Ontario Court of Appeal found a municipal resolution frustrated the legislative purpose of the provincial Renewable Energy Approval

The City of Kawartha Lakes appealed a decision from the Divisional Court quashing a resolution passed by the City refusing a request by Sumac Ridge Wind to use an unopened municipal road as part of a wind turbine project after it had obtained a provincial Renewable Energy Approval. The City also appealed the decision that the resolution was passed in bad faith. The Court of Appeal upheld the decision of the Divisional Court finding that the City’s resolution frustrated the legislative purpose of the provincial Renewable Energy Approval, and was made for an improper purpose and in bad faith.

Administrative law – Compliance with legislation – Decisions of administrative tribunals – Environmental matters – Government – Judicial Review – Municipal boards – Municipalities – Permits and Licences – Provincial v. Municipal – Resolutions – Road allowance

wpd Sumac Ridge Wind Inc. v. Kawartha Lakes (City), [2016] O.J. No. 3363, 2016 ONCA 496, Ontario Court of Appeal, June 22, 2016, P.S. Rouleau, G.J. Epstein and M.L. Benotto JJ.A.

This case involves an appeal by the City of Kawartha Lakes (the “City”) from a Divisional Court order quashing a resolution passed by the City refusing a request by the respondent, Sumac Ridge Wind (“Sumac”), to use an unopened municipal road allowance after it had obtained a provincial Renewable Energy Approval for a wind turbine project. Sumac’s application for the Renewable Energy Approval consisted of comprehensive plans and studies required by the Environmental Protection Act (the “Act”) and regulations made under the Act. Sumac proposed to locate the wind turbines on private lands within the City, but required its main access to be through the unopened municipal road allowance. Prior to obtaining approval from the Province, Sumac had engaged in a number of consultation efforts with the City. The City did not express any objection to the use or upgrading of the City road at that time. However, after Sumac obtained approval from the Province for its wind turbine project, the City passed a resolution refusing any request by Sumac to use the City road. The primary issues for the Court of Appeal were: (1) whether the City’s resolution frustrated the legislative purpose of the provincial Renewable Energy Approval process; and (2) whether the City’s resolution was made in bad faith.

In respect to the first issue, the Court applied the doctrine of paramountcy and the governing test for frustration of purpose. The Court characterized the provincial Renewable Energy Approval process as part of a broader statutory scheme aimed at approving projects that encourage the development of green energy, which, in turn, protect and conserve the environment. Thus, contrary to the position argued by the City, the Court held that the approval process resulted in a positive entitlement, and was not merely permissive in nature. While the City was able to advance reasonable considerations such as costs, indemnification and liability in relation to such projects (and as part of the consultation process), the Court held that the City was unable to refuse to issue permits because it simply disagreed with the project itself. In light of this, the Court had no trouble in concluding that the City’s resolution frustrated the Renewable Energy Approval.

In respect to the second issue, the Court upheld the ruling that the City’s refusal amounted to a decision made in bad faith. While a variety of facts were cited for this conclusion, central was the lack of objection raised by the City in response to Sumac’s early consultation efforts, before it had ultimately proceeded with the Renewable Energy Approval process. The City chose to object only after the window for addressing its purported concerns had passed and Sumac was essentially “locked into” the Renewable Energy Approval that depended on its use of the City road. In light of this, the Court upheld the inference reached by the Divisional Court that the City had acted in bad faith by exercising its jurisdiction over the City roads for an improper purpose.

This case was digested by Adam R. Way of Harper Grey LLP. If you would like to discuss this case further, please feel free to contact him directly at away@harpergrey.com or review his biography at http://www.harpergrey.com.

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