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Recent Judicial Developments of Interest to Oil and Gas Lawyers

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Recent Judicial Developments of Interest to Oil and Gas Lawyers RECENTJUDICIAL DEVELOPMENTS 293 RECENT JUDICIAL DEVELOPMENTS OF INTEREST TO OIL AND GAS LAWYERS STANLEYCARSCALLEN, Q.C., DONALD C. EDIE, Q.C., ROSA BECK AND VERA A. SLAWINSKI• Thepurpose of the article Is to provide a brief review le but de eel articleconsiste a/ournir un bre/ aperr11 of recent Canadianjudicial decisionsof interestto oil de.r recentes decisions judicia/res canadiennes and gas lawyers. The authors have surveyed illteressant/es avocats du domainepetro/ier et gazier. Canadian case law In the areas of government Les auteurs ont revu la jurisprudence canadienne regulation.conflicts, creditors rights. surfacerights. dans /es domaines de lu reg/ementalion contractsand tax. gouvernementale, des co'lflits. des drolls des creanciers,des droits de supe,f,cie, des contrats et des impots. TABLE OF CONTENTS I. ADMINISTRATIVELAW .••.....•....•.•......•......•......... 294 A. PARAMOUNTRESOURCES LTD. I'. ALBERTA {ENERGYAND UTILITIESBOARD) AND DEVON CANADA V. ALBERTA (ENERGY AND UTILITIESBOARD) . • . • . • . • . • . • . • . • . • . 294 8. DR. Q V. COLLEGEOF PHYSICIANSAND SURGEONS OF BRITISH COLUMBIA ................................... 296 C. lAWSOC/ETYOFNEWBRUNSWICKV. RYAN •.••...•........•.•. 298 D. Al.BERTA (ENERGY RESOURCESCONSERVA710NBOARD) I'. SARG OILS l7V. ..................................... 299 II. BUILDERS' LIENS .....•..•...•......•••..•..•.....•.•......• 302 A. PT/ GROUP V. ANG GATHERING& PROCESSINGLTD. {C.O.B. TRANSCANADAMIDSTREAM) •.•.•....•.•......•.....•. 302 B. TIME SEISMIC £\'Cl/ANGE LTD. I'. NORTHERN MOUNTAINHELICOPTERS .••......•.•...•..•.....••.....•. 304 III. CONFLICTOF LAWS . • . • . • . • . • . • . • . • . • . • • . • . • . • . • . 307 A. HERMAN V. ALBERTA {PUBLIC TRUSTEE) •......•.•...•.•...... 307 IV. CONTRACTS . • • • • . • . • • . • . • • . • • . • . • . • . • . • • . 307 A. AMJCAMPBEU I', KORDPRODUCTS .•.......•.....•.•...... 307 8. CANADIANBROADCASTING CORP. PENSION PLAN {TRUSTEEOF) V. BF REALTY HOLDINGSL7'D. •.••.....•.•....... 309 C. SOLWAr V. DA ns MOVING & STORAGE (C.O.B. KENNEDYMOVINGSYSTEMS) .•.•......•.............. 310 D. DEPAR MANAGEMENTLTD. I'. PIUTE PETROLEUMSLTD . ...•.••.•.....••........•.•...... 312 V. CREDITORS' RIGHTS . • . • . • • . • • . • . • . • . 3 14 A. ENRON CANADA (RtJ .•.•.•....•...................••.... 314 8. BATF.XENERGY L 1V. I'. ENRON CAN,IDA . • . • . 3 16 VI. EMPLOYMENT • . • . • . • . • • • • . • • • • • • . • . • • • . • . 3 18 A. MOTHERSELEV. GU!.F CANADA RESOURCESLTD. •............. 318 8. VARSITYPLYMOUTH CHRYSLER (/994) LTD. V. POMERLEAU........ 320 All with the Calgary finn CarscallenLockwood 1.1.P. 294 ALBERTALAW REVIEW (2004)42:1 C. WINDSHIPA V/ATIONLTD. V. DEMUEllES .•....••••...•.••..• · 321 VII. OCCUPATIONALHEALTH AND SAFETY ••••••....•.•.•... • ••••• , · , 322 A. R. V. GENERALSCRAP IRON & METALS LTD. • ••••.•.•••••...•• , 322 VIII. ENvlRONMENTALLAW ..•.•.••••.••.•.•.•.... ,,, •.. ,.,.,,,., • 324 A. R. V. PETRO-CANADA .•....••••••••.•.•..•.• , , , •••..•.• , • 324 IX. FREEHOLDLEASES ..••••.•...•.••••....•.•.••.•.•.• , •..•.. , • 325 A. FREYBERG V. FLETCHERCHALLENGE Oil AND GAS .... , , •.•...• , 325 B. MONTREAL TRUST V. WJU.ISTON WILDCATTERS •.•.•... , ..•.•. , , 329 X. GUARANTEES•....•.•..•.•.•.•.••.•.•....•..•.•...•..•.•.•. 330 A. SASKATCHEWANWHEAT POOL V. STRAIT CROSSING GROUP LTD. .•.•••••..•..•.• , •.•.•.. , , • , 330 B. DRYCO BUILDINGSUPPLIES V. WASYLISHYN•.••••.•...•••• , • , .. 331 XI. SURFACERIGHTS ......•.•••..•.••.•.•••.....•.•.•.•.•. , , • , • 332 A. ZUBICK V. CORRIDORPIPELINE LTD . •.•..•.•..•.•.•.•.• , . , , , , 332 XII. RIGHTSOF FIRST REFUSAL ......•.••.•.•.......•.•.•.•.•...• , • 334 A. CHASE MANHATTANBANK OF CANADA V. SU NOMA ENERGY ••••...• 334 XIII. ROYALTIES••......•.••.•.•.•.......•••.•..•.....•....•.•.• 336 A. NATIONAL TRUST V. JOHNSON .•..•.•.••.•..•.•.•.•.•..•. , , , 336 XIV. SET-OFF •.•.•.•.••.•..•.•......•.•.••.•..•.•.•.•.•..•.••• 338 A. ALGOMA STEEL V. UNION GAS LTD. •.•..•.•.••••.•......•.••• 338 xv. TAXATION .•••••.•.•••••••••.•..•.•.•••••••••.•......••••• 340 A. CNG PRODUCING V. ALBERTA (PROVINCIAL TREASURER) ....•.. , .•.•.•.••.•.••.•••.•.•.•. 340 B. RAINBOWPIPE LINE V. CANADA •......•...........•••.•.•.•. 341 C. MARKEVICH V. CANADA .•.••••.••••.•.•.......•.....•.•.•. 342 XVI. INJUNCTIONS ...•......•.•.•.•••••••••••.•..•..........•... 344 A. EXXON MOBIL CANADA ENERGY V. NOVAGAS CANADA LTD. • .•.•.••.•.•.•..•..•.•.....•....•• 344 XVII. SPLIT TITLE ...........•.•.•.•.••.•.••••.•..•.•.•.•.••.•.•• 347 A. ANDERSON V. AMOCO CANADA Oil AND GAS .•..••••••••••••••• 347 XVIII. CONFLICTSOF INTEREST........•.••.•.••••••.•••••••••••••••• 349 A. R. V. NEIL ...•.............•....•.•.....•.•.•.•.•••••.• 349 XIX. TORTIOUSINTERFERENCE WITH CONTRACTUAL RELATIONS .•.••.•... 353 A. VERCHER£ V. GREENPEACECANADA •.••••.•..•.•.•.•.••••.•• 353 I. ADMINISTRATIVELAW A. PARAMOUNT RESOURCES LTD.V. ALBERTA (ENERGY AND UTILITIES BOARD) AND DEVON CANADA V. ALBERTA (ENERGY AND UTILITIES BOARD) I. BACKGROUND In mattersbefore tribunalsthat employtheir own in-houseexpert staff,counsel have long been uneasy about the relationship between a panel hearing a particular dispute and that panel's staff. These cases illustratethat concernand begin to probe into the depths of this importantand delicate issue. RECENTJUDICIAL DEVELOPMENTS 295 2. FACTS During the course of a lengthy and complex hearing before the Alberta Energy and Utilities Board (AEUB), two issues concerningthe practice of the AEUB and its members and staff were brought before the Alberta Court of Appeal on applications for leave to appeal.1 The first applicationwas made by ParamountResources Ltd. (Paramount)in referenceto a paper scheduled to be presented by a senior member of AEUB staff at an industry conferencethat was held in Calgaryduring the course of the hearing.The topic of the paper dealt with issues that were before the AEUB in the hearing. The fact of the proposed presentationwas brought to the AEUB's attention and the AEUB issued a decision on the matter stating that no memberof the AEUB panel had read the paper, nor had there been any communicationhad between the panel members and the author of the paper. Paramount applied for leave to appeal the AEUB's decision, stating that the AEUB erred in law or jurisdiction by concludingthat there was no reasonableapprehension of bias, no violation of the principles of natural justice, nor any taint to the proceedings before the AEUB. Counselfor the AEUBargued on the applicationfor leaveto appeal that no direct or indirect communicationhad occurredbetween the author of the paper and the AEUB panel or AEUB staff and thus there was no impairmentof the AEUB's ability to consider the matters before it in the hearing impartiallyand fairly.2 The second application was made by Devon Canada (Devon) on the subject of the permissible scope of communicationbetween AEUB staff and the sitting AEUB panel.3 During the hearing, the AEUB had issued a letter stating that membersof the AEUB panel and AEUB staff would be conductingexaminations ofactual core samplesof the geological zones at issue in the hearing. Devonobjected to any communicationbetween staff and panel membersarising in connectionwith such examinations,as they were not conducted within the presence of hearing participants. This objection led to a broader discussion and submissionsto the AEUB by the hearing participantsregarding the extent of the allowable communicationbetween the membersof the AEUBpanel and the expert staff of the AEUB. In a decision of the AEUB dated 30 April 2002, the AEUBconcluded that "it was permitted to discuss the evidenceand argumentswith its staff in order to assist it in arriving at its own conclusions." 4 Devon sought leave to appeal the AEUB's finding, citing a denial of the principles of naturaljustice and, in particular,the principleof audi a/terampart em. Counselfor the AEUB presented evidence as to the nature of the legislativeprovisions governing the AEUB's use ofits staff. They arguedthat the principlesof naturaljustice were met with respect to the core examination,as the hearing participants were advised of the core in which the AEUB was ParamountResources ltd. v. Alberta (Energ)•andUtili11es Board), Decision of the Albcna Energyand Utilities Board, 21 June 2002: Appeal No. 02-0237 AC (02-0237 ACJ; Devon Canada v. Alberta (Energy and UtilitiesBoard) (2003), 3 Admin. L.R. (4th) I 54 (Alta. C.A.) [Devoti). 02-0237 AC, ibid. Decisionof theAlbcna Energyand Utilities Board,30 April 2002: AppealNo. 02-0174 AC [02-0174 AC]. (29 August2002), AEUBMemorandum of Argumentand Authoritiesof the Respondent[ unpublished). in ibid 296 ALBERTA LAW REVIEW (2004)42:1 interestedand were provided an opportunityin which to comment and address the other hearing participants' positions.Both applicationsfor leave to appeal were denied. 3. DECISION Dealingwith both applicationsin one writtenReasons for Decision,5McFayden J. found that the Devon applicationwas prematureand was more properlybrought as an appealof the finaldecision of the AEUB,and that the allegationof reasonableapprehension of bias in the Paramountapplication was not seriouslyarguable. 6 1 8. DR. Q V. COLLEGE OF PHYSICIANS AND SURGEONS OF BRITISH COLUMBIA I. BACKGROUND On 3 April 2003, the SupremeCourt of Canada simultaneouslyissued this decision and law Society of New Brunswick v. Ryan,8 discussed below. These two cases arose from appeals from decisions of administrativetribunals and address the principles involved in detenniningthe appropriatestandard of judicial review. 2. FACTS An inquiry committeeof the British ColumbiaCollege
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