Veolia Water Technologies Inc., successor by merger to HPD, LLC Respondent/Appellant (Plaintiff) v. K+S Potash Canada General, 2019 SKCA 73

Court of Appeal for Saskatchewan Docket: CACV3268 Citation: Veolia Water Technologies Inc. v K+S Potash Canada General Partnership , 2019 SKCA 73 Date: 2019-07-31 Between: Veolia Water Technologies Inc., successor by merger to HPD, LLC Respondent/Appellant (Plaintiff) And K+S Potash Canada General Partnership Applicant/Respondent (Defendant) Before: Richards C.J.S., Ryan-Froslie and Tholl JJ.A. Disposition: Application dismissed Written reasons by: The Honourable Chief Justice Richards In concurrence: The Honourable Madam Justice Ryan-Froslie The Honourable Mr.

Justice Tholl On Application From: Chambers decision dated April 18, 2019 Application Heard: May 15, 2019 Counsel: Shaunt Parthev, Q.C., and Janelle Souter for the Applicant Melanie Teetaert for the Respondent Richards C.J.S. I. Introduction [ 1 ] Veolia Water Technologies Inc. [Veolia] argued unsuccessfully in an appeal to this Court that K+S Potash Canada General Partnership [KSPC] should be enjoined from drawing on two irrevocable standby letters of credit. [ 2 ] Veolia resolved to seek leave to appeal the Court’s decision to the Supreme Court of Canada.

It then secured an order from a judge of this Court [Chambers judge] preventing KSPC from drawing on the letters of credit pending a decision from the Supreme Court on the leave application and, if leave was granted, pending a final resolution of the appeal. [ 3 ] KSPC now asks the Court to review and overturn the decision of the Chambers judge.

In this regard, it relies on s. 20(3) of The Court of Appeal Act, 2000 , SS 2000, c C-42.1 , and s. 65.1(3) of the Supreme Court Act , RSC 1985, c S-26 , as the basis of its application. [ 4 ] As explained below, neither s. 20(3) nor s. 65.1(3) is engaged by the circumstances at hand. As a result, KSPC’s application must be dismissed. II. background [ 5 ] The factual and procedural background underpinning KSPC’s application is largely set out in the decision of the Court that KSPC seeks to bring before the Supreme Court ( 2019 SKCA 25 ). The main features of that background can be summarized as follows: (

a) KSPC entered into a contract [Contract] with Veolia whereby Veolia agreed to design, supply and commission the evaporation, clarification and crystallization system for KSPC’s potash mine near Bethune, Saskatchewan. (

b) The first letter of credit in issue here [Letter of Credit #1] arose out of the Contract. It was furnished by Veolia to KSPC. The Contract provided that KSPC would draw on Letter of Credit #1 if Veolia “defaults in any of its obligations under this Contract and fails to remedy the default within any applicable cure period provided for in the Contract”. Letter of Credit #1 itself states that KSPC may draw on Société Générale, a financial institution located in France, up to the aggregate amount of $14,600,000 USD. (

c) The second letter of credit [Letter of Credit #2] is grounded in the collapse of a structure designed by Veolia and supplied to KSPC [Incident]. A reservation of rights agreement provided that KSPC could draw on Letter of Credit #2 for any damages recoverable under the Contract that were the result of, or arose out of, the Incident. Letter of Credit #2 authorizes KSPC to draw on Société Générale up to the aggregate amount of $15,000,000 USD. (

d) In August of 2017, Veolia commenced an arbitral proceeding against KSPC through the ADR Institute of Canada asking for compensation for certain work that it had performed following the Incident. (

e) In April of 2018, KSPC filed a statement of claim in the Court of Queen’s Bench seeking an amount exceeding $180,000,000 CAD in damages against Veolia in connection with the Incident. (

f) Veolia filed a statement of claim in the Court of Queen’s Bench in May of 2018. In it, Veolia alleged KSPC had not satisfied the conditions necessary for it to make draws on either Letter of Credit #1 or Letter of Credit #2. (

g) After filing its statement of claim, Veolia proceeded with a notice of application seeking an injunction prohibiting KSPC from drawing on either of the Letters of Credit. More specifically, Veolia claimed that, in relation to Letter of Credit #1, KSPC had failed to

provide it with an opportunity to cure alleged defaults under the Contract. In relation to Letter of Credit #2, Veolia contended KSPC hadproceeded without having a court or arbitral tribunal first determine whether its losses were recoverable under the Contract. As a bottomline, Veolia sought an order preventing KSPC from drawing on the Letters of Credit until such time as the Court of Queen’s Bench or anarbitral tribunal had determined that KSPC was entitled to draw on them. (

h) A Queen’s Bench Chambers judge denied the injunction sought by Veolia. He applied Bank of Nova Scotia v Angelica-Whitewear Ltd., (SCC), [1987] 1 SCR 59, and concluded that, because Veolia had not alleged or established that KSPCwas acting fraudulently, he would not enjoin KSPC from drawing on the Letters of Credit. (

i) Veolia then served and filed a notice of appeal in this Court and brought an application to a judge of this Court in Chambersfor an order enjoining KSPC from drawing on the Letters of Credit until the Court rendered a decision on its appeal. The Chambers judgeexpedited the hearing of the appeal and granted the injunctive relief sought by Veolia. (

j) This Court ultimately upheld the Queen’s Bench decision that had denied Veolia’s injunction application. (

k) Veolia determined that it would seek leave to appeal the Court’s decision to the Supreme Court of Canada. III. the decision under review [6] Having decided to seek leave to appeal to the Supreme Court, but before filing its leave materials, Veolia brought a Chambersapplication in this Court pursuant to s. 65.1(2) of the Supreme Court Act.

Section 65.1(2) permits a Chambers judge to stay proceedingswith respect to a judgment of the Court where the party seeking the stay intends to seek leave to appeal and a delay in issuing the staywould result in a miscarriage of justice. Veolia asked for an order enjoining KSPC from drawing on the Letters of Credit pending adecision by the Supreme Court on its application for leave to appeal and, if leave was granted, until a final decision from the SupremeCourt. [7] The Chambers judge concluded that s. 65.1 reached beyond the usual scope of stays.

In this regard, he relied on the followingpassage from RJR–MacDonald Inc. v Canada (Attorney General), (SCC), [1994] 1 SCR 311 at 329–330: In light of the foregoing and bearing in mind in particular the language of s. 97 of the Act we cannot agree with the first two points raisedby the Attorney General that this Court is unable to grant a stay as requested by the applicants.

We are of the view that the Court isempowered, pursuant to both s. 65.1 and r. 27, not only to grant a stay of execution and of proceedings in the traditional sense, but also tomake any order that preserves matters between the parties in a state that will prevent prejudice as far as possible pending resolution by theCourt of the controversy, so as to enable the Court to render a meaningful and effective judgment. The Court must be able to intervene notonly against the direct dictates of the judgment but also against its effects.

This means that the Court must have jurisdiction to enjoinconduct on the part of a party in reliance on the judgment which, if carried out, would tend to negate or diminish the effect of the judgmentof this Court. In this case, the new regulations constitute conduct under a law that has been declared constitutional by the lower courts. (Emphasis added) [8] The Chambers judge saw Veolia as being in essentially the same position as it had been in when it had sought to enjoin KSPCfrom drawing on the Letters of Credit pending its appeal to this Court.

Noting that the order sought by Veolia would avoid the problem ofits possible appeal to the Supreme Court becoming moot, the Chambers judge concluded the justice and equity of the situation requiredhim to grant the order sought by Veolia. [9] The Chambers judge granted an order in these terms: [11] Accordingly, to preserve the status quo in this litigation, [KSPC] is enjoined from drawing on the [Letters of Credit]. In the eventVeolia’s application for leave to appeal to the Supreme Court is denied, this order will cease to have effect.

If leave to appeal is granted,this order will remain in effect until the date of the final judgment of the Supreme Court in the matter. IV. KSPC’s application [10] Eight days after the Chambers judge rendered his decision, KSPC filed what it styles as a “notice of motion to vacate order”.KSPC contends the Chambers judge made several errors in reaching his decision. It relies on s. 20(3) of The Court of Appeal Act, 2000and s. 65.1(3) of the Supreme Court Act as the basis of its application and effectively asks the Court to entertain an appeal from thedecision of the Chambers judge.

V. analysis [11] As indicated, KSPC grounds its application on both s. 20(3) of The Court of Appeal Act, 2000 and s. 65.1(3) of the SupremeCourt Act. However, neither provision permits the Court to review the decision of the Chambers judge in the circumstances at hand. As aresult, KSPC’s motion can be resolved summarily on the basis that the Court has no authority to entertain it. There is therefore no need todeal with the issue of whether, as argued by Veolia, KSPC is estopped from taking issue with the decision of the Chambers judge.

Nor isit necessary to deal with KSPC’s submission that the Chambers judge erred in deciding as he did. A. Section 20(3) of The Court of Appeal Act, 2000 [12] Section 20(3) of The Court of Appeal Act, 2000 is the first provision on which KSPC purports to ground its application. A

proper understanding of s. 20(3) requires that it be considered in light of s. 20 as a whole.

Section 20 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 pendingin the court and that does not involve the decision of the appeal on the merits.

(2) A single judge sitting in chambers may hear and dispose of an application for leave to appeal.

(3) An order made by a judge in chambers, other than an order granting or denying leave to appeal, may be discharged or varied by thecourt. [13] Seen in context, it is readily apparent that s. 20(3) is of no assistance to KSPC. It relates to the discharge and variation of ordersmade by a judge in Chambers pursuant to s. 20(1), i.e., it relates to orders made by a Chambers judge that are incidental to appeals ormatters pending in this Court. See: Beer v Saskatchewan (Highways and Infrastructure), 2016 SKCA 24 at para 7, 476 Sask R 74.

Thedecision of the Chambers judge in issue here was not incidental to a pending appeal in this Court. Rather, his decision was made unders. 65.1(2) of the Supreme Court Act in relation to an appeal that had already been decided and in respect of which this Court was functus. [14] It follows that s. 20(3) of The Court of Appeal Act, 2000 is inapplicable to the situation at hand. It cannot serve as the basis fora review of the order made by the Chambers judge. B.

Section 65.1(3) of the Supreme Court Act [15] KSPC also relies on s. 65.1(3) of the Supreme Court Act as the foundation of its application to overturn the decision of theChambers judge.

Section 65.1 reads as follows: 65.1

(1) The Court, the court appealed from or a judge of either of those courts may, on the request of the party who has served and filed anotice of application for leave to appeal, order that proceedings be stayed with respect to the judgment from which leave to appeal is beingsought, on the terms deemed appropriate.

(2) The court appealed from or a judge of that court may exercise the power conferred by subsection (1) before the serving and filing ofthe notice of application for leave to appeal if satisfied that the party seeking the stay intends to apply for leave to appeal and that delaywould result in a miscarriage of justice.

(3) The Court, the court appealed from or a judge of either of those courts may modify, vary or vacate a stay order made under thissection. [16] KSPC approaches s. 65.1(3) as if it provides a general right of appeal to this Court from a decision of a judge made pursuant toss. 65.1(1) or (2). In my respectful view, this is a misreading of s. 65.1(3). [17] Like any statutory provision, s. 65.1(3) falls to be construed by way of the so-called modern principle endorsed by the SupremeCourt of Canada in Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 SCR 27 at para 21: Today there is only one principle or approach, namely, the words of

an Act are to be read in their entire context and in their grammaticaland ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament. [18] Let me begin with the ordinary and grammatical sense or meaning of the words used in s. 65.1(3). Significantly, the term“appeal” is nowhere to be found. Rather, the subsection speaks of a power to “modify, vary or vacate” a stay order.

This language, on itsface, appears to suggest an authority to adjust stay orders to take account of changes in circumstance rather than an authority to reviewthem by way of an appeal. [19] This view of s. 65.1(3) is confirmed by two other features of its wording. First, s. 65.1(3) operates only where a stay has beengranted pursuant to ss. 65.1(1) or (2). This is of some significance because, if it was designed to afford something in the nature of rights ofappeal in relation to stay decisions, one might expect that s. 65.1(3) would also apply in situations where a stay is denied.

Second, s.65.1(3) does not identify the specific court or judge that would entertain an application in the nature of an appeal. It does not specify that,for example, a litigant who wishes to challenge a stay decision made by a judge of a court of appeal should ask the court of appeal itself toconduct the necessary review. It says only that “[the Supreme Court], the court appealed from or a judge of either of those courts” maymodify, vary or vacate a stay order.

This is an unusual state of affairs if, as KSPC submits, s. 65.1(3) provides for a de facto appeal. [20] Thus, all things considered, the plain and ordinary meaning of the words found in s. 65.1(3) is that a stay order may bemodified, varied or vacated if there is a material change in the circumstances at play at the time when it was made. [21] While there is not a great deal of case authority on the meaning of s. 65.1(3), other courts appear to have seen s. 65.1(3) in thissame way, i.e., as allowing a stay order to be modified, varied or vacated in light of a material change in circumstances.

See: United TaxiDrivers’ Fellowship of Southern Alberta v Calgary (City of), 2003 ABCA 117 at para 11, 327 AR 300; and Turf Masters LandscapingLimited v T.A.G. Developments Limited (1995), (NS CA), 144 NSR (2d) 326 (WL) (CA) at para 39. [22] This sense of s. 65.1(3) is confirmed by the marginal note associated with it. That note describes s. 65.1(3) as dealing with the“modification” of stay orders. It stands in contrast to the marginal notes attached to the provisions of the Supreme Court Act grantingrights of appeal.

See, for example: “Appeals from references by lieutenant governor in council” (s 36); “Appeals with leave of provincialcourt” (s 37); “Appeal with leave of Federal Court of Appeal” (s 37.1); “Appeals per saltum” (s 38); and “Appeals with leave of SupremeCourt” (s 40). While it would be unwise to place significant interpretative weight on the marginal note for s. 65.1(3), nevertheless it doestend to confirm the notion that the subsection is concerned with something other than a right of appeal.

See: R v A.D.H., 2013 SCC 28 atpara 71, [2013] 2 SCR 269; and Law Society of Upper Canada v Skapinker, (SCC), [1984] 1 SCR 357 at 377. [23] Finally, I note that KSPC’s view of s. 65.1(3) is difficult to reconcile with the broad scheme of the Supreme Court Act. I say

this because, on the logic of KSPC’s assessment of s. 65.1(3), it could have asked a judge of the Supreme Court, or the Supreme Court itself, to review the decision of the Chambers judge. This is so because, as noted above, there is nothing in the wording of s. 65.1(3) that indicates the judge or court to which a litigant should turn if it is unhappy with a stay order. KSPC finds itself before this Court only because it chose to bring its application here. On its approach to s. 65.1(3), it could just as easily, and just as plausibly, be before the Supreme Court itself.

All of this is inconsistent with the overall organization of the Supreme Court Act which carefully limits the circumstances in which appeals can be brought before the Supreme Court in ss. 35 to 43 under the heading “Appellate Jurisdiction”.

Parliament should not be taken to have deliberately set out the Supreme Court’s appellate authority in this way and to have then gone on in s. 65.1(3) to have provided an additional right of appeal and, indeed, to have done so without even using the word “appeal”. [ 24 ] In the end, therefore, I am not persuaded that s. 65.1(3) somehow provides a de facto right of appeal in relation to stays granted pursuant to ss. 65.1(1) and (2) . Rather, s. 65.1(3) is best understood as allowing stay orders to be modified, varied or vacated if there has been a material change in circumstances.

No such change has been argued here and it follows that KSPC has no basis for asking the Court to overturn the decision of the Chambers judge. [ 25 ] This

interpretation of s. 65.1(3) does mean that, if a Chambers judge should make an error in granting a stay, his or her decision would be unreviewable in the absence of a material change in circumstances. This result may strike a litigant in KSPC’s position as being unfair or inappropriate. However, the bottom-line legal reality is that rights of appeal are not inherent. They exist only where provided for by statute and, if Parliament or a provincial legislature decides not to prescribe a right of appeal, there is no such right.

VI. conclusion [ 26 ] I conclude that, in the circumstances at play here, neither s. 20(3) of The Court of Appeal Act, 2000 nor s. 65.1(3) of the Supreme Court Act is applicable and, as a result, KSPC has no foundation for its application. It follows that its application must be dismissed. [ 27 ] Veolia is entitled to costs. “Richards C.J.S.” Richards C.J.S. I concur. “Tholl J.A.” Per Ryan-Froslie J.A. I concur. “Tholl J.A.” Tholl J.A.