2018 QCCS 842, 2018 QCCS 842

O'Leary Funds Management c.

Boralex inc. 2018 QCCS 842 SUPERIOR COURT (Commercial Division) CANADA PROVINCE OF QUÉBEC DISTRICT OF MONTREAL No: 500-11-039696-105 DATE: March 2 nd , 2018 _____________________________________________________________________ BY THE HONOURABLE Marie-Anne paquette, J.S.C. _____________________________________________________________________ O’LEARY FUNDS MANAGEMENT LP Original Plaintiff CANOE FINANCIAL LP CANOE GLOBAL GROWTH AND INCOME FUND CANOE CANADIAN HIGH INCOME FUND O’LEARY CANADIAN EQUITY INCOME FUND O’LEARY STRATEGIC YIELD FUND CANOE GLOBAL BALANCED FUND O’LEARY GLOBAL YIELD OPPORTUNITIES FUND O’LEARY HARD ASSET INCOME FUND Original Plaintiffs and First Plaintiffs in Continuance of Suit and CANOE “GO CANADA!” FUND CORP.

Second Plaintiff in Continuance of Suit v. BORALEX INC. 7503679 CANADA INC. BORALEX POWER INCOME FUND Defendants and COMPUTERSHARE TRUST COMPANY OF CANADA Impleaded Party and

MARCEL AUBUT CLAUDE BOIVIN MICHEL CÔTÉ JEAN E. DOUVILLE ALAIN RHÉAUME Interveners _____________________________________________________________________ JUDGMENT on Liability [1] _____________________________________________________________________ OVERVIEW [ 1 ] In the fall of 2010, Boralex Inc. [2] bought all the outstanding Units of the Boralex Power Income Fund ( Fund ).

The holders of 85.87% of the units of the Fund ( Fund Units or Units ) approved this forced acquisition ( Business Combination ). [ 2 ] As a result, O’Leary Funds Management LP ( O’Leary ), which was in disagreement with such acquisition, was forced to surrender all its Units in return for the consideration provided for in the approved Business Combination. [ 3 ] O’Leary is suing Boralex Inc., the Fund and Computershare Trust Company of Canada, the trustee of the Fund ( Computershare or Trustee ), for the damages allegedly resulting from what O’Leary claims to be an illegal and abusive taking of its Units. [ 4 ] According to O’Leary, the approval of at least 90% of the Units held independently from the acquirer, Boralex Inc., was required.

Also, O’Leary argues that the process was left in the hands of Boralex Inc., to the detriment of the other unitholders and in complete disregard of the Trustee’s duty to protect them. [ 5 ] The Court dismisses O’Leary’s Re-Amended Application, as the Business Combination was done in compliance with all the applicable laws and contracts. 1.

CONTEXT 1.1 The background history of the Fund [ 6 ] The Fund, an income trust, was created pursuant to a Trust Agreement dated December 20, 2001 ( Trust Agreement ). [3] Boralex Inc., then acting as promotor, created the Fund to own interests in eight power generating stations operated by its subsidiaries. [4] [ 7 ] Computershare was designated as the initial trustee, transfer agent and registrar of the Fund Units.

Seven trustees, a majority of whom were unrelated to Boralex Inc., were appointed to sit on the board ( Board of Trustees ). [ 8 ] On February 20, 2002, Computershare entered into an administration agreement with Boralex Power Inc. ( BPI or Administrator ), a wholly-owned subsidiary of Boralex Inc., to provide administrative and support services in connection with the Fund and the Fund Units ( Administration Agreement ). [5] 1.2 The background history of the Business Combination and of the Acquisitions of Units by O’Leary [ 9 ] In 2007, a public offer process was initiated to sell the Fund.

It led to no interesting offer. [ 10 ] On May 4, 2009, O’Leary, a limited partnership managing various investment funds, purchased its first Fund Units. [6] [ 11 ] At the December 11, 2009 meeting of the Board of Trustees, concerns were raised concerning the financial performance of the Fund. The Board of Trustees resolved to evaluate the options for the future of the Fund. [7] [ 12 ] On January 7, 2010, Mr. Bernard Lemaire, Executive Chairman of the Board of Boralex Inc., informed Mr.

Claude Boivin, President of the Board of Trustees, of Boralex Inc.’s intention to buy all the remaining Units of the Fund at $4.50 per Unit.

A letter of intent ( LOI ) was communicated to that effect. [ 13 ] On January 8, 2010, the Board of Trustees, then composed of eight trustees, three of whom were related to Boralex Inc., met to discuss the LOI. [8] [ 14 ] The proposed acquisition was then identified and treated as an “insider bid” within the meaning of Regulation 61-101 respecting protection of Minority Security Holders in Special Transactions ( Regulation 61-101 ), [9] as Boralex Inc. held more than 10% of the voting Fund Units. [10] In conformity with Regulation 61-101, the Board of Trustees appointed the five trustees unrelated to Boralex Inc. ( Independent Committee ) to run the evaluation process and negotiation with Boralex Inc.

Mr. Boivin was appointed president of the Independent Committee. [ 15 ] Shortly after, the Independent Committee retained the services of Fasken Martineau and of CIBC, respectively legal and financial advisors, to assist in making the best choice amongst the following options: [11]

(1) accepting the offer as is; (2) attempting to get a better offer from Boralex Inc.; (3) public auction; (4) do nothing; (5) postpone the decision until the new tax regime of income trusts come into force. [12] [ 16 ] The Independent Committee decided to continue the discussions with Boralex Inc. before turning to other alternatives. With the assistance of its legal and financial advisors, the Independent Committee also determined that the offer of $4.50 per Unit was likely insufficient and decided to retain the services of an independent valuator. [ 17 ] On the morning of February 25, 2010, Mr.

Lemaire confirmed Boralex Inc.’s strong interest in acquiring the outstanding Units at a price between $4.50 and $5.00 per Unit. [ 18 ] In the afternoon of February 25, 2010, the Independent Committee decided that Boralex Inc. had to submit a precise number before any independent valuation work could be done. [ 19 ] On March 2, 2010, Boralex Inc. issued a new expression of interest, at $5.00 per Unit ( Offer ). [ 20 ] The Independent Committee then decided to retain the services of BMO Capital Markets ( BMO ) as independent valuator within the meaning of Regulation 61-101 , to prepare a formal valuation and opinion as to the fairness of the Offer. [ 21 ] Meetings and special working sessions of the Independent Committee and its advisors followed. [13] [ 22 ] On May 3, 2010, the Independent Committee received BMO’s report [14] concluding that the fair market value was between $4.50 and $5.05 per Unit.

After consulting with its advisors, the Independent Committee determined that the Offer was fair to the unitholders (other than Boralex Inc.) and was in the best interests of the Fund and of such unitholders. [ 23 ] The Independent Committee therefore unanimously recommended that the unitholders (other than Boralex Inc.) accept the Offer and tender their Units. [ 24 ] Later on May 3, 2010, the Board of Trustees met and unanimously approved (with the three nominees of Boralex Inc. abstaining) the recommendations of the Independent Committee. [ 25 ] Later in the evening on May 3, 2010, the Fund, Boralex Inc. and the Administrator executed a Support Agreement ( Support Agreement ) [15] whereby they agreed to cooperate for the purpose of Boralex Inc. making an official take-over bid offer to purchase all outstanding Units at $5.00 per Unit ( Upcoming Take-Over Bid Offer ). [ 26 ] A press release publicly announcing the Support Agreement and the Upcoming Take-Over Bid Offer [16] was also issued in the evening of May 3, 2010. [ 27 ] O’Leary then became aware of the existence and terms of the Upcoming Take-Over Bid Offer. [ 28 ] On May 18, 2010, Boralex Inc. [17] officially launched the process by circulating its offer to purchase all outstanding Units at a price of $5.00 per Unit ( Take-Over Bid Offer ) and indicated as follows how it would to proceed to acquire the Units not voluntarily tendered: [18]

(1) In the first instance, Boralex Inc. intended to avail itself of

Section 6.29 of the Trust Agreement to compel the acquisition of all the Units by way of a Take-Over Bid, if it had the support of at least 90% of the Units (excluding the Units held by Boralex Inc. or its affiliates) ( Compulsory Acquisition ); [19]

(2) Alternatively, if such 90% support could not be achieved, Boralex Inc. would use commercially reasonable efforts [20] to pursue other means of acquiring the remaining Units by way of a subsequent acquisition transaction (defined as any transaction resulting in Boralex Inc. owing all of the Units or assets of the Fund) ( Subsequent Acquisition Transaction ). [21] [ 29 ] On May 18, 2010, after approval by the Independent Committee and by the Board of Trustees, the Trustee issued a Circular recommending the acceptance of the Take-Over Bid Offer ( Trustee’s Circular ). [22] [ 30 ] On May 31, 2010 O’Leary, then holding 5.36% of the Units, [23] justified as follows to the Independent Committee and to the Board of Trustees the reasons of its refusal to tender its Units:

(1) The Take-Over Bid Offer was not in the best interests of the unitholders; An open process to sell the Fund or its assets would generate greater value;

(2) The Take-Over Bid Offer did not reflect the real value of the Units and Boralex Inc. could improve it;

(3) The terms and conditions of the Convertible Debentures offered in exchange for the Units were unacceptable; and

(4) The status quo was better. [24] [ 31 ] On June 21, 2010, as many unitholders appeared to be either unsupportive of the Take-Over Bid Offer or ambivalent, the Independent Committee discussed the available options and decided to seek an extension of the Offer. [25]

[ 32 ] On June 28, 2010, date of the expiry of the Take-Over Bid Offer, Boralex Inc. extended it to July, 12, 2010. [26] [ 33 ] On July 12, 2010, Boralex Inc. further extended it to July 30, 2010, increased the interest rate on the convertible debentures to be issued in exchange for the Units and offered a new conversion price for Boralex Inc.’s shares ( First Amended Offer ). [27] [ 34 ] BMO concluded that the First Amended Offer was financially fair to the unitholders (other than Boralex Inc.). [28] The Independent Committee renewed its favourable recommendation. [ 35 ] O’Leary, which by then had increased its position to 8.95% of the Units, still felt these changes to be insufficient, as the offer remained at $5.00 per Unit. [29] [ 36 ] On July 19, 2010, the Board of Trustees unanimously decided that the First Amended Offer was fair and in the best interest of the Fund and of the unitholders (other than Boralex Inc.).

The Board of Trustees recommended that the unitholders accept it and tender their Units. [30] [ 37 ] The First Amended Offer was thereafter extended to August 13, 2010 [31] and to September 10, 2010. [32] [ 38 ] O’Leary still refused to tender its Units and publicly took the position that the transaction should not take place. [33] Other unitholders did the same. [34] [ 39 ] On August 25, 2010, Boralex Inc. further amended the offer to provide for alternatives on the manner in which the $5.00 consideration per Unit would be paid [35] and extended the offer to September 15, 2010 ( Second Amended Offer ). [36] Boralex Inc. also announced that it had entered into lock-up agreements with unitholders who had already agreed to tender their Units. [37] [ 40 ] O’Leary remained in disagreement with the proposed deal. [38] [ 41 ] On August 31, 2010, the Trustee’s Circular was amended and recommended the acceptance of the Second Amended Offer. [39] [ 42 ] On the same date, O’Leary filed the present Claim. [ 43 ] On September 1, 2010, Boralex Inc. announced that it would seek the approval by way of a special resolution (66⅔%) of the unitholders, inter alia, on any form of Subsequent Acquisition Transaction. [40] [ 44 ] On September 15, 2010, Boralex Inc. announced that it had increased its ownership to 68% of the Units and extended its offer to September 28, 2010. [41] [ 45 ] Still in disagreement with the fairness and legality of the proposed transaction, O’Leary urged Boralex Inc. to stop what it qualified as “misleading the unitholders”. [42] [ 46 ] On September 24, 2010, 7596740 Canada Inc. ( 759 or Subco ), a wholly-owned subsidiary of 7503679 Canada inc. ( 750 ), itself a wholly-owned subsidiary of Boralex Inc., was incorporated. [43] [ 47 ] On September 27, 2010, Boralex Inc. called a special meeting of the unitholders to vote, inter alia , on a resolution approving that all Units [44] be exchanged for redeemable preferred shares of Subco, which the holders would be forced to redeem at $5.00 per Unit ( Business Combination Resolution ). [45] [ 48 ] On September 28, 2010, Boralex Inc. announced that it had increased its holding to approximately 73% of the Units. [46] [ 49 ] On October 21, 2010, O’Leary bought its last Units. [47] [ 50 ] On the same day, the special meeting of the unitholders took place and the Business Combination Resolution was approved by 85.87% of the Units. [48] 1.3 The implementation of the Business Combination [ 51 ] On October 29, 2010, the Board of Trustees authorized the Fund and the Administrator to enter into the Business Combination, a form of Subsequent Acquisition Transaction, and to terminate the Trust Agreement. [49] [ 52 ] On November 1, 2010, phase I of the Business Combination was effected.

All the issued and outstanding Units [50] were exchanged for preferred shares of Subco, redeemed at $5.00 per share and paid either in cash or in convertible debentures of Boralex Inc. [51] [ 53 ] The Fund then became a wholly-owned subsidiary of Subco and on the next day, the Units were delisted from the Toronto Stock Exchange. [52] [ 54 ] On November 2, 2010, O’Leary received under protest $20,970,334.26 in cash and a value of $1,817,492 in convertible debentures of Boralex Inc., representing the amount payable for its Units pursuant to the terms of the Business Combination. [53] [ 55 ] Later in December 2010, phase II of the Business Combination was effected. 750 and 759 (Subco) were amalgamated, [54] the Fund was liquidated [55] and 750 was wound-up into Boralex Inc. [56] 2.

ISSUES IN DISPUTE [ 56 ] O’Leary’s claim does not focus on the fairness or reasonableness of the deal.

[ 57 ] O’Leary nevertheless conducted a whole-scale attack on the Business Combination, leaving no stone unturned. [ 58 ] In an undoubtedly imperfect attempt to analyze O’Leary’s countless criticisms in a structured and logical fashion, the Court will first address the legality of the Business Combination in view of the relevant legal and contractual provisions. [ 59 ] O’Leary claims that the conduct of the Defendants in respect of this deal was abusive, unreasonable and contrary to the good faith requirements of Québec law, thereby triggering their civil liability, will be addressed in the second stage. 3.

ANALYSIS [ 60 ] Before discussing the legality of the Business Combination and the extra-contractual liability of the Defendants, preliminary clarifications are in order concerning the judgments which the Autorité des marchés financiers ( AMF ) and the Superior Court have already rendered concerning the Business Combination. 3.1 The previous decisions and judgement 3.1.1 June 23, 2010 and August 12, 2010 decisions of the AMF [ 61 ] On June 23, 2010, the AMF held that the process contemplated for the acquisition of the outstanding Units complied with the applicable securities laws and regulations. [57] [ 62 ] When the AMF made this decision, it was aware that if a Compulsory Acquisition could not be achieved in the first instance, the alternative plan of Boralex Inc. was to proceed to a Subsequent Acquisition transaction approved by special resolution and through a shell company. [ 63 ] On August 13, 2010, the AMF [58] dismissed O’Leary’s Motion for orders to end all activities in respect of Boralex Inc.’s acquisition of the outstanding Units. [59] In this Motion, O’Leary was alleging that the process conducted by the Independent Committee was flawed, that the Board of Trustees had not fulfilled its duty to achieve the best possible price for the unitholders, and that the securities legislation requirements were not followed. [ 64 ] In dismissing O’Leary’s Motion, the AMF held that no prima facie evidence supported O’Leary’s requests for orders.

The AMF added that the Motion was served on the day before the expiry of the First Amended Offer, which did not allow sufficient time to adequately prepare and debate the issues raised. [60] 3.1.2 October 28, 2010 Judgment of the Superior Court [ 65 ] On October 6, 2010, 15 days before O’Leary bought its last Units, O’Leary filed a Motion to obtain a Safeguard Order in the present file. [ 66 ] On October 28, 2010, seven days after the vote on the Amendment Resolution and on the Business Combination Resolution at the special meeting of the unitholders, O’Leary’s Motion for a Safeguard Order was dismissed.

In essence, the Superior Court (Mr. Justice Yves Poirier) held that:

(1) O’Leary had an apparent right to claim that the support of 90% of the noteholders was required to amend

section 6.29 of the Trust Agreement, although Boralex Inc. was raising interesting arguments in this regard;

(2) The Business Combination was a different transaction from the Take-Over Bid transaction, to which

section 6.29 of the Trust Agreement relates, and was subject to different rules and requirements;

(3) O’Leary’s right to oppose the Business Combination was thus doubtful, as the relevant provisions of the Trust Agreement seemed to have been complied with;

(4) The balance of convenience was in favour of the Defendants, particularly as (

a) the order sought would prevent the materialization of a business transaction accepted by more than 66⅔% of the Units and (

b) O’Leary’s alleged prejudice was financial, and thus not irreparable. [61] 3.1.3 Their limited authority and ambit [ 67 ] None of the above decisions and judgment decide the fate of the present dispute. Neither the AMF nor the Superior Court made a binding ruling on the legality of the Business Combination or on the parties’ conduct. [ 68 ] On the one hand, the AMF decisions are based on securities legislation and regulations, which purport to regulate the public market in shares or securities. [62] The findings of the AMF may be relevant to a certain extent.

However, they do not address the issues from the same angles as the Superior Court must in the present civil liability dispute. For instance, the AMF does not deal with the issue of compliance with the Trust Agreement. [ 69 ] On the other hand, the Superior Court judgment was rendered at an interlocutory stage, based on partial evidence and on criteria which are different from those to consider and apply at the stage of the final judgment on liability. 3.2 The legality of the Business Combination

[ 70 ] For the following reasons the Court holds that the Business Combination respects the requirements of the relevant laws and of the Trust Agreement. 3.2.1 The applicable legal regime [ 71 ] The status, rights, obligations and expectations of all the parties involved are predicated on the legal characterization of the Fund. 3.2.1.1 The Fund is a trust governed by Quebec laws, not a corporation [ 72 ] The Fund is an unincorporated income trust governed by the laws of the Province of Québec and by the applicable laws of Canada. [63] To cut short on any remaining vague desire to apply corporate laws to the Fund, the Trust Agreement explicitly stipulates that the Fund is not a corporation, a company or a general partnership. [64] [ 73 ] Trusts in Québec do not follow the classical notion of ownership and are based on the notion of “patrimony by appropriation”. [65] They result inter alia from a contract which transfers property to an autonomous and distinct patrimony. [ 74 ] As a result, trusts established by contract are creature of contract and thrive from contractual liberty.

In large measure, the terms of the trust agreements are paramount and govern the trusts. They reflect the intent of the settlor in creating the trust, and should be interpreted to give effect to such intent. [66] [ 75 ] The Trust Agreement in the case at hand replicates the above principles of the Civil Code of Québec .

It reiterates that the patrimony of the Trust is a patrimony by appropriation which is autonomous and distinct from that of the settlors, the Trustee or any unitholder [67] and reiterates that terms of the Trust Agreement are paramount over any inconsistent provision of the Civil Code of Québec, to the extent permitted by law. [68] 3.2.1.2 The Non-compliance with Securities legislation is not an issue [ 76 ] O’Leary does not assert that Regulation 61-101, which provides for additional protection for security holders in certain circumstances, was not complied with. [69] [ 77 ] However, the mere compliance with Regulation 61-101 or other Securities legislation does not entitle the Fund to proceed with the Business Combination. [ 78 ] The power of the Defendants to compel the Plaintiffs to relinquish or exchange their units rests on the powers and restrictions provided for in the Trust Agreement or elsewhere in the law. [ 79 ] We shall only mention at this point that O’Leary never raised before the AMF that the Business Combination was misleadingly or falsely described in the Circulars and in other public documents.

The AMF would have been an ideal forum to raise any purported Prospectus or Circular misstatements. [ 80 ] The Court can thus rightly hold that the operations leading to the Business Combination were accurately and timely described in the materials made available to O’Leary and to the public all through the process. 3.2.2 The Trust Agreement [ 81 ] The following key question remains: did the Trust Agreement empower the Defendants to force a compulsory exchange of O’Leary’s Units though the Business Combination with the approval of 85.87 % of the Units? [ 82 ] For the following reasons, the Court answers in the affirmative. 3.2.2.1 The rights of O’Leary as a unitholder, beneficiary of the Fund [ 83 ] The Trust Agreement explicitly states that the “relationship of the Unitholders to the Trustee, to the Trust and to the Trust Property shall be solely that of beneficiaries in accordance with this Trust Agreement.” [70] [ 84 ] Unitholders of the Fund were not owners of the property of the Fund or shareholders, partners, associates or syndicates of the Fund. [ 85 ] Treating O’Leary as a property owner or as a shareholder would be a simplistic and distorted disregard of the specific rules governing unitholders’ situation as beneficiaries of a trust. [ 86 ] In the case at hand, the Trust Agreement limits the rights of the unitholders to the right to participate in distributions when and as declared by the Trustee.

Unitholders also enjoy rights associated with their units: the right to receive distributions, the right to vote on certain matters and the right to participate in the proceeds in the event of a winding-up of the Fund. [71] [ 87 ] Still, such rights of the unitholders are not perpetual or absolute. They can be set aside or limited by statute or by contract. The rules applicable to a trust agreement can also provide for the conditions under which unitholders may be compelled to surrender their units.

For instance, a trust agreement can provide for a collegial limitation on the rights of beneficiaries if, for example, a certain level of support is obtained in favour of such a limitation. [ 88 ] Therefore, even if the Court cannot resort to its inherent powers to force unitholder to surrender their units, [72] unitholders can

be forced to relinquish their units without their consent if a statute or if the Trust Agreement so permit. 3.2.2.2 The trustee’s obligations and powers [ 89 ] In Québec civil law, a trustee has control and exclusive administration of the trust patrimony. [73] The trustee must carry its duties in accordance with the law and the constituting act [74] and shall act with prudence and diligence, honestly and faithfully in the best interest of the beneficiary or of the object pursued. [75] [ 90 ] The trustee has an obligation of means and is not liable for losses or damages caused in the execution of its duties under the Trust Agreement, unless they arise from the trustee’s gross or wilful fault [76] or fraudulent acts. [ 91 ] This standard of care is reflected in Sections 4.4. and 13.2 of the Trust Agreement. [ 92 ] The Trust Agreement also states that the Trustee is not liable for relying or acting upon statements, reports or opinions issued by professional advisors of the Trust. [77] [ 93 ] With respect to the Trustee’s powers, the Trust Agreement requires no approval of the unitholders for most actions and decisions of the Trustee.

This issue will be more specifically addressed in paragraphs [158] to [162] of the present judgment, dealing with

Section 4.8 of the Trust Agreement. 3.2.2.2.1 The Trustee legally delegated certain powers and tasks [ 94 ] In the Administration Agreement entered into shortly after the constitution of the Fund, the Trustee (Computershare) designated the Administrator (BPI) to provide administrative and support services in connection with the Fund and the Fund Units. [78] [ 95 ] Soon after it was informed of Boralex Inc.’s intention to buy the outstanding Fund Units, the Trustee delegated to the Board of Trustees all powers necessary to examine and make recommendations on the conditions and modalities of Boralex Inc.’s proposed acquisition, including the power to retain the services of professional advisors and to delegate to a sub-committee formed of independent trustees. [79] [ 96 ] The Board of Trustees thereafter formed such a sub-committee (the Independent Committee) in conformity with Regulation 61- 101 , to run the evaluation process and negotiation with Boralex Inc. [ 97 ] O’Leary relies on

Article 1337 of the Civil Code of Québec , which provides that an administrator may not delegate generally the conduct of the administration or the exercise of a discretionary power, except to his co-administrators. Based on this article, O’Leary claims that the Trustee illegally delegated its duties to the Administrator, to the Board of Trustees and to the Independent Committee. 1337.

An administrator may delegate his duties or be represented by a third person for specific acts; however, he may not delegate generally the conduct of the administration or the exercise of a discretionary power, except to his co-administrators . [Emphasis added] 1337.

L’administrateur peut déléguer ses fonctions ou se faire représenter par un tiers pour un acte déterminé; toutefois, il ne peut déléguer généralement la conduite de l’administration ou l’exercice d’un pouvoir discrétionnaire, sauf à ses coadministrateurs . [ 98 ] The Court does not share this point of view. [ 99 ] To the contrary, the Trust Agreement stipulates that the Trustee is deemed [80] to have complied with its standard of care if it has delegated the performance of certain tasks to a property manager, including the Administrator. [81] [ 100 ] The Trust Agreement also excludes the application of several provisions of the Civil Code of Québec , including

Article 1337 . [82] [ 101 ] In any event, even if

Article 1337 of the Civil Code of Québec applied in the case at hand, the delegations to the Administrator, to the Board of Trustees and the Independent Committee do not violate this provision. They should be considered as co-administrators of the Trustee, within the meaning of

Article 1337 . [ 102 ] More importantly, the Trustee did not delegate generally the conduct of the administration of the Trust or the exercise of a discretionary power, as

Article 1337 forbids. The delegation of powers to the Administrator, as per the Administration Agreement, is specific to administrative and support services. The delegation to the Board of Trustees is also specific to the examination and recommendations to make concerning the conditions and modalities of Boralex Inc.’s proposed acquisition of the Units . [ 103 ] The Board of Trustees thereafter did not forego its role in appointing the Independent Committee.

As Boralex Inc.’s offer was an insider bid, Regulation 61-101 imposed the constitution and involvement of such independent committee, to ensure that the process was conducted at arm’s length. [ 104 ] The Court fails to see how the Trustee would have breached its duties under the Trust Agreement in so delegating specific tasks to the Administrator and to the Board of Trustees. [ 105 ] The delegations which O’Leary decries were actually necessary for the Trustee to properly fulfill its duties. [83] The delegation

to the Board of Trustees and to the Independent Committee, with the assistance of the relevant specialists, to review and follow up on Boralex Inc.’s offer was a prudent, diligent and loyal exercise of its powers. [84] The Board of Trustees and the Independent Committee were in a good position, at least as good as Computershare, to appreciate what was in the interest of the unitholders. [ 106 ] In any event, Computershare remained involved and informed of the developments concerning Boralex Inc.’s offers. [85] 3.2.2.2.2 The Trustee acted with reasonable care and in the best interests of the unitholders [ 107 ] Even though deference is owed to business decisions that are made honestly and in conformity with sound business judgment, Courts should not sit idly by if a Trustee’s decision or conduct is not based on a legitimate business purpose or is in breach of fiduciary duties. [86] [ 108 ] Here, there is no reason for the Court to substitute its own opinion or O’Leary’s submissions to the decisions and recommendations of the Trustee.

They were made honestly, prudently, in good faith and on reasonable and rational grounds, having regard to the particular situation which the Fund was facing. [87] [ 109 ] O’Leary’s minimization of the role of the Board of Trustees and of the Independent Committee is a rather poor and unfortunate depiction of the reality. The allegation that the Board of Trustees merely rubberstamped a deal imposed by Boralex Inc. is an untenable stretch which relies on thin air.

Same can be said of the allegation that the Board of Trustees slavishly, recklessly or negligently acquiesced to Boralex Inc.’s decision, which was discriminatory, not entered into for a proper purpose and contrary to the interests of the Fund or of the unitholders. [ 110 ] From the onset, a clarification is of the utmost importance.

Boralex Inc.’s appointed trustees declared their interest, did not participate in any discussions or decisions regarding the offer or regarding any other issues which raised the possible appearance of conflict and did not vote on them. [88] [ 111 ] Boralex Inc. has also been constantly transparent in its interests in the Fund, that it owned 23 % of the Units, that one of its wholly-owned subsidiaries was managing the Fund, that it was making the offer through a company which was its wholly-owned subsidiary, and that some members of the Board of Trustees were related to Boralex Inc. [89] [ 112 ] Boralex Inc. was instrumental to the Business Combination process. [ 113 ] That raises no surprise and no suspicion of servility of the Board of Trustees. [ 114 ] The proposal of a Business Combination emanated from Boralex Inc., which designed the Business Combination Offer and decided to proceed with it. [ 115 ] It was no surprise that Boralex Inc. was closely involved: it was Boralex Inc.’s own offer! [ 116 ] Such involvement of the offeror also did not preclude the Trustee from playing its role in weighing the reasonableness and legality of the proposed Business Combination.

It actually did, with the assistance of the Independent Committee and of the relevant advisors. [ 117 ] The Independent Committee had ample financial and management expertise and knowledge on power generating stations, to fulfill its mandate. The Independent Committee reached out to legal and financial advisors and to financial valuators to carry a proper assessment and make an informed and sound recommendation to the unitholders. This approach was reasonable. [ 118 ] Mr.

Boivin, president of the Independent Committee, summarized the problems which the Fund was facing at the time and explained to the Court why the Independent Committee recommended to continue the discussions with Boralex Inc. before considering a public auction: (1) income trusts would become taxable on January 1 st , 2011, when the new tax laws for income trusts was to come into force; (2) there were ongoing problematic cost fluctuations of the wood supply which fueled the biomass plants; (3) significant capital expenditures were mandatory under the Safety Dams Act for 2010 and subsequent years at the Buckingham, Forestville and Beauport power plants. (4) the Kingsey Falls cogeneration power plant contract was coming to term in November 2012; (5) the prospect of converting the Fund into a company which would have to compete with BPI, its manager;

(6) In the course of a public auction conducted in 2007, many interested buyers had questioned the value of the assets of the Fund. This process had led to no interesting offer and was abandoned;

(7) After the 2007 public offer process was abandoned, the Fund received no other offer;

(8) Launching a public auction process would have required a lot of energy and work to put together a data room and make the information available to interested buyers. The Independent Committee felt that such a heavy process could have led Boralex Inc. to withdraw its offer;

(9) Boralex Inc. seemed to be a natural buyer, as it was likely the one or one of the few interested in buying biomass and power stations;

(10) The fees payable under the Support Agreement had a repulsive effect on other potential buyers.

[ 119 ] These justifications for not launching a public auction process were not proved to be frivolous or foreign to the best interest of the Fund and of the unitholders. To the contrary. [ 120 ] Mr. Boivin also explained that the numbers and assumptions which Boralex Inc. submitted at the request of the Independent Committee were meticulously validated. Some were kept. Others were adjusted.

The independent Committee did everything to issue an independent, realistic, sound and fair recommendation on Boralex Inc.’s offers and assumptions. [90] [ 121 ] Here, deference is owed to the business decisions and recommendations made by the Independent Committee and the Board of Trustees and to the vote of the holders of more than 85% of the Units. [ 122 ] O’Leary attacks every component of the Business Combination and of the process leading to it, including the break-up fee and the non-solicit clause in the Support Agreement. [ 123 ] Still, even though there may have been two ways of approaching the privatization of the Fund, O’Leary failed to demonstrate that the decisions and recommendations made in the case at hand did not lie within the range of reasonable alternatives available [91] to suit the best interest of the unitholders and of the Fund.

More particularly, O’Leary failed to show that another alternative, namely a transaction at more than $5 per Unit, was “definitely available”. [92] [ 124 ] Actually, O’Leary’s position is very much predicated on the assumption that some other entity would have offered greater value for the Fund Units than Boralex Inc. has.

The premise is without any evidentiary support. [93] 3.2.2.2.3 The vote of the holders of 85.87 % of the Fund Units, not a Trustee’s decision, forced O’Leary to tender its Units [ 125 ] O’Leary submits that under the Trust Agreement, the Trustee did not have the power to force the unitholders to surrender their Units without their consent. [ 126 ] O’Leary claims that the powers of the Trustee [94] are limited to the “Trust Property”, as defined in the Trust Agreement, [95] and to the “affairs of the Trust”, as interpreted in jurisprudence, [96] which would not encompass any power over the Units or their ownership.

Hence, the Trustee would not have had the power to force O’Leary to surrender its Units. [ 127 ] The submission that the Trustee cannot force a unitholder to tender its Units is an ill-founded diversion. [ 128 ] Some provisions of the Trust Agreement indeed provide for compelled exchange or surrender of Fund Units. Unitholders can thus be forced, if the requirements of the Trust Agreement are met, to surrender their Units. The only issue is whether or not such requirements were met here. [ 129 ] The « affairs of the Trust » must extend to votes on combination and mergers.

The Trustee calls unitholders meetings, presides meetings, permits vote at meetings, etc. Technically speaking, the unitholders vote and approve a combination. The Trustee organizes the meeting, and the unitholders vote and adopt a resolution. The Trustee does not vote. [ 130 ] The right to force the surrender of the Units therefore does not lie with the Trustee. It lies with the unitholders, according to the level of approval required by the Trust Agreement. [ 131 ] Trustee did not vote on the Business Combination. The Trustee did not force O’Leary to surrender its Units.

The unitholders holding 85.87 % of the Units did.

The Trustee only recommended the approval of the Business Combination. [ 132 ] The Business Combination was implemented pursuant to this vote. [ 133 ] The issue is whether this vote, and the circumstances leading to it, were sufficient to implement the Business Combination and, as a result, to force an opposing unitholder such as O’Leary to surrender or exchange its Units. [ 134 ] As further explained below, they were. 3.2.2.3 Unitholders have no minority protection or dissent rights [ 135 ] Although the Fund is a trust, O’Leary relies on minority protection rights, dissent rights and other protections and conditions emanating from corporate statutes: (1) the Business Combination would not meet all the CBCA [97] conditions of a compulsory acquisition of shares of dissenting shareholders (namely the requirement that such acquisition be approved by 90% of the independent shareholders); (2) the Business Combination would force upon O’Leary a compelled exchange of its units similar to a statutory amalgamation squeeze-out under the CBCA , without

section 182 of the CBCA being applicable; [98] and without providing for dissent rights, which are mandatory in such a CBCA amalgamation; [99]

(3) The conditions for going-private transactions, including the mandatory dissent right of shareholders [100] would also not have been complied with. [ 136 ] The Corporate laws and remedies do not apply to the Fund. [ 137 ] Hence, O’Leary’s various arguments that the Business Combination would contravene the protections and conditions of the CBCA [101] are of no relevance. [ 138 ] The Trust Agreement also does not provide for such minority protection rights.

[ 139 ] Admittedly, some provisions of the Trust Agreement echo those of the CBCA. However, such resemblance or even identity does not automatically incorporate all of the CBCA protections and mechanisms in the Trust Agreement. There is no requirement for Trust Agreements to mimic the shareholder remedies contained in corporate statutes. Actually, they often do not. [102] [ 140 ] The fact that the Trust Agreement replicates some of the CBCA provisions, for instance the 90% approval threshold on take-over bids, while at the same time not providing for a dissent right, speaks volumes.

It should not be read as an oversight. [ 141 ] Also, even if O’Leary benefited from minority protection rights against oppressive conduct of the majority unitholders, the demonstration of such oppression was not made. [ 142 ] In its proceedings, O’Leary indeed alleges in many ways that its belief that it could not be forced to surrender its Units in the absence of a 90% support of the independent unitholders was an important safeguard for O’Leary and a material consideration in its decision to invest in the Fund. [ 143 ] These allegations fly in the face of O’Leary’s own evidence. [ 144 ] The minority protection right which O’Leary now raises as the cornerstone of the present litigation were far from a material consideration in its decision to invest in the Fund.

Actually, this issue arose only very late in the process, on August 26, 2010, [103] when O’Leary’s current attorneys became involved and had a hand in drafting O’Leary’s press release. [ 145 ] O’Leary indeed never invested or reinvested in the Fund on the basis of this 90% protection threshold, which it never raised in its public communications. [104] No one at O’Leary canvassed the Trust Agreement before making investment decisions. [ 146 ] O’Leary assumed throughout that a 66⅔% support was enough to compel the surrender of all the outstanding units. [105] [ 147 ] Such understanding, which many of the actors involved shared, [106] was objectively reasonable, in view of the representations of Boralex Inc. and the Fund.

Quite early in the process, Boralex indeed indicated that a 90% approval was not obtained, it would proceed otherwise to acquire all outstanding unit, namely by a Subsequent Acquisition Transaction. [107] [ 148 ] This alleged important 90% threshold cannot go under the radar for so long and, at the same time, be the bedrock of O’Leary’s alleged violation of its rights as a minority unitholder.

The 90% veto right argument came as an afterthought. [ 149 ] If O’Leary’s argument on the 90% approval threshold is accurate, the validity of the Business Combination will be impaired, not because the legitimate expectations of O’Leary were defeated, but because the decision of the Fund would be contrary to its own law, the Trust Agreement. 3.2.2.4 The 90% approval threshold on which O’Leary relies (s. 6.29) does not imbed minority protection rights and does not apply to the Business Combination [ 150 ] The Court rejects O’Leary’s submission that

Section 6.29 creates minority protection rights. [ 151 ] The text of this provision, read in full and in connection with the other provisions of the Trust Agreement, shows that

Section 6.29 only facilitates the immediate implementation of an offeror’s take-over bid if it is supported by 90% of the Units held independently from the offeror. [ 152 ] In such event, no further steps or formalities are required to consummate a take-over bid, other than sending a registered 20 day- notice to non-tendering offerees confirming the compulsory acquisition. In essence,

Section 6.29 permits a compulsory confiscation of up to 10% of the Units of holders opposed to a take-over bid without having to send a notice of meeting. [ 153 ] This provision is a facilitating provision and does not preclude a take-over bid acquisition form going forward if 10% or more of the independent unitholders object. The 90% threshold only eliminates the necessity of holding a meeting of unitholders. 6.29 Take-Over Bids (

a) In the event of a take-over bid for Trust Units, […] (

b) If , within 120 days after the date of a take-over bid for all of the outstanding Trust Units including Trust Units issuable upon conversion, exercise or exchange of Exchangeable Securities), the bid is accepted by the holders of not less than 90% of the outstanding Trust Units and the Trust Units issuable upon the exchange, conversion or exercise of any outstanding Exchangeable Securities, taken together, other than the outstanding Trust Units and the Trust Units issuable upon the exchange, conversion or exercise of any outstanding Exchangeable Securities held at the date of the take-over bid by or on behalf of, or issuable to, the offeror or an affiliate or associate of the offeror the offeror is entitled, on complying with this

section 6.29, to acquire the Trust Units held by the non-tendering offerees and the Trust Units issuable under any outstanding Exchangeable Securities. (

c) An offeror may acquire Trust Units and Trust Units underlying outstanding Exchangeable Securities held by a non-tendering offeree by sending by registered mail within 60 days after the date of termination of the take-over bid and in any event within 180 days after the date of the take-over bid, an offeror's notice to each non-tendering offeree stating that: (

i) the offerees holding more than 90% of the Trust Units and entitlements to Trust Units issuable upon the exchange, conversion or exercise of the outstanding Exchangeable Securities, taken together, to which the bid relates accepted the take-over bid ; (ii) the offeror is bound to take up and pay for or has taken up and paid for the Trust Units and Trust Units underlying such Exchangeable Securities of the offerees who accepted the take-over bid;

(iii) a non-tendering offeree is required to transfer his Trust Units and/or Trust Units issuable pursuant to outstanding Exchangeable Securities to the offeror on the terms on which the offeror acquired the Trust Units of the offerees who accepted the take-over bid; and (iv) a non-tendering offeree who does not transfer his Trust Units and/or Trust Units issuable pursuant to outstanding Exchangeable Securities in accordance with paragraph 6.29(c)(iii) within 20 days after he receives the offeror's notice is deemed to have elected to transfer, and to have transferred, his Trust Units and, if a holder of Exchangeable Securities, shall be deemed to have converted, exercised or exchanged such Exchangeable Securities and to have elected to transfer and to have transferred the underlying Trust Units to the offeror on the same terms that the offeror acquired the Trust Units from the offerees who accepted the take-over bid. (

d) Concurrently with sending the offeror's notice under subsection 6.29(c), the offeror shall send to the Trust a notice of adverse claim disclosing the name and address of the offeror and the name of the non-tendering offeree with respect to each Trust Unit and/or Exchangeable Security held by a non-tendering offeree. (

e) A non-tendering offeree to whom an offeror's notice is sent under subsection 6.29(

c) shall, within 20 days after he receives that notice, send his Trust Units and/or Trust Units issuable pursuant to outstanding Exchangeable Securities or cause his Trust Units and/or Trust Units issuable pursuant to outstanding Exchangeable Securities to be sent to the Trust . (

f) Within 20 days after the offeror sends an offeror's notice under subsection 6.29(c), the offeror shall pay or transfer to the Trust the amount of money or other consideration that the offeror would have had to pay or transfer to a non-tendering offeree if the non-tendering offeree had tendered under the take-over bid. (

g) The Trust is deemed to hold on behalf of the non-tendering offeree the money or other consideration it receives under subsection 6.29(f), and the Trust shall deposit the money in a separate account in a bank or other body corporate any of whose deposits are insured by the Canada Deposit Insurance Corporation (or any successor thereof) or guaranteed by the Quebec Deposit Insurance Board (or any successor thereof), and shall place the other consideration in the custody of a bank or such other body corporate. [Emphasis added] [ 154 ] In the absence of any express language to this effect, this facilitating effect of

Section 6.29 does not raise an a contrario presumption that the settlors sought to import a minority protection threshold. [ 155 ] Actually, the remaining provisions of the Trust Agreement are inconsistent with O’Leary’s

interpretation of

Section 6.29, as they provide for many instances where unitholders may be forced to surrender their units with a vote of 66⅔% of the Units. 3.2.2.5 Various transactions where a 66⅔% vote is sufficient to compel the surrender Units [ 156 ] Contrary to O’Leary’s submission,

Section 6.29 does not codify the only circumstances where unitholders could be forced to surrender their units against their will. [ 157 ]

Section 6.28, which deals with repurchase of Units, is incompatible with O’Leary’s submission: 6.28 Repurchase of Units The Trust shall be entitled to purchase for cancellation at any time the whole or from time to time any part of the outstanding Units, at a price per Unit and on a basis determined by the Trustee in compliance with the applicable securities regulatory laws, regulations or policies or the policies of any applicable stock exchange. [ 158 ] More importantly,

Section 4.8(

b) lists specific actions which the Trustee can undertake with the approval of 66⅔% of the Units (special resolution): 4.8 Restrictions on the Trustee's Powers and their Exercise (

b) The Trustee shall not, without the approval of the Unitholders by Special Resolution, take any of the actions set forth in

Schedule 4.8(

b) annexed hereto and incorporated herein by reference. [ 159 ]

Schedule 4.8(

b) reads as follows: CERTAIN MATTERS REQUIRING THE PRIOR APPROVAL OF THE UNITHOLDERS BY SPECIAL RESOLUTION 1. Vote the Boralex Power Units with respect to any matter which under the Boralex Power Trust Agreement requires or permits the approval of Boralex Power Units by special resolution as defined therein. 2. Amend this Trust Agreement except as permitted in

section 11.1. 3. Sell, lease or exchange all or substantially all of the property of the Trust, other than (

i) in the ordinary course of business, (ii) in specie redemptions permitted hereunder and (iii) in order to initially acquire the Boralex Power Units and Boralex Power Notes. 4. Authorize the termination, liquidation or winding up of the Trust, other than in the circumstances set forth in

section 12.1 [(termination resulting from the extinction of trust property)]. 5. The combination or merger or similar transaction of the Trust with any other person . [Emphasis added] [ 160 ] Hence, crucial transactions affecting the purpose or destiny of the Fund (termination, liquidation, wind-up, combination, merger

or similar transaction) can be enforced with the approval of 66⅔% of the Units. [ 161 ] All of these envisaged transactions ineluctably require dissenting unitholders to surrender their Units. [ 162 ] These provisions are at odds with any allegation of a supposed implicit overarching minority protection 90% threshold. 3.2.2.6 The trustee’s power to proceed to a “combination or merger or similar transaction” approved by a 66⅔% vote (Trust Agreement, s. 4.8) [ 163 ] The Defendants rely on

Section 4.8 and

Schedule 4.8 [108] of the Trust Agreement which provide that the Trustee cannot proceed to a “ combination or merger or similar transaction of the Trust with any other person ” without a special resolution. [109] [ 164 ] Regulation 61-101 defines a “business combination” as follows: " business combination " means, for an issuer, an amalgamation, arrangement, consolidation, amendment to the terms of a class of equity securities or any other transaction of the issuer, as a consequence of which the interest of a holder of an equity security of the issuer may be terminated without the holder's consent , regardless of whether the equity security is replaced with another security, but does not include: […] [Emphasis added] « regroupement d’entreprises »: à l’égard d’un émetteur, une fusion, un arrangement, un regroupement, une modification des conditions d’une catégorie de titres de participation ou toute autre opération de l’émetteur au terme de laquelle le droit sur son

titre du porteur d’un

titre de participation de l’émetteur peut être éteint sans son consentement , sans égard au fait que le

titre de participation soit remplacé par un autre titre, à l’exclusion des opérations suivantes:[…] [ 165 ] In 1975, the Supreme Court of Canada wrote the following on the purpose and finality of amalgamations: [I] n an amalgamation a different result is sought and different legal mechanics are adopted, usually for the express purpose of ensuring the continued existence of the constituent companies. The motivating factor may be the Income Tax Act or difficulties likely to arise in conveying assets if the merger were by asset or share purchase .

But whatever the motive, the end result is to coalesce to create a homogeneous whole . The analogies of a river formed by the confluence of two streams, or the creation of a single rope through the intertwining of strands have been suggested by others . [110] [Emphasis added] [ 166 ]

Section 4.8 empowered the Trustee of effect an amalgamation squeeze-out, pursuant to the terms of the Business Combination. [ 167 ] Interestingly, the chain of events leading to the Business Combination is not uncommon in commercial practice. There are many precedents where trust agreements were amended to obtain unitholders’ approval by a majority of 66⅔% for a second step compulsory acquisition when the initial threshold of 90% was not attained. [111] The conformity of the Court’s

interpretation of the Trust Agreement with such commercial practice stands as a further indication that the

interpretation which the Court holds is in line with the settlor’s intent. [ 168 ] Boralex Inc.’s plan to use commercially reasonable efforts to pursue other means of acquiring all the outstanding Units, in the event that it would not be able to meet the 90% approval threshold was also openly expressed in the Support Agreement, [112] as well as in Boralex Inc.’s [113] and Trustee’s [114] circulars. [ 169 ] Hence, the possibility of proceeding with such a subsequent acquisition has been envisaged from the beginning. [ 170 ] The forced surrender of the O’Leary Units was part of that business transaction.

With the approval of the holder of not less than 66 ⅔ of the Units (more precisely 85.87%), the Trustee had the power to take the actions towards this business transaction. 3.2.2.7 The Amendment provision (s. 11.1) further confirms the inexistence of O’Leary’s alleged minority or veto right [ 171 ] The Amendment

section of the Trust Agreement provides further reassurance to the effect that

Section 6.29, dealing with take- over bids, neither enshrines a minority protection right nor vests the holders of 10% of the Units with a veto right on any transaction which would force them to surrender their Units. 11.1 Amendment The provisions of this Trust Agreement, except where specifically provided otherwise, may only be amended by Special Resolution ; provided that the provisions of this Trust Agreement may be amended by the Trustee without the consent, approval or ratification of the Unitholders or any other person: (

a) prior to Closing, for any purpose in the sole discretion of the Trustee; or (

b) at any time for the purpose of: (

i) ensuring continuing compliance with applicable laws, regulations, requirements or policies of any governmental authority having jurisdiction over the Trustee or the Trust;

(ii) in the opinion of the Boralex Power Trustees, providing additional protection for the Unitholders; (iii) removing any conflicts or inconsistencies in this Trust Agreement or making minor corrections which are, in the opinion of counsel to the Trust, necessary or desirable and not prejudicial to the Unitholders; or (iv) making amendments which, in the opinion of the Boralex Power Trustees, are necessary or desirable in the interests of the Unitholders as a result of changes in taxation laws; but notwithstanding the foregoing, no such amendment shall modify the right to one vote per Unit or reduce the fractional undivided interest in the Trust Property represented by any Unit without the consent of the holder of such Unit and no amendment shall reduce the percentage of votes required to be cast at a meeting of the Unitholders for the purpose of this

section 11.1 without the consent of the holders of all of the Units then outstanding . [Emphasis added] [ 172 ] The Trust Agreement can therefore be amended by Special Resolution of the unitholders, except where the Trust Agreement requires a different level of support. Any prohibition to amend the Trust Agreement by Special Resolution shall therefore be expressly provided for elsewhere. [ 173 ] For instance,

Section 11.1 (2) increases the approval threshold for several types of amendments. Namely, the consent of all unitholders is required to modify the one vote per Unit rule, to reduce the fractioned interest in the Trust Property, to change the 66⅔% threshold required to amend the provisions of the Trust Agreement or to reduce the percentage of votes required to be cast at a meeting of the unitholders. [ 174 ]

Section 11.1 does not state or suggest that a higher level of support than 66⅔% is required to amend

Section 6.29, on which O’Leary relies to claim the existence of a minority right protection and of a veto right in favour of the holders of 10% of the Units. [ 175 ] The absence of such a distinction is not an oversight. [ 176 ] Had the settlors purported, through

Section 6.29, to introduce minority rights which, as O’Leary alleges, were key to the functioning of the Fund and the cornerstone of equitable treatment of minority unitholders, an exception would have been provided for in the general amendment provision of the Trust Agreement. It would have been simple to indicate that amending

section 6.29 was prohibited or required the approval level provided for in

Section 6.29 itself. [ 177 ] The settlors did not include such an exception in the amendment provisions of the Trust Agreement. Such silence shows that:

(1) section 6.29 did not provide for minority protection right; and

(2) section 6.29 could be amended by way of a special resolution. 3.3 The civil liability of Boralex Inc., of the Fund and of the Trustee [ 178 ] Based on the foregoing, O’Leary has failed to show that the actions of Boralex Inc., the Fund or the Trustee in connection with the Business Combination and the compelled surrender of O’Leary’s Units amount to a fault, an abuse of rights or an unlawful interference with O’Leary’s rights as a unitholder; thereby triggering their civil liability pursuant to

Article 1457 of the Civil Code of Québec . [ 179 ] With the view of leaving as less as possible allegedly crucial points unanswered, the Court adds that there is no evidence that Boralex Inc. launched the take-over bid in breach of its confidentiality obligations under the Administration Agreement. [115] The process leading to a potential transaction between Boralex Inc. and the Fund unavoidably required that Boralex Inc., on the one hand, and Boralex Power Trust, on the other hand, exchange information not publicly available.

On April 20, 2010, Boralex Inc. and Boralex Power Trust thus entered into a Non-Disclosure Agreement properly setting the conditions of transmission and use of such information for the purpose of the acquisition contemplated ( Non-Disclosure Agreement ). [116] [ 180 ] In the case at hand, the compliance with all the applicable legislative and contractual standards stands as an additional indication that the Defendants did not breach their civil duty of prudence and diligence. [117] [ 181 ] This conclusion is reinforced by the fact that there is no breach of securities legislation.

The securities industry is indeed heavily regulated, mainly to discourage detrimental forms of commercial behavior, to protect investors, and to favour capital market efficiency and public confidence in the system. [118] WHEREFORE, THE COURT: [ 182 ] DISMISSES Plaintiffs’ Re-Amended Application to institute proceedings; [ 183 ] WITH COSTS . __________________________________ MARIE-ANNE PAQUETTE, j.S.C. Me Louis-Martin O’Neill

Me Vincent Cérat Lagana FASKEN MATINEAU DUMOULIN s.e.n.c.r.l. Attorney for the Interveners DAVIS WARD PHILLIPS & VINEBERG s.e.n.c.r.l., s.r.l Attorneys for Original Plaintiffs and First Plaintiffs in Continuance of Suit Me Laurent Nahmiash Me Anthony Francescini DUNTON CANADA s,e,n,c,r,l. Attorneys for the Defendants Me Olivier Lessard ROUSSIN LESSARD S.N. Attorney for the Impleaded Party Hearing dates: January 8, 9, 11, 12, 2018 TABLE OF CONTENTS OVERVIEW ............................................................................................................................... 2 1.

CONTEXT .......................................................................................................................... 3 1.1 The background history of the Fund ........................................................................ 3 1.2 The background history of the Business Combination and of the Acquisitions of Units by O’Leary 3 1.3 The implementation of the Business Combination ................................................ 8 2. ISSUES IN DISPUTE ........................................................................................................ 9 3.

ANALYSIS .......................................................................................................................... 9 3.1 The previous decisions and judgement .................................................................. 9 3.1.1 June 23, 2010 and August 12, 2010 decisions of the AMF ........................... 9 3.1.2 October 28, 2010 Judgment of the Superior Court ....................................... 10 3.1.3 Their limited authority and ambit ...................................................................... 11 3.2 The legality of the Business Combination ............................................................ 11 3.2.1 The applicable legal regime ............................................................................. 11 3.2.1.1 The Fund is a trust governed by Quebec laws, not a corporation .......... 11 3.2.1.2 The Non-compliance with Securities legislation is not an issue ............ 12 3.2.2 The Trust Agreement ........................................................................................ 13 3.2.2.1 The rights of O’Leary as a unitholder, beneficiary of the Fund ............... 13 3.2.2.2 The trustee’s obligations and powers ....................................................... 14 3.2.2.2.1 The Trustee legally delegated certain powers and tasks ................ 14 3.2.2.2.2 The Trustee acted with reasonable care and in the best interests of the unitholders 16 3.2.2.2.3 The vote of the holders of 85.87 % of the Fund Units, not a Trustee’s decision, forced O’Leary to tender its Units ...................................................................................... 19 3.2.2.3 Unitholders have no minority protection or dissent rights ....................... 20 3.2.2.4 The 90% approval threshold on which O’Leary relies (s. 6.29) does not imbed minority protection rights and does not apply to the Business Combination ...................... 22

3.2.2.5 Various transactions where a 66⅔% vote is sufficient to compel the surrender Units 25 3.2.2.6 The trustee’s power to proceed to a “combination or merger or similar transaction” approved by a 66⅔% vote (TrustAgreement, s. 4.8)............................................. 26 3.2.2.7 The Amendment provision (s. 11.1) further confirms the inexistence of O’Leary’s alleged minority or vetoright.................................................................................................... 28 3.3 The civil liability of Boralex Inc., of the Fund and of the Trustee......................... 29 WHEREFORE, THE COURT:............................................................................................... 30 TABLE OF CONTENTS......................................................................................................... 31 [111] Re Primaris Retail Real Estate Investment Trust and KS Acquisition II LP, (2013) 36 OSCB 800, par. 1, 4, 10-11, 13, 16-18; ReTake-Over Bid for Drive Products Income Fund, par. 1, 9 (ON SEC); Re InStorage Real Estate Investment Trust,(2009) 32 OSCB 336, par. 1, 12; Re Take-Over Bid for ATS Andlauer Income Fund by 2186940 Ontario Inc, (2008), 31 OSCB 11757,par. 13-18; Re Granby Industries Income Fund and al., (2008) 31 OSCB 3013, par. 12-18; Re Art in Motion Income Fund and ClarkeInc., (2008) 31 OSCB 9142, par. 7-11, 13.