Saskatchewan Power Corporation v. Swift Current (City),

• Jurisdiction: Saskatchewan
• Judge: Gerwing, Lane and Smith, JJ.A.
• Neutral Citation: 2007 SKCA 27
• Court: Court of Appeal (Saskatchewan)
• Date: 09 June 2006

Swift Current v. Sask. Power (2007), 293 Sask.R. 6 (CA);

      397 W.A.C. 6

MLB headnote and full text

Temp. Cite: [2007] Sask.R. TBEd. MR.022

Saskatchewan Power Corporation (appellant/defendant) v. City of Swift Current (respondent/plaintiff) and Crown Investments Corporation and the Government of Saskatchewan (defendants)

City of Swift Current (appellant/plaintiff) v. Saskatchewan Power Corporation, Crown Investments Corporation, and the Government of Saskatchewan (respondents/ defendants)

(Nos. 1236; 1243; 2007 SKCA 27)

Indexed As: Swift Current (City) v. Saskatchewan Power Corp. et al.

Saskatchewan Court of Appeal

Gerwing, Lane and Smith, JJ.A.

March 8, 2007.

Summary:

In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan. In turn, Saskatchewan agreed to supply the City with its electricity. The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC). The City sued Saskatchewan, SPC and CIC, alleging breach of contract, unlawful interference with economic interests, breach of fiduciary duty, abuse of public office, unjust enrichment and participation in discriminatory pricing contrary to the Competition Act relating to power rates. Saskatchewan moved to strike all claims against it. CIC and SPC moved for particulars relating to the claim for breach of contract and to strike all other claims against them.

The Saskatchewan Court of Queen's Bench, in a decision reported at 272 Sask.R. 160, struck certain of the causes of action. The City appealed. No appeal was taken by the City from that portion of the order which struck the claims based on the Competition Act or breach of the statute. SPC appealed the refusal to strike the claims against it based on breach of fiduciary duty and unlawful interference with economic interests.

The Saskatchewan Court of Appeal allowed the appeal in part. The court struck all the claims against the Government and CIC. Against SPC, the court allowed the claims for unjust enrichment, breach of fiduciary duty and unlawful interference with economic interests to proceed.

Equity - Topic 3606

Fiduciary or confidential relationships - General principles - What constitutes a fiduciary relationship - In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan - In turn, Saskatchewan agreed to supply the City with its electricity - The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC) - The City sued Saskatchewan, SPC and CIC relating to power rates - The City alleged, inter alia, that SPC breached a fiduciary duty owed to the City which arose out of a term (clause 12) of the contract between the City and SPC - The Saskatchewan Court of Appeal affirmed the dismissal of a motion to strike the claim - The contract was not a standard form of contract, but represented a special relationship between SPC and the City - It was not obvious that clause 12 was a standard commercial contractual provision - Whether this clause gave rise to a fiduciary duty on the part of SPC was a question of the interpretation of this clause of the contract - See paragraphs 68 to 73.

Equity - Topic 3607

Fiduciary or confidential relationships - General principles - Relationships which are not fiduciary - In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan - In turn, Saskatchewan agreed to supply the City with its electricity - The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC), an agent of the Crown - The City sued Saskatchewan, SPC and CIC in respect of power rates - The City alleged, inter alia, that CIC breached a fiduciary duty owed to the City - The chambers judge struck the claim - The contractual obligations and perhaps unilateral discretion to change the City's power rates was vested in SPC alone - The fact that CIC might require SPC to submit for its review and approval, rates, charges and conditions did not vest CIC with the fiduciary discretion needed to sustain this cause of action - The Saskatchewan Court of Appeal agreed - See paragraph 71.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - [See Equity - Topic 3606 , Equity - Topic 3607 , Restitution - Topic 67 , Torts - Topic 76 , Torts - Topic 5021 and Torts - Topic 9162 ].

Public Utilities - Topic 4666

Public utility commissions or corporations (incl. private providers) - Regulation - Rates - Power to fix just and reasonable rates - [See Equity - Topic 3606 , Equity - Topic 3607 and Restitution - Topic 67 ].

Restitution - Topic 67

Unjust enrichment - General - Persons entitled to claim - In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan - In turn, Saskatchewan agreed to supply the City with its electricity - The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC) - The City sued Saskatchewan, SPC and CIC relating to power rates - The City alleged, inter alia, that SPC was unjustly enriched - SPC conceded an enrichment of SPC with a corresponding deprivation of the City - However, SPC argued that there was a juristic reason for the rates charged to the City given the existence of a contractual relationship - The chambers judge struck the claim - The Saskatchewan Court of Appeal allowed an appeal - The City pleaded that SPC imposed unlawful or unjustified fees and levies - This constituted a loss and a corresponding gain - If the rates imposed were not lawful then there was no juristic reason and the resulting profits could be recovered as a remedy - Whether or not a juristic reason existed was a decision for the trial judge - The chambers judge erred in striking the claim - See paragraphs 34 to 44.

Torts - Topic 76

Negligence - Duty of care - General principles - In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan - In turn, Saskatchewan agreed to supply the City with its electricity - The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC), an agent of the Crown - The City sued Saskatchewan, SPC and CIC relating to rates - The City alleged, inter alia, that CIC and Saskatchewan were negligent - The chambers judge struck the claim - Neither foreseeability nor proximity existed - A private law duty of care did not arise in these circumstances - The Saskatchewan Court of Appeal agreed - The duty owed by both entities was to the public as a whole and the duty was not a private duty - Further, even if a prima facie duty of care was found to exist the policy considerations referred to in the second stage of the Anns test would lead to a negation of the duty - The Government's or CIC's decisions whether or not to even have a review of utility rates was a policy decision - The City's argument that once CIC decided to review the rates it had to do so without negligence called into question the adequacy of the rate review process as a policy initiative, and also called into question the actual procedure used by the reviewers - Such governmental policy decisions ought not to be subject to tort claims - See paragraphs 45 to 67.

Torts - Topic 5021

Interference with economic relations - Elements of liability - General - In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan - In turn, Saskatchewan agreed to supply the City with its electricity - The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC) - The City sued Saskatchewan, SPC and CIC relating to power rates - The City alleged, inter alia, that SPC breached the contract and unlawfully interfered with economic interests - The chambers judge held that while a breach of contract called for an award of damages for loss directly or indirectly attributable to that breach, the tort of interference with economic interests might cast a wider scope for the measurement of damages - The tort was evolving - Applying the test under Queen's Bench Rule 173(a), it was not plain and obvious that the City's statement of claim disclosed no reasonable cause of action to try the tort of interference with economic interest - The Saskatchewan Court of Appeal agreed - See paragraphs 74 to 86.

Torts - Topic 9162

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Misfeasance in or abuse of public office - In 1930, the City of Swift Current sold its electrical generating plant to Saskatchewan - In turn, Saskatchewan agreed to supply the City with its electricity - The agreement was subsequently assigned to Saskatchewan Power Corp. (SPC), which was wholly owned by Crown Investments Corp. (CIC) - The City sued Saskatchewan, SPC and CIC relating to power rates - The City alleged, inter alia, that SPC employees abused public office - The chambers judge struck the claim - The identity of the employee or officer accused of abuse of office had to be known - The specific facts of the conduct of the employee or officer alleged to constitute dishonesty or bad faith in office also had to be pleaded - The Saskatchewan Court of Appeal allowed an appeal - The City clearly pleaded that the SPC's actions (in its capacity as a public office) were done deliberately for the purpose of reducing the value of the transmission entity to force its sale at a depressed price - It was not plain and obvious that the statement of claim disclosed no reasonable cause of action and the claim should not have been struck - The chambers judge erred by analyzing the issue as one of vicarious liability as argued by SPC as opposed to analyzing the claim as being one of direct liability as argued by the City - See paragraphs 22 to 33.

Cases Noticed:

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 16, footnote 5].

Odhavji Estate et al. v. Woodhouse et al., [2003] 3 S.C.R. 263; 312 N.R. 305; 180 O.A.C. 201, refd to. [para. 16, footnote 6].

Collins v. McMahon et al., [2002] Sask.R. Uned. 96; 2002 SKQB 201, refd to. [para. 18, footnote 7].

Saskatchewan Provincial Court Judges Association et al. v. Saskatchewan (Minister of Justice) et al., [1996] 2 W.W.R. 129; 137 Sask.R. 204; 107 W.A.C. 204 (C.A.), refd to. [para. 20, footnote 8].

1515545 Ontario Ltd. et al. v. Niagara Falls (City) et al. (2006), 206 O.A.C. 219; 78 O.R.(3d) 783 (C.A.), refd to. [para. 31, footnote 9].

Georgian Glen Development Ltd. v. Barrie (City), [2005] O.J. No. 3765 (Sup. Ct.), refd to. [para. 31, footnote 10].

Garland v. Consumers' Gas Co., [2004] 1 S.C.R. 629; 319 N.R. 38; 186 O.A.C. 128; 2004 SCC 25, refd to. [para. 36, footnote 11].

Pacific National Investments Ltd. v. Victoria (City) et al., [2004] 3 S.C.R. 575; 327 N.R. 100; 206 B.C.A.C. 99; 338 W.A.C. 99; 2004 SCC 75, refd to. [para. 37, footnote 12].

337965 B.C. Ltd. v. Tackama Forest Products Ltd. (1992), 67 B.C.L.R.(2d) 1 (C.A.), refd to. [para. 42, footnote 13].

Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), refd to. [para. 46, footnote 14].

Nielsen v. Kamloops (City) and Hughes, [1984] 2 S.C.R. 2; 54 N.R. 1, refd to. [para. 54, footnote 16].

Granite Power Corp. v. Ontario et al. (2004), 189 O.A.C. 128; 72 O.R.(3d) 194 (C.A.), refd to. [para. 55, footnote 17].

Cooper v. Registrar of Mortgage Brokers (B.C.) et al., [2001] 3 S.C.R. 537; 277 N.R. 113; 160 B.C.A.C. 268; 261 W.A.C. 268, refd to. [para. 55, footnote 18].

James v. British Columbia, [2005] 8 W.W.R. 417; 210 B.C.A.C. 60; 348 W.A.C. 60 (C.A.), refd to. [para. 56, footnote 19].

Nelson et al. v. Saskatchewan et al., [2004] 3 W.W.R. 89; 235 Sask.R. 250; 2003 SKQB 265, refd to. [para. 56, footnote 20].

Just v. British Columbia, [1989] 2 S.C.R. 1228; 103 N.R. 1, refd to. [para. 64, footnote 23].

Norberg v. Wynrib, [1992] 2 S.C.R. 226; 138 N.R. 81; 9 B.C.A.C. 1; 19 W.A.C. 1, refd to. [para. 69, footnote 26].

Frame v. Smith and Smith, [1987] 2 S.C.R. 99; 78 N.R. 40; 23 O.A.C. 84, refd to. [para. 69, footnote 27].

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al. (1998), 67 O.T.C. 22; 40 O.R.(3d) 229 (Gen. Div.), refd to. [para. 79, footnote 28].

Duke et al. v. Puts, [2004] 6 W.W.R. 208; 241 Sask.R. 187; 313 W.A.C. 187; 2004 SKCA 12, refd to. [para. 79, footnote 29].

Reach M.D. Inc. v. Pharmaceutical Manufacturers Association of Canada et al. (2003), 172 O.A.C. 202; 227 D.L.R.(4th) 458 (C.A.), refd to. [para. 80, footnote 30].

No. 1 Collision Repair & Painting (1982) Ltd. v. Insurance Corp. of British Columbia (2000), 141 B.C.A.C. 1; 231 W.A.C. 1; 80 B.C.L.R.(3d) 62 (C.A.), refd to. [para. 83, footnote 31].

Battlefield Equipment Rentals v. Fallingbrook Gardening Service Inc. et al., [2001] O.T.C. Uned. 74 (Sup. Ct.), refd to. [para. 84, footnote 32].

Authors and Works Noticed:

Osborne, Philip H., The Law of Torts (2000), p. 293 [para. 85, footnote 33].

Counsel:

Murray K. Walter, Q.C., and Michael Walter, for the City of Swift Current;

Robert W. Leurer, Q.C., and Naheed Bardai, for Saskatchewan Power Corporation and Crown Investments Corporation.

This appeal and cross-appeal were heard on June 9, 2006, by Gerwing, Lane and Smith, JJ.A., of the Saskatchewan Court of Appeal. The following judgment of the Court of Appeal was delivered by Lane, J.A., on March 8, 2007.