Appeal Court Allows $2-Billion Wind Farm Action to Proceed Against Government of Ontario

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On November 12, 2013, inTrillium Power Wind Corporation v. Ontario (Natural Resources), 2013 ONCA 683, the Ontario Court of Appeal allowed a $2-billion action by Trillium Power Wind Corporation (Trillium) to proceed against the Government of Ontario as a result of the government’s decision in 2011 to impose a moratorium on offshore wind power development. The Court allowed Trillium’s claim to proceed on the sole, narrow basis that the government had, allegedly, committed “misfeasance in public office” because, in imposing the moratorium when it did, the government had allegedly targeted Trillium, intending to cause Trillium harm.  However, the Court did not allow Trillium to proceed with its other claims based upon, among other things, breach of contract and negligence.

Brief Background

In February 2011, Ontario announced that offshore wind power development would be subject to a (second) moratorium, citing the need for further scientific studies of the potential impact(s) of the development.  By then, Trillium had allegedly expended over $5 million on the testing and development of an offshore wind power project that had been progressing through the regulatory process.

In September 2011, Trillium brought a civil action against the Ontario government seeking $2.25 billion in damages based on allegations of breach of contract, unjust enrichment, expropriation, negligent misrepresentation, negligence, misfeasance in public office, and intentional infliction of economic harm. The statement of claim further alleged that the provincial government acted unlawfully in that it breached a variety of statutes, including the Green Energy Act, 2009, the Electricity Act, 1998 and the Ontario Water Resources Act.

Lawyers for the province moved to strike Trillium’s action, arguing that the statement of claim disclosed no reasonable cause of action.  The motions judge agreed with the government, rejecting all of Trillium’s alleged causes of action and dismissing the action without leave to amend.

Having lost in the lower court, Trillium appealed to the Ontario Court of Appeal. A more detailed factual background on the lower court decision from 2012 can be found in our Osler Update of Oct 16, 2012.

Ontario Court of Appeal

The Court of Appeal largely agreed with the motions judge, noting that not only was it “plain and obvious” but “beyond all reasonable doubt” that Trillium could not succeed in its claims based on breach of contract, unjust enrichment, expropriation, negligent misrepresentation, negligence, and intentional infliction of economic harm.  However, the Court concluded that Trillium`s claim based upon misfeasance in public office could proceed, albeit on a narrowed basis.

A claim based upon allegations of misfeasance in public office requires a plaintiff to prove two specific facts: (1) the public official engaged in unlawful conduct in exercising his/her public functions; and (2) the public official was aware that his/her conduct was unlawful and that it would likely injure the plaintiff.  The latter fact of “awareness” requires proof of “bad faith” or “dishonesty.” Otherwise, public officials can and do, in good faith, make decisions that are adverse to the interests of certain members of the public, and such good faith decisions cannot ground a claim in misfeasance in public office.

The Court distilled the essence of Trillium’s “disorganized and prolix” complaint in support of its claim for misfeasance in public office into two points, namely that the Premier of Ontario, certain ministers, and their staff acted in bad faith by:

  1. imposing the moratorium on offshore wind farms and cancelling Ontario`s wind power projects for purely political motives in order to win more seats in an upcoming election, when they knew that their actions would harm Trillium; and
  2. specifically targeting Trillium by cancelling Ontario’s proposed offshore wind power projects in order to undercut Trillium’s pending financing.

On the first point, the Court concluded that purely political decisions or decisions “based on political considerations or electoral expediency” do not, on their own, meet the bad faith requirement for a claim based upon misfeasance in public office.  Rather, it is only the non-political reasons – the specific intention to injure Trillium – that may be subject to attack when alleging misfeasance in public office.

The Court, on the second point, found that there were sufficient allegations in Trillium`s pleadings linking to actual events, documents, and people in order to allow Trillium to proceed to the next step in the proceeding.

Discussion

The Court of Appeal, in confirming the motions judge`s decision, made it clear that proponents who choose to participate in discretionary government programs, such as Ontario’s renewable energy program, do so primarily at their own risk.  Governments may alter the policies that underlie a program, and may even alter or cancel such programs, in a manner that may be fully lawful and immune from civil suit even if individual participants suffer damage from such alteration or cancellation.  Much will depend upon the particular facts of a case.

The Court also made it clear that “purely political” decisions are not generally inconsistent with the obligations of public office and that the “bad faith” exception to the otherwise broad immunity conferred on core policy decisions remains narrow. That said, this is the first civil action in Ontario allowed to proceed against the government in respect of a cancelled, prospective, wind farm development project, and it may be an interesting one to watch.