Divisional Court File No.

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

(Court Seal)

TESLA MOTORS CANADA ULC

Applicant

and

ONTARIO (MINISTRY OF TRANSPORTATION)

Respondent

NOTICE OF APPLICATION FOR JUDICIAL REVIEW

TO THE RESPONDENT

A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicant. The claim made by the
Applicant appears on the following page.

THIS APPLICATION for judicial review will come on for a hearing before the Divisional Court
on a date to be fixed by the registrar at the place of hearing requested by the Applicant. The
Applicant requests that this application be heard at Osgoode Hall, 130 Queen Street West,
Toronto, Ontario M5H 2N5.

IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step in the
application or to be served with any documents in the application, you or an Ontario lawyer acting
for you must forthwith prepare a notice of appearance in Form 38A prescribed by the Rules of Civil
Procedure, serve it on the Applicant’s lawyer or, where the Applicant does not have a lawyer,
serve it on the Applicant, and file it, with proof of service, in the office of the Divisional Court, and
you or your lawyer must appear at the hearing.

IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE TO

THE COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSES ON THE
APPLICATION, you or your lawyer must, in additional to serving your notice of appearance,
serve a copy of the evidence on the Applicant’s lawyer or, where the Applicant does not have a
lawyer, serve it on the Applicant, and file it, with proof of service, in the office of the Divisional
Court within thirty days after service on you of the Applicant’s application record, or at least four
days before the hearing, whichever is earlier.

IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVEN TO IN YOUR

ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS
PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE
AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE.

Date August 10, 2018 Issued by

Registrar
Address of
court office: Osgoode Hall, 130 Queen Street West
Toronto, Ontario
M5H 2N5

TO: MINISTER OF TRANSPORTATION

Ministry of Transportation, Minister’s Office
77 Wellesley Street West
Ferguson Block, 3rd Floor
Toronto, Ontario M7A 1Z8

Respondent

AND TO: ATTORNEY GENERAL OF ONTARIO

Crown Law Office - Civil
720 Bay Street, 8th Floor
Toronto, Ontario M7A 2S9
 APPLICATION FOR JUDICIAL REVIEW

1. The applicant makes an application for:

(a) leave for this application to be heard on an urgent basis before a single judge of the
Divisional Court sitting as a judge of the Superior Court of Justice;

(b) if necessary, an order abridging the time for service of this application;

(c) an order quashing the Exclusion Decision (defined below);

(d) a declaration that, by consequence of (c) above, Tesla Model 3 vehicles sold by
Tesla Motors Canada ULC (“Tesla Canada”) are included in the Transition Plan
(defined below);

(e) in the alternative, an order quashing the Transition Plan (defined below);

(f) the applicant’s costs of this application; and

(g) such other relief as to this Honourable Court may seem just.

2. The grounds for the application are:

I. Overview

3. On July 11, 2018, the Minister of Transportation cancelled a program that provided

Ontario consumers with rebates for the purchase of electric vehicles. Before and after being

elected, the current Premier and members of the government had always promised that people who

ordered or bought a vehicle “before the cancellation would still get the rebate.” Instead, when the

Transition Plan was announced, the Minister of Transportation grandfathered applications for all

such purchases except for purchases from Tesla Canada.

4. The Minister of Transportation’s decision suddenly left hundreds of Tesla Canada’s

Ontario customers in the unfair position of no longer being eligible for the rebate they had

expected to receive when they ordered their vehicles, while purchasers of other brands and from
 -2-

other dealers will still receive the rebate during a transition period that runs until September 10,

2018. The decision has also already inflicted substantial harm on Tesla Canada in the form of lost

sales and the creation of an impression among Ontarians that Tesla Canada may be singled out for

future arbitrary treatment under the law. The unjustified targeting of Tesla Canada and its

customers was done without giving Tesla Canada any warning or the chance to provide input or

submissions. Tesla Canada received no reasons at all for its exclusion, which was an arbitrary and

entirely unreasonable decision, and should be quashed.

II. Tesla Canada

5. Tesla Canada is an Ontario-licensed automobile dealer that sells electric vehicles from

Tesla, Inc., an American company that designs and sells all-electric vehicles. Tesla Canada

employs more than 170 Ontarians in a range of jobs, including in sales, vehicle services, real

estate, marketing, electrical trades, installation and infrastructure development.

6. Unlike all other major manufacturers, Tesla, Inc. does not sell its vehicles through

independent franchised dealers. Instead Tesla, Inc. sells its vehicles to consumers either directly or

through wholly owned subsidiaries such as Tesla Canada. In Ontario, Tesla Canada currently

operates four stores that are licensed dealerships.

7. Since 2010, the Ontario government has given incentives for the purchase of electric

vehicles from a number of manufacturers. Cars sold by Tesla Canada have been among these

vehicles.
 -3-

III. The Electric and Hydrogen Vehicle Incentive Program

8. To reduce greenhouse emissions, the Ontario government has relied on a series of statutory

and regulatory measures, including, since 2010, programs offering incentives to individuals and

businesses that purchase or lease hybrid-electric or electric vehicles.

9. Most recently, the Ontario government provided incentives to Ontarians through the

Electric and Hydrogen Vehicle Incentive Program (the “EHVIP”), which provided rebates of up

to $14,000 to consumers buying eligible electric vehicles. Before its termination, the EHVIP

applied to qualified electric vehicles with a suggested retail price of under $75,000 that the

Ministry of Transportation (“MTO”) approved and listed on its website. As of July 11, 2018,

Tesla’s Model 3 vehicle was among the vehicles approved for a maximum rebate. So were

vehicles of other brands including BMW, Audi, Fiat Chrysler, Ford, General Motors, Hyundai,

Kia, Nissan and Volkswagen.

IV. The Climate Act and the Climate Plan

10. The EHVIP is contemplated by the Climate Change Mitigation and Low-carbon Economy

Act, S.O. 2016, c. 7 (the “Climate Act”) and the Climate Change Action Plan (the “Climate

Plan”).

11. The Climate Act and Climate Plan remain in force and effect.

A. The Climate Plan

12. Section 7 of the Climate Act requires the creation of the Climate Plan. The Climate Act

governs the Climate Plan’s creation, review, revision and repeal.

 -4-

13. The Climate Plan was published by the Province of Ontario on June 8, 2016. It expressly

requires the creation and maintenance of various incentives, and states that purchasers of eligible

electric vehicles will receive up to $14,000 in rebates per vehicle.

B. The Greenhouse Gas Reduction Account

14. Under Schedule 1 of the Climate Act, initiatives relating to the reduction of greenhouse gas

emissions from transportation (including initiatives, such as the EHVIP, that support increasing

consumer demand for zero-emission and plug-in hybrid vehicles) can be funded by the

Greenhouse Gas Reduction Account (the “GGRA”). The Climate Act does not require that all

funding for Climate Plan initiatives, such as the EHVIP, come from the GGRA, but does create the

GGRA and identify it as a potential source of funding for such initiatives.

15. The GGRA was intended to hold funding generated through mechanisms contemplated

under the Climate Act, including the Province’s cap and trade program, which was implemented

under the Climate Act and The Cap and Trade Program, O. Reg. 11/16. The Climate Plan

anticipated funding for the EHVIP from the GGRA in the amount of $140,000,000 to

$160,000,000.

16. Like the Climate Act and the Climate Plan, the GGRA remains intact. While it may be used

to fund the initiatives brought into being by the Climate Plan, those initiatives do not depend on the

existence of the GGRA, or the ongoing existence of any particular source of funding.

V. The Minister of Transportation terminates the EHVIP

17. On July 3, 2018, a news release posted on the Ontario government website announced that

Ontario Premier Doug Ford had “revoked” Ontario’s cap and trade regulation, and that the Ontario
 -5-

government would “immediately begin an orderly wind-down of all programs funded out of

cap-and-trade carbon tax revenues.” The EHVIP was one of these programs.

18. The release did not specifically mention the EHVIP, but noted a commitment by the

Premier that the “government will honour arrangements where contracts have already been signed

and orders have already been made…” That promise echoed commitments that Premier Ford’s

campaign had made while he was a candidate: “If you purchased a vehicle before the cancellation

you will still get the rebate.”

19. The Minister of Transportation terminated the EHVIP by a July 11, 2018 announcement on

the website of MTO (the “Termination”). The announcement set out a transition plan, as follows

(the “Transition Plan”):

On July 3, 2018, Ontario cancelled the cap and trade program as part of its
commitment to bring gas prices down by 10 cents a litre and help reduce costs for
Ontario families and businesses by $1.9 billion dollars per year.

Given the Electric and Hydrogen Vehicle Incentive Program and the Electric
Vehicle Charging Incentive Programs are funded through cap-and-trade proceeds,
these programs are cancelled.

Applications will be accepted from dealerships, car owners or prospective car

owners 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.

• 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.

In addition, the Electric Vehicle Charging Incentive Program is cancelled effective

July 11. Charging stations purchased and/or installed before this date will be
eligible to receive incentives if the application is submitted within 60 days of July
11.
 -6-

20. The reference in the announcement to the cancellation of the cap and trade program is a

reference to the Prohibition Against The Purchase, Sale and Other Dealings with Emission

Allowances and Credits, O. Reg. 386/18, which prohibits the purchase, sale and trading of

emission allowances and credits under the Climate Act.

VI. The arbitrary and targeted exclusion of Tesla Canada from the Transition Plan

21. The Minister of Transportation set out deliberately and arbitrarily to exclude Tesla Canada

and its customers from the Transition Plan (the “Exclusion Decision”) and sought to do so by

explicitly limiting the rebate to “[i]nventory that dealers have on lots or orders made by dealerships

with manufacturers” in the announcement of the Termination on the MTO website.

22. In fact, Tesla Canada is an Ontario-licensed dealer. As a result, in the language of the

original announcement MTO included Tesla Canada, at least with respect to vehicles on its

Ontario lots as of July 11, 2018. Apparently recognizing its mistake, MTO later altered the

wording to be sure to expressly exclude Tesla Canada and its customers from the Transition Plan.

23. On July 11, 2018, after the announcement of the Termination on its website, MTO sent

letters to dealerships outlining the procedure to be followed under the Transition Plan. Tesla

Canada received this letter, but soon received a notice saying that the sender had attempted to

“recall” it. MTO then sent a different letter to Tesla Canada that omitted details on how Tesla

Canada customers could obtain rebates under the Transition Plan and made clear that MTO had

decided specifically to exclude Tesla Canada alone. It read in part:

Vehicles that have been ordered directly from an original equipment manufacturer
by a consumer (i.e. direct sales as opposed to sales through a franchised
automobile dealership) but which have not been delivered, registered and plated on
or before July 11, 2018 are not eligible for an EHVIP incentive. [Emphasis added]
 -7-

24. MTO’s letter may have signalled a misunderstanding that Tesla Canada is a manufacturer

as opposed to a licensed dealer. Regardless, MTO’s intent arbitrarily and deliberately to exclude

Tesla Canada was clear: because Tesla Canada does not use a franchised dealership model, Tesla

vehicles ordered on or before July 11, 2018 would be categorically ineligible for rebates under the

Transition Plan, unlike vehicles made by every other manufacturer and those sold by every other

Ontario-licensed dealer. There is no legitimate basis under the Climate Act, the Climate Plan or

anywhere else for such an arbitrary exclusion of Tesla Canada.

25. On July 26, 2018, the Minister of Transportation made MTO’s discriminatory intentions

even more clear. In response to criticism about the Termination, the Minister of Transportation

said in the Legislative Assembly:

The electric vehicle program—we made it very clear that that would be one of the
programs that would be lost.

But we also were extremely fair in the way that we ended it. On July 11, we
announced that until September 10, all dealers and anyone who had purchased a
vehicle or had a vehicle on order, as long it was plated and delivered by September
10, other than Tesla—they would receive their rebate. [Emphasis added]

26. Further clarifying the Exclusion Decision’s targeted nature, in the Legislative Assembly on

July 31, 2018, the Parliamentary Assistant to the Minister of the Environment, Conservation and

Parks referred to the previous Ontario government’s provision of “Tesla subsidies”. Then, in

criticizing the cap and trade program, she commented derisively that a former official of the

Ministry of the Environment and Climate Change had taken “a job at none other than Tesla.”
 -8-

VII. The Exclusion Decision violated the requirements of procedural fairness

27. The Termination and the Exclusion Decision had the effect of suddenly and immediately

withdrawing the eligibility of Tesla Canada and its customers under the EHVIP, while the

customers of all other dealers and manufacturers remain eligible under the Transition Plan.

However, before making the Exclusion Decision, the Minister did not provide any notice to Tesla

Canada of the planned Termination or Exclusion Decision, and did not provide Tesla Canada with

any opportunity to make representations about them. This failure violated the requirements of

procedural fairness.

28. Had there been any legitimate purpose to the Exclusion Decision, the Minister of

Transportation should have given Tesla Canada the opportunity to address the proposal. For

example, there was clearly an initial lack of understanding within MTO that Tesla Canada is an

Ontario-licensed dealer. Because Tesla Canada’s interests were so directly affected by the

Exclusion Decision, the Minister of Transportation should have given it a meaningful opportunity

to participate, and his failure to do so is a demonstration of MTO’s discriminatory intent. The

Minister of Transportation’s failure to allow Tesla Canada any opportunity to give input is an

independently sufficient reason to quash the Exclusion Decision.

VIII. The Exclusion Decision is unreasonable

29. The Exclusion Decision is also unreasonable and unlawful. It causes harm to Tesla Canada

and its customers on an arbitrary basis. Particularly:

• The Exclusion Decision arbitrarily discriminated against Tesla Canada, and subjects it and
its customers to differential treatment by comparison with other licensed dealers, brands
and customers.

• The Exclusion Decision specifically targeted Tesla Canada without any justification.
 -9-

• The Exclusion Decision has created the impression that Tesla Canada and its customers
will not be treated equally under the law. In other words, customers may fear that their
purchase of a Tesla vehicle may attract further adverse government action on an arbitrary
basis.

• The Exclusion Decision has caused and will cause Tesla Canada and its customers to lose
money, again without any legitimate justification.

• The Exclusion Decision has no possible connection to the purposes of the Climate Act and
the Climate Plan, which contemplate the EHVIP, including the purpose “to reduce
greenhouse gas in order to respond to climate change, to protect the environment and to
assist Ontarians to transition to a low-carbon economy.” Nor did the Exclusion Decision
have any legitimate justification.

• Demonstrating the lack of justification, MTO has provided no reasons at all for the
Exclusion Decision.

30. For these reasons, the Exclusion Decision was unreasonable and should be quashed.

IX. This application should be heard on an urgent basis

31. This application must be heard on an urgent basis by a single judge of the Divisional Court,

sitting as a judge of the Superior Court, under s. 6(2) of the Judicial Review Procedure Act, R.S.O.

1990, c. J.1.

32. The Transition Plan went into effect on July 11, 2018, and is set to expire on September 10,

2018. As a result, there is only one month left in the Transition Plan in which to correct this

injustice. In the meantime, every day that the Transition Plan continues, the unquantifiable and

irreparable harm grows.

33. Tesla Canada did all that it could to deal directly with the respondent between the

announcement of the Transition Plan and now. However, the respondent has failed to answer Tesla

Canada’s attempts to discuss the matter.

 -10-

X. Legislation relied on

34. The applicant will rely on the following legislation:

(a) the Judicial Review Procedure Act, R.S.O. 1990, c. J.1;

(b) the Climate Change Mitigation and Low-carbon Economy Act, 2016, S.O. 2016, c.
7;

(c) The Cap and Trade Program, O. Reg. 11/16;

(d) Prohibition Against The Purchase, Sale and Other Dealings with Emission
Allowances and Credits, O. Reg. 386/18; and

(e) the Rules of Civil Procedure, Rules 38 and 68.

35. The following documentary evidence will be used at the hearing of the application:

(a) affidavit evidence, to be sworn or affirmed.

August 10, 2018 POLLEY FAITH LLP

The Victory Building
80 Richmond Street West
Suite 1300
Toronto, ON
M5H 2A4

Mark Polley (44413O)

mpolley@polleyfaith.com

Jeffrey Haylock (61241F)

jhaylock@polleyfaith.com

Sandy Lockhart (73554J)

slockhart@polleyfaith.com

Tel: 416.365.1600
Fax: 416.365.1601

Lawyers for the applicants

TESLA MOTORS CANADA ULC -and- ONTARIO (MINISTRY OF TRANSPORTATION)
Applicant Respondent
Divisional Court File No.

ONTARIO
SUPERIOR COURT OF JUSTICE
(DIVISIONAL COURT)

PROCEEDING COMMENCED AT
TORONTO

NOTICE OF APPLICATION FOR JUDICIAL REVIEW

POLLEY FAITH LLP

The Victory Building
80 Richmond Street West
Suite 1300
Toronto, ON
M5H 2A4

Mark Polley (44413O)

mpolley@polleyfaith.com

Jeffrey Haylock (61241F)

jhaylock@polleyfaith.com

Sandy Lockhart (73554J)

slockhart@polleyfaith.com

Tel: 416.365.1600
Fax: 416.365.1601

Lawyers for the applicant