Date: 20030424
Docket: T-1305-01
Neutral citation: 2003 FCT 478
BETWEEN:
IMPERIAL OIL RESOURCES LIMITED
Applicant
and
ROBERT D. NAULT, IN HIS CAPACITY AS MINISTER OF INDIAN AFFAIRS
AND NORTHERN DEVELOPMENT, HER MAJESTY THE QUEEN IN RIGHT OF CANADA as represented by the EXECUTIVE DIRECTOR ON INDIAN OIL
AND GAS CANADA, THE ATTORNEY GENERAL OF CANADA,
ERMINESKIN FIRST NATION, LOUIS BULL FIRST NATION,
MONTANA FIRST NATION and SAMSON CREE FIRST NATION
Respondents
INTRODUCTION
[1] These reasons arise out of an application for judicial review of a decision of the Minister of Indian Affairs and Northern Development dated the 13th of June, 2001 to the following effect:
By order of the Federal Court of Canada dated January 15, 1998, and upheld December 14, 1999, by the Federal Court of Canada, Appeals Division, a portion of Minister Ron Irwin's decision of November 25, 1996, has been quashed. The quashed portion of the decision dealt with a request by Imperial Oil Resources Limited (IORL) (letter dated February 14, 1995) that the Minister review a confirmation by the Executive Director of Indian Oil and Gas Canada (IOGC) (letter dated December 16, 1994) that IOGC would commence an audit of IORL's pre-1986 product price records for Pigeon Lake I.R. No. 138A.
Please disregard my letter of May 3, 2000, on this matter. Upon further consideration, I have decided to, again, formally review the Executive Director's decision. The four First Nations will be invited to make representation to me on this matter. My office will be in contact with Senior Counsel for IORL regarding matters of process.[1]
[2] The decision of the Executive Director (IOGC) referred to in the foregoing quotation is contained in a letter dated the 16th of December, 1994 from IOGC to IORL and is reflected in the following paragraphs:
Imperial Oil Resources Limited ("Imperial") is hereby informed that Indian Oil and Gas Canada ("IOGC") does intend to audit Bonnie Glen product prices prior to 1986, as stated in our letters of November 14, 1994 and December 2, 1994.
Bonnie Glen product prices prior to 1986 have not been audited by IOGC in the past. Findings of the audit of the period 1986 through 1988 indicate that incorrect product pricing was used for propane, butane and sulphur throughout that period. Imperial has agreed that these products were incorrectly priced and has submitted corrected royalties, not only for the audit period but also for some time afterward; January 1986 through February 1992 with respect to propane and butane, and January 1986 through December 1989 with respect to sulphur. IOGC has requested, but has not received, any assurances from Imperial that their systematically incorrect product pricing did not occur prior to 1986. Therefore, an audit of product prices will be undertaken, beginning with 1985 and working backwards until IOGC is satisfied that a point in time has been reached before which royalties were correctly paid.[2]
[3] In these reasons, Robert D. Nault, in his capacity as Minister of Indian Affairs and Northern Development, will be referred to as the "Minister". The Executive Director of Indian Oil and Gas Canada will be referred to as "IOGC". Imperial Oil Resources Limited will be referred to as the "Applicant".
[4] In the Memorandum of Fact and Law filed on behalf of the Applicant, the following summary appears under the heading "ORDER SOUGHT":
...the Minister of Indian Affairs has no jurisdiction or authority to again review the Executive Director's decision. In addition, there is no basis or purpose to conduct a further review of the Executive Director's decision. It is wholly unfair for the Minister to engage in a review process where the issues have already been determined, but where IORL's property and contractual rights may again be affected. As such, IORL seeks an Order of this Court granting the following:
(a) An Order prohibiting Minister Nault from again formally reviewing the Executive Director's decision;
(b) An Order quashing Minister Nault's decision of June 13, 2001 that seeks to again formally review the Executive Director's decision; and
(c) Costs of this application.[3]
BACKGROUND
[5] This is not the first time that the background to this application for judicial review has been before this Court. The decision of IOGC just quoted was the subject of review by the then Minister. The Minister issued a decision arising out of that review. That decision became the subject of judicial review before this Court. In his reasons arising out of that application for judicial review, Justice Rothstein, then of the Trial Division of this Court, described the background of the application before him in the following terms:
...This is a judicial review of a decision of the Minister of Indian Affairs and Northern Development (Minister) dated November 25, 1996 made under the Indian Oil and Gas Regulations 1995, SOR/94-753. The Minister's decision arose by reason of an application by the applicant, Imperial Oil Resources Ltd. ("IORL") to the Minister to review earlier decisions made by the Executive Director of Indian Oil and Gas Canada ("IOGC"). ...
The issue involves royalties on products of natural gas extracted from certain lands at or near Bonnie Glen, Alberta on the Pigeon Lake Indian Reserve No. 138A payable by the applicant to her Majesty in Right of Canada in Trust for the Sampson [sic], Ermineskin, Louis Bull and Montana Indian Bands. The relevant period is August 1, 1979 to December 31, 1985. During this time, Texaco Canada Resources Limited ("TCRL"), predecessor in title to the applicant, was the lessee and operator of the Bonnie Glen gas producing facility. TCRL sold gas products from the Bonnie Glen facility to an affiliated company, Texaco Canada Incorporated ("TCI") at the Bonnie Glen plant gate. Under an agreement between TCRL and TCI, TCI undertook to market gas products acquired from TCRL and to pay TCRL ninety-five percent of TCI's downstream sale price, netted back (i.e., after deducting transportation and other costs incurred beyond the plant gate) to the Bonnie Glen plant gate. ... Payment of 95% of TCI's resulting sale price netted back reflected a five percent marketing fee deduction by TCI from the final selling price. Royalties were calculated on the plant gate price, i.e. ninety-five percent of TCI's selling price netted back to the plant gate.
The Executive Director of IOGC formed the opinion that the five percent marketing fee should not have been deducted before calculation of royalties. As a result, he decided to conduct a formal audit of gas product prices prior to January 1, 1986. It was this decision that gave rise to the applicant's appeal to the Minister.
The Minister concluded that the Executive Director of IOGC had the right to examine, including the right to audit, the pre-1986 records of the TCRL and TCI. The Minister also determined that the five percent marketing fee was improperly deducted and required that the deduction be totally eliminated. The relevant portions of the Minister's decision state:
"The second review requested was of the Executive Director's decision in 1994 to audit product prices for the period prior to 1986. It is my conclusion that IOGC has the right to examine, including conducting an audit, pre-1986 records of Imperial and its affiliates, including marketing and sales records. Imperial's request in this matter is therefore denied. In any follow-up on this matter the Executive Director may consider that if sufficient documents were disclosed by Imperial during the course of the examination, IOGC's audit may no longer be necessary. The Executive Director may take such further actions as he determines necessary to resolve the matter.
"Incidental to the review, I have also considered the issue of the marketing fee deduction itself. Despite the passage of time, the record is clear that Imperial's predecessor improperly deducted a five percent marketing fee from the prices of natural gas products, other than ethane and pentane plus, in the period August 1979 through December 1985. Because of the nature of my responsibilities to First Nations, an adjustment by Imperial to totally eliminate this deduction will be required."
...
The review by the Minister was conducted under s. 57(2) of the Indian Oil and Gas Regulations 1995. Section 57 provides:[4]
... [citations omitted, section 57 of the Indian Oil and Gas Regulations, 1995 appears later in these reasons]
[6] Justice Rothstein found in favour of IORL. His Order was in the following terms:
(1) The decision of the Minister dated November 25, 1996 be and the same is hereby quashed.
(2) Without restricting the foregoing it is hereby decided that in the circumstances of this case and for the period ending December 31, 1985;
(a) There is no evidence that the actual selling price at the plant gate was less than fair market value;
(b) The Regulations do not authorize the Respondents to treat the marketing fee of a downstream affiliated entity as an expense of the operator for royalty calculation purposes, nor do the regulations authorize the Respondent to treat affiliated corporations as one and the same;
(c) There was no evidence disclosed on the record that there was an improper deduction of a 5% marketing fee for royalty calculation purposes; and
(d) The power to examine records of an operator under paragraph 42(1)(b) of the Regulations does not include the power to audit, nor does that power extend to an entity affiliated with the operator.[5]
[7] Following the confirmation of Justice Rothstein's decision by the Court of Appeal, the Minister wrote IORL on the 3rd of May, 2000 in the following terms:
By Order of the Federal Court of Canada dated January 15, 1998, and upheld December 14, 1999 by the Federal Court of Canada, Appeals Division, a portion of then Minister Irwin's decision of November 25, 1996 is quashed. The quashed portion dealt with Imperial Oil Resources Limited's (IORL) February 14, 1995 request that the Minister review the Executive Director of Indian Oil and Gas Canada's (IOGC) confirmation on December 16, 1994 that IOGC would commence an audit of IORL's pre-1986 records re Pigeon Lake I.R. No. 138A product prices. The courts have therefore effectively quashed the Executive Director's confirmation to commence the audit.
It is my understanding that the underlying issues, which led to the Executive Director of IOGC's 1994 decision to audit Imperial, remain unresolved. I am instructing the Executive Director, by copy of this letter, that he should contact IORL soon about resolving the underlying issues as well as the matter of the audit.[6]
[8] By letter of even date, the Minister wrote counsel for the Samson Cree First Nation, essentially in the terms of his letter to IORL, but with the following addition:
...I am instructing the Executive Director, by copy of this letter, that he should contact you soon to invite representation made to him by or on behalf of Samson Cree First Nation in this matter.[7]
[9] IOGC followed up on the Minister's letters to IORL and to counsel for the Samson Cree First Nation. Not to put too fine a point on things, no progress would appear to have been made,[8] and no further decision would appear to have been taken by IOGC.
[10] In the result, the issues between IOGC and IORL now before the Court, affecting as they do the interests of Ermineskin First Nation, Louis Bull First Nation, Montana First Nation and Samson Cree First Nation, went back the Minister. The decision letter here under review followed.
THE STATUTORY SCHEME
[11] IOGC is a branch of the Department of Indian Affairs and Northern Development responsible for the management and administration of exploration, development and exploitation of oil and gas reserves on Indian lands. "Indian lands" is a term defined in the Indian Oil and Gas Act[9]. That definition is in the following terms:
2. In this Act,
...
"Indian lands" means lands reserved for the Indians, including any interests therein, surrendered in accordance with the Indian Act and includes any lands or interests in lands described in any grant, lease, permit, licence or other disposition referred to in section 5;
2. Les définitions qui suivent s'appliquent à la présente loi.
...
« terres indiennes » Les terres réservées aux Indiens et tous droits y afférents cédés conformément à la Loi sur les Indiens, y compris les terres ou les droits fonciers visés par une concession, un bail, un permis, une licence ou tout autre acte d'aliénation visé à l'article 5.
[12] The Indian Oil and Gas Regulations, 1995[10] have been enacted pursuant to the Indian Oil and Gas Act and subsection 19(1) of the Financial Administration Act[11]. Those Regulations provide the mandate of IOGC and of its Executive Director.
[13] Section 57 of the Indian Oil and Gas Regulations,1995 is in the following terms:
57. (1) A person who is dissatisfied with a decision, direction, action or omission of the Executive Director under these Regulations may, within 60 days after the decision, direction or action or, in the case of an omission, within 60 days after the day on which the omission was discovered or ought to have been discovered, apply in writing to the Minister for a review of the decision, direction, action or omission.
(2) The Minister shall review an application made pursuant to subsection (1) and advise the applicant in writing of the final decision in the matter.
57. (1) Quiconque n'est pas satisfait d'une décision ou d'un ordre du directeur exécutif ou de toute mesure prise ou omise par lui selon le présent règlement, peut, dans les 60 jours suivant la décision, l'ordre ou la mesure ou, dans le cas d'une omission, dans les 60 jours suivant le jour où l'omission a été ou aurait dû être découverte, demander par écrit au ministre de réviser la décision, l'ordre, la mesure ou l'omission en cause.
(2) Le ministre doit réviser la demande visée au paragraphe (1) et aviser le demandeur par écrit de sa décision finale.
[14] The original decision of IOGC to audit Bonnie Glen product prices prior to 1986, quoted earlier in these reasons, purported to be taken under the authority of the Indian Oil and Gas Regulations, 1995. IORL was dissatisfied with that decision and applied in writing to the Minister for a review of the decision, in accordance with section 57 of the Indian Oil and Gas Regulations, 1995. It was the decision of the Minister on that review that came before Justice Rothstein and the Court of Appeal, as earlier referred to in these reasons.
[15] What are now at issue before this Court are the actions or decisions of the Minister, purportedly taken pursuant to section 57 of the Indian Oil and Gas Regulations,1995 and arising out of the same factual background, since the decision of the Federal Court of Appeal.
THE ISSUES
[16] In the Memorandum of Fact and Law filed on behalf of IORL, the sole point at issue on this application for judicial review is stated in the following terms:
Whether the Minister of Indian Affairs has the jurisdiction to again formally review the Executive Director's decision to conduct an audit of IORL's product prices prior to January 1, 1986 when this decision has already been the subject of review by his predecessor and was subsequently quashed on judicial review [and which quashing was] upheld on appeal.[12]
[17] The submissions on behalf of IORL are presented under two (2) headings, namely, "jurisdiction" and "improper purpose". Within the discussion of "jurisdiction", the issue of "functus officio" is raised. Functus officio was argued on behalf of IORL on the first day of hearing of this application for judicial review which was the 4th of December, 2002. Following submissions on behalf of IORL on that date, the hearing was adjourned to allow the question of functus officio to be further developed. The hearing of the application for judicial review resumed and was completed on the 14th of March, 2003.
[18] I am satisfied that the outcome of this application for judicial review turns on the issue of functus officio and not on the issue of improper purpose.
ANALYSIS
a) Jurisdiction and Functus Officio
[19] The substance of Justice Rothstein's Order on the earlier application for judicial review that arose out of the same facts here before the Court is quoted earlier in these reasons. Justice Rothstein quashed the decision of the Minister that was before him, that being the Minister's decision of the 25th of November, 1986. He did not refer the issue that was before the Minister back to the Minister for redetermination. Notwithstanding that fact, I am satisfied that, following Justice Rothstein's decision and the confirmation of that decision by the Federal Court of Appeal, it remained open to the Minister to undertake a reconsideration of the subject matter of the decision that was quashed.
[20] "Quash" is defined in The Shorter Oxford English Dictionary on Historical Principles [13] to mean "to annul, to make null or void (a law, decision, election... etc.); to throw out ... as invalid; to put an end to (legal proceedings). ... To bring to nothing; ...". In the same dictionary "null" is defined to mean "to reduce to nothing... to annul, cancel, make void... ." Thus, I conclude that the impact of Justice Rothstein's Order, as affirmed on appeal, was to signify that the legal proceeding that was before him was at an end and that the decision that was the subject of that proceeding was rendered non-existent or as nothing.
[21] In Brett v. Ontario (Board of Directors of Physiotherapy)[14], in an endorsement on the appeal record, the Ontario Court of Appeal stated that: "Consequently, while it may be technically correct to say that a reviewing court has no discretion to deny a rehearing, it may refuse to order one", and referred to the following passage from the reasons of Lord Justice Denning in R. v. Northumberland Compensation Appeal Tribunal[15]:
. . . the Court of King's Bench has an inherent jurisdiction to control all inferior tribunals, not in an appellate capacity, but in a supervisory capacity. . . .The King's Bench does not substitute its own views for those of the tribunal, as a court of appeal would do. It leaves it to the tribunal to hear the case again, and in a proper case may command it to do so.
[22] In Chandler v. Alberta Assn. of Architects[16], Justice Sopinka, for the majority, wrote at page 597:
Traditionally, a tribunal, that makes a determination which is a nullity, has been permitted to reconsider the matter afresh and render a valid decision.
For this proposition, he cited Justice McLachlin as she then was in Re Strizec Equities Ltd. v. Burnaby-New Westminster Area Assessor[17] to the following effect:
I am satisfied both as a matter of logic and on the authorities that a tribunal which makes a decision in the purported exercise of its power which is a nullity, may thereafter enter upon a proper hearing and render a valid decision: ...
[23] That is precisely what the Minister here purported to do following the quashing of his first decision by this Court. I am satisfied based on the foregoing definitions and authorities that he was entitled to act as he did.
[24] Thus, the Minister once again had before him the review or appeal of the IOGC decision contained in a letter dated the 16th of December, 1994 that is quoted earlier in these reasons. He determined by his letters of the 3rd of May, 2000, also quoted earlier in these reasons, to refer the issue of Bonnie Glen product pricing prior to 1986 back to IOGC for resolution of the "underlying issues as well as the matter of the audit", in consultation with IORL and taking into account any representations made on behalf of Samson Cree First Nation and, presumably, the other affected First Nations that are respondents on this application.
[25] I am satisfied that the Minister thus disposed of the review or appeal that was before him. I am further satisfied that the disposition was a final disposition in that there is no indication on the material before this Court that he intended to remain seized of the review or appeal or that he intended IOGC to report back to him for his further consideration of the matter. Even if he had so intended, I am satisfied that, given the language in which he returned the matter to IOGC, his intention could not have prevailed. Once he divested himself of the matter as he did, the Regulations simply did not vest him with authority to call the matter back before him. Only a further appeal under section 57 of the Regulations of a further decision by IOGC could have achieved that result.
[26] Once again in Chandler, supra, Justice Sopinka wrote at page 596:
As a general rule, once such a tribunal has reached a final decision in respect to the matter that is before it in accordance with its enabling statute, that decision cannot be revisited because the tribunal has changed its mind, made an error within jurisdiction or because there has been a change of circumstances.
[27] After the Minister referred the Bonnie Glen pricing issues back to IOGC and IOGC apparently found itself once again in difficulty in attempting to resolve the issues, IOGC apparently returned to the Minister. The decision here under review followed. The decision under review was, I am satisfied, the result of a "revisiting" of the Minister's decision of the 3rd of May, 2000. This is borne out by the terminology of the decision letter that is here under review. In that decision letter, the Minister wrote:
Please disregard my letter of May 3, 2000 on this matter. Upon further consideration, I have decided to, again, formally review the Executive Director's decision. ...
[28] Thus, by the decision under review, the Minister purported to do that which, "...as a general rule...", Justice Sopinka indicates he was precluded from doing. I am satisfied that none of the exceptions to the "general rule" identified by Justice Sopinka are applicable on the facts of this matter.
[29] In the result, I am satisfied that the Minister was functus officio when he purported to make the decision that is here under review. That decision will therefore be quashed.
[30] I find no basis on the material that is before the Court to conclude that the decision under review was made for an improper purpose.
CONCLUSION
[31] An Order will go quashing the decision of the Minister that is here under review, as reflected in the Minister's letter dated the 13th of June, 2001, the substance of which is quoted in paragraph [1] of these reasons and prohibiting the Minister from further reviewing the decision of the Executive Director of Indian Oil and Gas Canada, as quoted in paragraphs [4] of these reasons.
COSTS
[32] The Applicant is entitled to its costs against the Minister, taxed on the ordinary scale if not earlier agreed upon.
[33] The Louis Bull First Nation and Montana First Nation are entitled to a single set of costs as against the Minister, once again taxed on the ordinary scale unless earlier agreed upon.
[34] The Samson Cree First Nation is entitled to its costs as against the Minister taxed on the ordinary scale if not earlier agreed upon.
[35] There will be no order of costs for or against the Ermineskin First Nation which filed no material on this application and which was not represented at hearing.
___________________________________
J. F.C.C.
Ottawa, Ontario
April 24, 2003
FEDERAL COURT OF CANADA
TRIAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1305-01
STYLE OF CAUSE: IMPERIAL OIL RESOURCES LTD. v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: December 4, 2002 and March 13, 2003
REASONS FOR ORDER OF THE HONOURABLE MR. JUSTICE GIBSON
APPEARANCES:
Ms. Heather L. Treacy
Mr. E. David Tavender, Q.C. FOR APPLICANT
Ms. Lynn Cunningham FOR RESPONDENT, MINISTER OF INDIAN AFFAIRS AND NORTHERN DEVELOPMENT
Mr. Doug Rae
Mr. Tibor Osvath FOR RESPONDENT, SAMSON CREE FIRST NATION
Mr. Craig Tomalty FOR RESPONDENTS, LOUIS BULL FIRST NATION and MONTANA FIRST NATION
No representation FOR RESPONDENT, ERMINESKIN FIRST NATION
SOLICITORS OF RECORD:
Fraser Milner Casgrain LLP FOR APPLICANT
Barristers and Solicitors
3000, 5th Avenue Place
237 - 4th Avenue SW
Calgary, Alberta
Department of Justice Canada FOR RESPONDENT, Robert D.
Edmonton Regional Office Nault
211, Bank of Montreal Building
Edmonton, Alberta
Miller Thomson FOR RESPONDENTS,
Barristers and Solicitors Louis Bull First Nation
3000, 700 - 9th Avenue S.W. and Montana First Nation
Calgary, Alberta
Rae and Company FOR RESPONDENT, Samson
Barristers and Solicitors Cree First Nation
2910, 715 - 5th Avenue SW
Calgary, Alberta.
Blake, Cassels & Graydon LLP FOR RESPONDENT, Ermineskin First Nation
Barristers and Solicitors
Suite 2600, Three Bentall Centre
595 Burrard Street
Vancouver, British Columbia
[1] Applicant's Application Record, Tab 4, page 79.
[2] Applicant's Application Record, Tab 2, page 19.
[3] Applicant's Application Record, Tab 5, pages 97 and 98.
[4] See Imperial Oil Resources Ltd. v. Canada (Minister of Indian Affairs and Northern Development), (1997), 139 F.T.R. 106 at 108-9; affirmed [1999] F.C.J. No. 1910 (QL), (C.A.).
[5] Order of Justice Rothstein, Imperial Oil Resources Limited v. Ronald A. Irwin et al., [1997] F.C.J. No. 1767 (T.D.), T-151-97.
[6] Applicant's Application Record, Tab 2, page 13.
[7] Affidavit of Margaret L. Smith, filed the 24th of December, 2002, Exhibit "B".
[8] See the Affidavit of Margaret L. Smith, filed the 24th of December, 2002.
[9] R.S.C. 1985, c. I-7.
[10] SOR/94-753.
[11] R.S. 1985, c. F-11.
[12] Applicant's Application Record, Tab 5, page 88.
[13] Third Edition, Clarendon Press, Oxford.
[14] (1993), 104 D.L.R. (4th) 421 (O.C.A.).
[15] [1952] 1 All E.R. 122.
[16] (1989), 62 D.L.R. (4th) 168 (S.C.C.).
[17] (1983), 147 D.L.R. (3d) 637 (B. C.S.C).