The Estate of Gordon Stiles (the “Estate”) was denied its application for leave to appeal the decision of the Alberta Energy and Utilities Board (the “Board”) which denied the Estate’s review of its earlier decision to grant Esprit Exploration Ltd. (“Esprit”) a licence to drill a well on the land adjoining the lands owned by the Estate
Administrative law – Natural resources – Decisions of administrative tribunals – Energy and Utilities Board – Permits and licences – Judicial review – Procedural requirements and fairness – Appeal process – Compliance with legislation – Standard of review – Correctness
Stiles Estate v. Alberta (Energy and Utilities Board),  A.J. No. 1245, Alberta Court of Appeal, September 30, 2005, O’Leary J.A.
The main issue in the case was whether Esprit had given proper notice of its licence application regarding the drilling of the well. Esprit notified the widow of Gordon Stiles, who was the occupant of the Estate lands at the time. However, it did not notify the executor of the will of Gordon Stiles. The Estate argued that the failure to notify the executor was a failure to give proper notice of the licence application as required by the Energy Resources Conservation Act, R.S.A. 2000, c. E-10 (the “Act”).
The Board reviewed its own decision pursuant to section 39 of the Act and concluded that Esprit had complied with the notification and consultation requirements of the Act and its regulations. The Board also felt that even if notice had not properly been given to the Estate, the Estate lacked standing to object to the licence. That is, the Estate had failed to establish that it was directly and adversely affected by the decision to grant the well licence.
The Estate’s application for leave to appeal focused on the Board’s alternate finding that even if proper notice was not given, the Estate had not established that it had standing to object to the well licence. The Estate also argued that leave to appeal should be granted on the ground that the Board treated it unfairly in considering and determining its request for review of the initial Board decision.
The Court referred to the Act, at sections 26(1) and (2) and 41(1) and (2), for a proposition that a decision of the Board could only be appealed to the Alberta Court of Appeal on questions of jurisdiction or law, and then only with leave of the Court. In order to obtain leave, an applicant must demonstrate the question of law or jurisdiction raises a serious arguable point. The question for the leave judge was whether the proposed appeal was prima facie meritorious.
The Estate had brought an allegation of failure to comply with the duty of procedural fairness. This was seen as raising a legal issue to which the standard of correctness would apply. The reviewing court would determine whether the procedures followed were fair to the challenging party under the circumstances, and if a finding was made that an administrative body failed to comply with its duty of procedural fairness, the decision would be set aside. The Estate argued the Board had breached the duty of procedural fairness by denying it the opportunity to effectively participate in the process leading up to its decision.
The Court of Appeal held that the Board applied the correct test for standing in determining whether the Estate was a person whose rights may have been directly and adversely affected by the decision of the Board. The Board applied the test at the stage of the application for the well licence. The Court of Appeal held that unless the person seeking review could show that the decision in fact directly and adversely affected its rights, a review of the decision would be academic and would accomplish nothing.
The finding that the Estate failed to show any direct or adverse impact on it resulting from the decision to grant the well licence was held to be a question of fact, and therefore leave to appeal could not be granted on that point.
The Court then moved on to consider whether the Estate was denied procedural fairness through the manner in which the Board dealt with the Estate’s request for review of its decision to grant the well licence.
The Board advised the Estate about the procedures for requesting review of the Board’s decision under the Act. When a review was sought, the Board deferred its decision regarding that review request until the Audit Group had completed an assessment of Esprit’s compliance with the notification requirements of the Act and its regulations. When the Audit Group reached its conclusion that Esprit had complied with the consultation and notification requirements, the Board moved on to consider the review request and issued its decision.
The Estate’s submissions were centred around the audit process carried out by the Audit Group, and an allegation that the Board had improperly adopted the Audit Group’s conclusion as its own.
The Court of Appeal held that the reasons of the Board revealed that the determination of compliance with the notification requirements was a conclusion of the Board rather than simply an adopted conclusion of the Audit Group.
The Estate also argued that the Audit Group was acting as an administrative authority in conducting the audit and that its conclusion should therefore be subject to judicial review. The Court held that:
The Audit Group is an internal organ of the board. Its function is to conduct investigations and provide advice to the Board for enforcement purposes, not to make decisions that affect the rights of third parties. There was no dispute between the Audit Group and the Estate, and the Audit Group did not decide a dispute between the Estate and Esprit.
The Court held that the Audit Group did not owe a duty of procedural fairness to the Estate according to the factors set out in Baker v. Canada (Minister of Citizenship and Immigration),  2 S.C.R. 817. The administrative authority with the power to make decisions affecting the rights of the Estate was the Board.
None of the grounds of appeal advanced by the Estate were held to raise a serious arguable issue of law or jurisdiction and accordingly, the application for leave to appeal was dismissed.
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