Tribute Resources Inc. v. Ontario Energy Board, 2018 ONSC 265
CITATION: Tribute Resources Inc. v. Ontario Energy Board, 2018 ONSC 265
DIVISIONAL COURT FILE NO.: 1605/16
DATE: 2018-01-22
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
J. Henderson, H. Pierce, J. Fregeau JJ.
BETWEEN:
TRIBUTE RESOURCES INC.
Appellant
– and –
ONTARIO ENERGY BOARD and MUNICIPAL PROPERTY ASSESSMENT CORPORATION
Respondents
- and –
ONTARIO PETROLEUM INSTITUTE INC.
Intervenor
Mr. J. Downing, for the Appellant
Ms. A. Wood, for the Respondent, Ontario Energy Board
Ms. K. Lunau and Mr. C. Ho, for the Respondent, Municipal Property Assessment Corporation
Ms. C. Patterson, for the Intervenor
HEARD at London: November 28, 2017
REASONS ON APPEAL
Fregeau J.
Overview
[1] In 2015, the Appellant, Tribute Resources Inc. (“Tribute”) applied to the Ontario Energy Board (the “OEB”) under section 25(3) of the Assessment Act, R.S.O. 1990, c. A.31 (the “Assessment Act”) for an order declaring that certain gas pipelines owned by Tribute are not gas transmission “pipe lines” as defined in section 25(1) of the Assessment Act, nor had they been gas transmission “pipe lines” at any time from and after January 1, 2012. Tribute sought this order because it believed it had been wrongly assessed for taxes owing by the Municipal Property Assessment Corporation (“MPAC”) based on an incorrect characterization by MPAC as to certain pipelines owned by Tribute.[^1]
[2] In a decision dated May 5, 2016, the OEB concluded that the Tribute pipelines were properly assessed as gas “pipe lines” within the meaning of s. 25(1) of the Assessment Act.
[3] Tribute appealed the May 5, 2016 decision of the OEB to the Divisional Court.
The Facts
[4] Tribute is a corporation operated in Alberta and permitted to carry on a gas production business in Ontario. In 2014, Tribute purchased certain gas pipelines in southern Ontario (the “Tribute pipelines”).
[5] The Tribute pipelines constitute a natural gas gathering system used in the private production of natural gas. The system includes approximately 71 natural gas production wells, all of which are owned and operated by Tribute. The production wells are connected by underground pipelines to Tribute’s main gathering pipeline, which in turn conveys the natural gas to a metering site (the “delivery point”) adjacent to Union Gas Limited’s (“Union Gas”) transmission pipeline. Tribute sells the natural gas that it produces from the wells to Union Gas at the delivery point. The natural gas is then transported by Union Gas along its transmission pipeline system to consumers.
[6] MPAC assessed the Tribute pipelines to be “pipe lines” as defined in section 25(1) of the Assessment Act for the years inclusive of 2014–2016.
[7] Tribute applied to the OEB pursuant to section 25(3) of the Assessment Act, which provides that where there is a dispute as to whether a gas pipeline is a transmission pipeline within the meaning of s. 25(1) of the Assessment Act, the OEB shall decide the matter and its decision is final.
[8] In its May 5, 2016 decision, the OEB determined that the Tribute pipelines were appropriately assessed as “pipe lines” as defined in s. 25(1) of the Assessment Act.
Jurisdiction
[9] Pursuant to s. 33(1) of the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Sched. B, an appeal lies to the Divisional Court, even from a final order of the OEB.
Issues on Appeal
The issues on appeal are:
Did the OEB err in its interpretation of s. 25(1) of the Assessment Act in determining that the Tribute pipelines are “pipe lines … for the transportation or transmission of gas”; and
Did the OEB err in finding that the Tribute pipelines were designated by a previous owner as “transmission pipe lines” in the years in issue, as required by s. 25(1) of the Assessment Act, in the absence of direct evidence to support that finding?
The OEB Decision
[10] The OEB held that s. 25(1) of the Assessment Act sets out two conditions which must be satisfied for a pipeline to found to be a “pipe line” as defined therein:
The pipe line is used for the transportation or transmission of gas; and,
The pipe line was designated by the owner as a transmission pipe line.
[11] The OEB held that only the definition of pipelines under the Assessment Act is relevant and authoritative in determining whether the Tribute pipelines attract municipal tax liability. The OEB found, at p. 6 of its decision that the language in s. 25(1) of the Assessment Act was “clear and unambiguous, in that in order for the pipeline to qualify, the pipeline in question must be used for the transportation or transmission of gas.”
[12] The OEB held that the Tribute pipelines are used for the transportation of gas in the ordinary meaning of that word, “as the pipelines are used to move or transport gas from one location to another.”
[13] The OEB further concluded, in the absence of direct evidence on the point, that the Tribute pipelines were designated as “transmission pipe lines” by previous owners in approximately 2004, because assessment roll numbers for the pipelines were created in 2004. The OEB, at p. 7 of its decision, accepted MPAC’s position that an assessment roll number is created for pipelines only when they are designated by the owner and reported to MPAC, pursuant to ss. 25(1) and (2) of the Assessment Act.
[14] The OEB also concluded at p. 7 that “the only reasonable conclusion to draw from these circumstances is that the Tribute Pipelines were designated by the owners in approximately 2004.”
[15] Being satisfied that both parts of the two-part test set out in s. 25(1) of the Assessment Act were met, the OEB found that the Tribute pipelines were properly assessed as “pipe lines” by MPAC.
The Positions of the Parties
Tribute
[16] Tribute submits that the issues raised in this appeal involve statutory interpretation, which is a question of law where the standard of review would be correctness. Tribute further suggests that although the OEB is a specialized board, the Assessment Act is not its home statute and it did not apply any specialized expertise in its interpretation of the provisions in issue. Tribute asserts that this supports their submissions that the appropriate standard of review is correctness.
[17] Tribute also submits that the term “transmission pipe line”, as used in s. 25(1) of the Assessment Act, is a technical term in the oil and gas industry. The technical meaning of that terms does not, in Tribute’s opinion, include “gathering pipelines” like the Tribute pipelines. Tribute further submits that s. 25 of the Assessment Act applies to members of the oil and gas industry and not to the public at large. Tribute therefore argues that the term “transmission pipe line” should be given the technical meaning that is applied in the oil and gas industry, not the meaning set out in s. 25(1).
[18] Tribute contends that there was no evidence before the OEB that either Tribute, or any previous owner of the Tribute pipelines, designated the Tribute pipelines as “transmission pipe lines” at any time during the taxation years in question.
[19] Tribute further contends that the designation requirement in s. 25 of the Assessment Act is an annual requirement, as specified by subsection 25(2). Tribute submits that the OEB’s conclusion that the Tribute pipelines were previously designated as transmission pipelines in 2004 because roll numbers were created in that year is inconsistent with the annual notice requirement contemplated by s. 25(2). It is suggested that the OEB’s interpretation renders the annual notice requirements meaningless, which would be an absurd result.
OEB
[20] The OEB contends that the appropriate standard of review on this appeal is reasonableness.
[21] The OEB submits that the determination of whether a pipeline is a “pipe line” within the meaning of s. 25(1) of the Assessment Act is a matter within the expertise of the OEB that should be subject to deferential treatment on a reasonableness standard.
[22] The OEB further suggests that s. 25(3) of the Assessment Act, which specifically provides the OEB with authority to determine “disputes as to whether or not a gas pipe line is a transmission pipe line” supports a deferential approach to a review of the OEB decision.
[23] The OEB submits that it properly applied the rules of statutory interpretation and interpreted the words of s. 25(1) of the Assessment Act in their ordinary sense. The OEB contends that while a statute such as the Assessment Act may refer to technical matters, it is presumed that the words used within the statute will be considered in their ordinary sense. The OEB suggests that it reasonably and appropriately applied the rules of statutory interpretation in determining that the Tribute pipelines met the first part of the two-part test set out in s. 25(1) of the Assessment Act.
[24] The OEB submits there was nothing unreasonable about the OEB’s acceptance of MPAC’s evidence that assessment roll numbers are created for pipelines when they are designated by the owner as transmission pipelines and reported to MPAC, nor the acceptance that assessment roll numbers for the Tribute pipelines were created in 2004. The OEB suggests that the inference drawn from this evidence by the OEB — that a previous owner designated the Tribute pipelines as transmission pipelines — was a reasonable inference to draw so it is entitled to deference on appeal.
MPAC
[25] MPAC submits that there is a presumption that a reasonableness standard of review will apply where, as here, a decision-maker is interpreting its home statute or a statute closely connected to its function. MPAC argues that the jurisdiction of the Assessment Review Board to determine most assessment matters has, in cases such as this, been transferred to more specialized tribunals, like the OEB, in direct recognition of the specialized tribunal’s expertise.
[26] MPAC contends that the expertise of the OEB is specifically acknowledged in s. 25(3) of the Assessment Act, which provides that disputes as to whether or not a gas “pipe line” is a “transmission pipe line” shall be decided by the OEB, and that its decision is final. MPAC submits that such a decision should be accorded deference on appeal.
[27] MPAC further contends that the OEB correctly applied the ordinary rules of statutory interpretation to its interpretation of the relevant provisions of the Assessment Act, and that its interpretation was both reasonable and correct.
[28] MPAC suggests that the OEB found the language in s. 25(1) of the Assessment Act to be clear and unambiguous. To fall within s. 25(1), the OEB held that the pipeline in question must be used for the transportation or transmission of gas. MPAC notes that the OEB further held that the Tribute pipelines are used for the “transportation” of gas in the ordinary meaning of that word, as the pipelines are used to move or transport gas from one location to another.
[29] MPAC asserts that the OEB’s interpretation of s. 25(1) of the Assessment Act in the context of the Tribute pipelines is reasonable and entitled to deference on appeal.
[30] MPAC submits that s. 25(2) of the Assessment Act requires pipeline companies to notify MPAC annually of the age, length, and diameter of their pipelines. MPAC further submits that the designation of pipelines as “transmission pipe lines” by their owners, pursuant to s. 25(1) of the Assessment Act, is not an annual requirement. MPAC argues that if the Legislature had intended that pipelines be designated as “transmission pipe lines” annually, as suggested by Tribute, this requirement would have been expressly set out in s. 25(1).
[31] MPAC submits that the OEB made a factual finding that the Tribute pipelines had been designated by previous owners in approximately 2004 and that factual finding was supported by the evidence. MPAC submits that this finding is reasonable.
ONTARIO PETROLEUM INSTITUTE (“OPI”)
[32] The OPI appeared as an intervenor on the appeal. The OPI is a non-profit industry association which represents the interests of the vast majority of the 87 oil and gas producers in Ontario. It supported the position of Tribute.
[33] The OPI submitted that the OEB’s interpretation of s. 25(1) of the Assessment Act using the plain and ordinary meaning of the words “transportation” and “transmission” in the context of Tribute’s pipelines leads to unreasonable consequences. Such consequences include an over-valued tax assessment and a failure to account for obsolescence and depreciation of assets that are unique to gathering pipelines, such as the Tribute pipelines.
[34] OPI argues that the terms “transportation” and “transmission” should be interpreted according to their technical meanings in the oil and gas industry.
Discussion
Standard of Review
[35] In Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, the Supreme Court of Canada, citing Dunsmuir at para. 54, stated that deference will usually result where a tribunal is interpreting its own statute or statutes closely connected to its function with which it will have particular familiarity. This principle applies unless the interpretation of the home statute falls into one of the categories of questions to which the correctness standard continues to apply — constitutional questions; questions of law that are of central importance to the legal system as a whole and outside the adjudicator’s expertise; questions regarding the jurisdictional lines between two or more competing specialized tribunals; and, true questions of jurisdiction (para. 30).
[36] Unless the situation falls into these exceptions, the interpretation by a tribunal of its own statute or statutes closely connected to its function with which it will have particular familiarity, should be presumed to be a question of statutory interpretation subject to deference on judicial review (Alberta Teachers’, para. 34).
[37] In Edmonton (City) v. Edmonton East (Capilano) Shopping Centres Ltd., 2016 SCC 47, the majority for the Supreme Court noted that the current and applicable Dunsmuir standard of review framework “balances two important competing principles: legislative supremacy, which requires the courts to respect the choice of Parliament or a legislature to assign responsibility for a given decision to an administrative body; and the rule of law, which requires that the courts have the last word on whether an administrative body has acted within the scope of its lawful authority” (para. 21).
[38] In Edmonton East, the majority of the Court reiterated that the standard of review is presumed to be reasonableness if the question in issue involves the interpretation by an administrative body of its own statute or statutes closely related to its function. The rationale for this presumption was explained at para. 22:
This presumption of deference on judicial review respects the principle of legislative supremacy. … [and] also fosters access to justice to the extent the legislative choice to delegate a matter to a flexible and expert tribunal provides parties with a speedier and less expensive form of decision making. [Citations omitted.]
[39] The majority of the Supreme Court, in Edmonton East, expressly rejected the Alberta Court of Appeal’s conclusion that a statutory right of appeal of a tribunal decision results in a correctness standard of review. The majority confirmed that whenever a court reviews a decision of an administrative tribunal the standard of review must be determined on the basis of administrative law principles regardless of whether the review is conducted in the context of an application for judicial review or of a statutory appeal (para 30). The majority also noted that they have often applied a reasonableness standard on a statutory appeal from an administrative tribunal, even when the appeal clause contained a leave requirement and limited appeals to questions of law or to questions of law or jurisdiction (para. 34).
[40] For the foregoing and following reasons, we find that the applicable standard of review on this appeal is reasonableness, and that the May 5, 2016 decision of the OEB is entitled to deference.
[41] This is a statutory appeal of the May 5, 2016 decision of the OEB, and the OEB is an administrative tribunal. Pursuant to s. 25(3) of the Assessment Act, the Legislature has granted jurisdiction to the OEB to decide “all disputes as to whether or not a gas pipe line is a transmission line”, and has further expressly provided that the OEB’s decisions on this issue are final. In our opinion, this is a recognition by the Legislature of the expertise of the OEB on the narrow issue expressly referred to in s. 25(3) of the Assessment Act — “whether or not a gas pipe line is a transmission pipeline.” This suggests a reasonableness standard on review.
[42] The Assessment Act is not the OEB’s home statute, however, s. 25 of the Assessment Act deals exclusively with the definitions of “oil”, “gas” and “pipe lines”, which are matters closely connected to the function of the OEB and with which it has particular familiarity. This also suggests a reasonableness standard and deference on review.
[43] The two issues on the appeal involve the interpretation of s. 25(1) and, indirectly, s. 25(2) of the Assessment Act. These issues do not fall into any of the four categories of questions to which the correctness standard applies. The issues relate exclusively to the classification of pipelines for municipal property tax assessment purposes, a matter within the expertise of the OEB.
[44] The applicable standard of review is reasonableness and, on appeal, deference is to be accorded to the May 5, 2016 decision of the OEB.
[45] As enunciated by the Supreme Court in Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, the reasonableness standard imposes deferential self-discipline on the reviewing court. The onus is on the Appellant to positively show that the decision was unreasonable. Where the reasons for a decision are tenable, in the sense that they can withstand a probing examination, then the decision will not be unreasonable and a reviewing court must not interfere even if the tenable explanation is not one that the reviewing court finds compelling (paras. 46, 48 and 55).
[46] The Divisional Court’s 2015 decision in Gale v. College of Physicians and Surgeons of Ontario, 2015 ONSC 1981, at para. 8, summarizes the guiding principles when applying the standard of reasonableness:
Reasonableness is a deferential standard, animated by the principle that certain questions that come before tribunals do not lend themselves to one particular result. It is concerned with whether the outcome falls within a range of possible acceptable outcomes.
A reviewing court should not seize on one or more mistakes or elements of the decision that do not affect it as a whole. The question is rather whether the reasons, taken as a whole, are tenable as support for the decision.
Deference therefore requires that the [reviewing court] refrain from subjecting the tribunal’s reasons to a “painstaking scrutiny”. It would be “counterproductive to dissect” minutely a fact-finder’s reasons so as to undermine the fact-finder’s responsibility for weighing all of the evidence.
The task of the reviewing court is not to posit alternative interpretations of the evidence, or engage in a reassessment of the evidence. The powers of the appeal court do not amount to a general warrant to retry the case decided by the tribunal. Rather, the task of the reviewing court is to determine whether the … decision is reasonable and that it had “some basis in the evidence”. The reviewing court’s review of the evidence is “beside the point.”[Citations and internal quotations omitted.]
[47] The test for reasonableness has also been succinctly expressed by the Divisional Court in Michnick v. Bass Road Beach Association, 2015 ONSC 1936, at para. 33, as follows: “[A]re the reasons are intelligible, justifiable, and transparent and whether the result falls within the range of possible and acceptable outcomes”.
Issue 1: Did the OEB err in its interpretation of [s. 25(1)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) of the [Assessment Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) in determining that the Tribute pipelines are “pipe lines … for the transportation or transmission of gas”?
[48] In its decision, the OEB comprehensively reviewed Tribute’s position on this issue, namely that the Tribute pipelines are “gathering lines” and part of a natural gas gathering system used in the private production of natural gas, not transmission lines.
[49] The OEB noted at p. 5 of its decision that Tribute’s position was consistent with both the CSA Standards for the design, construction, operation, and maintenance of oil and gas pipeline systems in Canada, and with the definition of “pipeline” in the Oil, Gas and Salt Resources Act, R.S.O. 1990, c. P.12. The OEB also expressly acknowledged that the OEB staff agreed with the submission of Tribute that the Tribute pipelines are not “transmission lines” within the meaning of s. 25(1) of the Assessment Act, and that the Tribute pipelines fall within the definition of “gathering lines” as set out in the CSA Standards.
[50] However, the OEB rejected the application of the technical meaning of “transmission pipe line” as used in the oil and gas industry and held at p. 5 that “for the purpose of determining whether the Tribute pipelines attract municipal tax liability, it is only the definition under the Assessment Act that is relevant and authoritative in this context”.
[51] The OEB found the language in section 25(1) of the Assessment Act to be “clear and unambiguous” — “pipe line” means a pipe line used for the transportation or transmission of gas. Accordingly, the OEB, held that the Tribute pipelines are used for the transportation of gas “in the ordinary meaning of that word” because the pipelines are used to move or transport gas from one location to another.
[52] What is implicit in these findings is that the OEB found no reason to go outside of the plain and ordinary meaning of the words used in the statute. Put another way, the OEB found no reason to apply the technical meaning and understanding of the words as they are used in the oil and gas industry. This is consistent with the rules of statutory interpretation set out in E.A. Driedger’s Construction of Statutes, 2d ed, (Toronto: Butterworths, 1983), at p. 87:
Today there is only one principle or approach; namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.
[53] As noted by the Supreme Court in Pfizer Co. Ltd. v. Deputy Minister of National Revenue, 1975 194 (SCC), [1977] 1 S.C.R. 456, at p. 460:
The rule that statutes are to be construed according to the meaning of the words in common language is quite firmly established and it is applicable to statutes dealing with technical or scientific matters[.] [Citations omitted.]
[54] In all of the circumstances, we find that the OEB’s reasoning on this issue was intelligible, justifiable, and transparent. We further find that its decision to apply the common and ordinary meaning of the words used in s. 25(1) of the Assessment Act, and the result flowing from that, to be within the range of possible and acceptable outcomes.
Issue 2: Did the OEB err in finding that the Tribute pipelines were designated by a previous owner as “transmission pipe lines” in the years in issue, as required under [s. 25(1)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html) of the [Assessment Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-a31/latest/rso-1990-c-a31.html), in the absence of direct evidence to support that finding?
[55] No direct evidence of a s. 25(1) designation of the Tribute pipelines was provided to the OEB. MPAC provided evidence that assessment roll numbers are created for pipelines when they are designated by the owner and reported to MPAC pursuant to s. 25(1), and that assessment roll numbers for the Tribute pipelines were created in approximately 2004. The OEB held that “the only reasonable conclusion to draw from these circumstances is that the Tribute pipelines were designated by the owners in approximately 2004.”
[56] This is a factual finding that is entitled to deference on appeal. Our role on appeal is not to reassess the evidence before the OEB or to posit alternative interpretations of the evidence. We find that the conclusion drawn by the OEB on this issue had some basis in the evidence and was reasonable.
Conclusion
[57] The appeal is dismissed.
[58] If the parties cannot agree on the costs of the appeal they shall make written submissions as to costs, not to exceed three pages, exclusive of their respective Bills of Costs. The Respondents’ costs submissions shall be filed within 14 days of the release of this decision; the Appellant’s within seven days thereafter. If costs submissions are not filed within this time frame then the issue of costs shall be deemed to have been resolved.
“Justice J.S. Fregeau”
J. S. Fregeau, J.
I agree “Justice J.R. Henderson”
J. R. Henderson, J.
I agree “Justice H.M. Pierce”
H. M. Pierce, J.
Date of Release: January 22, 2018
CITATION: Tribute Resources Inc. v. Ontario Energy Board 2018 ONSC 265
DIVISIONAL COURT FILE NO.: 1605/16 DATE: 2018-01-22
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
J. Henderson, H. Pierce, J. Fregeau JJ.
BETWEEN:
TRIBUTE RESOURCES INC.
Appellant
– and –
ONTARIO ENERGY BOARD and MUNICIPAL PROPERTY ASSESSMENT CORPORATION
Respondents
- and –
ONTARIO PETROLEUM INSTITUTE INC.
Intervenor
REASONS ON APPEAL
Fregeau, J.
Date of Release: January 22, 2018
[^1]: The term “pipe line” is used in the Assessment Act, a variant of the dictionary spelling “pipeline”.