2017-Surface Rights Board Caselaw Review Debbie Bishop Heidi Meldrum Bishop Law Surface Rights Law Office

Common Law Principles on Costs Smith v. Alliance Pipeline Ltd Common Law Principles on Costs Smith v. Alliance Pipeline Ltd. 2011 SCC 7 [74]                          First, in the context of modern expropriation law, where statutes authorize awards of “all legal, appraisal and other costs”, Canadian jurisprudence and doctrine demonstrate that “costs on a solicitor-and-client basis should generally be given” (Bayview Builder’s Supply (1972) Ltd. v. British Columbia (Minister of Transportation & Highways), 1999 BCCA 320, 67 B.C.L.R. (3d) 312, at para. 3, citing Todd, at p. 526; see also Holdom v. British Columbia Transit, 2006 BCCA 488, 58 B.C.L.R. (4th) 207, at para. 11, and Hill v. Nova Scotia (Attorney General) (No. 2) (1997), 155 D.L.R. (4th) 767 (S.C.C.)). [75]                          Second, awarding costs on a solicitor-client basis accords well with the object and purpose of the NEBA , as reflected in s. 75 . [76]                          Third, this is a case in which “justice can only be done by a complete indemnification for costs” (Foulis v. Robinson (1978), 92 D.L.R. (3d) 134 (Ont. C.A.), at p. 142). Only this type of award can indemnify Mr. Smith as best one can for the inordinate amount of money — to say nothing of time — he has had to invest in what should have been an expeditious process. [77]                          Lastly, Mr. Smith should not be made to bear the costs of what is clearly a test case for the respondent. Mr. Justice Gill’s appointment to the bench ended 19 other arbitration proceedings against Alliance before the First Committee. Mr. Smith, on the other hand, has sought nothing more than to resolve a decade-old disagreement over reclamation work worth a few thousand dollars.

Cost Legislation and Rules Section 39(1) of the SRA gives the Board discretion to award “costs of and incidental to proceedings” under the SRA. The Board has established rules under Section 8(2) of the SRA specifically including Rule 31 addressing costs awards. Rule 31(2) provides the criteria which may be considered when making a costs award: In making an order for the payment of a party’s costs, the Board may consider:    (a)        the reasons for incurring costs;    (b)        the complexity of the proceeding;    (c)        the contribution of the representatives and experts retained;    (d)        the conduct of a party in the proceeding;    (e)        whether a party has unreasonably delayed or lengthened a proceeding;    (f)         the degree of success in the outcome of a proceeding;    (g)        the reasonableness of any costs incurred;    (h)        any other factor the Board considers relevant. 

How have the Rules Been Applied: Specifically the Degree of Success-Cleo Energy Corp. v. J. W. Max Ramsahoye Professional Corporation, 2017 ABSRB 753 (CanLII) Cost were awarded. The Board considered the Rules and factors: •       The Landowner is undertaking a statutorily mandated process under s. 27 of the Act. The Board agreed that the Application under S. 27 was necessary. The operator delayed the negotiations when the Operator advised that it was abandoning the lease sites. •      Three lease reviews were successfully negotiated. •       The Board found that the Lessors representative was knowledgeable as evidenced by the fact that the matters settled. •       The Board acknowledged that the operator failed to reply to the Lessor’s propositions, necessitating the filing of three s. 27 applications. •       The Operator would not agree to costs, therefore, the parties had to attend a Dispute Resolution Conference (DRC). The Lessor was required to prepare two written submissions in support of their costs application. The Board considered the degree of success of the rental review. The operator pointed out that the reviews resulted in an increase in rentals that amounted to about $1500 additional annual compensation and that the fees claimed (and awarded in full) totalled around $9000. The Board saw the completion of the rental review a measure of success in this matter.

Degree of Success- Canadian Natural Resources Limited v Authenac, 2017 ABSRB 404  The Board states: “The Act stipulates at s.27(6) that parties shall enter into negotiations in good faith prior to seeking a review.  If the lessor rejected an offer of compensation as too low but without regard to convincing evidence supportive of higher compensation, this could not be said to be good faith negotiations.  This would be a factor which would support a reduction in costs.” The Board looked at without prejudice offers introduced by the operator to the Board to assess the degree of success of the Applicants. “The Panel is aware that the offers were made on a “without prejudice” basis.  This means that the Panel cannot rely on the offers as evidence of the Operator’s view of fair compensation.  However, the Panel may take without prejudice offers into consideration when assessing the Lessor’s degree of success.   To the degree that the compensation awarded to the Lessor on review exceeds the prior compensation, the Lessor might be said to have had a degree of success.  At the same time, it would appear that the Operator’s offer, if accepted, would have undervalued the award only slightly in two of the leases, would have made little difference in one, and would have resulted in compensation significantly in excess of the compensation awarded in three of the leases.  Had the offer been accepted, the total compensation package for all six Surface Leases cumulatively, would have been significantly higher had the Operator’s offers been accepted.  This would also have saved costs for both the Operator and the Board.” Costs reduced but stated this was not because of the degree of success but because some of the evidence was not seen as relevant.

Advance and Interim Costs at the Surface Rights Board Advance Costs Not likely to be awarded by the SRB unless a new Rule or Policy is developed. Montana Alberta Tie Ltd. (Re), 2012 ABSRB 73 (CanLII) A large group on Landowners working together made a request for advance costs. They argued: that the length of time from the start of the file to hearing would require the Landowners to carry the costs of the process for more than 3 years. That the Landowners needed to hire experts and legal counsel to have a level playing field, The Board (Mr. Sibbald) decided that the SRA and the Rules did not give the SRB jurisdiction to order advance costs.

Interim Costs-MATL Cont The Board did grant the Landowners an award of interim costs stating: “an award may not be appropriate in all proceedings. Factors which the Panel considers as favouring such an award in these proceedings are the following: the length of time which the Applicants have been involved in this project, the magnitude of the project, the length of time which has passed since the commencement of the application to the Board for RoE, the lack of any funding being provided by MATL to date, and the expectation that the compensation hearings will not be held in the immediate future.”

ATCO Electric Ltd. v Pratch, 2017 ABSRB 615 (CanLII) Panel-Gordon Chapman ATCO’s 144 kv Powerline approved crossing a number of parcels of Land owned by the Pratch Family of varying size near St. Paul. One of the parcels was zoned country residential and the remaining 7 were zoned agricultural. ATCO used monopoles to cross these Lands. The Pratch family opposed the routing on their Lands at the AUC. After the ROE was issued but before the hearing at the SRB the parties agreed on Land Values that were different than the pattern evidence. The parties did not agree on injurious affection. ATCO argued that “the Landowners have failed to discharge their onus in this proceeding, having based their allegations as to the impacts caused by the Transmission Line on flawed, inconsistent data, bald assertions and speculation relating to potential, future impacts rather than on reliable evidence of actual loss, and have failed to properly quantify their claims relating to same.” ATCO argued that injurious affection should not be awarded because: They used monopoles; Lands are near St. Paul not Edmonton (as the Decisions that were relied upon) Landowners don’t intend to sell the Land.

The Landowners The Landowners retained Gettel Appraisals who presented several case studies where the same properties were appraised with and without Powerline influences to try to quantify the impact to property value. The Board drew the following conclusions from the case studies: The impact on property values increases as the power line visibility and proximity increases (the nearer the line is and the more visible it is increases the impact on value). Individual property features that decrease visibility can reduce that effect. Properties with power lines adjacent to or running through the property demonstrated a higher impact on value than those without.

Panel’s Findings The Panel found that the impact from transmission lines on purely agricultural Land is negligible. The Panel found that: The impact would be higher on developed parcels than parcels ripe for development. The impact of transmission lines on parcels that are developed for agricultural uses such as greenhouses would be similar to lands being held for development but less than residential use. The transmission line would change the location where development could occur on the Lands and this can be taken into account when calculating injurious affection. The Panel found that one of the parcels with a view of the lake would be impacted as it is being held for development.

Injurious Affection The Board found 7.5% impact on the remaining Lands- on Agricultural parcel used as a hobby farm and 7.5% on the parcel zoned County residential noting further subdivision potential could be impacted. The Board found 5 % on two of the other parcels that were impacted both zoned as agricultural lands,

Other Injurious Affection Decisions AltaLink Management Ltd. v. Royal Property Corp. ,2014 ABSRB 221 AltaLink Management Ltd. v. Soorya Investment Ltd. 2014 ABSRB 222 AltaLink Management Ltd. v. Yaltho, 2014 ABSRB 219 (5% decrease in value on remaining lands) Montana Alberta Tie Ltd. v. KERCP Farms Incorporated, 2014 ABSRB 474 (14% decrease in value on remaining lands) Koch also on the Agenda.