Consumers' Waterheater Income Fund and The Consumers' Waterheater Operating Trust - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - relief for wholly owned subsidiary ofincome fund from the requirements to make an annual filing inlieu of an information circular, where applicable, file an AIF,where applicable, and have a current AIF in order to qualifyto file a short form prospectus, subject to certain conditions,including that the parent complies with such requirements andhas no assets or liabilities, other than securities of the subsidiary,of more than nominal value having regard to the total consolidatedassets of the parent.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 80(b)(iii) and 81(2).

Applicable Ontario Rules

Ontario Securities Commission Rule 51-501 -AIF and MD&A.

Applicable National Instruments

National Instrument 44-101 -- Short Form ProspectusDistributions.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

MANITOBA, ONTARIO, QUEBEC,NEW BRUNSWICK,

PRINCE EDWARD ISLAND, NEWFOUNDLANDAND LABRADOR,

NOVA SCOTIA, THE NORTHWESTTERRITORIES, NUNAVUT

AND THE YUKON TERRITORY

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

THE CONSUMERS' WATERHEATERINCOME FUND

AND

IN THE MATTER OF

THE CONSUMERS' WATERHEATEROPERATING TRUST

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, New Brunswick, Prince Edward Island, Newfoundland andLabrador, Nova Scotia, the Northwest Territories, Nunavut andthe Yukon Territory (collectively, the "Jurisdictions")has received an application from The Consumers' WaterheaterIncome Fund (the "Fund") and The Consumers' WaterheaterOperating Trust (the "Trust") for a decision underthe securities legislation of the Jurisdictions (the "Legislation"),that the requirements contained in the Legislation to:

(a) make an annual filing (an "AnnualFiling") with the Decision Makers in lieu of filing aninformation circular, where applicable;

(b) file an annual information form (an "AIF")with the Decision Makers, where applicable; and

(c) have a "current AIF" (as definedin National Instrument 44-101 -- Short Form Distributions("NI 44-101")) in order to qualify under NI 44-101to file a short form prospectus;

shall not apply to the Trust, subject to certainterms and conditions;

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the Principal Regulatorfor this application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 -- Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS the Fund and Trust have representedto the Decision Makers that:

The Trust

1. The Trust is an unincorporated open-endedlimited purpose trust established under the laws of Ontariopursuant to a declaration of trust dated November 18, 2002,as amended and restated on December 17, 2002 (the "TrustDeclaration").

2. The Trust's principal and head office islocated at 25 Sheppard Avenue West, Suite 1400, Toronto, OntarioM2N 6S6.

3. The Trust's financial year-end is December31.

4. The beneficial interests in the Trust aredivided into units of the Trust ("Trust Units").An unlimited number of Trust Units are issuable under theTrust Declaration. All of the issued and outstanding TrustUnits are held by the Fund. The Fund is also the sole holderof subordinated unsecured notes of the Trust (the "UnsecuredNotes") issued by the Trust from time to time in connectionwith its capitalization.

5. The Trust became a reporting issuer, orthe equivalent, in each of the provinces and territories ofCanada that provides for a reporting issuer regime upon thefiling of a prospectus of the Trust dated January 15, 2003,and the issuance of a final MRRS Decision Document in respectthereof, under which the Trust offered secured notes (the"Debt Securities"). The Debt Securities are non-voting,except in certain limited circumstances. To its knowledge,the Trust is currently not in default of any applicable requirementsunder the Legislation.

6. The unconsolidated interim and annual financialstatements of the Trust will be prepared, filed and deliveredto the indenture trustee in respect of the Debt Securities,and related management's discussion and analysis of the financialconditions and results of operations will be prepared, filedand delivered to security holders of the Trust in accordancewith applicable Legislation.

The Fund

7. The Fund is an unincorporated open-endedlimited purpose trust established under the laws of Ontariopursuant to a declaration of trust dated October 28, 2002,as amended and restated on December 4, 2002 (the "FundDeclaration").

8. The Fund's principal and head office islocated at 25 Sheppard Avenue West, Suite 1400, Toronto, OntarioM2N 6S6.

9. The Fund's financial year-end is December31.

10. The beneficial interests in the Fund aredivided into units of the Fund ("Fund Units"). Anunlimited number of Fund Units and special trust units ofthe Fund ("Special Trust Units") are issuable underthe Fund Declaration. As at April 4, 2003, there were issuedand outstanding 39,668,798 Fund Units and 9,855,294 SpecialTrust Units. Special Trust Units provide voting rights inrespect of the Fund to holders of securities exchangeableinto Fund Units.

11. The Fund became a reporting issuer, orthe equivalent, in each of the provinces and territories ofCanada that provides for a reporting issuer regime upon thefiling of a prospectus of the Fund dated December 5, 2002and the issuance of a final MRRS Decision Document in respectthereof, under which the Fund offered Fund Units. The FundUnits are listed and posted for trading on the Toronto StockExchange. To its knowledge, the Fund is currently not in defaultof any applicable requirements under the Legislation.

12. The board of trustees of the Fund is,and pursuant to the Fund Declaration is required to be, identicalto the board of trustees of the Trust.

13. The administrative agent of the Fund isalso the administrative agent of the Trust. The administrativeagent provides advice and counsel with respect to the administrationof the day-to-day operations and affairs of the Fund and theTrust and other matters as may be requested by the Trusteesof the Fund and the Trust from time to time.

14. The Fund has no assets or liabilities(other than the Trust Units and the Unsecured Notes held byit) of more than nominal value having regard to the totalconsolidated assets of the Fund.

15. The Fund carries on no business otherthan its investment in the Trust.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers inOntario, Alberta, Saskatchewan, Nova Scotia and Newfoundlandand Labrador is that the requirement contained in the Legislationto make an Annual Filing with the Decision Makers in Ontario,Alberta, Saskatchewan, Nova Scotia and Newfoundland and Labradorin lieu of filing an information circular shall not apply tothe Trust for so long as:

(i) the Fund remains a reporting issuer underthe Legislation of those Jurisdictions providing for reportingissuer status;

(ii) the Fund files with the Decision Makersin Ontario, Alberta, Saskatchewan, Nova Scotia and Newfoundlandand Labrador, in electronic format under the Trust's SEDARprofile, the Fund's Annual Filing or information circular(the "Documents"), as applicable, at the same timeas they are required under the Legislation, where applicable,to be filed by the Fund;

(iii) the Trust pays all filing fees thatwould otherwise be payable by the Trust in connection withthe filing of the Documents;

(iv) the Fund sends the Documents to the securityholders of the Trust to the extent required under the Legislationat the same time and in the same manner as if the securityholders of the Trust were security holders of the Fund; and

(v) the Fund has no assets or liabilities(other than the Trust Units and the Unsecured Notes held byit) of more than nominal value having regard to the totalconsolidated assets of the Fund and carries on no businessother than its investment in the Trust.

May 26, 2003.

AND THE FURTHER DECISION of the DecisionMakers in Ontario, Saskatchewan and Quebec is that the requirementcontained in the Legislation to prepare and file an AIF withthe Decision Makers in Ontario, Saskatchewan and Quebec shallnot apply to the Trust for so long as:

(i) the Fund remains a reporting issuer underthe Legislation of those Jurisdictions providing for reportingissuer status;

(ii) the Fund files with the Decision Makersin Ontario, Saskatchewan and Quebec, in electronic formatunder the Trust's SEDAR profile, the AIF of the Fund at thesame time as it is required under the Legislation, where applicable,to be filed by the Fund;

(iii) the Trust pays all filing fees thatwould otherwise be payable by the Trust in connection withthe filing of the AIF;

(iv) the Fund sends the AIF to the securityholders of the Trust to the extent required under the Legislationat the same time and in the same manner as if the securityholders of the Trust were security holders of the Fund; and

(v) the Fund has no assets or liabilities(other than the Trust Units and the Unsecured Notes held byit) of more than nominal value having regard to the totalconsolidated assets of the Fund and carries on no businessother than its investment in the Trust.

May 26, 2003.

"John Hughes"

AND THE FURTHER DECISION of the DecisionMakers pursuant to the Legislation is that the requirement thatthe Trust have a current AIF in order to qualify under NI 44-101to file a short form prospectus shall not apply, provided that:

(i) the Fund has a current AIF; and

(ii) the Fund has no assets or liabilities(other than the Trust Units and the Unsecured Notes held byit) of more than nominal value having regard to the totalconsolidated assets of the Fund and carries on no businessother than its investment in the Trust.

May 26, 2003.

"John Hughes"