David Suzuki Foundation , SOCIÉTÉ POUR LA NATURE ET LES PARCS DU CANADA, NATURE QUÉBEC, ATTENTION FRAGÎLES v. SIERRA CLUB CANADA FOUNDATION, 2020 NLSC 94

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : David Suzuki Foundation v. Canada-Newfoundland and Labrador Offshore Petroleum Board , 2020 NLSC 94 Date : July 3, 2020 Docket : 201701G3354 Between: David Suzuki Foundation , SOCIÉTÉ POUR LA NATURE ET LES PARCS DU CANADA, NATURE QUÉBEC, ATTENTION FRAGÎLES and SIERRA CLUB CANADA FOUNDATION ApplicantS And: Canada-Newfoundland and Labrador Offshore Petroleum Board Respondent AND: CORRIDOR RESOURCES INC.

FIRST INTERVENOR AND: HER MAJESTY THE QUEEN IN RIGHT OF NEWFOUNDLAND AND LABRADOR SECOND INTERVENOR Before: Justice Rosalie McGrath Place of Hearing: St. John’s, Newfoundland & Labrador Dates of Hearing and February 25, 26, 2019 and Supplemental Submissions: January 15, 16, 2020

Summary: The Court quashed the decision of the Respondent Board that authorized the surrender of an exploration licence in exchange for theissuance of a new exploration licence over the same offshore area lands. The Court found that the Board had unreasonably interpreted itshome statute as granting it authority to effect such an exchange. Appearances: Aaron L. Felt, Joshua Ginsberg and Ian Miron Appearing on behalf of the Applicants Amy M. Crosbie Appearing on behalf of the Respondent Colm St. R.J. Seviour, Q.C. Appearing on behalf of the First Intervenor David G.

Rodgers Appearing on behalf of the Second Intervenor Authorities Cited: CASES CONSIDERED: David Suzuki Foundation v. Canada-Newfoundland and Labrador Offshore Petroleum Board, 2018 NLSC146; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65; Bell Canada v. Canada (Attorney General), 2019 SCC66; Canada Post Corp. v. Canadian Union of Postal Workers, 2019 SCC 67; Dunsmuir v. New Brunswick, 2008 SCC 9; Catalyst PaperCorp. v. North Cowichan (District), 2012 SCC 2; USW v. Canada (Minister of Citizenship and Immigration), 2013 FC 496; CanadianElevator Industry Education Program (Trustees of) v.

Nova Scotia (Elevators and Lifts Act), 2015 NSSC 362; Canadian ElevatorIndustry Education Program (Trustees of) v. Nova Scotia (Elevators and Lifts Act), 2016 NSCA 80; Rizzo & Rizzo Shoes Ltd., Re, (SCC), [1998] 1 S.C.R. 27; Layman v. Layman Estate, 2016 NLCA 13; Geophysical Services v. Encana Corp., 2016 ABQB230; Geophysical Service Inc. v. EnCana Corp., 2017 ABCA 125; Newfoundland and Labrador, (Environment and Climate Change) v.Atlantic Salmon Federation (Canada), 2018 NLCA 53; British Columbia (Securities Commission) v. McLean, 2013 SCC 67; C.U.P.E.,Local 41 v.

Alberta (Industrial Relations Board) (1978), 1978 ALTASCAD 47 , 1 A.C.W.S. 577, 8 AR 174 (Alta. S.C. (App.Div.)); Capital Vision Inc. v. Minister of National Revenue, 2002 FCT 1317; Baker v. Canada (Minister of Citizenship & Immigration),1999 SCC 699; C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 2; A.L. Stuckless & Sons Ltd. v. Newfoundland & Labrador(Minister of Forest Resources and Agrifoods), 2005 NLCA 11; Pennecon Energy Ltd. v. Metal World Inc., 2013 NLCA 67; RoyalNewfoundland Constabulary Public Complains Commission v. Oates, 2003 NLCA 40; Blueberry River Indian Band v.

Canada(Department of Indian Affairs & Northern Development), (SCC), [1995] 4 S.C.R. 344; Mobil Oil Canada Ltd. v.Canada-Newfoundland Offshore Petroleum Board, (SCC), [1994] 1 S.C.R. 202; NAV Canada c. Wilmington Trust Co.,2006 SCC 24 rev’ing, in part, Canada 3000 Inc., Re, (2005) 208 O.A.C. 397, 2005 CarswellOnt 2021 (SCC); ATCO Gas & PipelinesLtd. v. Alberta (Energy & Utilities Board), 2006 SCC 4; Elson v.

Canada (Attorney General), 2017 FC 459; Re Shoal Point EnergyApplication to Pursue Alternative Completion Strategy Respecting Diligent Pursuit – Exploration Licence 1070 (9 August 2017)(Canada-Newfoundland and Labrador Offshore Petroleum Board); Polaris Resources Ltd. v. Canada-Newfoundland & LabradorOffshore Petroleum Board, 2006 NLTD 143; Shin Han F & P Inc. v.

Canada-Nova Scotia Offshore Petroleum Board, 2014 NSCA 108 STATUTES CONSIDERED: Canada Newfoundland and Labrador Atlantic Accord Implementation Act, S.C. 1987, c. 3; Canada-Newfoundland and Labrador Atlantic Accord Implementation Newfoundland and Labrador Act, R.S.N.L. 1990, c. C-2; The ConstitutionAct, 1982, being

Schedule B to the Canada Act 1982 (UK), 1982, c 11; Canadian Environmental Assessment Act, 2012, S.C. 2012, c. 19,s. 52; Canada Oil and Gas Land Regulations, C.R.C., c. 1518; Canada Oil and Gas Operations Act, R.S.C., 1985 c. O-7; CanadaPetroleum Resources Act, R.S.C. 1985, c. 36;

Interpretation Act, R.S.C. 1986, c. I-21; Royal Newfoundland Constabulary Act, 1992,S.N.L. 1992, c. R-17; Canada, Treaties, laws and regulations, Canada Gazette,

Part I: Notices and Proposed Regulations, vol. 151, No. 5(February 4, 2017); Canada Oil and Gas Act, S.C. 1980-81-82-83, c. 81; Canada Petroleum Resources Act, R.S.C. 1985, c. 36;Department of Fisheries and Oceans Act, R.S.C. 1985, c. F-15 RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D

TEXTS CONSIDERED: Elmer A. Driedger, Construction of Statutes , 2nd ed. (Toronto: Butterworths, 1983); Ruth Sullivan, Sullivan on the Construction of Statutes , 6 th ed. (Markham: LexisNexis 2014); Ruth Sullivan, Statutory

Interpretation , 3 rd ed., (Irwin Law, Incorporated, 2016); Pierre-André Côte, The

Interpretation of Legislation in Canada , 4 th ed. (Toronto: Thomson Reuters Ltd., 2011); Ruth Sullivan, Sullivan on the Construction of Statutes , 5 th ed. (Markham: LexisNexis 2008); Oxford dictionary at https://en. oxforddictionaries.com REASONS FOR JUDGMENT McGrath, J. : INTRODUCTION [ 1 ] The Applicants have applied to this Court for an order in the nature of certiorari quashing the decision of the Respondent, Canada-Newfoundland and Labrador Offshore Petroleum Board (the “Board”) made on December 15, 2016 and implemented on January 15, 2017 (“Decision”). [ 2 ] The Respondent Board was created by the Canada-Newfoundland and Labrador Atlantic Accord Implementation Act , S.C. 1987, c. 3 (“ Federal Act ”) and section 9(1) of the Canada-Newfoundland and Labrador Atlantic Accord Implementation Newfoundland and Labrador Act , R.S.N.L. 1990, c.

C-2 (“ Provincial Act ”) (the “ Accord Acts” ), which implemented the Atlantic Accord between the Federal Government and the Province of Newfoundland and Labrador. The Accord Acts confer upon the Board powers, duties and functions relating to the management of Newfoundland and Labrador offshore petroleum resources. [ 3 ] In the Decision, the Board granted the First Intervenor, Corridor Resources Inc. (“Corridor”), Exploration Licence 1153 (EL 1153) in exchange for the surrender by Corridor of Exploration Licence 1105 (EL 1105).

Both EL 1153 and EL 1105 relate to the same offshore area continuing in a geological formation known as “Old Harry” in the Gulf of St. Lawrence between Newfoundland and Labrador and Quebec. [ 4 ] These Exploration Licences (“ELs”) were issued under the authority of section 9(1) of the Accord Acts . Each Act is almost identical but the addition of

section 48, which deals with aboriginal rights under the Constitution Act, 1982 , is not contained in the Provincial Act . As such, the numbering of the later sections in each Act differs. For ease of reference,

section numbers in this decision will be to the

section numbers of the Federal Act , with both Acts being collectively referred to as the Accord Acts . [ 5 ] Under the Accord Acts , exploration licences grant the interest owner the right to conduct exploration drilling and testing activities for petroleum in the offshore area, subject to the provisions of the Accord Acts and any specific terms of that licence. Section 69(2) of the Accord Acts prohibits the extension or renewal of the term of an exploration licence beyond a nine-year maximum term. [ 6 ] The nine-year term of EL 1105 began to run on January 15, 2008.

That term was further subdivided into two periods of five and four years, respectively, with Corridor being required to begin drilling an exploration well within the initial five-year period (“Period 1”) of the licence. Period 1 of the licence was extended beyond the initial five-year period on three different occasions, with the last extension being until January 14, 2017. However, it became apparent that Corridor would not begin drilling an exploration well on EL 1105 by that date. [ 7 ] Corridor and the Board then entered into an Exchange of Interest Agreement (“Exchange Agreement”) on September 2, 2016.

The Board agreed to issue a new exploration licence to Corridor pursuant to

section 61 of the Accord Acts and Corridor agreed to surrender EL 1105. The surrender and exchange was subject to conditions, including the approval of the Ministers of Natural Resources for both the Federal and Provincial governments, as well as compliance with statutory gazetting and consultation requirements. [ 8 ] On December 15, 2016, once the conditions were met, the Board made and gave notice of its decision to exchange EL 1105 for a new exploration licence, with an implementation date of January 15, 2017.

Corridor surrendered EL 1105 by signing and delivering a Surrender of Interest document dated January 11, 2017 and the Board issued EL 1153 to Corridor. Both EL 1105 and EL 1153 cover the same lands and include nearly identical terms and conditions. The only material difference between the two licences is the term length. EL 1153 was granted for a term of four years. PROCEDURAL HISTORY [ 9 ] The Applicants are non-governmental organizations with mandates to protect the environment. They have all been actively involved in the regulatory processes associated with offshore oil and gas exploration in the Gulf of St.

Lawrence and, specifically, in respect of the Old Harry geological formation. Four of the Applicants have, in addition to their individual efforts, formed the St. Lawrence Coalition, whose mandate is to protect the Gulf of St.

Lawrence from the impacts of offshore oil and gas activities by participating in regulatory proceedings, including those at issue in this application. [ 10 ] The Applicants filed this application for judicial review alleging that the Board acted unreasonably. [ 11 ] After issuing its application, Corridor and Her Majesty in Right of Newfoundland and Labrador (the “Province”) were granted intervenor status. The Federal Government was also notified of this application but did not seek to intervene.

[ 12 ] The Board, Corridor and the Province challenged the standing of the Applicants to bring this application. That application, as well as an application by another entity to be added as intervenor, was heard as a preliminary matter. By decision dated June 26, 2018, Chaytor, J., denied the third intended intervenor’s application. However, she granted the Applicants public interest standing to challenge the Decision on the grounds set forth in that decision ( David Suzuki Foundation v.

Canada-Newfoundland and Labrador Offshore Petroleum Board , 2018 NLSC 146 ). [ 13 ] To provide factual and legal context, I will generally summarize the history of these two licences. background [ 14 ] The following is a chronology of relevant events with respect to EL 1105 from issuance until it was surrendered and exchanged for EL 1153. [ 15 ] As noted above, EL 1105 was issued to Corridor with an effective commencement date of January 15, 2008 and a term of nine years, divided into two periods of five and four years, respectively.

EL 1105 would expire on January 15, 2013 at the end of the first five-year period (Period 1) unless Corridor began drilling an exploration well before that date or paid a $1 million drilling deposit to extend Period 1. [ 16 ] In October 2010, Corridor conducted a geo-hazard survey.

In February 2011, Corridor registered its proposed single well exploratory drilling project within the area of EL 1105 (the “Project”) for environmental assessment under the Canadian Environmental Assessment Act, 2012 , S.C. 2012, c. 19, s. 52 , as it then was. [ 17 ] The Board received more than fifty submissions and comments in relation to the Project from various individuals, groups, municipal government representatives, First Nations and environmental advocacy groups. [ 18 ] As a result, on June 3, 2011, the Chairman of the Board reported to the Minister of Environment for Canada as to the high level of public interest in the Project.

A recommendation was made that a mediator or review panel be appointed for the Project’s environmental assessment. [ 19 ] On August 15, 2011, the Minister of Environment for Canada wrote to the Chairman of the Board directing that a screening level environmental review of the Project be undertaken. However, in light of the generalized issues that were raised in public submissions and the fact that the Strategic Environmental Assessment (“SEA”) for the Western Newfoundland and Labrador offshore area was due to be updated, it was decided that the SEA work should include thorough public consultations.

These consultations would address and examine the broader environmental impacts of oil and gas activities in the area. [ 20 ] As such, the Project-specific environmental assessment (“EA”) was to be continued and completed as a screening by the Board while the SEA was ongoing.

The press release issued by the Board on August 16, 2011 indicated that the Board had begun planning for two separate environmental assessment processes that were independent, but informed by one another. [ 21 ] On August 25, 2011, the Board issued the terms of reference for the EA consisting of a Project screening to be conducted by an independent reviewer who would conduct extensive public consultations (the “IR Process”). The independent reviewer was to conduct public consultations in the five jurisdictions bounded by the Gulf of St.

Lawrence. [ 22 ] Corridor then sought and obtained an extension of Period 1 of EL 1105 from five years to seven years on November 23, 2011. The Board also agreed that EL 1105 could be further extended from seven years to eight years by filing a drilling deposit. [ 23 ] On December 21, 2011, Corridor delivered its EA documentation to the Board. Correspondence was exchanged and meetings were held between Corridor and the Board and the independent reviewer in early 2012 to gain an understanding of the intended IR Process. [ 24 ] At the same time, Corridor sought a prohibition order under

section 56 of the Accord Acts prohibiting Corridor from commencing or continuing any work or activity on those portions of the offshore area subject to EL 1105 until the Board notified Corridor that the SEA had been completed. On February 27, 2012, the Board issued a decision dismissing Corridor’s application for a prohibition order.

If granted, the prohibition order would have effectively provided a “time out” from EL 1105 to cover the period of the SEA process. [ 25 ] In a press release issued February 28, 2012, the Board advised that it had terminated the work of the independent reviewer and decided that the SEA should be completed before undertaking Project-specific public consultations. [ 26 ] On July 12, 2012, the Board advised Corridor that the Project had been declared a “designated project” under the Canadian Environmental Assessment Act . [ 27 ] On July 23, 2013, the Board granted Corridor a second Period 1 extension, extending Period 1 from seven to eight years, and providing for its further extension from eight years to eight years and 364 days, by filing a drilling deposit. [ 28 ] In April 2014, Corridor was advised that the Project would be subject to a requirement that Corridor engage in an Aboriginal Consultation Process (the “ACP”) for the Project in addition to the web-based public consultation for the EA which had also been directed by the Board.

No ACP guidelines or directives were prescribed. [ 29 ] On May 5, 2014, the SEA final report was released. That report affirmed the acceptability of petroleum based activity in the Gulf of St. Lawrence, subject to project-specific environmental assessments. [ 30 ] On July 18, 2014, Corridor submitted a request for a joint ministerial directive to issue a prohibition order under

section 56 of the Accord Acts in relation to EL 1105. Corridor’s rationale for the request was that the unusually long regulatory and approval

processes for the EA had unfairly consumed excessive time under EL 1105 and precluded Corridor from executing on the Project. [ 31 ] Corridor received replies from the Federal and Provincial Ministers of Natural Resources in December 2014 instructing Corridor to make its request directly to the Board. [ 32 ] Corridor made a request to the Board for licence term relief on January 19, 2015, but did not receive a reply.

On October 13, 2015, Corridor made a request to extend Period 1 of EL 1105 because neither the ACP nor the additional EA consultation process had commenced despite the fact that Period 1 was facing expiration. Corridor took the position that it did not have a meaningful opportunity to execute on the Project. [ 33 ] On January 11, 2016, Corridor applied to the Board to allow it to surrender and exchange EL 1105 pursuant to

section 61 of the Accord Acts because Corridor had experienced an “extraordinary and prolonged” environmental assessment process with longer timelines than those experienced by other operators seeking similar authorizations for drilling activity in the Province’s offshore area. [ 34 ] Specifically, Corridor proposed the following approach: 1) Corridor would first surrender its “principal area of interest” under EL 1105. 2) The Board would then issue a new interest to Corridor for the “principal area of interest” in exchange for Corridor surrendering the “residual (non-prospective)” area of EL 1105. [ 35 ] The Board and Corridor negotiated and entered into the Exchange Agreement on September 2, 2016 for a surrender of EL 1105 in exchange for a new exploration licence.

However, the Exchange Agreement did not adopt Corridor’s proposed approach. Instead, it provided that Corridor would first surrender EL 1105 in its entirety and the Board would subsequently issue a new exploration licence in the same lands with a four-year term. [ 36 ] In September 2016, the Board notified the public of this proposed decision to do a surrender and exchange.

The Board explained its rationale for the proposed decision as follows: The issuance of this proposed exploration licence will provide appropriate time for a robust review process associated with a proposed drilling operations authorization and validation of the geological prospect commonly referred to as Old Harry by restoring the term of the license to four years. [ 37 ] The Board received numerous comments both supporting and opposing the proposed decision.

The Applicants were among those who opposed the exchange and submitted comments challenging the legality of the Board’s proposed course of action. [ 38 ] The Board issued several memos, press releases and correspondence with respect to the proposed exchange using the words “re- issuance” and “extension” in describing the transaction.

It also referred to the exchange as restoring the term of EL 1105. [ 39 ] In background information provided by the Board to the Federal and Provincial Ministers of Natural Resources in September 2016, the Board also referred to the delays that have affected Corridor’s proposed drilling program, including the environmental review process and discussions regarding how the Board can assist in the ACP. [ 40 ] After receipt and consideration of the comments received from the public, the Board decided to proceed with a

section 61 surrender and exchange. Such a decision is considered to be a “fundamental decision” under the Accord Acts , being one that requires ministerial approval.

As such, before implementing the Decision, the Board wrote to secure the approval of the Federal and Provincial Ministers of Natural Resources. [ 41 ] In its letter seeking ministerial approval, the Board specifically noted that in requesting a prior period extension on EL 1105, the Board said that such an amendment would afford it the “time necessary to consider whether there should be a surrender and reissuance of this exploration licence given the factors which have impaired the normal exploration planning for an operator to file and receive a drilling program authorization”. [ 42 ] Each Minister approved the Decision, though the federal Minister noted that he was “approving this measure to ensure that rights holders in the Canada-Newfoundland and Labrador offshore area have confidence in the licence process.

As such, it is my firm view that there can be no further extensions granted”. He further advised that his Department would be conducting consultations with interested groups and citizens on potential oil and gas development in the Gulf of St. Lawrence area. These consultations would be conducted in parallel to the Board’s EA process. It was also expected that the Board and the Province would join in these consultations. [ 43 ] The Board implemented the Decision by issuing EL 1153 with an effective date of January 15, 2017.

Other than extending the licence term by four years, the terms and conditions of the proposed licence (which eventually became EL 1153) mirrored those of EL 1105. EL 1153 covers the same lands as EL 1105. EL 1153 does not require Corridor to forfeit the security deposit it posted under EL 1105, nor does it require the posting of a new security deposit. Corridor is entitled to submit work expenses incurred in relation to EL 1105 against the security deposit under EL 1153. [ 44 ] The reasons given by the Board for the Decision, as contained in the Canada Gazette

Part I , Vol. 151, No. 5, published on February 4, 2017 are as follows: The issuance of this new exploration licence equitably restores the exploration licence term to four years to afford time to complete the environmental assessment, to seek a drilling operations authorization and to validate the geological prospect commonly referred to as Old Harry. [ 45 ] The Applicants filed this originating application for judicial review after the Board implemented the Decision.

LEGISLATIVE SCHEME [ 46 ] As noted above, the Accord Acts give effect to the Atlantic Accord, a memorandum of agreement between the governments of Canada and Newfoundland and Labrador relating to the management of offshore petroleum resources. [ 47 ] Sections 47 to 64 of the Accord Acts set out the Board’s general powers with respect to oil and gas interests, while sections 65 to 70 define the Board’s powers with respect to exploration licences. [ 48 ] In exercising these powers, the Board must have regard to the purposes of the Atlantic Accord. The Accord’s purposes include:

a) to provide for the development of oil and gas resources offshore Newfoundland and for the benefit of Canada as a whole and Newfoundland and Labrador in particular; …

f) to provide for a stable and fair offshore management regime for industry;

g) to provide for a stable and permanent arrangement for the management of the offshore adjacent to Newfoundland by enacting the relevant provisions of this Accord in legislation of the Parliament of Canada and the Legislature of Newfoundland and Labrador and by providing that the Accord may only be amended by the mutual consent of both governments; and

h) to promote within the system of joint management, insofar as is appropriate, consistency with the management regimes established for other offshore areas in Canada. [ 49 ] In most cases, the Board has no power to directly issue an exploration licence; instead, it must first conduct a competitive public bidding process. Direct issuance is permitted in only two circumstances set out in section 61(1): (

i) where the Crown or interest holder has allowed an interest to lapse in error; and (ii) where the Crown and interest holder negotiate an exchange of rights. The first circumstance does not apply in this case. [ 50 ] Section 61(1)(

b) sets out the Board’s power in the second circumstance: Subject to sections 31 to 40, the Board may issue an interest, in relation to any Crown reserve area, without making a call for bids where… (

b) the Board is issuing the interest to an interest owner in exchange for the surrender by the interest owner, at the request of the Board, of any other interest or a share in any other interest, in relation to all or any portion of the offshore area subject to that other interest. [ 51 ] Because the exercise of the Board’s section 61(1)(

b) power is a “fundamental decision” subject to sections 31 to 40 of the Accord Acts , it is subject to the review and approval of the federal and provincial Ministers of Natural Resources. The Board cannot implement a fundamental decision until it has the approval of both Ministers, although the Board is deemed to have the approval of a Minister who fails to veto the decision within 30 days. [ 52 ] The Board’s section 61(1)(

b) exchange power is also limited in the sense that it can only directly issue a new licence to (

i) an “interest owner” and (ii) in respect of lands that are a “Crown reserve area”. [ 53 ] The Board’s power to directly issue an exploration licence is also subject to the rules governing all exploration licences (section 57(1)). This includes section 69(2) which prohibits the Board from extending or renewing the term of an exploration licence beyond nine years: Subject to subsection (3) and

section 70, the term of an exploration licence shall not exceed nine years from the effective date of the licence and shall not be extended or renewed. [ 54 ] This prohibition on extension or renewal is subject to the following three exceptions. The Board may extend a legacy exploration licence negotiated under a previous statutory regime.

An exploration licence is also automatically extended if the owner has begun drilling a well before the licence expires and continues to diligently pursue that well, or is prevented from drilling the well by dangerous or extreme weather conditions or mechanical or technical problems. Finally, section 56(4) of the Accord Acts automatically extends any interest that is subject to a Board or Ministerial order issued under sections 56(1) or (3) prohibiting work or activity on that interest.

All parties agree that none of these exceptions apply to EL 1105. [ 55 ] The issue is therefore whether the Board could have relied on the exchange power under section 61(1)(

b) to accept a surrender of EL 1105 and issue EL 1153 without making a call for bids. [ 56 ] The Applicants say the Board has acted unreasonably in its

interpretation of the Accord Acts in deciding it had the authority to effect such an exchange while the Board and Corridor contend that the Board’s

interpretation of its statutory authority was reasonable. The Province’s intervention was generally limited to making submissions concerning its relationship with the Board, the procedure

undertaken to approve a “fundamental decision” and to address any questions the Court may have. issues [ 57 ] The grounds raised by the Applicants in their brief asserting that the Board acted unreasonably are as follows: a. It is based on an abuse of section 61(1)(

b) of the Accord Acts . Reasonably interpreted, those provisions do not permit the Board to issue a new licence over lands identical to those surrendered. b. It contravenes section 69(2) which prohibits extending or renewing the term of an exploration licence beyond nine years. The Board’s Decision is an indirect attempt to do what these provisions preclude it from doing directly. c. It undermines the purposes of the Accord Acts and the Atlantic Accord.

The Board cannot attempt to remedy its own failures and regulatory delays by circumventing clear statutory proscriptions. law and analysis [ 58 ] The first issue for consideration on any judicial review is the standard of review to be applied. In this case, all counsel agreed at the hearing that the Decision should be reviewed on the standard of reasonableness. [ 59 ] Since the hearing of this application, the Supreme Court of Canada released a trilogy of decisions dealing with the nature of a court’s role on review of administrative decisions ( Canada (Minister of Citizenship and Immigration) v.

Vavilov , 2019 SCC 65 ; Bell Canada v. Canada (Attorney General) , 2019 SCC 66 ; and Canada Post Corp. v. Canadian Union of Postal Workers , 2019 SCC 67 ). [ 60 ] While all counsel continued to agree that the standard to be applied is that of reasonableness, counsel for the Applicants and the Board filed additional written submissions with respect to the application of the trilogy of cases to the Decision. [ 61 ] The Supreme Court of Canada in Vavilov set out a revised framework for determining the standard of review for administrative decisions.

The starting point of that framework is that the standard of reasonableness applies. However, that presumptive standard can be rebutted in two situations: 1. Where the legislature has statutorily prescribed a standard of review or where it has provided for an appeal from an administrative decision to a court (in which case appellate standards of review apply); and 2.

Where the question on review falls into one of the categories of questions that the rule of law requires be reviewed on a standard of correctness. [ 62 ] In looking at whether the presumptive standard of reasonableness has been rebutted, I agree that the Accord Acts do not contain a provision that prescribes a standard of review or a right of appeal. [ 63 ] The second exception to the presumption of reasonableness as the standard deals with the nature of the question on review.

Vavilov provides, at paragraph 53 , that the rule of law requires courts to apply the standard of correctness for the following types of legal questions: 1) Constitutional questions; 2) General questions of law of central importance to the legal system as a whole; and 3) Questions regarding the jurisdictional boundaries between two or more administrative bodies. [ 64 ] The legal question under review on this application does not fit within any of the categories for the second exception set forth in Vavilov . [ 65 ] Rather, this case turns on the

interpretation of the Board’s home statute. At paragraph 25 of Canada Post , the Supreme Court of Canada provided that reasonableness presumptively applies to an administrative decision-maker’s

interpretation of their enabling statute. That was the same presumption that applied under the former framework in Dunsmuir v. New Brunswick , 2008 SCC 9 . [ 66 ] As an aside, I note that the parties initially approached their standard of review submissions relying on Dunsmuir and cases that followed it. Applying the Dunsmuir framework, the review standard of reasonableness applied.

However, in light of the new Vavilov framework, it is not necessary to go through the entire Dunsmuir analysis in this decision to come to that conclusion. [ 67 ] I will, however, consider the parties’ submissions and pre-trilogy case law to the extent that it remains relevant to how a reviewing court is to apply the standard of reasonableness post-trilogy. [ 68 ] With respect to the manner of conducting such a review, the Board notes that the starting point remains judicial restraint.

At paragraph 13 of Vavilov , the court comments generally on reasonableness review as follows: 13 Reasonableness review is an approach meant to ensure that courts intervene in administrative matters only where it is truly necessary to do so in order to safeguard the legality, rationality and fairness of the administrative process. It finds its starting point in the principle of judicial restraint and demonstrates a respect for the distinct role of administrative decision makers. However, it is not a "rubber-stamping" process or a means of sheltering administrative decision makers from accountability.

It remains a robust form of review. [ 69 ] At paragraph 99 of Vavilov , the court notes that a reviewing court must develop an understanding of the decision-maker’s reasoning process to determine whether the decision as a whole is reasonable.

99 …To make this determination, the reviewing court asks whether the decision bears the hallmarks of reasonableness — justification, transparency and intelligibility — and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision: Dunsmuir , at paras. 47 and 74 ; Catalyst , at para. 13. [ 70 ] In making the above statements in Vavilov , the Supreme Court of Canada was reaffirming statements it had previously made in Dunsmuir and its 2012 decision in Catalyst Paper Corp. v. North Cowichan (District) , 2012 SCC 2 .

In particular, at paragraph 13 of Catalyst , referred to with approval in Vavilov , the court noted that a reviewing court must have: 13 …regard to the processes followed and whether the outcome falls within a reasonable range of alternatives in light of the legislative scheme and contextual factors relevant to the exercise of the power: Dunsmuir , at para. 47 . [ 71 ] Paragraph 47 of Dunsmuir further said that a reviewing court must be: … concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process.

But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law. [ 72 ] In my view, the comments dealing with the hallmarks of reasonableness do not reflect a departure from the law set out in Dunsmuir , as commented upon in Catalyst . Pre- Vavilov , courts were expected and required to consider the factual context and legislative scheme when reviewing a decision on a reasonableness standard.

That was an integral part of judicial review. [ 73 ] However, those comments, as well as similar comments in Vavilov , indicate a direction by the Supreme Court of Canada to reviewing courts that there should be a move away from any “hands off” approach that may have developed in certain cases. That approach could result in courts failing to take the steps required to understand the decision-maker’s reasoning process when determining whether a decision was, as a whole, unreasonable.

The Supreme Court of Canada reiterated statements made in prior decisions to the effect that the reasoning process is of central importance in determining whether a decision is reasonable. [ 74 ] While the Board and Corridor agree that Vavilov instructs reviewing courts to conduct a robust review of reasons, they say that, at paragraph 31 of Vavilov , the Supreme Court of Canada recognized that the relative expertise of the tribunal remains a relevant consideration in conducting a reasonableness review, even if it is no longer a relevant consideration in determining the standard of review. [ 75 ] Further, at paragraph 93 of Vavilov , the Court again recognized that a reviewing court must pay respectful attention to the experience of a decision-maker, especially one that has institutional expertise. 93 … In conducting reasonableness review, judges should be attentive to the application by decision makers of specialized knowledge, as demonstrated by their reasons.

Respectful attention to a decision maker's demonstrated expertise may reveal to a reviewing court that an outcome that might be puzzling or counterintuitive on its face nevertheless accords with the purposes and practical realities of the relevant administrative regime and represents a reasonable approach given the consequences and the operational impact of the decision.

This demonstrated experience and expertise may also explain why a given issue is treated in less detail. [ 76 ] Counsel for the Board also refers to paragraph 108 of Vavilov in which the court noted that the statutory scheme will also inform the acceptable approaches to decision making. For example, where a decision-maker is given wide discretion by statute, it would be unreasonable for a court to fetter that discretion.

The Board submits that it is the governing statutory scheme that is likely to be the most salient aspect of the legal context relevant to this particular Decision. [ 77 ] Applying the Vavilov criteria, a reasonable decision, even one made by a decision-maker with demonstrated expertise, still has to meet the justification, transparency and intelligibility requirements of Dunsmuir .

That requires the court to be able to trace the decision-maker’s reasoning without encountering any fatal flaws in its overarching logic. [ 78 ] At paragraph 100 of Vavilov , the majority gave guidance on the shortcomings or flaws in reasoning that may render a decision unreasonable.

The party challenging the decision bears the onus of establishing that such flaws are sufficiently central or significant to the decision. [ 79 ] At paragraph 101, the majority identified two types of fundamental flaws that may render a decision unreasonable: (1) a failure of rationality internal to the reasoning process; and (2) where a decision in untenable in light of the relevant factual and legal constraints that bear on it.

However, a reviewing court does not need to categorize the failure as belonging to one type or the other. [ 80 ] The Applicants submit that the central importance that Vavilov places on reasons and the reasoning process means that this Court must pay particular attention to the Board’s reasons. It says that the Supreme Court of Canada’s decision in Vavilov should resolve any debate about whether this Court’s standing decision limited the scope of this Court’s review.

In particular, it is clear from Vavilov that reviewing courts not only should, but must, determine whether a decision is untenable in light of the relevant factual and legal constraints that bear on it. [ 81 ] This has relevance as the Board and Corridor objected to some of the Applicants’ submissions when the matter proceeded to a hearing on the merits.

The Applicants’ submissions included an outline of the history of the Board’s dealings with Corridor, suggesting that Corridor bore a portion of the blame for failing to carry out exploratory and drilling activities under EL 1105, and that the Board had unreasonably accommodated Corridor in respect of the surrender and exchange.

In response, Corridor and the Board made submissions in which they gave their own characterization of the reasons why Corridor failed to carry out exploration activities during the term of EL 1105. [ 82 ] During the hearing, counsel for the Board stated that this judicial review raised issues solely related to the reasonableness of the Board’s

interpretation of its own statute and did not deal with the reasonableness of any of the Board’s rationale for deciding to issue EL 1153 in exchange for EL 1105.

[83] As Chaytor, J. stated at paragraph 27 of the standing decision, the question for determination, as phrased by the Applicants, wasas follows: “one of statutory

interpretation, that being, may the Board extend an exploration licence beyond the prescribed nine years inother than the two circumstances identified by the Act (neither of which are applicable in this case)? Or, does the constituting legislationallow the Board to do what it did?” She then noted that “the Board’s

interpretation of its enabling legislation is in question; the merits ofthe Decision are not before the Court”. [84] The reference to the merits of the decision not being before the Court must be put in context. That statement was made whendifferentiating the issues raised by the Applicants from the position of applicants in other standing applications. In those other cases,applicants were seeking to challenge the exercise of discretion by a decision-maker in matters identified as discretionary decisions undertheir home statutes (e.g. USW v.

Canada (Minister of Citizenship and Immigration), 2013 FC 496; Canadian Elevator IndustryEducation Program (Trustees of) v. Nova Scotia (Elevators and Lifts Act), 2015 NSSC 362; and Canadian Elevator Industry EducationProgram (Trustees of) v.

Nova Scotia (Elevators and Lifts Act), 2016 NSCA 80). [85] Put in context, the statement about not considering the merits of the Decision refers to the fact that, if it was reasonable for theBoard to interpret its home statute as giving it discretion to conduct such a surrender and exchange, this Court would not be consideringwhether the Board acted unreasonably in the exercise of that discretion. [86] I do not interpret the standing decision to mean that I am not to consider the factual and legal context that lead to the surrenderand exchange of EL 1105 and EL 1153.

It is against the factual and legal context that I must consider the reasonableness of the Board’sinterpretation of its statutory authority and, in particular, whether it carried out its responsibility to discern meaning and legislativeintent. That determination cannot be made in a vacuum.

Taking such an approach is consistent with both Vavilov and the cases thatprecede it. [87] In order to carry out this reasonableness analysis, I must have an appreciation of how the licencing process and entire statutoryscheme was intended to, and actually did, operate as well as the steps that must be taken for a licence holder to comply with the statutoryand licencing requirements.

This will then inform and help me to discern whether it was intended that the Board have statutory authorityto accept a surrender of a licence at the end of its nine-year term and issue a new licence for the same lands without going through thepublic bidding process. These considerations are all relevant to the issue of statutory

interpretation and whether the legislation allowedthe Board to make the Decision. [88] In fact, the Board’s own submissions refer back to specific delays associated with the SEA and regulatory approvals inassessing the context in which it carried out its interpretative exercise. It also references how similar situations were dealt with, applyingsimilar statutory provisions in other areas in Canada.

The Board also references its own public notices in relation to the exchange oflicences as well as its communications with Corridor. [89] However, that context is only to be considered in respect of deciding the issues raised and to be determined on this application.

Those issues relate to whether the Board acted unreasonably in interpreting its home statute as giving it authority to issue a newexploration licence of the same lands as an exploration licence that was at the end of its nine-year maximum term. [90] The application for judicial review did not ask the Court to review the reasonableness of the Board’s actions respectingenvironmental assessments or aboriginal consultations. In addition, it did not ask the Court to examine the reasons why Corridor failed todrill a well on EL 1105 before the end of the nine-year term of that licence.

Similarly, the issue of whether the Board actedunreasonably in how it exercised its discretion to effect a surrender and exchange was not under review, if such a discretion existed. If Ifind that the Board did not unreasonably interpret its home statute as granting it authority to effect this surrender and exchange, that is theend of my review. [91] In carrying out this contextual review of the Board’s statutory

interpretation, I am guided by comments made by the SupremeCourt of Canada in its judicial review trilogy. In Canada Post, in the context of a reasonableness review of a decision-maker’s statutoryinterpretation, the court described the decision-maker’s task at paragraph 121, as follows: 121 The administrative decision maker's task is to interpret the contested provision in a manner consistent with the text, context andpurpose, applying its particular insight into the statutory scheme at issue. It cannot adopt an

interpretation it knows to be inferior —albeit plausible — merely because the

interpretation in question appears to be available and is expedient. The decision maker'sresponsibility is to discern meaning and legislative intent, not to "reverse-engineer" a desired outcome. [92] The Applicants assert that, contrary to this instruction, the Board’s

interpretation of the Accord Acts was inferior, even ifarguably plausible. The context reveals that the

interpretation the Board placed on the statute was designed to engineer an expedientoutcome, i.e. the extension of a licence to accommodate Corridor. [93] On the other hand, the Board says its

interpretation is transparent and intelligible. Further, it is justified and rational given thecontext, text and purpose of the Accord Acts. This is consistent with the “modern approach” to statutory

interpretation. [94] That modern approach to statutory

interpretation was set out by the Supreme Court of Canada in Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, at paragraph 21. The court quoted with approval from Elmer A. Driedger, Construction ofStatutes, 2nd ed. (Toronto: Butterworths, 1983), at page 87, noting that statutory

interpretation cannot be founded on the wording of thelegislation alone. Rather, the author stated: 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 grammaticaland ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[ 95 ] In the context of a tribunal that is conducting an interpretative exercise, the Newfoundland and Labrador Court of Appeal took the same approach in Layman v. Layman Estate , 2016 NLCA 13 . At paragraph 23, the Court of Appeal set out the following as the “real questions” that a reviewing court must consider when judicially reviewing an interpretative decision on a reasonableness standard: The real questions the applications judge had to ask herself were: 1. Whether in light of the record before him, the reasons reveal that the arbitrator chose an

interpretation of the Contract that its words could bear. 2. Whether the

interpretation chosen by the arbitrator was justifiable in light of the facts and the law, even if there were competing

interpretations. [ 96 ] The same modern approach to statutory

interpretation was applied specifically to the Accord Acts by the Alberta Court of Queen’s Bench in Geophysical Services v. Encana Corp. , 2016 ABQB 230 . The court approved the same quote from Rizzo Shoes noted above but, at paragraphs 134 to 137, expanded on that approach as follows: 134 In Bell ExpressVu Ltd. Partnership v.

Rex , 2002 SCC 42 (S.C.C.) at para 27 the court further commented on the application of Driedger's principle: ...where the provision under consideration is found in an Act that is itself a component of a larger statutory scheme, the surroundings that colour the words and the scheme of the Act are more expansive. ... 135 And the court commented more recently, in Re Broadcasting , at para 12: ... The entire context of the provision thus includes not only its immediate context but also other legislation that may inform its meaning (R.

Sullivan, Sullivan on the Construction of Statutes (5th ed. 2008), at p. 411). 136 In other words, in interpreting a legislative provision, the court must form an impression of the meaning of the text, taking into account the purpose of the provision and all relevant contexts, including established legal norms. 137 Sullivan also suggests in her text Sullivan on the Construction of Statutes , 6th ed (Markham: LexisNexis Canada, 2014) at para 9.65 that a review of the legislative history, tracing its evolution from inception, through successive amendments, to its current formulation is another way of establishing legislative purpose: Tracing may reveal past decisions by the legislature to adopt a new policy or strike out in a new direction; it may reveal a gradual trend or evolution in legislative policy; or it may reveal the original purpose of legislation and show that this purpose has remained constant through successive amendments to the present. [Bold emphasis in original] [ 97 ] On appeal, the Alberta Court of Appeal in Geophysical Service Inc. v.

EnCana Corp. , 2017 ABCA 125 , confirmed the modern approach as the starting point for statutory

interpretation. Further, at paragraph 78, the court quoted with approval from Ruth Sullivan in Sullivan on the Construction of Statutes , 6 th ed. (Markham: LexisNexis Canada, 2014) at §2.1-2.2, in which the author states that the chief virtue of the modern approach: "…is its insistence on the complex, multi-dimensional character of statutory

interpretation. In interpreting a legislative provision, a court must form an impression of the meaning of its text. But to infer what rule the legislature intended to enact, it must also take into account the purpose of the provision and all relevant context. It must do so regardless of whether the legislation is considered ambiguous." [ 98 ] Further, at paragraph 79, the Alberta Court of Appeal noted that the grammatical and logical

interpretation must necessarily complement each other. The court quoted from the text by Pierre-André Côte, at page 324 of his work, The

Interpretation of Legislation in Canada , 4 th ed. (Toronto: Thomson Reuters Ltd., 2011), as follows: At the end of the last century, François Gény expressed what is today called the "modern principle" of

interpretation: . . . it is a fruitless exercise to oppose . . . the grammatical

interpretation to the logical one. It is all too clear that they necessarily complement each other, and that rational inferences applied with basic common sense will lead to a full comprehension of that intent whose expression, when analyzed grammatically, can only represent its skeleton. Nor is it appropriate for the reader to choose childishly between the text and the spirit of the law.

As the object of the exercise is to recreate the will of the legislature, the search for his intention must necessarily predominate: but the text intervenes as an authentic and solemn expression of the spirit of the law, a spirit which it serves to promote and from which it is inseparable. [ 99 ] As such, it is not sufficient to look solely to the plain meaning of the specific provisions in question. The decision-maker must pay sufficient attention to the scheme of the Accord Acts , their objects and the intention of both the Federal Parliament (“Parliament”) and the Provincial Legislature (“Legislature”).

It must place the words at issue in context. [ 100 ] Further, at paragraph 27 of Rizzo Shoes , Iacobucci, J. noted that it is a well-established principle of

interpretation that the legislature does not intend to produce absurd consequences. Referring to leading texts on statutory

interpretation, he made the following comment:

…According to Côté, supra , an

interpretation can be considered absurd if it leads to ridiculous or frivolous consequences, if it is extremely unreasonable or inequitable, if it is illogical or incoherent, or if it is incompatible with other provisions or with the object of the legislative enactment (at pp. 378-80). Sullivan echoes these comments noting that a label of absurdity can be attached to

interpretations which defeat the purpose of a statute or render some aspect of it pointless or futile (Sullivan, Construction of Statutes, supra , at p. 88). [ 101 ] At paragraph 23 of Newfoundland and Labrador, (Minister of Environment and Climate Change) v. Atlantic Salmon Federation (Canada) , 2018 NLCA 53 , Welsh, J.A. also noted that the provisions of a statute should be presumed to be intended to work together as part of a functioning whole.

She summarized an excerpt from an earlier edition of Sullivan, Sullivan on the Construction of Statutes , 5 th ed. (Markham, ON: LexisNexis 2008), at page 223: Governing principle . It is presumed that the provisions of legislation are meant to work together, both logically and teleologically, as parts of a functioning whole. The parts are presumed to fit together logically to form a rational, internally consistent framework; and because the framework has a purpose, the parts are also presumed to work together dynamically, each contributing something toward accomplishing the intended goal. ...

The presumption of coherence is also expressed as a presumption against internal conflict. It is presumed that the body of legislation enacted by a legislature does not contain contradictions or inconsistencies, that each provision is capable of operating without coming into conflict with any other. ... [ 102 ] I must also consider the principle that, where there is only one reasonable

interpretation of legislation, that is the

interpretation that must be applied. Otherwise, the decision can be said to be unreasonable. This principle was discussed by Moldaver, J. for the majority, in the Supreme Court of Canada decision in British Columbia (Securities Commission) v. McLean , 2013 SCC 67 , at paragraph 38 , as follows: 38 It will not always be the case that a particular provision permits multiple reasonable

interpretations. Where the ordinary tools of statutory

interpretation lead to a single reasonable

interpretation and the administrative decision maker adopts a different

interpretation, its

interpretation will necessarily be unreasonable — no degree of deference can justify its acceptance; see, e.g., Dunsmuir , at para. 75 ; Mowat , at para. 34. In those cases, the "range of reasonable outcomes" ( Khosa v. Canada (Minister of Citizenship & Immigration ), 2009 SCC 12 , [2009] 1 S.C.R. 339 (S.C.C.), at para. 4 ) will necessarily be limited to a single reasonable

interpretation — and the administrative decision maker must adopt it. [ 103 ] While the parties are generally in agreement that the above principles of statutory

interpretation are relevant to the issues to be decided in this case, they disagree fundamentally as to their application to the Board’s

interpretation of section 61(1)(

b) of the Accord Acts . [ 104 ] The Board asserts that its

interpretation of this

section allowing Corridor to surrender an exploration licence that was at the end of its maximum nine-year term in exchange for the Board issuing a new exploration licence over the same lands without calling for bids is one of a number of reasonable

interpretations. The Board and Corridor submit that this is not a case where there was only one reasonable

interpretation. As a result, this Court must give considerable deference to the Board’s expertise. [ 105 ] The Board references paragraph 49 of the majority decision in Dunsmuir in which the court commented on decisions involving the implementation of complex administrative schemes: 49 Deference in the context of the reasonableness standard therefore implies that courts will give due consideration to the determinations of decision makers.

As Mullan explains, a policy of deference "recognizes the reality that, in many instances, those working day to day in the implementation of frequently complex administrative schemes have or will develop a considerable degree of expertise or field sensitivity to the imperatives and nuances of the legislative regime": D. J. Mullan, "Establishing the Standard of Review: The Struggle for Complexity?" (2004), 17 C.J.A.L.P. 59, at p. 93.

In short, deference requires respect for the legislative choices to leave some matters in the hands of administrative decision makers, for the processes and determinations that draw on particular expertise and experiences, and for the different roles of the courts and administrative bodies within the Canadian constitutional system. [ 106 ] As noted above, the Supreme Court of Canada, in Vavilov , reiterated that a decision-maker may have specialized knowledge that results in an outcome that might be puzzling or counterintuitive.

Yet that decision may accord with the purposes and practical realities of the relevant administrative regime. The decision-maker may also have a better appreciation of the consequences and operational impact of the decision. [ 107 ] As such, where there is more than one reasonable

interpretation of a statutory provision, deference will be given to a specialized tribunal interpreting its constitutive or enabling legislation. It is the specialized and experienced tribunal that is in the best position to choose between competing reasonable

interpretations. A court should not choose its own. [ 108 ] Applying the above, I agree that, as a court reviewing the Decision with respect to the

interpretation of the Accord Acts , I am required to give deference to the Board as a specialized tribunal when interpreting its home statute. However, if there is only one reasonable

interpretation and that is not the

interpretation that was applied by the Board, the Decision must be overturned on the basis that it was unreasonable. In the event I find there was more than one reasonable

interpretation, I must nevertheless review the Decision of the Board to determine whether the

interpretation that it chose was one of the reasonable

interpretations. It is only an unreasonable

interpretation that will justify this Court interfering with the Board’s Decision that it had statutory authority to effect the surrender and exchange. [ 109 ] In determining whether the

interpretation relied upon by the Board was reasonable, I will start by examining the words used in section 61(1)(

b) in their ordinary and grammatical sense. Grammatical and Ordinary Sense of the Words [ 110 ] The Board says that the plain reading of the words used in section 61(1)(

b) support the

interpretation it placed on the section. It is helpful to reproduce that wording:

61(1) Subject to sections 31 to 40, the Board may issue an interest, in relation to any Crown reserve area, without making a call for bids where… (

b) the Board is issuing the interest to an interest owner in exchange for the surrender by the interest owner, at the request of the Board, of any other interest or a share in any other interest, in relation to all or any portion of the offshore area subject to that other interest. [ 111 ] The Board says that the use of the word ‘may’ discloses that the Board has discretionary authority. While I agree the use of the word ‘may’ does give the Board discretion, the issue is really the nature of the surrender and exchange power over which it is given discretion. [ 112 ] In discerning the meaning of section 61(1)(b), I must look to how the relevant words used in section 61(1)(

b) are defined in

section 47. 47 In this Part, call for bids means a call for bids made in accordance with

section 58; … Crown reserve area means portions of the offshore area in respect of which no interest is in force; … holder or interest holder means, in respect of an interest or a share therein, the person indicated, in the register maintained pursuant to Division VIII, as the holder of the interest or the share; interest means any former exploration agreement, former lease, former permit, former special renewal permit, exploration licence, production licence or significant discovery licence; interest owner means the interest holder who holds an interest or the group of interest holders who hold all of the shares in an interest; [ 113 ] It is notable that while an interest refers to a former exploration agreement, lease, permit or special renewal permit, these terms refer to interests that were granted under the former Canada Oil and Gas Land Regulations , C.R.C., c. 1518 .

Those are the regulations that governed offshore exploration prior to the implementation of the Accord Acts . Those words are therefore not applicable to this statutory

interpretation exercise. [ 114 ] The plain meaning of the relevant words of this section, therefore, in their ordinary and grammatical sense, allow for the surrender of an exploration licence in exchange for the issuance of another exploration licence. [ 115 ] The Board notes that an exchange is defined in the English Oxford dictionary at https://en.oxforddictionaries.com as follows:

An act of giving one thing and receiving another (especially of the same kind) in return. [ 116 ] The Board says that on a plain language reading of section 61(1)(b), there is nothing preventing the Board from exercising its discretion to exchange one interest, EL 1105, for another interest, EL 1153. Such an exchange may be for “all of the offshore area subject to that other interest”. [ 117 ] Both Corridor and the Board submit that, for the purpose of section 61(1)(b), EL 1105 is a stand-alone exploration licence.

As such, it is an “interest” which is legally separate and distinct from the interest the Board is issuing in exchange for the surrender. [ 118 ] I agree with the Board and Corridor that the

section provides for a surrender and exchange of an “interest” as opposed to a surrender and exchange of lands. This was acknowledged by the Applicants in their written reply and oral submissions. [ 119 ] Inserting the appropriate terminology from “interest” and “interest owner” to account for the specific exploration licences and interest owner on the facts before me, the Board says the

section would read as follows:

(1) Subject to sections 31 to 40, the Board may issue an interest, in relation to any Crown reserve area, without making a call for bids where … (

b) the Board is issuing the [Exploration Licence] to [a Licence Owner] in exchange for the surrender by [the Licence Owner], at the request of the Board, of any other [Exploration Licence] or a share in any other interest, in relation to all or any portion of the offshore area subject to that other [Exploration Licence]. [ 120 ] The Board says that there is nothing in the ordinary and plain meaning of the words suggesting that the new interest being issued cannot be in relation to the same portion of the offshore area that is subject to the interest that is being surrendered. [ 121 ] Further, Corridor and the Board submit that the

section does not prescribe temporal or sequential steps for the surrender of an interest and issuance of a new interest, as the Applicants appear to submit. [ 122 ] In its submissions, Corridor took this into account, suggesting that, in replacing words to account for the surrender and exchange at issue, section 61(1)(

b) may be fairly read as follows: 61(1) Subject to sections 31 to 40, the Board may issue an interest [EL 1153], in relation to any Crown reserve area [post surrender EL 1105], without making a call for bids where … (

b) the Board is issuing the interest [EL 1153] to an interest owner [Corridor as the owner of EL 1105] in exchange for the surrender by the interest owner [Corridor as the owner of EL 1105], at the request of the Board, of any other interest [EL 1105] or a share in any other interest, in relation to all or any portion of the offshore area subject to that other interest [EL 1105]. [ 123 ] The Applicants state that both the Board and Corridor’s submissions are based on distinguishing an “interest” from a geographic licence area. They rely on this distinction as support for their position that section 61(1)(

b) permits the surrender and exchange of “interests”, regardless of whether those interests apply to identical areas or lands. [ 124 ] However, the Applicants submit that section 61(1)(

b) inextricably ties the Board’s authority to issue a new interest to the concept of a licence area through the use of the terms “Crown reserve area” and “offshore area”. The term “offshore area” is defined in

section 2 of the Accord Acts and effectively means the entire area over which the Accord Acts apply. As noted above,

section 47 defines “Crown reserve area” as the portions of the offshore area in which no interest is in force. [ 125 ] The Applicants submit that section 61(1)(

b) uses those terms to define (

i) the scope of a licence owner’s ability to surrender a licence (i.e. only all or a portion of the offshore area lands covered by the interest); and (ii) the limits on the Board’s jurisdiction to issue a new licence (i.e. only in respect of a Crown reserve area). [ 126 ] The Applicants submit that the phrase “in relation to all or any portion of the offshore area subject to that interest” defines the geographic extent to which a licence owner may surrender an interest.

In particular, it makes it clear that a licence owner may only surrender its interest in offshore area lands subject to the interest that is being surrendered. [ 127 ] The Applicants state that the Board’s submission implies that the Board may issue a new licence over all or any portion of the offshore area subject to the existing licence. However, this

interpretation renders meaningless the words “in relation to a Crown reserve area” that are used in the opening clause of section 61(1) when describing the new interest the Board may issue. [ 128 ] The Applicants submit that the wording of that opening clause clearly restricts the Board from issuing a new interest in any part of the offshore area that is not a Crown reserve area. Any

interpretation that disregards this clear restriction must be unreasonable. [ 129 ] The Applicants further note that EL 1105 was surrendered in accordance with the provisions of the Exchange Agreement on January 11, 2017. It was at that time (i.e., effective upon the surrender and in accordance with the terms of the Exchange Agreement and the provisions of the Accord Acts ), that Corridor ceased to be an interest owner within the definition of the Accord Acts .

While it is true that the portion of the offshore area subject to EL 1105 became Crown reserve area at that point in time, the Applicants state that, at the time the surrendered area became a Crown reserve area, Corridor was a former interest owner and not an existing interest owner. As such, at the time it received EL 1153, it not only had no interest to surrender and exchange, it was also not an interest owner. [ 130 ] However, Corridor says the Applicants’ submissions and reasoning would result in an anomaly when applied to a multiple interest owner versus a sole interest owner.

On the Applicants’ reading of the section, a multiple interest owner could surrender an interest (which would then become a Crown reserve area), remain an interest owner (because it continued to hold other interests), and receive, in exchange for the surrender, a new interest covering the same area. Such a surrender and exchange could not occur with a sole interest owner. [ 131 ] Corridor also asserts there is nothing in the language of the

section that suggests an exchange of interest in relation to the same area is impermissible. By way of example, Corridor queries why the surrender of an interest in relation to 99% of the interest area would allow an exchange and issuance of a new licence under the

section but the surrender of 100% of an interest would not be permissible.

Corridor says this illustrates why the

interpretation of section 61(1)(

b) should be left to the Board as a tribunal possessing expertise in theoffshore licencing regime. [132] I agree with Corridor that the

section would be unreasonably interpreted if it applied differently to multiple interest owners ratherthan single interest owners. I also agree that allowing the surrender of 99% of the interest area, but not 100%, may seem unreasonable. However, if that occurred, and the Applicants are correct in their position on the statutory section 69(2) prohibition, I suspect it could besuggested that the Board’s decision was an unreasonable exercise of discretion. [133] Looking at the parties’ submissions, it appears the significant difference between their

interpretations based on an ordinary andgrammatical reading relates to whether the

section has to be interpreted to read that, at the time an interest is being surrendered, theoffshore area in relation to which the new licence is being issued must be a Crown reserve area. [134] If that is the only reasonable

interpretation, there would be no difference in treatment between multiple interest owners and singleinterest owners. It is not the status of the interest holder at the time of the exchange that is in issue but the status of the offshore arealands subject to the interests being surrendered and issued at the relevant time. Contravention of Section 69(2) [135] The second issue raised by the Applicants in their brief is that the Board’s Decision is an indirect attempt to do what is prohibitedby section 69(2); i.e. extend or renew the maximum nine-year term of EL 1105. As noted above, that

section reads: Subject to subsection (3) and

section 70, the term of an exploration licence shall not exceed nine years from the effective date of thelicence and shall not be extended or renewed. [136] A primary area of contention between the Board and the Applicants is the Applicants’ assertion that exploration licences have amaximum term of nine years unless extended in accordance with specific statutory powers. [137] The Applicants state that section 69(2) of the Accord Acts contains a specific prohibition against “extending or renewing” anexploration licence beyond the nine-year term limit.

The Board cannot use the section 61(1) surrender and exchange power tocircumvent this statutory prohibition. [138] The Applicants note that the language of the Board’s Decision makes it clear that it was extending or renewing the term of anexisting licence rather than facilitating a genuine exchange of interests. The Board described it as a “reissuance” intended to “provideterm relief under EL 1105” by “restoring the term of the licence to four years”.

The Applicants describe this as a transparent attempt toaccomplish indirectly what the Board was prohibited from doing under section 69(2). [139] The Applicants refer to paragraph 13 of the Supreme Court of Canada decision in C.U.P.E., Local 41 v. Alberta (IndustrialRelations Board) (1978), 1978 ALTASCAD 47 , 1 A.C.W.S. 577, 8 AR 174 (Alta. S.C. (App. Div.)) in which the AlbertaSupreme Court, Appellate Division, found that the powers given to the Alberta Board of Industrial Relations must be limited to thespecific provisions of the statute that created it.

Therefore: … it can not do indirectly what is beyond its powers to do directly, namely, to certify a minority as the bargaining agent for the majority. [140] The Applicants also rely on a decision of the Federal Court, Trial Division, in Capital Vision Inc. v. Minister of National Revenue,2002 FCT 1317. At paragraphs 57 to 59 of that decision, the court noted that the Minister of National Revenue could not circumvent astatutory requirement to obtain judicial authorization to obtain information by relying on another

section of the legislation pertaining toaudits. [141] The Applicants assert that where a statutory provision is used to achieve an unrelated purpose, such as in these circumstances, theDecision must be quashed. In Baker v. Canada (Minister of Citizenship & Immigration), 1999 SCC 699, at paragraph 53, the courtrecognized that considerable deference will be given to decision-makers in reviewing their exercise of discretion and determining thescope of their jurisdiction.

However, the following statement makes it clear that discretion must be exercised within the bounds of thejurisdiction conferred by statute. 53 …These doctrines recognize that it is the intention of the legislature, when using statutory language that confers broad choices onadministrative agencies, that courts should not lightly interfere with such decisions, and should give considerable respect to decision-makers when reviewing the manner in which discretion was exercised. However, discretion must still be exercised in a manner that iswithin a reasonable

interpretation of the margin of manouevre contemplated by the legislature, in accordance with the principles of therule of law (Roncarelli v. Duplessis, (SCC), [1959] S.C.R. 121), in line with general principles of administrative lawgoverning the exercise of discretion, and consistent with the Canadian Charter of Rights and Freedoms (Slaight Communications Inc. v.Davidson, (SCC), [1989] 1 S.C.R. 1038). [142] Similarly, in C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 29, at paragraphs 90 to 95, the Supreme Court of Canadarecognized that a Minister does not have an absolute and untrammeled discretion.

Such a discretion must be exercised in the perspectivewithin which a statute is intended to operate. It is therefore of utmost importance to look to the scheme and purpose of

an Act inconstruing the particular words used by the legislature to disclose its true intent. [143] At paragraph 72, the court also recognized the need for a statutory decision-maker to weigh all considerations pertinent to thedecision. A failure to take into account a relevant consideration is just as erroneous as taking into account an extraneous consideration. [144] The Applicants refer to case law from this jurisdiction that takes the same approach. In the Newfoundland and Labrador Court ofAppeal decision in A.L. Stuckless & Sons Ltd. v.

Newfoundland & Labrador (Minister of Forest Resources and Agrifoods), 2005 NLCA11, the Minister attempted to rely solely on the Forestry Act, R.S.N.L. 1990, c. F-23, to attach conditions to a permit even though the Actdid not authorize the Minister to do so. The Minister claimed that such conditions were necessary to ensure the viability of the industry.

Notwithstanding the merits of imposing such conditions, the Court of Appeal found at paragraph 94: 94 …the Act, as drafted, does not confer upon the Minister and the Department an unfettered power to direct the disposition of Crowntimber and the products thereof in whatever manner that, in their opinion, best advances the province’s economic objectives, as thoseobjectives may be from time to time.

The forest management authorized by the Act is restricted in its scope… [145] Similarly, the Applicants state that the Accord Acts do not confer upon the Board unfettered power to accomplish purposes itdeems to be in the best interests of the industry. It certainly does not have the discretion to make an exception to the prohibition againstextension and renewal contained in section 69(2). [146] However, the Board takes a different view of section 69(2) than the Applicants.

The Board takes the position that section 69(2)should be construed as a directory, as opposed to a mandatory, provision. [147] The Board relies on general principles of statutory

interpretation to state that the word “shall” is interpreted as imperative whilethe word “may” is permissive. This is codified in

section 11 of the

Interpretation Act, R.S.C. 1986, c. I-21. [148] The Board submits, however, that even in the case of an imperative provision, further consideration must be given to whether theprovision is “mandatory” or merely “directory”. This distinction was discussed in detail by the Newfoundland and Labrador Court ofAppeal in Pennecon Energy Ltd. v. Metal World Inc., 2013 NLCA 67.

At paragraph 49 of its decision, the Court of Appeal relied on the following from the 5th edition of Sullivan on the Construction of Statutes: 49 In Ruth Sullivan, Sullivan on the Construction of Statutes, 5th edition (Markham, ON: Lexis Nexis, 2008), at pages 74 to 79, theauthor discusses the word "shall" as either directory or mandatory. The difference between the two relates to the consequences or effectof non-compliance.

However, as noted by Sullivan at page 75, "shall" is always imperative or binding: If breaching an obligation or requirement imposed by "shall" entails a nullity, the provision is said to be mandatory; if the breach can befixed or disregarded, the provision is said to be directory. The term "directory" is unfortunate in so far as it implies that "shall" issometimes not imperative, that it sometimes has the force of a mere suggestion. The confusion is compounded when "mandatory" and"imperative" are used interchangeably — that is, when "mandatory" is used to indicate that a provision is binding or "imperative".

Theseare distinct concepts. "Shall" and "must" are always imperative (binding); neither ever confers discretion. But they may or may not bemandatory; that is, breach of a binding obligation or requirement may or may not lead to nullity. ... [149] The Board also refers to Ruth Sullivan, Statutory

Interpretation, 3rd ed., (Irwin Law, Incorporated, 2016), at page 91, in which theauthor notes that, as a general rule, “shall” is understood to be mandatory “unless this

interpretation would lead to an unacceptableconsequence or is otherwise inappropriate”. [150] A discussion of the term “shall” as mandatory is also contained in a decision of the Newfoundland and Labrador Court of Appealin Royal Newfoundland Constabulary Public Complaints Commission v. Oates, 2003 NLCA 40. In that case, the court consideredsection 28(2) of the Royal Newfoundland Constabulary Act, S.N.L. 1992, c. R-17, that provided that the Commissioner “shall” refer amatter to the chief adjudicator of the panel of adjudicators appointed under

section 29. However, as no chief adjudicator had beenappointed at that time, the Commissioner selected and appointed an adjudicator. In spite of the use of the word “shall” in section 28(2),the court held the provision was directory, not mandatory. The Court of Appeal held that it would be unjust to frustrate the rights of acomplainant citizen because the government failed to appoint a chief adjudicator. [151] At paragraphs 4 to 8, Roberts, J.A. identified three major rules which can assist a court in displacing a prima facie presumptionthat “shall” is mandatory: 1.

It is the duty of courts to try and get at the real intention of the legislature by carefully considering the whole scope of the statute; 2. When “a public duty is imposed and the statute requires that it be performed in a certain manner, or within a certain time, or underother specified conditions, such prescriptions may well be regarded as intended to be directory only in cases where injustice orinconvenience to others who have no control over those exercising the duty would result if such requirements were essential andimperative.” 3.

Possible prejudice to the parties. [152] The Board also refers to the Supreme Court of Canada’s decision in Blueberry River Indian Band v.

Canada (Department ofIndian Affairs & Northern Development), (SCC), [1995] 4 S.C.R. 344, at paragraph 42 as follows: This Court has […] held that the object of the statute, and the effect of ruling one way or the other, are the most important considerationsin determining whether a directive is mandatory or directory… [153] Relying on the above, the Board says that, while the plain language of section 69(2) in isolation provides that the explorationlicence “shall not be extended or renewed”, that language should not be taken as mandatory when viewed in context with the whole ofthe Accord Acts and the Atlantic Accord, their purposes, and the mandate of the Board.

The Board states that, in this instance, it isinappropriate to consider the word “shall” in section 69(2) as mandatory since there are various provisions in the Accord Acts that allowexploration licences to endure beyond a nine-year term. Further, the Board must interpret the Accord Acts by balancing a numbe

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