Rainbow

Rainbow

Wednesday, January 11, 2012

Ontario Court rules it can decide gas storage lease case

Justice Bryant of the Ontario Superior Court of Justice has ruled in favour a landowner in a gas storage related case, finding that the Court is in a position to determine issues related to leases.  Recently, Ontario courts have ruled on the exclusive jurisdiction of the Ontario Energy Board over gas storage in Ontario.  However, that exclusive jurisdiction only arises where there has been an order designating a gas storage area pursuant to the Ontario Energy Board Act

In this particular case, Justice Bryant found that the Court retained its inherent jurisdiction to rule on the leases because no designation order had yet been made by the Ontario Energy Board.  This decision is another in a growing line of decisions related to this matter.  Originally, Tribute Resources had taken over oil and gas and gas storage leases on the lands of McKinley Farms Limited in Huron County.  However, a previous ruling of the court, upheld on appeal, found that the gas storage lease terminated.  The Court of Appeal did rule that the oil and gas lease remained effective.  McKinley then signed a new gas storage agreement and oil and gas lease with a numbered company related to McKinley. 

In 2011, the numbered company applied to the Superior Court for declarations that its gas storage lease permits the storage of gas beneath the McKinley lands and that Tribute has no right under its gas and oil lease (which was not declared void by the Court of Appeal) to store gas.  Tribute then filed an application asking the Court to rule that it had no jurisdiction to decide the application by the numbered company and that the relief sought by the numbered company was within the exclusive jurisdiction of the Ontario Energy Board.  This application, as reported above, was dismissed.

Read the decision at: Tribute Resources v. 2195002 Ont. Inc.