Imperial Oil Ltd. v. Canada (Minister of Indian Affairs and Northern Development), docket A-80-98

Date: 19981116

Docket: A-80-98

CORAM:      THE CHIEF JUSTICE

BETWEEN:

     IMPERIAL OIL RESOURCES LIMITED

     Respondent

     (Applicant)

     - and -

     RONALD A. IRWIN, in his capacity as MINISTER OF INDIAN AFFAIRS

     AND NORTHERN DEVELOPMENT and HER MAJESTY THE QUEEN IN

     RIGHT OF CANADA as represented by the EXECUTIVE DIRECTOR

     OF INDIAN OIL AND GAS CANADA, DEPARTMENT OF

     INDIAN AFFAIRS AND NORTHERN DEVELOPMENT

     Appellant

     (Respondent)

Heard at Winnipeg, Manitoba on Wednesday, November 4, 1998.

Order delivered at Ottawa, Ontario on Monday, November 16, 1998.

REASONS FOR ORDER BY:      THE CHIEF JUSTICE

Date: 19981116

Docket: A-80-98

CORAM:      THE CHIEF JUSTICE

BETWEEN:

     IMPERIAL OIL RESOURCES LIMITED

     Respondent

     (Applicant)

     - and -

     RONALD A. IRWIN, in his capacity as MINISTER OF INDIAN AFFAIRS

     AND NORTHERN DEVELOPMENT and HER MAJESTY THE QUEEN IN

     RIGHT OF CANADA as represented by the EXECUTIVE DIRECTOR

     OF INDIAN OIL AND GAS CANADA, DEPARTMENT OF

     INDIAN AFFAIRS AND NORTHERN DEVELOPMENT

     Appellant

     (Respondent)

     REASONS FOR ORDER

THE CHIEF JUSTICE

[1]      Samson Cree Nation brings this motion pursuant to Rules 303, and in the alternative, 109 of the Federal Court Rules, 1998, to be added as a party, appellant, or in the alternative, an intervenor, in an appeal from the following order made by a Motions Judge in the Trial Division on 15 January 1998:

IT IS HEREBY ORDERED THAT:

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 declared 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 Respondents 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.

[2]      This order was made in proceedings commenced by the respondent, Imperial Oil Resources Limited, against the Minister of Indian Affairs and Northern Development ("the Minister") and others, for an order in the nature of certiorari quashing a decision of the Minister made on 25 November 1996, under the Indian Oil and Gas Regulations, 1995, (SOR/94-753).

[3]      The appeal from the order of the Motions Judge is taken by the Minister on the following grounds set out at page 7 of the memorandum of fact and law filed on behalf of the Minister on 17 August 1998:

(a)      Whether the authority of the Manager to examine the records of an operator under section 42(1)(b) of the Indian Oil and Gas Regulations, CRC, 1978 C-963, as amended (the IOG Regulations 1978) extends to an audit of those records and the records of an affiliate and;

(b)      Whether the Manager was authorized by the Regulations to disallow the 5% marketing fee deduction from the actual selling price of gas products for the purpose of royalty calculations.

[4]      By memorandum of fact and law filed on 1 October 1998, the respondent has responded to the issues raised in the appellant's memorandum.

[5]      On 20 October 1998, the appellant filed the requisition for a hearing date.

[6]      The motion of the Samson Cree Nation is opposed by the respondent, Imperial Oil Resources Limited. For its part, the appellant informed the Court by letter dated 2 November 1998, that he does not oppose the motion to intervene and he restated that position orally by his counsel who appeared at the hearing of this motion.

[7]      It is common ground that the relationship of the Samson Cree Nation and the appellant is that of beneficiary and trustee and that the subject matter of the dispute between the parties to the appeal could affect the entitlement of the Samson Cree Nation under certain oil and gas leases between the parties to the appeal. In other words, the financial interest of the Samson Cree Nation could be affected by the outcome of this appeal.

[8]      It is also not disputed that the Samson Cree Nation and others have commenced proceedings against the appellant for breach of trust and other relief in respect of the same leases and that those proceedings are ongoing.

[9]      These are the circumstances in which the Samson Cree Nation seeks to inject itself in the appeal to argue the following eight points alleged not to have been addressed by the appellant in its memorandum of fact and law:

1.      That the right to audit is provided by the Leases and other special agreements entered into between the Crown on behalf of, inter alia, the Samson Cree Nation, and the Lessees, who by assignment and amalgamation is now Imperial Oil Resources Limited such that the right to audit now binds Imperial Oil Resources Limited;

2.      That an audit or comprehensive inspection is necessary to place the relevant evidence before the Court;

3.      That notice was given in 1989 to, inter alia, Imperial Oil Resources Limited, that an audit would be required;

4.      That, in the specific circumstances relevant here, Texaco Canada Resources Limited and Texaco Canada Inc. are not arms length corporations and further that the corporate veil should be lifted between these corporate entities;

5.      That the Crown owes a fiduciary and trust obligation to the Samson Cree Nation and this fiduciary and trust obligation affects the interpretation of statutory provisions, that the interpretation of statutory provisions which have an impact upon treaty and aboriginal rights must be approached in a manner which maintains the integrity of the Crown; any ambiguities or doubtful expressions in the wording of a document must be resolved in favour of the Indians; and any limitations which restrict the rights of Indians must be narrowly construed: R. v. Badger, [1996] 1 S.C.R. 771, 793-4.

6.      That the Indian Oil and Gas Regulations provide for a Royalty calculated on "actual selling price" which is the price at which oil and gas are sold or "fair value" whichever is higher. Both "actual selling price" and "fair value" must be determined;

7.      That the Indian Oil and Gas Regulations only permit deductions from actual selling price for processing fees. Transportation and marketing fees are examples of fees which are not processing fees;

8.      That the meaning of "time and place of production" in the Indian Oil and Gas Regulations refers to wellhead and not plant outlet gate.

[10]      For the brief reasons that follow, I am of the opinion that the motion by the Samson Cree Nation should be dismissed with costs to the respondent.

[11]      First, although the Samson Cree Nation was not served with notice of the proceedings below, I am satisfied that it did have knowledge of those proceedings and could, if so advised, have sought to be added either as a party or as an intervenor in the proceedings below. In my view, it is now too late to add the Samson Cree Nation as a party to the proceedings and to allow it to change the focus of the litigation.

[12]      Secondly, having read the memoranda filed by both parties, I am far from satisfied that the points intended to be argued by the proposed intervenor will assist the Court in the resolution of issues in the appeal, as the parties have framed it. Indeed, my assessment of the submissions which the proposed intervenor intends to make will range too far from the issues in the appeal and will not only be unfair to the parties but will delay the proceedings. The respondent would certainly wish to file an amended memorandum in answer to the points intended to be raised by the proposed intervenor, since the focus of the appeal will be altered.

[13]      In my view, a refusal of the motion to participate in this appeal will not result in any prejudice to the Samson Cree Nation, since the appellant has an obligation as trustee to protect the interest of the Samson Cree Nation. Furthermore, if the appellant fails to discharge that obligation, the Samson Cree Nation has its remedy either in the ongoing litigation for breach of trust or otherwise at law or in equity.

     "Julius A. Isaac"

     C.J.