Shell Canada Ltd. v. Canada (Attorney General), (1998) 148 F.T.R. 24 (TD)

• Judge: Gibson, J.
• Court: Federal Court (Canada)
• Case Date: December 08, 1997
• Jurisdiction: Canada (Federal)
• Citations: (1998), 148 F.T.R. 24 (TD)

Shell Can. Ltd. v. Can. (A.G.) (1998), 148 F.T.R. 24 (TD)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

....................

Temp. Cite: [1998] F.T.R. TBEd. AP.028

Shell Canada Limited (applicant) v. The Attorney General of Canada (respondent)

(T-139-97)

Indexed As: Shell Canada Ltd. v. Canada (Attorney General)

Federal Court of Canada

Trial Division

Gibson, J.

March 19, 1998.

Summary:

The manager responsible for discharging the Crown's fiduciary and statutory obligations pursuant to the Indian Oil and Gas Act, held that Shell Canada Ltd. (Shell) was required to compute its gas cost allowance on the basis of its original capital cost of the relevant assets reduced by subtracting investment tax credits Shell had earned under the Income Tax Act. The Minister of Indian Affairs and Northern Development held that the decision was justified. Shell applied for judicial review.

The Federal Court of Canada, Trial Division, allowed the application, set aside the Minister's decision and referred the matter back to the Minister for reconsideration.

Administrative Law - Topic 222

The hearing and decision - Right to be heard - When available - Shell Canada had an interest in leases on the Stoney Indian Reserve - Each lease required Shell to pay a royalty on production of natural gas - Shell appealed a decision of the manager of the Indian Oil and Gas Commission respecting the computation of its gas cost allowance - Without affording Shell an opportunity to respond to submissions by the Commission, the Minister of Indian and Northern Development upheld the decision - The Commission's submissions included professional advice to which Shell had not had access - The Federal Court of Canada, Trial Division, held that the Minister erred in not affording Shell an opportunity to respond to the submissions - The submissions were not only relevant but substantive - See paragraphs 33, 34.

Administrative Law - Topic 2614

Natural justice - Evidence and proof - Rebuttal evidence - [See Administrative Law - Topic 222 ].

Indians, Inuit and Métis - Topic 5513

Lands - Reserves - Royalties from mines, minerals, oil and gas - Shell Canada had an interest in leases on the Stoney Indian Reserve - Each lease required Shell to pay a royalty on production of natural gas - Shell appealed a decision of the manager of the Indian Oil and Gas Commission respecting the computation of its gas cost allowance - The Minister of Indian and Northern Development upheld the decision - Shell sought judicial review, asserting that the manager had erred by considering the Commission's fiduciary duty to protect the Stoney Band's interests - The Federal Court of Canada, Trial Division, held that the fiduciary duty was an appropriate consideration - If the duty had been the sole basis on which the manager chose to change the meaning of relatively clear legislation, the decision would have been suspect - See paragraphs 28, 29.

Indians, Inuit and Métis - Topic 5513

Lands - Reserves - Royalties from mines, minerals, oil and gas - Shell Canada had an interest in leases on the Stoney Indian Reserve - Each lease required Shell to pay a royalty on production of natural gas - Pursuant to the authority granted under s. 2(4) of Schedule I of the Indian Oil and Gas Regulations, the manager of the Indian Oil and Gas Commission held that Shell was required to compute its gas cost allowance based on its original capital cost of relevant assets reduced by investment tax credits earned under the Income Tax Act - The Minister of Indian and Northern Development upheld the decision - Shell sought judicial review - The Federal Court of Canada, Trial Division, held that the Minister erred in endorsing the manager's decision to modify the costs of processing gas on a retrospective basis, where s. 24 did not provide for retroactive or retrospective operation - See paragraphs 35, 36.

Indians, Inuit and Métis - Topic 5513

Lands - Reserves - Royalties from mines, minerals, oil and gas - Shell Canada had an interest in leases on the Stoney Indian Reserve - Each lease required Shell to pay a royalty on production of natural gas - The manager of the Indian Oil and Gas Commission held that Shell was required to compute its gas cost allowance based on its original capital cost of relevant assets reduced by investment tax credits earned under the Income Tax Act - The Minister of Indian and Northern Development upheld the decision - The Federal Court of Canada, Trial Division, held that the manager had effectively held that the costs of processing did not include investment tax credits, i.e., investment tax credits reduced the costs of processing - That interpretation was reasonably within the manager's discretion - See paragraph 38.

Indians, Inuit and Métis - Topic 5513

Lands - Reserves - Royalties from mines, minerals, oil and gas - [See Administrative Law - Topic 222 ].

Statutes - Topic 6711

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Retrospective or retroactive operation - Regulations - [See second Indians, Inuit and Métis - Topic 5513 ].

Cases Noticed:

R. v. Canadian Pacific Ltd. (No. 1) (1977), 77 D.T.C. 5383 (F.C.A.), refd to. [para. 23, footnote 9].

Imperial Oil Resources Ltd. v. Canada (Minister of Indian Affairs and Northern Development) (1997), 139 F.T.R. 106 (T.D.), refd to. [para. 28, footnote 12].

Williams v. Canada (Minister of Citizenship and Immigration), [1997] 2 F.C. 646; 212 N.R. 63 (F.C.A.), refd to. [para. 31, footnote 13].

Sovereign Life Insurance Co. v. Canada (Minister of Finance) (1997), 135 F.T.R. 81 (T.D.), dist. [para. 34, footnote 14].

Martindale v. R., [1956-60] Ex. C.R. 153 (Can.), refd to. [para. 35, footnote 15].

Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271; 7 N.R. 401, refd to. [para. 36, footnote 16].

Statutes Noticed:

Indian Act Regulations (Can.), Indian Oil and Gas Regulations, C.R.C. 1978, c. 963, sect. 2(4) [para. 2].

Authors and Works Noticed:

Canada, Department of Indian and Northern Affairs, Guidelines for the calculation and reporting of Gas Cost Allowance for Natural Gas and Associated By-Products on Indian Lands (1982), generally [paras. 4, 5].

Jones, David Phillip, and DeVillars, Anne S., Principles of Administrative Law (2nd Ed. 1994), p. 146 [para. 27, footnote 11].

Counsel:

A. Meghji and Peter Leveque, for the applicant;

James Shaw, for the respondent.

Solicitors of Record:

Bennett Jones Verchere, Calgary, Alberta, for the applicant;

James Shaw, Department of Justice, Edmonton, Alberta, for the respondent.

This application was heard in Calgary, Alberta, on December 8, 1997, before Gibson, J., of the Federal Court of Canada, Trial Division, who delivered the following reasons for order on March 19, 1998.