BLG Logo
Banner

​​​​

 

 

What Are the Implications for Boards of Directors in Light of the Redwater Decision?What Are the Implications for Boards of Directors in Light of the Redwater Decision?287BLG Blog PostMichael A. Marionmmarion@blg.com | Michael A. Marion | 693A30232E777C626C6763616E6164615C6D616D i:0#.w|blgcanada\mam​BLG Counsel Beth Reimer-Heck, Q.C., participated in the New Realities - Climate Change and Social Media panel through the Institute of Corporate Directors, which discussed two significant challenges organizations will be facing in 2017, including the implementation of climate change policy in our economy and organizations, and social media’s influence and role. For the panel, Beth, BLG Associate Leanne Desbarats and BLG Articling Student Karleigh Maag, prepared What Are the Implications for Boards of Directors in Light of the Redwater Decision?, an article on the impacts of the Redwater Energy Corporation (RE) case and its potential impact on organizations.[Read more...]<p style="text-align:justify;">​BLG Counsel <a href="http://blg.com/en/Our-People/ReimerHeck-Beth" target="_blank">Beth Reimer-Heck, Q.C.</a>, participated in the <em>New Realities - Climate Change and Social Media</em> panel through the Institute of Corporate Directors, which discussed two significant challenges organizations will be facing in 2017, including the implementation of climate change policy in our economy and organizations, and social media’s influence and role. For the panel, Beth, BLG Associate <a href="http://blg.com/en/Our-People/Desbarats-Leanne" target="_blank">Leanne Desbarats</a> and BLG Articling Student <a href="http://blg.com/students/en/Students/maag-karleigh" target="_blank">Karleigh Maag</a>, prepared <em>What Are the Implications for Boards of Directors in Light of the Redwater Decision?</em>, an article on the impacts of the Redwater Energy Corporation (RE) case and its potential impact on organizations.</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=287" target="_blank"><em>Read more</em></a>...]</p>BLG Counsel Beth Reimer-Heck, Q.C., participated in the New Realities - Climate Change and Social Media panel through the Institute of Corporate Directors, which discussed two significant challenges organizations will be facing in 2017, including the implementation of climate change policy in our economy and organizations, and social media’s influence and role. For the panel, Beth, BLG Associate Leanne Desbarats and BLG Articling Student Karleigh Maag​, prepared What Are the Implications for Boards of Directors in Light of the Redwater Decision?, an article on the impacts of the Redwater Energy Corporation (RE) case and its potential impact on organizations.The full article is available online​.<p style="text-align:justify;"><span style="text-align:justify;">BLG Counsel </span><a href="http://blg.com/en/Our-People/ReimerHeck-Beth" target="_blank" style="text-align:justify;">Beth Reimer-Heck, Q.C.</a><span style="text-align:justify;">, participated in the <em>New Realities - Climate Change and Social Media </em>panel through the Institute of Corporate Directors, which discussed two significant challenges organizations will be facing in 2017, including the implementation of climate change policy in our economy and organizations, and social media’s influence and role. For the panel, Beth, BLG Associate </span><a href="http://blg.com/en/Our-People/Desbarats-Leanne" target="_blank" style="text-align:justify;">Leanne Desbarats</a><span style="text-align:justify;"> and BLG Articling Stu</span><span style="text-align:justify;">dent </span><a href="http://blg.com/students/en/Students/maag-karleigh" target="_blank" style="text-align:justify;">Karleigh Maag​</a><span style="text-align:justify;">, prepared W<em>hat Are the Implica</em></span><span style="text-align:justify;"><em>tions for Boards of Directors in Light of the Redwater Decisio</em></span><span style="text-align:justify;"><em>n?</em>, an article on the impacts of the Redwater Energy Corporation (RE) case and its potential impact on organizations.</span></p><p style="text-align:justify;">The <a href="http://blg.com/en/News-And-Publications/Publication_4829" target="_blank">full article is available online​</a>.</p>2/15/2017 5:00:00 AM2017-02-15T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#98850b8e-4cdc-41cf-9cf7-f309880c7c29;L0|#098850b8e-4cdc-41cf-9cf7-f309880c7c29|BLG Energy News and Events;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caBLG Energy News and Events
BLG Invite | The Alberta Carbon Levy: Dazed? Confused? Frustrated? Session 3BLG Invite | The Alberta Carbon Levy: Dazed? Confused? Frustrated? Session 3285BLG Blog PostMichael A. Marionmmarion@blg.com | Michael A. Marion | 693A30232E777C626C6763616E6164615C6D616D i:0#.w|blgcanada\mam​​Alberta’s new carbon levy came into effect January 1st, 2017, and discussions with Alberta have resulted in changes to the administration of the levy.We will provide information on these changes and many of the questions you have asked about the new levy such as What is included as a “production process” entitling the user to purchase fuel exempt of the levy?What documentation is required to support exempt sales of fuel?Which return must be filed by direct remitters and what transactions must be captured on that return?Are you required to report sales of fuel at time of delivery or when amounts are invoiced?Join BLG on Friday, February 24, 2017, for a discussion that will help you navigate the implementation of the Alberta carbon levy. ​[Read more​...]<p style="text-align:justify;">​​Alberta’s new carbon levy came into effect January 1st, 2017, and discussions with Alberta have resulted in changes to the administration of the levy.</p><p style="text-align:justify;">We will provide information on these changes and many of the questions you have asked about the new levy such as: </p><ul style="text-align:justify;"><li>What is included as a “production process” entitling the user to purchase fuel exempt of the levy?<br></li><li>What documentation is required to support exempt sales of fuel?<br></li><li>Which return must be filed by direct remitters and what transactions must be captured on that return?<br></li><li>Are you required to report sales of fuel at time of delivery or when amounts are invoiced?<br></li></ul><p style="text-align:justify;">Join BLG on <strong>Friday, February 24, 2017</strong>, for a discussion that will help you navigate the implementation of the Alberta carbon levy. </p><p style="text-align:justify;">​[<a href="/energy/Pages/Post.aspx?PID=285" target="_blank">Read more​</a>...]<br></p>​Alberta’s new carbon levy came into effect January 1st, 2017, and discussions with Alberta have resulted in changes to the administration of the levy.We will provide information on these changes and many of the questions you have asked about the new levy such as What is included as a “production process” entitling the user to purchase fuel exempt of the levy?What documentation is required to support exempt sales of fuel?Which return must be filed by direct remitters and what transactions must be captured on that return?Are you required to report sales of fuel at time of delivery or when amounts are invoiced?Join BLG on Friday, February 24, 2017, for a discussion that will help you navigate the implementation of the Alberta carbon levy. Registration and Breakfast730 am – 800 am​Session800 am – 915 amQ&A915 amSpeakersAlan Ross and Beverly Gilbert, BLG.​Moderated byBruce Lawrence, BLGLocationCentennial Place West Tower3rd Flr, 250 5th St SWCalgary, ABCLICK HERE​ to RSVP by Monday, February 20 If you have any questions regarding this event, please direct them to Ruxandra Andreiasi at rsvpcalgary@blg.com.<p style="text-align:justify;">​Alberta’s new carbon levy came into effect January 1st, 2017, and discussions with Alberta have resulted in changes to the administration of the levy.</p><p style="text-align:justify;">We will provide information on these changes and many of the questions you have asked about the new levy such as: </p><ul style="text-align:justify;"><li>What is included as a “production process” entitling the user to purchase fuel exempt of the levy?<br></li><li>What documentation is required to support exempt sales of fuel?<br></li><li>Which return must be filed by direct remitters and what transactions must be captured on that return?<br></li><li>Are you required to report sales of fuel at time of delivery or when amounts are invoiced?<br></li></ul><p style="text-align:justify;">Join BLG on <strong>Friday, February 24, 2017</strong>, for a discussion that will help you navigate the implementation of the Alberta carbon levy. </p><p style="text-align:justify;"><strong>Registration and Breakfast</strong><br>7:30 am – 8:00 am</p><p style="text-align:justify;"><strong>​Session</strong><br>8:00 am – 9:15 am</p><p style="text-align:justify;"><strong>Q&A</strong><br>9:15 am</p><p style="text-align:justify;"><strong>Speakers</strong><br><a href="http://blg.com/en/Our-People/Ross-Alan" target="_blank">Alan Ross</a> and <a href="http://blg.com/en/Our-People/Gilbert-Beverly" target="_blank">Beverly Gilbert</a>, BLG.</p><p style="text-align:justify;"><strong>​Moderated by</strong><br><a href="http://blg.com/en/Our-People/Lawrence-Bruce" target="_blank">Bruce Lawrence</a>, BLG</p><p style="text-align:justify;"><strong>Location</strong><br>Centennial Place West Tower<br>3rd Flr, 250 5th St SW<br>Calgary, AB</p><p style="text-align:justify;"><a href="http://bordenladnergervaisllp.com/s/bb24ec1bd93d4e21c2fa9701caf46d41af7c558b" target="_blank">CLICK HERE​</a> to RSVP by Monday, February 20 </p><p style="text-align:justify;">If you have any questions regarding this event, please direct them to Ruxandra Andreiasi at <a href="mailto:rsvpcalgary@blg.com" target="_blank">rsvpcalgary@blg.com</a>.</p><div style="text-align:justify;"><br></div>2/13/2017 5:00:00 AM2017-02-13T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#98850b8e-4cdc-41cf-9cf7-f309880c7c29;L0|#098850b8e-4cdc-41cf-9cf7-f309880c7c29|BLG Energy News and Events;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caBLG Energy News and Events
Cybersecurity UpdateCybersecurity Update284BLG Blog PostMichael A. Marionmmarion@blg.com | Michael A. Marion | 693A30232E777C626C6763616E6164615C6D616D i:0#.w|blgcanada\mam​​​​​​​​The continually evolving nature of cybersecurity threats means that a continually improving cybersecurity strategy is critical. BLG's Cybersecurity Law Group​ provides the legal components of that strategy, whether it be in the context of managing, responding to or remediating a breach. The group recently released two important newsletters in regards to cybersecurity guidance and cyber risk management. ​[Read more​...]<p style="text-align:justify;">​<span>​​​​​​​The continually evolving nature of cybersecurity threats means that a continually improving cybersecurity strategy is critical. BLG's </span><a href="http://blg.com/en/Expertise/Cybersecurity" target="_blank">Cybersecurity Law Group​</a><span> provides the legal components of that strategy, whether it be in the context of managing, responding to or remediating a breach. The group recently released two important newsletters in regards to cybersecurity guidance and cyber risk management. </span>​</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=284" target="_blank"><em>Read more​</em></a>...]</p>The continually evolving nature of cybersecurity threats means that a continually improving cybersecurity strategy is critical. BLG's Cybersecurity Law Group​ provides the legal components of that strategy, whether it be in the context of managing, responding to or remediating a breach. The group recently released two important newsletters in regards to cybersecurity guidance and cyber risk management. Cybersecurity Guidance for Small and Medium Size EnterprisesAuthored by Bradley J. Freedman and Joseph DiPonioSmall and medium size enterprises are increasingly being targeted by cyber criminals. The U.S. National Institute of Standards and Technology and other government agencies have issued guidance to help small and medium size businesses understand and manage risks to their ​information, systems and networks. >> READ MORECyber Risk Management –Regulatory Guidance for Reporting Issuers’ Continuous Disclosure of Cyber Security Risks and Incidents​Authored by Bradley J. FreedmanCanadian Securities Administrators recently published Multilateral Staff Notice 51-347 - Disclosure of cyber security risks and incidents to provide reporting issuers with important guidance for compliance with continuous disclosure obligations regarding cybersecurity risks and incidents.​>> READ ​MORE<p style="text-align:justify;">The continually evolving nature of cybersecurity threats means that a continually improving cybersecurity strategy is critical. BLG's <a href="http://blg.com/en/Expertise/Cybersecurity" target="_blank">Cybersecurity Law Group​</a> provides the legal components of that strategy, whether it be in the context of managing, responding to or remediating a breach. The group recently released two important newsletters in regards to cybersecurity guidance and cyber risk management. </p><h4>Cybersecurity Guidance for Small and Medium Size Enterprises</h4><p style="text-align:justify;">Authored by <a href="http://blg.com/en/Our-People/Freedman-Bradley" target="_blank">Bradley J. Freedman</a> and <a href="http://blg.com/en/Our-People/DiPonio-Joseph" target="_blank">Joseph DiPonio</a><br></p><p style="text-align:justify;">Small and medium size enterprises are increasingly being targeted by cyber criminals. The U.S. National Institute of Standards and Technology and other government agencies have issued guidance to help small and medium size businesses understand and manage risks to their ​information, systems and networks. </p><p style="text-align:justify;"><strong>>> </strong><a href="http://blg.com/en/News-And-Publications/Documents/Publication_4794.pdf" target="_blank"><strong>READ MORE</strong></a></p><h4>Cyber Risk Management –Regulatory Guidance for Reporting Issuers’ Continuous Disclosure of Cyber Security Risks and Incidents</h4><p style="text-align:justify;">​Authored by <a href="http://blg.com/en/Our-People/Freedman-Bradley" target="_blank">Bradley J. Freedman</a><br></p><p style="text-align:justify;">Canadian Securities Administrators recently published Multilateral Staff Notice 51-347 - Disclosure of cyber security risks and incidents to provide reporting issuers with important guidance for compliance with continuous disclosure obligations regarding cybersecurity risks and incidents.​</p><p style="text-align:justify;"><strong>>> </strong><a href="http://blg.com/en/News-And-Publications/Documents/Publication_4806.pdf" target="_blank"><strong>READ ​MORE</strong></a></p>2/10/2017 5:00:00 AM2017-02-10T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#98850b8e-4cdc-41cf-9cf7-f309880c7c29;L0|#098850b8e-4cdc-41cf-9cf7-f309880c7c29|BLG Energy News and Events;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#4a5f3df2-f070-4411-8e37-bbcc6eb3d6c2;L0|#04a5f3df2-f070-4411-8e37-bbcc6eb3d6c2|CybersecurityBLG Energy News and Events;Cybersecurity
BLG Energy Law Blog December 2016 & January 2017 DigestBLG Energy Law Blog December 2016 & January 2017 Digest283BLG Blog PostMichael A. Marionmmarion@blg.com | Michael A. Marion | 693A30232E777C626C6763616E6164615C6D616D i:0#.w|blgcanada\mam​​​​​​​​​​The December 2016 and January 2017 summary put together by the editors of The Resource BLG Energy Law Blog is now available on the BLG website. Some of the topics posted about includeOur 2016 Year in Reviews 2016 Year in Review Top 10 Legislative, Regulatory and Policy Changes and Trends of Import to the Canadian Energy Industry 2016 Year in Review Top 10 Judicial Decisions and Trends of Import to the Canadian Energy Industry [Read more...]<div>​​​​​​​​​​The December 2016 and January 2017 summary put together by the editors of The Resource: BLG Energy Law Blog is now available on the BLG website. Some of the topics posted about include:</div><div><br></div><div><strong>Our 2016 Year in Reviews</strong></div><div><p></p><p></p><ul><li><a href="/energy/Pages/Post.aspx?PID=272" target="_blank"><em>2016 Year in Review: Top 10 Legislative, Regulatory and Policy Changes and Trends of Import to the Canadian Energy Industry</em> </a><br></li><li><a href="/energy/Pages/Post.aspx?PID=273" target="_blank"><em>2016 Year in Review: Top 10 Judicial Decisions and Trends of Import to the Canadian Energy Industry</em></a> <br></li></ul><p></p></div><p>[<a href="/energy/Pages/Post.aspx?PID=283" target="_blank"><em>Read more</em></a>...]</p> The December 2016 and January 2017 summary put together by the editors of The Resource BLG Energy Law Blog is now available on the BLG website. Some of the topics posted about include​​Our 2016 Year in Reviews2016 Year in Review Top 10 Legislative, Regulatory and Policy Changes and Trends of Import to the Canadian Energy Industry 2016 Year in Review Top 10 Judicial Decisions and Trends of Import to the Canadian Energy Industry >> FIND MORE YEAR IN REVIEW POSTSQuick pipeline updatesFederal Liberal Government Approves Line 3 and Line 2 PipelinesPresident Trump’s Executive Order on Keystone XL – encouragement but not an approval >> FIND MORE PIPELINE POSTSOur perspective on recent decisionsThe Limits of Ultra vires, Interjurisdictional Immunity and Cooperative Federalism in Interprovincial Pipeline Approvals Application of Rogers Communications Inc v Châteauguay (City) 2016 SCC 23Gross Overriding Royalty Interests Not Interest In Land Absent Clear Language >> FIND MORE RECENT DECISION POSTS The full digest​ is available on BLG.com. To review this information offline, download our print-friendly pdf​.​<p></p><p>The December 2016 and January 2017 summary put together by the editors of The Resource: BLG Energy Law Blog is now available on the BLG website. Some of the topics posted about include:​​</p><h3>Our 2016 Year in Reviews</h3><ul><li><a href="/energy/Pages/Post.aspx?PID=272" target="_blank"><em>2016 Year in Review: Top 10 Legislative, Regulatory and Policy Changes and Trends of Import to the Canadian Energy Industry</em> </a><br></li><li><a href="/energy/Pages/Post.aspx?PID=273" target="_blank"><em>2016 Year in Review: Top 10 Judicial Decisions and Trends of Import to the Canadian Energy Industry</em></a> <br></li></ul><p><strong>>> <a href="http://blg.com/en/News-And-Publications/Publication_4824" target="_blank">FIND MORE YEAR IN REVIEW POSTS</a></strong></p><h3>Quick pipeline updates</h3><ul><li><a href="/energy/Pages/Post.aspx?PID=266" target="_blank"><em>Federal Liberal Government Approves Line 3 and Line 2 Pipelines</em></a><br></li><li><a href="/energy/Pages/Post.aspx?PID=278" target="_blank"><em>President Trump’s Executive Order on Keystone XL – encouragement but not an approval</em></a><br></li></ul><p><strong>>> <a href="http://blg.com/en/News-And-Publications/Publication_4824" target="_blank">FIND MORE PIPELINE POSTS</a></strong></p><h3>Our perspective on recent decisions</h3><ul><li><a href="/energy/Pages/Post.aspx?PID=271" target="_blank"><em>The Limits of Ultra vires, Interjurisdictional Immunity and Cooperative Federalism in Interprovincial Pipeline Approvals: Application of Rogers Communications Inc v Châteauguay (City) 2016 SCC 23</em></a><br></li><li><a href="/energy/Pages/Post.aspx?PID=276" target="_blank"><em>Gross Overriding Royalty Interests Not Interest In Land Absent Clear Language</em></a><br></li></ul><p><strong>>> <a href="http://blg.com/en/News-And-Publications/Publication_4824" target="_blank">FIND MORE RECENT DECISION POSTS</a></strong></p><p>The <a href="http://blg.com/en/News-And-Publications/Publication_4824" target="_blank">full digest​</a> is available on BLG.com. To review this information offline, <a href="http://blg.com/en/News-And-Publications/Documents/Publication_4824.pdf" target="_blank">download our print-friendly pdf​</a>.​</p>2/9/2017 5:00:00 AM2017-02-09T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#98850b8e-4cdc-41cf-9cf7-f309880c7c29;L0|#098850b8e-4cdc-41cf-9cf7-f309880c7c29|BLG Energy News and Events;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caBLG Energy News and Events
Newfoundland Court Determines an Employer was not Justified in Terminating the Employment of an Offshore Worker found to be in Possession of MarijuanaNewfoundland Court Determines an Employer was not Justified in Terminating the Employment of an Offshore Worker found to be in Possession of Marijuana282BLG Blog PostAndrew Pozzobonapozzobon@blg.com | Andrew Pozzobon | 693A30232E777C626C6763616E6164615C61706F7A7A6F626F6E i:0#.w|blgcanada\apozzobon​​Recently in Communications, Energy and Paperworkers Union (UNIFOR, Local 2121) v. Terra Nova Employers' Organization, 2016 CanLII 85306 (NL SCTD), the Supreme Court of Newfoundland and Labrador quashed the decision of an arbitrator that had determined that an employer was justified in terminating an offshore union worker’s employment after he was found to be in possession of marijuana in contravention of the employer’s Drug and Alcohol Policy. In quashing the decision, Justice Burrage held that the decision of the arbitrator was unreasonable. Justice Burrage noted that while the worker was in actual possession, as the marijuana was found in his pocket, the wording of the employer’s Drug and Alcohol Policy required that the worker "know" that he had possession of the marijuana while he was on a company facility or was performing company business. [Read more...]<p style="text-align:justify;">​​Recently in <a href="http://www.canlii.org/en/nl/nlsctd/doc/2016/2016canlii85306/2016canlii85306.pdf" target="_blank"><em>Communications, Energy and Paperworkers Union (UNIFOR, Local 2121) v. Terra Nova Employers' Organization</em></a>, 2016 CanLII 85306 (<em>NL SCTD</em>), the Supreme Court of Newfoundland and Labrador quashed the decision of an arbitrator that had determined that an employer was justified in terminating an offshore union worker’s employment after he was found to be in possession of marijuana in contravention of the employer’s Drug and Alcohol Policy. In quashing the decision, Justice Burrage held that the decision of the arbitrator was unreasonable. Justice Burrage noted that while the worker was in actual possession, as the marijuana was found in his pocket, the wording of the employer’s Drug and Alcohol Policy required that the worker "know" that he had possession of the marijuana while he was on a company facility or was performing company business. </p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=282" target="_blank"><em>Read more</em></a>...]</p>Recently in Communications, Energy and Paperworkers Union (UNIFOR, Local 2121) v. Terra Nova Employers' Organization, 2016 CanLII 85306 (NL SCTD), the Supreme Court of Newfoundland and Labrador quashed the decision of an arbitrator that had determined that an employer was justified in terminating an offshore union worker’s employment after he was found to be in possession of marijuana in contravention of the employer’s Drug and Alcohol Policy. In quashing the decision, Justice Burrage held that the decision of the arbitrator was unreasonable. Justice Burrage noted that while the worker was in actual possession, as the marijuana was found in his pocket, the wording of the employer’s Drug and Alcohol Policy required that the worker "know" that he had possession of the marijuana while he was on a company facility or was performing company business. BackgroundThe worker (the Worker) was employed by Magna Services Limited (Magna) and was part of the UNIFOR, Local 2121 union. He worked on the Terra Nova offshore petroleum production platform, located off of Newfoundland. The offshore work environment is extremely hazardous, which has led employers working in that environment to adopt strict policies prohibiting illegal drugs or alcohol, regardless of the quantity. Magna had adopted a Drug and Alcohol Policy (the Policy) which provided that the possession of an illegal drug by an employee “on a company facility” or while “performing company business” was prohibited. After receiving a call from Magna to report to Work, the Worker arrived at a helicopter facility for transport to the offshore petroleum platform. While passing through security, a small piece of tinfoil was found that included a small quantity of marijuana. The Worker denied knowing that the marijuana was in his pocket. Magna later terminated the Worker’s employment on the grounds that he was in possession of an illegal drug, contrary to the Policy. UNIFOR, Local 2121 filed a grievance on the Worker’s behalf. The grievance (the Grievance) was heard by a sole arbitrator (the Arbitrator). In his award, the Arbitrator dismissed the Grievance and upheld the decision of Manga to terminate his employment. In the Arbitrator’s decision, the Arbitrator quoted Resource Development Trades Council of Newfoundland & Labrador v. Voisey's Bay Employer's Assn. Inc. (2004), 134 L.A.C. (4th) 323, [RDC], a decision that had also considered the issue of possession. The Arbitrator concluded that in order to be caught by the Policy, it was necessary to prove that the Worker was in possession of the prohibited substance. The Arbitrator determined that the test for possession required actual physical presence of the drug and knowledge of its actual physical presence. The Arbitrator found that the Worker was credible and he also found as “a fact” the Worker was unaware of the presence of marijuana in his pocket at the time he entered onto the company facility. However, the Arbitrator was satisfied that at some point prior to his arrival at work, the Worker knew that he had marijuana in his pocket, but by the time of his arrival at the company facility he had forgotten it was there. As such, on the balance of probabilities, the Arbitrator concluded that the Worker was in possession of marijuana while performing company business, in contravention of the Policy and as such Magna was justified in terminating his employment. UNIFOR, Local 121 applied for a review of the arbitration decision. Decision In the decision, Justice Burrage noted that the arbitrator was called upon to determine if the Worker was in possession of marijuana in violation of the Policy. In order to determine this question, it was necessary to apply the facts to the legal requirements necessary for such possession. Therefore, the question to be decided was one of mixed fact and law and as such, the standard of review to be applied to the arbitrator’s decision was reasonableness. Justice Burrage reviewed the decision in RDC and noted that the arbitrator in RDC held that possession required both actual physical presence of the drug (actus reus) and knowledge of its actual physical presence (mens rea). Justice Burrage noted that the presence of marijuana in the Worker’s jeans did not serve as a violation of the Policy. It was only once the Worker was on a “company facility” or “performing company business” that the Policy was engaged. Therefore, Justice Burrage determined that while the Worker was in actual physical possession, proof was required, on a balance of probabilities that the Worker knew he was in possession while on “company facility” or “while performing company business”. The mens rea was not simply the intent to possess the marijuana, but the intent to do so while performing company business. In the decision, Justice Burrage noted that the Arbitrator appeared to have confused simple possession with possession that was in violation of the Policy. Justice Burrage noted that Arbitrator had found that the Worker was unaware of the presence of marijuana in his pocket. Justice Burrage distinguished between possession of marijuana and possession of marijuana while on a company facility or engaged in a company business. If the Policy only required possession, the Worker could not rely on his forgetfulness as a defence to the possession. However, the possession of marijuana was not a violation of the Policy as it was only once that the Worker was on a “company facility” or “performing company business” that the Policy was engaged. Therefore, Justice Burrage concluded that the Arbitrator had adopted a legal test for possession that was in contravention of the Policy. Justice Burrage went on to note that while the Court was required to give deference to the determination of the Arbitrator, the Arbitrator’s conclusion that the Worker was in violation of the Policy did not fall within the range of reasonable outcomes available. Under the circumstances, the Arbitrator’ ruling was set aside. While Justice Burrage recognized that the facility to which the Worker was working was in a very “dangerous part of the world” and deterrence was critical, he did not accept Magna’s submission that the decision would open the floodgates to the transport of illegal drugs to the offshore. He noted that in many cases knowledge could be inferred despite the protestations of the employee and each case would depend on its own facts. In this case the arbitrator had found the Worker to be credible and accepted his evidence that he did not know that he was in possession at the time. ImplicationsThis case turned on the Arbitrator’s finding that the Worker was unaware of the presence of the marijuana as he entered security and the wording of the Policy so it is unlikely that this decision could be applied universally. However, the case does highlight the importance of having a properly worded Drug and Alcohol Policy. This case also highlights the difficulty that employers have in enforcing Drug and Alcohol Policies. Even where a worker is found to be in possession of a prohibited substance in contravention of a Drug and Alcohol Policy, depending on the wording of the policy, the employer may have to prove that the worker knew that he or she was in possession of the prohibited substance. <p style="text-align:justify;">Recently in <a href="http://www.canlii.org/en/nl/nlsctd/doc/2016/2016canlii85306/2016canlii85306.pdf" target="_blank"><em>Communications, Energy and Paperworkers Union (UNIFOR, Local 2121) v. Terra Nova Employers' Organization</em></a>, 2016 CanLII 85306 (<em>NL SCTD</em>), the Supreme Court of Newfoundland and Labrador quashed the decision of an arbitrator that had determined that an employer was justified in terminating an offshore union worker’s employment after he was found to be in possession of marijuana in contravention of the employer’s Drug and Alcohol Policy. In quashing the decision, Justice Burrage held that the decision of the arbitrator was unreasonable. Justice Burrage noted that while the worker was in actual possession, as the marijuana was found in his pocket, the wording of the employer’s Drug and Alcohol Policy required that the worker "know" that he had possession of the marijuana while he was on a company facility or was performing company business. </p><h3>Background</h3><p style="text-align:justify;">The worker (the Worker) was employed by Magna Services Limited (Magna) and was part of the UNIFOR, Local 2121 union. He worked on the Terra Nova offshore petroleum production platform, located off of Newfoundland. The offshore work environment is extremely hazardous, which has led employers working in that environment to adopt strict policies prohibiting illegal drugs or alcohol, regardless of the quantity. Magna had adopted a Drug and Alcohol Policy (the Policy) which provided that the possession of an illegal drug by an employee “on a company facility” or while “performing company business” was prohibited. </p><p style="text-align:justify;">After receiving a call from Magna to report to Work, the Worker arrived at a helicopter facility for transport to the offshore petroleum platform. While passing through security, a small piece of tinfoil was found that included a small quantity of marijuana.  The Worker denied knowing that the marijuana was in his pocket. Magna later terminated the Worker’s employment on the grounds that he was in possession of an illegal drug, contrary to the Policy. UNIFOR, Local 2121 filed a grievance on the Worker’s behalf. </p><p style="text-align:justify;">The grievance (the Grievance) was heard by a sole arbitrator (the Arbitrator). In his award, the Arbitrator dismissed the Grievance and upheld the decision of Manga to terminate his employment. In the Arbitrator’s decision, the Arbitrator quoted <em>Resource Development Trades Council of Newfoundland & Labrador v. Voisey's Bay Employer's Assn. Inc.</em> (2004), 134 L.A.C. (4th) 323, [<em>RDC</em>], a decision that had also considered the issue of possession. The Arbitrator concluded that in order to be caught by the Policy, it was necessary to prove that the Worker was in possession of the prohibited substance. The Arbitrator determined that the test for possession required actual physical presence of the drug and knowledge of its actual physical presence. The Arbitrator found that the Worker was credible and he also found as “a fact” the Worker was unaware of the presence of marijuana in his pocket at the time he entered onto the company facility. However, the Arbitrator was satisfied that at some point prior to his arrival at work, the Worker knew that he had marijuana in his pocket, but by the time of his arrival at the company facility he had forgotten it was there.  As such, on the balance of probabilities, the Arbitrator concluded that the Worker was in possession of marijuana while performing company business, in contravention of the Policy and as such Magna was justified in terminating his employment.  UNIFOR, Local 121 applied for a review of the arbitration decision. </p><h3>Decision </h3><p style="text-align:justify;">In the decision, Justice Burrage noted that the arbitrator was called upon to determine if the Worker was in possession of marijuana in violation of the Policy. In order to determine this question, it was necessary to apply the facts to the legal requirements necessary for such possession. Therefore, the question to be decided was one of mixed fact and law and as such, the standard of review to be applied to the arbitrator’s decision was reasonableness. </p><p style="text-align:justify;">Justice Burrage reviewed the decision in RDC and noted that the arbitrator in RDC held that possession required both actual physical presence of the drug (<em>actus reus</em>) and knowledge of its actual physical presence (<em>mens rea</em>). Justice Burrage noted that the presence of marijuana in the Worker’s jeans did not serve as a violation of the Policy. It was only once the Worker was on a “company facility” or “performing company business” that the Policy was engaged. Therefore, Justice Burrage determined that while the Worker was in actual physical possession, proof was required, on a balance of probabilities that the Worker knew he was in possession while on “company facility” or “while performing company business”. The <em>mens rea</em> was not simply the intent to possess the marijuana, but the intent to do so while performing company business. </p><p style="text-align:justify;">In the decision, Justice Burrage noted that the Arbitrator appeared to have confused simple possession with possession that was in violation of the Policy. Justice Burrage noted that Arbitrator had found that the Worker was unaware of the presence of marijuana in his pocket. Justice Burrage distinguished between possession of marijuana and possession of marijuana while on a company facility or engaged in a company business. If the Policy only required possession, the Worker could not rely on his forgetfulness as a defence to the possession. However, the possession of marijuana was not a violation of the Policy as it was only once that the Worker was on a “company facility” or “performing company business” that the Policy was engaged. Therefore, Justice Burrage concluded that the Arbitrator had adopted a legal test for possession that was in contravention of the Policy. Justice Burrage went on to note that while the Court was required to give deference to the determination of the Arbitrator, the Arbitrator’s conclusion that the Worker was in violation of the Policy did not fall within the range of reasonable outcomes available. Under the circumstances, the Arbitrator’ ruling was set aside. </p><p style="text-align:justify;">While Justice Burrage recognized that the facility to which the Worker was working was in a very “dangerous part of the world” and deterrence was critical, he did not accept Magna’s submission that the decision would open the floodgates to the transport of illegal drugs to the offshore. He noted that in many cases knowledge could be inferred despite the protestations of the employee and each case would depend on its own facts. In this case the arbitrator had found the Worker to be credible and accepted his evidence that he did not know that he was in possession at the time.  </p><h3>Implications</h3><p style="text-align:justify;">This case turned on the Arbitrator’s finding that the Worker was unaware of the presence of the marijuana as he entered security and the wording of the Policy so it is unlikely that this decision could be applied universally. However, the case does highlight the importance of having a properly worded Drug and Alcohol Policy. </p><p style="text-align:justify;">This case also highlights the difficulty that employers have in enforcing Drug and Alcohol Policies. Even where a worker is found to be in possession of a prohibited substance in contravention of a Drug and Alcohol Policy, depending on the wording of the policy, the employer may have to prove that the worker knew that he or she was in possession of the prohibited substance.  </p>2/6/2017 5:00:00 AM2017-02-06T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#05db54b2-7a5f-4abd-b4d3-fe0dc1304321;L0|#005db54b2-7a5f-4abd-b4d3-fe0dc1304321|Labour and Employment;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3caLabour and Employment
Potential Changes to NAFTA could have Significant Impacts on Obtaining Canadian Work PermitsPotential Changes to NAFTA could have Significant Impacts on Obtaining Canadian Work Permits281BLG Blog PostBrian D. Portasbportas@blg.com | Brian D. Portas | 693A30232E777C626C6763616E6164615C626470 i:0#.w|blgcanada\bdp​​​​​President Donald Trump frequently raised the issue of renegotiating the North American Free Trade Agreement (NAFTA) during his campaign. Since taking office, he has renewed his criticism and intent to renegotiate NAFTA. As we previously reported in The Historic 2016 United States Elections Canada and the United States — Forward Together, any changes to NAFTA could have significant impacts on business immigration between Canada and the U.S. Companies have long used NAFTA to facilitate the temporary entry of certain categories of workers such as intra-company transferees and professionals. President Trump’s campaign promise to “Make America Great Again,” may not be so great for citizens of the U.S. or Mexico that are currently eligible to use NAFTA provisions to obtain temporary Work Permits for Canada. Although the potential impacts to NAFTA are unknown, foreign nationals considering a Canadian Work Permit application using the benefits afforded under NAFTA, may wish to take steps to apply sooner rather than later.[Read more...]<p style="text-align:justify;">​​​​​President Donald Trump frequently raised the issue of renegotiating the North American Free Trade Agreement (NAFTA) during his campaign. Since taking office, he has renewed his criticism and intent to renegotiate NAFTA. As we previously reported in <a href="http://blg.com/en/News-And-Publications/Publication_4726" target="_blank"><em>The Historic 2016 United States Elections: Canada and the United States — Forward Together</em></a>, any changes to NAFTA could have significant impacts on business immigration between Canada and the U.S.  Companies have long used NAFTA to facilitate the temporary entry of certain categories of workers such as intra-company transferees and professionals.  President Trump’s campaign promise to “Make America Great Again,” may not be so great for citizens of the U.S. or Mexico that are currently eligible to use NAFTA provisions to obtain temporary Work Permits for Canada.  Although the potential impacts to NAFTA are unknown, foreign nationals considering a Canadian Work Permit application using the benefits afforded under NAFTA, may wish to take steps to apply sooner rather than later.</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=280" target="_blank"><em>Read more</em></a>...]</p>President Donald Trump frequently raised the issue of renegotiating the North American Free Trade Agreement (NAFTA) during his campaign. Since taking office, he has renewed his criticism and intent to renegotiate NAFTA. As we previously reported in The Historic 2016 United States Elections Canada and the United States — Forward Together, any changes to NAFTA could have significant impacts on business immigration between Canada and the U.S. Companies have long used NAFTA to facilitate the temporary entry of certain categories of workers such as intra-company transferees and professionals. President Trump’s campaign promise to “Make America Great Again,” may not be so great for citizens of the U.S. or Mexico that are currently eligible to use NAFTA provisions to obtain temporary Work Permits for Canada. Although the potential impacts to NAFTA are unknown, foreign nationals considering a Canadian Work Permit application using the benefits afforded under NAFTA, may wish to take steps to apply sooner rather than later.The Canadian government has also implemented changes in the area of immigration, although considerably less drastic. For example, Immigration, Refugees and Citizenship Canada implemented changes to the Express Entry system on November 19, 2016. These changes were part of the government’s targeted improvements to support Canada’s Global Skills Strategy. New Ministerial instructions were released that amended the Comprehensive Ranking System point allocation scheme. Although some of these allocations may be considered a welcome change by some applicants, and increase their likelihood of receiving an Invitation to Apply for permanent residence, the changes can have adverse effects on other applicants. In addition, the leniency period is now over for the electronic Travel Authorization (eTA) entry requirement. This leniency period, which was originally set to end on September 29, 2016, was extended to give travelers and airlines more time to prepare for the changes. Effective November 9, 2016, visa exempt foreign nationals (including British citizens) who fly to or transit through Canada are required to have an eTA. You can find further details on these changes in Immigration Update Changes to the Express Entry System and Electronic Travel Authorization Reminder​. More labour and employment topics can be found in BLG’s recent newsletter​.For further details on how potential changes may impact your company’s operations, contact your BLG Business Immigration Lawyer. Brian PortasCalgarybportas@blg.com403.232.9705​Brian DingleTorontobdingle@blg.com416.367.6189Jeff ThomasVancouverjsthomas@blg.com604.640.4203​Darren McGuireQuebecdmcguire@blg.com514.954.3105<p style="text-align:justify;">President Donald Trump frequently raised the issue of renegotiating the North American Free Trade Agreement (NAFTA) during his campaign. Since taking office, he has renewed his criticism and intent to renegotiate NAFTA. As we previously reported in <a href="http://blg.com/en/News-And-Publications/Publication_4726" target="_blank"><em>The Historic 2016 United States Elections: Canada and the United States — Forward Together</em></a>, any changes to NAFTA could have significant impacts on business immigration between Canada and the U.S.  Companies have long used NAFTA to facilitate the temporary entry of certain categories of workers such as intra-company transferees and professionals.  President Trump’s campaign promise to “Make America Great Again,” may not be so great for citizens of the U.S. or Mexico that are currently eligible to use NAFTA provisions to obtain temporary Work Permits for Canada.  Although the potential impacts to NAFTA are unknown, foreign nationals considering a Canadian Work Permit application using the benefits afforded under NAFTA, may wish to take steps to apply sooner rather than later.</p><p style="text-align:justify;">The Canadian government has also implemented changes in the area of immigration, although considerably less drastic.  For example, Immigration, Refugees and Citizenship Canada implemented changes to the Express Entry system on November 19, 2016.  These changes were part of the government’s targeted improvements to support Canada’s Global Skills Strategy.  New Ministerial instructions were released that amended the Comprehensive Ranking System point allocation scheme.  Although some of these allocations may be considered a welcome change by some applicants, and increase their likelihood of receiving an Invitation to Apply for permanent residence, the changes can have adverse effects on other applicants.  </p><p style="text-align:justify;">In addition, the leniency period is now over for the electronic Travel Authorization (eTA) entry requirement.  This leniency period, which was originally set to end on September 29, 2016, was extended to give travelers and airlines more time to prepare for the changes.  Effective November 9, 2016, visa exempt foreign nationals (including British citizens) who fly to or transit through Canada are required to have an eTA.  You can find further details on these changes in <a href="http://blg.com/en/News-And-Publications/Publication_4808" target="_blank"><em>Immigration Update: Changes to the Express Entry System and Electronic Travel Authorization Reminder​</em></a>. </p><p style="text-align:justify;">More labour and employment topics can be found in <a href="http://bordenladnergervaisllp.com/rv/ff002e1d534b8dfe07c2bd7f0f499910a6a4049e">BLG’s recent newsletter​</a>.</p><p style="text-align:justify;">For further details on how potential changes may impact your company’s operations, contact your BLG Business Immigration Lawyer. </p><p style="text-align:justify;"><strong>Brian Portas</strong><br>Calgary<br>bportas@blg.com<br>403.232.9705</p><p style="text-align:justify;"><strong>​Brian Dingle<br></strong>Toronto<br>bdingle@blg.com<br>416.367.6189</p><p style="text-align:justify;"><strong>Jeff Thomas<br></strong>Vancouver<br>jsthomas@blg.com<br>604.640.4203</p><p style="text-align:justify;"><strong>​Darren McGuire</strong><br>Quebec<br>dmcguire@blg.com<br>514.954.3105</p>2/3/2017 5:00:00 AM2017-02-03T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#05db54b2-7a5f-4abd-b4d3-fe0dc1304321;L0|#005db54b2-7a5f-4abd-b4d3-fe0dc1304321|Labour and Employment;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#9da5a837-5fd3-476c-90ba-3dabecb65674;L0|#09da5a837-5fd3-476c-90ba-3dabecb65674|Immigration;GP0|#79f5b025-e6dd-4c66-873b-67e8780cf972;L0|#079f5b025-e6dd-4c66-873b-67e8780cf972|Regulatory;GP0|#02c6fbc3-adb6-494d-8393-8d0d1439d41d;L0|#002c6fbc3-adb6-494d-8393-8d0d1439d41d|United StatesLabour and Employment;Immigration;Regulatory;United States
Immune (At Least For Now): Divided Supreme Court of Canada Strikes Claim for Charter Damages Against Energy Regulator Immune (At Least For Now): Divided Supreme Court of Canada Strikes Claim for Charter Damages Against Energy Regulator 280BLG Blog PostGarrett Finegan;Michael A. Mariongfinegan@blg.com | Garrett Finegan | 693A30232E777C626C6763616E6164615C6766696E6567616E i:0#.w|blgcanada\gfinegan;mmarion@blg.com | Michael A. Marion | 693A30232E777C626C6763616E6164615C6D616D i:0#.w|blgcanada\mam​​​On January 13, 2017, the Supreme Court of Canada (SCC) released its decision in Ernst v. Alberta Energy Regulator. As BLG noted in our blog post​ discussing the SCC’s decision to hear the Ernst case, leave to appeal was granted on a narrow but important constitutional issue. The Plaintiff, Jessica Ernst, claimed that the Energy Resources Conservation Board (the Board) had violated her rights under Canadian Charter of Rights and Freedoms (the Charter), and sought damages as a remedy pursuant to Section 24 of the Charter. The Alberta Court of Appeal (ABCA) had struck the Charter claim on the basis that, even if a Charter breach was proven, the Board was immune to damages for a Charter breach by virtue of a statutory immunity clause. In a split decision, the SCC ultimately upheld the ABCA decision to strike Ms. Ernst’s Charter claim, but did so on grounds​ which differed from the reasoning adopted by the ABCA. The decision is notable for the energy industry because while it does not immediately alter the status quo with respect to the Board’s broad immunity from damages claims, it leaves the law in this area surprisingly unsettled. ​[Read more​...]<p style="text-align:justify;">​​​On January 13, 2017, the Supreme Court of Canada (SCC) released its decision in <a href="http://www.canlii.org/en/ca/scc/doc/2017/2017scc1/2017scc1.pdf" target="_blank"><em>Ernst v. Alberta Energy Regulator</em></a>. As BLG noted in <a href="/energy/Pages/Post.aspx?PID=90" target="_blank">our blog post​</a> discussing the SCC’s decision to hear the Ernst case, leave to appeal was granted on a narrow but important constitutional issue. The Plaintiff, Jessica Ernst, claimed that the Energy Resources Conservation Board (the Board) had violated her rights under <em>Canadian Charter of Rights and Freedoms</em> (the <em>Charter</em>), and sought damages as a remedy pursuant to Section 24 of the <em>Charter</em>. The Alberta Court of Appeal (ABCA) had struck the <em>Charter</em> claim on the basis that, even if a <em>Charter</em> breach was proven, the Board was immune to damages for a <em>Charter</em> breach by virtue of a statutory immunity clause. In a split decision, the SCC ultimately upheld the ABCA decision to strike Ms. Ernst’s <em>Charter</em> claim, but did so on grounds​ which differed from the reasoning adopted by the ABCA. The decision is notable for the energy industry because while it does not immediately alter the status quo with respect to the Board’s broad immunity from damages claims, it leaves the law in this area surprisingly unsettled. ​</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=280" target="_blank">Read more​</a>...]</p> On January 13, 2017, the Supreme Court of Canada (SCC) released its decision in Ernst v. Alberta Energy Regulator. As BLG noted in our blog post discussing the SCC’s decision to hear the Ernst case, leave to appeal was granted on a narrow but important constitutional issue. The Plaintiff, Jessica Ernst, claimed that the Energy Resources Conservation Board (the Board) had violated her rights under Canadian Charter of Rights and Freedoms (the Charter), and sought damages as a remedy pursuant to Section 24 of the Charter. The Alberta Court of Appeal (ABCA) had struck the Charter claim on the basis that, even if a Charter breach was proven, the Board was immune to damages for a Charter breach by virtue of a statutory immunity clause. In a split decision, the SCC ultimately upheld the ABCA decision to strike Ms. Ernst’s Charter claim, but did so on grounds which differed from the reasoning adopted by the ABCA. The decision is notable for the energy industry because while it does not imme​diately alter the status quo with respect to the Board’s broad immunity from damages claims, it leaves the law in this area surprisingly unsettled.BackgroundAs discussed in more detail in our previous blog post about the ABCA’s decision in Ernst, Ms. Ernst’s claim is based on her allegation that she suffered damages as a result of a coal bed methane shallow drilling program that was approved by the Board. Ms. Ernst claimed damages against the Board on two grounds (i) negligent administration of a regulatory regime; and (ii) breach of Ms. Ernst’s Charter right to freedom of expression. The negligence claim was struck by the ABCA on the basis that the Board did not owe a duty of care to Ms. Ernst, and in any event, her claim was barred by Section 43 of the Energy Resources Conservation Act, (the ERCA), which stated, in part, that “No action…may be brought against the Board…in respect of any act or thing done purportedly in pursuance of this Act...” (Section 43). This aspect of the ABCA’s decision was not appealed, and as we recently noted in our blog post regarding Goodhart v Alberta Energy Regulator, the ABCA’s decision in Ernst has been held to apply with equal force to negligence claims against the Board’s successor, the Alberta Energy Regulator (AER). The Charter claim was rooted in Ms. Ernst’s vocal public criticism of the Board. Ms. Ernst alleged that in order to punish her for her criticism, the Board informed her that Board staff would avoid all contact with her until such time as she agreed to stop raising concerns through the media or public. Ms. Ernst alleged that this decision violated her right to freedom of expression under Section 2(b) of the Charter. The Court of Queen’s Bench found that this novel Charter claim was not so unsustainable that it could be struck out summarily, but found that it was barred by Section 43. On appeal to the ABCA, Ms. Ernst explicitly argued that she was not challenging the constitutionality of Section 43, but rather was arguing that this section did not apply to bar Charter claims. This argument was rejected by the ABCA, which held that Section 43 did apply to bar Ms. Ernst’ claim for Charter damages.Ms. Ernst appealed to the SCC, arguing for the first time that Section 43 clearly barred her claim for Charter damages, and as such, was unconstitutional. As noted in our blog post about the SCC decision to grant leave to appeal, it was anticipated that Ernst would have broad implications for many regulatory and administrative tribunals by providing guidance regarding the interplay between statutory immunity provisions and claims for Charter damages.The DecisionThere was a tight three-way split (414) of the nine-member SCC panel in this case. The first opinion, authored by Justice Cromwell, with Justices Karakatsanis, Wagner and Gascon concurring, adopted Ms. Ernst’s position that it was plain and obvious that Section 43 barred a claim for Charter damages. Justice Cromwell held the implication of this position was that to avoid the striking of her claim on the basis of Section 43, Ms. Ernst had a burden to provide “an adequate factual basis” to permit a finding that Section 43 was unconstitutional. Because Ms. Ernst had not met this evidentiary burden, the immunity clause applied. Ms. Ernst’s claim was correctly struck. This finding was seemingly sufficient to dispose of the appeal, but Justice Cromwell went on to find that Charter damages could never be an appropriate and just remedy for Charter breaches by the Board. This finding was due to both the appropriateness of judicial review as an alternative, more effective remedy, and the numerous policy rationales for statutory and common law immunity from civil suits granted to many quasi-judicial bodies and administrative agencies (discussed in more detail in our blog post on the ABCA decision in Ernst). Respecting the latter, Justice Cromwell found that “opening the Board to damages claims will distract it from its statutory duties, potentially have a chilling effect on its decision making, compromise its impartiality, and open up new and undesirable modes of collateral attack on its decisions” (at paragraph 55). Justice Cromwell held that case-by-case determinations of Charter damages are not necessary, because to effectively achieve its policy objectives, immunity must be granted for any and all claims of damages. Interestingly, this finding was influenced by, but did not turn on, the presence of a statutory immunity clause. Justice Cromwell noted at paragraph 50“Of course these sorts of statutory provisions cannot override constitutional rights, but the policy reasons on which they are based can and should be taken into account by a reviewing court.”In the second opinion, Justice Abella agreed with Justice Cromwell that, on its face, the immunity clause barred a Charter damages claim. Justice Abella then emphasized that Ms. Ernst had failed at the lower court levels to give notice of a constitutional challenge to the Attorney General of Alberta, as required by Section 24 of the Judicature Act, and had in fact denied that such a challenge was being made. Justice Abella noted that the required notice of a constitutional challenge is more than a formality, as it is imperative that any court considering the constitutionality of a statutory provision hear evidence and argument justifying the provision from the government which enacted it. In Justice Abella’s view, Ms. Ernst’s failure to properly raise the constitutional challenge meant that it would be procedurally improper for the SCC to consider whether Section 43 was constitutional. Because Section 43’s constitutionality had not been successfully challenged, it applied to strike Ms. Ernst’s Charter damages claim. Justice Abella also found that, on the facts of this case, the only appropriate remedy was judicial review of the Board’s decision to cease communicating with Ms. Ernst.The third and dissenting opinion, authored by Chief Justice McLachlin and Justices Moldaver and Brown, with Justice Côté concurring, would have set aside the order striking Ms. Ernst’s Charter damages claim and returned the claim to the Alberta Court of Queen’s Bench for consideration at first instance. This result was based on the dissenting Justices’ opinion that it was not plain and obvious that the punitive conduct alleged by Ms. Ernst would be caught by the language of Section 43, which only covered acts “done purportedly in pursuance of” the ERCA. As it was arguable that allegedly punitive acts were not authorized by the ERCA, Ms. Ernst should be granted an opportunity to show that the Board’s decision to avoid all contact with her was not protected by Section 43. It was only after a court had determined that the Board’s conduct was protected by Section 43 that the issue of Section 43’s constitutional validity could arise. It is noteworthy that the dissenting Justices’ findings in respect of the effect of Section 43 on Ms. Ernst’s Charter damages claim directly contradicted the positions taken by both the Board and Ms. Ernst herself. This aspect of the dissenting opinion attracted particular criticism from Justice Cromwell, largely on the basis that it would be unfair to decide the case on the basis of an issue that was not raised during the hearing.The dissenting Justices strongly argued against Justice Cromwell’s finding that Charter damages could never be an appropriate and just remedy for a Charter breach by the Board. Common law and statutory immunity granted to state actors is always qualified by exceptions, such as where there is evidence of bad faith or abuse of power. If Ms. Ernst’s allegations of punitive conduct were true – which was to be presumed for the purposes of an application to strike – there was no compelling policy rationale to immunize the Board from such serious misconduct. The dissenting Justices also found that it was not plain and obvious that judicial review would be an effective alternative remedy to Charter damages, particularly with respect to vindicating Ms. Ernst’s rights and deterring future breaches by the Board. In the result, it was not plain and obvious that Charter damages could not be an appropriate and just remedy for Ms. Ernst’s claims. ImplicationsIn the long term, the strong dissent and lack of a true majority decision raise more questions than answers with respect to the interplay between Charter damages and regulatory decision-making. Most notably, the decision leaves open the possibility that, in different factual and procedural circumstances, a Charter damages claim against an administrative or quasi-judicial body might be successful at the SCC. In any such claim, the Ernst decision would at least seem to make it clear that the presence of a statutory immunity clause will not be determinative of the result, but rather will simply be a key factor to be considered.Until such a claim is successfully brought at the SCC, the immediate implication of the decision for the energy industry is that lower courts remain likely to protect the AER and other administrative and quasi-judicial bodies from actions for damages, regardless of whether such actions are brought pursuant to the Charter or the common law. Courts, especially in Alberta, remain likely to find that the only appropriate means of challenging a decision made by an administrative and quasi-judicial body such as the AER is an application for judicial review. So, for the time being it is business as usual. In these uncertain times, any certainty for industry is welcome.<p style="text-align:justify;"> </p><p style="text-align:justify;">On January 13, 2017, the Supreme Court of Canada (SCC) released its decision in <a href="http://www.canlii.org/en/ca/scc/doc/2017/2017scc1/2017scc1.pdf" target="_blank"><em>Ernst v. Alberta Energy Regulator</em></a>. As BLG noted in <a href="/energy/Pages/Post.aspx?PID=90" target="_blank">our blog post</a> discussing the SCC’s decision to hear the Ernst case, leave to appeal was granted on a narrow but important constitutional issue. The Plaintiff, Jessica Ernst, claimed that the Energy Resources Conservation Board (the Board) had violated her rights under <em>Canadian Charter of Rights and Freedoms</em> (the <em>Charter</em>), and sought damages as a remedy pursuant to Section 24 of the <em>Charter</em>. The Alberta Court of Appeal (ABCA) had struck the <em>Charter</em> claim on the basis that, even if a <em>Charter </em>breach was proven, the Board was immune to damages for a <em>Charter</em> breach by virtue of a statutory immunity clause. In a split decision, the SCC ultimately upheld the ABCA decision to strike Ms. Ernst’s <em>Charter </em>claim, but did so on grounds which differed from the reasoning adopted by the ABCA. The decision is notable for the energy industry because while it does not imme​diately alter the status quo with respect to the Board’s broad immunity from damages claims, it leaves the law in this area surprisingly unsettled.</p><h3>Background</h3><p style="text-align:justify;">As discussed in more detail in <a href="/energy/Pages/Post.aspx?PID=21" target="_blank">our previous blog post</a> about the <a href="http://www.canlii.org/en/ab/abca/doc/2014/2014abca285/2014abca285.pdf" target="_blank">ABCA’s decision</a> in <em>Ernst</em>, Ms. Ernst’s claim is based on her allegation that she suffered damages as a result of a coal bed methane shallow drilling program that was approved by the Board. Ms. Ernst claimed damages against the Board on two grounds: (i) negligent administration of a regulatory regime; and (ii) breach of Ms. Ernst’s <em>Charter</em> right to freedom of expression. </p><p style="text-align:justify;">The negligence claim was struck by the ABCA on the basis that the Board did not owe a duty of care to Ms. Ernst, and in any event, her claim was barred by Section 43 of the <em>Energy Resources Conservation Act</em>, (the <em>ERCA</em>), which stated, in part, that “No action…may be brought against the Board…in respect of any act or thing done purportedly in pursuance of this Act...” (Section 43).  This aspect of the ABCA’s decision was not appealed, and as we recently noted in <a href="/energy/Pages/Post.aspx?PID=252" target="_blank">our blog post</a> regarding <a href="http://www.canlii.org/en/ab/abqb/doc/2016/2016abqb469/2016abqb469.pdf"><em>Goodhart v Alberta Energy Regulator</em></a>, the ABCA’s decision in <em>Ernst</em> has been held to apply with equal force to negligence claims against the Board’s successor, the Alberta Energy Regulator (AER). </p><p style="text-align:justify;">The <em>Charter</em> claim was rooted in Ms. Ernst’s vocal public criticism of the Board. Ms. Ernst alleged that in order to punish her for her criticism, the Board informed her that Board staff would avoid all contact with her until such time as she agreed to stop raising concerns through the media or public. Ms. Ernst alleged that this decision violated her right to freedom of expression under Section 2(b) of the <em>Charter</em>. The Court of Queen’s Bench found that this novel <em>Charter </em>claim was not so unsustainable that it could be struck out summarily, but found that it was barred by Section 43. On appeal to the ABCA, Ms. Ernst explicitly argued that she was not challenging the constitutionality of Section 43, but rather was arguing that this section did not apply to bar <em>Charter </em>claims. This argument was rejected by the ABCA, which held that Section 43 did apply to bar Ms. Ernst’ claim for <em>Charter </em>damages.</p><p style="text-align:justify;">Ms. Ernst appealed to the SCC, arguing for the first time that Section 43 clearly barred her claim for <em>Charter</em> damages, and as such, was unconstitutional. As noted in <a href="/energy/Pages/Post.aspx?PID=90" target="_blank">our blog post</a> about the SCC decision to grant leave to appeal, it was anticipated that <em>Ernst</em> would have broad implications for many regulatory and administrative tribunals by providing guidance regarding the interplay between statutory immunity provisions and claims for <em>Charter </em>damages.</p><h3>The Decision</h3><p style="text-align:justify;">There was a tight three-way split (4:1:4) of the nine-member SCC panel in this case. The first opinion, authored by Justice Cromwell, with Justices Karakatsanis, Wagner and Gascon concurring, adopted Ms. Ernst’s position that it was plain and obvious that Section 43 barred a claim for <em>Charter</em> damages. Justice Cromwell held the implication of this position was that to avoid the striking of her claim on the basis of Section 43, Ms. Ernst had a burden to provide “an adequate factual basis” to permit a finding that Section 43 was unconstitutional. Because Ms. Ernst had not met this evidentiary burden, the immunity clause applied. Ms. Ernst’s claim was correctly struck. </p><p style="text-align:justify;">This finding was seemingly sufficient to dispose of the appeal, but Justice Cromwell went on to find that Charter damages could never be an appropriate and just remedy for Charter breaches by the Board. This finding was due to both the appropriateness of judicial review as an alternative, more effective remedy, and the numerous policy rationales for statutory and common law immunity from civil suits granted to many quasi-judicial bodies and administrative agencies (discussed in more detail in <a href="/energy/Pages/Post.aspx?PID=21" target="_blank">our blog post</a> on the ABCA decision in <em>Ernst</em>). Respecting the latter, Justice Cromwell found that “opening the Board to damages claims will distract it from its statutory duties, potentially have a chilling effect on its decision making, compromise its impartiality, and open up new and undesirable modes of collateral attack on its decisions” (at paragraph 55). Justice Cromwell held that case-by-case determinations of <em>Charter</em> damages are not necessary, because to effectively achieve its policy objectives, immunity must be granted for any and all claims of damages. Interestingly, this finding was influenced by, but did not turn on, the presence of a statutory immunity clause. Justice Cromwell noted at paragraph 50:</p><blockquote style="margin:0px 0px 0px 40px;padding:0px;border:currentcolor;"><p style="text-align:justify;">“Of course these sorts of statutory provisions cannot override constitutional rights, but the policy reasons on which they are based can and should be taken into account by a reviewing court.”</p></blockquote><p style="text-align:justify;">In the second opinion, Justice Abella agreed with Justice Cromwell that, on its face, the immunity clause barred a Charter damages claim. Justice Abella then emphasized that Ms. Ernst had failed at the lower court levels to give notice of a constitutional challenge to the Attorney General of Alberta, as required by Section 24 of the <em>Judicature Act</em>, and had in fact denied that such a challenge was being made. Justice Abella noted that the required notice of a constitutional challenge is more than a formality, as it is imperative that any court considering the constitutionality of a statutory provision hear evidence and argument justifying the provision from the government which enacted it. In Justice Abella’s view, Ms. Ernst’s failure to properly raise the constitutional challenge meant that it would be procedurally improper for the SCC to consider whether Section 43 was constitutional. Because Section 43’s constitutionality had not been successfully challenged, it applied to strike Ms. Ernst’s <em>Charter</em> damages claim. Justice Abella also found that, on the facts of this case, the only appropriate remedy was judicial review of the Board’s decision to cease communicating with Ms. Ernst.</p><p style="text-align:justify;">The third and dissenting opinion, authored by Chief Justice McLachlin and Justices Moldaver and Brown, with Justice Côté concurring, would have set aside the order striking Ms. Ernst’s <em>Charter</em> damages claim and returned the claim to the Alberta Court of Queen’s Bench for consideration at first instance. This result was based on the dissenting Justices’ opinion that it was not plain and obvious that the punitive conduct alleged by Ms. Ernst would be caught by the language of Section 43, which only covered acts “done purportedly in pursuance of” the <em>ERCA</em>. As it was arguable that allegedly punitive acts were not authorized by the <em>ERCA</em>, Ms. Ernst should be granted an opportunity to show that the Board’s decision to avoid all contact with her was not protected by Section 43. It was only after a court had determined that the Board’s conduct was protected by Section 43 that the issue of Section 43’s constitutional validity could arise. It is noteworthy that the dissenting Justices’ findings in respect of the effect of Section 43 on Ms. Ernst’s <em>Charter</em> damages claim directly contradicted the positions taken by both the Board and Ms. Ernst herself. This aspect of the dissenting opinion attracted particular criticism from Justice Cromwell, largely on the basis that it would be unfair to decide the case on the basis of an issue that was not raised during the hearing.</p><p style="text-align:justify;">The dissenting Justices strongly argued against Justice Cromwell’s finding that <em>Charter</em> damages could never be an appropriate and just remedy for a<em> Charter </em>breach by the Board. Common law and statutory immunity granted to state actors is always qualified by exceptions, such as where there is evidence of bad faith or abuse of power. If Ms. Ernst’s allegations of punitive conduct were true – which was to be presumed for the purposes of an application to strike – there was no compelling policy rationale to immunize the Board from such serious misconduct.  The dissenting Justices also found that it was not plain and obvious that judicial review would be an effective alternative remedy to <em>Charter</em> damages, particularly with respect to vindicating Ms. Ernst’s rights and deterring future breaches by the Board. In the result, it was not plain and obvious that <em>Charter</em> damages could not be an appropriate and just remedy for Ms. Ernst’s claims. </p><h3>Implications</h3><p style="text-align:justify;">In the long term, the strong dissent and lack of a true majority decision raise more questions than answers with respect to the interplay between <em>Charter</em> damages and regulatory decision-making. Most notably, the decision leaves open the possibility that, in different factual and procedural circumstances, a <em>Charter</em> damages claim against an administrative or quasi-judicial body might be successful at the SCC. In any such claim, the Ernst decision would at least seem to make it clear that the presence of a statutory immunity clause will not be determinative of the result, but rather will simply be a key factor to be considered.</p><p style="text-align:justify;">Until such a claim is successfully brought at the SCC, the immediate implication of the decision for the energy industry is that lower courts remain likely to protect the AER and other administrative and quasi-judicial bodies from actions for damages, regardless of whether such actions are brought pursuant to the <em>Charter</em> or the common law. Courts, especially in Alberta, remain likely to find that the only appropriate means of challenging a decision made by an administrative and quasi-judicial body such as the AER is an application for judicial review. So, for the time being it is business as usual. In these uncertain times, any certainty for industry is welcome.</p>2/1/2017 5:00:00 AM2017-02-01T05:00:00ZTrue1float;#2.00000000000000float;#2017.00000000000string;#Februaryfloat;#201702.000000000GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & Gas;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#23e50663-be85-467e-acf9-7150e42ed669;L0|#023e50663-be85-467e-acf9-7150e42ed669|Energy;GP0|#59822b77-534c-4b80-a42f-b48ce4a981d7;L0|#059822b77-534c-4b80-a42f-b48ce4a981d7|Constitutional Law;GP0|#79f5b025-e6dd-4c66-873b-67e8780cf972;L0|#079f5b025-e6dd-4c66-873b-67e8780cf972|Regulatory;GP0|#80272199-c96f-4e96-a610-ee5c8caae603;L0|#080272199-c96f-4e96-a610-ee5c8caae603|Environment;GP0|#a8d93e98-a569-4c7f-ac81-5c92b85685cd;L0|#0a8d93e98-a569-4c7f-ac81-5c92b85685cd|Appeals;GP0|#49f71978-9f87-4c5c-9046-899dce05f688;L0|#049f71978-9f87-4c5c-9046-899dce05f688|Supreme Court AdvocacyOil & Gas;Energy;Constitutional Law;Regulatory;Environment;Appeals;Supreme Court Advocacy
Alberta Court of Queen’s Bench Clarifies that Leave is Not Required to Cross-Examine on an Affidavit of RecordsAlberta Court of Queen’s Bench Clarifies that Leave is Not Required to Cross-Examine on an Affidavit of Records279BLG Blog PostLeanne Desbarats;Karen A. Salmonldesbarats@blg.com | Leanne Desbarats | 693A30232E777C626C6763616E6164615C6C646573626172617473 i:0#.w|blgcanada\ldesbarats;ksalmon@blg.com | Karen A. Salmon | 693A30232E777C626C6763616E6164615C6B73616C6D6F6E i:0#.w|blgcanada\ksalmon​​​It was previously unclear under the Alberta Rules of Court, Alta Reg 124/2010 (the Rules) whether leave of the Court was required to question on an affidavit of records (an AOR). In a recent decision from Justice Macleod (2017 ABQB 26), which upheld a decision of Master Prowse, it was confirmed that leave is not required and that questioning on an AOR is a right under the Rules. This decision provides an important procedural clarification and also sets out certain limitations on the scope of such a cross-examination.​​[Read more...]<p style="text-align:justify;">​​​It was previously unclear under the Alberta Rules of Court, Alta Reg 124/2010 (the Rules) whether leave of the Court was required to question on an affidavit of records (an AOR). In a recent decision from Justice Macleod (2017 ABQB 26), which upheld a decision of <a href="https://www.canlii.org/en/ab/abqb/doc/2016/2016abqb623/2016abqb623.pdf">Master Prowse</a>, it was confirmed that leave is not required and that questioning on an AOR is a right under the Rules. This decision provides an important procedural clarification and also sets out certain limitations on the scope of such a cross-examination.​​</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=279" target="_blank"><em>Read more</em></a>...]</p>​​​It was previously unclear under the Alberta Rules of Court, Alta Reg 124/2010 (the Rules) whether leave of the Court was required to question on an affidavit of records (an AOR). In a recent decision from Justice Macleod (2017 ABQB 26), which upheld a decision of Master Prowse​, it was confirmed that leave is not required and that questioning on an AOR is a right under the Rules. This decision provides an important procedural clarification and also sets out certain limitations on the scope of such a cross-examination.​​BackgroundIn this case, counsel for the plaintiff Penn West Petroleum Ltd. (Penn West) attempted to arrange for the cross-examination of the deponent of the AOR of one of the defendants, Canadian Natural Resources Limited (CNRL). Counsel for CNRL objected to the cross-examination on the basis that the Rules do not expressly provide for such a right. The Old Rules expressly provided that “a person who has made an affidavit, including an affidavit of documents, filed in any action or proceedings, may be cross-examined on the affidavit without order” (rule 414(1)). However, the current Rules do not expressly deal with whether cross-examination on an AOR is available without court order. Rule 6.7 deals with cross examination on an affidavit. However, that rule only deals with affidavits in support of an application or in reply to an application and does not deal with cross-examination on an AOR. Rule 5.11 provides that a Court can order cross-examination on an AOR to assist the Court in making a determination about whether a record should be provided. It states 5.11(1) On application, the Court may order a record to be produced if the Court is satisfied that(a) a relevant and material record under the control of a party has been omitted from an affidavit of records, or(b) a claim of privilege has been incorrectly or improperly made in respect of a record.(2) For the purpose of making a decision on the application, the Court may(a) inspect a record, and(b) permit cross-examination on the original and on any subsequent affidavit of records. [Emphasis Added]However, this section only deals with when the Court is considering whether to order the production of a specific record and did not comment on any general right to cross-examine on an AOR. There was previously no case law resolving this issue in Alberta with the sole comment on the general right to cross-examine on an AOR being the decision Manson Insulation Products Ltd. v Crossroads C&I Distributors, 2014 ABQB 442 where the Court stated The parties have proceeded on the assumption that leave is required to cross examine on an affidavit of records.……the application does not technically fall under rule 5.11(2)… Furthermore, while the question is not before me for consideration, it has yet to be determined that the rules prohibit cross-examination on affidavits of records on more general grounds, as a matter of right. [Emphasis Added]Decision In Master Prowse’s decision, he held that a party does not need leave of the court to cross-examine a deponent of an AOR. He acknowledged that the Rules are silent on the issue but commented there are strong general policy considerations that support allowing parties to cross-examine on AORs as a right, as it would assist parties in resolving issues before the court in a timely and cost-effective way in line with the purpose and intention of the Rules. Master Prowse also commented on the limitations of the right to cross-examine on an AOR. He stated that cross-examination on an AOR is not meant to give a party two chances at examination for discovery of adverse parties and that a cross-examination “does not open up the scope of a cross-examination on an AOR to the extent of an examination for discovery”. Further, he stated that if a party “believes, in the particular circumstances of the case, that the cross-examination is unnecessary or abusive they can move to set aside the appointment.”CNRL appealed the decision of Master Prowse. In reviewing the decision, Justice Macleod agreed with Master Prowse’s analysis, finding that a deponent of an AOR can be cross examined as of right. Justice Macleod stressed that cross examination on an AOR is an important tool to “test the methodology or the adequacy of document production” but also stated that if a party believes that cross examination is unnecessary or abusive it can make a motion to set aside the appointment. Justice Macleod also noted that restricting the right to cross examine on an AOR does not accomplish the stated goal in the Rules to “provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost effective” and that there is nothing to be gained in terms of expediting litigating by requiring a party to obtain leave of the Court to cross examine on an AOR.ImplicationsThis decision provides an important procedural clarification. Parties should be prepared for the possibility of the cross examination of their deponent on an AOR and should also be mindful of the limited scope of such an examination.<p style="text-align:justify;">​​​It was previously unclear under the Alberta Rules of Court, Alta Reg 124/2010 (the <em>Rules</em>) whether leave of the Court was required to question on an affidavit of records (an AOR). In a recent decision from Justice Macleod (2017 ABQB 26), which upheld a decision of <a href="https://www.canlii.org/en/ab/abqb/doc/2016/2016abqb623/2016abqb623.pdf">Master Prowse​</a>, it was confirmed that leave is not required and that questioning on an AOR is a right under the Rules. This decision provides an important procedural clarification and also sets out certain limitations on the scope of such a cross-examination.​​</p><h3>Background</h3><p style="text-align:justify;">In this case, counsel for the plaintiff Penn West Petroleum Ltd. (Penn West) attempted to arrange for the cross-examination of the deponent of the AOR of one of the defendants, Canadian Natural Resources Limited (CNRL). Counsel for CNRL objected to the cross-examination on the basis that the <em>Rules</em> do not expressly provide for such a right. </p><p style="text-align:justify;">The Old <em>Rules</em> expressly provided that “a person who has made an affidavit, including an affidavit of documents, filed in any action or proceedings, may be cross-examined on the affidavit without order” (rule 414(1)). </p><p style="text-align:justify;">However, the current <em>Rules</em> do not expressly deal with whether cross-examination on an AOR is available without court order. Rule 6.7 deals with cross examination on an affidavit. However, that rule only deals with affidavits in support of an application or in reply to an application and does not deal with cross-examination on an AOR. </p><p style="text-align:justify;">Rule 5.11 provides that a Court can order cross-examination on an AOR to assist the Court in making a determination about whether a record should be provided. It states: </p><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">5.11(1) On application, the Court may order a record to be produced if the Court is satisfied that</p></blockquote><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">(a) a relevant and material record under the control of a party has been omitted from an affidavit of records, or</p></blockquote></blockquote><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">(b) a claim of privilege has been incorrectly or improperly made in respect of a record.</p></blockquote></blockquote><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">(2) For the purpose of making a decision on the application, the Court may</p></blockquote><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">(a) inspect a record, and</p></blockquote><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">(b) <span style="text-decoration:underline;">permit cross-examination on the original and on any subsequent affidavit of records</span>. [Emphasis Added]</p></blockquote></blockquote><p style="text-align:justify;">However, this section only deals with when the Court is considering whether to order the production of a specific record and did not comment on any general right to cross-examine on an AOR. </p><p style="text-align:justify;">There was previously no case law resolving this issue in Alberta with the sole comment on the general right to cross-examine on an AOR being the decision <em>Manson Insulation Products Ltd. v Crossroads C&I Distributors</em>, 2014 ABQB 442 where the Court stated: </p><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">The parties have proceeded on the assumption that leave is required to cross examine on an affidavit of records.</p><p style="text-align:justify;">…</p><p style="text-align:justify;">…the application does not technically fall under rule 5.11(2)… Furthermore, while the question is not before me for consideration, <span style="text-decoration:underline;">it has yet to be determined that the rules prohibit cross-examination on affidavits of records on more general grounds, as a matter of right</span>. [Emphasis Added]</p></blockquote><h3>Decision </h3><p style="text-align:justify;">In Master Prowse’s decision, he held that a party does not need leave of the court to cross-examine a deponent of an AOR. He acknowledged that the <em>Rules</em> are silent on the issue but commented there are strong general policy considerations that support allowing parties to cross-examine on AORs as a right, as it would assist parties in resolving issues before the court in a timely and cost-effective way in line with the purpose and intention of the <em>Rules</em>. </p><p style="text-align:justify;">Master Prowse also commented on the limitations of the right to cross-examine on an AOR. He stated that cross-examination on an AOR is not meant to give a party two chances at examination for discovery of adverse parties and that a cross-examination “does not open up the scope of a cross-examination on an AOR to the extent of an examination for discovery”. Further, he stated that if a party “believes, in the particular circumstances of the case, that the cross-examination is unnecessary or abusive they can move to set aside the appointment.”</p><p style="text-align:justify;">CNRL appealed the decision of Master Prowse. In reviewing the decision, Justice Macleod agreed with Master Prowse’s analysis, finding that a deponent of an AOR can be cross examined as of right. Justice Macleod stressed that cross examination on an AOR is an important tool to “test the methodology or the adequacy of document production” but also stated that if a party believes that cross examination is unnecessary or abusive it can make a motion to set aside the appointment. Justice Macleod also noted that restricting the right to cross examine on an AOR does not accomplish the stated goal in the <em>Rules</em> to “provide a means by which claims can be fairly and justly resolved in or by a court process in a timely and cost effective” and that there is nothing to be gained in terms of expediting litigating by requiring a party to obtain leave of the Court to cross examine on an AOR.</p><h4>Implications</h4><p style="text-align:justify;">This decision provides an important procedural clarification. Parties should be prepared for the possibility of the cross examination of their deponent on an AOR and should also be mindful of the limited scope of such an examination.</p>1/30/2017 5:00:00 AM2017-01-30T05:00:00ZTrue1float;#1.00000000000000float;#2017.00000000000string;#Januaryfloat;#201701.000000000GP0|#f61f75ba-8b4a-47e4-ac93-81a58bdb7860;L0|#0f61f75ba-8b4a-47e4-ac93-81a58bdb7860|Public Policy;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & Gas;GP0|#6ed29997-7c09-433d-9f4f-e4bb2ce1b29b;L0|#06ed29997-7c09-433d-9f4f-e4bb2ce1b29b|LitigationPublic Policy;Oil & Gas;Litigation
Gross Overriding Royalty Interests Not Interest In Land Absent Clear LanguageGross Overriding Royalty Interests Not Interest In Land Absent Clear Language276BLG Blog PostChidinma Thompson;Josef G. A. Kruger;Steven Bodi;Tory Hibbittcthompson@blg.com | Chidinma Thompson | 693A30232E777C626C6763616E6164615C6374686F6D70736F6E i:0#.w|blgcanada\cthompson;jkruger@blg.com | Josef G. A. Kruger | 693A30232E777C626C6763616E6164615C6A676B i:0#.w|blgcanada\jgk;sbodi@blg.com | Steven Bodi | 693A30232E777C626C6763616E6164615C73626F6469 i:0#.w|blgcanada\sbodi;thibbitt@blg.com | Tory Hibbitt | 693A30232E777C626C6763616E6164615C7468696262697474 i:0#.w|blgcanada\thibbitt​​​Two recent decisions of Canadian courts have reiterated the critical requirement of clear language in contracts creating royalties where parties intend such royalties to be “interest in land,” that is, real property. The Supreme Court of Canada had established in Bank of Montreal v. Dynex Petroleum Ltd. 2002 SCC 7 (Dynex) that gross overriding royalty interests (GORR) could constitute interest in land provided the parties so intended and that intention was sufficiently evidenced in an agreement. Based on Dynex, the status of GORR must be determined on a case-to-case basis. Both Walter Energy Canada Holdings Inc, (Re), 2016 BCSC 1746 (Walter Energy) and Third Eye Capital Corporation v Dianor Resources Inc, 2016 ONSC 6086 (Dianor), provide recent examples of how courts approach the exercise of determining whether a specific GORR constitutes an interest in land. The British Columbia Supreme Court and Ontario Superior Court of Justice considered the types of provisions that will fail court scrutiny, and emphasized the importance of including, in royalty agreements and agreements creating royalty interests, language which expressly creates and conveys an interest in land. Dianor also addresses a court’s ability in insolvency proceedings to convey and vest assets free and clear of royalty interests.[Read more…]<p style="text-align:justify;">​​​Two recent decisions of Canadian courts have reiterated the critical requirement of clear language in contracts creating royalties where parties intend such royalties to be “interest in land,” that is, real property. The Supreme Court of Canada had established in <em>Bank of Montreal v. Dynex Petroleum Ltd</em>. 2002 SCC 7 (<em>Dynex</em>) that gross overriding royalty interests (GORR) could constitute interest in land provided the parties so intended and that intention was sufficiently evidenced in an agreement. Based on <em>Dynex</em>, the status of GORR must be determined on a case-to-case basis. Both <em>Walter Energy Canada Holdings Inc, (Re)</em>, 2016 BCSC 1746 (<em>Walter Energy</em>) and <em>Third Eye Capital Corporation v Dianor Resources Inc</em>, 2016 ONSC 6086 (<em>Dianor</em>), provide recent examples of how courts approach the exercise of determining whether a specific GORR constitutes an interest in land. The British Columbia Supreme Court and Ontario Superior Court of Justice considered the types of provisions that will fail court scrutiny, and emphasized the importance of including, in royalty agreements and agreements creating royalty interests, language which expressly creates and conveys an interest in land. <em>Dianor</em> also addresses a court’s ability in insolvency proceedings to convey and vest assets free and clear of royalty interests.</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=276" target="_blank"><em>Read more</em></a>…]</p>​​Two recent decisions of Canadian courts have reiterated the critical requirement of clear language in contracts creating royalties where parties intend such royalties to be “interest in land,” that is, real property. The Supreme Court of Canada had established in Bank of Montreal v. Dynex Petroleum Ltd. 2002 SCC 7 (Dynex) that gross overriding royalty interests (GORR) could constitute interest in land provided the parties so intended and that intention was sufficiently evidenced in an agreement. Based on Dynex, the status of GORR must be determined on a case-to-case basis. Both Walter Energy Canada Holdings Inc, (Re), 2016 BCSC 1746 (Walter Energy) and Third Eye Capital Corporation v Dianor Resources Inc, 2016 ONSC 6086 (Dianor), provide recent examples of how courts approach the exercise of determining whether a specific GORR constitutes an interest in land. The British Columbia Supreme Court and Ontario Superior Court of Justice considered the types of provisions that will fail court scrutiny, and emphasized the importance of including, in royalty agreements and agreements creating royalty interests, language which expressly creates and conveys an interest in land. Dianor also addresses a court’s ability in insolvency proceedings to convey and vest assets free and clear of royalty interests.Walter Energy In 2000, three individuals (the royalty owners) assisted Western Canadian Coal Corporation (WCC) in acquiring and maintaining certain coal licenses pertaining to the Wolverine mine (the Licenses), and conveyed the mine and Licenses to WCC in exchange for 1% royalty (the Wolverine Royalties) pursuant to a royalty sharing agreement (RSA). Walter Energy Canada Holdings Inc. (WEC), following an acquisition, was the successor in interest of the Licenses. WEC subsequently was involved in insolvency proceedings under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36 (CCAA) and sought court approval of the transfer of its mining properties including the Licenses to Conuma Coal Resources (CCR). The proposed asset purchase agreement (APA) contemplated that the Wolverine Royalties would be excluded. One of the royalty owners challenged this exclusion, arguing that the RSA created an interest in land which encumbered the properties. The British Columbia Supreme Court had to determine “whether, on a proper interpretation of the RSA, it can be said that the parties intended the royalty owner to have an interest in land, as opposed to a contractual right to the royalty stream from production under the Wolverine coal licenses.” The RSA contemplated that WCC would pay a royalty of “one percent (1%) for all product tonnes produced from the ….Wolverine coal properties”. The RSA also contemplated that WCC would be the beneficial owner of all of the coal licenses comprising the Properties, including the Wolverine Licenses, “…free and clear of all liens, charges and claims of others.” The RSA contained the provision that it would “enure to the benefit of and be binding upon the parties and their respective successors, heirs, executors, administrators and permitted assigns.” The Court held that the RSA was not intended to create an interest in the land, rather it simply represented a contractual right to payment as the consideration for which the royalty owner transferred his rights in the properties. The court found that the language creating the Wolverine Royalties in the RSA did not meet the Dynex requirements. To reach this conclusion, the Court found as follows WEC was stated to have “acquired” the Licenses and be the beneficial owner of them free of “any claims of others;” The assignors had relinquished their direct rights to the Licenses, including any further aspect of control; Neither the RSA nor the APA contained formal conveyancing language such as “grant, assign, transfer or convey” any right in the substances beneath the relevant properties; The APA did not contain the language what the Wolverine Royalties would “run with the land” and the RSA did not contain restrictions on the ability of WEC to sell the Licences or contain a requirement of a purchase to assume obligations under the RSA; and Reference to the payment of the Wolverine Royalties was to what was “produced” from – importantly, not a royalty “in” – the relevant properties.DianorDianor Resources Inc. (DRI), was an insolvent company with interests in mining assets in Ontario (the Ontario Assets) and Quebec. DRI’s receiver applied for an Order approving the sale of the Ontario Assets in which 2350614 Ontario Inc. (235Co) held GORRs. 235Co was controlled by Mr. John Leadbetter, and did not oppose the sale but argued that the Ontario Assets would be conveyed subject to 235Co’s GORRs. While the GORRs were created under a Crown Land Agreement and Patented Land Agreement (the Agreements) by which DRI acquired the Ontario Assets from 3814793 Ontario Inc., another entity controlled by Mr. Leadbetter, it was unclear from the records how 235Co acquired the GORR. However, this fact was immaterial to the Court’s findings.The winning offer by Third Eye Capital Corporation (TECC) was conditional on the GORRs being terminated or significantly reduced. TECC’s offer contemplated a payout of the GORRs in the amount of $250,000 which 235Co refused. TECC argued that the Court had jurisdiction to cancel the GORRs under a vesting order if fair compensation was paid for those rights. The central issue was whether 235Co’S GORRs constituted interest in land. Ultimately, the Court approved the sale to TECC. As in Walter Energy, the Court applied Dynex to determine whether the Agreements created the GORRs in the Ontario Assets. The Agreements provided that once DRI became the owner of a 100% interest in the mining claims, the optionors (235Co) would “retain a [20% GORR] for diamonds and a [1.5% GORR] for all other metals and minerals” which was calculated on an appraised value of the contemplated substances in accordance with other provisions of the Agreements. The appraised value for diamonds was calculated after they had been recovered or produced, cleaned and sorted. The non-diamond GORR was payable on the basis of gross revenue derived from all product sold by Dianor. The Court held that the GORRs are not interests in land, although the Agreements clearly set out the parties intentions as follows “It is the intent of the parties hereto that the [GORR] shall constitute a covenant and an interest in land running with the Property and the Mining Claims and all successions thereof or leases or other tenures which may replace them, whether created privately or through governmental action, and including, without limitation, any leasehold interest.”The Court noted that while this clause stated the intention of the parties it failed to convey an interest in land. The ultimate issue is whether that intent is carried out in the contract. The Court emphasized the importance of the parties creating provisions which have the effect of granting a right in real property. Without specific wording, such an agreement will only create a right to the percentage of minerals or petroleum substances derived from the extracted minerals, instead of conveying such a right. It is not sufficient to state the intentions of the parties. The Court noted other instances where the words “covenants and agrees to pay” and “produced” have been interpreted, and the distinction drawn between the “granting” of royalties attached to or in the land or minerals in situ, and the “payment” of royalties derived from attaching to the minerals or revenues “produced” or “removed” from the land. The latter creates only contractual rights. Other relevant factors the Court considered include whether an owner is in control of the lands and if the royalty holder retains a right to enter upon the lands to explore for and extract minerals. In this case, the Court found that 235Co had no right to enter the property to explore and extract diamonds or minerals, and the GORR was calculated on post-production substances. Applying Dynex, the Court concluded that 235Co’s GORR was not an interest in land. The Court also addressed and confirmed the powers of courts to cancel the GORRs under a vesting order. The jurisdiction of the Courts to grant vesting orders derives from the common law, the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (BIA) and the Ontario Courts of Justice Act (CJA). Further, the BIA and CJA give the Court jurisdiction to order the property be sold and on what terms. The Court found that TECC was entitled to be the purchaser of the assets as the successful bidder under the authorized bid process, and that the Court had the jurisdiction to grant a vesting order of the Ontario Assets to TECC on terms considered just. TECC was able to purchase the Ontario Assets free and clear of 235Co’s GORRs upon payment of the $250,000 offered, which was considered a reasonable amount for 235Co’s royalty rights. The court didn’t decide TECC’s argument that even if the royalty rights were an interest in land, a vesting order could be made vesting clear title in the assets being sold on the proviso that fair value be paid to the holder of the royalty rights. However, the Court saw no reason why its jurisdiction would not be the same whether the royalty rights were or were not an interest in land.​ImplicationsThe status of royalty interests continues to spawn extensive litigation in Canadian courts. This determination impacts asset conveyance and whether a purchaser will acquire assets encumbered with or free of the royalty. This is particularly so with pre-Dynex royalty agreements that did not clearly specify the parties’ intentions. However, Dianor and Walter Energy have confirmed that even specifying the parties’ intention to create an interest in land by itself is not enough. The parties must carry that intention through in the agreement by creating the interest in land, using specific wording consonant with conveying real property interests. The problem is compounded when profitable assets encumbered by royalties are being sold through court-supervised sales processes in insolvency proceedings. Insolvency statutes are paramount, give the courts broad powers and create different priorities over properties. As shown in Dianor, having royalty interest in land may not be a guarantee to retaining royalty assets in insolvency proceedings. These cases provide a measure of certainty as to the requirements for making royalty interests real property. Real property rank higher in priority than personal property and in that sense, other than by vesting orders, should provide some form of security to royalty owners. Similarly, the guidance in determining which royalty interest is real property and the power of the courts to grant vesting orders provide monitors, receivers and insolvency professionals with additional tools in insolvency proceedings and sales processes.<p style="text-align:justify;">​​Two recent decisions of Canadian courts have reiterated the critical requirement of clear language in contracts creating royalties where parties intend such royalties to be “interest in land,” that is, real property. The Supreme Court of Canada had established in <em>Bank of Montreal v. Dynex Petroleum Ltd</em>. 2002 SCC 7 (<em>Dynex</em>) that gross overriding royalty interests (GORR) could constitute interest in land provided the parties so intended and that intention was sufficiently evidenced in an agreement. Based on <em>Dynex</em>, the status of GORR must be determined on a case-to-case basis. Both <em>Walter Energy Canada Holdings Inc, (Re)</em>, 2016 BCSC 1746 (<em>Walter Energ</em>y) and <em>Third Eye Capital Corporation v Dianor Resources Inc</em>, 2016 ONSC 6086 (<em>Dianor</em>), provide recent examples of how courts approach the exercise of determining whether a specific GORR constitutes an interest in land. The British Columbia Supreme Court and Ontario Superior Court of Justice considered the types of provisions that will fail court scrutiny, and emphasized the importance of including, in royalty agreements and agreements creating royalty interests, language which expressly creates and conveys an interest in land. <em>Dianor</em> also addresses a court’s ability in insolvency proceedings to convey and vest assets free and clear of royalty interests.</p><h3><em>Walter Energy </em></h3><p style="text-align:justify;">In 2000, three individuals (the royalty owners) assisted Western Canadian Coal Corporation (WCC) in acquiring and maintaining certain coal licenses pertaining to the Wolverine mine (the Licenses), and conveyed the mine and Licenses to WCC in exchange for 1% royalty (the Wolverine Royalties) pursuant to a royalty sharing agreement (RSA). Walter Energy Canada Holdings Inc. (WEC), following an acquisition, was the successor in interest of the Licenses. WEC subsequently was involved in insolvency proceedings under the <em>Companies’ Creditors Arrangement Act</em>, RSC 1985, c C-36 (CCAA) and sought court approval of the transfer of its mining properties including the Licenses to Conuma Coal Resources (CCR). The proposed asset purchase agreement (APA) contemplated that the Wolverine Royalties would be excluded. One of the royalty owners challenged this exclusion, arguing that the RSA created an interest in land which encumbered the properties. </p><p style="text-align:justify;">The British Columbia Supreme Court had to determine “whether, on a proper interpretation of the RSA, it can be said that the parties intended the royalty owner to have an interest in land, as opposed to a contractual right to the royalty stream from production under the Wolverine coal licenses.” The RSA contemplated that WCC would pay a royalty of “one percent (1%) for all product tonnes produced from the ….Wolverine coal properties”. The RSA also contemplated that WCC would be the beneficial owner of all of the coal licenses comprising the Properties, including the Wolverine Licenses, “…free and clear of all liens, charges and claims of others.” The RSA contained the provision that it would “enure to the benefit of and be binding upon the parties and their respective successors, heirs, executors, administrators and permitted assigns.” </p><p style="text-align:justify;">The Court held that the RSA was not intended to create an interest in the land, rather it simply represented a contractual right to payment as the consideration for which the royalty owner transferred his rights in the properties. The court found that the language creating the Wolverine Royalties in the RSA did not meet the <em>Dynex</em> requirements. To reach this conclusion, the Court found as follows: </p><ul style="text-align:justify;"><li><p>WEC was stated to have “acquired” the Licenses and be the beneficial owner of them free of “any claims of others;” <br></p></li><li><p>The assignors had relinquished their direct rights to the Licenses, including any further aspect of control; <br></p></li><li><p>Neither the RSA nor the APA contained formal conveyancing language such as “grant, assign, transfer or convey” any right in the substances beneath the relevant properties; <br></p></li><li><p>The APA did not contain the language what the Wolverine Royalties would “run with the land” and the RSA did not contain restrictions on the ability of WEC to sell the Licences or contain a requirement of a purchase to assume obligations under the RSA; and <br></p></li><li><p>Reference to the payment of the Wolverine Royalties was to what was “produced” from – importantly, not a royalty “in” – the relevant properties.<br></p></li></ul><h3><em>Dianor</em></h3><p style="text-align:justify;">Dianor Resources Inc. (DRI), was an insolvent company with interests in mining assets in Ontario (the Ontario Assets) and Quebec. DRI’s receiver applied for an Order approving the sale of the Ontario Assets in which 2350614 Ontario Inc. (235Co) held GORRs. 235Co was controlled by Mr. John Leadbetter, and did not oppose the sale but argued that the Ontario Assets would be conveyed subject to 235Co’s GORRs. While the GORRs were created under a Crown Land Agreement and Patented Land Agreement (the Agreements) by which DRI acquired the Ontario Assets from 3814793 Ontario Inc., another entity controlled by Mr. Leadbetter, it was unclear from the records how 235Co acquired the GORR. However, this fact was immaterial to the Court’s findings.</p><p style="text-align:justify;">The winning offer by Third Eye Capital Corporation (TECC) was conditional on the GORRs being terminated or significantly reduced. TECC’s offer contemplated a payout of the GORRs in the amount of $250,000 which 235Co refused. TECC argued that the Court had jurisdiction to cancel the GORRs under a vesting order if fair compensation was paid for those rights. The central issue was whether 235Co’S GORRs constituted interest in land.  </p><p style="text-align:justify;">Ultimately, the Court approved the sale to TECC. As in <em>Walter Energy</em>, the Court applied <em>Dynex</em> to determine whether the Agreements created the GORRs in the Ontario Assets. The Agreements provided that once DRI became the owner of a 100% interest in the mining claims, the optionors (235Co) would “retain a [20% GORR] for diamonds and a [1.5% GORR] for all other metals and minerals” which was calculated on an appraised value of the contemplated substances in accordance with other provisions of the Agreements. The appraised value for diamonds was calculated after they had been recovered or produced, cleaned and sorted. The non-diamond GORR was payable on the basis of gross revenue derived from all product sold by Dianor. </p><p style="text-align:justify;">The Court held that the GORRs are not interests in land, although the Agreements clearly set out the parties intentions as follows: </p><blockquote style="margin:0px 0px 0px 40px;border:none;padding:0px;"><p style="text-align:justify;">“It is the intent of the parties hereto that the [GORR] shall constitute a covenant and an interest in land running with the Property and the Mining Claims and all successions thereof or leases or other tenures which may replace them, whether created privately or through governmental action, and including, without limitation, any leasehold interest.”</p></blockquote><p style="text-align:justify;">The Court noted that while this clause stated the intention of the parties it failed to convey an interest in land. The ultimate issue is whether that intent is carried out in the contract. The Court emphasized the importance of the parties creating provisions which have the effect of granting a right in real property. Without specific wording, such an agreement will only create a right to the percentage of minerals or petroleum substances derived from the extracted minerals, instead of conveying such a right. It is not sufficient to state the intentions of the parties. </p><p style="text-align:justify;">The Court noted other instances where the words “covenants and agrees to pay” and “produced” have been interpreted, and the distinction drawn between the “granting” of royalties attached to or in the land or minerals <em>in situ</em>, and the “payment” of royalties derived from attaching to the minerals or revenues “produced” or “removed” from the land. The latter creates only contractual rights. Other relevant factors the Court considered include whether an owner is in control of the lands and if the royalty holder retains a right to enter upon the lands to explore for and extract minerals. In this case, the Court found that 235Co had no right to enter the property to explore and extract diamonds or minerals, and the GORR was calculated on post-production substances. Applying <em>Dynex</em>, the Court concluded that 235Co’s GORR was not an interest in land. </p><p style="text-align:justify;">The Court also addressed and confirmed the powers of courts to cancel the GORRs under a vesting order. The jurisdiction of the Courts to grant vesting orders derives from the common law, the <em>Bankruptcy and Insolvency Act</em>, RSC 1985, c B-3 (BIA) and the Ontario Courts of Justice Act (CJA). Further, the BIA and CJA give the Court jurisdiction to order the property be sold and on what terms. The Court found that TECC was entitled to be the purchaser of the assets as the successful bidder under the authorized bid process, and that the Court had the jurisdiction to grant a vesting order of the Ontario Assets to TECC on terms considered just. TECC was able to purchase the Ontario Assets free and clear of 235Co’s GORRs upon payment of the $250,000 offered, which was considered a reasonable amount for 235Co’s royalty rights. The court didn’t decide TECC’s argument that even if the royalty rights were an interest in land, a vesting order could be made vesting clear title in the assets being sold on the proviso that fair value be paid to the holder of the royalty rights. However, the Court saw no reason why its jurisdiction would not be the same whether the royalty rights were or were not an interest in land.​</p><h3>Implications</h3><p style="text-align:justify;">The status of royalty interests continues to spawn extensive litigation in Canadian courts. This determination impacts asset conveyance and whether a purchaser will acquire assets encumbered with or free of the royalty. This is particularly so with pre-<em>Dynex</em> royalty agreements that did not clearly specify the parties’ intentions. However, <em>Dianor</em> and <em>Walter Energy</em> have confirmed that even specifying the parties’ intention to create an interest in land by itself is not enough. The parties must carry that intention through in the agreement by creating the interest in land, using specific wording consonant with <strong>conveying</strong> real property interests. </p><p style="text-align:justify;">The problem is compounded when profitable assets encumbered by royalties are being sold through court-supervised sales processes in insolvency proceedings. Insolvency statutes are paramount, give the courts broad powers and create different priorities over properties. As shown in <em>Dianor</em>, having royalty interest in land may not be a guarantee to retaining royalty assets in insolvency proceedings.   </p><p style="text-align:justify;">These cases provide a measure of certainty as to the requirements for making royalty interests real property. Real property rank higher in priority than personal property and in that sense, other than by vesting orders, should provide some form of security to royalty owners.  Similarly, the guidance in determining which royalty interest is real property and the power of the courts to grant vesting orders provide monitors, receivers and insolvency professionals with additional tools in insolvency proceedings and sales processes.</p>1/27/2017 5:00:00 AM2017-01-27T05:00:00ZTrue1float;#1.00000000000000float;#2017.00000000000string;#Januaryfloat;#201701.000000000GP0|#0a180068-c259-455b-93ff-3332ab709aa3;L0|#00a180068-c259-455b-93ff-3332ab709aa3|Royalties;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & GasRoyalties;Oil & Gas
President Trump’s Executive Order on Keystone XL—encouragement but not an approvalPresident Trump’s Executive Order on Keystone XL—encouragement but not an approval278BLG Blog PostAlan L. Ross;Peter Bryanaross@blg.com | Alan L. Ross | 693A30232E777C626C6763616E6164615C61726F7373 i:0#.w|blgcanada\aross;pbryan@blg.com | Peter Bryan | 693A30232E777C626C6763616E6164615C70627279616E i:0#.w|blgcanada\pbryan​​On January 24th, 2017, President Trump issued an executive order inviting TransCanada Keystone Pipeline LP to re-submit its application to the State Department for a Presidential Permit for the construction and operation of the Keystone XL Pipeline, and directing the State Department to expeditiously review and reach a final determination, using much of its previous analysis, within 60 days of TransCanada’s application. If the Presidential Permit is granted, President Trump’s executive order also directs the Department of the Army, the Department of the Interior, the Bureau of Land Management, and Fish and Wildlife to expeditiously review and approve as warranted, water crossings, rights of way and other permits required for the pipeline. This is encouraging news for TransCanada (which has already indicated that it intends to re-submit its application for the Presidential Permit), and for the US$8B, 830,000 bbl/d project that has been frustrated by regulatory and political delays since 2008. President Trump’s executive order is not a Presidential Permit, however, and significant legal and commercial issues still lay ahead. ​[Read more...]<p style="text-align:justify;">​​On January 24th, 2017, President Trump issued an executive order inviting TransCanada Keystone Pipeline LP to re-submit its application to the State Department for a Presidential Permit for the construction and operation of the Keystone XL Pipeline, and directing the State Department to expeditiously review and reach a final determination, using much of its previous analysis, within 60 days of TransCanada’s application. If the Presidential Permit is granted, President Trump’s executive order also directs the Department of the Army, the Department of the Interior, the Bureau of Land Management, and Fish and Wildlife to expeditiously review and approve as warranted, water crossings, rights of way and other permits required for the pipeline.  This is encouraging news for TransCanada (which has already indicated that it intends to re-submit its application for the Presidential Permit), and for the US$8B, 830,000 bbl/d project that has been frustrated by regulatory and political delays since 2008. President Trump’s executive order is not a Presidential Permit, however, and significant legal and commercial issues still lay ahead. ​</p><p style="text-align:justify;">[<a href="/energy/Pages/Post.aspx?PID=278"><em>Read more</em></a>...]</p>On January 24th, 2017, President Trump issued an executive order inviting TransCanada Keystone Pipeline LP to re-submit its application to the State Department for a Presidential Permit for the construction and operation of the Keystone XL Pipeline, and directing the State Department to expeditiously review and reach a final determination, using much of its previous analysis, within 60 days of TransCanada’s application. If the Presidential Permit is granted, President Trump’s executive order also directs the Department of the Army, the Department of the Interior, the Bureau of Land Management, and Fish and Wildlife to expeditiously review and approve as warranted, water crossings, rights of way and other permits required for the pipeline. This is encouraging news for TransCanada (which has already indicated that it intends to re-submit its application for the Presidential Permit), and for the US$8B, 830,000 bbl/d project that has been frustrated by regulatory and political delays since 2008. President Trump’s executive order is not a Presidential Permit, however, and significant legal and commercial issues still lay ahead. What is an Executive Order and Presidential Permit?An executive order is a presidential prerogative derived from Article II of the US constitution. It essentially declares government policy and provides direction to government agencies and departments. It is legally binding, but it cannot reverse a law passed by Congress. In fact, Congress can influence executive orders by passing laws which restrict funding for certain programs, or which explicitly prevent an executive order from taking effect.Similarly, a Presidential Permit is an exercise of the executive branch’s constitutional powers, considered to be part of the president’s “inherent constitutional authority to conduct foreign affairs.” Presidential Permits are intended to provide executive branch review of trans-border facilities and commercial activities. This authority has been exercised since the late 1880’s with respect to telegraph and communications facilities, electric transmission facilities, and pipelines. In 1968, permitting authority for cross border oil pipelines was delegated by executive order 11423 to the State Department1, which order was subsequently amended by executive order in 1994 to require the State Department to consult with various federal departments. In 2004, an executive order established the State Department procedure for reviewing Presidential Permit applications for oil pipelines. The State Department is directed to determine whether a proposed project would serve the “national interest,” and in doing so, it often considers impacts on the environment, economy, energy security, foreign policy, and culture. Third time the charm? While the protracted history of the Keystone XL project has been well documented elsewhere, it may be worth recalling some significant steps in its application for a Presidential Permit. The first application for a Presidential Permit occurred in September 2008. As a result of a revised route, stemming from Nebraska’s new 2011 siting requirements, the State Department announced that it needed additional time to review the application. Congress then passed a law requiring the State Department to issue a decision on the Presidential Permit application within 60 days, causing the State Department to deny the permit citing insufficient time to meet the deadline. The second application for a Presidential Permit was made in May 2012, based on a new route and new stated purpose, but following extensive review, the State Department ultimately denied the Presidential Permit in November 2015. The Path Forward President Trump’s executive order offers encouragement to reconsider the Keystone XL project in light of the new policy direction. It seems to signal that the application for a Presidential Permit will not be subject to the same regulatory and political delays as in the past. However, complicated issues remain ahead. In a concurrent executive order, President Trump directed the Department of Commerce to require domestically produced materials and equipment in US pipeline projects. While TransCanada has previously stated that 50% of the pipe for Keystone XL would come from US sources, it is not clear what effect that executive order will have on the project cost or timing. President Trump also made vague references to renegotiating “some of the terms” of the project, presumably as conditions to the Presidential Permit and perhaps including increased financial returns to the US, without providing further details. Finally, hurdles remain with Nebraska state approvals, and with potential and ongoing challenges related to tribal matters, environmental issues, and even the reviewability and constitutionality of any issued Presidential Permit. Nevertheless, supporters of the Keystone XL project have reason for renewed optimism. 1The Federal Energy Regulatory Commission (FERC) issues presidential permits for natural gas pipelines, and the Department of Energy (DOE) issues presidential permits for electric transmission lines. ​<p style="text-align:justify;"></p><div><p style="text-align:justify;">On January 24th, 2017, President Trump issued an executive order inviting TransCanada Keystone Pipeline LP to re-submit its application to the State Department for a Presidential Permit for the construction and operation of the Keystone XL Pipeline, and directing the State Department to expeditiously review and reach a final determination, using much of its previous analysis, within 60 days of TransCanada’s application. If the Presidential Permit is granted, President Trump’s executive order also directs the Department of the Army, the Department of the Interior, the Bureau of Land Management, and Fish and Wildlife to expeditiously review and approve as warranted, water crossings, rights of way and other permits required for the pipeline.  This is encouraging news for TransCanada (which has already indicated that it intends to re-submit its application for the Presidential Permit), and for the US$8B, 830,000 bbl/d project that has been frustrated by regulatory and political delays since 2008. President Trump’s executive order is not a Presidential Permit, however, and significant legal and commercial issues still lay ahead. </p><h3>What is an Executive Order and Presidential Permit?</h3><p style="text-align:justify;">An executive order is a presidential prerogative derived from Article II of the US constitution.  It essentially declares government policy and provides direction to government agencies and departments. It is legally binding, but it cannot reverse a law passed by Congress. In fact, Congress can influence executive orders by passing laws which restrict funding for certain programs, or which explicitly prevent an executive order from taking effect.</p><p style="text-align:justify;">Similarly, a Presidential Permit is an exercise of the executive branch’s constitutional powers, considered to be part of the president’s “inherent constitutional authority to conduct foreign affairs.”  Presidential Permits are intended to provide executive branch review of trans-border facilities and commercial activities. This authority has been exercised since the late 1880’s with respect to telegraph and communications facilities, electric transmission facilities, and pipelines. In 1968, permitting authority for cross border oil pipelines was delegated by executive order 11423 to the State Department<sup>1</sup>, which order was subsequently amended by executive order in 1994 to require the State Department to consult with various federal departments. In 2004, an executive order established the State Department procedure for reviewing Presidential Permit applications for oil pipelines.  The State Department is directed to determine whether a proposed project would serve the “national interest,” and in doing so, it often considers impacts on the environment, economy, energy security, foreign policy, and culture. </p><h3>Third time the charm? </h3><p style="text-align:justify;">While the protracted history of the Keystone XL project has been well documented elsewhere, it may be worth recalling some significant steps in its application for a Presidential Permit. The first application for a Presidential Permit occurred in September 2008. As a result of a revised route, stemming from Nebraska’s new 2011 siting requirements, the State Department announced that it needed additional time to review the application.  Congress then passed a law requiring the State Department to issue a decision on the Presidential Permit application within 60 days, causing the State Department to deny the permit citing insufficient time to meet the deadline. The second application for a Presidential Permit was made in May 2012, based on a new route and new stated purpose, but following extensive review, the State Department ultimately denied the Presidential Permit in November 2015. </p><h3>The Path Forward </h3><p style="text-align:justify;">President Trump’s executive order offers encouragement to reconsider the Keystone XL project in light of the new policy direction. It seems to signal that the application for a Presidential Permit will not be subject to the same regulatory and political delays as in the past. However, complicated issues remain ahead. In a concurrent executive order, President Trump directed the Department of Commerce to require domestically produced materials and equipment in US pipeline projects. While TransCanada has previously stated that 50% of the pipe for Keystone XL would come from US sources, it is not clear what effect that executive order will have on the project cost or timing. President Trump also made vague references to renegotiating “some of the terms” of the project, presumably as conditions to the Presidential Permit and perhaps including increased financial returns to the US, without providing further details. Finally, hurdles remain with Nebraska state approvals, and with potential and ongoing challenges related to tribal matters, environmental issues, and even the reviewability and constitutionality of any issued Presidential Permit. Nevertheless, supporters of the Keystone XL project have reason for renewed optimism. </p></div><hr /><p style="text-align:justify;"><span style="font-size:0.6em;"><sup>1</sup>The Federal Energy Regulatory Commission (FERC) issues presidential permits for natural gas pipelines, and the Department of Energy (DOE) issues presidential permits for electric transmission lines. ​</span><br></p>1/26/2017 5:00:00 AM2017-01-26T05:00:00ZTrue1float;#1.00000000000000float;#2017.00000000000string;#Januaryfloat;#201701.000000000GP0|#60a6f187-f0e0-4c65-a06c-b97febf6542e;L0|#060a6f187-f0e0-4c65-a06c-b97febf6542e|Oil & Gas;GTSet|#939fe804-8a2a-4cfa-af8f-5756b32ac3ca;GP0|#7ea7e480-c8e7-48db-baae-396516e81926;L0|#07ea7e480-c8e7-48db-baae-396516e81926|PipelinesOil & Gas;Pipelines