Questerre Energy Corp (Canada) QTEYF

plaintiffs' rights under sections 6 of the Quebec Charter

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THE INTEREST OF THE DECISION

This decision provides a recent illustration of the general principles applicable to an application for a stay of the provisions of a statute in a public law context. The interest of this decision appears in particular from the following elements:

 

• The public interest must be considered when the debate raises questions of a constitutional nature. However, while there is a presumption that legislation is in the public interest, the public interest should not be given disproportionate weight where the tests of colour of right and serious prejudice favour the party seeking the stay.

 

• Where a fundamental right guaranteed by the Charter has been infringed, the analysis of serious or irreparable harm must take into account that monetary compensation is uncertain because of the nature of the harm suffered.

 

• The prejudice to a party is not limited to the costs it would have to bear: the Court must also consider the consequences of applying the provisions sought to be stayed in order to determine whether a final judgment, in favour of the plaintiff, could remedy them.

 

• An application for a stay of application of a legislative measure must be made within a reasonable time, which must be assessed in particular by reference to the size and complexity of the case.

 

• An order for interim enforcement of a judgment ordering a stay of a statute may be justified in light of the serious and substantial prejudice that would be suffered by the plaintiff without such an order.

 

 

 

 

 

 

Factual background

Historically, hydrocarbon exploration and exploitation activities have been governed by the Mining Act, then by the Petroleum Resources Act, as well as the regulations adopted under these Acts. Under these statutes, the plaintiffs were issued or acquired from third parties licences for the exploration or production of hydrocarbons.

 

On 22 August 2022, the FMA came into force. This Act provides for a ban on the exploration and production of hydrocarbons and the exploitation of brine, the revocation of the licences held by the plaintiffs and the obligation for the applicants to permanently close their wells, as well as a compensation program for the holders of the revoked licenses.

 

 

 

 

 

The Superior Court's Reasons

1. Analysis of the criteria applicable to an application for a stay of the provisionsof a statute

 

• Colour of Right or the Existence of a Serious Issue

The judge concluded that the determination of the plaintiffs' rights under sections 6 of the Quebec Charter and 952 of the C.C.Q. was a serious issue that merited an in-depth analysis.

 

According to the plaintiffs, the components of the right to expropriation, as codified in article 952 C.C.Q., are immutable and included in the protection conferred by section 6 of the Quebec Charter. For the Attorney General of Quebec ("AGQ"), the use of the words "except to the extent provided by law" in section 6 of the Quebec Charter incorporates a reservation allowing the legislature to modulate the right of every person to the peaceful enjoyment and free disposal of his or her property without it being possible to invoke an infringement of the right to property provided for by the Quebec Charter.

 

The judge noted that the AGQ's argument may seem circular, in that the Quebec Charter would enshrine the attributes of the right to property — and thus protect any person against an infringement of that right by a legislative act — while shielding from any possible legal challenge a law that infringed that would infringe that same right to property. The judge concluded that the issue merited a thorough analysis of the merits of the case.

 

• Serious or irreparable harm

The plaintiffs point to the considerable sums they would have to spend to permanently shut down their wells and the transmission of confidential data and trade secrets.

 

Although the evidence did not establish exactly the value of the work required for the permanent closure of the wells in their current state, the judge noted that the costs of this work would be in the tens of millions of dollars.

 

The judge also noted that the communication and immediate use of the plaintiffs' confidential data and trade secrets could hardly be compensated and remedied in the event of a declaration of unconstitutionality of the contested provisions of the LMF.

 

Finally, in concluding that the plaintiffs risk substantial prejudice, the judge considered the AGQ's submissions, which argued that in the event of a declaration of unconstitutionality, no damages could be claimed under the legislator's immunity.

 

• The balance of convenience

The judge noted that given the constitutional nature of the debate, the public interest must be taken into consideration. In this regard, he notes the existence of a presumption that a validly enacted legislation was for the benefit of the public. However, the judge specified that the public interest must not be given disproportionate importance, especially when, as in this case, the criteria of colour of right and serious prejudice are favourable to the party seeking the stay.

In this regard, the judge weighed the serious or irreparable harm demonstrated by the plaintiffs against the effect of a stay of the well closure and data transmission provisions against the fundamental objective of the FMA, which is to put an end to the exploration and production of hydrocarbons.

The judge concluded that despite the stay, this objective remained preserved. In doing so, the balance of convenience favours the plaintiffs.

 

2. Reasonable time

The judge noted that the submission of the requests for a stay occurred after the LMF had been in force for fourteen months. However, the judge noted in particular the size and complexity of the case, which brings together twelve judicial bodies subject to special management following a change of judicial district. The AGQ's argument relating to the lateness of the applications for a stay is therefore rejected.

 

3. Provisional enforcement

Provisional enforcement on appeal is an exceptional measure. The judge noted that if his judgment were to be appealed, the plaintiffs would face a risk of serious or irreparable harm in the absence of an interim enforcement order.

 

For this reason, the judge orders the provisional execution of the judgment.

 

The group of professionals assigned by GBV to this case is composed of Marc-Andr Gravel, Charles-Francis Roy, Guillaume Lemieux, Catherine Lord and Anne-Clara Girard-Tremblay.
https://www.gbvavocats.com/publications/loi-mettant-fin-a-la-recherche-dhydrocarbures

 

THE INTEREST OF THE DECISION

This decision provides a recent illustration of the general principles applicable to an application for a stay of the provisions of a statute in a public law context. The interest of this decision appears in particular from the following elements:

 

• The public interest must be considered when the debate raises questions of a constitutional nature. However, while there is a presumption that legislation is in the public interest, the public interest should not be given disproportionate weight where the tests of colour of right and serious prejudice favour the party seeking the stay.

 

• Where a fundamental right guaranteed by the Charter has been infringed, the analysis of serious or irreparable harm must take into account that monetary compensation is uncertain because of the nature of the harm suffered.

 

• The prejudice to a party is not limited to the costs it would have to bear: the Court must also consider the consequences of applying the provisions sought to be stayed in order to determine whether a final judgment, in favour of the plaintiff, could remedy them.

 

• An application for a stay of application of a legislative measure must be made within a reasonable time, which must be assessed in particular by reference to the size and complexity of the case.

 

• An order for interim enforcement of a judgment ordering a stay of a statute may be justified in light of the serious and substantial prejudice that would be suffered by the plaintiff without such an order.

 

 

 

 

 

 

Factual background

Historically, hydrocarbon exploration and exploitation activities have been governed by the Mining Act, then by the Petroleum Resources Act, as well as the regulations adopted under these Acts. Under these statutes, the plaintiffs were issued or acquired from third parties licences for the exploration or production of hydrocarbons.

 

On 22 August 2022, the FMA came into force. This Act provides for a ban on the exploration and production of hydrocarbons and the exploitation of brine, the revocation of the licences held by the plaintiffs and the obligation for the applicants to permanently close their wells, as well as a compensation program for the holders of the revoked licenses.

 

 

 

 

 

 

The Superior Court's Reasons

1. Analysis of the criteria applicable to an application for a stay of the provisionsof a statute

 

• Colour of Right or the Existence of a Serious Issue

The judge concluded that the determination of the plaintiffs' rights under sections 6 of the Quebec Charter and 952 of the C.C.Q. was a serious issue that merited an in-depth analysis.

 

According to the plaintiffs, the components of the right to expropriation, as codified in article 952 C.C.Q., are immutable and included in the protection conferred by section 6 of the Quebec Charter. For the Attorney General of Quebec ("AGQ"), the use of the words "except to the extent provided by law" in section 6 of the Quebec Charter incorporates a reservation allowing the legislature to modulate the right of every person to the peaceful enjoyment and free disposal of his or her property without it being possible to invoke an infringement of the right to property provided for by the Quebec Charter.

 

The judge noted that the AGQ's argument may seem circular, in that the Quebec Charter would enshrine the attributes of the right to property — and thus protect any person against an infringement of that right by a legislative act — while shielding from any possible legal challenge a law that infringed that would infringe that same right to property. The judge concluded that the issue merited a thorough analysis of the merits of the case.

 

• Serious or irreparable harm

The plaintiffs point to the considerable sums they would have to spend to permanently shut down their wells and the transmission of confidential data and trade secrets.

 

Although the evidence did not establish exactly the value of the work required for the permanent closure of the wells in their current state, the judge noted that the costs of this work would be in the tens of millions of dollars.

 

The judge also noted that the communication and immediate use of the plaintiffs' confidential data and trade secrets could hardly be compensated and remedied in the event of a declaration of unconstitutionality of the contested provisions of the LMF.

 

Finally, in concluding that the plaintiffs risk substantial prejudice, the judge considered the AGQ's submissions, which argued that in the event of a declaration of unconstitutionality, no damages could be claimed under the legislator's immunity.

 

• The balance of convenience

The judge noted that given the constitutional nature of the debate, the public interest must be taken into consideration. In this regard, he notes the existence of a presumption that a validly enacted legislation was for the benefit of the public. However, the judge specified that the public interest must not be given disproportionate importance, especially when, as in this case, the criteria of colour of right and serious prejudice are favourable to the party seeking the stay.

In this regard, the judge weighed the serious or irreparable harm demonstrated by the plaintiffs against the effect of a stay of the well closure and data transmission provisions against the fundamental objective of the FMA, which is to put an end to the exploration and production of hydrocarbons.

The judge concluded that despite the stay, this objective remained preserved. In doing so, the balance of convenience favours the plaintiffs.

 

2. Reasonable time

The judge noted that the submission of the requests for a stay occurred after the LMF had been in force for fourteen months. However, the judge noted in particular the size and complexity of the case, which brings together twelve judicial bodies subject to special management following a change of judicial district. The AGQ's argument relating to the lateness of the applications for a stay is therefore rejected.

 

3. Provisional enforcement

Provisional enforcement on appeal is an exceptional measure. The judge noted that if his judgment were to be appealed, the plaintiffs would face a risk of serious or irreparable harm in the absence of an interim enforcement order.

 

For this reason, the judge orders the provisional execution of the judgment.

 

The group of professionals assigned by GBV to this case is composed of Marc-Andr Gravel, Charles-Francis Roy, Guillaume Lemieux, Catherine Lord and Anne-Clara Girard-Tremblay.