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.

Utility Corridor Regulation in Canada: Shifting Jurisdictions

Read my article published in the Spring 2010 Newsletter of the Ontario Expropriation Association about the effect of shifting regulatory jurisdictions on easement agreements and landowners at: OEA Spring 2010 Newsletter.

Read comment on Snopko v. Union Gas decision by Professor Nigel Bankes, University of Calgary

Professor Nigel Bankes of the University of Calgary, Faculty of Law, has posted a comment on the recent decision of the Ontario Court of Appeal in Snopko v. Union Gas.  The case confirmed the OEB's exclusive jurisdiction over gas storage in Ontario.  With respect to the Court's decision on the jurisdiction of the Board to determine the validity of private contracts, Bankes notes:

What appears to be unusual about the present case i.e. the Snopko decision is that it concludes that some matters that might appear to be matters of private law are so closely connected with the core elements of an energy regulator’s jurisdiction (here the jurisdiction to deal with holdouts when assembling a gas storage project and the power to set compensation accordingly) that the ordinary courts must decline jurisdiction even though the issues are presented by the plaintiff as private law matters e.g. invalidity of a lease and even unconscionability. This clearly goes beyond confirming the power of the regulator to decide points of law as a necessary element in exercising its jurisdiction; instead the decision accords to the regulator an exclusive original jurisdiction over a broad range of matters. One wonders if this is not a step too far? Is the OEB really the best place to decide whether an agreement is tainted by unconscionability? Even if it has the ability to do so as a necessary part of deciding other issues that may be put to the Board does it follow from this that a plaintiff cannot submit these issues to a s.96 Court?

Read the comment at: ABlawg.ca.