T-2252-91
CNG Transmission Corporation (Applicant)
v.
National Energy Board, ANR Pipeline Company,
Rochester Gas & Electric Corporation, St. Clair
Pipelines Limited, TransCanada PipeLines Limited
(Respondents)
INDEXED AS: CNC TRANSMISSION CORP. V. CANADA
(NATIONAL ENERGY BOARD) (T.D.)
Trial Division, Cullen J.—Ottawa, October 3, 4 and
18, 1991.
Judicial review — Prerogative writs — Certiorari — Appli
cation to quash National Energy Board (NEB) decision to
review refusal of respondent companies' application for
authorization to çonstruct pipeline — Applicant submitting
competing pipeline proposal — Former Board Chairman con
sultant to respondent, contacting Chairman directly (contrary
to Board policy) to arrange meeting between Chairman, Vice-
Chairman and representatives of unsuccessful pipeline compa
nies — Presenting negative reactions to refusal and sugges
tions as to how NEB should proceed in light of allegedly
changed circumstances — Applicant unrepresented at meeting
— Board deciding to abridge review process — Given terms of
National Energy Board Act, procedural nature of decision and
type of function exercised, principle of fairness applied,
although not to same degree as to hearing on merits — Man
ner of conducting meeting unfair — Applicant denied reasona
ble opportunity to address issue of whether should be review —
Reasonable apprehension of bias — Although NEB members
should not be precluded from meeting with industry representa
tives, meeting should have been limited to procedural matters.
Judicial review — Prerogative writs — Prohibition — Appli
cation to prohibit eleven named National Energy Board mem
bers from participating in review of refusal of application for
authorization to construct pipeline — Subsequent to refusal,
meeting between Board Chairman, Vice-Chairman and repre
sentatives of unsuccessful companies — Meeting violated audi
alteram partem principle of fairness — Application allowed
with respect to Chairman and Vice-Chairman — Given sub
stantive nature of discussions, and their participation in deci
sion to review refusal, reasonable apprehension of bias —
Denied as to Board members who received minutes of meeting.
Energy — National Energy Board deciding to review refusal
of respondents' application for authorization to construct pipe
line and to abridge review process — Applicant not given
opportunity to address issue of whether should be review —
Respondents given two opportunities to make case, one of
which at private meeting in absence of applicants — Consider
ation of National Energy Board Act, procedural nature of deci
sion and function exercised — Board's powerful mandate
accompanied by heavy responsibility to be fair — Breach of
audi alteram partem principle of fairness — Decision to review
quashed — NEB Chairman and Vice-Chairman prohibited
from participating in any review as present at private meeting
and participating in decision to review refusal.
This was an application for certiorari to quash the National
Energy Board's (NEB) decision to review its refusal of the
respondent companies' application for authorization to con
struct a pipeline and for prohibition prohibiting 11 named NEB
members from participating in a rehearing. The applicant had
submitted a competing proposal for the transportation of gas
received from the Canadian pipeline system to New York state.
Both proposals required regulatory approval in Canada and the
United States. After the NEB refusal was released, the U.S.
Federal Energy Regulatory Commission (FERC) approved the
respondents' proposal conditional upon NEB approval. Mr.
Edge, a former NEB Chairman and now consultant to a parent
company of a respondent company, contacted the present
Chairman to arrange a meeting with the latter, Vice-Chairman
and legal counsel. Board policy/rules require that all contacts
with the Board be made through the Secretary. At the meeting
the respondent companies expressed negative reactions to the
NEB decision, made representations on aspects of the case and
expressed the view that the FERC decision was a changed cir
cumstance which justified review. The Chairman and Vice-
Chairman indicated that they did not think that the Board
would initiate a review of its own volition, and it was agreed
that the respondent companies would submit a section 21
review application in which they could request that the review
process be expedited. Board members received a summary of
this meeting. As agreed, a section 21 review application was
filed and a copy forwarded to the applicant, which requested
an opportunity to address the issue of whether a review should
take place. Without responding thereto, the Board decided to
abridge the review process, having been "persuaded by the
applicants' arguments" that a review was justified. Board
Rules require the Board to hear public comment on whether a
decision should be reviewed, but it also has the power to dis
pense with any provision of the Rules. The issues were
whether the NEB decision to review was subject to the princi
ples of fairness; and if so, whether the meeting with the
respondent companies raised a reasonable apprehension of bias
or constituted a denial of natural justice and breach of the
requirements of fairness as a result of the breach of the audi
alteram partent principle.
Held, the application for certiorari should be allowed; the
application for prohibition should be allowed only with respect
to the Chairman and Vice-Chairman.
Upon consideration of the terms of the National Energy
Board Act, the procedural nature of the decision and the type of
function exercised by the Board, it had to be concluded that
procedural fairness did apply although not to the same degree
as with respect to hearings into the merits. It could be argued
that the applicant had been prejudiced by the denial of the
opportunity to address the issue of whether a review should
take place, when the respondents had been given two opportu
nities to make out their case, one of which took place privately
and in the absence of any of the parties opposed in interest.
The rules of fairness cover the audi alteram partem and the
neuro judex in causa sua debet esse rules.
As to reasonable apprehension of bias, the problem with the
Board's decision was that the source of the idea to abridge the
review procedure came from a group representing the losing
pipeline interests during a private meeting with the Chairman
and Vice-Chairman. Had it come from the NEB itself without
input from outside sources, there would be no problem.
The Board has a powerful mandate which is accompanied
by a heavy responsibility to be fair, not to favour one side to
the detriment of the other, or not to seem to do so. A meeting
to discuss procedure would have been appropriate, even if held
with only some of the participants and on the clear understand
ing that it was to discuss procedure only. The meeting should
have been stopped when it became apparent that matters other
than procedure were to be introduced for discussion.
In light of all the circumstances, there was a reasonable
apprehension of bias. NEB members should not be precluded
from meeting with members of the "industry". Preliminary dis
cussions or meetings do not automatically trigger a reasonable
apprehension of bias. However, the extraordinary circum
stances warranted intervention. The context of and overall sub
stance of what transpired was a determining factor, bearing in
mind the NEB's mandate as well as its policies and proce
dures. The NEB was on notice that the "losing party" would be
filing an application for review; the Chairman and Vice-Chair
man met with certain pipeline representatives who made up the
"losing parties"; the meeting was arranged through direct con
tact by the former Chairman, who was acting on behalf of one
of the pipeline companies, with the Chairman, which was con
trary to the NEB's rules and policy; significant and substantive
issues were discussed; arguments were advanced in support of
representatives' positions and ideas were advanced as to how
the NEB should proceed, i.e. that the NEB should initiate a
review on its own volition. A few days later an application for
review was filed and shortly thereafter the NEB decided to
conduct a review, stating that it had acceded to the applicants'
arguments. The meeting and the way it was conducted were
unfair to the applicant and others involved in the original pro
ceeding who did not have a reasonable or fair opportunity to
address the issue of whether the review should take place.
The participation of the Chairman and Vice-Chairman in the
meeting, given what was discussed and their participation in
the decision to review, gave rise to a reasonable apprehension
of bias. They should be prohibited from participating in any
review or rehearing. It would not be appropriate to prohibit the
other NEB members from participating in a review just
because they received minutes of the meeting.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
National Energy Board Act, R.S.C., 1985, c. N-7, ss. 3(1)
(as am. by S.C. 1990, c. 7, s. 3), 4, 6 (as am. idem, s. 4),
7(2), 8(b), 11, 21 (as am. idem, s. 10).
CASES JUDICIALLY CONSIDERED
APPLIED:
Old St. Boniface Residents Assn. Inc. v. Winnipeg (City),
[1990] 3 S.C.R. 1170; (1990), 75 D.L.R. (4th) 385; [1991]
2 W.W.R. 145; 2 M.P.L.R. (2d) 217; 69 Man. R. (2d)
134; 46 Admin. L.R. 161; 116 N.R. 46; Energy Probe v.
Atomic Energy Control Board, [1984] 2 F.C. 227; (1984),
8 D.L.R. (4th) 735; 5 Admin. L.R. 165; 13 C.E.L.R. 66;
43 C.P.C. 13 (T.D.); affd [1985] 1 F.C. 563; (1984), 15
D.L.R. (4th) 48; 11 Admin. L.R. 287; 13 C.E.L.R. 162; 56
N.R. 135 (C.A.).
COUNSEL:
J. H. Smellie and D. K. Wilson for applicant
CNG Transmission Corporation.
Nicol J. Schultz and Susan Brown for intervenor
Tennessee Gas Pipeline Company.
John J. Marshall, Q.C. for respondent St. Clair
Pipelines Limited.
H. G. Intven and Robert B. Cohen for respon
dent TransCanada PipeLines Limited.
T. Bradbrooke Smith, Q.C., T. Gregory Kane
and Rowland J. Harrison for respondents Roch-
ester Gas & Electric Corporation and ANR
Pipeline Company.
Margery A. Fowke for respondent National
Energy Board.
SOLICITORS:
Osier, Hoskin & Harcourt, Ottawa, for applicant
CNG Transmission Corporation.
Fraser & Beatty, Ottawa, for intervenor Tennes-
see Gas Pipeline Company.
Macleod, Dixon, Calgary, for respondent St.
Clair Pipelines Limited.
McCarthy, Tétrault, Toronto, for respondent
TransCanada PipeLines Limited.
Stikernan, Elliott, Toronto, for respondents
Rochester Gas & Electric Corporation and ANR
Pipeline Company.
Law Branch National Energy Board, Calgary,
for respondent National Energy Board.
The following are the reasons for order rendered in
English by
CULLEN J.: This is an application by CNG Trans
mission Corporation (CNG) for certiorari quashing
the decision of the respondent National Energy Board
(NEB), dated August 9, 1991, to proceed with an
internal review of an NEB decision dated July 4,
1991 in respect of Hearing Order GH-1-91 and for
prohibition prohibiting 11 named members of the
NEB from participating in any review or rehearing of
the July 4, 1991 decision.
GROUNDS OF THE MOTION
The applicant submits that the circumstances sur
rounding the NEB's decision of August 9, 1991 give
rise to a reasonable apprehension of bias on the part
of the named NEB members and constitute a denial
of natural justice and a breach of the requirements of
fairness.
BACKGROUND
The facts of this case concern two groups of large
pipeline companies which are competing for authori
zations to transport gas to the upper New York state
market. Both groups propose to transport gas
received from the Canadian pipeline system of Trans-
Canada PipeLines Limited (TransCanada). One
group, consisting of TransCanada, ANR Pipeline
Company (ANR), Rochester Gas & Electric Corpora
tion (RG&E) and St. Clair Pipelines Limited. (St.
Clair), proposes that the gas reach the market by
means of a new pipeline in New York State called the
Empire State Pipeline. This pipeline would connect
with the TransCanada system at the Niagara River
near Chippewa, Ontario. To reach the Niagara River
connecting point, TransCanada proposes to construct
a 20.6 km pipeline, known as the Blackhorse Exten
sion, and related facilities. This proposal requires
approvals from both the Canadian and U.S. energy
regulatory authorities. The Empire facility would
pass through market areas traditionally served by
CNG. The second group, consisting of CNG and Ten-
nessee Gas Pipeline Company (Tennessee), proposes
that the gas be taken from the TransCanada system at
an existing connecting point on the Niagara River
near Lewiston, New York. In such a proposal the
Blackhorse Extension would not be required but
would require new compression facilities and expan
sion of existing pipeline facilities in New York. This
proposal also requires regulatory approvals both in
Canada and the U.S.
On July 20, 1989, TransCanada filed an application
with the NEB for authority to construct the
Blackhorse Extension and related facilities. By Hear
ing Order No. GH-1-91 the NEB set the matter down
for public hearing at Niagara Falls, Ontario for April
22, 1991. Evidence was heard in Niagara Falls
between April 22 and 26, 1991, and oral argument
was heard in Ottawa on May 6, 1991.
In a letter dated January 28, 1991 (see exhibit B to
affidavit of Henry Edwards Brown (Brown)), Trans-
Canada, through a Mr. Varga, "requested the Board
release its decision with reasons or alternatively its
decision without reasons, the Board's Order and Con
ditions of approval relating thereto for the Blackhorse
Extension. Application by July 3, 1991, with reasons
to follow thereafter as soon as possible." Mr. Varga
had cited a cogent rationale for this request.
On July 4, 1991, the NEB issued its decision (GH-
1-91) denying TransCanada's application with rea
sons to follow.
On July 9, 1991, the U.S. Federal Energy Regula
tory Commission (FERC) granted authorization for
construction of. the Empire State Pipeline conditional
upon NEB approval of the Blackhorse extension. The
FERC dismissed without prejudice CNG's and Ten-
nessee's application for authorization to construct
their proposed pipeline and facilities.
On July 11, 1991, Mr. Varga again pressed for an
early release of reasons for decision preferably by
July 22, 1991. He also indicated that TransCanada
anticipated filing a review application (Exhibit D to
affidavit of Brown).
On July 16, 1991, Mr. Edge, a consultant acting on
behalf of Coastal Corp. (parent company of ANR),
contacted the NEB Board Chairman to arrange a
meeting with NEB officials on July 23, 1991. Mr.
Edge is a former member and Chairman of the NEB.
This meeting was eventually held on July 29, 1991.
On July 25, 1991 the NEB issued its reasons in
respect of the GH-1-91 decision. The NEB indicated
that its decision was based on a finding that the pro
posed Blackhorse extension facilities were not
needed and that the New York markets could be
served in a timely fashion by less expensive and envi
ronmentally superior means.
On July 29, 1991, Mr. Edge and representatives of
The Coastal Group, RG&E and St. Clair (note: Mr.
Bergsma is V.P. of Union Gas and appeared as a wit
ness in the NEB hearing in his capacity as President
of St. Clair), met with Chairman Priddle, Vice-Chair
man Fredette and a member of the NEB's legal staff.
The pipeline representatives expressed negative
views and reactions to the NEB's decision; they
made representations on aspects of the case and
expressed the view that the FERC decision was a
changed circumstance upon which the GH-1-91 deci
sion was based and therefore a review of the decision
was warranted. Mr. Edge proposed that the NEB ini
tiate a review on its own volition. The Chairman and
Vice-Chairman indicated that they did not think it
likely that the NEB would initiate such a review. It
was then agreed that those corporations represented
at the meeting could submit a section 21 review
application in which they could request that the
review process be expedited by the NEB. This expe
ditious review would be achieved by dispensing with
the two-step review process and proceeding directly
with a review on the merits with a short but fair com
ment period. At the outset of the meeting Mr. Priddle
agreed to report back to the members of the NEB on
the results of the meeting. A few days later, the 11
members named in this motion received a summary
of the meeting.
On August 2, 1991, TransCanada, on behalf of
itself, ANR, St. Clair and RG&E filed an application
with the NEB for review of the GH-1-91 decision,
pursuant to section 21 of the National Energy Board
Act [R.S.C., 1985, c. N-7 (as am. by S.C. 1990, c. 7,
s. 10)] (the Act). The applicants relied on the FERC
decision as a changed circumstance to justify the
review. The applicants also requested, on the grounds
of urgency, that the Board dispense with the two-
stage review process contemplated in Part V of the
Board's Draft Rules of Procedure.
Although CNG and Tennessee received no formal
notice, they did receive a copy of TransCanada's
review application and wrote to the NEB requesting a
reasonable and fair opportunity to address the issue
of whether a review should take place at all.
No response was received to this request, but on
August 9, 1991, the NEB decided to abridge the
review process and advised that it had been "per-
suaded by the applicants' arguments" that a review
was justified.
ISSUES
The decision being attacked is the decision of
August 9, 1991 to abridge the review process and ini
tiate a review of the merits of the GH-1-91 decision.
Essentially what has to be determined is whether this
decision should be quashed on the basis that the
NEB's conduct with respect to the July 29 meeting
with certain pipeline representatives raises a reasona
ble apprehension of bias on the part of the NEB or
constitutes a denial of natural justice and a breach of
the requirement of fairness as a result of the breach of
the audi alteram partem principle and whether prohi
bition should issue against any or all members of the
NEB.
APPLICANT'S POSITION
The applicant CNG submits that in hearing and
deciding on the Blackhorse extension the NEB
clearly exercised a quasi-judicial function and is sub
ject to the rules of natural justice and procedural fair
ness and that it is equally clear that the NEB per
forms a quasi-judicial function when conducting a
review or rehearing application pursuant to section
21. Therefore, the NEB and its members must he
seen to act impartially. All parties must be given a
fair opportunity to make representations. The NEB
must not hear evidence or representations of one side
behind the back of others.
The applicant argues that the circumstances are
such as to, give rise to a reasonable apprehension of
bias. At the meeting of July 29 advice was given on
important underpinnings of the very application that
was filed with the NEB on August 2, 1991. The sig
nificance of this advice, according to the applicant, is
evident in the structure of the August 2 application
for review which essentially mirrored the proposal
advanced by Mr. Priddle and Mr. Fredette at the pri
vate meeting on July 29. Further, that a reasonable
person can only conclude that the decision of Mr.
Priddle, Mr. Fredette and the other members of the
NEB who received the notes of the private meeting
may have been influenced by the course of conduct
leading to the August 9 decision. The NEB stated that
it had been "persuaded by the applicants' arguments"
that a review was warranted, to which the applicant
CNG asked the question "which arguments", those
advanced at the private meeting or in the application
for review?
The applicant CNG also submits that the NEB's
course of conduct breached the principle of audi
alteram partem in that the NEB heard evidence and
representations from one side behind the back of the
other. The applicant maintains that the NEB gave no
opportunity to interested parties, such as CNG, to
address the preliminary issue of whether the GH-1-91
decision should be reviewed, as is normally required
by the Board's Draft Rules.
The applicant also alleges that the events took
place in the face of established external and internal
policies of the NEB regarding contact by outside par
ties with the NEB or its members, which include that
NEB members or staff never discuss the merits of a
particular application or offer an opinion on the like
lihood of success of an application as these are mat
ters upon which the NEB must adjudicate and decide.
The applicant maintains that by virtue of their par
ticipation in the private meeting, their gratuitous
advice on important underpinnings of the application
for review, which was formally submitted a few days
later, and their active participation in the August 9
decision, Mr. Priddle and Mr. Fredette must be dis
qualified from participating in any review or rehear-
ing of the GH-1-91 decision. Further, that in the cir
cumstances, the disqualification should be extended
to those additional individuals named in the notice of
motion.
RESPONDENTS' POSITION
The various respondents have submitted separate
arguments, which are basically similar. All submit
that the decision to initiate a review of the GH-1-91
decision was not a decision or order of an administra
tive nature required by law to be made on a judicial
or quasi-judicial basis. They have characterized the
decision as procedural and preliminary in nature, as
interim with no final rights, privileges or licences
affected. The question whether GH-1-91 should be
varied or rescinded remains to be determined in the
NEB's ongoing review proceeding. As such, the
NEB is not required to hold hearings in these matters.
At worst, it is submitted that the NEB was obliged to
comply with the duty of fairness. TransCanada main
tains that the rules of procedural fairness, including
the audi alteram partem rule (it would follow that
reasonable apprehension of bias would also be
included), generally do not apply to preliminary deci
sions. TransCanada argues that the decision to initiate
the review would not have an important impact on
CNG or the other parties because they would have a
full opportunity to participate in the review proceed
ing to attempt to persuade the NEB that the decision
should not he changed. At most the applicant CNG
has lost its right to have "two or more kicks at the
can". Therefore, no substantive rights were lost. The
respondents add that interested parties were served
with the application for review, which included the
request to abridge the review procedure, and there
fore were afforded an opportunity to respond and
comment on this request.
It is also submitted that even if the principles of
fairness are ordinarily applicable to applications to
review or to rehear, the NEB has a discretion by vir
tue of Rule 5 to abridge those rules in special circum
stances. In this case, the NEB simply chose to exer
cise its discretion under its own procedures and the
respondents note that a reviewing Court should exer
cise caution in overruling the legitimate exercise of
discretion by a specialized tribunal such as the NEB.
With respect to the issue of reasonable apprehen
sion of bias, the respondent TransCanada maintains
that the mere fact that a Board member participated
in a preliminary meeting of a procedural or investiga
tive nature does not give rise to a reasonable appre
hension of bias. It therefore follows that the receipt of
minutes of such a meeting also does not raise a rea
sonable apprehension of bias. This respondent further
maintains that the fact that the members present at
the July 29 meeting may have had discussions with
other NEB members who participated in the decision
to initiate the review does not give rise to the reason
able apprehension of bias on the part of those other
members so as to justify their exclusion from the
review. The respondent argues that it would trivialize
the principle nano judex in causa sua debet esse to
find a reasonable apprehension of bias in these cir
cumstances. Moreover, it would unduly fetter tribu
nals, such as the NEB, which have a broad supervi
sory and regulatory mandate over an industry. The
NEB should not be precluded from meeting with
members of the industry or learning about significant
developments relevant to decisions made.
The respondents submit that CNG's allegation of
the breach of the audi alteram partem rule only
applies to the application for certiorari and not to
prohibition as CNG and the other parties had a full
opportunity to make their case on the matters dis
cussed at the July 29 meeting during the course of the
NEB's ongoing review proceeding. It is further sub
mitted that the issuance of prohibition against all
members of the NEB would frustrate the purposes of
the Act. In summary, it is argued that the CNG appli
cation represents an attempt to judicialize the process
of the NEB, particularly in respect of meetings held
while no "relevant proceedings" were ongoing and in
respect of a procedural or preliminary nature made in
the course of fulfilling the NEB's mandate under the
Act.
STATUTORY CONTEXT—THE NATIONAL
ENERGY BOARD
The NEB derives its powers from the National
Energy Board Act, R.S.C., 1985, c. N-7, as amended.
Section 11 stipulates that the NEB is a "court of
record". It is given a broad mandate to discharge
various functions under the Act, including the grant
ing of authorizations to construct pipelines and
related facilities. Subsection 3(1) [as am. by S.C.
1990, c.7, s. 3] of the Act provides that the NEB con
sist of not more than nine members appointed by the
Governor in Council; in addition, up to six temporary
members may be appointed at any one time (section
4). As of June 1, 1991, the following were members
of the NEB: R. Priddle (Chairman); J. G. Fredette
(Vice-Chairman); R. B. Horner, Q.C.; W. G. Stewart;
D. B. Gilmour; A. Côté-Verhaaf; M. Musgrove; C.
Bélanger; R. Illing; D. B. Smith (temporary member)
and K. W. Vollman (temporary member). A quorum
consists of three members, (subsection 7(2)). The
Chairman is designated by the Governor in Council
under section 6 [as am. idem, s. 4] of the Act as the
chief executive officer of the NEB to have supervi
sion over and direction of the work and staff of the
NEB.
Section 21 of the Act empowers the NEB to
review, vary or rescind any order or decision made
by it or to rehear any application before deciding it.
Pursuant to section 8 of the Act, the NEB may
make rules respecting, inter alia, the procedure for
making applications, representations and complaints
to the Board, the conduct of hearing and generally the
manner of conducting any business before the Board,
(paragraph 8(b)). The NEB's Draft Rules Part V pro
vide that applications for review are required to be
filed with the Secretary of the NEB and must be
served on every person who was a party to the origi
nal proceeding. The party served then has 20 days in
which to submit a written statement, file it and serve
it. The applicant then has 10 days in which to submit
a reply (Rules 41, 42 and 43). It is an established
practice of the NEB, as prescribed by Rule 45 (Deter-
mination), to deal with applications for review in a
two-step process. First, the NEB determines whether
a decision should be reviewed once it hears from
interested parties, i.e., public comment on the ques
tion of whether the decision should be reviewed. Sec
ond, if it decides to review, the NEB then disposes of
the application or determines the appropriate proce
dures to govern the conduct of that review. However,
under Rule 5 of the Draft Rules, the NEB has the
power to dispense with, vary or supplement any pro
visions of these Rules and under Rule 7 the NEB has
the power to abridge the time prescribed in the Rules
for the review.
COMMENTS
I agree with the respondent's view that the deci
sion of August 9 to abridge the two-step review pro
cess in respect of the GH-1-91 decision is not quasi-
judicial in nature but is a procedural decision. There
fore the question that I have to deal with is whether
the NEB is obliged to comply with the principles of
fairness and if so, to what extent does the fairness
go? I disagree with TransCanada's argument that pro
cedural fairness does not apply in the circumstances
as the NEB's decision is a preliminary decision. I
think the proper approach to resolving the question of
whether procedural fairness applies is the approach
noted by Sopinka J. in Old St. Boniface Residents
Assn. Inc. v. Winnipeg (City), [ 1990] 3 S.C.R. 1170,
at page 1191:
The content of the rules of natural justice and procedural fair
ness were formerly determined according to the classification
of the functions of the tribunal or other public body or official.
This is no longer the case and the content of these rules is
based on a number of factors including the terms of the statute
pursuant to which the body operates, the nature of the particu
lar function of which it is seized and the type of decision it is
called upon to make. This change in approach was summarized
in Syndicat des employé.s de production du Québec et de
l'Acadie v. Canada (Canadian Human Rights Commission),
[1989] 2 S.C.R. 879. I stated (at pp. 895-96):
Both the rules of natural justice and the duty of fairness are
variable standards. Their content will depend on the circum
stances of the case, the statutory provisions and the nature of
the matter to be decided. The distinction between them there
fore becomes blurred as one approaches the lower end of the
scale of judicial or quasi-judicial tribunals and the high end of
the scale with respect to administrative or executive tribunals.
Accordingly, the content of the rules to be followed by a tribu
nal is now not determined by attempting to classify them as
judicial, quasi-judicial, administrative or executive. Instead,
the court decides the content of these rules by reference to all
the circumstances under which the tribunal operates. [Empha-
sis added.]
It has been argued that the principles of fairness
normally applied in respect of NEB hearings into the
merits of a case should not be applied with the same
rigour to the process by which the NEB determines to
rehear. I agree that the degree of procedural fairness
to be applied in this case should be lower, but fair
ness should still apply. In the circumstances it can be
argued that the applicant CNG has been prejudiced
by the NEB decision in that the respondents ANR, St.
Clair and RG&E have been effectively given two
opportunities to make out their case, one of which
took place privately and in the absence of any of the
parties opposed in interest. Further, CNG has been
denied the opportunity to address the issue of
whether a review should take place.
The jurisprudence is clear on the fact that the rules
of fairness cover the audi alteram partem rule and the
nemo judex rule: Energy Probe v. Atomic Energy
Control Board, [ 1984] 2 F.C. 227 (T.D.); affd by
[1985] 1 F.C. 563 (C.A.). As Reed J. noted in the
Energy Probe case, at page 234, "I have no doubt that
the duty to act fairly as enunciated by the Supreme
Court of Canada in the Nicholson case must include a
requirement for an unbiased decision maker. Any
other conclusion would undercut the whole concept
of the requirement of a duty of fairness."
With respect to the question of reasonable appre
hension of bias, there is no dispute that the issue is
not whether the members named are actually biased
(and counsel for the applicant made it quite clear they
were not making such an allegation) but whether the
circumstances could properly cause a reasonably
well-informed person to have a reasonable apprehen
sion of a biased appraisal or judgment by the
member, however unconscious or unintentional it
might be.
The major problem with the NEB's decision is that
the source of the idea to abridge the review procedure
came from a group representing the losing pipeline
interests during a private meeting with certain mem
bers of the NEB, notably the Chairman and the Vice-
Chairman. Had the decision come from the NEB
itself without any input from outside sources, it could
not be subject to attack as the Act does allow for pro
cedural changes.
It is clear, certainly, that had Chairman Priddle and
Vice-Chairman Fredette met on July 29, 1991 with
counsel for National Energy Board (NEB) to discuss
the FERC decision, following which counsel's report
was sent to all members of the NEB, such a meeting,
and the consequential notification, was wholly within
the powers given to the NEB. This would, in my
view, be within the NEB's mandate and certainly it
would have been appropriate if counsel's report
stated that they had considered the FERC report and
decided not to review the decision on their own voli
tion, but would await any development that might be
pursued by corporations under the provisions of sec
tion 21. No case could be made that the Court should
interfere in those circumstances and if it did so it
would clearly be judicializing the process of the
NEB.
The real issue here is: did the meeting that was
actually held on July 29, 1991 and initiated by Mr.
Edge and attended by representatives of the Coastal
Group, RG&E and St. Clair, warrant the Court's
attention as suggested by the applicant and as dis
puted by the respondents. In my view, yes, bearing in
mind that both parties accepted that the Court must
consider all the circumstances. As indicated earlier,
the FERC decision was made on July 9, 1991 and
within the week Mr. Edge contacted the NEB Chair
man to arrange a meeting with NEB officials for July
23, 1991. The Board's policy/rules require that all
contacts with the Board be made through the Secre
tary. This policy is outlined in a NEB letter, dated
April 23, 1980, (exhibit M to affidavit of Brown),
addressed to all companies under the NEB's jurisdic
tion and specifically states:
If for any reason representatives of the industry subject to
the Board's jurisdiction wish to meet with the Board or a
member, a communication should be addressed to the Secre
tary outlining the purpose of the meeting and the topics to be
discussed. The communication and the Secretary's response
would form part of the Board's public record.
Mr. Edge would have been aware of that and also
aware of the fact that he was in clear violation of
them when he contacted the Chairman directly. I sus
pect that if it had been anyone other than Mr. Edge,
Mr. Priddle would have pointed out to him that any
such contact should be made through the Secretary.
This was not put to Mr. Edge and it is not surprising
given the fact that he had a long and distinguished
career with the Board, and I suspect Mr. Priddle
responded as most objective observers would expect
him to and did not put this admonition to Mr. Edge.
Further, a NEB memorandum dated July 21, 1987
(exhibit B to affidavit of Brown), directed to all staff
from the then acting Secretary provides in part that:
The Board has an obligation to make itself and its staff availa
ble for consultation with applicants on matters such as proce
dure, filing requirements, etc., but should never discuss the
merits of a particular application or offer an opinion on the
likelihood of success of an application, as these are matters
upon which the Board must adjudicate and render a decision.
It is clear that Mr. Priddle and other Board mem
bers were apprehensive about a meeting before the
NEB issued its reasons in respect of GH-1-91. In a
letter dated August 30, 1991 to counsel for the appli
cant Mr. F. J. Morel, A/General Counsel, (exhibit R
to affidavit of Brown), we found the following:
You are correct in assuming that Board members other than the
Chairman and Vice Chairman of the Board were aware of the
29 July meeting. However, I have ascertained that the opening
paragraphs of the notes of the 29 July meeting that were pro
vided to you, is [sic] not quite accurate when it refers to a brief
discussion among members of the meeting prior to its taking
place. In fact during an informal meeting of the Board that
took place on 22 July 1991, the Chairman of the Board
informed the members present at the meeting that Mr. C.G.
Edge, acting on behalf of Coastal, had contacted the Adminis
trative Assistant to the Chairman to request a meeting on 23
July with Board officials regarding the GH-1-91 decision.
Members expressed the view that such a meeting could better
take place after publication of the GH-1-91 reasons for deci
sion on 25 July. The meeting requested by Mr. Edge was con
sequently postponed to 29 July 1991.
In my view it was wrong to have such a meeting
unless Mr. Priddle was convinced that it was to dis
cuss procedure only. The NEB has a powerful man
date and with it goes a heavy responsibility to be fair,
not to favour one side to the detriment of the other, or
not to seem to do so. A meeting to discuss procedure
is appropriate, even, in my view, if held with only
some of the participants and on the clear understand
ing that it is to discuss procedure only. Mr. Priddle
had no way of knowing that they would be discussing
other than procedure when he acquiesced to Mr.
Edge's request for a meeting. However, upon receipt
of the document handed in by Mr. Edge, entitled
"Board Action", the Chairman, Vice-Chairman and
counsel should have been aware that Mr. Edge was
seeking more than procedural guidance. Secondly,
members of the corporations expressed their negative
reaction to the reasons that had been published by the
Board. Other matters of substance were discussed
and the introduction of any one of them should have
been stopped or the meeting should have been can
celled. I will refer to these later.
Given the importance of this meeting, it is appro
priate that the report prepared by counsel for the
NEB be reproduced here, along with a document
headed "Board Action" "which was used by Mr.
Edge for his presentation" (exhibit C to affidavit of
Brown).
Blackhorse Meeting 29 July 1991
Representations from Messrs. Geoff Edge (Consultant), Jim
Cordes (President, Coastal), John Bergsma (VP, Union) and
David Laniak (Senior VP, RG&E)
Messrs. Mr. Priddle and Fredette and Ms. Fowke in attend
ance.
Mr. Priddle said that with the decision and reasons now pub
lished, a meeting can now appropriately take place. It has no
formal status in the Board's processes. Ile would however
report back to Members on the meeting which had been briefly
discussed among them.
After receiving their reaction to the reasons (not positive)
Cordes pointed out that FERC has now found that Tennessee is
not a viable alternative, as it was when the panel made its deci
sion. In their view this is new information which results in
changed circumstances.
RG&E reiterated its position that Tennessee is not an accept
able transportation supplier. Tennessee was not interested in
the expansion until RG&E started to look at it itself and
expressed interest in becoming a part owner. RG&E ques
tioned whether Tennessee could provide service without con
struction.
The parties emphasized the need for the facilities so that
cogens could get financing.
They pointed out that NYPSC and FERC made decisions on
the NY market and to have them overturned by another regula
tory body in another jurisdiction is unfortunate. Edge put for
ward the proposition that normally a regulatory body respects
another regulatory body's decision. He suggested that in this
instance the Board should give weight to where the other regu
latory action is taking place. He noted that the bulk of the facil
ities are in the USA. Parties wondered whether the panel could
have reached the same decision if the Tennessee option was
not an option.
Bergsma contrasted the NEB decision with the favourable
FERC decision on the St. Clair connecting facilities. He went
on to discuss the market and how several parties will now be
looking for US gas because Canadian gas would not give them
competitive diversity. Sourcing through the US is cheaper than
alternative Canadian arrangements. End users have to make
their arrangements now because they don't have the luxury of
waiting any longer. They need approved transport as well as
firm gas supply.
Edge wondered how the Board could evaluate the Canadian
public interest without knowing what the US decision is: there
may be something that needs balancing against the US deci-
sion. He proposed that the Board initiate a review on its own
motion to place the FERC decision on the record. This would
save time which is of the essence. Edge's proposal is attached.
The members indicated that they did not think it likely that
the Board would initiate a review on its own motion. It was
agreed that the parties could submit a s. 21 application. Since a
primary concern is timing they could request in that applica
tion that the review process be expedited: that the two-step
process be done away with by the Board finding that there is
prima fade evidence of changed circumstances and proceed
directly to a review on the merits with a short (although fair)
comment period.
There was, of course, no indication by members as to partic
ular timing much less that the Board would go to an immediate
review upon receiving an application. Fredette pointed out the
importance of the applicants supplying a convincing explana
tion of the relevant FERC decision. (At the ANE dinner that
evening, George Hugh indicated that TCPL has a review appli
cation in hand.)
BOARD ACTION:
— Initiate a review of the decision (s. 21(I)), of its own
motion (s. 15(3)).
— A review under s. 21(I) is in the nature of an appeal. As
such, it can be confined to the specific grounds giving rise
to the review, without the need to reconsider the whole
Blackhorse proceeding, and can be dealt with by the Board
as a whole or a panel of its members.
— Take judicial notice of the FERC Decision, on the basis
that it has, inter alia, denied certification of the alternative
means by which the proposed markets can be served and
has approved the Empire State Pipeline application.
— Notify parties that the Board will receive submissions on
the issue of whether the FERC Decision is a changed cir
cumstance that required review of the Blackhorse Decision
and has, inter alla, rendered nugatory the Board's conclu
sion "that, through expansion of TransCanada's existing
Niagara Line, the proposed markets can be served in a
timely fashion by less expensive and environmentally
superior means".
— Convene a proceeding on not more than two weeks'
notice, to hear oral argument on this issue only.
— Alternatively, fix a two week period for written submis
sions.
— Indicate if possible this week whether the Board will initi
ate a review, so that a formal application for review, if
necessary, can be made expeditiously.
Unhappily, as there were no minutes of the meet
ing, we have no way of knowing precisely who domi
nated the meeting or who may have made the repre
sentations and what emphasis was placed on the
various representations made by the respondents.
We do know, however, that Mr. Priddle began the
meeting by stating that with the decision and reasons
now published, "A meeting can now appropriately
take place." He put all on notice that this meeting did
not have a formal status in the Board's processes but
that he would report back to the members "on the
meeting which had been briefly discussed among
them."
Next, I was somewhat taken aback to hear that the
respondents made, and the Chairman and Vice-Chair
man heard, negative comments on the reasons for the
decision. One could hardly expect that they would be
positive but I think one is entitled to assume that this
should hardly be an item on the agenda dealing with
procedure. Apparently Mr. Cordes felt it necessary to
point out the decision of FERC. In my view, this is
offensive because the Board is deemed to be fully
apprised of FERC's decisions and particularly one so
intimately involved with the Board's own decision.
Again, this is hardly the time, place, or manner in
which the issue of changed circumstances should be
raised. The substantive issue raised by RG&E is even
more inappropriate in these circumstances, particu
larly when CNG and Tennessee are not present to
rebut these comments. The other substantive issue
made is that: "The parties emphasized the need for
the facilities so that cogens could get financing."
Again, in the next paragraph, the respondents are
pointing out further issues of substance, namely, that
the NEB's decision was in conflict with NYPSC and
FERC, that it was unfortunate, and that normally a
regulatory body respects another regulatory body's
decision. Throughout that whole paragraph we in
effect have Mr. Edge making the case, not only for a
review, but also what conclusions should be reached
by the Board given the fact that FERC and NYPSC
have declared the Tennessee option was not an
option. Mr. Bergsma, for his part, "went on to discuss
the market and how several parties will now be look
ing for US gas because Canadian gas would not give
them competitive diversity. Sourcing through the US
is cheaper than alternative Canadian arrangements."
This whole paragraph indicates once again that the
meeting was replete with substantive issues. Then we
read where Mr. Edge wondered how the Board could
evaluate the Canadian public interest without know
ing what the United States decision was and then
made the substantive point that the Board should
review on its own volition.
It is also clear that a decision was taken by the
Board, namely, that they would not be initiating a
review on their own volition and then went on to sug
gest or recommend or point out the most expeditious
way of getting the respondents' point of view across.
And finally we hear from Mr. Fredette that it is
important for the applicants to supply a convincing
explanation of the relevant FERC decision. This may
have been obvious, as suggested by the respondents,
but when the Vice-Chairman says it, it pretty well
drives it home. The Chairman and the Vice-Chair
man, and possibly counsel if she was consulted,
reached the conclusion that the FERC decision was
not a changed circumstance which would move them
to review their decision on their own volition. They
were not satisfied, and Mr. Fredette said that it was
important that the applicants supply a convincing
explanation of the relevant FERC decision.
There can be no question that this meeting and the
conduct of it were unfair to the applicant and others.
Of real concern to me are the following:
1. Mr. Edge did not contact the Board through the
Secretary but went directly to the Chairman, which
was clearly contrary to rules and policy of the Board,
and Mr. Edge knew it.
2. Mr. Edge had requested a meeting which would
have been held under his timetable before the reasons
for the order came out, seemingly an indication that
they wanted to have some impact on the reasons and
in all likelihood on the decision itself.
3. This was a meeting where significant, substantive
issues were discussed and arguments advanced by the
respondents in support of their strongly held views.
4. If the respondents wanted to know whether the
FERC decision represented a changed circumstance
which would move the Board to act under its own
volition, a letter, through the Secretary, would have
been sufficient to secure that information. It was
inappropriate in my view to advance ideas about why
they should do so and more particularly that it was
done at this meeting.
5. If anything, the respondents made the obvious
point that matters were in a mess as a result of two
different decisions from two different tribunals. How
ever, they then argued or represented that the NEB
decision was the decision to be reviewed.
6. When the Board indicated it had decided to con
duct a review, it stated that it was acceding to the
"applicants' arguments" but as counsel for CNG
pointed out, were these arguments made at the meet
ing or were they made on the application, or both?
7. The respondents left that meeting in the full
knowledge that if they wanted a review they would
have to initiate it themselves and also that they had to
come up with a convincing explanation of the rele
vant FERC decision. They also had good reason to
believe the process would be expedited, i.e., "proceed
directly to a review on the merits with a short
(although fair) comment period."
8. The counsel's report was not sent to any of the par
ties, and only received by CNG August 22, 1991
(exhibit L) after Mr. Smellie's letter of 15 August
1991 (Exhibit K). The respondents made the point
that nothing was secret and it was always available to
the applicant if asked for. Here one cannot ask for
something one doesn't know exists.
All of which can be described at best as an
"extremely indiscreet mode of proceeding."
In light of the circumstances noted above, includ
ing the fact that the NEB had been on notice that
TransCanada was likely to file a review application, I
agree with the applicant that a reasonably informed
person could envisage that the NEB was going to be
asked at some point to make some decision and that
there was some risk that the information discussed at
the meeting could possibly find its way into such a
decision.
After reviewing the arguments, I agree with the
respondents that NEB members should not he pre
cluded from meeting with members of the "industry"
and that a reasonable apprehension of bias is not
automatically triggered as a result of preliminary dis
cussions or meetings. Clearly a situation where a
party whose application for pipeline construction has
been granted meets with NEB members to discuss
when pipeline construction can commence would not
warrant and should not warrant judicial interference.
However, in the case before me we have a number of
extraordinary circumstances which have raised a
number of concerns and which I feel warrant inter
vention. As such, a determining factor in my coming
to this decision was the context of and the overall
substance of what transpired, bearing in mind the
NEB's mandate as well as its policies and proce
dures. This was not merely a situation where an NEB
member participated in a preliminary meeting of a
procedural or investigative nature. Instead, we have a
situation where the NEB is on notice that the "losing
party" would be filing an application for a review;
the Chairman and Vice-Chairman meet with certain
pipeline representatives who make up the "losing
parties"; this meeting is arranged through direct con
tact by the former Chairman, who is now acting on
behalf of one of the pipeline companies, with the
Chairman, which is contrary to the rules and policy
of the NEB; significant and substantive issues are
discussed; arguments are advanced in support of rep
resentatives' position and ideas are advanced as to
how the NEB should proceed, i.e., that the NEB
should initiate a review on its own volition. A few
days later an application for review is filed and
shortly after that the NEB decides to conduct a
review and states that is has acceded to the appli
cants' (in the section 21 application) arguments.
Clearly the July 29 meeting and how it was con
ducted were unfair to the applicant and others
involved in the original proceeding. Further, in the
circumstances I do not think that the applicant and
other interested parties can be said to have had a rea
sonable or fair opportunity to address the issue of
whether the review should even take place.
I am also of the view that Messrs. Priddle and
Fredette's participation in the July 29 meeting, given
what was discussed at this meeting and their partici
pation in the August 9 decision to proceed with a
review of the GH-1-91 decision, gives rise to a rea
sonable apprehension of bias which a reasonably
well-informed person could properly have, of a
biased appraisal and judgment of the issue.
Therefore, for the reasons noted above, the appli
cation for certiorari will be granted quashing the
decision of the NEB, dated August 9, 1991, to pro
ceed with an internal review of the NEB decision
dated July 4, 1991 in respect of Hearing Order GH-1-
91.
With respect to the application for prohibition, on
the basis of the evidence I cannot find that the named
members of the NEB, other than Messrs. Priddle and
Fredette, should be prohibited from participating in
any review or rehearing of the July 4, 1991 decision.
I agree with the respondents' position that the issu
ance of a writ of prohibition against the other NEB
members would not be appropriate in the circum
stances. Therefore, prohibition will be granted
prohibiting Messrs. Priddle and Fredette from partici
pating in any review or rehearing of the July 4, 1991
decision in respect of Hearing Order GH-1-91.
The applicant is entitled to its costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.