Divisional Court File No.

: 497/18
ONTARIO
SUPERIOR COURT OF JUSTICE
(DIVISIONAL COURT)
B E T W E E N:

TESLA MOTORS CANADA ULC

Applicant
- and -

ONTARIO (MINISTRY OF TRANSPORTATION)

Respondent

FACTUM OF THE RESPONDENT

ONTARIO (MINISTRY OF TRANSPORTATION)

Date: August 21, 2018 MINISTRY OF THE ATTORNEY GENERAL

Crown Law Office – Civil
720 Bay Street, 8th Floor
Toronto, ON M7A 2S9
Fax: (416) 326-4181

Antonin I. Pribetic (LSO# 34843S)

Tel: (416) 314-2540

Tamara D. Barclay (LSO# 42795V)

Tel: (416) 326-4103

Brent Kettles (LSO# 61568E)

Tel: (416) 314-2040

Counsel for the Respondent

TO: POLLEY FAITH LLP
The Victory Building
80 Richmond Street West, Suite 1300
Toronto, ON M5H 2A4
Fax: (416) 365-1601

Mark Polley (LSUC# 44413O)

Tel: 416-365-1603

Jeffrey Haylock (LSUC# 61241F)

Tel: (416) 365-0404

Sandy Lockhart (LSUC# 73554J)

Tel: (416) 306-6450

Counsel for the Applicant

 INDEX
PAGE

PART I – OVERVIEW ................................................................................................................ 1

PART II – THE FACTS ............................................................................................................... 2

The EVIP and EHVIP Programs................................................................................................. 2

The Wind Down of the EHVIP Program .................................................................................... 4

Tesla’s Eligibility for Transition Funding .................................................................................. 5

PART III – ISSUES AND THE LAW ........................................................................................ 8

Issue 1: The Application Is Not Urgent and Delay Will Not Involve a
Failure of Justice ....................................................................................................................... 8

Issue 2: Decisions Regarding Transition Funding Are Not Reviewable ............................ 12

This Application is Not Justiciable as it Attacks a Core Policy

Decision of Government ....................................................................................................... 12

The Expenditure of Public Funds is Not Judicially Reviewable .......................................... 15

Neither the Climate Act nor the PTHIA Compel Expenditure of Public Funds ................... 18

Issue 3: The Applicant is not Entitled to Declaratory Relief ............................................. 21

Issue 4: Decisions Regarding Transition Funding were not

Unreasonable, Arbitrary, Discriminatory or Unfair ........................................................... 23

The Standard of Review is Reasonableness.......................................................................... 23

Decisions Regarding Transition Funding were not

Unreasonable, Arbitrary or Discriminatory .......................................................................... 23

Decisions Regarding Transition Funding Were Not Procedurally Unfair ............................ 27

PART V – CONCLUSION ......................................................................................................... 28

PART VI – ORDER SOUGHT .................................................................................................. 28

SCHEDULE “A”......................................................................................................................... 30

SCHEDULE “B” ......................................................................................................................... 33

 1

PART I – OVERVIEW

1. The Applicant, Tesla Motors Canada ULC (“Tesla Canada” or the “Applicant”) brings an

application, on an urgent basis, seeking judicial review of a decision by the Province of

Ontario (“Ontario”) regarding eligibility for the transition funding available as part of the

wind-down of Ontario’s Electric Hydrogen Vehicle Incentive Program (“EHVIP”).

2. Tesla Canada seeks to challenge Ontario’s decision to limit eligibility for one of two

categories of transition funding to independently-owned, franchised car dealerships. It

asserts that its exclusion from this category of transition funding is unreasonable,

discriminatory, arbitrary, and procedurally unfair and seeks prerogative and declaratory

relief that would render it eligible. The Applicant also seeks leave to have this application

heard urgently before a single judge of this Court.

3. There is no merit to the application and it should be dismissed outright. At a minimum, this

application is neither urgent nor is there a likelihood of a failure of justice if it is heard by a

full panel of the Divisional Court in the ordinary course.

4. Further, this application should be dismissed for the following reasons:

1) The decision at issue is not justiciable or reviewable as it relates to a core policy

decision of government regarding the allocation of public financial resources;

2) This Court has no jurisdiction to grant the declaratory relief sought as there is no

exercise of a statutory power of decision at issue; and

 2

3) Even if the decision were reviewable, the decision was made for valid public

reasons and was not unreasonable, arbitrary, discriminatory or procedurally

unfair.

PART II – THE FACTS

The EVIP and EHVIP Programs

5. The Electric Vehicle Incentive Program (“EVIP”) was launched in June 2010 to support early

adopters of electric vehicles (“EVs”). EVIP was established pursuant to s. 118 of the Public

Transportation and Highway Improvement Act, R.S.O. 1990, c. P. 50 (the “PTHIA”).

Incentives under EVIP were initially paid from Ontario’s general revenues. In 2010, the

program offered incentives for the purchase or lease of EVs of between $5,000 and $8,500,

depending on the size of the vehicle’s battery.1

6. In February 2016, EVIP was updated to accelerate EV adoption and contribute to reducing

greenhouse gas emissions in the transportation sector. EVIP offered incentives of between

$6,000 and $13,000 based on battery size, plus $1,000 for EVs with five or more seats. The

incentive was capped at $3,000 for vehicles priced from $75,000 to $150,000 and there was

no incentive for vehicles priced over $150,000. The incentive was further capped at 30% of

the Manufacturer’s Suggested Retail Price (“MSRP”) for all other EVs.2

7. In January 2017, EVIP was further updated to help achieve Ontario’s Climate Change Action

Plan target for EV and hydrogen passenger vehicle sales. The $3,000 cap on incentives for

battery EVs priced between $75,000 and $150,000 was removed, as was the cap of 30% of

1
Affidavit of Vrinda Vaidyanathan, dated August 17, 2018 at paras 3–4 [Vaidyanathan Affidavit].
2
Ibid at para 5.
 3

MSRP. At this time, the funding for EVIP ultimately was charged to the Greenhouse Gas

Reduction Account (“GGRA”, described in greater detail below).3

8. On March 9, 2018, the program was again updated to incorporate hydrogen vehicles

(becoming EHVIP) and to further support the Climate Change Action Plan. EHVIP

established new incentives for the purchase or lease of hydrogen vehicles, eliminated

incentives for EVs with a MSRP of more than $75,000, eliminated incentives for EVs leased

for less than three years and changed the incentive structure for EVs based on the vehicle’s

range and seating capacity.4

9. The EVIP and EHVIP programs provided financial incentives for eligible vehicles directly to

purchasers and lessees. If dealers provided a “point-of-sale discount” to purchasers, the

dealers could submit applications for the incentives on behalf of the purchasers and be paid

the purchasers’ incentives. The EVIP and EHVIP programs did not and do not provide

incentives directly to dealers, and purchasers remained responsible for compliance with all

program requirements.5

10. Purchasers applying for an incentive under EHVIP were required to make the following

declarations:

1. “You agree that all decisions made by the Province of Ontario relating
to EHVIP, including applicant and vehicle eligibility and the incentive
amount, are final and binding and can not be appealed.”

2. “You acknowledge that: […]

3
Ibid at para 6.
4
Ibid at para 7.
5
Ibid at para 8.
 4

e) the program may be changed or cancelled by the Province of

Ontario at any time for any reason whatsoever, without notice.
[…]

g) funding for EHVIP is subject to appropriation from the

legislature and is not guaranteed for any specific applicant.” 6

The Wind Down of the EHVIP Program

11. Following the Ontario Provincial Election on June 7, 2018, the incoming Government of

Ontario approved the termination of programs and funding under the GGRA. As an

initiative funded through the GGRA, one of the programs to be terminated was EHVIP.7

The decision to terminate EHVIP and the terms of its wind-down was made by Cabinet.8

12. On July 11, 2018, MTO announced the cancellation and wind-down of EHVIP. The

announcement provided that to be considered eligible for incentives (“Transition Funding”),

applications will be accepted only if one of the following conditions has been met:

 Eligible vehicles that have been delivered to consumers, registered, and plated
on or before July 11 will receive the incentive (“First Category”)

 Inventory that dealers have on lots or orders made by dealerships with

manufacturers on or before July 11, will also be honoured for the incentive
provided that the vehicle is delivered to consumers, registered, and plated by
September 10. (“Second Category”)9

13. Applications for Transition Funding are required to be submitted within 90 days of vehicle

registration and plating.10

6
Ibid at paras 8–9 and Exhibit B at 5.
7
Ibid at para 17.
8
Cross-examination of V. Vaidanathan on her affidavits, sworn the 15th and 17th day of August, 2018, dated August
20, 2018 at pp. 8-9, qq. 34-44 [Vaidanathan Cross-Examination].
9
Vaidyanathan Affidavit, supra note 1 at para 18.
10
Ibid at para 19.
 5

The Applicant’s Eligibility for Transition Funding

14. As of July 11, 2018, the only vehicle sold by the Applicant that was eligible for an incentive

under EHVIP was the 2018 “Model 3” in its long-range, rear-wheel-drive trim (the “Tesla

Model 3”). The Tesla Model 3 only became available for delivery in Ontario in May 2018

despite the Applicant’s ability to do so earlier.11

15. There is a significant time lag between the date on which an individual initially places a

$1,000 reservation for a Tesla Model 3 and when it is delivered to the purchaser. It is

common for purchasers of the Tesla Model 3 to wait between two and four months between

the date they order their vehicle and the date on which it is delivered and plated.12

Production delays at Tesla Canada’s US parent company are a factor in those delays.13

16. Consumers who purchased the Tesla Model 3 long range rear-wheel-drive trim and had it

delivered, registered, and plated on or before July 11, 2018 are eligible for the First

Category of Transition Funding provided they submit an application within 90 days of

registration and plating.14

17. The Second Category of Transition Funding was only extended to independently-owned,

franchised dealerships. Although Tesla Canada is registered with the Ontario Motor Vehicle

Industry Council (“OMVIC”) to sell vehicles in Ontario, its dealerships are neither

11
Ibid at paras 21, 22; Affidavit of Dustin Leitch, dated August 18, 2018 at para 20 [Leitch Affidavit]; Cross-
Examination of Dustin Leitch on his Affidavits sworn the 13th and 19th days of August, 2018, dated August 20,
2018, p. 50, qq. 243-244 [Leitch Cross-Examination].
12
Vaidyanathan Affidavit, supra note 1 at para 23 and Exhibit E; First Affidavit of Vrinda Vaidyanathan, dated
August 15, 2018, at para 4 and Exhibit A.
13
Leitch Cross-Examination, supra note 11, pp. 18-19, qq. 83-89.
14
Vaidyanathan Affidavit, supra note 1 at para 24.
 6

independently-owned, nor franchised. OMVIC does not require dealerships to be

independently-owned or franchised as a condition of registration.15

18. Rather, each “dealership” registered by Tesla Canada is owned by Tesla Canada, which is

itself a wholly-owned subsidiary of its US parent company – Tesla, Inc.16 Tesla Canada

states that it has a unique business model of selling vehicles directly to consumers through

company-owned stores.17 Virtually all Tesla Model 3 sales are made online through Tesla

Canada’s website and configurator.18

19. The Second Category of Transition Funding was made available for inventory that

independently owned, franchised dealerships had on lots, and orders that dealers have made

with manufacturers on or before July 11, 2018. A vehicle is eligible for the Second Category

of Transition Funding if the vehicle is delivered to the consumer, registered, and plated on

or before September 10, 2018 and an application for the incentive is submitted within 90

days of vehicle registration.19

20. Ontario made a deliberate policy decision to only extend the Second Category of Transition

Funding to vehicles from independently-owned, franchised dealerships. The rationale for

only including independently-owned, franchised dealers in the Second Category was to

minimize negative impacts to independently-owned, franchised dealerships, which may be

small or medium-sized businesses.20

15
O Reg 333/08, s 11: under the Motor Vehicle Dealers Act, 2002, SO 2002, c 30, Sched. B.
16
Vaidyanathan Affidavit, supra note 1 at para 26 and Exhibit F.
17
Leitch Affidavit, supra note 11 at paras 12–17.
18
Leitch Cross-Examination, supra note 11 at pp. 8-9, qq. 26-31.
19
Vaidyanathan Affidavit, supra note 1 at para 25.
20
Ibid at para 27.
 7

21. By contrast, EV manufacturers tend not to be small or medium-sized businesses. In addition,

independently-owned, franchised dealersships may have vehicle inventory on lots or may

have made orders from manufacturers that could not be rescinded or returned. The policy

rationale does not apply to vehicles sold directly by manufacturers, nor dealerships that are

owned by manufacturers, such as the Applicant.21

22. The Applicant was not targeted or singled out, nor is it uniquely impacted by the decision

not to extend the Second Category of Transition Funding beyond independently-owned

franchised dealerships. The policy decision not to include vehicles sold directly by

manufacturers to the public or through non-independently-owned, non-franchised

dealerships affects any EV manufacturer with this type of business model. In addition to the

Applicant’s one vehicle model impacted by this policy decision, one vehicle model sold by

Mercedes-Benz and four vehicle models sold by Smart may be affected.22

23. Tesla was not unique among any other automobile manufacturers in not having been given

an opportunity to comment on the EHVIP cancellation or wind-down. Rather, as the EHVIP

application form requires purchasers to acknowledge, EHVIP and any funding provided

may be cancelled at any time, for any reason, and without notice.23

21
Ibid.
22
Ibid at para 28.
23
Ibid at para 29.
 8

PART III – ISSUES AND THE LAW

24. The issues on this application are:

1) Whether this application is urgent and whether any delay will involve a likelihood
of a failure of justice;
2) Whether Ontario’s decisions regarding Transition Funding are reviewable or
justiciable, given that they involve a core policy decision regarding the Crown’s
common law spending powers;
3) Whether the Applicant is entitled to a prerogative remedy or declaratory relief;
and
4) Whether decisions regarding Transition Funding were unreasonable, arbitrary,
discriminatory, or procedurally unfair.

25. Ontario submits that the answer to each of these questions is “No” and the application must

be dismissed.

Issue 1: The Application Is Not Urgent and Delay Will Not Involve a Failure of Justice

26. The Applicant brings this application pursuant to section 6(2) of the Judicial Review

Procedure Act.24 The court must first determine whether this is a case of “urgency,” and

then it must determine whether “the delay required for an application to the Divisional Court

is likely to involve a failure of justice.”25 Ontario submits that the Applicant has

demonstrated neither.

27. This Court allows hearings on an urgent basis in rare circumstances where an Applicant can

demonstrate extreme hardship if the application is not heard urgently, such as the re-

admission of a student to a private high school after a mid-semester expulsion to prevent the

24
RSO 1990, c J.1, s 6(2) [JRPA].
25
Savone v LSUC, 2013 ONSC 1015 at para 6, [2013] OJ No 854 [Savone].
 9

loss of the entire academic year (and the loss of the almost $20,000 tuition paid up-front) or

the removal of a child from the care of his foster parents. 26 In all cases, the merit of the

proposed application is an essential component of the failure of justice criteria.27

28. In the commercial context, financial loss may meet the urgency and failure of justice

criteria, but only in cases where the loss would be a permanent loss of market share or a

permanent loss of business.28 Here, the Applicant has put forth no such evidence of

permanent loss of market share or loss of business. Tesla Canada’s affiant, Dustin Leitch is

the Regional Service Manager and is not involved in Tesla’s sales process. 29 Mr. Leitch

stated he believed that Tesla Canada had been harmed, but could provide no evidence of any

harm to it or its reputation.30

29. This application is not urgent. Ontario announced its intention to wind-down programs

funded from the GGRA on July 3, 2018. The cancellation of EHVIP and the terms of the

Transition Funding were announced on July 11, 2018. Assuming that the Applicant is

correct about the merits of its application, which Ontario denies, eligibility for Transition

Funding does not affect ongoing or new purchases. Rather, it affects a finite and

determinable quantity of orders: purchases delivered on or before July 11, 2018; or

inventory or orders from dealers that are delivered to customers on or before September 10,

26
See, for example, C.D. v. Ridley College, 1996 CanLII 8128 (Ont. Sup. Ct.); Lennox and Addington Family and
Children's Services v. W.E., 2007 CanLII 38120 (Ont. Sup. Ct. – Div. Ct.)
27
Savone, supra 25 at para 9.
28
Apotex Inc. v Ontario (Minister of Health and Long Term Care), [2006] OJ No 5141.
29
Leitch Cross-Examination, supra note 11 at p. 5, qq. 10-15.
30
Ibid at pp. 43-44, qq. 202-209.
 10

2018. It is in Tesla Canada’s interest to ship vehicles to customers to complete a sale as soon

as practicably possible irrespective of whether EHVIP Transition Funding is time-limited.31

30. Should either this Court or the Divisional Court find that the Applicant’s customers are

eligible to apply for the Second Category of Transition Funding, such eligible purchasers

and any incentive they may be eligible for are finite, quantifiable and can be compensated.

There is no spectre of irreparable harm to the Applicant or its customers.

31. Mr. Leitch asserts that as of August 19, 2018, there were 319 outstanding orders for eligible

Tesla Model 3 vehicles with purchase orders prior to July 11, 2018 which can be delivered

by September 10, 2018.32 Mr. Leitch admitted on cross-examination that none of these

orders had been made from a Tesla Canada dealership to Tesla, Inc., the manufacturer.

Rather, each order had been made directly by a purchaser.33 On July 11, 2018, Tesla Canada

was only in possession of 34 Tesla Model 3s in Ontario not yet assigned to a specific

customer.34

32. Moreover, Tesla Inc., the parent company of Tesla Canada only started delivering Tesla

Model 3s to Ontario in or around May 2018.35 Given Tesla Canada’s documented two-to-

four month delivery wait time,36 it is unclear how many Tesla Model 3 purchasers would be

eligible for Second Category Transition Funding as a consequence of Tesla Canada’s

inability to provide them a vehicle on or before September 10, 2018 in any event of the

outcome of this application.

31
Ibid at pp. 47-49, qq. 226-239.
32
Ibid at p. 51-52, 54, qq. 250-55, 262.
33
Ibid at pp. 51-52, qq. 250-255
34
Leitch Affidavit, supra note 11, at para 48.
35
Ibid at para 20.
36
Vaidyanathan Affidavit, supra note 1 at para 23; Leitch Cross-Examination, supra note 11 at p. 47, q. 222.
 11

33. Tesla Canada states that the total number of customers affected by the decisions regarding

Transition Funding is 319.37 This can be contrasted with Tesla, Inc.’s stated production

target of 5,000 Tesla Model 3s per week.38

34. Mr. Leitch states that 175 customers cancelled orders for a Tesla Model 3 since July 11,

2018 on the basis of the loss of eligibility for EHVIP Transition Funding beyond July 11,

2018. 39 On cross-examination, Mr. Leitch admitted that Tesla Canada is not aware of the

reason for the cancellations as customers are not required to provide one.40 Further, Mr.

Leitch attributed the lost sales to the termination of EHVIP incentives as a whole, rather

than Tesla Canada’s ineligibility for a portion of the Transition Funding.41

35. Assuming for the sake of argument that the number is accurate and the cancellations were

solely due to the loss of eligibility (rather than a myriad of other personal or financial

reasons), a total of 175 vehicles out of 5,000 produced per week is a negligible amount of

lost sales and does not remotely represent a permanent loss of Tesla Canada’s business.

There will be no failure of justice if this matter is heard before a full panel of the Divisional

Court in the usual course.

36. No urgency exists, and any brief delay required for a hearing before a full panel will not

likely involve a failure of justice. Any alleged harm suffered by Tesla Canada, should the

Court ultimately make the order requested by Tesla Canada, could be addressed on a

retroactive basis and be quantified and compensated based on Tesla Canada’s ability to

37
Leitch Cross-Examination, ibid at pp. 47, q. 226.
38
Ibid at p. 25, q. 119; Vaidyanathan Affidavit, Exhibit E.
39
Leitch Affidavit, supra note 11 at para 47.
40
Leitch Cross-Examination, supra note 11 at pp. 43-44, qq. 202-210.
41
Leitch Cross-Examination, supra note 11 at pp. 53, qq. 257-260.
 12

deliver any eligible Model 3 vehicles ordered on or before July 11, 2018 and registered and

plated on or before September 10, 2018.

37. Ontario anticipates that Tesla Canada will argue that Ontario failed to produce documents

relevant to its decision regarding Transition Funding during the cross-examination of its

affiant, Vrinda Vaidyanathan on Monday, August 20, 2018.42

38. Tesla Canada is not entitled to documentary discovery on an application for judicial

review.43 Tesla Canada sought an urgent hearing of this matter on August 22, 2018. At the

time this hearing was scheduled, Tesla Canada made no mention of any request for

documents and did not seek to include in the timetable for this application. Tesla Canada

made no request for documents until after the close of business on Friday, August 17, 2018

and asked that they be provided on Monday, August 20, 2018. Tesla Canada’s request was

both overbroad and unreasonable in the circumstances of the urgent hearing it sought.

Issue 2: Decisions Regarding Transition Funding Are Neither Reviewable Nor Justiciable

This Application is an Impermissible Attack on a Core Policy Decision of Government

39. While framed as a judicial review of an ostensibly administrative decision, the application is

essentially an attack on a core policy decision made by Ontario’s Cabinet to wind-down

EHVIP and to extend the Second Category of Transition Funding to a limited group of

applicants. Such a decision is not reviewable by the Court and is not a basis to quash the

decision.

42
Vaidanathan Cross-Examination, supra note 8 at pp. 10-11, qq. 45-46.
43
Manitoba Metis Federation Inc. v The Government of Manitoba et al., 2018 MBQB 131 [Manitoba Metis
Federation] at paras 53-65, [2018] MJ No 195.
 13

40. A challenge to the justiciability of an application involves a review of the subject matter of

the application to determine whether it is appropriate for judicial consideration.44

Justiciability is typically determined with reference to the pleadings. 45 In considering

whether the issues raised in a claim are justiciable, a court must examine whether the claim

engages issues that are purely political in nature or whether the claim raises issues that have

a sufficient legal component to warrant judicial intervention.46

41. Subject to a constitutional challenge, applications directed at the wisdom of government

legislation are non-justiciable.47

42. In addition, government policy decisions are non-justiciable absent allegations of bad faith

or irrationality. In R. v. Imperial Tobacco, the Supreme Court of Canada struck a third party

claim against Canada on the basis that “government policy decisions are not justiciable and

cannot give rise to tort liability”. The Court defined “core policy decisions” as the “[t]he

weighing of social, economic, and political considerations to arrive at a course or principle

of action is the proper role of government, not the courts”.48 The court concluded that core

44
Lorne M Sossin, Boundaries of Judicial Review: The Law of Justiciability in Canada, 2d ed (Toronto: Carswell,
2012) at 9 [Sossin, Boundaries of Judicial Review]; see also Canada (Auditor-General) v Canada (Minister of
Energy, Mines & Resources), [1989] 2 SCR 49, [1989] SCJ No 80 at paras 49–50.
45
Operation Dismantle Inc. v The Queen, [1985] 1 SCR 441, [1985] SCJ No 22 [Operation Dismantle Inc.]; Aleksic
v Canada (Attorney General) (2002), 165 OAC 253, [2002] OJ No 2754 at paras 19-45 (Div Ct); Canadian Bar
Assn. v British Columbia, 2008 BCCA 92 at paras 10-15, 50-53, leave to appeal ref’d [2008] SCCA No 185; Teskey
v Canada (Attorney General), 2014 ONCA 612, leave to appeal ref’d [2014] SCCA No 455; Committee for
Monetary and Economic Reform v Canada, 2016 FC 147 at paras 46-57, aff’d 2016 FCA 312, leave to appeal ref’d
[2017] SCCA No 47; CUPE v HMQ, 2017 ONSC 4874 at paras 8-42, aff’d 2018 ONCA 309 at paras 8-14.
46
Reference Re Canada Assistance Plan (BC), [1991] 2 SCR 525, [1991] SCJ No 60 at paras 26-27 [Reference Re
Canada Assistance Plan (BC)]; see also Operation Dismantle Inc., ibid at para 38; Canadian Union of Public
Employees v. Canada (Minister of Health), 2004 FC 1334 at paras 39-48, [2004] FCJ No 1582.
47
Ontario Federation of Anglers & Hunters v Ontario (Ministry of Natural Resources), [2002] OJ No 1445 at paras
4955, 211 DLR (4th) 741 (CA), leave to appeal ref’d [2002] SCCA No 252 [Ontario Federation of Anglers &
Hunters]; see also Sossin, Boundaries of Judicial Review, supra note 44 at 204; Reference Re Canada Assistance
Plan (BC), ibid; Amax Potash Ltd. v Saskatchewan, [1977] 2 SCR 576, [1976] SCJ No 86 at 12-13.
48
R v Imperial Tobacco, 2011 SCC 42, at paras 72, 87, [2011] 3 SCR 45 [Imperial Tobacco].
 14

policy government decisions and actions taken pursuant to those decisions are protected

from suit provided that they are neither irrational nor taken in bad faith.49

43. Chief Justice McLachlin’s decision in Entreprises Sibeca described two concepts of bad

faith that permit a court to intervene in otherwise non-justiciable policy or political

decisions:

… the concept of bad faith can encompass not only acts committed deliberately with
intent to harm, which corresponds to the classical concept of bad faith, but also acts that
are so markedly inconsistent with the relevant legislative context that a court cannot
reasonably conclude that they were performed in good faith.50

44. The Applicant does not assert that the Ontario’s decision was made in bad faith or irrational.

Although the application variously describes the Applicant’s non-eligibility for Second

Category Transition Funding as “arbitrary”, “unreasonable”, and “discriminatory”, it does

not assert that there was any intention to harm the Applicant or that the scope of Transition

Funding is so markedly inconsistent with the legislative context that it could not have been

made in good faith.

45. Ontario vigorously denies that the terms of Transition Funding are arbitrary, unreasonable,

and/or discriminatory for the reasons described at paragraphs 61-74 below. Rather,

Ontario’s position is that the decision was reasonable, rational and non-discriminatory as set

out below. However, even if the Applicant were correct in this regard, decisions that are

arbitrary, unreasonable, or discriminatory, but which fall short of bad faith, are not

justiciable.

49
Imperial Tobacco, ibid at paras 89-90; see also Trillium Power Wind Corp. v Ontario (Ministry of Natural
Resources), 2013 ONCA 683 at para 50-53 [2013] OJ No 5117; Ontario Federation of Anglers & Hunters, ibid at
paras 49-55; Reference Re Canada Assistance Plan (B.C.), supra note 46.
50
Entreprises Sibeca Inc. v Frelighsburg (Municipality), 2004 SCC 61 at paras 25-26 [2004] 3 SCR 304.
 15

The Expenditure of Public Funds is Not Judicially Reviewable

46. Canadian courts have consistently held that expenditures of public funds in grant programs

are discretionary public policy decisions made by government under the Crown’s common

law spending powers.51 Those powers entitle the executive branch of government to make

decisions on the allocation of public financial resources. Such decisions are a core policy

function of government which is not judicially reviewable, even where those decisions

adversely affect the economic interests of individuals or groups.52 Policy considerations

which motivate Cabinet decisions are not reviewable in the absence of a jurisdictional error

or a constitutional challenge.53

47. In Hamilton-Wentworth, a regional municipality sought judicial review of the decision of

the Minister of Transportation to refuse to fund the building of an expressway through an

environmentally sensitive area, despite the government’s agreement almost 20 years earlier

to jointly fund the project. In Hamilton-Wentworth, as in the instant case, the PTHIA

conferred a broad, permissive authority to enter into such agreements.54 However, Callaghan

C.J.O.C., writing for the Divisional Court, dismissed the application and held that the

51
Pharmaceutical Manufacturers Assn. of Canada v. British Columbia (Attorney General) (1997), [1997] BCJ No
1902 (BCCA) at paras 27-29, 149 DLR (4th) 613; leave to appeal ref’d [1997] SCCA No 529; ATU, Local 1374 v
Saskatchewan (Minister of Finance), 2017 SKQB 152 at paras 45-47, [2017] SJ No 218; Metropolitan General
Hospital v Ontario (Minister of Health) (1979), 25 OR (2d) 699, [1979] OJ No 4344 (HC) at paras 9-10, 13;
Manitoba Metis Federation, supra note 43, at paras 53-65
52
Huron-Perth Children’s Aid Society v. Ontario (Minister of Children and Youth Services), 2012 ONSC 5388 at
paras 52, 57-58 [2012] OJ No 4982 (Div Ct) [Children's Aid Society of Huron-Perth]; Ontario Federation of Labour
v. Ontario (Minister of Economic Development, Trade and Tourism) (1996), 31 O.R. (3d) 302, [1996] OJ No 3991
at 8 (Gen Div); Regional Municipality of Hamilton-Wentworth v. Minister of Transportation for the Province of
Ontario (1991), 2 OR (3d) 716, [1991] OJ No 439 at paras 43, 46-47 (Div Ct) [Hamilton-Wentworth].
53
Dixon v Canada (Governor in Council), [1997] 3 FC 169, [1997] FCJ No 985 at para 17 (CA); Thorne’s
Hardware Ltd. v. R, [1983] 1 SCR 106 at para. 9, [1983] SCJ No 10.
54
Compare the language of the then s. 99(2) of the PTHIA discussed at Hamilton-Wentworth, ibid at para 22 with
the language of s. 118(2) of the PTHIA.
 16

Cabinet’s decision not to fund the expressway was simply a statement of funding policy and

not the exercise of a statutory power of decision attracting judicial review.55

48. In considering judicial review of the non-allocation of public funds, the Divisional Court

held:

In the instant case the Minister responsible on behalf of the Cabinet has clearly
indicated Cabinet's priorities for spending. While the matter has not been put
before the Legislative Assembly, I am prepared to accept as inevitable that the
result of such a decision will be the non-allocation of funds. Were this court to use
its authority to direct the government to appropriate funds for the completion of
this project by way of declaration or any other order, it would be trenching on the
exclusive control the revenue of a sovereign Legislative Assembly in relation to
fiscal matters. In these circumstances, there is no decision which is subject to
judicial review.

The nature of the action under review here is, in my view, observably and
significantly different from those situations where the court requires government,
be they municipal or provincial, to carry out mandates according to law and which
require the expenditure of money. The decision in issue represents an exercise of
the government’s right to allocate its funds as it sees proper. Such a conclusion is
essential to the parliamentary system of democracy.56

49. The Divisional Court reached a similar conclusion in Children's Aid Society of Huron-Perth

where several Children’s Aid Societies sought judicial review of decisions of the Minister of

Children and Youth Services to allocate what they alleged were insufficient resources to

them in a fiscal year. In rejecting the application, the Divisional Court held:

The starting point for this analysis is recognition of the principle that funding of the
CASs falls squarely within the policy-making function of the Government of
Ontario regarding the allocation of limited financial resources. Absent bad faith or
an improper purpose, decisions of this nature are not subject to judicial review.
[…]

[…] The Applicants' real objection is not the use of a funding model but the cost
factors in that model insofar as these cost factors do not, in their opinion, reflect

55
Hamilton-Wentworth, supra note 52 at para 42.
56
Ibid at paras 45-46.
 17

their cost of delivery of the mandated services. Absent evidence that such factors
were arrived at in bad faith or for an improper purpose, however, the Court has no
authority to review the adoption and application of the funding model.

In this case, there is no allegation that the Minister exercised her statutory
discretion in bad faith or for an improper purpose. Accordingly, the Ministry
decisions resulting from the application of the funding model to the particular
circumstances of each CAS are not subject to judicial review.57

50. In Kuki v Ontario (Training, Colleges, and Universities), the applicant sought an urgent

judicial review of a decision by the Ministry of Training, Colleges and Universities to deny

his application for education funding under the Second Career program.58 The applicant

wanted to pursue a Master's degree in Public Administration with the goal of finding

employment in the public sector. The Ministry denied the application on the basis that this

was not one of the approved occupations listed in the program’s guidelines.

51. This Court dismissed the application as being without merit, holding:

The Crown has the authority to establish programs for the benefit of the public as it
sees fit. Programs that are created without statutory authority at the discretion of
the government are not reviewable by courts of law unless they violate the
Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982,
[…], or other important fundamental rights. There is no evidence that any of the
Applicant's Charter or other rights have been violated…

The decision of MTCU to define who was eligible for the Second Career program
is a decision that is not subject to judicial review because it is a decision for the
disbursement of public funds and as such is within the authority of the legislature
alone…59 [citations omitted]

52. Kuki is factually analogous to the instant case, albeit in a different context. The Applicant’s

core complaint is that it has not been included in or made eligible for a discretionary

disbursement of public funds. The Applicant does not allege any violation of its

57
Children’s Aid Society of Huron-Perth, supra note 52 at paras 52, 57-58.
58
Kuki v Ontario (Training, Colleges, and Universities), 2013 ONSC 5574, [2013] OJ No 3956 [Kuki].
59
Ibid at paras 13-14.
 18

constitutional rights or bad faith on the part Ontario. Rather, the application seeks to

overturn an exercise of the government’s right to allocate public funds. Such applications

are not justiciable and the appropriate remedy for the Applicant lies in the political and not

judicial sphere.

Neither the Climate Act nor the PTHIA Compel Expenditure of Public Funds

53. In its Application Record, the Applicant relies on the Climate Change Mitigation and Low-

carbon Economy Act (the “Climate Act”) and the Climate Change Action Plan (the “Action

Plan”) it establishes as a basis for inclusion in the Second Category of Transition Funding.60

Such reliance is misplaced. Nothing in the Climate Act requires Ontario to continue to fund

any specific program or directs Ontario in how programs funded by proceeds of the Climate

Act are to be wound-down or managed.

54. EVIP was established pursuant to the Minister of Transportation’s general authority to

provide grants under s. 118(2) of the PTHIA in 2010, six years before the Climate Act was

proclaimed into force. Section 118(2) of the PTHIA provides the Minister of Transportation

with a broad, plenary authority to provide grants and financial assistance out of money

appropriated by the Legislature for specific projects the Minister considers to be of

provincial significance:

(2) On and after January 1, 1997, the Minister may, out of money appropriated
therefor by the Legislature and upon such conditions as he or she considers
advisable, provide grants, loans and other financial assistance to any person,
including the council of a band, within the meaning of the Indian Act (Canada), and
a municipal corporation, for specific projects that the Minister considers to be of
provincial significance.

60
Notice of Application, at paras 10-16.
 19

55. Section 118(2) of the PTHIA is a codification of the Crown’s common law spending

powers. Nothing in s. 118(2) imposes a statutory duty or obligation on the Minister or on

Ontario to provide grants to any particular person or program and nothing in it requires the

Minister to continue to do so if a grant is provided and no one is entitled to a grant made

under this section.61

56. In May 2016, the Climate Act came into force. The Climate Act establishes the GGRA and

provides that amounts may be charged out of that account for certain purposes (s. 71).

Schedule 1 of the Climate Act sets out several examples of initiatives which may be funded,

in whole or in part, from the GGRA. Section 7 of the Climate Act requires that Ontario

prepare the Action Plan to set out actions under a regulatory scheme designed to achieve

targets for the reduction of greenhouse gas emissions.

57. EHVIP is currently funded through the GGRA and a decision was made to wind it down as

part of the overall termination of programs and funding under the GGRA. 62 The Climate Act

requires that money spent out of the GGRA be spent for purposes related to the reduction of

greenhouse gasses. There is nothing in the Climate Act, whether in Schedule 1, or in the

requirement to have an Action Plan, that requires Ontario to provide funding for any

initiative or creates an entitlement for an entity to receive funding for a particular initiative.

58. The terms of the Transition Funding the Applicant seeks to judicially review are policy

decisions of Cabinet authorized by s. 118(2) of the PTHIA, not the Climate Act. Ontario

61
Valley Rubber Resources Inc. v British Columbia (Minister of Environment, Lands and Parks), 2002 BCCA 524
at paras 32-33, [2002] BCJ No 2163; Hamilton-Wentworth, supra note 52; Skypower CL 1 LP v Ontario (Minister of
Energy), 2012 ONSC 4979, 298 OAC 204.
62
Vaidyanathan Affidavit, supra note 1 at paras 17-18.
 20

decided to provide grants and financial assistance in one of two limited circumstances: (1)

individuals who purchased an EHVIP eligible vehicle and had it delivered on or before July

11, 2018; and (2) inventory that independent, non-franchised dealers had on lots or orders

made by dealerships with manufacturers on or before July 11, 2018 provided that the

vehicle is delivered to consumers, registered, and plated by September 10, 2018. Transition

Funding for the wind-down of EHVIP is a limited grant provided by Ontario for a specific

project of provincial significance.

59. In Friends of the Earth, an environmental advocacy group sought a judicial review seeking

declaratory and mandatory relief requiring the Government of Canada to comply with its

Climate Change Plan under the Kyoto Protocol.63 In dismissing the application, the Federal

Court held:

These are policy-laden considerations which are not the proper subject matter for
judicial review. That is so because there are no objective legal criteria which can be
applied and no facts to be determined which would allow a Court to decide whether
compliance had been achieved…

It is not appropriate for the Court to parse the language of s. 5 into justiciable and
non-justiciable components, at least, insofar as that language deals with the content
of a Climate Change Plan. This provision must be read as a whole and it cannot be
judicially enforced on a piecemeal basis. While the failure of the Minister to
prepare a Climate Change Plan may well be justiciable, an evaluation of its content
is not.64 [citations omitted]

60. Nothing in the PTHIA, the Climate Act, or the Crown’s common law spending powers

restricts or compels Ontario’s broad authority to make grants. Otherwise, this Court would

effectively be asked to judicially determine the terms and conditions of Transition Funding:

To whom would the grant be paid? In what amount? For what period of time? For what

63
Friends of the Earth - Les Ami(e)s de la Terre v Canada (Governor in Council), 2008 FC 1183 at paras 33-36,
[2009] 3 FCR 201 [Friends of the Earth].
64
Ibid.
 21

class of vehicles? Upon which conditions? Such questions are essentially non-justiciable

questions of core public policy for government and not the proper subject of a judicial

review.

Issue 3: The Applicant is not Entitled to Declaratory Relief

61. In its Notice of Application, the Applicant seeks both an order quashing the decision

regarding transition funding, a declaration that the Applicant is included in both categories

of Transition Funding, or, alternatively, an order quashing the Transition Plan. However, the

Applicant does not challenge or seek to quash the cancellation of the EHVIP incentive

program itself.65

62. Section 2(1) of the JRPA provides:

Applications for judicial review

2 (1) On an application by way of originating notice, which may be styled “Notice
of Application for Judicial Review”, the court may, despite any right of appeal, by
order grant any relief that the applicant would be entitled to in any one or more of
the following:
1. Proceedings by way of application for an order in the nature of
mandamus, prohibition or certiorari.
2. Proceedings by way of an action for a declaration or for an injunction, or
both, in relation to the exercise, refusal to exercise or proposed or
purported exercise of a statutory power.

63. The exercise of a “statutory power of decision”, as defined in the JRPA is not required for

relief in the nature of mandamus, prohibition or certiorari.66 However, Ontario courts have

65
Notice of Application, paras 1(c)-(d).
66
Setia v Appleby College, 2013 ONCA 753 at paras 8, 26, [2013] OJ No 5736 [Setia]; Sangar v Ontario (Private
Career Colleges Superintendent), 2018 ONSC 673 at paras 33–36, [2018] OJ No 538.
 22

held that a valid statutory power of decision must have been exercised in order for a party to

claim declaratory relief.67

64. Not every decision made in the exercise of a power conferred by or under a statute

constitutes a statutory power of decision. A statutory power of decision exists only where

there is a specific power or right to make the very decision in issue. 68 This Court has no

jurisdiction to grant declaratory relief where there is not a statutory power of decision.69

65. The Applicant has not identified a statutory power of decision exercised in this case. The

decisions to wind-down EHVIP and the terms of Transition Funding were policy decisions

made by Cabinet. Section 118 of the PTHIA does not confer a specific power or right for the

Minister or Ontario to make the very decision in question: whether Tesla Canada is eligible

for the Second Category of Transition Funding. The PTHIA does not identify a “decision”

or a “decision-maker” regarding Transition Funding. Rather, the PTHIA codifies broad

granting authority as submitted above. The Applicant is not entitled to a declaration.70

67
Association of Professors of the University of Ottawa v University of Ottawa, 2018 ONSC 1191 at paras 5, 6,
[2018] OJ No 898 [University of Ottawa]; Paine v University of Toronto (1981), 34 OR (2d) 770 (CA) at para 7,
[1981] OJ No 3187 [Paine].
68
Setia, supra note 66 at para 26; Paine, supra note 67 at para 7.
69
University of Ottawa, supra note 67 at para 5.
70
See also McLeod v City of Brantford, 2018 ONSC 943 at paras 8–15, [2018] OJ No 696 (Div Ct).
 23

Issue 4: Decisions Regarding Transition Funding were not Unreasonable, Arbitrary,

Discriminatory or Unfair

The Standard of Review is Reasonableness

66. In the alternative, should Ontario’s decisions on Transition Funding be ultimately

determined to be reviewable, Ontario submits that the applicable standard of review is

reasonableness. In accordance with Dunsmuir v. New Brunswick, questions of fact,

questions of mixed fact and law, and the exercise of discretion are factors that attract a

standard of reasonableness. In these cases, the decisions of administrative decision-makers

will usually attract deference automatically. Deference may also be warranted where a

decision-maker has developed particular expertise in the application of his/her own statute.71

67. The reasonableness standard of review can be summarized this way:

A court will not interfere with a tribunal decision that is reasonable. This is a
deferential standard that recognizes the legislative intention to grant discretion to
the tribunal. Reasonableness is concerned with the existence of justification,
transparency and intelligibility within the decision-making process, as well as
whether the decision falls within a range of possible, acceptable outcomes which
are defensible in respect of the facts and law. The ambit of reasonable outcomes is
informed by the context including the statutory purposes, the nature and expertise
of the decision maker, and the nature of the issue.72

Decisions Regarding Transition Funding were not Unreasonable, Arbitrary or Discriminatory

68. Ontario submits that even if the decision regarding eligibility for Transition Funding is

otherwise reviewable (which is not conceded) it was neither unreasonable, nor arbitrary, nor

discriminatory. A decision is reasonable if it is justified, transparent, intelligible, and falls

71
Dunsmuir v New Brunswick, 2008 SCC 9 at paras 51–54, 64, [2008] SCJ No 9 [Dunsmuir]; Skypower, supra note
61 at para 48.
72
Sara Blake, Administrative Law in Canada, 6th ed, (Toronto: LexisNexis, 2017) at paras 8.4–8.5, relying on
Dunsmuir, ibid at paras 47–49, 135–39, 144, 149–53, 167.
 24

within a range of possible, acceptable outcomes which are defensible in respect of the facts

and law.

69. Ontario’s decision to provide a grant to certain classes of purchasers and dealers as part of

the wind-down of EHVIP is expressly authorized by statute. The rationale for the decision

to only include independently-owned, franchised dealerships for the Second Category of

Transition Funding was two-fold:

1) Minimize negative impacts to independently-owned, franchised dealerships which

may be small or medium-sized business; and

2) Independently-owned, franchised dealerships may have vehicle inventory or made

orders with manufacturers that could not be returned or rescinded.73

70. The decision is justified on valid public policy grounds: the protection of small or medium-

sized businesses from the economic impact of an EHVIP wind-down given their relative

lack of ability to return or rescind vehicle orders. It is intelligible and was communicated to

the Applicant on the same day the wind-down of EHVIP was publicly announced.74

71. Tesla Canada relies upon a statement made by the Premier of Ontario to assert that Ontario

had a different rationale for its decision not to extend the Second Category of Transition

Funding to it.75 The statement does not support that argument. The Premier’s statement was

made in response to a media question more than a month after the decision was made. The

statement, on its face, does not discuss Tesla Canada’s eligibility for the Second Category of

73
Vaidyanathan Affidavit, supra note 1 at para 27.
74
Leitch Affidavit, supra note 11 at para 30.
75
Supplementary Affidavit of Dustin Leitch, dated August 20, 2018, at para. 7 and Exhibit A.
 25

Transition Funding or the rationale for that decision. The statement simply reiterates

Ontario’s commitment to terminating EHVIP and suggests that Tesla Canada should

consider opening a manufacturing facility in Ontario.

72. Ontario’s decision did not discriminate against or target Tesla Canada. First, and foremost,

Tesla Canada’s customers are eligible to apply for the First Category of Transition Funding

– all Tesla Canada customers who purchased an eligible Tesla Model 3 and had it delivered,

registered and plated on or before July 11, 2018 are eligible for an incentive if they submit

their application within 90 days of registration and plating. In this respect, Tesla Canada’s

customers are identically situated as all other purchasers of eligible vehicles delivered,

registered and plated by July 11, 2018.

73. Second, Tesla Canada is not the only manufacturer which is ineligible for the Second

Category of Transition Funding. All EV manufacturers selling EVs through non-

independently-owned, non-franchised dealerships are ineligible for the Second Category of

Transition Funding. Ontario is aware that, in addition to the one model sold by the

Applicant, there is also one Mercedes-Benz and four Smart EV models in the same

position.76

74. The fact that Tesla Canada customers are not eligible for the Second Category of Transition

Funding is neither arbitrary nor irrational. It bears emphasis that it is Tesla Canada’s

customers who must apply for the EHVIP incentive, not Tesla Canada. Tesla Canada, a

wholly owned subsidiary of Tesla, Inc., does not meet either of the policy goals of the

Second Category of Transition Funding – the protection of small or medium-sized

76
Vaidyanathan Affidavit, supra note 1 at para 28.
 26

businesses with limited ability to return or rescind vehicle orders. The failure to qualify for

this type of Transition Funding is a direct and rational consequence of not falling within the

parameters of the group the Second Category of Transition Funding is intended to support.77

75. Ontario’s decision falls within a range of acceptable, rational, and defensible outcomes for

the wind-down of EHVIP. More so, given that Tesla Canada was not entitled to receive an

incentive under EHVIP, unless it paid out a $14,000 rebate to its customers by way of point-

of-sale rebate. EHVIP incentives were and are only available to purchasers and lessees of

qualified EVs. Dealers and manufacturers were only entitled to submit applications for the

incentives on behalf of the purchasers if they provided a “point-of-sale discount” to the

purchasers.78 On cross-examination, Mr. Leitch admitted that Tesla Canada does not provide

point-of-sale discounts to its customers79 and that its customers are responsible for applying

for and obtaining any EHVIP incentive they may be eligible for.80

76. Beyond the fact that no individual had a legal entitlement to an ex gratia government grant

under the PTHIA or Climate Act, the Applicant was never entitled to receive EHVIP

incentives itself. A decision not to extend a Second Category of EHVIP Transition Funding

to an Applicant who was never entitled to direct EHVIP funding cannot be outside the range

of acceptable, defensible outcomes.

77. The Divisional Court’s decision in Skypower is apposite. In that case, an applicant for the

Ontario Power Authority’s “feed-in tariff” sought to judicially review a direction of the

77
Ibid at paras 26-27.
78
Ibid at para 8.
79
Leitch Cross-Examination, supra note 11 at p. 42, q. 197.
80
Ibid at p. 40, q. 187.
 27

Minister of Energy changing the rules for assessment of applications. In dismissing the

application, Nordheimer J. (as he then was), held:

Equally fatal to the applicants’ application is the concept implicit in its position
that once a government program is announced and a person applies under it, the
government is precluded from making any changes to the program for those
persons who have submitted applications even though those applications have not
yet been considered or approved. Such a concept is untenable in relation to
government programs. It would also be unworkable given the many different
considerations that apply to government programs and the ever present prospect
that those considerations may change over time. Government programs, after all,
represent government policy and reflect government priorities. Those policies and
priorities will inevitably change over time…

The applicants assumed the same risk in making their applications to the FIT
program, that is, that the terms of the program might change because of changing
government policy. While it may sometimes seem unfair when rules are changed in
the middle of a game, that is the nature of the game when one is dealing with
government programs.81 [citations omitted]

Decisions Regarding Transition Funding Were Not Procedurally Unfair

78. Ontario submits that on the same ground, the Applicant was not denied procedural fairness.

Tesla Canada cannot have expected to have been consulted about Transition Funding for the

wind-down of an incentive program to which it was never directly entitled. To the contrary,

applicants for EHVIP incentives were required to acknowledge in writing that:

1) Government decisions regarding eligibility and incentive amounts were final,

binding and could not be appealed;

2) EHVIP could be changed or cancelled by Ontario at any time, for any reason, and
without notice; and

3) EHVIP funding was subject to appropriation from the Legislature and not
guaranteed for any specific amount.82

81
Skypower, supra note 61 at paras 82–84.
82
Vaidyanathan Affidavit, supra note 1 at paras 9, 10 and Exhibit B.
 28

79. Against this factual backdrop, an EV manufacturer could not have reasonably expected to be

consulted about the wind-down of EHVIP. Indeed, the Applicant was treated in the same

manner as all EHVIP-eligible manufacturers: no other EV manufacturers were given an

opportunity to comment.83

80. Ontario submits that decisions regarding Transition Funding for EHVIP, even if reviewable,

were reasonable, rational, non-discriminatory, and procedurally fair.

PART V – CONCLUSION

81. This application challenges a decision which is non-justiciable and unreviewable. It seeks

relief that this Court has no jurisdiction to grant and asserts entitlement to a discretionary

public grant under legislation that creates no obligation on the part of Ontario or entitlement

on the part of the Applicant.

82. Even if the Applicant were entitled to review of a core public policy decision regarding the

expenditure of public funds, its ineligibility for the Second Category of Transition Funding

was made for valid public policy reasons that were not unreasonable, arbitrary or

discriminatory. Tesla Canada is effectively asking this Court to make a declaratory order at

the behest of its customers to provide them a grant from public funds. This Honourable

Court should decline.

PART VI – ORDER SOUGHT

83. Ontario respectfully requests that this application be dismissed with costs.

83
Ibid at para 29.
 30

SCHEDULE “A”

Authorities Relied Upon

1. Aleksic v Canada (Attorney General) (2002), 165 OAC 253, [2002] OJ No 2754 (Div Ct).

2. Amax Potash Ltd. v Saskatchewan, [1977] 2 SCR 576, [1976] SCJ No 86.

3. Apotex Inc. v Ontario (Minister of Health and Long Term Care), [2006] OJ No 5141.

4. Association of Professors of the University of Ottawa v University of Ottawa, 2018 ONSC

1191, [2018] OJ No 898.

5. ATU, Local 1374 v Saskatchewan (Minister of Finance), 2017 SKQB 152, [2017] SJ No
218.

6. C.D. v Ridley College, [1996] OJ No 3800, 44 Admin LR (2d) 108 (Sup Ct).

7. Canada (Auditor-General) v Canada (Minister of Energy, Mines & Resources), [1989] 2

SCR 49, [1989] SCJ No 80.

8. Canadian Bar Assn. v British Columbia, 2008 BCCA 92, leave to appeal ref’d [2008]
SCCA No 185.

9. Canadian Union of Public Employees v. Canada (Minister of Health), 2004 FC 1334,

[2004] FCJ No 1582.

10. Committee for Monetary and Economic Reform v Canada, 2016 FC 147, aff’d 2016 FCA
312, leave to appeal ref’d [2017] SCCA No 47.

11. CUPE v HMQ, 2017 ONSC 4874, aff’d 2018 ONCA 309.

12. Dixon v Canada (Governor in Council), [1997] 3 FC 169, [1997] FCJ No 985 (CA).

13. Dunsmuir v New Brunswick, 2008 SCC 9, [2008] SCJ No 9.

14. Entreprises Sibeca Inc. v Frelighsburg (Municipality), 2004 SCC 61, [2004] 3 SCR 304.

15. Friends of the Earth - Les Ami(e)s de la Terre v Canada (Governor in Council), 2008 FC
1183, [2009] 3 FCR 201.

16. Huron-Perth Children’s Aid Society v Ontario (Minister of Children and Youth Services),
2012 ONSC 5388, [2012] OJ No 4982 (Div Ct).

17. Kuki v Ontario (Training, Colleges, and Universities), 2013 ONSC 5574, [2013] OJ No
3956.
 31

18. Lennox and Addington Family and Children's Services v W.E., 2007 CanLII 38120 (Div
Ct).

19. Lorne M Sossin, Boundaries of Judicial Review: The Law of Justiciability in Canada, 2d
ed (Toronto: Carswell, 2012).

20. Manitoba Metis Federation Inc. v The Government of Manitoba et al., 2018 MBQB 131,
[2018] MJ No 195.

21. McLeod v City of Brantford, 2018 ONSC 943, [2018] OJ No 696 (Div Ct).

22. Metropolitan General Hospital v Ontario (Minister of Health) (1979), 25 OR (2d) 699,
[1979] OJ No 4344 (HC).

23. Ontario Federation of Anglers & Hunters v Ontario (Ministry of Natural Resources),
[2002] OJ No 1445, 211 DLR (4th) 741 (CA), leave to appeal ref’d [2002] SCCA No 252.

24. Ontario Federation of Labour v Ontario (Minister of Economic Development, Trade and
Tourism) (1996), 31 O.R. (3d) 302, [1996] OJ No 3991 (Gen Div).

25. Operation Dismantle Inc. v The Queen, [1985] 1 SCR 441, [1985] SCJ No 22.

26. Paine v University of Toronto (1981), 34 OR (2d) 770, [1981] OJ No 3187 (CA).

27. Pharmaceutical Manufacturers Assn. of Canada v British Columbia (Attorney General)

[1997] BCJ No 1902 (BCCA), 149 DLR (4th) 613, leave to appeal ref’d [1997] SCCA No
529.

28. R v Imperial Tobacco, 2011 SCC 42, [2011] 3 SCR 45.

29. Reference Re Canada Assistance Plan (BC), [1991] 2 SCR 525, [1991] SCJ No 60.

30. Regional Municipality of Hamilton-Wentworth v Minister of Transportation for the

Province of Ontario (1991), 2 OR (3d) 716, [1991] OJ No 439 (Div Ct).

31. Sangar v Ontario (Private Career Colleges Superintendent), 2018 ONSC 673, [2018] OJ
No 538.

32. Sara Blake, Administrative Law in Canada, 6th ed, (Toronto: LexisNexis, 2017).

33. Savone v LSUC, 2013 ONSC 1015, [2013] OJ No 854.

34. Setia v Appleby College, 2013 ONCA 753, [2013] OJ No 5736.

35. Skypower CL 1 LP v Ontario (Minister of Energy), 2012 ONSC 4979, 298 OAC 204.

36. Teskey v Canada (Attorney General), 2014 ONCA 612, leave to appeal ref’d [2014] SCCA
No 455.
 32

37. Thorne’s Hardware Ltd. v. R, [1983] 1 SCR 106, [1983] SCJ No 10.

38. Trillium Power Wind Corp. v Ontario (Ministry of Natural Resources), 2013 ONCA 683,
[2013] OJ No 5117.

39. Valley Rubber Resources Inc. v British Columbia (Minister of Environment, Lands and
Parks), 2002 BCCA 524, [2002] BCJ No 2163.
 33

SCHEDULE “B”

Legislation Relied Upon

1. Public Transportation and Highway Improvement Act, RSO 1990, c P. 50, ss 99(2), 118

2. O Reg 333/08, s 11: under the Motor Vehicle Dealers Act, 2002, SO 2002, c 30, Sched. B

3. Judicial Review Procedure Act, RSO 1990, c J.1, ss 2(1), 6(2)

4. Climate Change Mitigation and Low-carbon Economy Act, 2016, SO 2016, c. 7, ss 7, 71

 34

1. Public Transportation and Highway Improvement Act, RSO 1990, c P. 50, ss 99(2), 118

Grants, loans, etc., for specific projects

118 (1) Until January 1, 1997, the Minister may, out of money appropriated therefor by the
Legislature and upon such conditions as he or she considers advisable, provide grants, loans and
other financial assistance to any person, including the council of a band, within the meaning of
the Indian Act (Canada), and a municipal corporation, for specific projects.

Limitation after 1996

(2) On and after January 1, 1997, the Minister may, out of money appropriated therefor by the
Legislature and upon such conditions as he or she considers advisable, provide grants, loans and
other financial assistance to any person, including the council of a band, within the meaning of
the Indian Act (Canada), and a municipal corporation, for specific projects that the Minister
considers to be of provincial significance.
 35

2. O Reg 333/08, s 11: under the Motor Vehicle Dealers Act, 2002, SO 2002, c 30, Sched. B

Requirements for registration as a motor vehicle dealer

11. (1) The following are prescribed, for the purposes of subsections 5.1 (1) and 6 (1) of the Act,
as requirements for registration or renewal of registration as a motor vehicle dealer:

1. The fee required under clause 9 (b) is paid.

2. If the applicant is an individual, the applicant is at least 18 years of age.

3. The applicant does not owe money to the Crown under the Retail Sales Tax Act or, if the
applicant does owe such money, the applicant has made arrangements, acceptable to the
Ministry of Finance, to pay the money.

4. Every person who is associated with the applicant as described in subsection 1 (2) of the
Act also satisfies the requirements set out in paragraph 3.

5. The applicant shall ensure that every person, of whose name the applicant receives notice
from the registrar under subsection (2), also satisfies the requirements set out in paragraph 3
within a reasonable time period that the registrar specifies.

6. If the applicant for registration is a registrant, a former registrant or a person registered at

any time under the Motor Vehicle Dealers Act,

i. the applicant is not in default of levies or payments to the Fund and has not failed to
reimburse the Fund as required under subsection 42 (6) of the Act, or

ii. if the applicant is in default or has failed to reimburse the Fund, the applicant has made
arrangements with the registrar under subsection 42 (8) of the Act and has complied or is
complying with those arrangements.

7. The applicant shall ensure that every person who is a former registrant or a person
registered at any time under the Motor Vehicle Dealers Act and of whose name the applicant
receives notice from the registrar under subsection (2) also satisfies the conditions set out in
paragraph 6 within a reasonable time period that the registrar specifies.

8. For registration other than as an outside Ontario dealer, a lease finance dealer or a fleet
lessor, the persons identified in subsection (3) have successfully completed the course
designated by the registrar for the purposes of this paragraph.

9. For registration as an outside Ontario dealer, the applicant is registered in another

jurisdiction as a person with equivalent status to a registered motor vehicle dealer. O. Reg.
333/08, s. 11 (1); O. Reg. 221/09, s. 5.
 36

(2) Upon receiving an application for registration or renewal of registration, the registrar shall
notify the applicant of the name of every person who, in the opinion of the registrar, is
described in clause 6 (4) (a), (b) or (c) of the Act or shall notify the applicant that, in the
opinion of the registrar, there is no person who is described in any of those clauses. O. Reg.
333/08, s. 11 (2).

(3) Paragraph 8 of subsection (1) applies to each of the following persons unless the person
has been in charge of the day to day operations of a registered motor vehicle dealer since
January 1, 2007 and without any break in time that amounts to two consecutive years:

1. If the applicant is an individual, the applicant and, if the applicant will not be in charge
of the day to day operations of the applicant as a motor vehicle dealer, the individual who
will be so in charge.

2. If the applicant is a corporation and one of the directors or officers of the applicant will
be in charge of the day to day operations of the applicant as a motor vehicle dealer, that
director or officer.

3. If the applicant is a corporation and none of the directors or officers of the applicant will
be in charge of the day to day operations of the applicant as a motor vehicle dealer, at least
one of the directors or officers of the applicant and the individual who will be so in charge.

4. If the applicant is a partnership and one of the partners of the applicant will be in charge
of the day to day operations of the applicant as a motor vehicle dealer, that partner.

5. If the applicant is a partnership and none of the partners of the applicant will be in
charge of the day to day operations of the applicant as a motor vehicle dealer, at least one
of the partners of the applicant and the individual who will be so in charge.
 37

3. Judicial Review Procedure Act, RSO 1990, c J.1, ss 2(1), 6(2)

Applications for judicial review

2(1) On an application by way of originating notice, which may be styled “Notice of Application
for Judicial Review”, the court may, despite any right of appeal, by order grant any relief that the
applicant would be entitled to in any one or more of the following:

1. Proceedings by way of application for an order in the nature of mandamus, prohibition or

certiorari.

2. Proceedings by way of an action for a declaration or for an injunction, or both, in relation to

the exercise, refusal to exercise or proposed or purported exercise of a statutory power.

Application to judge of Superior Court of Justice

6(2) An application for judicial review may be made to the Superior Court of Justice with leave
of a judge thereof, which may be granted at the hearing of the application, where it is made to
appear to the judge that the case is one of urgency and that the delay required for an application
to the Divisional Court is likely to involve a failure of justice.
 38

4. Climate Change Mitigation and Low-carbon Economy Act, 2016, SO 2016, c. 7, ss 7, 71

Climate change action plan

7 (1) The Government of Ontario shall prepare a climate change action plan that sets out actions
under a regulatory scheme designed to modify behaviour that will enable Ontario to achieve its
targets for the reduction of greenhouse gas emissions.

Traditional ecological knowledge

(2) If a First Nation or Métis community offers its traditional ecological knowledge to the
Minister, the Minister shall take into consideration the role of traditional ecological knowledge
with respect to the action plan.

Impact on low-income households

(3) The action plan must consider the impact of the regulatory scheme on low-income
households and must include actions to assist those households with Ontario’s transition to a
low-carbon economy.

Contents of plan
(4) For each of the actions set out in the action plan, the plan shall establish a timetable for taking
the action.

Same
(5) The action plan shall include the following information:

1. The potential reduction in greenhouse gas resulting from the action.

2. An assessment of the cost per tonne of the potential reduction in greenhouse gas.

3. If an action could be funded, in whole or in part, using the amounts in the Greenhouse Gas
Reduction Account, the estimated amount of any funding from the Account that may be
contemplated.

Public notice
(6) The Minister shall, before January 1, 2017, lay the action plan before the Assembly and make
it available to the public on a website of the Government or in such other manner as may be
prescribed by the regulations.

Periodic revision and review

(7) The action plan may be revised at any time and must be reviewed at least every five years or
as otherwise prescribed.

Public notice after review

(8) If the action plan is revised following a review, the Minister shall, at the earliest reasonable
opportunity, lay the revised action plan before the Assembly and make it available to the public
on a website of the Government or in such other manner as may be prescribed by the regulations.
 39

Status
(9) For greater certainty, the action plan and any revisions to it are not undertakings within the
meaning of the Environmental Assessment Act.

[…]

Greenhouse Gas Reduction Account

71 (1) An account shall be established in the Public Accounts to be known as the Greenhouse
Gas Reduction Account in English and Compte de réduction des gaz à effet de serre in French in
which shall be recorded the following amounts:
1. The amount of the proceeds from the distribution of Ontario emission allowances
created under section 30.
2. Any amounts payable to the Crown by a participant under section 14.
3. The amount of any administrative penalties that are paid under section 57.
4. The amount of any fees payable to the Crown under this Act.
5. All expenditures of public money incurred under subsection (2).

Authorized expenditures
(2) Amounts not exceeding the balance in the account may be charged to the Greenhouse Gas
Reduction Account and paid out of the Consolidated Revenue Fund for the following purposes:
1. To fund costs incurred by the Crown, directly or indirectly, in connection with the
administration and enforcement of this Act and the regulations or to reimburse the Crown for
expenditures incurred by the Crown, directly or indirectly, for any such purpose.
2. To fund, directly or indirectly, costs relating to initiatives described in Schedule 1 to this Act
that are reasonably likely to reduce, or support the reduction of, greenhouse gas and costs
relating to any other initiatives that are reasonably likely to do so.
3. To reimburse the Crown for expenditures incurred by the Crown, directly or indirectly, for any
purpose described in paragraph 2.

Restriction
(3) No amount is payable under paragraph 2 or 3 of subsection (2) during a year in respect of any
initiative unless the Minister reviews and provides an evaluation of the initiative to Treasury
Board. The Minister’s review shall consider,
(a) the potential greenhouse gas reductions of the initiative;
(b) the relationship of the initiative to the achievement of the greenhouse gas emission
reduction targets established under section 6;
(c) the relationship of the initiative to other potential, planned and funded initiatives to
reduce greenhouse gas;
(d) the relationship of the initiative to the climate change action plan prepared
under section 7;
(e) whether the initiative is also likely to assist low-income households and vulnerable
communities with their transition to a low-carbon economy; and
(f) such other matters as the Minister considers appropriate.
 40

Public notice re: evaluations

(4) At least once during each fiscal year, the Minister shall make a report available to the public
about the evaluations provided under subsection (3) to Treasury Board during the year with
respect to initiatives that are funded from the Greenhouse Gas Reduction Account.

Reimbursement of expenditures
(5) A reimbursement described in paragraph 3 of subsection (2) for an expenditure incurred by
the Crown shall not be made after the books of the Government of Ontario are closed for the
fiscal year in which the expenditure is incurred.

Specified expenditures
(6) Despite subsection (5), $366,445,123 is deemed, as of March 31, 2018, to be charged to the
Greenhouse Gas Reduction Account as reimbursement for expenditures described in paragraph 3
of subsection (2) that were incurred by the Crown on or after November 1, 2015 and on or before
March 31, 2017 but were not reimbursed from the Account before the books of the Government
of Ontario were closed for the fiscal year in which the expenditures were incurred.

Annual report
(7) Every year, the Minister shall prepare a report about the Greenhouse Gas Reduction Account
setting out the following:
1. A description of each of the amounts credited and charged to the Account during the year.
2. A description of each of the initiatives with respect to which amounts were charged to the
Account during the year, identifying any of those initiatives that were contemplated in the
climate change action plan prepared in respect of the year.
3. A description of amounts charged to the Account to reimburse the Crown for expenditures
incurred by the Crown, directly or indirectly, in connection with the administration and
enforcement of this Act and the regulations.
4. Such other information as may be required by regulation.

Same
(8) The Minister shall lay the report before the Assembly when the Public Accounts for the year
are laid before the Assembly in accordance with the Financial Administration Act.

[…]

SCHEDULE 1
GREENHOUSE GAS REDUCTION ACCOUNT

Initiatives
1 (1) Any of the following types of initiatives may be funded, in whole or in part, from the
Greenhouse Gas Reduction Account in accordance with section 71 of the Act, but only, for any
particular initiative, if the particular initiative is reasonably likely to reduce, or support the
reduction of, greenhouse gas:
 41

1. Initiatives relating to the reduction of greenhouse gas from energy sources and uses
through the use of renewable and alternative energy sources and uses including the
following:
i. The production or installation of renewable, low-carbon, carbon-free and net zero
alternative energy.
ii. The research, development or deployment of technologies that eliminate or reduce
the need to use fuels that emit greenhouse gasses.
iii. Distributed renewable energy generation and energy management technologies to
support load-shifting, energy storage, net metering and other measures to eliminate
the need for grid-based electricity during natural gas peaking.
iv. Carbon capture and storage technology for greenhouse gas emitting energy
sources.

2. Initiatives relating to the reduction of greenhouse gas from land use and buildings
including the following:
i. Geothermal solutions, insulation, and other technologies that will reduce
greenhouse gas emissions from buildings and neighbourhoods.
ii. Support for increasing consumer demand for near-net-zero and net zero buildings,
structures and communities.
iii. Infrastructure to support adoption and use of zero emission and plug-in hybrid
vehicles, and low-carbon alternative fuels.
iv. The design, construction and retrofitting of buildings and structures to reduce
greenhouse gas emitting energy sources related to space and water cooling and
heating.

3. Initiatives relating to the reduction of greenhouse gas from transportation including the
following:
i. Support for increasing consumer demand for zero emission and plug-in hybrid
vehicles.
ii. Active transportation infrastructure that will reduce greenhouse gas.
iii. Public transit vehicles and infrastructure that reduce greenhouse gas emissions.
iv. Technologies, infrastructure, vehicles, buildings and structures that reduce
greenhouse gas emissions associated with the movement of goods.

4. Initiatives relating to the reduction of greenhouse gas from industry including the
following:
i. Technologies that reduce greenhouse gas emissions.
ii. Switching from higher greenhouse gas emitting sources of energy, carbon capture,
sequestration and storage and changes to processes, including changes to the inputs
to those processes that reduce greenhouse gas emissions.

5. Initiatives relating to the reduction of greenhouse gas from agriculture, forestry and
natural systems including the following:
i. Support for agriculture, soil and forestry approaches that are intended to reduce or
remove greenhouse gas.
ii. Treatment or destruction of by-products that produce greenhouse gas.
 42

iii. Carbon capture, sequestration and storage.

6. Initiatives relating to the reduction of greenhouse gas from the waste system including
the following:
i. Reducing the waste that produces greenhouse gas.
ii. The management and use of waste to reduce greenhouse gas.
iii. The use and destruction of by-products of waste management that produce
greenhouse gas such as landfill gas.

7. Initiatives relating to the reduction of greenhouse gas through the use of financial
models and services including the following:
i. Support for organizations that develop and deliver financing tools, project
aggregation, and professional services for initiatives that reduce greenhouse gas
emissions.
ii. The use of risk capital funds to invest in clean technologies that reduce greenhouse
gas emissions.

(2) Without limiting the generality of subsection (1), any initiative described in subsection (1)
may include any of the following actions:

1. Researching, developing and deploying technology, equipment and scientific

processes.
2. Developing and delivering education and training.
3. Providing information to the public.
4. Activities related to innovation.
5. Other actions.
TESLA MOTORS CANADA ONTARIO (MINISTRY OF Divisional Court File No.: 497/18
ULC and TRANSPORTATION)

Applicant Respondent

ONTARIO
SUPERIOR COURT OF JUSTICE
(DIVISIONAL COURT)

PROCEEDINGS COMMENCED IN
TORONTO

FACTUM OF THE RESPONDENT

MINISTRY OF THE ATTORNEY

GENERAL
Crown Law Office – Civil
720 Bay Street, 8th Floor
Toronto, ON M7A 2S9
Fax: (416) 326-4181

Antonin I. Pribetic (LSO# 34843S)

Tel: (416) 314-2540
Email: Antonin. Pribetic@ontario.ca

Tamara D. Barclay (LSO# 42795V)

Tel: (416) 326-4103
Email: tamara.barclay@ontario.ca

Brent Kettles (LSO# 61568E)

Tel: (416) 314-2040
Email: Brent.Kettles@ontario.ca

Counsel for the Respondent