Case information

Constitutional law — Taxation — Regulatory charge — Civil procedure — Motion to strike —Whether the charge from a regulatory scheme can exceed the lowest necessary cost to deliver the service — Whether a court is required to look beyond legislation in determining whether a levy is a regulatory charge or tax — Whether the delegation of authority from the legislature to a subordinate entity to collect a levy, without delegating any discretionary powers, is contrary to s. 53 of the Constitution Act, 1867 — Whether the incorporation of environmental and social policy goals in procurement convert cost recovery by a public authority into an unconstitutional tax — Whether an allegation of “colourability” requires a full evidentiary hearing where a constitutional challenge would otherwise be dismissed based on the text of the impugned legislation?

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National Steel Car Ltd. manufactures steel rail cars and is a heavy electricity user. Changes to Ontario’s electricity pricing formula led to a dramatic price increase for electricity paid by heavy users like National Steel Car. The electricity pricing formula in Ontario is administered by the Independent Electricity System Operator (IESO). When the IESO sets electricity prices, it makes a “Global Adjustment” to the price of electricity. A component of the Global Adjustment funds electricity procurement contracts under the feed-in tariff program (FIT). National Steel Car brought two applications for declarations that the FIT program was actually a colourable attempt to disguise a tax as a regulatory charge. National Steel Car alleged that the FIT program was an illegal tax which required a referendum. The respondents named by National Steel Car brought a motion under Rule 21.01(1)(b) of the Rules of Civil Procedure, RRO 1990, Reg 194, to strike each application on the ground that it disclosed no reasonable cause of action. The motion judge struck National Steel Car’s applications on the basis that it was plain, obvious, and beyond doubt that they could not succeed. The Court of Appeal granted the subsequent appeal and remitted the matter to the Superior Court on the basis that a full evidentiary record was required to determine the issues raised by National Steel Car.