Friday, January 28, 2011
The City of Thunder Bay entered into an option agreement with Horizon Legacy Energy Corp. for the construction of a wind farm on city property. Although the option included a copy of the lease, it did not specify the exact location of the farm. That was to be worked out between the City and the company. The City had the ultimate power to make the decision, but after City Council turned down the location that had been put forward by the company and endorsed by a City committee, the company commenced a legal action to require that the City comply with the option and locate the farm as requested.
The City brought a motion to the Court asking that the court action be thrown out in favour of arbitration. Under the lease, which the City signed, disputes were supposed to be resolved through arbitration and not in the Courts. However, the Court found that this was not an issue about the lease; it was an issue about the option, which did not include an arbitration clause. On that basis, the Court did not determine the issue of whether the lease could actually be a lease at common law if the location of the leased premises was not defined.
Read the decision at: Horizon Legacy Energy Corporation, et al v. The Corporation of the City of Thunder Bay.