



COURT OF APPEAL FOR ONTARIO

CITATION: 2195002 Ont. Inc. v. Tribute Resources
    Inc., 2013 ONCA 576

DATE: 20130926

DOCKET: C56232

Doherty, Simmons and Pepall JJ.A.

BETWEEN

2195002 Ontario Inc.

Applicant (Respondent in Appeal)

and

Tribute Resources Inc.

Respondent (Appellant in Appeal)

Christopher A. Lewis, for the appellant

William Mitches, for the respondent

Heard: June 11, 2013

On appeal from the judgment of Justice Helen A. Rady of
    the Superior Court of Justice, dated October 18, 2012, with reasons reported at
    2012 ONSC 5412, 113 O.R. (3d) 67.

By the Court:

[1]

This appeal involves a dispute
    over the interpretation of various oil and gas agreements and whether they
    confer a right to inject and store gas into and under certain lands now owned
    by McKinley Farms Limited (the McKinley Lands). Both the appellant, Tribute
    Resources Inc. (Tribute), and the respondent, 2195002 Ontario Inc. (219
    Ontario), claim the right to inject and store gas into and under the McKinley
    Lands under agreements made with the landowner.

[2]

The application judge held that
    219 Ontario was entitled to the disputed rights by virtue of a Gas Storage
    Lease made in March 2009 (the 219 Ontario Gas Storage Lease).  She rejected
    Tributes claim to those rights under an Oil and Gas Lease dated October 12,
    1977 (the 1977 Oil and Gas Lease) as amended by a Unit Operation Agreement
    dated November 30, 1984 (the 1984 Unit Operation Agreement).

[3]

Although the application judge accepted
    that the 1977 Oil and Gas Lease and the 1984 Unit Operation Agreement conveyed
    certain gas storage rights that were in turn subsequently assigned to Tribute,
    she found that those rights were replaced by the terms of a Gas Storage Lease
    entered into by Tribute and
McKinley
    Farms Limited
on September 24, 1998 (the
    1998
Tribute Gas Storage Lease
).

[4]

Previous litigation that reached this court determined that the 1998
    Tribute Gas Storage Lease terminated in September 2008: see
Tribute Resources Inc. v. McKinley Farms Ltd.
,
2010 ONCA 392, 263 O.A.C. 214.
The
    application judge concluded that the termination of the 1998 Tribute Gas
    Storage Lease left Tribute without any right to store gas on the McKinley
    Lands. Any of Tributes gas storage rights with respect to the land had been
    replaced by the terms of the now terminated 1998 Tribute Gas Storage Lease. The
    219 Ontario Gas Storage Lease was, therefore, the only agreement permitting gas
    storage rights on the McKinley Lands.

[5]

On appeal, Tribute argues that the
    1977 Oil and Gas Lease and the 1984 Unit Operation Agreement do contain gas
    storage rights and that those rights continue to exist despite the termination
    of the 1998
Tribute Gas Storage Lease
.  Tributes argument turns primarily on the
    interaction of the relevant provisions of these three documents and, in
    essence, involves an issue of contractual interpretation.

[6]

219
    Ontario submits that the application judge properly interpreted the relevant
    documents. However, 219 Ontario also raises a preliminary argument that this
    courts jurisdiction to hear this appeal has been ousted because of an order
    made by the Ontario Energy Board (the OEB) after the application judges
    decision.

[7]

For
    the reasons that follow, we reject 219 Ontarios preliminary argument and, in
    addition, we dismiss Tributes appeal.

A.

219 Ontario
s preliminary Argument

[8]

As a preliminary argument, 219 Ontario submits
    that although the application judge had jurisdiction to determine the
    contractual rights of the parties under the various agreements, this court has
    no jurisdiction to entertain an appeal from the application judges decision
    because of an order made by the OEB four months after the application judges
    decision in respect of the McKinley Lands.

[9]

On December 21, 2012, at the request of Tribute,
    the OEB made an order under s. 36.1 of
Ontario Energy Board Act
, 1998, S.O. 1998, c. 15, Sched. B (the Energy Act) designating
    the McKinley Lands as a gas storage area and a further order under s. 38 of the
    Energy Act authorizing Tribute to inject, store and remove gas from those
    lands. In addition, the OEB stayed the pending compensation application in
    relation to those lands pending conclusion of all related court proceedings 
    including any appeal of [the application judges decision]. Presumably, 219
    Ontarios contractual rights in the lands, if any, would be relevant to any
    compensation order made by the OEB.

[10]

219 Ontarios preliminary argument is premised
    on various provisions of the
Energy Act
that deal with the OEBs authority to regulate gas storage areas and
    on this courts decision in
Snopko v. Union Gas Ltd.
,
2010 ONCA 248
100
    (O.R.) (3d) 161, interpreting those provisions.

[11]

As
    described in
Snopko
, at para. 22:

[u]nder the [Energy] Act, the [OEB] has broad
    jurisdiction to regulate the storage of natural gas, to designate an area as a
    gas storage area, to authorize the injection of gas into that area, and to
    order the person so authorized to pay just and equitable compensation to the
    owners of the property overlaying the storage area.

[12]

Under s.
    36.1(a) of the Energy Act, the OEB may designate an area as a gas storage area
    for the purposes of the Act.

[13]

Section 37
    prohibits the injection of gas for storage into a geological formation:

unless the geological formation is
    within a designated gas storage area and, in relation to gas storage areas
    designated after January 31, 1962, unless  authorization has been obtained..

[14]

Under s.
    38(1) of the Energy Act, the OEB may authorize the injection, storage and
    removal of gas from a designated gas storage area.

[15]

Subject
    to any agreement, s. 38(2) requires a person authorized to inject, store and
    remove gas from a designated gas storage area to make just and equitable compensation
    to the owners of such rights with respect to those rights and for any damage
    resulting from their exercise.

[16]

Notably, s. 38(3) of
    the Energy Act gives the OEB exclusive jurisdiction to deal with compensation
    issues relating to authorized injection and storage rights and prohibits civil
    proceedings with respect to such issues:

38. (3) No action or other
    proceeding lies in respect of compensation payable under this section and,
    failing agreement, the amount shall be determined by the Board.

[17]

Further, s. 19 of the
    Energy Act gives the OEB the authority to hear and determine all questions of
    fact and law falling within its jurisdiction together with exclusive
    jurisdiction in respect of all matters in which jurisdiction is conferred on it
    by the Energy Act:

19. (1) The Board has in all matters
    within its jurisdiction authority to hear and determine all questions of law
    and fact.



(6) The Board has exclusive
    jurisdiction in all cases and in respect of all matters in which jurisdiction
    is conferred on it by this or any other Act.

[18]

In
Snopko
, this court upheld a decision dismissing for want of
    jurisdiction an action brought by land owners against a company authorized to
    inject and store gas on their lands where the action was commenced after a s.
    38 compensation order had been made.

[19]

In
Snopko
, the landowners action was framed in
    misrepresentation, breach of contract, unjust enrichment, nuisance and
    negligence. This court held that in determining whether an action or proceeding
    falls within the prohibition contained in s. 38(3), it is the substance and not
    the form of the claim that governs. On the facts of that case, this court found
    that despite their legal labels, in substance, the landowners claims fell
    within the scope of just and equitable compensation as described in s. 38(2)
    of the
Energy Act
.

[20]

Relying on
Snopko
and on the various provision of the
Energy Act
to which we have
    referred, 219 Ontario contends that the orders designating the McKinley Lands
    as a gas storage area under the
Energy Act
and authorizing Tribute to inject, store and remove
    gas into and from those lands had the effect of ousting the courts
    jurisdiction to further adjudicate the issues of contractual interpretation in
    dispute on this appeal.

[21]

We do not accept 219 Ontarios
    submissions. The issue of jurisdiction was raised in the Superior Court. It is
    now undisputed that the application judge had jurisdiction to make her
    decision. In our view, nothing in s. 38(3) of the Energy Act ousts the
    jurisdiction of this court to entertain an appeal on the merits from a final
    order of a Superior Court judge made within its jurisdiction.

[22]

Tribute brought a preliminary
    application in the Superior Court objecting to that courts jurisdiction to
    entertain the application because of its pending application to the OEB for
    orders under ss. 36.1 and 38 of the Act. In an endorsement dated January 6,
    2012, Bryant J. dismissed Tributes objection: see
Tribute Resources
    Inc. v. 2195002 Ontario Inc.
,

2012
    ONSC 25.

[23]

In his endorsement, Bryant J.
    concluded that this courts decision in the previous litigation between the
    parties,
Tribute Resources Inc. v. McKinley Farms
,
resolved the jurisdiction issue.

[24]

At the time of the appeal hearing
    in the previous litigation, Tribute had a prior application pending before the
    OEB for an order designating the McKinley Lands as a gas storage area and for
    injection and storage rights.

[25]

At paras. 18 and 19 of this
    courts previous decision, Juriansz J.A. held that s. 38(3) of the Energy Act

did not affect the courts jurisdiction:

The parties are agreed that the recent decision of this court
    in
Snopko v. Union Gas Ltd.
(citations omitted), does not apply to
    this case. In
Snopko
, this court examined the scope of the privative
    clause set out in s. 38(3) of the [Energy Act]

Section 38(1) provides that the OEB may make a designation
    order authorizing a person to inject gas into, store gas in and remove gas
    from a designated gas storage area and, and to enter into and upon the land in
    the area and use the land for that purpose and such an authorized person is
    required under s. 38(2) to make just and equitable compensation for the right
    to store gas or for any damage resulting from the authority to do so.
The
    substances of the claims in this case do not fall within the language of s.
    38(2) as no designation order has been made by the OEB in relation to these
    lands.
The courts jurisdiction to determine the questions on appeal is
    not at issue. [Emphasis added.]

[26]

At paras. 23 and 24 of his endorsement,
    Bryant J. adopted this reasoning. He held that the interpretation of the leases
    was not within the OEBs exclusive jurisdiction because the OEB had not yet
    made an order designating the proposed storage areas under the Energy Act.

The pending application filed by 219 [Ontario], dated September
    1, 2011, requests a judge of the Superior Court to interpret the Tribute Oil
    and Gas Lease and the 219 Ontario Gas Storage Lease. The Board has not
    designated a gas storage area or authorized a person to inject gas into,
    store gas in and remove gas from a designated gas storage area and to enter
    into and upon the land in the area and use the land for that purpose or made a
    compensation order under s. 36.1, s. 38(1), s. 38(2) or s. 38(3) of the [Energy
    Act].

In my view, the substance of the claims made by 219 Ontario in
    its application to the Superior Court for the interpretation of leases does not
    fall within the language of s. 36.1, s. 38(1) or s. 38(2) of the [Energy Act].
    I find that judges of the Superior Court regularly interpret leases and other
    contracts and have the jurisdiction to interpret the contacts at issue and to
    grant the relief sought by 219 Ontario. I further find that the interpretation
    of the leases is not within the exclusive jurisdiction of the Board because the
    Board has not made an order designating the proposed storage areas under s.
    36.1 or 38 of the Act [Energy Act]. [Footnotes omitted.](
Tribute v.
    McKinley, supra
, at paras. 18 and 19).

[27]

Bryant J.s decision was not
    appealed.

[28]

The
    jurisdiction of this court to entertain this appeal derives from s. 6 of the
Courts
    of Justice Act
, R.S.O. 1990, c. C. 43 (the CJA). Under s. 6(1)(b) of the
    CJA, this court has jurisdiction to entertain an appeal from the application
    judges decision because it is a final order of a Superior Court judge.

[29]

The parties agree that the application judge had jurisdiction to
    render her judgment interpreting the relevant contractual documents. Her
    judgment is a final order and nothing in s. 38(3) of the
Energy
    Act
ousts this courts jurisdiction to entertain an appeal under s.
    6(1)(b) of the CJA. Neither the decision of the application judge, nor this
    decision, address compensation under the
Energy Act
.
    The order of the OEB made some four months after the decision of the
    application judge cannot turn what was an order interpreting contractual rights
    into an order for compensation under the Energy Act.

[30]

The questions of what, if any,
    effect this courts decision will have on the OEBs determination of the compensation
    issues now outstanding under the
Energy Act
and whether this appeal may now be moot are different
    issues than the jurisdictional issue raised by 219 Ontario.

[31]

The fact that this court has
    jurisdiction to entertain an appeal from the application judges decision does
    not determine the question of the effect, if any, of this courts decision on
    the compensation issues under the
Energy Act
.

[32]

We make no comment on that
    subject, which will be a matter for the OEB to determine.

[33]

To the extent that 219 Ontario may be arguing that
    this court should not entertain this appeal because the OEB is entitled to make
    its own determination of the issues decided by the application judge thus
    making this appeal moot, we would not give effect to that argument in the circumstances
    of this case.
Although 219 Ontario submits that this court should not
    hear this appeal, it also submits that the OEB is bound by the application
    judges decision. We reject that position. 219 Ontario cannot have it both
    ways. If the OEB decides it is bound by the application judges decision, the
    issues before this court are not moot.

[34]

In
    any event, as we have said, in its December 21, 2012, decision, the OEB stayed
    the compensation application in relation to the McKinley Lands pending the
    conclusion of all related Court proceedings  including any appeal of Superior
    Court File No. 5041/2011. The terms of this order indicate that from the
    perspective of the OEB, the outcome of this appeal has potential relevance to
    the terms of any compensation order to be made by the OEB. Accordingly, even if
    this appeal is now technically moot because the OEB is entitled to make its own
    determination of the issues determined by the application judge, we would
    exercise our discretion to decide it: see
Borowski v. Canada (Attorney
    General)
, [1989] 1 S.C.R. 342, at p. 353.

B.

the interpretation issue

[35]

The application judge gave several reasons for
    holding that the 1998 Tribute Gas Storage Lease replaced the gas storage rights
    conveyed under the 1977 Oil and Gas Lease as amended by the 1984 Unit Operation
    Agreement. Tribute raises multiple grounds of appeal relating to those reasons.
    In our view, it is unnecessary that we address all of Tributes arguments
    because an examination of the agreements at issue demonstrates that the
    application judges conclusion is correct.

(1)

The
Agreements at Issue

[36]

In her reasons, the application
    judge briefly reviewed the agreements at issue. In doing so, she reproduced
    relevant provisions of the 1977 Oil and Gas Lease that refer to storage rights:

That the Land Owner  does hereby grant, demise, and lease to
    Operator for the term of ten years and so long thereafter as oil or gas are
    produced in paying quantities, or storage operations are being conducted, and
    Land Owner also leases to Operator the exclusive right to drill for, produce,
store
,
    treat, transport and remove by any method all oil and gas found in or under the
    said lands,
to store in any gas sands on the premises and withdraw
    their from gas originally produced from other lands



If, at any time prior to the termination of this lease, the
    Operator should decide to utilize
any underlying productive gas sand as
    a storage reservoir for the gas originally produced from other lands
,
Operator agrees to notify Land Owner of such utilization, and thenceforth to
    pay Land Owner double the herein specified acreage rental amount as full
    compensation for the storage rates hearing granted and in lieu of all delay
    rental  [Emphasis added by application judge.]

[37]

The application judge noted that
    gas was discovered on the McKinley Lands by Tributes predecessor in 1982 and
    1983.Following that discovery, the 1977 Oil and Gas Lease was amended by the
    1984 Unit Operation Agreement, which included detailed provisions relating to
    production royalties and which replaced the royalty provisions in the 1977 Oil
    and Gas Lease. Once again, the application judge reproduced relevant portions
    of the 1984 Unit Operation Agreement that refer to storage rights:

AND WHEREAS it is believed that the Salina and Guelph-Lockport
    formation underlying those certain lands listed and described in Schedule B
    hereunto annexed and a part hereof, (and which include all or part of the said
    lands) contain a gas as or gas and oil reservoir or pool known as the Stanley
    4-7-XI Pool as hereinafter defined;

AND WHEREAS for the purpose of protecting the Stanley 4-7-XI
    Pool  and for the protection of their correlative rights  the parties hereto
    desire to amend the said lease and to unite and combine that portion of the
    said lands which is included in Schedule B  with all of the other lands in
    the said schedule, into a single operative unit



12. If, at any time prior to the termination of this Agreement,
    the Lessee should decide to utilize
the underlying productive gas sand
    as a storage reservoir
for gas originally produced from other lands,
    the Lessee agrees to notify the Lessor of such utilization, and thenceforth to
    pay Lessor double the herein specified acreage rental amount as full
    compensation for the storage rights herein granted and in lieu of all delay
    rental in event there is a productive well or wells on these lands at the date
    of said notification
the Lessee shall not commence utilization of the
    lands as a storage reservoir without first entering into an agreement with the
    Lessor to settle the value of the Lessors royalty



16. Excepting as herein hereby expressly modified or amended,
the
    said lease shall continue in all respects in full force and effect for so long
    as therein provided, and the same as so amended or modified is ratified and
    confirmed

[Emphasis added by application judge.]

[38]

As for the 1998 Tribute Gas
    Storage Lease, the application judge noted that it included, among others, the
    following terms:

The Lessor doth hereby demise and lease unto the Lessee  the
    said lands save and except the surface rights thereto  to be held by the
    Lessee subject to the oil and gas lease, as tenant for a term of Ten (10) years
    from the date hereof, subject to renewal as hereinafter provided, for the
    purpose of injecting, storing and withdrawing gas, natural and/or artificial, 
    within or from the devised lands



16.
Subject to its rights, if any, under the oil and
    gas
lease, the Lessee shall not inject gas into the demised lands
    under the provisions hereof unless



21. This Agreement expresses and constitutes the entire
    agreement between the Parties, no implied covenant or liability of any kind is
    created or shall arise by reason of these present or anything herein contained.
    [Emphasis added by application judge.]

[39]

In addition, the application judge
    referred to the following terms contained in Schedule B to the 1998 Tribute Gas
    Storage Lease:

·

a termination provision;

·

the 1998 compensation rates for
    crop damage and the mechanism for their calculation in ensuing years; and

·

a term stating, all provisions in
    this schedule shall be additional and shall be paramount with any of the terms
    contained in the original agreement.

(2)

The Application Judges Reasons

[40]

After reviewing the agreements at
    issue and the legal principles relevant to the interpretation of commercial
    contracts, the application judge turned to her analysis. She concluded that the
    1998 Tribute Gas Storage Lease was intended to replace gas storage rights
    contained in the 1977 Oil and Gas Lease and in the 1984 Unit Operation
    Agreement for several reasons.

[41]

First, the 1998 Tribute Gas
    Storage Lease contained an entire agreement clause. The application judge said,
    [t]his must mean that all matters pertaining to storage are contained in that
    lease.

[42]

Second, Schedule B to the 1998
    Tribute Gas Storage Lease stated all provisions in this schedule shall be
    additional and shall be paramount with any of the terms contained in the
    original agreement. The application judge concluded that this was a clear
    expression of the parties intention that the [
1998 Tribute Gas Storage Lease]
was
    to prevail [over the earlier agreements], at least in respect of those matters
    dealt with in the schedule.

[43]

Third, in the application judges
    view, the 1984 Unit Operation Agreement supported her conclusion. The 1984 Unit
    Operation Agreement contemplated that a further agreement would be entered into
    prior to the lessee beginning to use the lands as a gas storage reservoir.
    Further, while the 1984 Unit Operation Agreement specifically provided that
    except as modified by it, the 1977 Oil and Gas Lease remained in full force and
    effect, the
1998 Tribute Gas Storage
    Lease
contained no such language.

[44]

Fourth, the
1998 Tribute Gas Storage Lease
contained broader storage rights and more detailed
    provisions relating to storage rights than the earlier agreements. In the
    application judges view:

[t]he parties subsequent conduct in executing a specific
    storage lease support[ed] the common sense conclusion that they considered that
    the earlier lease dealt primarily with drilling and extraction rights and did
    not adequately provide for storage.

In her view, it was disingenuous for Tribute to
    assert that the 1998 Tribute Gas Storage Lease was created to supplement the
    earlier agreements. The broader rights and privileges included in the 1998
    Tribute Gas Storage Lease were:

strong objective evidence that the parties intended the storage
    lease to provide for all of the contractual rights and obligations governing
    storage and that it was to replace rather than supplement the earlier
    agreement.

(3)

Tribute

s Position on Appeal

[45]

Tribute submits that the
    application judge made multiple errors in her interpretation of the
1998 Tribute Gas Storage Lease
:

·

she failed to consider and give
    meaning to the four references in the
1998
    Tribute Gas Storage Lease
to that
    agreement being subject to the oil and gas lease;

·

she erred in relying on the entire
    agreement clause in the
1998 Tribute Gas
    Storage Lease
as supporting her interpretation
    that the
1998 Tribute Gas Storage Lease
replaces the earlier agreements;

·

she erred in failing to accept the
    uncontradicted evidence of Tributes representative that the
1998 Tribute Gas Storage Lease
was intended to supplement the earlier agreements and
    to provide Tribute with a modern form of gas lease to submit to the OEB;

·

she erred in concluding that the
    words original agreement in Schedule B to the
1998 Tribute Gas Storage Lease
referred to the 1977 Oil and Gas Lease as opposed to the pre-printed section of
    the
1998 Tribute Gas Storage Lease
; and

·

she erred in concluding that the
    language of the 1984 Unit Operation Agreement supported her interpretation.

[46]

In addition, Tribute asserts that
    the application judges findings are procedurally unfair because she referred
    in her reasons to six decisions not relied on by 219 Ontario and because her
    central conclusion that the
1998 Tribute
    Gas Storage Lease
was intended to replace
    gas storage rights contained in earlier documents was not anchored in the pleadings.

(4)

Discussion

[47]

As we have said, in our view, an
    examination of the agreements at issue demonstrates that the
1998 Tribute Gas Storage Lease
was intended to replace the earlier agreements
    insofar as they related to gas storage rights. We note, first of all, that the
    1998 Tribute Gas Storage Lease is, on its face, a detailed document designed
    specifically to address gas storage rights, whereas the 1977 Oil and Gas Lease
    as amended by the 1984 Unit Operation Agreement addresses the issue of gas
    storage rights somewhat peripherally.

[48]

Both the title and terms of the
    1998 Tribute Gas Storage Lease demonstrate that the agreement was designed
    specifically to address gas storage rights. The document is called, and
    registered on title as, a Gas Storage Lease Agreement. The demising clause
    states that the lands (save and except the surface rights) are leased for the
    purpose of injecting, storing and withdrawing gas, natural and/or artificial 
    within or from the demised lands. The terms of the 1998 Tribute Gas Storage
    Lease are detailed and make more specific provision for matters addressed in
    less detail in the earlier agreements.

[49]

For example,
Schedule B to the 1998 Tribute Gas Storage Lease makes
    specific provision for
the 1998
    compensation rates for crop damage for individual crops and the mechanism for
    calculation of crop damage rates in ensuing years.

[50]

By way of contrast, the 1977 Oil
    and Gas Lease as amended by the 1984 Unit Operation Agreement deals primarily
    with oil production and royalties issues. Although gas storage rights are
    provided for, they are not the main focus and are not dealt with in the same
    level of detail as in the 1998 Tribute Gas Storage Lease.

[51]

Perhaps more importantly, the
    payment provisions of the 1998 Tribute Gas Storage Lease are different than,
    and inconsistent with, the payment provisions of the 1977 Oil and Gas Lease as
    amended by the 1984 Unit Operation Agreement.

[52]

The latter documents provide a per
    acreage charge for gas storage rates and require that the parties enter into a
    further agreement to address residual royalties. Clause 12 of the 1984 Unit
    Operation Agreement states:

12. If, at any time prior to the termination of this Agreement,
    the Lessee should decide to utilize the underlying productive gas sand as a
    storage reservoir for gas originally produced from other lands, the Lessee
    agrees to notify the Lessor of such utilization, and thenceforth to pay Lessor
    double the herein specified acreage rental amount as full compensation for the
    storage rights herein granted and in lieu of all delay rental in event there is
    a productive well or wells on these lands at the date of said notification the
    Lessee shall not commence utilization of the lands as a storage reservoir
    without first entering into an agreement with the Lessor to settle the value of
    the Lessors royalty.

[53]

In contrast, the 1998 Tribute Gas
    Storage Lease provides that the lessee will serve a notice of what it proposes
    to pay for gas storage rights and that if the parties cannot agree, the issue
    will be determined by arbitration. Clauses 16-18 of the 1998 Tribute Gas
    Storage Lease read as follows:

16. Subject to its rights, if any, under the oil and gas lease,
    the Lessee shall not inject gas into the demised lands under the provisions
    hereof until it has offered to the Lessor the additional acreage rental to be
    paid to the Lessor in respect of its storage operations to be conducted
    hereunder in the manner hereinafter provided and until it has offered to
    purchase from the Lessor, as hereinafter provided, the Lessors interest in
    such of the gas and oil and related hydrocarbons (hereinafter called the
    petroleum substances) contained in the demised lands as are liable on the
    withdrawal of the gas so injected to be co-mingled indistinguishably therewith
    as to their respective volumes, or as are liable to be rendered commercially
    unrecoverable by reason of such injection or the storage operations to be
    conducted by the Lessee hereunder. Nothing herein shall prevent the Lessee from
    and it is hereby given the right at any time and from time to time to purchase
    the Lessors interest in any or all the other petroleum substances contained in
    the demised lands.

17. The purchase price of any of the petroleum substances to be
    purchased by the Lessee under Clause 16 hereof shall be computed as follows:



18. In the event that the Lessee desires to purchase any of the
    petroleum substances as provided in Clauses 16 and 17 hereof, it shall give
    written notice to the Lessor of the quantity thereof to be purchased, the price
    therefor computed as provided in Clause 17(a) and the effective date of such
    purchase. The Lessee shall in addition state the additional acreage rental to
    be paid by the Lessee in respect of its storage operations to be conducted
    hereunder. The Lessor shall within Thirty (30) days from the receipt of the
    aforesaid notice advise the Lessee that it disputes either the purchase price
    or the additional acreage rental or both of them and in default of such notice
    of dispute the Lessor shall be deemed to have agreed thereto and the same shall
    become final and binding upon the Lessor and the Lessee. In the event that the
    Lessor gives such notice of dispute, such purchase price and additional acreage
    rental and any other compensation payable to the Lessor in respect of the
    Lessees storage rights hereunder shall be determined by a board of arbitration
    in the manner provided under the Energy Board Act of Ontario and the
    regulations thereunder or any act or regulations in amendment or substitution
    therefor.

[54]

In our view, this difference in
    the payment provisions makes it clear that the
1998 Tribute Gas Storage Lease
was
    intended to replace the earlier agreements and not merely to supplement them.
    Because of the difference in the payment provisions, the two sets of documents
    could not co-exist.

[55]

Equally compelling evidence that
    the 1998 Tribute Gas Storage Lease was intended to replace the earlier
    agreements is the fact that this agreement provides that it would terminate if
    the issue of designation of the lands as a Gas Storage Area had not been taken
    to the OEB within ten years.

[56]

The
1998 Tribute Gas Storage Lease
had
    a term of ten years. Clause 3 of the main body of the agreement provides for
    automatic renewal of the agreement upon the expiry of the ten year term unless
    the lessee provided written notice of its desire not to renew the agreement.

[57]

However, Schedule B to the
1998 Tribute Gas Storage Lease
states:

This Gas Storage Lease Agreement shall terminate on the tenth
    anniversary date, if and only if, the Lessee or some other person has not
    applied to the Ontario Energy Board to have the said lands or any part thereof
    designated as a Gas Storage area on or before the tenth anniversary date
    hereof.

[58]

In our view, when read in
    conjunction with clause 3 of
the 1998
    Tribute Gas Storage Lease

providing for the automatic renewal of that agreement,
    the termination provision in Schedule B demonstrates that the parties intended
    Tributes gas storage rights to come to an end if the issue of gas storage
    rights had not been taken to the OEB within the ten year term. The automatic
    renewal provision ensured that Tributes gas storage rights were to continue
    indefinitely and that they were to do so on the terms set out in the 1998
    Tribute Gas Storage Lease. However, they would only continue indefinitely if
    the issue of gas storage rights had been taken to the OEB during the initial
    term of the 1998 Tribute Gas Storage Lease. Otherwise, gas storage rights would
    end.

[59]

Based on our review of the
    relevant agreements, we are satisfied that the application judge was correct in
    holding that the
1998 Tribute Gas Storage
    Lease was intended to replace the earlier agreements.

[60]

Further,
    we reject Tributes claim that it has suffered procedural unfairness. The issue
    before the application judge was the proper interpretation of the agreements at
    issue. Tribute has had a full opportunity to present and respond to arguments
    concerning that issue.

C.

Disposition

[61]

Based on the foregoing reasons, we reject 219
    Ontarios preliminary argument that this court lacks jurisdiction to entertain
    this appeal and we dismiss Tributes appeal. Costs of the appeal are to 219
    Ontario fixed in the amount of $26,150 inclusive of disbursements and
    applicable taxes as agreed upon by the parties.

Released: DD September 26, 2013

D.H. Doherty J.A.

J.M.
    Simmons J.A.

S.E. Pepall J.A.


