DATE: 20010117

DOCKET: M26756/C34115

COURT OF APPEAL FOR ONTARIO

RE: THE CORPORATION OF THE CITY OF SUDBURY (Applicant/Respondent by Appeal) v. UNION GAS LIMITED (Respondent/Appellant) – AND – UNION GAS LIMITED (Applicant by Cross-Application/Appellant) v. THE CORPORATION OF THE CITY OF SUDBURY (Respondent by Cross-Application/Respondent by Appeal)

BEFORE: OSBORNE A.C.J.O.

COUNSEL: Kevin LaRoche for the intervener, City of Kingston

Sharon Wong for Union Gas Limited

Mahmud Jamal for the Corporation of the City of Sudbury

HEARD: December 22, 2000

E N D O R S E M E N T

[1] The Corporation of the City of Kingston has moved for leave to intervene in this appeal in which the appellant is Union Gas Limited (Union) and the respondent is the Corporation of the City of Sudbury (Sudbury). The Sudbury appeal is scheduled to be argued on January 26, 2001. Kingston’s general position is that there is a common question of law in its appeal involving Union Gas which is to be argued before the Divisional Court on a date to be determined and the Sudbury appeal in this court which, as I have said, will be argued on January 26, 2001.

[2] Kingston’s motion is brought under Rule 13.01. It provides:

(1) A person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims,

(a) an interest in the subject matter of the proceeding;

(b) that the person may be adversely affected by a judgment in the proceeding; or

(c) that there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

(2) On the motion, the court shall consider whether the intervention will unduly delay or prejudice the determination of the rights of the parties to the proceeding and the court may add the person as a party to the proceeding and may make such order as is just.

[3] Union Gas opposes Kingston’s motion. Sudbury takes no position on the motion, although its counsel did attend.

[4] For the reasons set out briefly below, I think Kingston’s motion should be dismissed.

[5] The Sudbury appeal by Union Gas is from the judgment of the Hon. Madam Justice Molloy. The central issue before Molloy J. was the meaning and scope of paragraph 22 of the Sudbury-Union Gas franchise agreement. Sudbury and Union Gas advance very different interpretations of that paragraph of the franchise agreement. Molloy J. held that paragraph 22 was ambiguous and did not reflect the position of either party. She concluded that paragraph 22 gave Sudbury the right to purchase the gas distribution system when rights granted under the franchise agreement expired, irrespective of any order made by the Ontario Energy Board under the Municipal Franchises Act, R.S.O. 1990, c. M.55 (MFA). In reaching this conclusion, Molloy J. had to consider the scope of the jurisdiction of the Ontario Energy Board under s. 10 of the MFA. On this subject, she said, at p. 660:

The power of the OEB to extend the term of a franchise under s. 10 of the Municipal Franchises Act is limited. There is no power in the OEB to grant a franchise to another party over the objection of a municipality. There is only the power to renew or extend an existing franchise, and then only if “public convenience and necessity appear to require it”. Further, the OEB’s jurisdiction in this situation is limited to extending or renewing the term of “a right to operate” gas works. This is in contrast to the broader categories of franchise rights referred to in s. 9 of the Act which include, in addition to the right to operate gas works, the right to “construct”, “extend” or “add to” the works. However, where the appropriate circumstances exist for the exercise of the OEB’s jurisdiction to renew or extend the term of operating rights, the Board also has an ancillary jurisdiction under s. 10(2) to impose “terms and conditions” on the renewal or extension. The OEB’s jurisdiction under this provision is not restricted by who has ownership of the gasworks. It is open to the OEB to grant an extension of a term of a right to operate a gas distribution system even though that party may not have an ownership interest in the works, subject to the overriding requirement of “public convenience and necessity”.

[6] In its appeal in the Sudbury proceeding, Union Gas’ position is that the applications judge was wrong in reaching her conclusion as set out above.

[7] The Kingston franchise agreement has no provision comparable to the contractual provisions in issue in the Sudbury appeal. Although the Kingston and Sudbury appeals both require consideration of the scope of the Ontario Energy Board’s jurisdiction under s. 10 of the MFA, the two appeals differ significantly. The Kingston proceedings arose from Union Gas’ application to the Ontario Energy Board pursuant to s. 10 of the MFA for renewal of its franchise right to operate gas works in the former Township of Pittsburgh, made part of Kingston by amalgamation. Kingston objected to the renewal of Union Gas’ franchise and asked the Ontario Energy Board to transfer possession and control of its gas works to Kingston despite Union Gas’ objection to that transfer. The order requested by Kingston would have resulted in Union Gas continuing to own the gas works in name only while the operation and control of the gas works would be with Kingston.

[8] The Ontario Energy Board found that the order requested by Kingston would have resulted in the expropriation of Union Gas’ assets. The Board concluded that it did not have jurisdiction under s. 10 of the MFA to give such an order.

[9] The critical issue in the Kingston proceeding is whether the Ontario Energy Board has the power under s. 10 of the MFA to order a franchisee to transfer possession and control of its assets to a third party without the consent of the franchisee. The issue in the Sudbury appeal in this court is whether the Ontario Energy Board’s jurisdiction under s. 10 of the MFA to renew a gas franchise is sufficient to empower the Ontario Energy Board to authorize the franchisee to continue operating the gas works despite a compulsory sale and transfer of the ownership of those works to Sudbury.

[10] I should note here that there is a second issue, that is whether the Ontario Energy Board has jurisdiction on the renewal of a franchise to authorize additions to existing gas works which is common to both the Kingston and Sudbury matters.

[11] In my opinion, Union Gas is correct in submitting that while both the Kingston and Sudbury proceedings implicate the scope of the Ontario Energy Board’s jurisdiction under s. 10 of the MFA, apart from what Union Gas refers to as a “generic similarity”, the two proceedings do not have much in common. Indeed, on this motion, Kingston’s position is that if granted leave to intervene, it would seek leave to file the Ontario Energy Board decision in the Kingston-Union Gas proceeding so that the panel hearing the Sudbury appeal could understand the factual background of the Kingston-Union Gas matter. Thus, this court in the Sudbury appeal would be required to review the factual background in the Kingston-Union Gas matter in order to make sense of the would-be intervener’s submissions.

[12] In considering a motion for leave to intervene, the court must exercise a discretion having regard to:

• the nature of the case;

• the relevant issues; and

• the likelihood that the party seeking leave to intervene will be able to make a useful contribution to the appeal without causing an injustice to the parties.

[13] In the final analysis, the court must consider whether the contribution that might be made by the would-be intervener is sufficient to counterbalance the disruption caused by the increase in the dimensions and complexity of the appeal now before this court: see M.V.H. (1994), 1994 CanLII 7324 (ON SC), 20 O.R. (3d) 70 (Gen. Div.).

[14] On the Sudbury appeal, this court will have to consider the scope of the Ontario Energy Board’s jurisdiction under s. 10 of the MFA; it will consider that issue in the context of the Sudbury-Union Gas franchise agreement and related relevant facts. This court will not be required to consider the scope of s. 10 of the MFA in the context of the Kingston-Union Gas issues and facts. Thus, although the Sudbury and Kingston issues may be found in the same book, they are dealt with in different chapters.

[15] In my view, the judgment of this court in the Kingston appeal will not have a direct bearing on the Kingston proceedings now before the Divisional Court. It seems to me that the disadvantages of permitting Kingston to intervene substantially outweigh the advantages.

[16] Thus, the motion for leave to intervene is dismissed with costs.

“Osborne A.C.J.O.”