Crawford Smith Weighs in on Ontario Court of Appeal Decision

Partner Crawford Smith has given his thoughts to The Lawyer’s Daily on an Ontario Court of Appeal decision in Union Gas Limited v. Norwich (Township) 2018 ONCA 11, where it was ruled that parties can contract out of statutory provisions.

The conflict between was around who was responsible for payment of a section of gas pipeline that needed to be relocated. An excerpt of the article from The Lawyer’s Daily is below:

An engineer’s report, commissioned by Norwich, identified the conflict and stated that if relocation is required “the extra costs incurred shall be borne by the utility involved in accordance with the provisions of section 26 of the [Drainage Act].”

The appellant, Union Gas Limited, and the respondent, the Township of Norwich, have a franchise agreement which allows Union to operate its gas pipelines within Norwich’s boundaries. Section 12 of the agreement permits Norwich to request Union to relocate any part of the gas system when necessary and provides for cost-sharing.

According to court documents, Union Gas issued Norwich an invoice requesting a 35 per cent contribution to cover the cost of the pipeline relocation. Norwich didn’t pay the invoice, so Union Gas proceeded with the relocation and brought an application to the Superior Court of Justice to determine the rights of both parties.

The application judge, Justice Marc Garson, categorized the issue as whether the relocation costs fell under the purview of the franchise agreement or s. 26 of the Drainage Act, which provides for the assessment of a public utility and payment of increased costs for drainage works.

Union Gas appealed the decision which ordered them to pay the full costs of the relocation, and Norwich was then ordered to pay the original 35% of the relocation costs.

Crawford, who along with associate Emily Sherkey was the counsel for the appellant, told The Lawyer’s Daily the Court of Appeal clearly articulated parties were able to contract out of statutory provisions.

"That, I think, has been the law for some time, but there were not particularly clear articulations of that principle,” Crawford said.

“The case itself is relatively narrow in its application. It’s not often that you’re going to have issues that concern the intersection of a franchise agreement between a gas utility in a municipality and the Drainage Act, which has been around forever. The issue turned on whether the franchise agreement was an effective contracting out of the Drainage Act provisions, and the court held that it was. And in doing so articulated this principle quite clearly,” he said.

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