[Page 186]
IN THE MATTER OF AN ARBITRATION UNDER CHAPTER ELEVEN OF
THE
NORTH AMERICAN FREE TRADE AGREEMENT AND THE
UNCITRAL ARBITRATION RULES, 1976
PCA CASE NO. 2018-54
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In the Matter of Arbitration Between:
TENNANT ENERGY, LLC,
Claimant,
and
GOVERNMENT OF CANADA,
Respondent.
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Volume 2
Tuesday, November 16, 2021
The hearing in the above-entitled matter
came on at 9:00 a.m. (EST) before:
MR. CAVINDER BULL SC, President
MR. R. DOAK BISHOP, Arbitrator
SIR DANIEL BETHLEHEM, Arbitrator
[Page 187]
ALSO PRESENT:
Registry, Permanent Court of Arbitration:
MR. JOSÉ LUIS ARAGÓN CARDIEL
Legal CounselMS. CLARA RUIZ GARRIDO
Assistant Legal CounselMS. DIANA PYRIKOVA
Case ManagerCourt Reporter:
MR. DAVID A. KASDAN
Registered Diplomate Reporter (RDR)
Certified Realtime Reporter (CRR)
Worldwide Reporting, LLP
529 14th Street, S.E.
Washington, D.C. 20003
United States of AmericaTechnical Support - Law In Order:
MR. FARAZ KHAN
Observers:
MS. ROMANE S. DUNCAN
MS. MARÍA GÓMEZ
[Page 188]
APPEARANCES:
On behalf of the Claimant:
MR. BARRY APPLETON
MR. GABRIEL MARSHALL
Appleton & Associates International Lawyers LP
121 Richmond St W, Suite 304
Toronto, Ont M5H2K1MR. EDWARD MULLINS
MS. SUJEY HERRERA
MS. CRISTINA CARDENAS
Reed Smith, LLP
1001 Brickell Bay Drive, 9th Floor
Miami, Florida 33131
United States of AmericaClient Representative:
MR. JOHN C. PENNIE
[Page 189]
APPEARANCES: (Continued)
On behalf of Respondent:
MS. HEATHER SQUIRES
MR. MARK KLAVER
MS. ALEXANDRA DOSMAN
MR. STEFAN KUUSKNE
MR. BENJAMIN TAIT
MS. KRYSTAL GIRVAN
MS. JESSICA SCIFO
MR. SCOTT LITTLE
MR. MARK LUZ
MR. JEAN-FRANCOIS HEBERT
Trade Law Bureau (JLT)
Global Affairs Canada
125 Sussex Drive
Ottawa, Ontario, K1A 0G2
CanadaCore Legal, Trial Graphics
MS. GEN BARLOW
Investment Trade Policy Division, Global Affairs
Canada:MR. MATTHEW TONE
MS. CALLIE STEWARTLegal Affairs Branch, Global Affairs Canada:
MR. ALAN KESSEL
Ministry of Economic Development, Job Creation and
Trade, Government of Ontario:MS. SAROJA KURUGANTY
MS. MARGARET KIM
MS. ADRIANNA MILITANO
[Page 190]
APPEARANCES: (Continued)
Ministry of Energy, Government of Ontario:
MR. ERIK GULOIEN
MS. KAREN SLAWNER
MR. WILLIAM COUTTSIndependent Electricity System Operator:
MS. EVA MARKOWSKI
[Page 191]
C O N T E N T S
PAGE
PRELIMINARY MATTERS...................................192
WITNESSES:
LUCAS MCCALL
JOHN C. PENNIE
CONFIDENTIAL SESSIONS
1....................................................242-274
2....................................................293-326
[Page 192]
1
P R O C E E D I N G S
2
PRESIDENT BULL: Good day to everyone. Let's
3
begin proceedings for today. This is Day 2 of the
4
jurisdictional hearing for Tennant Energy and Government
5
of Canada, PCA Case Number 2018-54. We have on the Agenda
6
today two witnesses who will be examined; that's Mr. Lucas
7
McCall and Mr. John Pennie.
8
Before we get the first witness, I had a matter
9
of housekeeping I wanted to raise with the Parties, and
10
principally with the Claimant. Mr. Appleton, I
11
wondered--I wanted some clarification. The Witness after
12
the two that we have today, after Mr. Pennie, is Mr. John
13
Tennant, and I wanted to know whether if--if we were ahead
14
of time, would it be possible for Mr. John Tennant to
15
begin his examination today, or is that not possible? I'm
16
asking this just so that we have a clear idea of how we're
17
going to spend today. So, if you could let me know
18
whether--what the plan is on that front.
19
I can't hear you, Mr. Appleton.
20
(Pause.)
21
MR. APPLETON: We're having a technical issue.
22
PRESIDENT BULL: Yes, we can hear you now.
23
MR. APPLETON: Excellent. Thank you very much.
24
Mr. President, we did not anticipate that we
25
would be able to get to Mr. Tennant today, and I recall
[Page 193]
1
that Sir Daniel was quite clear that, at least our
2
understanding was that he did not want to break witnesses
3
if that was not going to be necessary, and since we
4
anticipated that Mr. Tennant's--John Tennant's testimony
5
would take a considerable period of time, and we
6
anticipate that Mr. Pennie's testimony will probably take
7
a considerable period of time, I don't think that's going
8
to be practical for today. We can reassess, but I think
9
it would be quite difficult to do at this point.
10
PRESIDENT BULL: Okay. And that's perfectly
11
fine, Mr. Appleton. That's in accordance with the
12
schedule. I just wanted to check what the possibilities
13
were.
14
So, the other matter of housekeeping is a very
15
minor one. Whilst the Agenda doesn't provide for
16
examination-in-chief, I will ask counsel to do the usual
17
on direct examination very briefly before handing the
18
Witness over for cross-examination. And if the other
19
thing to mention is if counsel can just be mindful of the
20
15-minute break and finding a moment for that, that would
21
be very helpful.
22
Are there any housekeeping matters that Parties
23
want to raise before we bring in the first witness?
24
MS. SQUIRES: No, nothing on our end.
25
MR. APPLETON: And nothing from us.
[Page 194]
1
PRESIDENT BULL: Very good.
2
Then let's proceed with Mr. McCall. And if he
3
can be brought into the main room, please.
4
LUCAS MCCALL, RESPONDENT'S WITNESS, CALLED
5
MS. SQUIRES: I'm going to step aside here as
6
well. Ms. Dosman's going to do the direct examination of
7
Mr. McCall.
8
PRESIDENT BULL: Sure. Thank you, Ms. Squires.
9
Mr. McCall, can you see and hear me?
10
THE WITNESS: I can, thank you, yes.
11
PRESIDENT BULL: Good. Mr. McCall, were you in
12
attendance at yesterday's proceedings?
13
THE WITNESS: No, I was not.
14
PRESIDENT BULL: Right. Mr. McCall, my name is
15
Cavinder Bull. I'm the Presiding Arbitrator for this
16
matter. You will see on the screen, my two colleagues on
17
the Tribunal, Mr. Doak Bishop and Sir Daniel Bethlehem.
18
Together, we are the Tribunal that is hearing the case.
19
Thank you for being here today to testify. Before I hand
20
you over to counsel for examination, I need to ask you to
21
make an affirmation that you will tell the truth during
22
these proceedings. And a copy of a Declaration for Fact
23
Witness should be on your screen.
24
Can you see that?
25
THE WITNESS: I can.
[Page 195]
1
PRESIDENT BULL: Would you make that Declaration
2
out loud, please.
3
THE WITNESS: Sure. I solemnly declare upon my
4
honor and conscience that I will speak the truth, the
5
whole truth, and nothing but the truth.
6
PRESIDENT BULL: Thank you, Mr. McCall. And
7
I'll put you now in the hands of Ms. Dosman.
8
MS. DOSMAN: Thank you.
9
DIRECT EXAMINATION
10
BY MS. DOSMAN:
11
Q. Good morning. Lucas, I'd like to confirm that
12
you have before you a printed and unmarked copy of your
13
Witness Statement dated September 21, 2020 (RWS-1).
14
A. I do.
15
Q. And are there any matters in your statement that
16
you would like to correct or to update?
17
A. No, there is not.
18
Q. And do you have any other documents or notes
19
with you?
20
A. No, I do not.
21
Q. Very good. With that, I'll hand things over to
22
counsel for the Claimant.
23
PRESIDENT BULL: Thank you, Ms. Dosman.
24
Can I check, it's Ms. Herrera doing the
25
cross-examination for this Witness?
[Page 196]
1
MS. HERRERA: That is correct, Mr. President.
2
PRESIDENT BULL: Please proceed.
3
REALTIME STENOGRAPHER: I can barely hear you,
4
Ms. Herrera.
5
(Pause.)
6
CROSS-EXAMINATION
7
BY MS. HERRERA:
8
Q. Good morning, Mr. McCall. My name is Sujey
9
Herrera, I'm one of the attorneys representing the
10
Claimant in these proceedings, Tennant Energy LLC. And
11
I'll be asking you some questions this morning, so I
12
appreciate your patience already.
13
Now, I understand from your Witness Statement
14
that you have been working for Global Affairs Canada since
15
2010; is that correct?
16
A. That's correct.
17
Q. Okay. If it's okay with you, I will be
18
referring to Global Affairs Canada and its predecessor
19
Ministries as GAC; is that okay?
20
A. Yes, thank you.
21
Q. Thank you.
22
Now, just so I understand because I'm not from
23
Canada so, you know, I just want to be clear, GAC is, in
24
essence, Canada's Foreign Affairs and Trade Ministry?
25
A. That's correct.
[Page 197]
1
Q. Now, when you started with the GAC, you started
2
in the Investment Trade Policy Division?
3
A. That's correct.
4
Q. And you served as Trade Policy Officer from
5
November 2010 to June 2013?
6
A. That's correct.
7
Q. And then from June 2013 through August 2017, you
8
became a Senior Trade Policy Officer?
9
A. That's correct.
10
Q. And as an Investment Trade Policy Officer, your
11
job was to provide trade policy advice relating to
12
Canadian international economic law controversies?
13
A. Yes, it was to provide policy advice in relation
14
to international investment trade policy.
15
Q. And so would that include expertise and
16
knowledge about NAFTA Chapter Eleven cases?
17
A. Yes.
18
Q. And in that context, would you be aware of
19
ongoing developments in NAFTA Chapter Eleven cases that
20
are underway?
21
A. Yes, particularly the ones that I was working
22
directly on.
23
Q. Which ones were you working directly on?
24
A. Most particularly the Mesa v. Canada Case. I
25
also contributed to other cases including the Eli Lilly
[Page 198]
1
Case and a few others but Mesa was my main case when I was
2
in the Investment Trade Policy Division.
3
Q. Now, in your role as Trade Policy Advisor, would
4
you be aware of developments in other disputes involving
5
Canada trade policies such as those that were underway at
6
the World Trade Organization?
7
A. Peripherally. I would potentially be copied on
8
messages, but no, I didn't provide policy advice or
9
support any ongoing litigation or files at--dispute
10
settlement files at the WTO.
11
Q. Got it. Sorry, I'm taking notes at the same
12
time, so. All right.
13
Now, would you involve--sorry, would you read
14
decisions of any disputes involving Canada that were
15
issued from the WTO?
16
A. No.
17
Q. So, since you weren't reading decisions, you
18
weren't analyzing WTO-related cases; correct?
19
A. No, that's correct.
20
Q. Now, you did mention that Mesa v. Canada was one
21
of your primary cases. Would you have read decisions that
22
were issued in Mesa v. Canada?
23
A. Yes, I would have read the majority of the ones,
24
particularly the pleadings, less so the Procedural Orders,
25
but in terms of the meat of the case, I would read the
[Page 199]
1
submissions.
2
Q. And would you read them as soon as they came out
3
or when would you have read them?
4
A. Generally, you know, within a few days of them
5
coming out if they were critical to the case, within, you
6
know, a day or so.
7
Q. Okay. So, about the decisions that you were
8
reading about, would you then brief officials about those
9
decisions?
10
A. Yes, if there's major developments, we would
11
brief senior management on major developments.
12
Q. And what would you consider a major development
13
that would be sufficient for you to brief officials?
14
A. Anything usually that was likely to have a large
15
bearing on the case or attract public scrutiny or
16
attention.
17
Q. Now, as part of your role at the GAC, were also
18
involved in any negotiation or international trade
19
agreements?
20
A. Yes.
21
Q. And in those negotiations, were you ever present
22
when Government expressed their position on particular
23
issues such as environmental issues or diversity in
24
international trade?
25
A. Sorry, environmental issues or--I missed the
[Page 200]
1
second part of the question.
2
Q. Diversity in international trade.
3
A. Diversity--
4
MS. DOSMAN: I stop the Witness briefly. I'd
5
just like to recall that in Procedural Order No. 1, it's
6
quite clear that witnesses are to be cross-examined on
7
relevant matters that were addressed within their Witness
8
Statements. So, if I could just ask counsel to confine
9
your questions as agreed in Procedural Order No. 1.
10
MS. HERRERA: Ms. Dosman, his Witness Statement
11
does talk about his background, and I am asking him about
12
his background and his expertise on international trade
13
issues. A big issue that Canada itself raised during its
14
Opening is the Mesa Power arbitration and everything about
15
the Mesa Power arbitration, and so the majority of these
16
questions have been about his involvement, expertise--
17
REALTIME STENOGRAPHER: I'm sorry, you're going
18
to have to slow down and speak more clearly. The majority
19
of the questions have been related to what?
20
MS. HERRERA: His expertise, his background and
21
expertise and his involvement in the Mesa Power
22
arbitration.
23
MS. DOSMAN: And certainly no objection to
24
matters that are addressed in Mr. McCall's Witness
25
Statement, but insofar as the WTO or other policy matters
[Page 201]
1
of the Government of Canada, that's beyond the scope.
2
PRESIDENT BULL: So, Ms. Herrera, I think you're
3
mindful of the provision in Procedural Order No. 1 that
4
Ms. Dosman is referring to?
5
MS. HERRERA: Yes, I am, Mr. President.
6
PRESIDENT BULL: To the extent that you're
7
asking the Witness about his background, that's fine,
8
but--and please bear in mind the limitation that Parties
9
have agreed to in that Paragraph 9.11(c) of Procedural
10
Order No. 1 that Ms. Dosman refers to. I think with that
11
reminder, you can proceed for now.
12
MS. HERRERA: Thank you, Mr. President.
13
BY MS. HERRERA:
14
Q. Now--okay. As part of your international--as
15
part of your role within the GAC, were you involved with
16
Canada's position on Transparency International--in their
17
international trade agreements?
18
A. Yes.
19
Q. And for Canada, transparency is important for
20
purposes of attracting investment and promoting Investor
21
faith in Canada; correct?
22
A. Yes.
23
Q. Now--let's see--now, you mentioned earlier that
24
because the Mesa--sorry, the Mesa v. Canada Case was one
25
of your primary cases that you would regular
[Page 202]
1
read--regularly read the submissions in that arbitration.
2
Do you recall that testimony?
3
A. Yes.
4
Q. And so you would have read, for example, the
5
Notice of Intent that was submitted by Mesa Power on
6
July 6, 2011; correct?
7
A. Yes.
8
Q. And you would have read it--would you have read
9
it shortly after then, or when would you have read it?
10
A. I would have read it shortly after it was
11
delivered to Canada.
12
Q. Now, what was your impression of the controversy
13
when you saw the Notice of Intent?
14
A. I can't recall my impression at the time.
15
Q. Would you have briefed officials on the--what
16
was found in the Notice of Intent?
17
A. Yes.
18
Q. And what in particular about the Notice of
19
Intent would have prompted you to brief officials about
20
it?
21
A. To be honest, I can't recall many of the details
22
of the case. It was a while ago, but, you know, we didn't
23
receive many Notices of Intent, so it was a significant
24
development. We would have briefed on the Parties
25
involved, the measures involved, in this case a provincial
[Page 203]
1
measure involved and next steps, but I don't recall any of
2
those specific details, but that generally would have been
3
what we would have briefed on.
4
Q. Now, in your role as Deputy Director at the GAC,
5
do you receive reports of media articles involving
6
Canadian trade policy controversies?
7
A. Yes.
8
Q. If it's okay with you, I'm going to refer to
9
those reports as collection of articles as media packs.
10
A. As media?
11
REALTIME STENOGRAPHER: Do clarify and slow down
12
your words, please, because I did not catch that either.
13
MS. HERRERA: Sure.
14
BY MS. HERRERA
15
Q. I said that I'm going to refer to the collection
16
of articles as media packs, P-A-C-K-S.
17
A. Okay.
18
Q. So, what kind of information is typically
19
included in the media packs?
20
A. It would be on a daily basis, we received--you
21
know, the Department receives media articles of interest
22
to the Department, and it's generally the header of the
23
Article and a two- or three-line description of its
24
content and a link to it.
25
[Page 204]
1
Q. And does that include articles about
2
international claims made by Investors against Canada?
3
A. Yes, I believe it would. Yes, it should.
4
Q. Now--let me see. Just a second. Now, we
5
discussed transparency a little bit earlier and how
6
important transparency is to Canada to promote faith in
7
the Investment policies of Canada. Do you recall that?
8
A. Yes.
9
Q. So, if the Government of Canada denied that it
10
engaged in internationally wrongful conduct, you would
11
agree with me that it would be prudent for others to
12
believe in Canada, in good faith, unless there is proof of
13
actual wrongdoing, wouldn't you?
14
A. I think that would apply to all circumstances
15
with regards to accusations, yes.
16
Q. All right. Because otherwise, Canada would be
17
inundated with premature lawsuits and claims; right?
18
A. Presumably but I'm not an expert in that area.
19
Q. Got it. Were you aware that Canada denied any
20
wrongdoing as to the Claims asserted in the Mesa Power
21
arbitration.
22
A. Sorry, can you repeat the question, please?
23
Q. Of course.
24
Were you aware that Canada denied any wrongdoing
25
as to the Claims asserted in the Mesa Power arbitration?
[Page 205]
1
A. Yes--well, no--I don't know the details of the
2
Claim or the accusation.
3
Q. Okay, but you testified earlier that you
4
reviewed, as part of your role, you reviewed the
5
pleadings, the submissions that were a filed in the Mesa
6
Power v. Canada arbitration; correct?
7
A. Yes.
8
Q. Okay. So, when you were reviewing those
9
submissions and those pleadings, you didn't know--see that
10
Canada denied that they did anything wrong, that they did
11
not--
12
(Overlapping speakers.)
13
Q. My question to Mr. McCall was, you know, he
14
wasn't familiar with (drop in audio), and so my follow-up
15
question is: Mr. McCall, you earlier testified that as
16
part of your role at the GAC, you regularly--you read the
17
Mesa Power submissions as they came out, so my--you recall
18
that testimony; correct?
19
A. Yes.
20
Q. Okay. So, you don't--you do not recall, even
21
though you viewed all those submissions at the time,
22
whether Canada, in fact, denied any international--any
23
violation of its international obligations under the NAFTA
24
Treaty?
25
A. It's been more than a decade since I've read
[Page 206]
1
most of the submissions, but I would imagine that that
2
statement would be in our submissions, because it's our
3
defense, so I would imagine we would defend ourselves and
4
include lines similar to that, although, I cannot remember
5
any of the specifics.
6
Q. Got it.
7
Now, I'm going to--actually, I will go now to
8
your--one of the documents that you referred to in your
9
Witness Statement, in particular it's a document called
10
Canada's--Government of Canada Outline of Potential Issues
11
and it has been designated as R-81. Just give me a second
12
and I'll pull it up and I'll put it on the screen.
13
Do you have it on the screen?
14
A. I do, thank you.
15
Q. And so, this is Government of Canada Outline of
16
Potential Issues July 31, 2012.
17
Do you see that?
18
A. I do.
19
Q. Give me one second. Now, if you go here to
20
Paragraph--I'm going to take you to Paragraph 17, and here
21
in this Outline of Potential Issues submitted by Canada in
22
the Mesa Power arbitration, it says: "Moreover, Canada
23
denies that any of the Measures mentioned in the Notice of
24
Intent or in the invalid Notice of Arbitration breach
25
Canada's obligations under Chapter Eleven."
[Page 207]
1
Do you see that?
2
A. I do.
3
Q. Okay. And so--and then I'm now going to take
4
you to Paragraph 23. And here Canada says: "In
5
conclusion, none of the Measures identified by the
6
Claimant in its Notice of Intent or invalid Notice of
7
Arbitration are inconsistent with Canada's obligation
8
under NAFTA Chapter Eleven."
9
Do you see that?
10
A. I do.
11
Q. Okay. Now, you would agree with me that the
12
public and Investors seeing statements that are so
13
unequivocal by Canada that they did not violate any
14
obligations or any law, they should believe Canada; right?
15
A. Yes.
16
Q. Okay. Now, Mr. McCall, did you read the Annual
17
Report of the Ontario Auditor General in 2010?
18
A. I did not.
19
Q. Why would you not have read it?
20
A. I don't--I don't see--I don't read the vast
21
majority of publications by governments and certainly at
22
the provincial level, so I don't see--at the time I
23
presumably would have not seen it relevant to my personal
24
or work life, so I would have made the decision conscious
25
or otherwise not to have read the 2010 Ontario Report that
[Page 208]
1
you referred to.
2
Q. Understood. Is that also the case in relation
3
to the Ontario Auditor General Report of 2011?
4
A. Yes. I don't recall ever reading any Ontario
5
Auditor General Report.
6
Q. Got it. And it's for the same reason, you don't
7
read all publications by governments or Provincial
8
Governments?
9
A. That's correct.
10
Q. Understood. Now, going back to your statements
11
about your involvement with the Mesa Power arbitration.
12
Now, I understand from reviewing your Witness Statement
13
that the primary purpose of it was to introduce what was
14
publicly available on the GAC's website about the Mesa
15
Power arbitration; correct?
16
A. That's correct.
17
Q. Okay. Other than posting submissions on the GAC
18
website, what was--did you have any other involvement with
19
the Mesa Power arbitration?
20
A. Yes. As discussed earlier, I briefed senior
21
officials if there was major developments in the case. I
22
would review Canada's submissions to ensure that they were
23
consistent with our general approach to investment trade
24
policy that we were taking in our negotiations. I would
25
respond to media requests and communications requests, and
[Page 209]
1
just generally monitor the file from an investment trade
2
policy perspective.
3
Q. Okay. Now, you mentioned earlier that you would
4
determine if something was a major development depending
5
on whether it would impact public relations; correct?
6
A. That would be one--one determination, yes.
7
Q. And what would be the other determinations?
8
A. Oh, well it's been a while since I've done the
9
job, but a whole host of things in terms of, you know,
10
implications on our relationship with the Province; or
11
again, you know, in showing that we were, you know, being
12
consistent with the provisions that we were negotiating in
13
our international treaties at the time; major budget
14
implications if there was something going to be expensive
15
in the litigation process that we would need to flag for
16
budget reasons; things of that nature.
17
Q. Now, just to be clear, Mr. McCall, you do not
18
have personal knowledge of what Tennant Energy LLC knew
19
of--
20
REALTIME STENOGRAPHER: I'm sorry, could you
21
repeat your question. It was not clear.
22
MS. HERRERA: That's not a problem.
23
BY MS. HERRERA
24
Q. Mr. McCall, just to clear the record, you do not
25
[Page 210]
1
personally have any knowledge about what Tennant Energy
2
LLC would have known about the Mesa Power arbitration;
3
correct?
4
MS. DOSMAN: If I could just recall again
5
Paragraph 9.11(c), Ms. Herrera. Mr. McCall didn't testify
6
about Tennant Energy's knowledge at any point in time, so
7
if you could please confine your questions to matters that
8
were addressed or presented in his Witness Statement, we
9
would be grateful.
10
PRESIDENT BULL: Ms. Herrera, that seems right
11
to me.
12
MS. HERRERA: Your Honor, he is testifying about
13
what was available on the GAC, Government of Canada's
14
website and Canada is using that to say that our client
15
should have had knowledge of it, but I, of course, will
16
limit the testimony to the President's instructions.
17
BY MS. HERRERA:
18
Q. Now, Mr. McCall, I'm looking at Paragraph 3 of
19
your Witness Statement. Do you have that with you?
20
A. I do.
21
Q. Now, in Paragraph 3 of your Witness Statement,
22
you list a number of documents from the Mesa Power
23
arbitration which you indicate were available on the GAC
24
website as of May 8, 2013; is that a correct summary of
25
what's there?
[Page 211]
1
A. Yes.
2
Q. Now, I understand that you would have read all
3
of these document--based on your prior testimony, that you
4
would have read all of these documents, either at the time
5
that they were issued or shortly thereafter; correct?
6
A. Certainly the pleadings and by the--either the
7
Respondent or the Claimants, likely the Procedural Orders,
8
but if they got too much into the nuts and bolts in terms
9
of how the Tribunal functions or how the case is going to
10
function, I--I generally often would not read those, but
11
certainly the pleadings of the Parties that are at the
12
first half of that page, I would have read.
13
Q. Now, as far as determining that these were
14
available as of May 8, 2013, I understand that that came
15
from a screenshot of the GAC website that has been
16
submitted as R-030; is that correct?
17
A. Yes, that's correct.
18
Q. Okay. Now, did you take that screenshot?
19
A. No, I did not.
20
Q. Okay. So, where did that screenshot come from?
21
A. I believe it came from IT Experts within the
22
Department.
23
Q. And so is it fair to assume that IT Experts went
24
back into the history of the GAC website to figure out
25
what was there as of May 8, 2013?
[Page 212]
1
A. Yes.
2
Q. Okay. And why would--strike that.
3
Have you--now, since you said you reviewed the
4
documents listed there, particularly the pleadings; right?
5
So, I assume you referred to the Notice of Intent to
6
submit a claim to arbitration; is that correct?
7
A. That's right.
8
Q. So, did you also read the Notice of Arbitration?
9
A. Yes.
10
Q. Okay. And what about Government of Canada's
11
Outline of Potential Issues?
12
A. Yes, I would have read that at the time.
13
Q. And the Government of Canada's Objection to
14
Jurisdiction?
15
A. Yes, I would have read that.
16
Q. What about the Request for Bifurcation?
17
A. I would have likely read that, yes.
18
Q. And I assume also the Response on Bifurcation?
19
A. Yes, that's correct.
20
Q. But not the Procedural Orders or the
21
Confidentiality Order?
22
A. I would have been less likely to have read
23
those, but I likely would have read the first few
24
Procedural Orders in the case but I can't--I can't say
25
whether I read these exact ones, but I would have likely
[Page 213]
1
read the first--the first two or three Procedural Orders
2
because of their importance to getting the case up and
3
running.
4
Q. All right. Now, Mr. McCall, do you recall
5
whether in the documents that you did review from this
6
list, whether any of them mentioned the Company
7
International Power Canada?
8
A. I don't recall.
9
Q. Now, going now to Paragraph 8 of your Witness
10
Statement, sorry (sound interference).
11
REALTIME STENOGRAPHER: I'm sorry, say the
12
number again?
13
MS. HERRERA: Paragraph 5.
14
BY MS. HERRERA:
15
Q. Do you have it in front of you, Mr. McCall?
16
A. I do, thank you.
17
Q. Mr. McCall, now here I see that you list an
18
additional three documents which you indicate were
19
available on the GAC website as of September 11, 2013.
20
A. Yes.
21
Q. And this also came from a screenshot that has
22
been attached to the record as R-030; correct?
23
A. Yes.
24
Q. And would this screenshot have been generated
25
the same way as the other screenshots that we discussed?
[Page 214]
1
A. Yes.
2
Q. Now, did you review any of these documents that
3
are listed here?
4
A. I would have--would have likely reviewed the
5
Investor's answer on Canada's Preliminary Objections on
6
Jurisdiction. I can't say for certainty whether I would
7
have reviewed Procedural Order No. 4 or 5.
8
Q. Do you recall whether the Investor's answer on
9
Canada's Preliminary Objections mentioned International
10
Power Canada?
11
A. I can't recall.
12
Q. Now, Mr. McCall, do you know whether any other
13
documents were loaded to the GAC website other than these
14
that you list here in your Declaration?
15
A. There would have certainly been many additional
16
documents after the time period in question here that were
17
loaded on to the website.
18
Q. How would we know what those other documents
19
are?
20
A. We would have to do something similar in terms
21
of getting in touch with our IT colleagues to go back in
22
time and do snapshots of the website at different moments
23
in time after September 11, 2013.
24
Q. Why does your Declaration only cover these two
25
days, May 8, 2013, and September 11, 2013?
[Page 215]
1
A. Those were just the dates that I was asked to
2
comment on and write a witness statement on from counsel.
3
Q. Now, Mr. McCall, you were--since you were
4
involved with the Mesa Power arbitration, you were at the
5
Mesa Power NAFTA Hearing in October 2014; correct?
6
A. That's correct, I was.
7
Q. Were there other trade analysts that were at the
8
Hearing?
9
A. Not from the Federal level, although there were
10
trade analysts from the provincial level.
11
Q. And why would you have attended this hearing?
12
Is it because you were in charge of--or that was one of
13
your primary roles while you were Trade Policy Advisor at
14
the time?
15
A. Exactly, yes.
16
Q. Were you there every day of the Hearing?
17
A. I believe so. I can't recall specifically but I
18
think I was there for every day of the Hearing. I think
19
it lasted about four days, but from what I recall, at
20
least three or four days, but I believe I was there for
21
every day, yes.
22
Q. Were you present during the examination of
23
Ms. Sue Lo--Ms. Susan Lo, then?
24
A. Yes, I believe I was.
25
Q. And just to be clear, she's the former Ontario
[Page 216]
1
Assistant to the Deputy Minister of Energy; correct?
2
A. I can't remember her role. I just remember her
3
name and the fact that she testified.
4
Q. Now, as an Assistant Deputy Minister--if that's
5
her role, is that a senior government position in the
6
Canadian Government?
7
MS. DOSMAN: Ms. Herrera, really, I hate to
8
interject again, but we're straying far beyond the scope
9
of Mr. McCall's Witness Statement here.
10
MS. HERRERA: Mr. McCall said he was there. He
11
said that part of his background has to do with the Mesa
12
Power arbitration, and he has testified that he was there
13
at the Hearing, and I'm asking him about what happened at
14
the Hearing and the Mesa Power arbitration has been--is a
15
subject matter of his Witness Statement.
16
MS. DOSMAN: His role and his background, yes,
17
but as to what was said and by whom and what their roles
18
were during the Hearing, that is entirely beyond the
19
scope.
20
PRESIDENT BULL: Ms. Herrera, it does seem to me
21
that what happened at the Hearing, the substance of it
22
goes beyond the scope of the Witness Statement.
23
Now, I allowed sort of the background questions
24
because one doesn't know what you're going to use that
25
background for until you actually get to it, but if your
[Page 217]
1
intent is to ask about what happened in the Mesa Hearing,
2
then, it's not apparent to me how that relates to his
3
Witness Statement. If it does, you can explain it to me.
4
MS. HERRERA: Yes. Yes, Mr. President. It does
5
relate to his Witness Statement because the entire reason
6
that his Witness Statement was put into the record was to
7
establish what was known by a certain time in the public,
8
and I want to put in the record of what was not known in
9
the public, you know--they have only given us through
10
September 2013. They haven't put in the Declaration,
11
although he's talking about what was available, they have
12
completely excluded everything that was not available to
13
the public, everything that was not available to our--I
14
apologize Mr. McCall because I'm--this is lawyer argument,
15
but everything that was not available for our client to
16
know about and is relevant for jurisdictional purposes for
17
this Hearing.
18
PRESIDENT BULL: I'm just wondering whether
19
cross-examination is really the avenue for you to make
20
that point. I mean, the Witness is testifying about what
21
was in the public domain and from when. He--he's not
22
saying that's the only thing that was in the public
23
domain. He's not saying that those were the only facts
24
that existed.
25
So, I appreciate the point that you're trying to
[Page 218]
1
make, and I think it can be made, but I'm not convinced
2
that cross-examination is the avenue for you to press that
3
point.
4
MS. HERRERA: Understood, Mr. President. I
5
will--I will rephrase my questions.
6
PRESIDENT BULL: Thank you.
7
MS. HERRERA: Thank you.
8
BY MS. HERRERA:
9
Q. Mr. McCall, your Witness Statement does discuss
10
documents that were loaded to the public website--I'm
11
sorry, the GAC public website; is that correct?
12
A. That's correct.
13
Q. Do you recall whether the GAC public's website
14
ever posted the Post-Hearing Briefs from the Mesa Power
15
arbitration?
16
A. I can't recall.
17
Q. Do you recall whether the GAC website ever
18
posted the video--video Transcript of the Mesa Power
19
arbitration?
20
A. No, I don't recall ever uploading or asking that
21
any video be uploaded. It was only ever PDF or Word
22
documents.
23
Q. Understood.
24
MS. HERRERA: That is all I have for now but I
25
would like to confer with my colleagues just to confirm
[Page 219]
1
that there's no further questions.
2
PRESIDENT BULL: Certainly.
3
MS. HERRERA: Thank you.
4
(Pause.)
5
MS. HERRERA: Thank you for your patience.
6
Just one final question.
7
BY MS. HERRERA:
8
Q. Mr. McCall, you mentioned that the video would
9
not have been posted or you don't think would have been
10
posted. Would the paper Transcript have been posted to
11
the GAC website?
12
A. I don't recall the Transcripts being posted, but
13
I would have to ask my IT colleagues for a list of the
14
documents that were posted. I don't recall posting them,
15
but again, I just don't recall.
16
Q. Thank you, Mr. McCall. I thank you for your
17
patience, and that's all. I don't have any further
18
questions.
19
THE WITNESS: Okay, thank you.
20
PRESIDENT BULL: Thank you, Ms. Herrera.
21
Is there any re-examination?
22
MS. DOSMAN: No re-examination. Thank you.
23
PRESIDENT BULL: Thank you very much.
24
Can I check if my colleagues have any questions
25
for Mr. McCall.
[Page 220]
1
ARBITRATOR BISHOP: I have no questions.
2
ARBITRATOR BETHLEHEM: None from me, either.
3
PRESIDENT BULL: And Mr. McCall, you will be
4
happy to hear that I have no questions for you either.
5
So, your role in this Hearing is done. Thank you very
6
much for your assistance.
7
THE WITNESS: You're welcome. Thank you.
8
(Witness steps down.)
9
PRESIDENT BULL: So, we are happily ahead of
10
schedule. And can we have Mr. John Pennie on now? Is
11
that possible?
12
I'm checking with Claimant's counsel.
13
MR. MULLINS: Yes, we are available--Mr. Pennie
14
is available, and I think he is showing on the screen.
15
PRESIDENT BULL: Good. Very good.
16
Mr. Pennie, you can see and hear me; right?
17
THE WITNESS: I can. Good morning,
18
Mr. President.
19
JOHN C. PENNIE, CLAIMANT'S WITNESS, CALLED
20
PRESIDENT BULL: Now, I know you were present at
21
yesterday's proceedings, and you should be, I think,
22
familiar with all three Members of the Tribunal by now.
23
THE WITNESS: I am, and thank you, Sir Daniel
24
and Mr. Bishop for giving us a chance to discuss our
25
concerns.
[Page 221]
1
PRESIDENT BULL: Very good.
2
Mr. Pennie, can you just state your full name
3
for the record, please.
4
THE WITNESS: John C. Pennie.
5
PRESIDENT BULL: What does "C" stand for?
6
THE WITNESS: Craigans.
7
PRESIDENT BULL: Thank you.
8
REALTIME STENOGRAPHER: Sorry, could you spell
9
that, please?
10
THE WITNESS: C-R-A-I-G-A-N-S.
11
REALTIME STENOGRAPHER: Thank you.
12
PRESIDENT BULL: Mr. Pennie, I'm going to ask
13
you to make a declaration before you give your testimony.
14
It's on the screen, and if you could do that out loud,
15
please.
16
THE WITNESS: Yes, Mr. President.
17
I solemnly declare upon my honor and conscience
18
that I will speak the truth, the whole truth, and nothing
19
but the truth.
20
PRESIDENT BULL: Thank you, Mr. Pennie.
21
Mr. Mullins, over to you.
22
(Pause.)
23
MR. MULLINS: Whenever the Panel is ready, we
24
will go back on the record.
25
PRESIDENT BULL: Mr. Mullins, if you're
[Page 222]
1
comfortable and you're ready, then you can proceed.
2
MR. MULLINS: Thank you.
3
DIRECT EXAMINATION
4
BY MR. MULLINS:
5
Q. Mr. Pennie, do you have a copy of your
6
Declaration (CWS-1) in front of you, sir?
7
A. I do.
8
Q. Do you have any updates to your Declaration now
9
that you've had a chance to review it?
10
A. I do have two--excuse me, three sentences.
11
Q. Can you walk us through that, Mr. Pennie.
12
In Paragraph 48?
13
A. In Paragraph 48, the first line from the bottom
14
of the paragraph on Page (drop in audio).
15
Q. Would you start reading it for us so we can
16
follow you.
17
A. It says: "Skyway 127 in December 2011 in trust
18
for the benefit of the undesignated--still undesignated
19
holding company."
20
Q. What correction do you want to make on that
21
sentence, Mr. Pennie?
22
(Overlapping speakers.)
23
A. "Skyway 127" should say "Premier."
24
Q. Okay. Is there any other corrections you want
25
to make?
[Page 223]
1
PRESIDENT BULL: I'm sorry, I didn't quite
2
understand that correction.
3
BY MR. MULLINS:
4
Q. Mr. Pennie, let me just walk you through it so
5
we're clear.
6
The sentence we're talking about says: "John
7
Tennant held the Skyway 127 Shares from I.Q. Properties
8
and the ones later issued to him from Skyway 127 in
9
December 2011 in trust for the benefit of the still
10
undesignated (sound interference)." Are there corrections
11
you want to make to that sentence?
12
A. Yes. Where it says "Skyway 127," it should say
13
"Premier," so the Shares are from Premier, not from Skyway
14
127.
15
And for the benefit of the undesignated--still
16
undesignated holding company which was actually designate.
17
Q. And what was the designated Holding Company?
18
A. Tennant Travel.
19
Q. Are there any other changes you want to make to
20
your statement, Mr. Pennie?
21
A. Paragraph 51 of the same page.
22
Q. Yes.
23
A. It should have said "since April" instead of
24
June at the beginning of the sentence.
25
Q. Thank you, Mr. Pennie. Is there any other
[Page 224]
1
changes you would like to make?
2
A. Yes.
3
Paragraph 103 on Page 23.
4
Q. Okay.
5
A. The first sentence refers to June 2015, and it
6
should be August 15, 2015.
7
Q. Okay. With those changes in mind, Mr. Pennie,
8
do you have any other changes you would like to make?
9
A. I do not.
10
Q. So, the (drop in audio) testimony is your
11
testimony in this case?
12
A. Yes.
13
Q. And just with the Chair's allowance, just for
14
the record, can you tell us a little bit about who you are
15
and your background, just so we can introduce the Witness.
16
A. Well, I'm 82 years old. I'm still working. I
17
have been in business for 62 years. I've founded
18
businesses in five different industries. My first, while
19
I theoretically retired at the turn of the century, the
20
business I was in, and that was around the time that the
21
Ontario Power Authority--excuse me, not the Ontario--Hydro
22
I--well, the Ontario--Ontario Hydro was being broken up by
23
the Government into three businesses. And as a result of
24
that, they were seeking private capital to help them
25
rebuild the infrastructure that had been neglected and was
[Page 225]
1
causing black-outs due to lack of power supply and so on
2
in the preceding 20 years where they hadn't invested in
3
the infrastructure, so they were trying to correct that.
4
And secondly, they wanted to foster renewable
5
energy, so that was when I became interested in this.
6
So, you want me to talk about the program--
7
Q. I think that was helpful, Mr. Pennie, and with
8
the Chair's discretion, just if you could just briefly
9
talk a little bit about your experience in the renewable
10
energy business just so we have your background for the
11
record.
12
A. So, around 2003, I was sitting down for dinner
13
with some friends of mine, and we were talking about the
14
renewable energy portfolio that Ontario was trying to
15
build, and so we decided that--(sound interference) we
16
decided that we would try with an entry into the program
17
that was being offered at the time which was a tender for
18
contracts, and so we purchased 180-acre property for about
19
$750,000, and we put a Met Tower, or a tower to measure
20
the wind density, and arranged for a connection to the
21
Hydro I grid, and did a bid on it at the time they were
22
being accepted, which was I think a two-year period this
23
was over.
24
And so, when the Contracts were awarded, we
25
didn't get a contract. And, of course, we wanted to know
[Page 226]
why, so I did visit with the Ministry of Energy and found that our price was too high, and that was because the wind on the property that we had selected, although it seemed to be significant, wasn't as good as the wind 20 miles west of here, and so because the wind wasn't (unclear) enough, our price was too high, so we decided that since they announced the RESOP Program, which was Renewable Standard Offer Program--Renewable Energy Standard Offer Program, that we would like to see if we could participate in that to recover some of the money that we had spent. And so, we identified a higher wind regime in the Grand Valley area which was at a 1500-foot elevation, and our initial property was a 950-foot elevation above sea level. And so, we put in a Met Tower there and found the wind was about 40 percent stronger. And so we then leased a number of properties and decided to go ahead and participate in the RESOP Program when it opened for applications, so one of the criteria of the RESOP Program was that the maximum size of any project was 10 megawatts, and so I believe we prepared two projects of 10 megawatts each. They were close to each other in that area. While we were doing that, Derek Tennant, my cousin, had indicated he was very interested in what we were doing, the impact of renewable energy on the
[Page 227]
environment and so on, so we discussed doing some additional sites where he would raise the capital for those projects. The first two that we were doing were under the name of Windrush Energy, so there were several other projects assembled. His daughter was brought in to do the land leases, and Derek focused on raising the money for the land leases, and I was responsible for preparing the RESOP applications and so on. So, when the first RESOPs opened, there were nine contracts awarded, and we got three of the nine, so we had learned our lesson well on the first project where we weren't successful in number one, in getting the right energy regime; number two, having the structure of the Project suitable for Contract. So, that was the beginning of it. We did a total of nine RESOP projects over the next few years, and we got seven RESOP contracts. So, the first three did go through the completion over a period of about seven years due to the very lengthy process of public meetings, and negotiations with First Nations, and they ultimately got built and are running today. So, when the FIT Program replaced the RESOP Program--FIT is Feed-In-Tariffs--with fixed-priced contracts. This was designed for larger projects.
[Page 228]
Typically--I can't remember the minimum size, it was between 30 and 50 megawatts, I think--but it looked like an economical size would be 100 megawatts, and so we had envisioned to do one like that. And we ordered additional Met Towers to measure the wind in other areas and discovered that the wind in the Bruce area was very good, and some were better in the Grand Valley area. So, we also learned that the Province was building an additional transmission line from the Bruce Nuclear Plant to Milton, which is on the outskirts of the greater Toronto area. MS. SQUIRES: I'm sorry, Mr. Pennie and Mr. Mullins, I don't mean to interject here, but would note that direct examination was meant to be quite brief, and the Witness has had an opportunity to provide direct testimony in his Witness Statement that Claimant has provided in written submissions. A lot of it speaks to that type of material, and I just wonder how long this direct testimony will continue in this regard. MR. MULLINS: I was actually going to wrap him up. I really just wanted him to talk about his wind program and I think we got to the Skyway project. And with that, I'm fine with moving on. PRESIDENT BULL: Good. BY MR. MULLINS:
[Page 229]
Q. Okay. Thank you so much, Mr. Pennie. With that, I will turn you over to cross-examination. PRESIDENT BULL: Thank you, Mr. Mullins. I'm just waiting to see who will do the cross-examination. MS. SQUIRES: That will be me. We're doing a bit of changing seats around here, but it's me again this morning. PRESIDENT BULL: That's fine, Ms. Squires, whenever you're ready. MS. SQUIRES: Great, thank you very much. CROSS-EXAMINATION BY MS. SQUIRES: Q. Good morning, Mr. Pennie, how are you today? A. Excellent, thank you. How are you? Q. I'm good, thank you. My name is Heather Squires. As you know from hearing the Opening Statements yesterday, and I'm counsel for the Government of Canada in this proceeding. I'm going to ask you a few questions today so that my team and the Tribunal can better understand the Witness Statement (CWS-1) that you have put forward in the arbitration on behalf of the Claimant. If you don't understand a question that I'm asking, please let me know, I will repeat it or rephrase it. It's really important that we
[Page 230]
understand each other going forward this morning. It's also important you answer my questions, so to the extent that there is a "yes" or "no" answer to my question, I would appreciate if you could give that first and I will give you the necessary time to provide any context or fuller answer that you may wish to provide. I would also note that I am going to be referring to numerous documents throughout the course of our morning together. Some of them have been designated as confidential by the Claimant, so in that regard we will be cutting the feed from time to time. But I'll let you know when that happens. Also, if you have any trouble seeing a document on front of you--in front of you, if you would like to see another portion of a document or anything in that regard, please just let me know, and we will do our best to assist you in that regard. Does that sound good? A. Yes, certainly. Thank you, Ms. Squires. Q. Okay. Perfect. I want to start just asking you a couple questions about the corrections that you made to your Witness Statement there a few moments ago. And maybe just generally speaking, can you provide me with a little bit of understanding as to why
[Page 231]
these were corrections were made now instead of through filing a Reply Witness Statement with the Claimant's Reply? A. Well, I guess that's a matter for my lawyers to advise on. Q. Were you asked to provide a Reply Witness Statement, Mr. Pennie? A. No. Q. Okay. One other point that I would just like a little bit of clarification on, and that was the change of a date that you made, and you said in Paragraph 51 of your Witness Statement that you changed June 2011 to become April 2011; is that correct? A. Yes, that's correct. Q. Okay. Now, I'm wondering if we can, Gen, if you can haul up for me the Claimant's Reply Memorial, and I want to turn to Paragraph 154. (Pause.) Q. 154. There we go. And I want to highlight the last sentence of that paragraph. Wait, that's perfect, Gen. Yep, that's great. Now, can you see that okay, Mr. Pennie? A. I can see what you've pulled up, yes. Q. Okay. So now, the paragraph in your Witness Statement originally said, "since June 2011, the interest
[Page 232]
of Tennant Energy have effectively controlled the Skyway 127 investment." You've now changed that to say, "since April 2011, the interest of Tennant Energy have effectively controlled the Skyway investment." The Claimant's Reply Memorial says, "because of this arrangement, Tennant Travel, now Tennant Energy, have effectively--effective voting control of Skyway 127 since December of 2011," so I'm a little bit confused, or seeking a bit of clarity. Is it April, is it June, or is it December? A. Well, my recollection is that John Tennant, the title to the Shares, at the time that Derek Tennant was unable to fulfill his obligation to repay John Tennant for $200,000 that John Tennant had loaned to Derek, and the date of that default was April. I don't remember the exact day, April of 2011. Q. Okay. So, if I understand correctly, then, this Reply Memorial is also an error that effective voting and control would have been as of April some Date 2011? A. Well, John Tennant received additional Shares during the--in June, I believe it was, so I'm not sure what your question is. Q. That's okay, Mr. Pennie. Perhaps we can move on. I was trying to seek some clarity on the dates but perhaps that will came out as we move through our
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questions this morning as well, so thank you. Gen, you can remove that exhibit from the screen, thank you. All right, Mr. Pennie. You spent a bit of time this morning discussing some projects you had discussed for the RESOP and some renewable energy programs that Ontario had in place, and I see in your Witness Statement (CWS-1), and through that testimony, that you would consider yourself an experienced wind developer; is that right? A. Yes. Q. And I also noticed in your Witness Statement that you sat on the Ontario ISO Renewable Energy Standing Committee. Can you tell me about that Committee, who was on is it, the years it was active? A. Well, I don't remember the years it was active, but other representatives in the industry from the Ontario Power Authority, I think Hydro One and a few other developers were on that Committee. Q. Now, Mr. Pennie, you're a Canadian citizen; correct? A. I am. Q. Are you an American citizen as well? A. No. Q. And you're a member of the Tennant Energy Board of Management; correct?
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A. I am. Q. Were you ever a member of the Board of Management of Tennant Travel? A. No. Q. So, Tennant Travel--can you tell me when you became a Member then of the Board of Tennant Energy? A. When my wife and I exchanged our Shares in Skyway 127 for Shares in Tennant Energy, which was I think in 2015. Maybe it was 2014. I'm not sure. Q. Okay. So, you became a Member of the Board in Tennant Energy at the same time you transferred your Shares in Skyway 127 to Tennant Energy; is that correct? A. Yes, that's correct. Q. Now, you're also a Member of the Board of Skyway 127? A. Yes. I'm a Director and (inaudible.) Q. And your-- REALTIME STENOGRAPHER: I'm sorry, excuse me. Excuse me. "I'm a Director" and what? THE WITNESS: Secretary. REALTIME STENOGRAPHER: Thank you. BY MS. SQUIRES: Q And what was involved in being a Corporate Secretary, Mr. Pennie? A. I maintained the Minute Book records of the
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Company and the Share Register. Q. When you updated those Shareholder Registers, were they shared with the other Shareholders? A. Yes, sometimes. Q. And there would have been Shareholder Meetings from time to time; correct? A. Just of the principals that were running the business. GE and Premier didn't take an active role on that. Q. So, I think we'll come back to GE in Premier in a moment, but I take note of your comment there. Who was responsible for recording minutes of those meetings? A. I would be. Q. And Shareholder votes would have taken place at those meetings as well? A. Well, it was rather informal, you know. I don't think we did it that way. Q. When would voting have taken place, Mr. Pennie? A. Well, if your question is did we vote on everything that was going on in the business, no, we didn't. We had discussions. We had a consensus but we didn't do voting. Q. Mr. Pennie, the Claimant's submissions in the arbitration referred to a voting bloc. Am I to assume
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that that was more of a consensus building exercise rather than a voting bloc? A. Well, it would be both. Q. Okay. So, votes did take place? A. They may have. I don't remember specifically. Q. If Shareholders were absent from a meeting, would you let them know of voting results? A. Yes. Q. And if Shareholders were planning on not voting in a particular meeting, how was that communicated to you? A. GE never wanted to attend any meetings. Our main interest was turbine contracts and providing financing. Q. I'm sorry, who--and this was GE, you said? A. Yes. Q. And in terms of documents of how that was communicated to you, do you have any documents evidencing GE taking on this passive role? A. No. Q. So, that was an oral agreement? A. Yes. Q. Okay, Mr. Pennie, you mentioned earlier that John Tennant received his initial Shares in Skyway 127 due to a default on a personal loan that John had given to Derek's Holding Company, I.Q. Properties; is that right?
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A. That is correct. Q. And the Shares were collateral for that loan? A. (Unclear) That loan was granted back in 2009, I think. Q. Now, Derek then defaulted on that loan on April--or I.Q. Properties--I apologize. I.Q. Properties defaulted on that loan on April 19, 2011; correct? A. Yes. Q. And so at that point, if I understand correctly, John Tennant was then in a position to call for those Shares if he wanted to; correct? A. Well, he did. He told me verbally he wanted the Shares. Q. So, he told you--was there any documentary record of that? A. Did he send me an e-mail or anything, no. We talked on the phone. Q. And what day was that, Mr. Pennie, that he told you that? A. I believe it was on the day the note was in default. Q. So, April 19, 2011? A. That sounds right. Q. Okay. I want to take you to your Witness Statement (CWS-1), and I'm not going to put it up on the
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screen because there is a bit of Confidential Information in that paragraph but I think we can discuss it without perhaps bringing it up and having to cut the feed, and I want to turn to Paragraph 48 of your Witness Statement. A. Yes. Q. So, if we look at the first line, the second sentence, it notes there that John Tennant first acquired the rights to Derek Tennant's interest in Skyway 127 on April 19, 2011. Do you see that? A. Yes, I see it. Q. So, in your Witness Statement there, you note that he acquired the right to the Shares, but I want to make sure right now that you're testifying that he--he called the Shares on that day, not just that he had the right to the Shares? A. Yes, he wanted the Shares. If I used inappropriate language, I apologize. (Overlapping speakers.) A. He had the Shares--he had access to the Shares that were to be transferred to him. Q. No need to apologize, Mr. Pennie. That's fine. Okay. So, he had the right to the Shares. He told you orally on April 19 that he would like to have the Shares. As Corporate Secretary of Skyway 127, you
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received the direction to do that Share Transfer then on June 20, 2011; is that right? A. Yes. We were pretty busy at the time with our RESOP projects and so on, and so I didn't get to do all the documentation right away. Q. Okay. So, as of this date, then, as of June 20th, that is the date that John Tennant is finally holding shares in Skyway 127, and it's reflected in the corporate records; correct? A. Well, he was holding them since April, but that was when, as a transfer agent, I--being the Secretary, I was essentially (unclear) when it was entered into the Minute Book. Q. Okay. So if I can--just to confirm, then, your testimony this morning is that the Shares were not entered into the Minute Book until June 20, 2011, but John Tennant had the Shares prior to that in April of 2011? A. No. He was the de facto owner of the Shares as of April 19, 2011. The fact I didn't get it entered into the paperwork for two months, I guess it was, was the fact that we were busy and, you know, it's a family--a lot of our businesses are family enterprises, so--and that was my job to get it done, but I didn't get it done right away. Q. Okay. So, Derek is--in this intervening time period, I.Q. Properties is still holding the legal title
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to the Shares; John Tennant has de facto ownership or beneficial ownership of the Shares; and then John Tennant received the legal title to the Shares when you registered them or transferred them on June 20th; is that correct? A. Well, I'm not a lawyer. I believe that he had legal ownership of the Shares in April 19. We had to locate a Share Certificate. We were busy doing other things. The record-keeping was in June. Q. Mr. Pennie, could John Tennant have voted any Shares in Skyway 127 prior to June 20, 2011? A. Yes. Q. Even though he was not on the Shareholder ledger. A. Well, he is a de facto owner of the Shares. Q. Do you have any documents evidencing that he voted Shares or that he obtained ownership of the Shares any time before June 20, 2011? A. Well, he obtained ownership when Derek defaulted on the loan in April 19th, 2011. Was that your question? Q. Not my question. I understand that to be your position. My question is a little bit about more of the evidence demonstrating that, but I think we can move on because you did say something that was a bit interesting to me about the timing of registering the Shares in the ledger on June 20th and that you were quite busy.
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I want to take a minute to look at--we're going to go into confidential session here. I apologize. So, we'll take a moment to cut the feed. MS. SQUIRES: If someone can let me know when we're ready to proceed. (End of open session. Attorneys' Eyes Only session begins.)
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ATTORNEYS' EYES ONLY SESSION SECRETARY ARAGÓN CARDIEL: You can go ahead, Ms. Squires. MS. SQUIRES: Okay, thank you. I want to pull up Exhibit C-116, Gen, if you can do that. BY MS. SQUIRES: Q. Now, this is a shareholder ledger, and you signed it, Mr. Pennie. You're familiar with this document? A. Yes. Q. And towards the top there we can see--and we can highlight it for you to make it a little easier--the date of this ledger is June 9, 2011. Do you see that? A. Yes, I see it. Q. Okay. So, as a matter of just the calendar, this is sometime between April and June 20th, 2011, we have a shareholder ledger. A. Right. Q. And I want to move to the bottom of that ledger there--Gen will highlight--there's a Share Transfer going on right at bottom, and we see here that Premier Renewable is transferring Shares to GE Energy. Do you see that?
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A. I see it. Q. So, Mr. Pennie, can you explain to me why you were too busy to register this de facto transfer of Shares to John Tennant until June 20, yet you had time to register this Share transfer on June 9? A. I think I didn't have the Share Certificates signed back by Derek, and Prem--GE were in a big rush to get this done, and it was an oversight. Q. Okay. So, you did not have the Share Certificate signed by Derek as of June 9, 2011. A. I didn't have it in my possession, no. Q. Okay. So, you could not transfer the Shares then without that; correct? A. Well, I preferred to have the Share Certificates so I could put it in the Minute Book, and then note it in the Register. Q. Mr. Pennie, let's turn to Paragraph 48 of your Witness Statement (CWS-1), and we'll stay in confidential just for a minute because I know there are a few things in that paragraph that are designated. And I want to look at the third line from the top there. And it says--there you note (reading): John Tennant told me that he was holding the Skyway 127 shares as a bare trustee for a corporation to be named. Do you see that?
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A. I do. Q. How did he tell you this? Was that a phone? E-mail, in person-- (Overlapping speakers.) A. John Tennant lives in California and was living in California since the mid-90s, I think it was. So, most of our dealings--in fact, I would say 99 percent of our dealings were on the phone. Q. Okay. So, it would be fair to say, then, that this was an oral conversation then? A. Yes. Q. Okay. When did this conversation take place, Mr. Pennie? A. He told me that he wanted at the time of him getting the Shares, and that was back in April, that he wanted to hold these as a Trustee for a corporation, a holding company that he would acquire or whatever and he couldn't name it then, and so he said he was a Trustee for the Share--he wanted to be the Trustee for the Shares. Q. I appreciate that, Mr. Pennie. I'm trying to get a bit more of a sense as to exactly when this corporation was named. So, at this point in time when you're speaking to Mr. Tennant, he's saying that the Corporation has not yet been named. So, I'm trying to get a sense in the chronology of when this conversation took
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place. Could you have a more specific date you can give me or a bit more precision on this claim that you're making? A. The conversation I had with John Tennant on the phone would have been on the day that the note was in default, and at that time there were a number of things discussed. He wanted the Shares--he felt he was entitled to the Shares as of that date, and he wanted to be consulted in any major decisions, as the new Shareholder, but he didn't want to hold the Shares in his personal name. He wanted them as his Trustee so that he could find a corporation to hold the Shares, so that was all in the conversation that we had. Q. Okay. And this was the conversation on the day of the default you said, on April 19, 2011. A. It would have been, yes. Q. Okay. So, if I understand correctly--and please do correct me if I'm not right on this--on April 29--sorry, on April 19, 2011, John Tennant is now--has de facto control over Shares that Derek Tennant--or I.Q. Properties still has the legal title to, and John Tennant is then in turn holding those Shares in Trust for another entity that has not yet been named. A. When you said I.Q. Properties had the legal--І
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forgot your term, but you said something about a legal hold on the Shares or whatever, I don't think that's correct, but I'm not a lawyer. I think John Tennant has the legal hold, but that's for a lawyer to decide. Q. Okay. Perhaps I can rephrase a bit then to use the words that you used earlier. As of April 19, 2011, Derek Tennant had not yet signed the Share Certificates--correct?--to transfer. A. Yeah, he had to sign the Share Certificates. Q. Okay. So, on that date, the Share Certificates had not yet been signed, yet John Tennant has some sort of ownership not through the certificates to the Shares and then he is, in turn, then holding those Shares as a Trustee for a corporation that has not yet been named and you have been told this on the phone in an oral conversation. A. Yeah. That was my understanding that the Shares were effectively his as of that date. Q. Okay. Now, Mr. Pennie, I want to move to something that you said in your corrections earlier today while we're on the same paragraph, and towards the end there you corrected the sentence to say that John Tennant--I'm sorry, I'm going to get the exact correction. Give me one moment here. A lot of paper flying around these days.
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ARBITRATOR BISHOP: Are you leaving the subject of his statement about what John Tennant told him about being a Trustee? Are you leaving that subject now? MS. SQUIRES: No, I'm not. In fact, I'm moving in that same paragraph just to try and figure out those dates-- (Overlapping speakers.) (sound interference). ARBITRATOR BISHOP: Okay-- MS. SQUIRES: --a little more clarity on those dates. If you just give me one second. My colleague has unplugged my monitor. Give me one second. Okay. Long legs sitting next to me here. (Laughter.) BY MS. SQUIRES: Q. Okay. So, you corrected your Witness Statement (CWS-1) this morning, Mr. Pennie, to say that towards the end, and I believe this is what you said: The ones later issued to him by Premier Renewable in December 2011 in trust for the benefit of, and instead of "still under designated Holding Company," that should have said "Tennant Travel Services"; that was your correction? A. It still was undesignated, I think, at that time, but I don't remember. Q. Okay. So, I'm sorry. My apologies, then.
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So, your testimony is that, by December 2011, the Trustee was still undesignated; is that right? A. I don't remember, but I think that was the case. Q. Okay. Now, we're going to move on, if you could just give me--bear with me for one moment. MS. SQUIRES: Yes, we can move away from this exhibit, Gen. You can feel free to take it down. We will move on to another topic now. ARBITRATOR BETHLEHEM: Ms. Squires, before you do, I got the impression that Mr. Bishop wanted to ask a question on this paragraph, and I did as well, just a point of clarification. MS. SQUIRES: Certainly. ARBITRATOR BISHOP: Yes, I did want to ask a question, if I could. ARBITRATOR BETHLEHEM: Shall we go back into confidential session, because where are we on confidential... SECRETARY ARAGÓN CARDIEL: We have not left it yet, so please proceed. ARBITRATOR BISHOP: Okay. Mr. Pennie, on this statement, in Paragraph 48 of your Witness Statement, where it says: "John Tennant told me that he was holding the Skyway 127 shares as a bare trustee for a corporation to be named," did he in that conversation with you use the
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term "bare trustee"? THE WITNESS: I think he did, but I can't remember. ARBITRATOR BISHOP: Why did you put the term "bare trustee" in this sentence? THE WITNESS: So I thought that that refers to the Trustee bearing the Shares. ARBITRATOR BISHOP: Well, I guess that gets to my next question, which was: What does the term "bare trustee" mean, as you understand it? THE WITNESS: That I'm holding on to a piece paper supposedly as a Trustee. ARBITRATOR BISHOP: I'm sorry? I didn't hear that. THE WITNESS: I'm holding on to a piece of paper as a Trustee, but I'm not a lawyer. I'm not sure. But that is a term that I had heard before. ARBITRATOR BISHOP: Okay. Did he tell you in this conversation why he wanted to hold the Shares as a Trustee? THE WITNESS: Yeah. He was uncertain as to whether--when he acquired the Shares as to the value of them and whether there might be any tax implications, so he wanted to get them into a corporation--well, possibly value of the Shares might change at the time it went to a
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corporation, so we were uncertain about that, and he didn't have time to talk to an auditor; and so, he just wanted to make sure that he was a Trustee and it would end up in a corporation and that there wouldn't be an issue, possible issue, concerning capital gains transferring back and forth. ARBITRATOR BISHOP: So, he told you that he wanted to act as a Trustee essentially for tax purposes? THE WITNESS: Well, we didn't know if there would be tax implications but just in case, yes. ARBITRATOR BISHOP: Did he tell you what the terms of the Trust were going to be? THE WITNESS: No. Discussed terms. He was they were transferred to a company that he would name in the future. ARBITRATOR BISHOP: So, he simply told you that was--he wanted to hold the Shares as a Trustee but didn't give you any other details about this Trust; is that correct? THE WITNESS: Well, other than as a Trustee, he was going to vote the Shares, if necessary, and he wanted to be consulted in terms of the management of the business. ARBITRATOR BISHOP: Okay. Thank you. That's all I have at the moment.
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ARBITRATOR BETHLEHEM: I had the same questions as Mr. Bishop, and I'm not going to repeat them. But, Mr. Pennie I'd just like to ask you in respect of this paragraph, there are a number of statements of facts, your assertion of facts, to which you reference the Shareholder ledger (C-116) and other documents. But there are a number of other statements in which you don't reference anything, and they seem to go to the intention or the understanding of John Tennant, for example. If you have a look at the penultimate sentence, you say: Eventually John Tennant used the existing California limited liability corporation set up by his brother Jim Tennant to acquire and maintain. My question to you is a general question: I mean, it looks here as if you are testifying as a matter of fact to a number of issues that may not be within your own direct knowledge, and we have Witness Statements from Mr. Tennant. I'm just wondering why you are addressing these issues in your Witness Statement and where all of this information does come from. Are you testifying that all of this detail is within your own direct knowledge? THE WITNESS: I'm just going to read here. (Witness reviews document.) THE WITNESS: Yes. I believe all of this was in my direct knowledge.
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ARBITRATOR BETHLEHEM: So, including all the--for example, the second sentence: John Tennant first acquired the rights to Derek Tennant's 11.3 percent on the 19th of April, et cetera. I'm not going to press the point. I just-- (Overlapping speakers.) THE WITNESS: (Unclear.) ARBITRATOR BETHLEHEM: --it's a very important paragraph, and Mrs. Squires has taken you--Ms. Squires has taken you to it in some detail, and Mr. Bishop has asked a number of questions, so I would just like to clarify the point. THE WITNESS: So, Sir Daniel, if your question is was I aware that he was acquiring the Shares in April 19th as a result of his loan default, the answer would be yes, if that's the question. ARBITRATOR BETHLEHEM: The question also goes to the generality of this paragraph that you are testifying to circumstances or understandings or intentions on behalf of other people who have given Witness Statements in these proceedings, and yet they are not referenced to any documentation. So the question is: Is everything in this paragraph within your direct knowledge? You can take a moment to read the paragraph again, if you would like. THE WITNESS: Thank you.
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(Witness reviews document.) THE WITNESS: I believe I was--this was on my direct knowledge, yes. ARBITRATOR BETHLEHEM: Okay. Thank you very much. PRESIDENT BULL: Mr. Pennie, I have a question before I think--before I suggest that we take a break. I'm still unclear what you wish the third last sentence of Paragraph 48 to read. So, you made some amendments to that. That's the sentence and if the person with control of the share screen could highlight it--yes, that's the sentence. Mr. Pennie, you can see the sentence highlighted? THE WITNESS: I can. PRESIDENT BULL: Right. You've made some amendments. I got the first one. (Overlapping speakers.) PRESIDENT BULL: So, Mr. Pennie, I want some clarity on this. So, I understand that the sentence should read: "John Tennant held the Skyway 127 shares from I.Q. Properties and the ones later issued to him from Premier in December 2011." Have I got that right so far? THE WITNESS: Yes, Mr. President. That's
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correct. PRESIDENT BULL: And then from December 2011, could you tell us how the sentence should read? THE WITNESS: "In Trust for the benefit of the undesignated holding company." The word "still" I think is mis--doesn't clarify it probably. PRESIDENT BULL: So, we should delete the word "still," and it should read the "undesignated holding company."? THE WITNESS: Yes. I believe that would be more accurate. PRESIDENT BULL: Right. And did you want to insert the reference to Tennant Travel? THE WITNESS: Well, the reference is not in the previous sentence. PRESIDENT BULL: Okay. So, the sentence should read at the end: "In December 2011, in Trust for the benefit of the undesignated holding company," full stop; correct. THE WITNESS: Yes, sir. PRESIDENT BULL: Thank you, Mr. Pennie. I just wanted that clear for myself. THE WITNESS: Yes, Mr. President. PRESIDENT BULL: Ms. Squires, would it be
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convenient to take a 15-minute break now? MS. SQUIRES: I think so if I could just ask one quick question from what Mr. Pennie said in response to Arbitrator Bishop's question. I promise it will not take long. PRESIDENT BULL: No, no, that's fine, Ms. Squires. Go ahead. MS. SQUIRES: Okay. BY MS. SQUIRES: Q. Mr. Pennie-- MS. SQUIRES: Gen, if you could remove that exhibit from the screen, I think that would be great so I can see Mr. Pennie. There we go. BY MS. SQUIRES: Q. Mr. Pennie, when Arbitrator Bishop asked you what your understanding was of the term "bare trustee," you said that you thought it meant he was holding--and I'm quoting you here--"holding on to a piece of paper supposedly as a Trustee." Was there any paper evidencing the Trust or not? A. No. Q. All right. MS. SQUIRES: Those are my questions. I think it's a great time to take a break. We'll see you in 15 minutes.
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PRESIDENT BULL: Let's do that. Let's take that 15-minute break, please. THE WITNESS: Thank you. (Recess.) PRESIDENT BULL: Right. I think we're all back. Can I just remind everybody that moving forward from this point, we are not in confidential session unless counsel requests it. Ms. Squires, whenever you're ready. MS. SQUIRES: Thank you. And, unfortunately, because I am going to move to some of the Shareholder Ledgers that the Claimant has designated confidential, we're going to have to cut the feed. SECRETARY ARAGÓN CARDIEL: You may proceed, Ms. Squires. MS. SQUIRES: Great. Thank you so much. BY MS. SQUIRES: Q. Let's turn to Exhibit C-117, Mr. Pennie. It's going to come up on your screen. Now, this is the Shareholder Ledger for Skyway 127 that's dated June 20, 2011. Do you see the date there on the top? A. I do. Q. And if we scroll down, you can see this is where
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those Shares are being registered in the Share Ledger from I.Q. Properties to John Tennant; correct? A. Yes. Q. Now, nowhere in this Shareholder Ledger does it identify Tennant Travel Services as a beneficial owner; is that correct? A. No. Q. So, just John Tennant? A. Right. John Tennant as Trustee. Q. Okay. You would agree with me that the Shareholder Ledger does not recognize him as a Trustee; correct? A. No. As my understanding of Ontario law is that you don't register a Trusteeship. You register the name of the Trustee, and John Tennant was the Trustee. So, if I'm deficient in my knowledge, then I apologize, but that's why I registered it as John H. Tennant as the Trustee owning the Shares. Q. Okay. Was the existence of the Trust registered in any other corporate documents or anywhere else? A. No. Q. Let's turn to Exhibit C-115. This is another Share Ledger. And this one is dated January 15, 2015, so we've moved ahead a few years here. And at the bottom
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there, if you scroll down, it's noting that John Tennant is transferring 875,000 Shares to Tennant Travel Services. Do you see that? A. Yes. Q. So these are the Shares in Skyway 127 Inc. that John Tennant was allegedly holding in trust. They're now being transferred to Tennant Travel outright; is that correct? A. That's my understanding. Q. So, what happened, to your knowledge, Mr. Pennie, what happened in January 2015 that triggered John Tennant to transfer the Shares outright instead of continuing to hold them in Trust? A. Because he all along intended to put them into a company rather than continue to hold them personally as a Trustee. Q. So, Mr. Tennant's intention--again, forgive me if this is not a question that you have knowledge to, that's a fine answer, but John Tennant's intention was to hold--put the Shares into a holding company all along; is that what you're saying? A. Yes. I had knowledge of that because that's what he told me. Q. Okay. Now, Marilyn Field is your wife; correct? A. She is.
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Q. And so you and Marilyn also transferred shares to Tennant Travel on this day; correct? A. We did. Q. And you're not holding those Shares in Trust for Tennant Travel prior to this, though; correct? A. No. They are held personally. Q. Can you tell me why both of you transferred your Shares on that day? A. Well, we were part of the family. John Tennant and Derek Tennant and Jim Tennant are cousins of mine through my mother, and so we have been in a number of--particularly Derek and I have been in a number of business partnerships previously, and we like to keep the voting together, so that was why--that was our motive to do that. Q. Okay. What did you receive in exchange for those Shares? I know you mentioned earlier that this was when you received a spot on the Board of the Claimant. What else did you receive, if anything, for that transfer? A. Marilyn received 22.5 percent of the Tennant Travel Shares, and I received the same amount. Q. So--I'm sorry, can you repeat that for me, Mr. Pennie? A. Marilyn received 22.5 percent of the Tennant Travel Shares, and I received the same amount.
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Q. And so, in return for transferring your Shares to Tennant Travel--I'm sorry, can you give me one second, Mr. Pennie. A. Certainly, Ms. Squires. (Pause.) Q. Okay. So, Mr. Pennie, apologies for that. So, if I understand correctly, you and Marilyn both received shares in Tennant Travel; is that correct? A. Yes, I'm confirming that. Q. Okay. And who gave you those Shares? A. It would have been generated by Jim Tennant. Q. Okay. So, Jim Tennant gave you and your wife shares in Tennant Travel? A. Yes. Q. And this is in 2015; correct? A. Yes. Q. And we don't have any documents demonstrating this. Was that all done orally, Mr. Pennie? A. Yeah, I don't think that we had the paperwork because the intention was to change the name of the company. Q. Okay, no documents. Okay. I'm going to ask you one more question on this, Mr. Pennie. Are you still an owner of Tennant Travel Services or Tennant Energy as it's now known?
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A. I am. Q. And who are the owners? (Overlapping speakers.) Q. Sorry. A. John Tennant has 45 percent, and Jim Tennant has 10 percent, and Marilyn and I each have 22.5 percent. There has been no change. Q. Okay. Thank you, Mr. Pennie. Let's stay on these ledgers for one more minute, and let's turn to C-118, which is another--the ledger from November 25, 2009, and I see you have 5.6 percent shares in Skyway 127 at this time; correct? A. Yes. Q. And you maintain this 5.6 percent ownership until December 2011; is that right? A. Can you show me December 2011? Q. Absolutely. Let's go to Exhibit C-114. And if we look there, the line with your name, we see now you've moved up to 11.3 percent. A. Yes. Q. Okay. So, I'm sorry for the jumping around, but I do want to move to C-116 for a minute, and we will come back to this shortly after, but let's go to C-116. This is the June 9, Shareholder Ledger. And if we look at the
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bottom there, it notes that Premier Renewable is transferring shares to GE Energy. Do you see that? A. Yes. Q. And that's bringing GE Energy's ownership in Skyway 127 Inc. up to 50 percent; correct? A. Correct. I might mention GE Energy was a New York-based company. Q. Okay. I see that there in the ledger recognizing New York. At Paragraph 59 of your Witness Statement, Mr. Pennie, you say that GE became a 50 percent partner in Skyway 127 on December 30, 2011. Am I correct to say that that should, in fact, say June 9, 2011? A. It would seem so. Q. Okay. I would like to go back to that December ledger that was Exhibit C-114. Now, at this time, in December 2011, Derek Tennant and I.Q. Properties no longer owned shares in Skyway 127 Inc.; is that right? A. Correct. Q. And this document is still noting that 50 percent ownership by GE Energy; correct? A. Yes.
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Q. Okay. So, let's move ahead, then, to the next ledger we have on the record and that's the one dated January 15, 2015. So, three or four years later. We will move on that. That's C-115, Gen. Perfect. Now, we see at this point in time, GE is no longer a shareholder in Skyway 127 Inc.; is that right? A. Correct. Q. Okay. And we see here towards the bottom, if you can just scroll down, Gen, you are transferring 437,500 Shares to Tennant Travel. We spoke about that a few minutes ago; is that right? A. Yes. Q. So--and that represents 11.3 percent; correct? A. Yes. Q. So, we just looked at the December ledger, and you had 437,500 Shares or 11.3 percent. This document is showing you transferring that same amount of shares to Tennant Energy, but if we look at the ledger, it's showing that you still have 93,750 Common B Shares and 875,000 Common Shares or 25 percent ownership in Skyway. Where did those additional shares come from, Mr. Pennie? A. Can we go to the previous Minute Book record? Q. Sure, the December 2011? So, that's Exhibit C-114, Gen. So, we see here that you have 437,500.
[Page 264]
A. If we look at the transfers down below. Q. Yeah. A. So there is the answer, came from Premier Renewable. Q. So, I'm not sure if that's the answer, actually, Mr. Pennie. When we're seeing--so this is the ledger, you're getting in this one 218,700--it's cut off on my screen but 218,700 Shares, and that's bringing your total to, if we scroll up, 11.3 percent, so 437,500. So, as of this date, December 2011, you have 437,500 Shares in Skyway 127 Inc.; correct? A. Right. Q. So, let's go to the January 2015 ledger again. That's C-115, Jen. In this ledger, we see you transferring that exact amount of shares that you had in December 2011 to Tennant Travel Services, but the ledger is still showing you, though, as having around 93,000 Common B Shares and 875,000 Common Shares, so my question to you is: Where did those Shares come from? Because you seem to have gotten additional shares in Skyway 127 Inc. somewhere between December 2011 and January 2015? We don't have a ledger for that, so I'm wondering where those Shares came from. A. Often the top of my head I can't recall, but it
[Page 265]
seems to me we're missing a page here. Q. Okay. Apologies to jumping back one more time. Let's go back to that December ledger. Sorry, my mistake. Before I move here, I do want to make a note, you agree that Derek Tennant has the same amount of shares as you do in January 15, 2015; correct? A. Is that the date above? Q. Yes, we can scroll up so you can see. A. Yes, I agree. Q. Okay. So, we discussed a minute ago that Derek did not have any shares in December 2011, so in addition to you receiving shares in that intervening period, Derek also received some shares in that period; correct? A. Yes. Q. Okay. Let's go back to the December ledger (C- 114). Mr. Pennie, here we see that GE Energy has 187,500 Common B Shares and 1,750,000 Common Shares. If you divide that number by two, it works out to the same amount of shares that yourself and Derek Tennant then had in January 2015. Did the Shares that you received come from General Electric? A. Must have. I think we're missing a page here. Q. We're missing a ledger. So, somewhere in
[Page 266]
between December 30, 2015 and January 2015, there is a ledger reporting a Shareholder transaction whereby shares went from GE Energy to you and Derek Tennant; is that correct?
A. Well, that seems to be the obvious conclusion. I don't remember. There was a lot of transactions between Premier and GE over this issue and that issue and so on and so forth. So, I don't remember that precisely, and I have to refer to the record.
Q. Okay. And can you confirm for me again, both you and Derek are not American nationals; correct?
A. We're not.
Q. Now, I'm going to turn to Paragraph 67 of your Witness Statement (CWS-1), and haul this up on the screen, stay in confidential for just a minute.
A. Paragraph what?
Q. Paragraph 67.
A. Okay.
Q. It says there on June 30, 2016, GE Energy later transferred its Shares in Skyway 127 to Tennant in exchange for consideration, and it mentions the right to sell turbines.
Do you see that?
A. Yes.
Q. GE didn't own any shares in June 2016, so this
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is, in fact, an incorrect date?
A. Shall we go back to the Share Register?
Q. Absolutely the January one, or the December?
A. The one after 2015.
Q. Okay. The January 2015 ledger. The C-115, Gen. If we look at this ledger, we do not see GE Energy anywhere.
A. Looks like that may have been an error in my 67; it should be 2015. I'd have to check to the registers more precisely.
Q. Are you aware--and I appreciate that you might not have the document--we don't have any documents--the ledgers to present to you, Mr. Pennie, unfortunately, in that intervening period. Do you know if GE held any shares after 2014?
A. After 2014?
Q. Yes.
A. When was the transfer to Tennant Travel? When was the date of that?
Q. So, my understanding from the ledgers, Mr. Pennie, is that, and from your testimony just now, is that a logical conclusion is that the GE Shares were transferred to yourself and Derek sometime between December 2011 and January 2015 and then in turn you transferred some shares to Tennant Travel in January 2015
[Page 268]
retaining some shares which, in fact, you then perhaps transferred to Tennant Travel in a ledger later on, but we don't have any ledger after December 2015.
And my question is we don't have any record of any shares going directly from GE Energy to Tennant Travel Services, and I'm trying to establish if that did, in fact, occur, and if you have any knowledge of that.
A. Yes, it did occur, and I don't know why you don't have that exhibit.
Q. Okay. Do you recall when that occurred?
A. Not precisely, no.
Q. Okay.
A. It was certainly after 2014. I think it was more--it may have been 2016. I don't recall.
Q. And I don't mean to belabor this point much further, but if GE was to transfer shares to Tennant Energy in 2016, if GE did not own shares on January 15, 2015, so there also must be a shareholder somewhere where GE regained shares in Skyway 127 and then transfers them on to Tennant Energy; correct?
A. That actually--my recollection is that did occur.
Q. So, there was a break in GE's ownership of the Shares whereby yourself and Derek owned the Shares?
A. I don't know. I would have to see the missing
[Page 269]
pages.
Q. Okay. I appreciate that, Mr. Pennie. Just a few more moments in confidential session. I want to take a minute to explore the way in which decisions were made or voting took place at Skyway 127 because as you mentioned, a lot of this was done orally given that this was a family business, and we don't have any documents on the record, so I have a few questions for you.
Let's look at the Claimant's Reply submission, and I want to look at Paragraph 154.
ARBITRATOR BETHLEHEM: Ms. Squires, can I just clarify, when you talk about the Claimant's Reply submissions you're, in fact, talking about the document that's described as Counter-Memorial on Jurisdiction?
MS. SQUIRES: I am, in fact. It has a dual title.
BY MS. SQUIRES:
Q. If we look at this paragraph, it says there the Claimant is talking about when Tennant Energy--when John Tennant, my apologies, obtained additional shares in Skyway 127 in December 2011, and it's noting that John Tennant informed yourself and Derek Tennant that the trust would continue to vote the Shares with Derek and John Pennie to control the Company.
Do you see that?
[Page 270]
A. I see that.
Q. So, this paragraph is saying that Derek, John and yourself were voting shares in a common manner in December 2011; correct?
A. Well, if we agreed to vote together, it isn't automatic.
Q. All right. If you agreed.
Now, a few minutes ago, we looked at Exhibit C-114, and that was the ledger from December 30, 2011, and we established that Derek did not appear on that ledger.
So, Derek could not be part of a voting bloc at that time if he did not have any shares in the company to vote; is that correct?
A. No, he could not.
Q. Okay. So, is that paragraph in the Reply incorrect?
A. I don't know the answer because I don't remember, and I don't have the other Share Registers to refer to to clarify these dates, so I don't know the answer.
Q. Okay. Perhaps I can take you a minute, Mr. Pennie, to Derek's Witness Statement (CWS-3), it may help refresh your memory a little bit, and we'll turn to Paragraph 25.
So, Derek is saying there that he knows that in
[Page 271]
April 2011, you, your wife Marilyn would pool your votes in Skyway 127 together with John Tennant. Do you see that?
A. I see that.
Q. So, is the voting bloc that is discussed throughout the Claimant's submissions in this arbitration, is it Derek, John and yourself or is it Marilyn, John Tennant and yourself?
A. Well, in Tennant Energy, Derek did not have any shares in Tennant Energy, so it was my wife and I and John Tennant and Jim Tennant.
Q. Paragraph 25, Mr. Pennie is referring to both in Skyway 127, so the voting bloc for Skyway 127, was that yourself, John Tennant, and Marilyn; is that correct? Am I reading that right?
A. John Tennant was a Trustee.
Q. Okay.
A. I'm getting confused. I don't understand the question.
Q. I guess I'm trying to figure out which three individuals were part of the voting bloc that alleged control over the--over Skyway 127, but we can move on, if you like.
A. You're getting me confused about who owned shares when because there were a number of transfers back
[Page 272]
and forth between GE, Premier, and the individual Shareholders, so to answer that other than John Tennant had control of--as a Trustee of the Shares that went to him from Derek--or not from Derek but from I.Q. Properties on April 26, 2011, that would be correct.
Q. Okay. So, I agree with you, Mr. Pennie, it is a little bit confusing, given the few documents that we have on the record and the corrections that are being made throughout the various submissions, but let's go back to Exhibit C-114 for a minute.
This is that December 30th, 2011 Shareholder, and as I mentioned back at the very beginning of our time this morning, control over Skyway 127 as pleaded by the Claimant was in December 30th, 2011, so at this time. And I want to look at this because I note there that yourself, Marilyn and John Tennant, you make up about 45.2 percent of the Shares in a company; correct?
A. Can you blow that up? I can't see it.
Q. Yes, absolutely. I appreciate it's quite small.
A. Yes.
Q. So, you don't make up 50 percent of the voting shares in the Company; correct? Just a question of math, that 42.5 is less than 50; correct?
A. Correct.
Q. So, you owned less than GE Energy which owned
[Page 273]
50 percent; correct?
A. Yes.
Q. Now, you say that GE was a silent partner, but at Paragraph 51 of your Witness Statement (CWS-1), you note that GE continued its commitment to provide equity for the entire project; correct?
A. Let me look at Paragraph 51.
Q. Absolutely. Take your time.
A. Sorry, now what is the question?
Q. So, my question is, we see that GE is holding 50 percent shares, and you noted at Paragraph 51 that GE continued its commitment to provide equity for the Project, so I want to make sure I understand that GE is providing--they are providing the full equity for the Project; correct?
A. Not the full equity. We already had equity in it, but yes, they were providing a majority of the equity.
Q. So, if I understand correctly again, your statement is GE was providing funding for the Project but it did not exercise any votes or participate in any Shareholder Meetings; is that correct?
A. No, I didn't participate in the meetings.
Q. And you have no documentation demonstrating GE's failure to participate?
A. No.
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Q. Okay. And again, was there any document that demonstrated this voting bloc? Was this written down, or was that an oral agreement?
A. It was oral. It's family business.
Q. Okay. So, the voting bloc was oral, GE Energy's decision not to vote was also communicated to you orally? Is that right?
A. They didn't really have an interest in participating in the details of the business. They had an interest in providing funding of turbines, so no, they didn't want to be involved in voting or discussions.
Q. I think we can move out of the confidential session now and we'll get away from these tiny Shareholder Ledgers for a few minutes. If I could just know when we're out.
(Attorneys' Eyes Only session ends.)
[Page 275]
SECRETARY ARAGÓN CARDIEL: We're back live.
MS. SQUIRES: Okay, thank you.
BY MS. SQUIRES:
Q. Really just a few more questions for you, Mr. Pennie, I appreciate that this has been going on for quite some time. You testified that you were aware that the Mesa arbitration was ongoing; is that right?
A. Yes.
Q. And can you tell me why you did not attend the Mesa Hearing in 2014?
A. Well, the press coverage of the Mesa allegations, some of the allegations, and then in different things that I read, for example, in the Globe and Mail in the middle of July 2011 (R-059), the Minister of Energy, Brad Duguid, had said everything was done properly, so Mesa was making allegations. They were behind us in the queue. I had a letter from Joanne Butler, the Vice President of OPA, saying that in the next round we were still in the queue. We were higher ranked than Mesa, so I wasn't concerned about people behind me of what their complaints were because they didn't get a contract. I wasn't complaining I didn't get a contract; I was expecting to get one in the next round. So no, I didn't follow that.
[Page 276]
Q. So, you followed the proceeding in the media, but you did not--
A. I didn't follow it in the media. Sometimes I would see it in the media.
Q. Okay. Are you aware that the Mesa Tribunal held that all the measures at issue in this arbitration were consistent with the NAFTA?
A. Can you ask that question again?
Q. I'm asking if you're aware that the Tribunal in Mesa Power held that all of the Measures that Tennant Energy says violate Article 1105 of the NAFTA were, in fact, consistent with the NAFTA?
A. I'm not a legal expert. I can't answer that. Our case is not the Mesa case. Ours is a totally different case.
Q. Okay. Did you read the Mesa Award (RLA-001) when it came out?
A. I think I did review it, but I don't remember anything about it.
Q. Okay. Let's turn to Exhibit C-027.
Now, this document was filed as an exhibit with the Claimant's submissions in the--this arbitration. It will give Gen a minute to get it up there.
(Pause.)
MS. BARLOW: Just a moment. I'm just having a
[Page 277]
little bit of technical difficulty.
MS. SQUIRES: No worries.
(Pause.)
MS. SQUIRES: Would it help, Gen, if I moved on a little further and come back to this one or is it a problem over all with accessing exhibits?
MS. BARLOW: Unfortunately, it was a problem over all but let me go ahead and restart my program. I should have it up in a couple of seconds.
MS. SQUIRES: Okay.
(Pause.)
BY MS. SQUIRES:
Q. Here we go. So, this is Exhibit C-027, and it was filed with the Claimant's submission in this arbitration, and in this index, it was filed as dated September 1st, 2011, and it was entitled "Skyway 127 Project history attachments only." And I'm wondering if you could help me understand this document a little bit, Mr. Pennie.
Maybe we will just skip ahead to Page 4 to start.
Now, this is a letter that you received from Joanne Butler at the Ontario Power Authority on July 4, 2011, indicating that Skyway 127 was not successful in receiving a contract on that date; is that right?
[Page 278]
A. That said that but--I can't read it, but it also says as I recall, they were still in the--at this time, the Project will remain in the priority ranking and proceed to the Economic Connection Test the following--no. Any way, it says that we're going to remain in the priority ranking.
Q. Okay. Now, let's scroll up one page, and this is a list, it's dated June 6, 2011, and it reflects circuit availability of certain connection points and it lists transmission areas. Are you familiar with this document?
A. I am.
Q. Okay. And we will go up one more page to Page 2.
Now, this is an OPA document from June 4th, 2011, and it lists off projects that were ranked in the Bruce Transmission area.
Do you see that?
A. Yes.
Q. And we see there that someone has drawn blue lines to strike out certain projects. At the bottom of the page there, it notes that the blue line means FIT Awards July 4th, 2011, after deduction for West of London.
Do you see that?
A. Yes.
[Page 279]
Q. So, the ones crossed out by the blue lines, those are the ones that got FIT Contracts on July 4th by switching into the Bruce from the West of London Region; is that correct?
A. I don't remember if they were all switched over, but anyway, yes, they got Contracts.
Q. Now, we see that someone has highlighted the Skyway 127 Project there (drop in audio)--that was you?
A. That was me.
Q. So, did you create this document in September 2011, Mr. Pennie?
A. I printed it out from the OPA, and then I marked it up, yes.
Q. Okay. So, you would have also highlighted Mesa Power in the 9th spot at the same time in September 2011?
A. Yes, I did.
Q. Okay. So, this document then, in September 2011, you are comparing which document, which projects got contracts on July 4th, 2011, and you're aware that you did not get a project, and that Mesa Power also did not get a project because of that July 9, 2011 Contract Award; is that correct?
A. What date did you say?
Q. July 4th, 2011.
A. Yeah, July 4th, 2011, I did not get a contract
[Page 280]
or Skyway did not get a contract.
Q. Okay. Let's turn now to RLA-001, and I appreciate that this is a legal authority, but it's the Mesa Award, which, in this arbitration, is a little bit of an authority and a little bit of an exhibit, it's a bit of an anomaly, and I want to turn to Paragraph 678. The last sentence of this paragraph, you can see that the Tribunal is noting with respect to meeting that NextEra had with the Ministry of Energy in events of the June 3rd direction, they're noting that Mesa had not established that the content of these meetings differed in any relevant manner from the many meetings which the Ministry conducted in the normal course with Investors in the FIT Program.
Do you see that?
A. I see what it says.
Q. And I want to turn to Exhibit C-121, and I will have a question--I'm going to go to a couple of exhibits and then I will have a question for you to connect the dots. Let's turn to Exhibit C-121.
This is the public hearing Transcript of the Mesa Power Hearing, and if you scroll down to the third page, Gen, you can see that this is the day that Susan Lo was cross-examined and her testimony starts there around Page 5.
[Page 281]
And you recall who Susan Lo is, Mr. Pennie?
A. She was a Deputy Minister of Energy.
Q. Let's turn--let's have a look at what Sue says there at a couple points, and let's turn to Page 159, Gen. I want to look at Line 13 to 14.
Sue was saying there, "I had a lot of meetings with proponents. That was my job."
Do you see that?
A. I do.
Q. And if we turn, just going a little bit further in her testimony at Page 183 at Line 19 to 22, she's saying: "My staff and I were always in regular forum with the industry and having regular meetings with Stakeholder groups."
Do you see that?
A. Yes.
Q. Mr. Pennie, that's a few examples showing meetings between fit Applicants and the Government, including Ms. Sue Lo herself, who the Claimant has taken particular issue with. Can you explain to me why Skyway 127 did not reach out to take advantage of these opportunities that were available to FIT Proponents to learn more about the program or decisions that were being made?
A. Well, I would take exception that we didn't
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reach out.
Number 1, I attended all of the sessions in person which were day-long sessions, and I think the first round of sessions conducted by the OPA was 10 days over two weeks. That's my recollection anyway. I attended any conference calls the OPA had and identified myself as being on those conference calls.
In addition to that, I was in contact with Colin Anderson, the President of the OPA, usually by phone. I was in contact with Shawn Cronkwright who was in charge of the FIT Program, and Jim MacDougall, another officer of the OPA, constantly to make sure that we were complying and that what we needed to do to be successful.
Q. Mr. Pennie, I note that in response to your question that you've listed out quite a few individuals who were witnesses in the Mesa arbitration.
In the context of your discussions with those individuals, did you ever ask about the reasoning behind the June 3rd direction, about the Mesa Power arbitration or anything in that respect?
A. Can you rephrase that question?
Q. Yes.
In answering my question, you referred to numerous individuals who you had contact with over the years, including Shawn Cronkwright, Jim MacDougall and
[Page 283]
Colin Anderson at the OPA. Now, Shawn and Jim were both witnesses in the Mesa proceeding and testified quite heavily to meetings that they had with FIT Proponents, and I'm wondering in your conversations with them, did you ever inquire as to the nature of decisions that were being made with respect to the FIT Program, about the Mesa arbitration, specifically given you knew it was ongoing? I'm wondering if you ever took--if you ever used those meetings as opportunities to learn about the Mesa proceeding or how decisions were being made within the Government?
A. Hmm, so we had a relationship with those individuals and with the OPA over many of our RESOP projects that had been going on for almost ten years, and we were still expecting until the FIT Program was terminated in 2013 that we might receive a contract because we were next in the queue and there was 450 megawatts still available. So, in any conversations I had, I did not say anything such as you're suggesting. I did say is everything being--continue to be according to the FIT Rules, and I was assured it was. Was there anything that I had to know that was different that may have occurred that I should be aware of, and I was assured not, that I did not have--that that was not the case or I didn't need any additional information.
[Page 284]
So, that was the way I characterized it because I was trying to be polite, courteous, and continue as a potential firm to get another contract.
Q. Okay. So, you would agree with me, then, that these individuals from the OPA were happy to meet and to discuss and answer your questions as addressed.
A. Yeah, in regard to this--in regard to the FIT Program Rules, but I was not aware that there were conversations going on that were getting around the FIT Program Rules and that they were actually carried out. In fact, it's part of a conspiracy, and I wasn't aware of the Breakfast Club, and I wasn't aware until 2020 about code words about projects and so on.
So, I wasn't aware that IPC where Mike Crawley, the President of IPC, International Power Corporation, who was the President of the Ontario Liberal Party and then subsequently the President of the Canadian Liberal Party, was able to get preferential treatment out of the West of London zone through the Breakfast Meeting decisions. I was not aware of any of that.
Q. Okay. Okay, Mr. Pennie, I'm going to ask you something different. I may come back to that in a second, but give me a minute to sort my thoughts while I ask you about something else.
Let's turn to the Canada's Counter-Memorial in
[Page 285]
the Mesa proceedings and it's Exhibit C-117--C-177.
Sorry, Gen. It helps if you have the exhibit number, C-177.
And I want to look at Paragraph 159.
A. What is the date of this?
Q. February 28, 2014. You can see there in the top right-hand corner.
A. Yes.
Q. Okay. And we'll look at Paragraph 159.
So, these are Canada's arguments in the arbitration, and it's making reference there to the Skyway 127 Wind Energy Project, making this reference on February 28, 2014. It's noting there that Skyway also submitted a letter from GE as supplier.
Do you see that?
A. Yes.
Q. And at the end of the sentence, we can see that Canada is citing to Footnote 371, and if, Gen, if I could take you down to 371, you see that there is a letter there--there we go--from GE to Premier Renewable on that date, November 29--November 27--sorry--2009.
Do you see that?
A. Yes.
Q. Now, Mr. Pennie, you were the individual who provided consent for the OPA to release the Skyway 127 FIT
[Page 286]
Application for use in the Mesa proceeding; is that correct?
A. I don't remember doing that, no.
Q. Okay. The FIT Application when submitted to the Ontario Power Authority, that was submitted on a confidential basis; correct? The OPA could not just distribute it to whoever they wanted?
A. Right.
Q. So, someone at Skyway 127 would have had to consent for Canada to be able to obtain the FIT Application for use in Mesa Power; correct?
A. Yes.
Q. To your recollection, then, no one at Skyway when providing that consent asked how the Skyway 127 application may be relevant to this arbitration?
A. I don't even recall giving that permission.
Q. Okay. But someone would have.
A. Well, maybe it was Pim de Ridder. I don't know.
Q. Mr. Pennie, your first request for information with respect to the Mesa case was when you sought out Mr. Appleton in June of 2015; is that correct?
A. I don't remember. It was not prior to that, no.
Q. Your Witness Statement (CWS-1) notes that your first--you first sought out Mr. Appleton in June of 2015.
Is that date still correct?
[Page 287]
A. Yes.
Q. Now, did you read any pleadings that were available in that case prior to meeting with Mr. Appleton, or is that the first time you obtained any documents for the arbitration, for the Mesa Power arbitration?
A. Well, we're talking over a period of basically, I don't know, seven or eight years, and there are many, many documents, thousands of documents, and to remember exactly when I read any specific document, I can't other than the only document that impressed me with shocking revelations was one I read after August 15th, 2015, the hearing brief of Mesa Power (C-017). So, prior to that, I might have read something, but it wouldn't have been much before, I don't think, March of 2015, but anyway, that was the only one I found shocking. Otherwise, it was just any document that I had looked at, it seemed like Canada was denying, denying, denying, and Mesa was accusing, accusing, accusing, so that didn't help me at all.
Q. Okay. What date did you retain counsel--retain Mr. Appleton and Mr. Mullins as your counsel in this arbitration?
A. Hmm. I think it was 2017.
Q. Do you know what date that would be in 2017?
A. I don't remember, no.
Q. I believe yesterday your counsel said it was
[Page 288]
March 2017. Does that sound right?
A. Yeah, that's probably correct.
Q. Okay. The Notice of Arbitration--or the Notice of Intent--my apologies--was filed by Tennant Energy on March 2nd, 2017. So, am I correct to say that counsel was retained and the NoA was filed within a one-day period?
A. Well, that would have been around the same time, yes.
Q. Okay, so the NoI was put together in one night.
A. Well, I don't know that.
Q. Okay, Mr. Pennie.
Can you give me one moment? I'm going to consult with my colleague.
We may be done here this morning, which would make a very early finish to the day for some us. Some us are into the evening for sure, but could you give me one moment, Mr. Pennie.
(Pause.)
Q. All right, Mr. Pennie, I think I am finished with you for now. We will hand it over to the Tribunal for questions or your counsel for redirect.
(Overlapping speakers.)
A. (Unclear.)
Q. I appreciate the time, Mr. Pennie, and I know it's so hard to do this virtually, but I do appreciate
[Page 289]
that.
A. Thank you, Ms. Squires.
PRESIDENT BULL: Thank you, Ms. Squires.
Mr. Pennie, I have a question, and it's just a detail I wanted to clarify. You were asked some questions about the media reports on the Mesa Power arbitration; right? You recall that?
THE WITNESS: Yeah.
PRESIDENT BULL: So, what I wanted to ask you was you said that you saw some of these media reports, and my question is: When you noticed media reports about the Mesa Power case, would you have read those media reports that you noticed? Or would you not have read the text of the articles that you saw?
THE WITNESS: Well, one I do remember which I read was a Globe and Mail (R-059) which reported on what you call notice of--I forgot what it was that Mesa files initially, but it was--I do remember it was around the middle of July in 2011 after the Contracts had been let, that--and Globe and Mail, Mr. President, is Canada's premier business newspaper, so usually their reporting is fairly good and usually balanced, so they had some claims that Mesa was making, that T. Boone Pickens was making, a big picture of him.
And then they had a quote, a fairly extensive
[Page 290]
quote from Brad Duguid, the Minister of Energy, saying that this is all unfounded--I'm characterizing here--all unfounded, that everything in the FIT Program had been followed by the rule of law, and so--but I've been dealing with the Government of Ontario all my life, and so I had no reason to suspect that anything was happening in terms of what I later learned was a conspiracy.
So, you know, I read about it and moved on with things like we were in the process of having to renew our leases on 6,800 acres because we had this letter from Joanne Butler, so we decided to focus on that; they had to be renewed for another three years, under the expectation we were still in the priority ranking, as I had marked up that document that Ms. Squires showed us (C-027). So, Mesa was lower in the queue than us. They were making some complaints because they didn't get a contract. I didn't see that to be anything but complaints. And the Minister of Energy was assuring us that is--that's all it is, is complaints, so--disappointment, you know, so what? You didn't get a contract, so now you're going to sue people? That didn't make sense to me, so I didn't feel there was anything valuable in following that.
PRESIDENT BULL: So, Mr. Pennie, coming back to my question, it seems that when you saw that one particular article that you've just been talking about (R-
[Page 291]
059), you did read it in full; right?
THE WITNESS: I did.
PRESIDENT BULL: Right. So, you would have seen more than one article about the Mesa Power case; right?
THE WITNESS: Well, there are other articles. I don't think I read them all in detail, no.
PRESIDENT BULL: That's what I wanted to know. Thank you.
Do my colleagues have any questions before I ask counsel to re-examine?
ARBITRATOR BISHOP: I think I may have one question about--if we can take him back to Paragraph 48 for a moment of his Witness Statement.
ARBITRATOR BETHLEHEM: And that just was the confidential one, wasn't it, in case, Doak, you want to go into confidential mode?
ARBITRATOR BISHOP: Well, perhaps we need to. I'm not sure.
PRESIDENT BULL: Perhaps that would just be safer.
MS. SQUIRES: That is correct. That is a confidential paragraph in the Witness Statement.
ARBITRATOR BISHOP: Okay.
(End of open session. Attorneys' Eyes Only
[Page 292]
session begins.)
[Page 293]
ARBITRATOR BISHOP: Just tell me when I go forward.
SECRETARY ARAGÓN CARDIEL: Bear with me, please.
ARBITRATOR BISHOP: Sure.
Maybe it will take longer to go into confidential session than my question will last.
SECRETARY ARAGÓN CARDIEL: Please go ahead, Mr. Bishop.
ARBITRATOR BISHOP: Yes.
The third line from the bottom of Paragraph 48--I know you were asked about this earlier, but it says that John Tennant held the Skyway 127 Shares issued to him from now Premier in December 2011 in Trust for the benefit of a still undesignated Holding Company. And I know you were asked about that. Did you say that at that point in December 2011 there was no designated Holding Company for the Shares to be held in Trust for? Is that correct?
THE WITNESS: Yeah. I don't think it was designated at that point, but I can't remember.
ARBITRATOR BISHOP: Okay. And when was a holding company designated as the beneficiary of this oral trust, as you understand it?
THE WITNESS: Well, either around that time or
[Page 294]
subsequent to that, John had a discussion with his brother, Jim, about acquiring Tennant Travel, and whenever that happened, he informed me of that.
ARBITRATOR BISHOP: Do you remember when that was?
THE WITNESS: I don't.
ARBITRATOR BISHOP: You may not--you may know or you may not know this, the answer to this question, but can there be a trust for the benefit of an unknown beneficiary?
THE WITNESS: I'm sorry, Mr. Bishop. I'm not a lawyer. I don't think I can answer that question.
ARBITRATOR BISHOP: That's fair enough. Thank you. Those are the only questions I have.
ARBITRATOR BETHLEHEM: I have a number of questions or rather a question, but I don't know whether the material--I don't think any of it refers to Confidential Material, but perhaps we might just conveniently stay in confidential mode, and I wonder whether I could prevail, Ms. Squires, on your technical colleagues to put relevant material on the screen, if I could do that.
MS. SQUIRES: Yes, not a problem at all.
ARBITRATOR BETHLEHEM: Mr. Pennie, I want to just try and sort of clarify something or give you an
[Page 295]
opportunity to address this, and let me sort of preface my question by saying that I fully understand what you said in your Witness Statement about when you came to know certain things on reading the Mesa Power--or seeing the Mesa Power Transcript or evidence. I understand that entirely and the dates associated with that.
What I'd like to do is just to take you quickly seriatim through a number of paragraphs in your Witness Statement and then just ask you a straightforward question, and I wonder, first of all, if we could call up Paragraph 32 of the Witness Statement, and you'll see there in the second sentence that it says, you say, "While we had placed into the group of successful candidates during the dry run, we were unfairly not awarded the FIT Contract."
You see that?
THE WITNESS: I see that.
ARBITRATOR BETHLEHEM: Could I then ask if we could call up Paragraph 42.
And you'll see the last sentence there: "While we had placed into the group of successful candidates during the dry run, we were unfairly treated and not awarded the FIT Contract," and those are both referenced in 2010.
Do you see that?
[Page 296]
THE WITNESS: Yes.
PRESIDENT BULL: If we could then go to Paragraph 61, please.
Now, this is a slightly different formulation, which you'll see the last sentence: "So while we were not rejected on July 4th, 2011, we did not receive a contract on that date."
You see that?
THE WITNESS: I do.
ARBITRATOR BETHLEHEM: And then if we could go to Paragraph 75, please: "On June 3, 2011, the OPA issued a new set of rules to award Contracts to the FIT Program. The OPA did this without any prior notice being given to us. These new rules made significant changes to the FIT Program and the already existing rankings in the different regions."
You see that?
THE WITNESS: I do.
ARBITRATOR BETHLEHEM: And then to Paragraph 81, and you'll see there it says: "The June 11, 2011 Ontario Minister direction to reduce the amount of available transmission for the FIT Program went entirely against my expectation of how a FIT Program was to operate. It was grossly unfair and lacked even-handedness."
Do you see that?
[Page 297]
THE WITNESS: I do.
ARBITRATOR BETHLEHEM: And then the last one that I'd like to take you to is to Paragraph 86 at the top of the next page: "Yet, in the Bruce Milton Transmission Project rule change on June 30, 2011, the Applicants could change to interconnect points outside the region. Unexpectedly and unfairly, they could suddenly be long transmission lines" et cetera, and you see that?
THE WITNESS: I see that.
ARBITRATOR BETHLEHEM: And, Mr. Pennie, my question to you, and it's straightforward and there's nothing sort of hidden in it. I just want to bring these issues to the fore so that your counsel and counsel for Canada can address these in due course, and I take it from these statements and other statements in your Witness Statement that in the period June to December 2011, you had, if I could put it in these terms--this is not your language--but an acute perception of unfairness and improper treatment. Is that an accurate reading of all of these statements?
THE WITNESS: Well, Sir Daniel, could I just explain something about the FIT Program in order to answer your question?
ARBITRATOR BETHLEHEM: Please do.
THE WITNESS: So in all of the meetings that I
[Page 298]
attended and in the written material about the FIT Program, one of the guiding principles--there were two guiding principles in terms of connection--number 1. We could not aggregate former RESOP projects into a larger project like if you had--such as NextEra had six RESOP projects in the London zone that they didn't get contracts for, and they were able--they were allowed to aggregate those from six, 10 megawatts into sixty--I don't remember what the final number was, unfortunately, but anyway they were able to aggregate those into a larger project. So, that was a change that basically occurred through the Breakfast Club that I didn't know about. The second principle was that--and they drew charts and a lot of--I think we spent two days on this in the FIT sessions--that if the closest project to the transmission had priority over the other projects, so that is specifically why we set out to accumulate 6,800-acres at some expense, in the millions, in the Bruce area just northeast of the Bruce nuclear plant where a transmission line with two circuits on it went through, and we actually had transmission towers on lands that we leased.
So, our conclusion was we are the closest because we had zero connection distance to transmission.
So, those were the principles.
So, the fact that all of a sudden the London
[Page 299]
Transmission Zone was allowed in was a bit of a surprise.
But, so, yes, I was concerned about that and surprised about it, and I did feel it was unfair, but I was less concerned about that when I was told I was still in the priority ranking. I was next in the priority ranking according to my analysis of the contracts that had been let, and I knew that there was still 450 megawatts of available transmission in the Bruce and was assured by Colin Anderson and others that I spoke to in the OPA that they were still expecting another round of applications, so I wasn't concerned about leases' issues. They were behind me in priority ranking. I wasn't concerned about other projects; I was concerned about ours, and it looked like we were right there ready to go in the next round.
So, even though that was unfair, I was less concerned about it at that time. I didn't know the reasons of how it became unfair until 2015, and that was shocking.
ARBITRATOR BETHLEHEM: Mr. Pennie, thank you very much.
And, Ms. Squires, we can take the--we can clear the screen, I think, now.
Thank you, Mr. Pennie. That's very helpful in response. And, as I say, I did not want to draw you in necessarily into the fuller explanation which is set out
[Page 300]
in your Witness Statement very clearly.
I just wanted to get your response, which I now have--thank you--about your sense of unfairness already in this period of June-December 2011. So, thank you very much. That's the only question that I have. Apologies for taking so much time.
THE WITNESS: Thank you, Sir Daniel.
PRESIDENT BULL: Is there any re-examination, Mr. Mullins?
MR. MULLINS: There is, but...
I wonder if this would be a good time to take our lunch break because I need to put some papers together, if that would work out. Otherwise, I would have to break my examination in the middle.
PRESIDENT BULL: Good. Then let's do that.
And just for our planning purposes, Mr. Mullins, would you have an estimates of how long you might be? I won't hold you to it.
MR. MULLINS: I have it. That's one of the things I need to figure out. It will take a little bit, so I'll have a better answer after lunch.
PRESIDENT BULL: Okay. Then let's take the half-hour break now, and we can come back after that.
MR. MULLINS: Actually, I think we scheduled a little bit longer than that. We have to get our--we had
[Page 301]
some issues with our technology here, so I was wondering if we can take--I think we had scheduled at least 45 minutes.
PRESIDENT BULL: You're right, Mr. Mullins. Thank you for reminding me. It is supposed to be a 45-minute break, so let's do that, and we can come back.
MR. APPLETON: President Bull, I'm sorry. I barged in on Mr. Mullins' line here.
I'm told from our IT team that they would like to test out the microphone placement again, and that would need a few more minutes, and that's why I'm going to ask if a team is available at the PCA side or wherever to get this done and whether we might have another 15 minutes in the lunch period just so that we can get that technical part done so the microphones are working again. They think they have an idea, but they need to check it on the other side, and we don't want to have everybody on at that time, as you understand.
SECRETARY ARAGÓN CARDIEL: We will reach out to you very shortly, Mr. Appleton.
MR. APPLETON: But I'm asking the President if we could have an hour so that we have the 15 minutes in there so that we can get that fixed up.
ARBITRATOR BETHLEHEM: May I just ask a question on this? I mean it seems as if the technology is actually
[Page 302]
now, with Mr. Mullins having moved seats, is actually working fine. I'm just wondering why we're extending a break in the middle of examination of a witness.
MR. APPLETON: It will only take 15 minutes and we have the people here. We're concerned that we won't have the IT people that know the set up at the end of the day because they started in the early morning, and so I'd like to make sure that if we have to have a part replaced, we can still it today. Otherwise, it could cause lingering problems as we go along because why I'd like to try to get it now because, by the time we are finished, I don't think we're going to have that person available. That's the only reason I'm asking for the extra--I'm only asking for 15 minutes.
PRESIDENT BULL: Okay. Let's do this. Let's take a 45-minute break, and I think--try and do what you can in that time period.
MR. APPLETON: Thank you.
(Recess.)
PRESIDENT BULL: I think we should proceed. In the interest of efficiency, let's move ahead.
And whilst we don't have live stream obviously, the recording will be available to the public, so we can proceed now with the redirect by Mr. Mullins.
So, let's have Mr. Pennie back on screen.
[Page 303]
Whenever you're ready, Mr. Mullins, please go ahead.
BY MR. MULLINS:
Q. Good afternoon, Mr. Pennie. Are you prepared to go forward?
A. I am.
Q. Remind us that you are the--can you tell us if you have an issue? You said you're 82 years old?
A. Yes, I am.
Q. Okay. Well, if you get tired, just tell me. I don't feel it's too long, but if you need to take a break, just tell me, okay?
A. I will.
Q. Mr. Pennie, I want to go through some testimony because I want to make sure that the record is clear.
As I understand your testimony--and you tell me if I get this wrong--in April--on April 19, Mr. Tennant acquires the Shares as a bare trustee for a trust to be held in the future. Is that--is that your memory?
A. The Trust was as of the date of April 19th for--to be designate--to be deposited or transferred to a company to be designated in the future, is my understanding.
Q. Perfect.
[Page 304]
What we're trying to do is pin down when that company was designated. And, in fact, if I recollect from Arbitrator Bishop, he asked you do you remember when that was, and you say "I don't remember." I wonder if we show you some documents that may help refresh your recollection. Is that possible?
A. Yes.
Q. Well, I want to show you is a--the Witness Statement that actually Ms. Squires showed you, could we put on the screen Witness Statement 3, CWS-3 Witness Statement. And if we go to Paragraph 25, and if I look in the record, Ms. Squires asked you to turn to Paragraph 25, and she read from you the second sentence in Paragraph 25, where it says John Pennie and his wife Marilyn Field would pool their votes in Skyway 127 together with my brother John's Trust voting power in Skyway 127, and you remember she asked you that; right?
A. She did.
Q. Is that a true statement, Mr. Pennie? That sentence? Is that what happened?
A. Are we talking about the whole thing or the last sentence or what?
Q. Let's just go one by one. The second sentence that she pointed to you, that's a true statement; right?
A. Yes.
[Page 305]
Q. Okay. She didn't go to the sentence right before it in the same paragraph, where your cousin Derek said: "I spoke with John Pennie and my brother John after designation of Tennant Travel Services for the Share Transfer on April 26, 2011."
Is that a true statement? Or does this refresh your recollection of when that conversation occurred?
A. It probably could have been. I don't remember, it's so long ago.
Q. Okay. The prior Paragraph 24 says: "John Pennie, my brother John and me got out of phone"--she didn't show you this paragraph either--"John Pennie, my brother John and me got on the phone to confirm the arrangement on April 26, 2011," and then it says: "My brother John said he was holding the Shares in Trust for Tennant Travel Services LLC. He explained the decision to use Jim Tennant's company as a listed company Tennant Travel." At least according to Derek Tennant, that occurred on April 26, 2011.
Do you have any reason to believe that that did not happen, Mr. Pennie?
A. Well, I know what was described happened, and since he says that was the date, I have no reason to believe that wasn't the date.
Q. Okay. So, when you go back to your Witness
[Page 306]
1 Statement you corrected today, and if you go to
2 Paragraph 51, where you talked about--we corrected the
3 date April 2011, Paragraph 51--I will wait until we get it
4 up on the screen for a second.
5 ARBITRATOR BETHLEHEM: That's got Confidential
6 Information in it, doesn't it?
7 MR. MULLINS: I don't think--oh, maybe it does.
8 VOICE: We will give you the public version.
9 MR. MULLINS: The section I'm going to ask you
10 doesn't have Confidential Information.
11 I was going to ask about the first sentence.
12 BY MR. MULLINS:
13 Q. The sentence we corrected, you changed that to
14 April 2011, it says: "Since April 2011, the interest of
15 Tennant Energy has effectively control of Skyway 127
16 investment."
17 Can you explain why--what you mean by that?
18 A. Up through the Shares of John Tennant was
19 holding in trust that were to be exchanged for Shares of
20 Tennant Energy.
21 Q. And again, according to you, if you go to
22 Paragraph 47, that occurred on April 19, 2011?
23 A. Yes.
24 Q. And you talk about--the next paragraph: "At the
25 time we were very busy with Skyway with the FIT
[Page 307]
1 Applications and John's shares were out registered in the
2 Skyway 127 Corporate Books until June 2011." Can you
3 explain about that, what was going on then?
4 A. We had already seven RESOP projects we were
5 managing. We were waiting on the FIT Awards. We had
6 other decisions to consider such as dealing with, I think
7 it was, 50 landowners about renewing their leases for
8 another three years, and so we were pretty busy.
9 Q. And you were shown some documents that showed
10 that Mr. Tennant, as Trustee, held a minority shareholder
11 interest and eventually got a larger share interest. Why
12 would you say that Tennant Energy controlled effectively
13 Skyway 127, given the shareholder interest it had? How do
14 you explain that to the Tribunal?
15 A. Well, it was in an agreement we had with John
16 that he would have--since he had become a significant
17 shareholder, that he would haves I wouldn't say "veto
18 power" but certainly be consulted on any major decisions,
19 and that we would, as a family, try to work together and
20 follow those wishes.
21 Q. And so you're saying, because of that, Tennant
22 Energy controlled it in terms of ultimately having the
23 final decision-making? I'm trying to understand your
24 testimony.
25 A. Well, definitely when Marilyn and I put our
[Page 308]
1 shares into Tennant Energy was in control but by verbal
2 agreement, it had the same effect prior to that.
3 Q. That's good.
4 Now, during--what is your position with Skyway
5 127?
6 A. I'm the Director and the Corporate Secretary,
7 and I manage--when there was a project, I managed the
8 Project.
9 Q. And who was responsible for dealing with the
10 day-to-day situations of Skyway 127?
11 A. I was.
12 Q. Again, in conjunction with this arrangement you
13 just talked about?
14 A. Well, I wouldn't review day to day with Derek or
15 John, and I would deal with day to day. Periodically, we
16 would have one discussion about any other longer-term
17 issues.
18 Q. Now, we--you spoke about what happened in 2011
19 when--July 4, 2011, you discovered that there were FIT
20 Contracts that were being awarded but Skyway 127 did
21 not--Skyway 127 was not awarded one. Did you have any
22 discussions internally about suing Canada at that point?
23 A. No, because we didn't see any need--because we
24 didn't get a contract, what do you sue about? I didn't
25 get a contract? I'm disappointed? You can't sue about
[Page 309]
1 being disappointed.
2 Q. And however, Arbitrator Sir Daniel was asking
3 about, well, you must have realized that there was
4 disappointment and perhaps unfairness. Did you do
5 anything to investigate this unfairness that might be
6 present?
7 A. Yes. I did contact executives at the OPA over
8 the next period of time, and--you know, as I had described
9 earlier, tried to diplomatically determine from them if
10 there are any things that I should be concerned about,
11 whether there were any things going on that required my
12 attention concerning the FIT process.
13 Q. What was the response?
14 A. Everything was fine. Everything was being
15 followed according to the rule of law, according to the
16 FIT policies.
17 Q. And did you ask them, "Well, what about IPC?
18 What happened there?" Did you have any discussions of
19 IPC?
20 A. I didn't have discussions about a specific
21 company or competitor.
22 Q. When did you learn that IPC--that there had been
23 a special arrangement with respect to IPC where they
24 specifically made sure that--IPC was not going to be shut
25 out of the FIT Awards? When did you learn that,
[Page 310]
1 Mr. Pennie?
2 A. In at least the Post-Hearing Brief (C-017)
3 became it publicly available of August 2015.
4 Q. At least that's when you looked at it; right?
5 A. Well, that's when it was available. It wasn't
6 available before that--
7 Q. Okay.
8 A. --I recall.
9 Q. You also mentioned an article in the paper--I
10 think it's the Globe and Mail--maybe we could pull that
11 up. It's R-59.
12 This is a--you mentioned this article. Is this
13 the article you're talking about?
14 A. This is the article, yes.
15 Q. Okay. And you mentioned that you saw some
16 discussion. I'm going to point you to--I think you
17 mentioned the Energy Minister Brad Duguid.
18 A. Yes. That's in here somewhere.
19 Q. I think we've highlighted for you there.
20 Is that the statement that you--
21 (Overlapping speakers.)
22 A. Yes.
23 The statement goes on the quote, "Ontario is a
24 global leader in clean energy development, et cetera, et
25 cetera, and our planning is creating thousands of jobs",
[Page 311]
1 and it then goes on to say he rejected and makes the point
2 that had been unfairly treated; that OPA runs an open,
3 fair, and transparent process to award clean-energy
4 contracts in the Feed-in-Tariff Program, and all companies
5 are treated equally the same opportunities to participate,
6 regardless of whether they are Ontario-based or
7 internationally-based.
8 So, that was confirmed when I talked to folks at
9 the Ontario Power Authority over the months following.
10 Q. And this wasn't your first rodeo. Did you have
11 any prior experience with Ontario in believing what they
12 told you?
13 A. Well, as I said, I have been in business 62
14 years, and I have never run into a government ultimately
15 saying things that were done by the rule of law and in
16 actual fact discovering later that there was a conspiracy,
17 that there were secret--secret meetings with [Redacted]
18 [Redacted] and so on. All this to subvert the rights
19 of the people following the rules of the program, so that
20 was a shock. I never run into that before in 62 years. I
21 worked with government people in Japan and England, in the
22 United States and Canada, and never ran into that before.
23 Q. And you--so you read this newspaper article (R-
24 059), you tell us specifically who you spoke to after
25 these articles come out and you find out that Mesa Power
[Page 312]
1 had sued?
2 A. I can't tell you specific dates, but I could
3 tell you people I did speak to were Colin Anderson, the
4 President of the OPA; Shawn Cronkwright, who was in charge
5 of the FIT Program; and Jim MacDougall. I spoke to
6 Jim--well, I had spoken with Jim a number of times over
7 the next year or so, and Jim left the OPA and I spoke
8 to--talked to him after he left the OPA. Nobody ever gave
9 me an indication of anything but basically what Brad
10 Duguid said.
11 Q. Do you know Mr. Pickens?
12 A. No, I do not.
13 Q. Did you know anybody at Mesa Power?
14 A. I believe Mr. Pickens passed away. Isn't that--
15 Q. Well, yeah.
16 At that time, did you talk to anybody at Mesa
17 Power about the Claim?
18 A. I did not talk to anybody in Mesa Power about
19 the Claim.
20 Q. And--
21 A. What I would like to explain, they're a
22 competitor, and they were behind me in the queue, so why
23 would I have an interest in that? I'm ahead of them in
24 the queue.
25 Q. And meanwhile--so you're now in the time period,
[Page 313]
1 so did you understand that it was impossible for Skyway
2 127 to get a contract in July 2011? Is that your
3 understanding?
4 A. It was impossible? Absolutely not. I thought
5 it was 90 to 100 percent possible because I knew certain
6 things. I knew there was still allegedly 450 megawatts
7 available because I had attended an ICO meeting, and there
8 are other documents--I can't remember them--saying there
9 were 400 megawatts. Only 750 megawatts was allocated to
10 the new contracts.
11 And I had a letter from the OPA Vice President
12 Joanne Butler saying we were still in the ranking, so--
13 Q. Can you--sorry to cut you off.
14 A. I was 90 to 100 percent sure we would get a
15 contract in the next FIT round.
16 Q. And when you--after--during this time period,
17 did Skyway do any further investments in this period after
18 July of 2011 based on your belief that you had a
19 90 percent chance of getting a contract despite your not
20 being in July 2011?
21 A. Yeah, we committed to about a quarter million
22 dollars in additional lease payments and continuation of
23 the met tower and Skyway 127 location.
24 Q. And was GE still a participant in the deal at
25 that point?
[Page 314]
1 A. Yes.
2 Q. And you talked--sorry. Go ahead, Mr. Pennie.
3 A. GE still believed that we had a chance, too.
4 Q. And we talked about--you were shown some
5 documents that shows the Share Registry--showing the Share
6 Registries showing the ownership levels of GE at various
7 times, and I guess your testimony is that GE came in and
8 out at one point?
9 A. Well, not at one point. Over a period of time
10 there were shares going back and forth primarily related
11 to the issues with Premier who didn't perform well and so
12 on and on forth, and GE desired to have a bigger position
13 in order to continue to provide the opportunity for
14 turbine availability.
15 Q. At any time whether--when they were at--in the
16 Project, were they--did they ever act out as other than as
17 a passive investor in terms of what you talked about
18 earlier?
19 A. No, they did not.
20 Q. You were--I'm sorry to jump around--the
21 challenges of redirect--go somewhat chronologically, so
22 we're now in 2013. At some point in 2015, the Shares are
23 transferred by yourself and your wife and your--and
24 Mr. Tennant to Tennant Travel. Do you remember that?
25 A. Yes.
[Page 315]
1 Q. Okay. And had you talked to an attorney about a
2 NAFTA claim prior to doing that?
3 A. Prior to...
4 Q. Prior to transferring the Shares of Tennant
5 Energy in January 2015, had you spoken to an attorney
6 about a NAFTA claim in January 2015?
7 Let me try to clarify it for you.
8 You testified that you met with Mr. Appleton, or
9 hired Mr. Appleton in May 2017; correct? March of 2017 I
10 misspoke.
11 (Overlapping speakers.)
12 A. Yes, that's when we hired him.
13 Q. Okay. I will make sure I get the dates.
14 A. 2017, I believe--
15 (Overlapping speakers.)
16 A. If you said 2017, that's correct.
17 Q. You met Mr. Appleton when?
18 A. In June, middle of June, 2015.
19 Q. Prior to meeting Mr. Appleton, had you spoken to
20 anybody about bringing a NAFTA claim in June 2015? A
21 lawyer.
22 A. No.
23 Q. And so, the transfer in January 2015 to Tennant
24 Energy, why was that done, Mr. Pennie?
25 A. Well, family business, and we wanted to
[Page 316]
1 consolidate everything under one holding company.
2 Q. Now, going back--sorry for jumping around--going
3 back to the 2013 time period, so after--so, you now
4 learned that they shut down the program in June 2013. Why
5 did Tennant Energy not sue then?
6 A. Well, I continued my contacts with the OPA. We
7 still were doing projects, so I didn't want to become
8 adversarial with the RESOP projects, and I was still
9 getting the same assurances that there was more
10 confirmation that there was still availability of capacity
11 in the Bruce Zone, so that potentially in the future the
12 Government might decide to release that, and so I wanted
13 to maintain the business or maintain Skyway 127 as a
14 corporation and be ready.
15 Q. And you testified you had not--you didn't know
16 about the, for example, the IPC issue at that point
17 because you learned that, really, two years later, over
18 two years later; is that right?
19 A. That's correct.
20 Q. At some point, though, you did reach out to
21 Mr. Appleton. What prompted that, Mr. Pennie?
22 A. Around the beginning of June in 2015, Chuck
23 Eddy, who was the President--
24 REALTIME STENOGRAPHER: Sorry, could you say
25 that name again?
[Page 317]
1 THE WITNESS: Chuck, C-H-U-C-K, E-D-D-Y, I
2 believe.
3 A. Chuck Eddy was the President of CANWEA, which is
4 the Canadian Wind Energy Association of which we were a
5 member, and he had involvement with the Mesa Group, so he
6 called me and said that I should look into the Mesa Power
7 Hearing, and that the attorney for Mesa Power was Appleton
8 & Associates. So I contacted Appleton & Associates. And
9 around June 15th and 16th, Derek and I met with him in his
10 office to see if we could find out what Mr. Eddy was
11 referring to, specifically whether there was any judgment
12 or whether there was any additional information, and
13 Mr. Appleton said everything was confidential and that he
14 couldn't really tell us anything, but if we wanted to find
15 out anything, we should look on the PCA website.
16 So, looking at the PCA website didn't help a lot
17 because the real revelation came still full of
18 accusations, still full of stuff that Canada was denying
19 and everything, and I don't remember the names of all of
20 the documents, but it wasn't until August 15th when the
21 PCA website had a redacted version of the Hearing, and I
22 was able to see the testimony of Sue Lo the Deputy
23 Minister, and Shawn Cronkwright, Jim MacDougall; Bob Chow,
24 who I didn't know personally, but had heard him speak in
25 meetings where he spoke.
[Page 318]
1 And what I saw there, even though it was
2 redacted was pretty shocking.
3 Q. Right.
4 And can you tell us what you saw there that was
5 so shocking that was different from what you saw before?
6 A. Well, I saw that IPC, International Power
7 Corporation, the President Mike Crawley was also the
8 President of the Ontario Liberal Party and the Federal
9 Liberal Party. They had gotten preferential treatment out
10 of the West of London Zone, and they had--they had
11 projects that didn't get contracts in the first go-round
12 of that zone, and I think they were blocked because in
13 June--in 2011--I'm trying to think of the date--it might
14 have been May; I'm not sure--the Minister of Energy had
15 issued a directive reserving 500 megawatts in the West of
16 London Zone for the Samsung Consortium, so it appeared
17 that he got blocked by that earlier, in contracts earlier,
18 so he was allocated given secret access to the Breakfast
19 Club which I had no idea even existed, senior officials to
20 connect into the Bruce, which was given in a five-day
21 window to change a connection point way back in June of--I
22 think it was June 4th, 2011. So, he had used that special
23 access to get contracts, and I wasn't aware of that until
24 then.
25 Q. Thank you.
[Page 319]
1 If I could just take a break, I would like to
2 talk with my counsel to see if there is anything else.
3 PRESIDENT BULL: Certainly, Mr. Mullins.
4 MR. MULLINS: Thanks so much.
5 (Pause.)
6 MR. MULLINS: That's all my questions for now.
7 Thank you, Mr. Pennie, for your time. I know it's been a
8 long day, morning or afternoon.
9 THE WITNESS: Thank you, Mr. Mullins. And thank
10 you, Mr. President.
11 PRESIDENT BULL: Let me just check with my
12 colleagues to see if they had any questions arising from
13 the redirect.
14 ARBITRATOR BISHOP: I have no questions.
15 ARBITRATOR BETHLEHEM: Neither do I.
16 PRESIDENT BULL: Then, Mr. Pennie, it looks like
17 your testimony is done for this arbitration. Thank you
18 very much for being here and for answering counsel's
19 questions.
20 MS. SQUIRES: I apologize to interject. I'm
21 wondering about the opportunity for recross. I know the
22 Procedural Order 1 does contemplate the possibility of
23 that for issues arising in the redirect at the Tribunal's
24 discretion, and I'm wondering if it's possible to ask just
25 one brief question.
[Page 320]
1 PRESIDENT BULL: What is it concerning?
2 MS. SQUIRES: The most recent information that
3 Mr. Pennie provided about the new knowledge he could only
4 have learned in August 2015 with respect to IPC.
5 PRESIDENT BULL: Ms. Squires, I will allow you
6 to ask that question and then Mr. Mullins will, of course,
7 have an opportunity to redirect after that.
8 So, Mr. Pennie, my apologies. I jumped the gun.
9 Ms. Squires has a question or two for you.
10 THE WITNESS: Thank you.
12 BY MS. SQUIRES:
13 Q. Again, apologies for making you sit through this
14 a little bit longer, Mr. Pennie.
15 I do want to confirm, your testimony just a
16 moment ago to Mr. Mullins' questions was that what you
17 specifically could not learn until August 2015 was that a
18 particular company, IPC, with connections to the Liberal
19 Party of Canada or Liberal Party of Ontario got
20 preferential treatment in 2001 and, therefore, they were
21 able to get a FIT Contract; is that right? 2011. Sorry.
22 Is that correct?
23 A. I believe that's what I said.
24 Q. Okay. And I'm wondering if we could haul
25 up--and I could get some help with the exhibit number--the
[Page 321]
1 Mesa--the Reply Memorial filed in the Mesa arbitration.
2 Give me just one second, and I will get an exhibit number.
3 VOICE: It should be R-78.
4 MS. SQUIRES: R-78.
5 VOICE: No, sorry.
6 MS. SQUIRES: No, that might not be right.
7 Apologies for this.
8 VOICE: C-182.
9 BY MS. SQUIRES:
10 Q. C-182.
11 And you want to turn to Paragraph 778. And I
12 want to take a look at this paragraph here.
13 So, here Mesa Power is referring to a Witness
14 Statement of Peter Wolchak, and Peter Wolchak is a
15 journalist who made a Witness Statement. If you want
16 confirmation, I could take you to the paragraph that's
17 provided in his Witness Statement. He is noting here a
18 relationship between NextEra and the Government of Ontario
19 that was not one-sided, and that the evidence demonstrates
20 that NextEra received significant beneficial treatment.
21 And if you go down a little bit further, it said NextEra
22 made corporate donations to the Ontario Liberal Party
23 around the time of June 3rd, 2011, which reached maximum
24 donations around the time of the June 3rd rule change.
25 So, here we see an example of Mesa alleging a
[Page 322]
1 FIT Proponent with connections to the Liberal Party of
2 Ontario having insider connections leading to a rule
3 change, and I want to be very clear of what your testimony
4 is.
5 Is it that you identify--you learned that IPC
6 was another political favorite in 2015, or that you did
7 not know if there was favorable treatment towards anyone
8 in 2015--until 2015?
9 A. First of all, as you can see, this is
10 Paragraph 778, so no, I did not review this document in
11 that detail, and I missed this or didn't see it, and I
12 don't know when exactly I looked at it briefly. So no, I
13 didn't know about that.
14 Q. Thank you, Mr. Pennie. Those are all my
15 questions, and I do appreciate your time.
16 PRESIDENT BULL: Mr. Mullins, anything to follow
17 up on?
18 MR. MULLINS: Not on that.
19 PRESIDENT BULL: Thank you.
20 Then, Mr. Pennie, thank you again for your
21 assistance and your testimony.
22 THE WITNESS: Again, Mr. President, Sir Daniel
23 and Mr. Bishop, I appreciate the opportunity to try to
24 shed some daylight on our findings and the fact that I
25 believe that you do have jurisdiction in this matter.
[Page 323]
1 PRESIDENT BULL: Right. Thank you.
2 (Witness steps down.)
3 PRESIDENT BULL: So, that, I think, brings us to
4 the end of today's work. Tomorrow, we have--
5 ARBITRATOR BETHLEHEM: Mr. President, can I just
6 raise a question. We had reflected through earlier--this
7 is the Tribunal--as to whether there may be any questions
8 we want to put to both Parties so they have them in mind
9 of advance of their closing. I do have one question or
10 one issue that I would like to raise, if you would permit
11 me to do so, although otherwise I'm happy to defer to
12 another day.
13 PRESIDENT BULL: No, no, I had not forgotten,
14 and I was leading up to that, but--let me explain that to
15 the Parties.
16 As I was saying, we have two witnesses we will
17 deal with tomorrow, so the Tribunal is aware we're still
18 in the midst of hearing from the Witnesses, but as
19 proceedings go ahead, there are some questions that come
20 to mind or issues that the Tribunal may have. And whilst
21 they are fresh in our minds, we might want to put them to
22 the Parties, not necessarily for an immediate response but
23 for you to follow up on in due course. And in that vein,
24 Sir Daniel had mentioned that he has some matters to
25 highlight to the Parties, and perhaps I give him the
[Page 324]
1 floor.
3 ARBITRATOR BETHLEHEM: Thank you very much. And
4 I'm looking here at Ms. Squires and Mr. Mullins, so I'm
5 addressing you.
6 I should say that I expressly do not invite an
7 answer now--this is for Friday--and I also expressly say
8 that I don't know whether the point that I'm about to
9 raise is relevant or if it's relevant, in which direction
10 it goes. It's just that it's a point that occurs to me in
11 the light of Mr. Pennie's evidence, you know, with a
12 caveat I might have missed it in the pleadings or perhaps
13 just sort of hidden away. There is a point that I would
14 like to put to you in the interest of transparency of at
15 least one Member of the Tribunal to whom this occurs.
16 In the Claimant's written pleadings, there is
17 quite a lot of reference, for good and proper reasons, to
18 the definitional parts of Chapter Eleven, Article 1139,
19 and in particular to the definitions of "investment" and
20 most particularly to the definitions of "an investment of
21 an investor of a Party" and the definition of "an investor
22 of a Party." And the definition of "an investment of an
23 investor of a Party" includes the language of "means an
24 investment owned or controlled directly or indirectly by
25 an investor of such a Party."
[Page 325]
1 Now, there is in the Respondent's pleadings a
2 passing reference--I think it's in two footnotes, but
3 there is no elaboration--to Philip Morris against
4 Australia--that's RLA-141--where there was quite a lot of
5 discussion about "control over," I think around about
6 Paragraph 508.
7 Now, in the light of Canada's First Objection
8 under 1116(a) or 1116(1), I would like to know whether
9 there is any issue that the Tribunal ought to be aware of
10 arising out of the testimony that we've heard in relation
11 to ownership and control because, as I say, it seems to be
12 an issue that's buried away but has not been addressed in
13 the pleadings of the Parties at least quite in these
14 terms, so I would invite you to file that away in your "to
15 address" box for Friday, if you could please just clarify
16 for me. And the relevant provisions, I think, as far as I
17 can see them, would be the implications of the definition
18 in 1139 for the language in 1101.
19 Thank you.
20 PRESIDENT BULL: Can I check if Mr. Bishop wants
21 to raise anything today?
22 ARBITRATOR BISHOP: Not at this time,
23 Mr. President. Thank you.
24 PRESIDENT BULL: Good.
25 Then I think we're done for today, and we can
[Page 326]
1 adjourn and resume with tomorrow's proceedings at the same
2 time that we began proceedings today. Thank you,
3 everyone. See you tomorrow.
4 MS. SQUIRES: Thank you.
5 MR. APPLETON: Thank you.
6 (Whereupon, at 1:57 p.m. (EST), the Hearing was
7 adjourned until 9:00 a.m. (EST) the following day.)
[Page 327]
I, David A. Kasdan, RDR-CRR, Court
Reporter, do hereby certify that the foregoing
proceedings were stenographically recorded by me and
thereafter reduced to typewritten form by
computer-assisted transcription under my direction
and supervision; and that the foregoing transcript
is a true and accurate record of the proceedings.
I further certify that I am neither counsel
for, related to, nor employed by any of the parties
to this action in this proceeding, nor financially
or otherwise interested in the outcome of this
litigation.
Signature
DAVID A. KASDAN