Canada: 2015 Year In Review: Top 10 Judicial Decisions Of Import To The Canadian Oil And Gas Industry

Last Updated: February 12 2016
Article by Michael A. Marion, Daniel B.R. Johnson, Alan Ross, Michael G. Massicotte, Karen A. Salmon and Rick Williams

Most Read Contributor in Canada, September 2016

Last year's list of the top ten judicial decisions of import to the Canadian Oil and Gas Industry (found here) illustrated that 2014 was a high-water mark for important judicial decisions affecting the oil and gas industry. In 2015, we have seen several of the key 2014 cases applied, confirmed or addressed, in particular in relation to Aboriginal title, contract interpretation, and the use of summary judgment as a realistic option to resolve oil and gas disputes. However, 2015 also provided us a wealth of important cases focused on a myriad of areas of interest to all stakeholders in the oil and gas industry: enforcement of foreign judgments, mergers and acquisitions, the use of experts, the interplay between federal bankruptcy legislation and provincial legislation regulating oil and gas activity, freehold lease termination issues, and recovery of damages related to environmental contamination and associated costs.

In this post, we highlight ten of the most important judicial decisions of 2015, and related trends, of import to oil and gas industry participants, for 2016 and beyond.

1. Chevron Corp v Yaiguaje (SCC)1 (Enforcement of Foreign Judgments)

This case (found here) involved a multi-billion dollar trial judgment awarded by an Ecuadorian court in relation to environmental damage arising out of oil and gas activities in Ecuador. The successful plaintiffs commenced an action in Ontario to have the foreign judgment enforced against both Chevron Corp. and its Canadian subsidiary. Chevron raised a jurisdictional challenge claiming the Ontario court had no jurisdiction over the enforcement action because, among other things, there was no real and substantial connection between Ontario and the subject matter of the dispute and Chevron.

The Supreme Court of Canada, noting among other things principles of international comity, found that Ontario did have jurisdiction over the enforcement action, and took a generous approach in favour of foreign judgment creditors on the threshold jurisdictional issue. In doing so, it held that there was no requirement that there be a real and substantial connection between the enforcing court and the original dispute or defendant. As a result of this case, it will be difficult for defendants to challenge the jurisdiction of Canadian courts to adjudicate foreign judgment enforcement actions.

While this is an important case because it sends the message that the door is open in Canada for Canadian courts to hear foreign judgment enforcement actions, the Supreme Court was clear that it was only passing judgment on the threshold jurisdictional issue. The more compelling issues of greater implication in this case are yet to come. For example, it may still be open to defendants in the enforcement action to defend the enforcement of a foreign judgment on the basis that the action should be stayed, or because the original judgment was obtained through fraud or denial of natural justice, or because enforcement is contrary to Canadian public policy. While these are difficult defences to establish, they may very well be relevant in Chevron or in future cases relevant to the oil and gas industry where international oil and gas operations are conducted in jurisdictions with dramatically different legal systems which may be corrupt or otherwise offend Canadian public policy.

Another important issue we expect to be addressed in Chevron is the ability to enforce a judgment, obtained against one corporate entity, against a subsidiary or other affiliated or related corporation which was not party to the foreign action. It remains to be seen whether, or in what circumstances, a Canadian court would pierce the corporate veil or otherwise enforce a judgment against related corporations that were not parties to the foreign action. The attempt by the foreign plaintiffs in Chevron to obtain recovery from related corporations is part of a developing trend we have been following. For example, (see our blog posts here and here), we have commented on attempts by a group of Guatemalan citizens to obtain judgment against a parent corporation for conduct of its subsidiaries operating a mine in Guatemala.

For companies operating internationally, Chevron signals the willingness of Canadian courts to entertain foreign judgment enforcement actions. It should also, however, serve as a warning that obligations incurred in foreign states cannot necessarily be avoided by segregating assets in other jurisdictions. Oil and gas industry participants should closely monitor the ongoing proceedings in Chevron and similar cases.

2. The Supreme Court of Canada Bankruptcy Trilogy (Paramountcy of Bankruptcy and Insolvency Act)

In two of three cases in this trilogy, Alberta (Attorney General) v Moloney2 (available here), 407 ETR Concession Co. v Canada (Superintendent of Bankruptcy)3 (available here), Saskatchewan (Attorney General) v Lemare Lake Logging Ltd4 (available here) the Supreme Court of Canada held that a provision of a provincial regulatory statute was inoperative under the doctrine of federal paramountcy because the provision in question conflicted with the federal Bankruptcy and Insolvency Act (BIA). In, the Supreme Court of Canada applied the doctrine of federal paramountcy, but concluded that no conflict between provincial and federal legislation existed. This trend toward recognizing paramountcy of federal bankruptcy legislation has increased importance given the current economic environment, and this is even more so in the oil and gas industry given stubbornly low commodity prices and the increased bankruptcy and insolvency of oil and gas companies presently being experienced in Alberta and other oil and gas producing provinces. So, while the specific provisions in issue in these three cases may not be directly applicable to energy industry players, the principles expressed will likely guide future decisions that directly impact the oil and gas industry.

Examples of the interplay between federal bankruptcy and provincial legislation directly related to the oil and gas industry have already arisen in 2015. For example, in Lemke v Petroglobe5(available here, and previously blogged by BLG here), Alberta's Surface Rights Board ruled that an application by a landowner for the Surface Rights Board's assistance under Alberta's Surface Rights Act in obtaining payment of overdue annual payments to them could not continue in the face of the statutory stay under section 69.3 of the BIA. The Surface Rights Board has already had to render several decisions in the Petroglobe matter.6

A more recent and relevant example is the court proceedings in Red Water Energy Corp.7 in which, in December 2015, the Alberta Court of Queen's Bench heard argument and reserved its decision. The central issue in Redwater is the interplay between bankruptcy legislation and provisions of Pipeline Act, the Oil and Gas Conservation Act and the Alberta Energy Regulator's Directive 006 (Licensee Liability Rating (LLR) Program and Licence Transfer Process), including the AER's authority to order and enforce abandonment orders and to refuse to transfer licences. In particular, the Court was asked to consider whether it is appropriate in certain circumstances for the AER to refuse to transfer licences. We expect a decision in 2016 and, likely, an expedited trip to the Alberta Court of Appeal. Regardless of the outcome, this decision will have a significant impact on the oil and gas industry. If the AER is successful, and its enforcement provisions can be used notwithstanding bankruptcy, there could be an impact on the value and sale of assets under a bankruptcy and the ability of receivers or trustees to find purchasers for the benefit of creditors, possibly resulting in a sizeable increase to the cost of borrowing for the oil and gas industry. Conversely, if the AER's provisions are found to be unenforceable in bankruptcy, there will be potential implications for Alberta's orphan well fund. Either way, it may fundamentally change the risk profile for investment in Alberta's increasing number of distressed energy assets.

Given the current economic climate, and the likely increase in oil and gas related bankruptcies which will result, we expect the impact of Moloney, 407 ETR, and Lemare Lake will continue to be felt in 2016.

3. Ernst v Alberta (Energy Regulator) (SCC)8 (Charter Damages Against Regulator)

The Ernst case, which involves actions by a landowner against an oil and gas operator, the Province of Alberta, and the Alberta Energy Regulator, arising out of alleged harm caused by fracture stimulation in oil and gas operations, was included in our 2014 list of the top ten decisions impacting the oil and gas industry (found here) and in earlier blog posts (found here). In 2015, the Supreme Court of Canada granted leave to appeal on one constitutional question, namely whether certain provisions in Alberta's Energy Resources Conservation Act were constitutionally inapplicable or inoperable to the extent that they bar a claim against the AER for a breach of the landowner's right to freedom of expression under the Canadian Charter of Rights and Freedoms, and an application for the remedy of "Charter damages" under the Charter's remedy provisions. Ms. Ernst's allegation is that the AER breached her Charter right to freedom of expression by failing to accept further communications from her.

In granting leave to appeal (without reasons), the Supreme Court of Canada has indicated that it will address the issue of whether or to what extent a legislative provision protecting the regulator from civil actions and remedies is constitutional if the provision purports to limit remedies under section 24 for breach of Charter rights. The development of this area of law is ongoing, topical, and will be of interest to many regulatory and administrative tribunals. We note that in June 2015, the Supreme Court of Canada rendered its decision in Henry v British Columbia9, (found here), which addressed the question whether malice was required in order to establish a claim of Charter damages against a Crown prosecutor for wrongfully failing to disclose information to an accused in a criminal case.

The Ernst decision will have significant impact on the AER and any other regulatory tribunal that has statutory protection from civil liability or actions. In 2016, we will look forward to guidance from the Supreme Court as to the proper framework for addressing the interplay between statutory immunity provisions and Charter damages claims against state actors.

4. Tervita Corporation v Canada (Commissioner of Competition) (SCC)10 (Competition and Mergers and Acquisitions)

In January, the Supreme Court of Canada issued its first decision under the merger review provisions of the federal Competition Act in nearly twenty years (see the SCC decision here and a BLG Alert dated January 23, 2015 here). Tervita provided additional clarity on the application of the "prevention" branch of section 92 of the Competition Act, and the "efficiencies" defence under section 96 of the Act.

The Supreme Court's discussion of the "prevention" branch of section 92 of the Act raises questions for the oil and gas industry, particularly for midstream asset owners (pipelines, tanks, processing) and service companies. The Court noted that the concern under the "prevention" branch of section 92 is that a firm with market power will use a merger to preserve that power to prevent competition that could otherwise arise in a contestable market. This analysis requires looking to the market condition that would otherwise have existed (if not for the merger) to assess whether the potential competitor would have entered the market and the effect that might have had on the competitive environment. For example, this might mean that service firms with specialized technology operating in a discrete geographic region need to be prepared to defend a merger that appears to preserve its market power by preventing new entrants or increased competition.

The Court also noted that the timeline for evaluating whether market power would have been eroded by a new potential competitor in that notional market may be extended if the market contains significant barriers to entry. Considering the high barriers to entry in the midstream sector, as an example, and the potential for a merger of incumbents to preserve market power and prevent competition that could have otherwise occurred, mid-streamers in concentrated markets may come under increased scrutiny in the event of a merger.

The efficiencies defence is an important part of the merger regime. It provides a defence to a challenge of an otherwise anti-competitive merger where the merger or proposed merger has brought about or is likely to bring about offsetting gains in efficiency. As noted in our earlier Alert (found here), the Court confirmed that even marginal efficiency gains are sufficient for section 96 to be invoked and require a balancing of efficiencies versus anti-competitive effects. Ultimately, the balancing test mandates a flexible but objectively reasonable approach by which the tribunal must determine both quantitative and qualitative aspects of the merger, and then weigh and balance those aspects. Typically, where the quantitative anti-competitive effects outweigh the quantitative efficiencies, no further review will be needed. The Court's decision will increase the burden on the Competition Bureau to challenge efficiency claims, as it now must spend significant time and effort to quantify the anti-competitive effects of such transactions. This will likely result in an approach that reinforces the role of efficiencies in merger reviews, which will benefit merger parties.

Given the current economic environment, and the resulting expected additional consolidation and takeover activity in the oil and gas industry (as illustrated in the recent and well-publicized bid by Suncor Energy Inc. to acquire Canadian Oil Sands Ltd.), this decision may have increasing importance to industry.

5. Stewart Estate v TAQA North Ltd (Alta CA)11 (Freehold Lease Termination)

In November, the Alberta Court of Appeal rendered its decision in Stewart Estate v TAQA North Ltd (found here). It is a lengthy decision providing the latest from three Court of Appeal Justices on important freehold lease termination issues. In December, we issued our lengthy blog post (found here) summarizing the Court's findings and analysis. In our view, this decision significantly impacts a number of key issues touching freehold oil and gas leases, from both from a legal and practical perspective, but does not provide, in some areas, as much clarity as one would have hoped. Borrowing from our recent blog post, these are the highlights of the decision:

  1. The wording in historic oil and gas leases, especially where original lessees and lessors are unavailable, will be interpreted, "as they might have been objectively understood by an informed person reading them when they were executed, not how they would be read today."
  2. In interpreting the applicability of the shut-in provision in a lease, the Courts may first focus on the actual subjective analysis by the lessee to determine the reasons for the shut-in at the time, and will not focus on, or will give much less weight to, expert evidence analyzing the economic performance of the well after the fact.
  3. Lessees should operate under the assumption that under standard oil and gas leases, once a lessee concludes that a well is not capable of economic production, the lessee has the specified number of days within which to stimulate the existing formation or complete the well in another formation. A proviso providing that the calculation of the specified number of days shall not include any suspension caused by a lack of market or any cause beyond the lessee's reasonable control may not apply to a well that is no longer capable of producing leased substances in commercial quantities.
  4. Lessees who intend to recomplete a well in a different zone where the well has been properly shut-in under the terms of the lease, but where the shut-in is beyond the specified number of days allowed under the terms of the lease, should immediately approach the lessor for a re-grant on the same terms. If there is a top lease already in place, the lessee should consider dealing with the top lease before any capital costs are spent on recompleting the well in a different zone.
  5. Lessees who know or ought to know that their lease has expired but who continue to produce hydrocarbons under the lease will likely be liable for subsurface trespass and conversion and will likely be required to disgorge the net revenue from production to the lessors (mild rule). However, in any particular case the Courts will apply what is "just and equitable" and, for egregious behaviour, the lessees may still be required to disgorge gross revenue from production to the lessors (harsh rule). Conduct justifying the harsh rule of damages remains unclear.
  6. Lessors and underground storage operators should take comfort in the Court of Appeal recognition of subsurface trespass to mines and minerals and the remedies for subsurface trespass and wrongful conversion.
  7. Limitations and the concepts of leave and licence, or estoppel or waiver, will continue to be issues in lease termination cases. Lessors are expected to take reasonable steps and exercise due diligence in discovering their injury, and the limitations clock may start running shortly after production ceases and long before lessors obtain a legal opinion that their lease has terminated. Further, acceptance of royalty payments or other encouragement to continue production may preclude a claim until the lessor provides a clear notice to vacate the property or commences and serves an action.
  8. Where a gross overriding royalty (GORR) is carved out of a lessee's working interest, the GORR expires once the lease from which it is carved expires. GORR owners should be cautious where payments are received after a well has been shut-in and then placed back on production. In such circumstances, the GORR owner may be best advised to hold the payments in trust pending a title opinion or a re-granted lease. Lessors will be entitled to an accounting for the amounts paid to the GORR owner following lease termination. The GORR owner may be accountable to the lessor, or possibly to the lessee who has to account to the lessor, for any GORR payments received after the lease terminates.
  9. The practice of top-leasing and litigation maintenance and funding by top-lessees does not constitute champerty or maintenance. While top-lessees do not have a direct claim against lessees for trespass where their interest is contingent upon a "determination" that existing leases have terminated, a differently structured top-lease may possibly give rise to a direct claim.
  10. It may be possible to obtain in rem declarations as to the validity of leases even where not all parties who arguably have an interest in the leases are before the court.

We expect that leave to appeal has been or will be sought in this case. The oil and gas industry will know soon whether the Supreme Court believes it should provide greater clarity on these complex contract and property law issues.

6. White Burgess Langille Inman v Abbott and Haliburton (SCC)12 (Use of Experts)

The oil and gas industry is heavily dependent on the use of both internal and external experts in the carrying on of business, including dispute resolution. There has been an increasing trend to use multiple experts in the litigation process, both generally and, in particular, in oil and gas litigation. At the same time, there has been increasing tension between courts and the use of experts, which has led to a number of decisions addressing the use or misuse of experts, and the role of clients, counsel and the experts in the court process13. The judiciary is increasingly concerned about: (i) experts providing evidence favouring the party calling them; (ii) the risk that judges will defer to expert opinions instead of coming to their own conclusions; (iii) the increased costs of litigation due to proliferation of experts; and (iv) the use of experts in situations where their evidence is not really needed to assist the court.14 Given the proliferation of technical experts in the oil and gas industry and its related disputes, these judicial developments are worthy of note.

In 2015, in White (found here), the Supreme Court of Canada provided guidance on the duties expected of expert witnesses in litigation and the framework for the admission or exclusion of expert evidence in a trial. The Court confirmed the well-established principle that the duties owed by an expert to the court (to be fair, objective and non-partisan, and to assist the Court) outweighed the expert's duty to the party calling the expert's evidence. The Court further held that if the expert witness is unable to or unwilling to fulfill his or her duty, they do not qualify to perform the role of an expert and their evidence should be excluded. There will be a low burden on the expert to meet this additional threshold requirement, after which the burden shifts to the party opposing the expert to show that there is a realistic concern that the expert is unable and/or unwilling to comply with the duty. Further, even if the expert meets this initial threshold, the court retains discretion to exclude expert evidence based on an overall weighing of costs and benefits of receiving the evidence.

What does this all mean? While White rationalizes a framework for determining the admissibility or exclusion of expert evidence, it will be based on the circumstances in each case. The key take-away for industry is that White represents another example of the tension between courts and the use of expert evidence. Industry participants should be aware of the increasing risk that their, and their legal counsel's, dealings with experts may be scrutinized, and that the increasing risk that expert evidence upon which their case relies may not be admitted by courts.

7. SemCams ULC v Blaze Energy Ltd (Alta QB)15 (The Rise of Summary Judgment in Oil and Gas Cases)

In our 2014 list of the top ten judicial decisions of import to the Canadian oil and gas industry (found here), we included Hyrniak v Mauldin16 and noted the Supreme Court of Canada's "shift in culture" toward the more ready application of summary judgment by Canadian courts. We noted that "while there remains some uncertainty as to when a particular court will feel that... there is enough evidence to fairly and justly adjudicate the dispute, what is clear is that courts are eager to improve access to justice and it is very likely that the number of oil and gas cases that will be decided in Canada by way of summary procedure will increase significantly". Since then, this has been borne out, and SemCams is but one example of this trend.

In SemCams, the Alberta Court of Queen's Bench granted summary judgment in favour of SemCams ULC for amounts unpaid under a gas processing and transportation agreement, even though the payee, Blaze Energy Ltd., disputed the amounts owing, because the agreement between them contained a "pay first, audit later" clause. We have previously blogged about SemCams (found here).

SemCams is not an outlier. There have been a flurry of summary judgment decisions in the past 12 months or so in oil and gas related disputes. For example:

  • in Bernum Petroleum Ltd v Birch Lake17, an operator obtained summary judgment under the 2007 CAPL operating procedure, and the joint-owner's attempt to use a counterclaim founded on a gross negligence allegation against the operator, in order to avoid summary judgment, was rejected. See our blog post on this case here;
  • in Precision Drilling Canada Limited Partnership v Yangarra Resources Ltd18, Precision Drilling obtained summary judgment and the court upheld an exclusion clause in a CAODC master agreement which provided that each of the parties would bear the risk of their own losses for specified risks. See our blog post on this case here;
  • in Shallow Gas Drilling Corp v Legacy Oil and Gas Inc19, the defendant obtained summary dismissal of claims related to alleged breaches of a "Participation, Joint Operating & Clarification Agreement" and in relation to the alleged failure to drill test wells to an appropriate depth;
  • in Apache Canada Ltd v TransAlta Cogeneration LP20, a claim related to an alleged breach of a right of first refusal under long term natural gas supply agreement was summarily dismissed;
  • in Floate v Gas Plus Inc21, Shell Canada Limited obtained summary dismissal of a claim against it alleging it was partly responsible for environmental contamination at a gas station. See our blog post on this case here;
  • in Talisman Energy Inc v Questerre Energy Corporation22, Talisman, as operator under a farmout agreement, obtained summary judgment for unpaid drilling costs even though Questerre had brought a counterclaim, based on a "no-offset" clause in the 1990 CAPL Operating Procedure. This is further confirmation that Alberta Courts will be reluctant to allow a counterclaim to stand in the way of summary judgment.

Courts appear to have taken up the call to provide summary resolution of oil and gas disputes, where appropriate. In a time where there are significant delays to obtain court dates for trial or lengthy applications, this should be a welcome development to industry and every dispute should be carefully assessed to determine whether a summary procedure is a viable option. Given current market conditions, the need for cash, or the need to collect from companies which are on the brink of insolvency, we expect the trend toward summary resolution of oil and gas disputes to continue in 2016 and beyond.

8. Saik'uz First Nation and Stellat'en First Nation v Rio Tinto Alcan Inc23 (Aboriginal Title)

As noted in our 2014 list (found here), 2014 saw the Supreme Court of Canada grant a declaration of Aboriginal title in Tsilhqot'in Nation v British Columbia,24 (found here). In 2015 we have seen decisions related to claims against private parties founded upon unproven Aboriginal title claims. These should be of particular interest to the oil and gas industry given that, historically, Aboriginal title claims have primarily been made against the federal or provincial Crown.

In Saik'uz (see our blog post on this case here) the British Columbia Court of Appeal addressed whether claims founded upon Aboriginal title which were brought against private parties, before the existence of Aboriginal title had been established, should be struck as disclosing no reasonable cause of action, or should be summarily dismissed based on a defence of statutory authority. The Court of Appeal concluded that there was no principled reason to require that the plaintiffs first obtain a declaration against the Province regarding the existence of their Aboriginal title rights. Further, the Court of Appeal was of the view that the defence of statutory authority gave rise to real issues requiring trial.

This case, and the Ominayak case discussed next, add to a growing but unsettled body of law dealing with industry's potential liability to First Nations for interference with alleged Aboriginal rights and the question of how extensively industry can rely on Crown authorizations or approvals to provide insulation from liability.

9. Ominayak v Penn West Petroleum Ltd (Alta QB)25 (Aboriginal Title and Challenging Regulatory Approvals)

In Ominayak v Penn West Petroleum Ltd. (found here; our earlier blog post on this case can be found here), the Lubicon Lake Nation (the "LLN") asserted Aboriginal title and rights on lands and sought a declaration that all approvals that had been previously issued to Penn West for the production of oil on the lands, were illegal and void. The claim also included an allegation of trespass founded on the same claim of Aboriginal title. The LLN had previously commenced an action against the provincial and federal governments, which also asserted Aboriginal title and rights.

Penn West sought to strike the LLN's claim on the basis that it was an abuse of process since it virtually duplicated the Crown claim, and that it constituted a collateral attack on regulatory approvals previously granted.

The Court allowed the trespass claim to continue because any duplication between the two actions did not constitute an abuse of process due to the fact that one action was a private claim against private defendants (Penn West) and one was a public claim against public defendants (the Crown).

However, the Court found that the portions of the claim attacking the validity of the Penn West's approvals were a collateral attack and therefore invalid because there were processes available (judicial review or leave to appeal) to challenge the approvals which LLN did not follow. The Court's application of the collateral attack doctrine may be viewed by industry as a positive step toward adding certainty and predictability to Alberta's regulatory approval process. A party will be precluded from challenging the validity of regulatory approvals previously obtained, outside of the procedures specifically established for a challenge.

It is also important to note that the claim founded upon Aboriginal title that was allowed to continue has not yet been decided on its merits. Looking forward to 2016, Ominayak raises the question of whether the Alberta oil and gas industry is entitled to rely on the defence of statutory authority in response to a claim of trespass based on Aboriginal title where oil and gas operations are conducted in good faith reliance on valid and unchallenged regulatory approvals.

10. JI Properties Inc v PPG Architectural Coatings Canada Ltd26 (BCCA) (Statutory Claims to Recover Environmental Remediation Costs)

The question of who pays for environmental contamination related costs continues to emerge as one of the most critical issues for the oil and gas industry. The complex public and private cost recovery frameworks in place in Canada is something that we addressed in a recent paper published in the Alberta Law Review.27 These issues will be amplified by the ever-increasing focus on the environment provincially, federally and internationally, as we have addressed in our 2015 list of the Top 10 Legislative, Regulatory and Policy Changes Impacting the Canadian Oil and Gas Industry (found here). Private industry participants who incur the costs of environmental remediation are often left to seek recovery for costs from other private parties, including from current or past working interest owners or previous owners of the lands.

As a result of these factors, we view JI Properties Inc (found here) as an important decision for industry, as it serves as another example of an appellate court in an oil and gas producing province interpreting legislation consistent with the "polluter pays" principle. In this case, the current owner of a contaminated industrial site incurred significant remediation costs and was utilizing a statutory cause of action created by the B.C. Environmental Management Act28 to recover from a previous owner of the land.

The British Columbia Court of Appeal rejected a defence by the former owner that it was not liable for costs of remediation because it had obtained a "certificate of compliance" for its previous remediation work before it sold the property. The Court held that a comfort letter provided prior to the contaminated sites regulatory regime coming into force did not meet the definition of a certificate of compliance, nor was there a grandfathering contemplated by the legislation in these circumstances. In discussing these and other issues, the Court of Appeal commented that the regulatory scheme is not only intended to ensure that a polluter pays, but also to compel the timely remediation of contaminated sites by forcing current owners to remediate as a pre-condition to securing other regulatory approvals. See here for our more detailed blog post on JI Properties. A similar approach to interpreting legislation in Ontario was followed by the Ontario Court of Appeal in 2015.29

In 2016, and beyond, we expect the focus on environmental protection to intensify. We further expect that Courts and administrative tribunals, relying on the polluter pays principle and the "fundamental value of environmental protection" espoused by the Supreme Court of Canada,30 will continue to interpret legislation and the common law in favour of assisting private parties in recovering environmental remediation costs from those who caused or contributed to the problem.

As always, Borden Ladner Gervais LLP will continue to monitor judicial developments in 2016 that are of interest to the oil and gas industry.


1 2015 SCC 42.

2 2015 SCC 51.

3 2015 SCC 52.

4 2015 SCC 53.

5 015 ASRB 740.

6 See also: Portas v PetroGlobe Inc, 2015 ABSRB 708 and Rodin v PetroGlobe Inc, 2015 ABSRB 727.

7 Alberta Treasury Branches v Redwater Energy Corp (docket 1501-04793) and Redwater Energy Corp. (Re). (docket BK01-094570).

8 See:

9 2015 SCC 24.

10 2015 SCC 3.

11 2015 ABCA 357.

12 2015 SCC 23.

13 See, for example, the Ontario Court of Appeal decision in Moore v Getahun, 2015 ONCA 55 (found here) where that Court overturned a lower court decision which was highly critical of the practice of legal counsel to discuss draft reports with experts.

14 See, for example: Bernum Petroleum Ltd v Birch Lake Energy Inc, 2014 ABQB 652 (found here) and our blog about this case (found here).

15 2015 ABQB 218.

16 2014 SCC 7.

17 2014 ABQB 652.

18 2015 ABQB 433.

19 2015 ABQB 606.

20 2015 ABQB 650.

21 2015 ABQB 725.

22 2015 ABQB 775.

23 2015 BCCA 154.

24 2014 SCC 44.

25 2015 ABQB 342.

26 2015 BCCA 472.

27 M. Marion, M. Massicotte and J. Duhn, Canada's Aging Oil and Gas Infrastructure: Who Will Pay? The Public and Private Cost Recovery Frameworks (2014) 52 Alta L Rev No. 2 331.

28 SBC 2003, c-53.

29 See: Midwest Properties Ltd v Thordason, 2015 ONCA 819, and our blog about it here. In that case, the Court allowed the owner of a property affected by environmental contamination from a neighboring property to collect damages for the contamination, even though the polluter had already been convicted of and fined for offences under the Ontario Environmental Protection Act. The Court was concerned that a different interpretation would discourage civil suits and potentially discourage the Ministry of Environment from issuing remediation orders for fear of blocking a later civil suit

30 Canadian Forest Products Ltd v The Queen, 2004 SCC 38.

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Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.