Veolia Water Technologies, Inc., successor by merger to HPD, LLC Applicant/Appellant (Plaintiff) v. K+S Potash Canada General, 2018 SKCA 61

Court of Appeal for Saskatchewan Docket: CACV3268 Citation: Veolia Water Technologies, Inc. v K+S Potash Canada General Partnership , 2018 SKCA 61 Date: 2018-08-07 Between: Veolia Water Technologies, Inc., successor by merger to HPD, LLC Applicant/Appellant (Plaintiff) And K+S Potash Canada General Partnership Respondent/Respondent (Defendant) Before: Ottenbreit J.A. (in Chambers) Disposition: Application granted Written reasons by: The Honourable Mr.

Justice Ottenbreit On Application From: QBG 1528 of 2018, Regina Application Heard: July 11, 2018 Counsel: Daniel Tapp for the Applicant Shaunt Parthev and Markel Chernekoff for the Respondent Ottenbreit J.A. I. Introduction [ 1 ] Veolia Water Technologies, Inc. appeals the decision of the Chambers judge dated June 29, 2018, dismissing an application for an interlocutory order enjoining K+S Potash Canada General Partnership from drawing on two Irrevocable and Unconditional Letters of Credit Numbers 02502-1087236PEE and 02502-1148368PEE (LOCs).

Veolia now seeks an interim order enjoining K+S from drawing on the LOCs until this Court renders its decision on the appeal. For the reasons hereinafter set forth, that application is granted. II. Background [ 2 ] K+S brought an action against Veolia seeking more than $180,000,000 in damages as a result of a dispute between the parties arising out of a contract whereby Veolia agreed with K+S to design, supply and commission an Evaporation and Crystallization System for the K+S Legacy Project potash mine and production facility near Bethune, Saskatchewan.

In accordance with the contract, Veolia provided the first LOC on which K+S could draw if Veolia defaulted on certain contractual obligations. Veolia provided the second LOC on which K+S could draw if it was determined that certain damages resulting from the collapse of steel framing supporting a large crystallizer designed and supplied by Veolia was attributable to Veolia and could be recovered under the contract. [ 3 ] K+S had taken steps to draw on the first LOC and had given notice that it intended to take similar steps to draw on the second LOC.

Veolia took the position that K+S had no right to do so, arguing that there had been no default or, alternatively, that contractual provisions between it and K+S required an adjudication of liability by a court or an arbitrator before K+S could draw on the LOCs. [ 4 ] In June 2018, Veolia applied for an interim injunction enjoining K+S from drawing on the LOCs. After argument on the application, the Chambers judge reserved the decision and issued a fiat granting a temporary order preventing K+S from taking any further steps to draw on the LOCs until his decision was issued.

He stated the temporary order was intended as a preventative measure to ensure that there was no significant prejudice caused to either party’s position until he had an opportunity to consider the matter more fully. Three days after the application was heard, the Chambers judge issued a decision dismissing Veolia’s application. On July 4, 2018, five days later, Veolia served and filed its notice of appeal of the Chambers decision. III.

Analysis [ 5 ] Veolia argues that its appeal is bona fide and that I have jurisdiction to hear this application based on s. 20(1) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1, which reads as follows: 20

(1) A single judge sitting in chambers may hear and dispose of an application or motion that is incidental to an appeal or matter pending in the court and that does not involve the decision of the appeal on the merits. [ 6 ] Veolia seeks an order enjoining K+S from drawing on the LOCs until the determination of the appeal. It submits that the relief it seeks is not the same as the relief sought on the appeal proper. It argues the relief is incidental to its appeal and that if granted will enable the appeal to proceed and be decided on its merits.

Veolia submits that the overarching principles of the jurisprudence cited by both it and K+S underline the importance of preserving both the status quo pending appeal and Veolia’s right to have the appeal decided and not rendered moot in the interim. It argues that these principles apply regardless of the procedural context in which they arise, i.e., whether or not such an order sought is incidental to a stay under Rule 15 of The Court of Appeal Rules . Veolia acknowledges

there is in this case no order to stay under Rule 15. It argues that if not enjoined from doing so, K+S will draw down the LOCs and itsappeal for an injunction to prevent that from happening will be moot. It submits therefore that the court “has not only the right but theduty to preserve the rights of the parties”, citing Blackwoods Beverages Ltd. v Dairy Employees (No. 1) (1956), (SKCA), 3 DLR (2d) 529 (WL) (Sask CA) at para 10. [7] In

summary, Veolia argues that I have broad power to enjoin K+S from drawing on the LOCs pending the appeal of theChambers decision because such an order would not effectively decide the appeal on the merits and, at the same time, would insure theappeal does not become moot.

It cites Haug v Dorchester Institution, 2016 SKCA 55, [2016] 10 WWR 484: [3] To begin, as is evident by the language of s. 20(1) of The Court of Appeal Act, 2000, a single judge of this Court sitting inchambers has broad power but is restricted in its exercise to disposing of applications or motions that are “incidental to an appeal ormatter pending in the court” and that do not “involve the decision of the appeal on its merits.” This power has been interpreted aspermitting a Chambers judge to make all manner of orders affecting procedural matters incidental to an appeal or to preserve the statusquo pending the appeal, provided the order does not, in its effect, decide the appeal or render it moot.

See, as examples, Mann v KPMGInc., 2001 SKCA 24, 203 Sask R 267; T.E.T. v J.D.L., 2004 SKCA 76, 249 Sask R 218; Sundown Theatre Co. Ltd. v Ro-Edd AgenciesLtd., 2009 SKCA 78, 337 Sask R 111 [Sundown]; Affinity Credit Union v United Food and Commercial Workers, Local 1400, 2014SKCA 114, 446 Sask R 204; Beare v Kirby Enterprises Inc., 2013 SKCA 44, 414 Sask R 66.

On the other hand, it is not open to a singlejudge of this Court sitting in chambers to make an order that effectively puts an end to an appeal or that addresses in a final way a matterproperly left to the panel who will hear the appeal, such as an application to adduce fresh evidence.

See, as examples, Kachur v LaniganCreek-Dellwood Brook Watershed Association, 2006 SKCA 81, 285 Sask R 180; Sundown; Clements v Preece, 2014 SKCA 63, 438Sask R 222; He v Chen, 2010 SKCA 29, 346 Sask R 274; 604598 Saskatchewan Ltd. v Saskatchewan Liquor and Gaming LicensingCommission (Sask) (1997), (SK CA), 152 Sask R 201 (CA); Cochet v Cochet (1989), (SK CA), 74Sask R 219 (CA); Owen v Thomas (1988), 60 Sask R 84 (CA); Turbo Resources Ltd. v Gibson (1987), (SK CA), 60Sask R 221 (CA). [8] K+S submits that a single judge has no jurisdiction to grant the order sought.

It relies on Beare v Kirby Enterprises Inc.,2013 SKCA 44, 414 Sask R 66 [Beare], where Caldwell J.A. dismissed an application for an interim order in the nature of injunctiverelief to cause a municipality to remove a diversion culvert already installed at a roadway junction. The culvert had the effect of allowingimminent spring runoff waters to flow toward the appellant’s property and away from the respondent’s property.

Caldwell J.A. stated: [7] Applied to the circumstances of this matter, regardless of whether examined under s. 20(1) or under the inherent jurisdiction ofthe Court, the relief requested by the Appellant is undoubtedly beyond the authority of the Court. I say this, first, because I amcompelled to conclude that the broad relief sought here is not incidental to the appeal, even on an interim basis.

This is so because, giventhe imminence of the spring runoff and the current status of the appeal proper, the interim injunctive and mandamus relief sought by theAppellant would render the appeal moot by the time it could be heard and, thereby, substantively determine the appeal.

Second,assuming (without deciding) that a judge in chambers is empowered to grant relief in the nature of that sought by the Appellant under theinherent jurisdiction of the Court, in the circumstances of this matter, the relief sought would undoubtedly fall outside that powerbecause the Appellant’s application seeks to obtain more in the way of relief than does his appeal. The Appellant’s application for reliefin the nature of injunctive and mandamus relief is therefore dismissed. (Italic emphasis in original) [9] K+S also relies on Carman Loraas v Bruce Loraas (15 May 2018) Regina, CACV3244 (Sask CA) [Loraas].

In that case, aQueen’s Bench Chambers judge had dismissed an application for an injunction preventing one shareholder of a company from incurringany financial obligation on behalf of the company in excess of a certain amount or entering into any lease, sale or purchase of realproperty. In that case, the appellant requested an order in this Court pending the hearing of the appeal.

Ryan-Froslie J.A. determined shedid not have jurisdiction to grant such relief stating: [10] Bruce submits this Court does not have jurisdiction to grant the relief requested by Carman as that relief is not incidental to theappeal but rather requires a judge of this Court in Chambers to decide issues which, in effect, are the issues to be determined in theappeal proper. In the alternative, Bruce argues that if a judge of this Court in Chambers has the authority to grant the relief requested, thethree-prong test set out in RJR–MacDonald applies.

Bruce points to paragraphs 42–45 of the Chambers judge’s decision which concludeCarman has not met that test in that he has not established irreparable harm or that the balance of convenience favours the granting of theorder. Bruce further submits that the Chambers judge found Bruce had not breached the BCA and thus Carman’s reliance on s. 240 as thebasis for his application is misplaced. The application cannot succeed on that basis without finding Bruce has breached that Act. [11] In my view, a single judge of this Court in Chambers does not have the jurisdiction to grant the relief requested by Carman.

Therelief requested is not incidental to the appeal but rather requires a judge of the Court in Chambers to determine the very issues underappeal, namely, what constitutes the status quo with respect to running LDS; the test to be applied when granting orders pursuant to s.240 of the BCA; and whether, if the three-prong test set out in RJR–MacDonald is applicable, Carman has established that he wouldsuffer irreparable harm if the order was not granted and that the balance of convenience favours the order. I say this because: (

a) the relief requested by Carman on this interim application is identical to the relief requested and denied in the Court of Queen’sBench; (

b) the issues raised on this application are identical to the issues raised and determined by the Queen’s Bench Chambers judgewhose order is now under appeal; and (

c) Carman’s grounds for appeal allege the Chambers judge erred in his determination of what constitutes the status quo (seegrounds 4(

a) to (

d) of Carman’s notice of appeal), in determining whether the three-prong test set out in RJR–MacDonald applies in thecircumstances (see ground 4(

e) of the notice of appeal), and in finding Carman did not meet the three-prong test as he had not establishedirreparable harm or that the balance of convenience favoured the granting of the order (see ground 4(

f) of the notice of appeal). [10] K+S submits that the arguments advanced by Veolia mirror the arguments of the applicant in Loraas. It submits I do not have

jurisdiction to make the order requested. I disagree. [11] In Loraas, Ryan-Froslie J.A., citing Beare, affirmed that a single judge of this Court has power to hear and dispose of anymatter incidental to an appeal that does not involve the decision of the appeal on its merits. A single judge of this Court also has thepower to preserve the status quo and prevent the frustration of an appeal as was explained by Caldwell J.A. in Morin v Matheson, 2017SKCA 80 [Morin]: [6] In effect then, this leaves Mr. Morin asking this Court for something in the nature of injunctive relief prohibiting Ms.

Mathesonfrom pursuing enforcement under the notices of continuing seizure and arrears. A Chambers judge of this Court has the power to grantinjunctive relief so as to preserve the status quo and prevent the frustration of an appeal: Beare v Kirby Enterprises Inc., 2013 SKCA 44,414 Sask R 66; Taylor v Eisner (1989), (SK CA), 80 Sask R 84 (CA). [12] Whether a judge should exercise the power to determine incidental matters, preserve the status quo and prevent the frustrationof an appeal is fact specific. In Beare and Loraas that power was not exercised.

In Beare, it was because the relief requested was greaterthan that at issue in the appeal and granting the relief would have rendered the appeal moot. In Loraas, it was because the relief couldnot be granted without finding that the issues raised in the notice of appeal were correct, effectively deciding the appeal and rendering itmoot. [13] In this case, while the argument of K+S that the relief being requested is the same as that on the appeal has a superficialattraction, this is not really the case.

The application before me requests an interim injunction that is not dependent on the merits of theright of K+S to draw on the LOCs without a court or arbitral tribunal determination. In the application before me, the duration of theinjunction is also short term and not congruent with the longer term at stake in the appeal. Another distinguishing factor is that in theappeal, unlike this application, Veolia also requests that K+S be required to repay any monies drawn on the LOCs prior to the court’sruling.

I am satisfied the issues at play in this application are not identical to those on the appeal and that I need not make anydetermination of the issues on the appeal to decide this application. I am satisfied that the relief being requested is incidental andsubordinate to the appeal. [14] The nub of this application is whether I should exercise my discretion and order the relief requested to preserve the appeal andnot render it moot. This may happen if K+S draws on the LOCs before the appeal is heard.

Interestingly, in Beare and Loraas theopposite was the case; granting the relief would have rendered the appeal moot. [15] As set forth in Morin, the test to be applied in a case such as this is the three-part injunctive relief test set out in Manitoba(A.G.) v Metropolitan Stores Ltd., (SCC), [1987] 1 SCR 110 at paras 31–35 (QL), and Kim v University of Regina(1990), (SK CA), 85 Sask R 166 (CA), as confirmed in RJR–MacDonald Inc. v Canada (Attorney General), (SCC), [1994] 1 SCR 311 at para 36 (QL) [RJR–MacDonald]. [16] This test as enunciated in RJR–MacDonald at paragraphs 76–80 is whether the applicant has demonstrated: (

a) that the appealraises a serious question to be tried (generally a low threshold); (

b) that irreparable harm will result if the relief is not granted; and (

c) thebalance of (in)convenience is in its favour. [17] Applying this test, I am satisfied that Veolia has made out its case that K+S should be enjoined from drawing on the LOCspending appeal. Veolia’s grounds of appeal, even if they are ultimately unsuccessful, nevertheless cross the low threshold of raising aserious issue to be considered by this Court. With respect to the factor of irreparable harm, there is a high likelihood the appeal willeffectively become moot if the relief is not granted.

However, to be clear, I am not saying that the prospect of the appeal becoming mootwill in all circumstances be conclusive. It is one factor that is relevant to one part of the test (see, for example, Ulmer v British ColumbiaSociety for the Prevention of Cruelty to Animals, 2010 BCCA 98, 284 BCAC 162, where the appeal would similarly have been moot butthe applicant failed on the balance of convenience part of the test). The balance of convenience is in Veolia’s favour. In my view, Veoliawill suffer the greater harm if, in the circumstances of this case, its appeal is undercut by K+S drawing on the LOCs.

It is a fairobservation that any prejudice K+S experiences in the delay in drawing on the LOCs pending appeal will, if Veolia is unsuccessful, beadequately dealt with and be compensated in the claim of K+S against Veolia. [18] In

summary, K+S shall be enjoined from drawing on the LOCs until the hearing of this appeal. [19] Given my decision, it is appropriate to expedite the appeal. Accordingly, Veolia shall serve and file its factum and appealbook and otherwise perfect its appeal no later than 4:00 p.m. on September 4, 2018. K+S shall serve and file its factum no later than 4:00p.m. on September 21, 2018. The Registrar is directed to set this matter for hearing the first available date in October or November 2018. [20] Costs of this application shall be reserved to the panel hearing the appeal. “Ottenbreit J.A.” Ottenbreit J.A.