Mobil Oil Canada Ltd. v Canada

Mobil Oil Canada Ltd. v. Canada
Mobil Oil Canada Ltd. v. Canada-NewfoundlandOffshore Petroleum Board[1994] 1 SCR, 202
Court	Supreme Court of Canada
Administrative Law
Jugement	Justice Iacobucci
Author	Thavisha Anthony

The appellants of this case; Mobil Oil Canada Limited., Gulf Canada Resources Limited, Petro-Canada Inc., and Chevron Canada Resource Limited(“the companies”) interested owners under the statutory regime which governed petroleum exploration and development in the Newfoundland offshore region.[1]Administrative jurisdiction in this area is given to the Canada-Newfoundland Offshore Petroleum Board (the “Board”) pursuant to the Acts: Canada Oil and Gas Act (1986) and the repealed act under Canada-Newfoundland Atlantic Accord Implementation Act (the Implementation Act) of 1987.[2]

Facts

In 1982 the companies drilled a well called the “Nautilis well” and requested a “significant discovery declaration” (SDD) under Canada Oil and Gas Act (1986),the application in question is the one made in 1990 where the companies applied again for a SDD under the repealed Act in regard to the same Nautilis well.[3] The Chairman of the Board, pursuant to section 71 of the Implantation Act wrote a letter to the companies regarding the SDD application, stating that it would not be put before the Board “because any application for an additional significant discovery would have to be based upon the result of a well other than Natilus well and because no additional well has been drilled, the application for a SDD cannot be granted.”[4]Upon this rejection, the companies applied to the Newfoundland Supreme Court seeking a certiorari to quash the decision by the Chairmen and requested an order of mandamus for the Board to reconsider the application in accordance with section 124 of the Implementation Act providing an oral hearing before the Oil and Gas Committee (the Committee).[5] The Board appealed and the Newfoundland Court of Appeal, held that the companies were entitled for an initial hearing before the Board, not the Committee. The Companies appealed and the Board cross appealed.

Issue for the Supreme Court of Canada

       i.   Whether a SDD under section 71(1) of the federal Implementation Act involve an off shore well which has never been subjected of an earlier SDD?

      ii.   Once a SDD application have been submitted to the Board, does the Board have an obligation to refer the application to the Committee?

    iii.   Whether, Chairmen denying application without an oral hearing abridged procedural fairness owed to the companies?

Outcome

Newfoundland Supreme court, Trial judge Wells J: Questioned what a “significant discovery” is according to s. 71, he stated the application can be disregarded unless a well has been drilled, but he found no statutory authority to conclude there was a threshold test established. Wells J stated that legislators intended to provide a high degree of procedural fairness in SDD application, and the Board failing to grant companies a hearing contravened the principle of natural justice. Thus, Wells J quashed the decision and ordered a mandamus. The Board appealed this decision.

Newfoundland Court of Appeal, Gushue J.A: he too agreed there is no mechanism for the determination of what a “significant discovery” is per se as section 47 of the Act appears to have an apparent gap in the legislation.[6] He held that since there was no new well drilled, there was no significant discovery declaration. However, Gushue J.A stated that the Companies were stripped of their procedural fairness rights, and should have been afforded the right to a hearing before the Board, and not the Committee.[7]

Supreme Court of Canada: leading judgment given by Iacobucci J.

Issue i: whether “significant discovery” meant a fresh new well.

Iacobucci J: considered what “significant discovery” meant through reading section 71 and 47 of the Implementation Act. He stated in s. 47 “significant discovery” meant discovery indicated by the first well on a geological feature, and there was nothing ambiguous about this section.[8] He went on to state that s.47 meaning of “first well” obviously meant “first and only well”. In addition, he took the plain English view of what “discovery” meant, a “new” and “one” discovery per geological area. Therefore, for such reasons, Iacobucci J rejected the companies’ position for an application of SDD to be granted under s. 71 of the Act, for it has to be a fresh well. He concluded that this argument will not have succeeded as a matter of law.

Issue ii and iii: Did the Board require the application to be referred to the Committee, and whether the Chairmen breached companies procedural rights.

Iacobucci J: agrees with the Court of Appeal for an application of SDD to be sent to the Committee; it involves a matter of a technical issue.[9]A “significant discovery” issue fall into the technical issue category as per section 71, and as a result, the Board must consider the recommendations of the Committee as per procedural fairness. However, Iacobucci J concludes “SDD application made in the absence of a fresh well is a non-technical issue which could not have benefited from the Committee input”[10] since there was only one well at issue (Nautilus well) which was previously subjected to a SDD in 1986, it cannot be a fresh well; thus, does not need to be sent to the Committee. Iacobucci J’ concluded that the Board had the jurisdiction to reject companies’ 1990 application without sending it to the Committee. Iacobucci J argues because of the effect of such a decision to the affected parties, it would be inconsistent to disregard companies’ rights of procedural fairness. For such reasons it would be appropriate to allow the decision to be quashed and compel the Board to reconsider. However given the facts of the case, the Board will be bound in law to reject the application based on the meaning of “significant discovery.”[11] (The issue of procedural fairness and principles of natural justice, will be combined with the significance of this case)

Significance to Administrative law

Although this case is particular to the area of offshore activities, it did raise issues of procedural fairness and principle of natural justice connected to Administrative law, as the Board disregarded the applicant’s right to a fair hearing. As Iacobucci J states, based on previous cases, when procedural guarantees are at issue, it is important to consider the relationship between the affected party and the decision- maker and the effect of the decision.[12]

The decision given by the Chairman was of “final nature” and the parties affected were interest owners, meaning there was large sums of money involved. The relationship between the interest owners and the Board is significant as the effect of the decision may have adverse effects on the interest owners,[13] thus owing a higher degree of procedural fairness to the companies. Iacobucci J states although there are no technical issues in this case, it would be inconstant to reject a novel legal argument without affording the applicant any procedural protection. He saw the Chairman’s response “application could not be brought before the Board because it was not bona fide” as a product of an improper subdelegation which interrupted companies right to a fair hearing.[14]However, as mentioned above, although procedural fairness arguments would lead the Court to quash Chairman’s decision, it is nonsensical to compel the Board to reconsider, as they would be forced to make the same decision just in fair conditions.

The decision of the Chairman stripped the applicant’s right to be heard; the Chairman was found to be acting ultra-virus of his power. As Professor Wade of Administrative Law (6th ed. 1988) suggests, procedural fairness should be given first priority, and case facts should not trump issues of procedural fairness breaches. [15] This case is significant to administrative law as it illustrates the importance of procedural rights such as the right to be heard, and effects of such breaches of rights have on applicants and tribunals themselves.

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References == [1]Mobil Oil Canada Ltd. v. Canada-Newfoundland Offshore Petroleum Board[1994] 1 SCR, 202

[2] Ibid, 207

[3] ibid

[4] Ibid 209

[5] Ibid

[6]Ibid, 213

[7]Ibid, 214

[8]Ibid, 215-216

[9]Ibid, 221

[10]ibid 223

[11]Ibid, 228

[12]Ibid, 224

[13]Ibid, 225

[14]Ibid, 227

[15]Ibid 228