Mobil Oil v. Offshore Petroleum (1994), 115 Nfld. & P.E.I.R. 334 (SCC);
360 A.P.R. 334
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Mobil Oil Canada Ltd., Gulf Canada Resources Limited, Petro-Canada Inc. and Chevron Canada Resources Limited (appellants) v. Canada-Newfoundland Offshore Petroleum Board (respondent)
(22948)
Indexed As: Mobil Oil Canada Ltd. et al. v. Canada-Newfoundland Offshore Petroleum Board
Supreme Court of Canada
Lamer, C.J.C., La Forest, L’Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major, JJ.
February 24, 1994.
Summary:
In 1982, Mobil Oil discovered hydrocarbons in an offshore well designated as Nautilus C-92. In 1984, Mobil applied under the Canada Oil and Gas Act for a declaration of significant discovery (S.D.D.) in respect to the well and a surrounding area of 41 sections. The S.D.D. meant that the discoverer (Mobil) was given the exclusive right to explore and develop the whole extent of the geological feature to which the discovery well applied. That area could be significantly larger than the area covered by the original exploration licence. In 1986, a S.D.D. was made covering eleven sections. Mobil requested that the Minister review the matter and increase the area to 30 sections. The Minister refused. Mobil applied to have the Minister’s decision quashed.
The Federal Court of Canada, Trial Division, in a decision reported at 35 F.T.R. 50, declined to quash the decision. Mobil continued to believe that the area covered should have been greater. In 1990, after the Canada Oil and Gas Act was repealed, Mobil applied under the Canada-Newfoundland Atlantic Accord Implementation Act for a S.D.D. covering 25 sections in an area surrounding the eleven sections designated in 1986. Nineteen of the sections had been part of the original application. The chairman of the Offshore Petroleum Board summarily rejected the application. The chairman submitted that the application was merely a request for an amendment of the 1986 declaration, and as such, was required by s. 71(4) of the Implementation Act, to be based upon additional drilling. It would cost Mobil 25 million dollars to drill another well. Therefore, Mobil submitted that s. 71(1) only referred to reasonable grounds. The issue of drilling was only one of numerous factors to be considered in dealing with the application; it was neither a precondition nor an essential element. Mobil applied for, inter alia, certiorari to quash the chairman’s decision and for mandamus ordering the Board to consider the application.
The Newfoundland Supreme Court, Trial Division, in a decision reported at 87 Nfld. & P.E.I.R. 58; 271 A.P.R. 58, allowed the application in part. The Board appealed.
The Newfoundland Court of Appeal, in a decision reported at 95 Nfld. & P.E.I.R. 95; 301 A.P.R. 95, dismissed the appeal. However, the court directed that the orders of certiorari and mandamus issued by the Trial Division be amended to reflect the Court of Appeal’s different reasons. Mobil appealed. The Board cross-appealed.
The Supreme Court of Canada dismissed the appeal and declined to quash the chairman’s decision. The court allowed the cross-appeal. The court based its decision on the fact that the chairman, while denying Mobil its right to a hearing, had reached the correct result in law by holding that an application for a S.D.D. could only be made on the basis of fresh drilling and because there could only be one S.D.D. for any given geological feature. Furthermore, an amendment to the S.D.D. pursuant to s. 71(4) required additional drilling.
Administrative Law – Topic 265
The hearing and decision – Right to a hearing – Persons entitled to a hearing – Mobil Oil applied for a declaration of significant discovery (S.D.D.) under s. 71 of the Canada-Newfoundland Atlantic Accord Implementation Act – The chairman summarily declined to place the application before the Board because it was not based on new drilling – Mobil submitted that it was entitled to a hearing – The Supreme Court of Canada held that Mobil was entitled to a hearing – The court found that the Board had improperly subdelegated its power to the chairman – The court also noted that a hearing may have been possible through an exchange of correspondence – Nevertheless, the court declined to quash the chairman’s decision because he had reached the correct decision in law – See paragraphs 33 to 56.
Administrative Law – Topic 5199
Judicial review – Certiorari – Discretionary bars to issue of certiorari – Correct result despite error – [See
Administrative Law – Topic 265
].
Mines and Minerals – Topic 8253
Oil and gas – Exploration agreements – Significant discovery area – Requirements for – Drilling results – Section 71 of the Canada-Newfoundland Atlantic Accord Implementation Act allowed for the declaration of significant discovery (S.D.D.) – Mobil submitted that an application could be brought by any holder of an exploration licence based on such evidence as the holder deemed necessary – The chairman of the Offshore Petroleum Board claimed that an application had to be based on drilling – The Supreme Court of Canada held that an application under s. 71(1) for a S.D.D. had to be based on fresh drilling – Furthermore, an application under s. 71(4) for an amendment of a S.D.D. had to be based upon additional drilling – See paragraphs 20 to 30.
Mines and Minerals – Topic 8255
Oil and gas – Exploration agreements – Significant discovery area – The hearing – Right to – [See
Administrative Law – Topic 265
].
Cases Noticed:
Cardinal and Oswald v. Kent Institution (Director), [1985] 2 S.C.R. 643; 63 N.R. 353; 49 C.R.(3d) 35; [1986] 1 W.W.R. 577; 23 C.C.C.(3d) 118; 24 D.L.R.(4th) 44, refd to. [para. 43].
Knight v. Board of Education of Indian Head School Division No. 19, [1990] 1 S.C.R. 653; 106 N.R. 17; 83 Sask.R. 81; 69 D.L.R.(4th) 489; [1990] 3 W.W.R. 289, refd to. [para. 43].
Inuit Tapirisat of Canada and National Anti-Poverty Organization v. Canada (Attorney General), [1980] 2 S.C.R. 735; 33 N.R. 304; 115 D.L.R.(3d) 1, refd to. [para. 46].
Homex Realty and Development Co. v. Wyoming (Village), [1980] 2 S.C.R. 1011; 33 N.R. 475, refd to. [para. 49].
Harelkin v. University of Regina, [1979] 2 S.C.R. 561; 26 N.R. 364, refd to. [para. 53].
R. v. Monopolies and Mergers Commission, [1986] 1 W.L.R. 763; [1986] 2 All E.R. 257 (C.A.), refd to. [para. 55].
Statutes Noticed:
Canada-Newfoundland Atlantic Accord Implementation Act, S.C. 1987, c. 3, sect. 2 [para. 34]; sect. 17(1) [para. 30]; sect. 30 [para. 34]; sect. 47 [para. 11]; sect. 51 [para. 50]; sect. 69, sect. 70(1) [para. 42]; sect. 71(1), sect. 71(2), sect. 71(4) [para. 11]; sect. 96, sect. 119 [para. 28]; sect. 124, sect. 127(2) [para. 11]; sect. 142(1), sect. 142(2) [para. 34].
Canada-Newfoundland Atlantic Accord Implementation (Newfoundland) Act, S.N. 1986, c. 37, generally [para. 3].
Canada Oil and Gas Act, S.C. 1980-81-82-83, c. 81, sect. 44(1) [paras. 23, 24, 26]; sect. 44(3) [paras. 24, 26].
Declarations of Significant Discoveries Order No. 0-6 (1986), SI/86-156 [para. 6].
Authors and Works Noticed:
Canada, House of Commons Debates, 2nd Session, 33rd Parliament, March 2, 1987, p. 3707 [para. 39].
Canada, House of Commons Legislative Committee on Bill C-6, Minutes of Proceedings and Evidence, Issue No. 1, November 4, 1986, p. 1:48 [para. 35].
Côté, P.-A., Interpretation of Legislation in Canada (2nd Ed. 1991), p. 152 [para. 42].
Driedger, E.A., Construction of Statutes (2nd Ed. 1983), p. 92 [para. 29].
Oxford English Dictionary (2nd Ed. 1989), vol. IV [para. 27].
Wade, H.W.R., Administrative Law (6th Ed. 1988), p. 535 [para. 54].
Counsel:
Michael F. Harrington, Q.C., for the appellants/respondents;
T.B. Smith, Q.C., and D. Angus Taylor, for the respondent/appellant.
Solicitors of Record:
Stewart McKelvey Stirling Scales, St. John’s, Newfoundland, for the appellants;
Stikeman, Elliot, Ottawa, Ontario, for the respondent.
This appeal was heard on November 30, 1993, by Lamer, C.J.C., La Forest, L’Heureux-Dubé, Sopinka, Gonthier, Cory, McLachlin, Iacobucci and Major, JJ., of the Supreme Court of Canada.
The decision of the court was given by Iacobucci, J., on February 24, 1994, when the following decision was filed in both official languages.
