Tax court may seal Irving Oil, Repsol financial documents

A court in Ottawa is being asked to permanently seal documents that expose confidential financial arrangements between Irving Oil and Repsol at Saint John's Canaport LNG facility even though details of what the documents reveal have already been widely reported.   

Hundreds of pages of material about Canaport LNG were obtained and reported on by CBC News last spring. 

The documents show, among other issues, Irving Oil has been collecting $12.25 million US per year in rent on the LNG properties from its partner Repsol. 

That caused Saint John council to launch a review into whether property tax breaks granted on those properties in 2005 — and now worth $7.5 million per year — were really needed.

Peter Hyslop, a Hartland-based lawyer who reviewed some of the material at the request of CBC News, says the documents are critical to Saint John's evaluation of whether to renegotiate or cancel the LNG property tax break and a court sealing them will make that evaluation more difficult.

"Information is power in negotiations. The more you know about the other side and the other side's position the better off you are," said Hyslop.  

"This is to limit the access to information. It's pretty simple."

Lawyers for Repsol submitted a number of documents about the LNG development to the federal tax court in Alberta in 2014 during a fight with Ottawa over disallowed tax credits. 

The material included the partnership agreement between Irving Oil and Repsol, the lease agreement with Irving Oil for use of its property at the LNG site and a master service agreement between the companies that obliged Repsol to guarantee Irving Oil profits from its investment in the project — even if the project failed. 

CBC News paid a fee to obtain the documents from the court last April but within a week of the first story about their contents appearing in June, lawyers for Repsol began making application to have the documents declared confidential.

On June 9 in Ottawa, Justice Gerald Rip of the Tax Court of Canada issued a temporary order sealing the material and preventing others from accessing it pending a full hearing on July 29.

That hearing was held but Rip has not yet ruled whether to grant an order to seal the material permanently.  

The temporary order does not include a publication ban, however, and does not restrict CBC News from continuing to report on the material it has already obtained.

'Horse is out of the barn'

Jan Sieving, a Repsol spokeswoman, said the company will not comment on its reasons for seeking to have the documents sealed while the matter is before the court and Rip is still considering his decision.

But Matt Pearn, a Fredericton lawyer, says Repsol's initial voluntary public disclosure of the material undermines any subsequent argument it makes that it should be sealed.

"The horse is out of the barn already," said Pearn.

"The general rule is an open court principle so documents that are filed into court are available and accessible. Knowing that, you would think before June of this year, Repsol would have tried to protect this information."

The sealing order has already prevented Saint John from obtaining a full court record of the LNG tax case to help in its review of the LNG property tax concession and both Pearn and Hyslop say that can only hurt its ability to make a decision on what to do.

Saint John council voted 9-0 to conduct the review and asked for a complete report back from city staff by late August. 

Coun. Shirley McAlary says she hopes the matter can be dealt with later this month.