried?

[11]

When
    a party is seeking a stay of a decision of this court pending an application
    for leave to appeal, pursuant to
Supreme Court Act
, R.S.C. 1985, c.
    S-26, s. 65.1, the serious issue factor is modified:
Livent Inc. v.
    Deloitte & Touche
, 2016 ONCA 395, 131 O.R. (3d) 784, at para. 7.

[12]

As
    Gillese J.A. explained in
Iroquois Falls Power Corporation v. Ontario
    Electricity Financial Corporation
, 2016 ONCA 616, affd 2016 ONCA 687, the
    application judge must make a preliminary assessment of the merit of the leave
    application, taking into consideration the stringent leave requirements in the
Supreme
    Court Act
: at para. 17. Since the Supreme Court of Canada typically
    grants leave only in cases of public or national importance, an application
    judge must consider whether these considerations are apt to be met.

[13]

To
    be sure, the threshold on both the merits and the national or public importance
    considerations remains low:
Livent Inc.
, at paras. 8-9. If there is
    little likelihood that leave to appeal will be granted, however, this will
    militate against the imposition of a stay:
Iroquois Falls,
2016 ONCA
    687, at para. 4.

[14]

Alectras
    primary argument is that this courts decision raises a serious issue of public
    importance as to whether an arbitrators jurisdiction is to be determined by
    interpreting the arbitration clause in isolation, or in the context of the
    agreement as a whole.

[15]

Alectra
    urges that the decision is contrary in two respects to this courts previous direction
    in
Mexico v. Cargill, Incorporated
, 2011 ONCA 622, 107
    O.R. (3d) 528, leave to appeal to S.C.C. denied, [2011] S.C.C.A. No. 528.
    First,
Cargill
directs that when determining jurisdiction, it should
    be asked whether there is anything in the agreement as a whole that precludes
    the arbitrator from making the award: para. 52. Alectra contends that this court
    did not look at the agreement as a whole in the case under consideration. Second,
Cargill
recognizes that language that prohibits an arbitrator from
    making a damages award is a jurisdictional limitation: para. 72. Alectra
    contends that this courts decision appears to hold otherwise.

[16]

Alectra
    maintains that there is significant public interest in settling the proper
    approach to interpreting contracts when identifying the jurisdiction an
    arbitrator has been given.

[17]

Alectra
    also proposes that this courts holding that the application judge erred in
    considering the reasonableness of the arbitrators interpretation of the
    contract when determining jurisdiction raises important issues relating to the
    appropriate standard of review, particularly after the decision in
Sattva
    Capital Corp. v. Creston Molly Corp.
, 2014 SCC 53, [2014] 2 S.C.R. 633.

[18]

SPN
    argues that both of these issues are neither serious nor do they raise issues
    of public importance. Instead, they are hypothetical issues in the sense that
    neither arises from this decision. SPN argues that this court considered the
    agreement as a whole, including the provisions relied on by the application
    judge, ss. 2 and 5. Moreover, since this court recognized in para. 43 of its
    decision that an arbitrators jurisdictional question must be answered
    correctly, the application of the reasonableness standard does not arise here.
    Ultimately, SPN urges that it will not be possible for Alectra to persuade the
    Supreme Court of Canada that this case, which turns on an idiosyncratic
    contract between the parties, raises issues of public or national interest.

[19]

I
    am inclined to the view expressed by SPN. It strikes me that the proper
    characterization of this courts decision is that this court considered the PAMA
    as a whole before finding that the arbitrator correctly decided that he had
    jurisdiction to interpret and apply the terms of the PAMA, including whether to
    award damages for lost profits. I agree with SPN that since the issues relied
    upon by Alectra are not clearly raised in this case, a finding that the
    proposed grounds of appeal are of public importance is unlikely.

[20]

I
    cannot go so far as to say, however, that Alectra has not met the low threshold
    of showing that it raises serious issues that could be found to be of
    sufficient public importance to enable leave to appeal to be granted.

[21]

This
    courts decision is complicated and its proper interpretation is open to
    debate. That being so, there may be questions relating to the fit between this
    courts reasoning and what it said in
Cargill.
This courts decision
    in
Smyth v. Perth and Smiths Falls District Hospital
, 2008 ONCA 794, 92
    O.R. (3d) 656, can also be read as providing some support to Alectras position
    that there is a role for reasonableness review of an arbitrators decision. In
    rendering the decision underlying this application, this court overcame that
    complication by describing that part of
Smyth
as
obiter
:
    para. 44.

[22]

As
    counsel for Alectra pointed out in oral argument, a commercial list judge also approached
    the matter as Alectra suggests, and a panel of this court found SPNs leave
    application relating to these same questions to have sufficient importance to
    warrant granting leave to this court.

[23]

Simply
    put, while I do not believe that Alectras claim strongly raises serious issues
    of public importance, and I believe it to be unlikely that leave to appeal will
    be granted, I cannot find that the low threshold has not been met.

B.

Will Alectra suffer Irreparable harm?

[24]

Alectra
    relies on SPNs precarious financial situation to satisfy the irreparable harm
    consideration. It argues that if this courts decision is not stayed, and SPN
    collects damages, SPN will be unable to repay those damages if the Supreme
    Court of Canada ultimately rules that those damages were not due.

[25]

Were
    that to prove true, it would qualify as irreparable harm within the meaning of
    the test for a stay:
Sistem Mühendislik A.S. v. Kyrgyz Republic
, 2014
    ONCA 576, 325 O.A.C. 198. As Strathy C.J.O. said in
Livent Inc
., at
    para. 10, irreparable harm can refer to harm that cannot be cured because one
    party cannot collect damages from the other.

[26]

The
    risk that SPN will be unable to repay those damages therefore satisfies the irreparable
    harm consideration. However, that risk should not be exaggerated. First, even
    in the event that SPN was to collect the entire damages award, it requires
    approximately half of that amount to repay its creditors. There is no basis for
    apprehending that the entire amount of the damages award will be put at risk if
    a stay is not ordered. Second, and more importantly, SPN has presented evidence
    that it has a liquidity problem, not net worth problems. It has assets it can
    monetize in time to repay Alectra, if required.

[27]

I
    am not persuaded that those assets are speculative, as Alectra contends. SPNs
    claim that the leases are worth approximately $2.5 million may not prove to be
    sustained, but $463,913 was backed out of the damages award in this case to
    represent the value of the leases.

[28]

Moreover,
    the non-contradicted evidence before me is that SPN is entitled to compensation
    from the Independent Electricity System Operator (IESO compensation) for
    cancelled FIT contracts, of up to $250,000 per contract. Although it is not
    clear how much will actually be recovered, even if SPN does not recover the
    entire $14.4 million in IESO compensation it is claiming, it can reasonably be
    anticipated that its claims are worth a considerable amount.

[29]

Finally,
    the irreparable damage that Alectra apprehends is entirely contingent on the
    Supreme Court of Canada granting leave and overturning this courts decision.
    While not impossible, that outcome is unlikely.

[30]

Although
    refusing the stay does pose some incalculable risk that this decision could
    cost Alectra money in the long-run which it could prove to be entitled to, that
    risk is not as grave as Alectra claims.

C.

Does The balance of convenience favour a stay?

[31]

In
    my view, on the evidence before me, the balance of convenience strongly favours
    denying Alectras application for a stay of the enforcement of this courts
    order.

[32]

The
    parties agree that currently SPN is having serious liquidity problems. Its
    creditors, owed approximately $7 million, are standing down in the expectation
    that SPN can collect the damages this court has determined SPN is entitled to.
    If this courts decision is stayed, SPNs continued viability will be placed at
    increased risk by those creditors.

[33]

Moreover,
    SPNs liquidity problems, which would be solved if this courts decision is enforced,
    are preventing SPN from competing for lucrative contracts.

[34]

It
    is not too much to say in these circumstances that there are existential risks
    to SPN if a stay is granted. If those risks materialize and SPN does ultimately
    prove to be entitled to the damages award this court has upheld, the damage
    that the stay of enforcement will cause cannot readily be undone.

[35]

In
    contrast, Alectra has earnings and assets in the billions. While there is a
    modest risk that if the stay is denied Alectra may end up losing money that it could
    prove to be entitled to, the intensity of that risk pales next to the risk to
    SPN if the stay is granted.

CONCLUSION

[36]

On
    balance, I am not persuaded that it is in the interests of justice to stay the
    enforcement of this courts order of April 2, 2019. The application is
    dismissed.

[37]

As
    agreed between the parties, costs are awarded to SPN in this application in the
    amount of $7,500 inclusive of all applicable taxes and disbursements.

David M. Paciocco J.A.


