Canada: The Last Word On Offshore Wind In Ontario

The Ontario Court of Appeal decision in Trillium Power Wind Corporation v. Her Majesty the Queen in Right of the Province of Ontario confirms the relative primacy afforded executive decisions of government, while at the same time highlighting the uphill battle that aggrieved parties will almost certainly face in seeking redress for abrupt governmental changes in policy, even when such changes materially, if not disastrously, affect their legitimate business interests. 

The facts of the case are straightforward.  Since 2004, Trillium Power had been proposing to build a wind farm offshore in Lake Ontario, near Main Duck Island off Prince Edward County.  In pursuit of that end, Trillium expended substantial time and money, including applying for a Crown lease of a portion of the lake bed on which the project would be built, incurring significant application fees, and undertaking various other activities, including in conjunction with assorted government officials.  Importantly however, by February 11, 2011, when the government of Ontario abruptly changed course and imposed a moratorium on all further offshore wind development in the province, Trillium had still not secured a feed-in tariff contract for the project from the Ontario Power Authority, nor had it obtained a Renewable Energy Approval (REA) from the Minister of the Environment.  Furthermore, it had still not been granted a Crown lease over any part of the lake bed of Lake Ontario. 

Notably, on February 9, 2011, Trillium pre-notified the government that it was proposing to close a $26 million financing for the project within just a few days.  Just two days after receiving that notification, the provincial government responded by issuing a press release imposing an immediate  moratorium on all further offshore wind development.  The press release advised that no new REAs or FIT contracts would be considered or awarded, pending the completion of further scientific research into offshore wind development in the province.   

With limited options, Trillium promptly sued the Province for damages, claiming negligence, negligent misrepresentation, and malfeasance in public office on the part of provincial officials.  In its pleadings, Trillium asserted that it had received absolutely no prior notification of the government's decision to suspend offshore wind development.  Moreover, it claimed that the moratorium had been imposed by the government for "purely political motives and for electoral expediency in order to win more seats in the [then] upcoming [provincial] election", and that the government knew full well that its decision would detrimentally affect Trillium's business interests in particular.

At first instance, a lower court dismissed Trillium's lawsuit entirely, ruling that the government was allowed to change its stated policy objectives on wind in accordance with its perception of the public interest.  The court took particular cognizance of the fact that Trillium had not yet obtained any formal governmental approvals for the project.  Further, the court observed that "[t]he weighing of social, economic and political considerations to arrive at a course or principle of action is the proper role of government, not the courts".  As the moratorium was a "core policy" decision made by the executive, the government's decision was completely immune from suit.

On appeal, the Ontario Court of Appeal essentially upheld the lower court decision to dismiss Trillium's claim against the Province, subject to one, rather limited, exception.  The Court ruled that Trillium should be permitted to pursue its claim for public official 'malfeasance', but only if and to the extent that Trillium could show that the public officials responsible for the decision were engaged in unlawful conduct in the exercise of their public functions and that the decision specifically targeted Trillium and was, in essence, purposely intended to injure Trillium.  The Court was quick, however, to constrain this exception.  In particular, it emphasized that, to the extent that the executive decision to suspend offshore wind development was taken as a core policy decision (which it appeared to be), the matter was generally immune from suit, even if the decision happened to be based on "political factors" or on matters of "political or electoral expediency".  In short, it was not inconsistent with the obligations of the office for the premier of the province (or his or her ministers) to respond to public pressure by cancelling further offshore wind development, even if the decision was designed to shore up the government's electoral support.  After all, as the Court pointed out, most executive decisions are taken within a political context.

Furthermore, the Court of Appeal held that it was not sufficient that the government might have knowledge that its decision would be adverse to the interests of certain of its citizens.  Knowledge of harm suffered by certain constituents is not a sufficient basis on which to conclude that the government had acted unlawfully.  There had to be some additional evidence that the public officials deliberately engaged in conduct inconsistent with their public office and that the conduct was itself unlawful and designed to injure Trillium.  Trillium was left with an avenue of potential recourse, but that avenue was severely constrained indeed.

The Court of Appeal's decision highlights the need for project proponents to proceed cautiously and deliberately, particularly early on in the conceptualization and design stage of their projects, and certainly prior to the receipt of requisite governmental approvals.  Likewise, potential project financiers must also be similarly wary, ideally making the receipt of all requisite governmental approvals a condition of funding.  In truth, initial government encouragement for a project or class of projects can quickly disappear, especially if dark clouds gather on the political horizon.  In fact, if such clouds do appear on the horizon and if the government abruptly changes course, the chances of recovery against government officials must be considered remote, absent very specific evidence of malfeasance.

For now, the Court's decision seems to be the last word on offshore wind in the Province of Ontario.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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