Hydro One privatization an unassailable core policy decision, Appeal Court rules

No evidence exists that TORONTO Ontario Premier Kathleen Wynne or any of her senior ministers acted in bad faith when they made the decision to privatize part of provincial utility Hydro One, the province’s top court ruled on Tuesday. Upholding an earlier ruling dismissing a lawsuit against the province, the Ontario Court of Appeal agreed the Liberal government’s decision is immune to such legal action because the privatization was a matter of “core policy.” As a result, the plaintiffs would have had to show detailed evidence the decision was either irrational or made in bad faith, the Appeal Court said in a ruling that comes just months ahead of an election in which the privatization is likely to be a key issue.

“Matters of core policy are supposed to be immune from suit, absent rare cases of irrationality or bad faith,” the Appeal Court said. The case arose when the Wynne government decided to sell off part of Hydro One — a decision that had gone completely unheralded during the provincial campaign that returned the Liberals to office in 2014. The government said money from the sale of shares would go to pay down long-term hydro-related debt and fund transit and other infrastructure projects.

The Canadian Union of Public Employees and other ratepayers sued Wynne along with her energy and finance ministers, arguing the privatization plan was a scheme to reward donors to the Liberal party as a way to keep the donations flowing. As such, they said, the government had acted in bad faith. Last August, Superior Court Justice Peter Cavanagh dismissed the suit without a trial.

The plaintiffs appealed, arguing Cavanagh had made several mistakes. Among his purported errors, they argued their claim did support a bad-faith conclusion that should at least have been dealt with at trial. The Appeal Court, however, found no reason to disagree with Cavanagh.

Simply alleging officials acted in bad faith or for partisan political purposes, the court said, is not enough.