Administrative law – Permits and licences – Compliance with legislation – Inspections – Powers under legislation
Nexen Inc. v. Saskatchewan (Chief Electrical Inspector),  S.J. No. 128, Saskatchewan Court of Queen’s Bench, March 6, 2002, Pritchard J.
On August 13, 2001, the chief inspector, appointed by SaskPower pursuant to s. 6 of The Electrical Inspection Act, 1993 (the “Act”), refused to issue a permit to Nexen. Nexen brought an application under s. 33 of the Act, which allows for an appeal of a decision of the chief inspector to a judge of the Court of Queen’s Bench.
Nexen is in the business of oil and gas exploration. Since 1998, Nexen operated 73 electrified sites, including a nine-mile electrical distribution line that it used to transmit electricity required by these facilities. Nexen purchased electricity from SaskPower. In July 2001, Nexen constructed a one-and-a-half mile extension to its electrical distribution system. The parties agreed that the extension was built in accordance with all applicable construction and safety requirements. The chief inspector refused to issue a permit to allow the extension to be electrified. The stated reason for the refusal was that the electrical installation was in contravention of s. 38 of The Power Corporation Act. This section grants SaskPower the exclusive right to “supply, transport, distribute and sell” electricity in its franchise area. Nexen argued that the words “supply, transport, distribute and sell” are properly interpreted to mean that SaskPower only has monopoly over those activities if they are taken in respect of third parties. Nexen further submitted that the chief inspector was not entitled to consider s. 38 of the Power Act when determining if a permit under the Act is to be issued.
The court reviewed the decision of the BC Supreme Court in Re Stacey’s Furniture World Clearance Centre Ltd. and Armstrong et al (1981), 121 D.L.R. (3d) 712, where a store owner successfully challenged the decision of a licensing inspector who had refused to provide a license under the Sale of Goods on Closing Out Act on the basis that the owner was in breach of certain bylaws. In Re Stacey’s, the court had held that the license inspector’s discretion in issuing a permit was to be exercised according to proper legal principles and that the inspector was not acting in accordance with such principles when considering matters irrelevant to the specific statute in issue and, as a result, his decision was a nullity.
In the case at bar, SaskPower argued that under s. 17(1) of the Electrical Inspection Act, the chief inspector was entitled to refuse to issue a permit “for cause”, a term which was not defined in the Act. However, s. 17 laid out a non-exhaustive list of circumstances where it would be appropriate or necessary for the inspector to refuse to issue a permit. The court was satisfied that the overall purpose of the Act was to regulate electrical installations to ensure that they are constructed and operated in accordance with certain technical and safety standards. A review of s. 17 established that all of the listed examples of appropriate uses of the chief inspector’s powers related directly or indirectly to fulfilling this particular purpose. The court held that it was apparent that the chief inspector’s denial of the requested permit had absolutely nothing to do with construction or safety standards of the installation and related solely to a concern that was extraneous and irrelevant to the purpose and objective of the statute under which the inspector derived his powers. In the result, Nexen’s appeal was allowed and the decision of the chief inspector was set aside.
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