LAND AND PROPERTY RIGHTS TRIBUNAL
|
Citation: |
Ember Resources Inc. v Miller, 2022 ABLPRT 179 |
||
|
|
|
||
|
Date: |
2022-01-26 |
||
|
File No. |
BR2021.0068 (Ref File No. RC2019.2473) |
||
|
Decision No. |
LPRT2022/SR0179 |
||
|
Municipality: |
Kneehill County |
||
|
The Surface Rights Board (“SRB”) is continued under the name Land and Property Rights Tribunal (“Tribunal”), and any reference to Surface Rights Board or Board is a reference to the Tribunal. |
|||
|
In the matter of a proceeding commenced under section 29 of the Surface Rights Act, RSA |
|||
|
2000, c S-24 (the “Act”) |
|||
|
And in the matter of land in the Province of Alberta within the: |
|||
|
NE 1⁄4-30-32-26 -W4M as described in Certificate of Title No. 031 265 880 (the “Land”) particularly the area granted for Well Licence No.0348905 (the “Site”). |
|||
|
|
|||
|
Between: |
|
||
|
Ember Resources Inc. |
|
||
|
Applicant, |
|
||
|
- and - |
|
||
|
|
|
||
|
Trident Exploration (Alberta) Corp. |
|
||
|
Former Licensee, |
|
||
|
- and - |
|
||
|
|
|
||
|
Robert B. Miller |
|
||
|
Landowner. |
|
||
|
|
|
||
|
Before: |
Susan McRory |
|
|
|
|
(the “Panel”) |
|
|
DECISION
APPEARANCES BY WAY OF WRITTEN SUBMISSIONS:
Tara Rout OWEN LAW for the Applicant
Paul Vasseur for the Landowner
BACKGROUND/OVERVIEW:
[1] This is an application under section 29 of the Surface Rights Act to review Decision No. LPRT2021/SR0295 (the original decision) of the Tribunal dated May 25, 2021. The panel hearing the original matter was dealing with an application under section 36 for the recovery of unpaid compensation for 2019 and orders demanding payment, suspension and termination upon a failure to make payment were included in the decision.
[2] Upon receiving satisfactory proof of non-payment, section 36(4) of the Act requires that notice be sent to the Operator(s) demanding full payment. Based on the record provided by the Alberta Energy Regulator, (AER) Ember Resources Inc. (EMBER) was identified as the current licensee and 100% working interest participant.
Trident Exploration (Alberta) Corp. had been the previous licensee. (TRIDENT)
[3] On July 17, 2020 Notice of Proceedings was sent to EMBER RESOURCES INC. at 3700-400 3 Ave SW Calgary AB T2P 4H2.
The Notice began by providing a summary of the particulars of the application, including the name of the Applicant, the name of the Operator, the land location, the date of the original agreement, the current compensation rate, the payments missed and the total amount claimed.
The Notice went on to indicate:
We have received an application for assistance under section 36 of the Surface Rights Act (SRA) from the above names Applicant(s) and the details of that claim are listed in the table above. You have been identified as an operator defined in section 36(1) of the SRA and as an operator that may be responsible for making payments under the Agreement. If you would like to request a copy of the application, please contact Board Administration
Please Note: If another year’s compensation goes unpaid, the Applicant(s) is eligible to request an amendment to the application to include any subsequent missed payment. If the Applicant(s) amend the application to add further missed payments, we will not provide you with additional notice. The Board will consider all the outstanding compensation requested to date.
The application is currently in the queue for processing. If you wish to respond to this notice, a written response must be submitted within 30 days from the date of this letter. After the deadline, the application, supporting evidence and any responses we receive will be reviewed and forwarded to a Panel of the Board for a decision.
[Emphasis in the original]
No response was provided by EMBER within the time line provided.
[4] Based on the evidence available at that time, the original panel determined that:
The well licence is registered in the name of the Operator. The Site has not been reclaimed, and accordingly, the Right of Entry Instrument remains in effect. (Para 6)
On that basis, the original panel found that EMBER was the Operator and responsible for payment. On August 5, 2021 a Direction to Pay Order No.: LPRT0984/2021 was issued based on the directions in Decision No. 2021/0627 regarding unpaid compensation.
[5] EMBER was provided with a copy of the decision sent to the same address as the original Notice. The decision begins as follows:
DEMAND FOR PAYMENT
AND ORDERS SUSPENDING AND TERMINATION ENTRY RIGHTS
IT IS DEMANDED that the Operator pay THREE THOUSAND ONE HUNDRED THIRTY-EIGHT AND 00/100 DOLLARS ($3,138.99) (the “Compensation”) to the Applicant.
IT IS ORDERED that if the Board does not received satisfactory evidence that the Compensation has been paid in full to the Applicant, then without further notice the Operator’s right to enter the Site shall be suspended and terminated under section 36(5) of the Act at 4:30 p.m. on the dates below...
▪ Suspension effective from June 8, 2021, for 15 days
▪ Termination effective from June 23, 2021
[6] On June 16, 2021 EMBER brought an application under section 29 of the Act seeking re-consideration of the original decision and orders granted. EMBER took the position that it was not the operator at the time of non-payment, that it had not been provided with original notice and that this matter first came to their attention on June 14, 2021 when they received a copy of the decision.
[7] According to the electronic file system that the Tribunal maintains, the Notice dated July 17, 2020 had been sent to EMBER.
[8] Section 8(2) of the Act gives the Tribunal the power to make rules governing practice and procedure. Rule 7 deals with the failure of a party to attend a proceeding:
If a party refuses or fails without reasonable excuse to comply with these rules....the Board may make any decision, order, or direction it considers appropriate in the circumstance, including one or more of the following:
(a) an order limiting the participation of a party in the proceedings or limiting the evidence which may be presented by a party in the proceedings...
(c) an order that the non-complying party may pay the costs of another party resulting from the non-compliance...
[9] On June 23, 2021, Tribunal administration requested that EMBER provide additional information on three issues:
- a reasonable explanation for EMBER’s failure to respond to the original Notice
- the evidentiary basis for EMBER’s submissions that it did not obtain and interest in the Site until November 1, 2019
- commentary on the applicability of section 36(1) as including successors and assignees
The request was that EMBER reply before August 20, 2021.
[10] EMBER did reply albeit six days late. Over the objections of the Landowner, this Panel was prepared to extend the time to allow for filing of EMBER’s submission. Please refer to Ember Resources Inc. v. Miller, 2021 ABLPRT 687 (CanLII)
[11] In the more fulsome submissions in support of the application for re-consideration EMBER argued three points:
- that it had not received the original notice
- that no demand had been issued prior to suspension and termination
- that although EMBER is now a successor and assignee, it did not have that status at the time of non-payment.
Critical to the outcome of this file, EMBER also provided new evidence in the form of an Order granted by the Court of Queen’s Bench which specified that, subject only to approval being granted by the Alberta Energy Regulator, the transfer of assets to EMBER was to be “free and clear of” any claims. This obviously was evidence that had not been provided to the original panel. Based on the records provided by the AER, is was also clear that the transfer had in fact been approved.
[12] On December 1, 2021, Mr. Vasseur responded on behalf of the Landowner’s indicating as follows:
Based on the information that Ember has provided we believe that Ember does not share responsibility for arrears from June 1st 2019 until November 1st 2019 as Ember only became the operator on that date.
[13] EMBER responded on December 17, 2021, suggesting that the Landowner had admitted that EMBER is not liable, that the Landowner was in breach of the Surface Rights Rules and that EMBER was requesting costs as against the Landowner.
POSITION OF THE APPLICANT
With respect to the Failure to Respond
[14] EMBER has not provided any explanation for its failure to respond.
In support of the Application for re-consideration
[15] EMBER bases its request for re-consideration on important errors of law. EMBER suggests that there are three issues to consider:
Demand for Payment
EMBER argues that section 36(5) of the Act provides that the pre-requisite for suspension and termination is that a demand for payment be made and that no such demand was issued.
Date of Acquisition
EMBER argues that it did not acquire an interest in the Site until November 1, 2019.
Status as Operator
EMBER admit that it is now a successor, but did not have that status at the time of non-payment.
However, the more important evidence that EMBER now provides is a copy of Justice Dario’s Order of October 30, 2019.
In support of the merits
[16] The arguments and evidence in support of the request for re-consideration would apply to a decision on the merits.
POSITION OF THE LANDOWNER
[17] The Landowner agrees that EMBER should not be liable.
ISSUE S
1. Has EMBER provided a reasonable excuse of failing to respond?
2. If no reasonable excuse has been offered, what remedy is appropriate?
3. As a preliminary matter, has the Applicant established the pre-requisites that would allow the Tribunal to re-consider the original decision and orders of May 25, 2021?
4. Should the Tribunal review, rescind, amend or replace the original decision and orders of May 25, 2021, and if so should the Tribunal reconsider Order No.: LPRT0984/2021?
5. Has the Landowner failed to comply with any provision of the Surface Rights Rules?
6. If there has been a failure to comply by the Landowner, what remedy is appropriate?
DECISION
1. EMBER has not provided a reasonable excuse of failing to respond.
2. Although no excuse has been provided, there has been substantial compliance so no remedy is required.
3. As a preliminary matter, the Applicant has established the pre-requisites that would allow the Tribunal to re-consider the original decision and orders of May 25, 2021. The review will include the Direction to Pay Order No.: LPRT0984/2021 that issued on August 5, 2021.
a. The Panel rescinds the original decision and orders of May 25, 2021 as they relate to EMBER and replaces Trident Exploration (Alberta) Corp. as the operator.
b. The Panel rescinds the suspension order and termination order.
c. A written notice shall be sent to Trident Exploration (Alberta) Ltd. demanding full payment of the compensation in the amount of $3138.00.
d. The Panel rescinds Direction to Pay Order No.: LPRT0984/2021 and, unless the Tribunal receives satisfactory evidence that the compensation has been paid in full to the Applicant, an order shall issue with Trident Exploration (Alberta) Corp. as the operator, directing the Minister to pay the compensation of $3138.00.
4. The Landowner has not violated any provision of the Surface Rights Rules.
5. Based on the decision above, the Panel will not consider any remedy under Rule 7. Furthermore, the request by EMBER that costs be awarded is dismissed.
REASONS FOR DECISION
[18] The review in this case turns solely on a question of an error of fact as it relates to the Order issued by Justice Dario. However, the other issues raised by the parties require consideration.
Failure to Respond
[19] Although EMBER did not provide any explanation for its failure to respond, this Panel can well appreciate the complications created by COVID-19 and the difficulty in having staff work from home and then transition back into the office. This Panel is prepared to conclude that EMBER made investigations into its system for handling correspondence and has no answer to provide except to say that it has no record of receiving the Notice that was sent.
Remedy
[20] In considering what action to take in the event of failure to comply, this Panel must consider whether there has been substantial compliance and whether any other party was prejudiced. As to substantial compliance, EMBER did provide submissions and important evidence. As the outcome of this decision is that the Landowner will be paid through General Revenue, any prejudice to the Landowner would be minimal and would not justify this Panel making an order under Rule 7(1).
Basic Requirements for Re-consideration
[21] Section 8(2) of the Act gives the Tribunal the power to make rules governing the procedure and practice for proceedings. Rule 37 governs the process for reconsideration. Re-consideration is a two-step process. An applicant must first establish that the pre-requisites for re-consideration have been met. Only at that point is the Tribunal in a position to order a re-hearing or any other process. The relevant excerpts from Rule 37 are as follows:
(3) The Board may only decide to review a decision or order if one of the following basic requirements for review are met...
(a) the decision or order shows an obvious and important error of law or jurisdiction;
(b) the decision or order shows an important error of fact...in the decision or order that affects the decision or order.
Error of Law or Jurisdiction
[22] EMBER bases its application on error of law. This Panel concludes that there is no error in law revealed in the original decision.
As to the Demand for Payment, the decision itself meets the requirements of sections 36(4) and 36(5): the demand begins this heading:
DEMAND FOR PAYMENT
[Emphasis in the original]
The decision goes on to include a written demand for payment, a written order served upon the operator suspending the right of entry and written notice of its intention to terminate thereafter. Suspension and termination flow after a period of time in which payment could be made.
EMBER suggests that it acquired its interest in the Site after the date of non-payment and that the definition of “successor” would only apply at that time. That interpretation is at odds with the words in the legislation and the consistent line of decisions by the Tribunal.
First, for the purpose of recovery of compensation applications, the definition of the word “operator” is set by section 36(1) of the Act, which explicitly gives the word a broader meaning than in the rest of the Act.
Second, section 36(1) contemplates that persons may “become liable” upon acquiring a status the Act prescribes as being “an operator”.
“Operator’ means any person, who at the time of non-payment under a surface lease...became liable...
At the end of the definition of “operator” is another category of potential operators:
...and includes a successor, assignee, executor, administrator, receiver, receiver-manager or trustee of a person referred to in clause (a) (b)(c), (d) or (e) who was so liable...
Clearly successors, assignee, executor and the like is a status that is conferred after the fact as it were, of the obligation of the original party, in this case the holder of the licence issued by the AER.
This is an issue that was addressed in the decision of the Tribunal in Murray v. Goodland Energy Ltd. 2017 ABSRB 641. The panel in that case held that the new operator, by virtue of being a successor to the original licence holder, was responsible for payments pre-dating its involvement in the Site. That decision has not been overturned by the Court and has been followed consistently in other decisions of the Tribunal.
Error of Fact
[23] However, EMBER in its submissions establishes a fundamental fact that was not known at the time of the original decision: that the acquisition of interest in the Site was as the result of an Order of the court that specifically prohibits any claim as against the new purchaser. While EMBER is the operator within the definition in the Act, by operation of the order of the Court, the Tribunal can take no action. Please refer to Burnat v. Magnum Energy Inc., 2018 ABSRB 115 (CanLII).
[24] Without a response from EMBER, this is evidence that would not otherwise be known to the original panel but it is a highly relevant and definitive answer to the request for re-consideration. On that basis, this Panel is finds that the basic requirements for re-consideration have been met.
Review of the Decision and Orders
[25] Rule 37(5) requires that before the Tribunal grants a request for review, it shall ensure that all parties have had an opportunity to make submissions. The Landowners have had that opportunity and have conceded the issues in so far as EMBER is concerned.
[26] On that basis, this Panel is prepared to proceed based on the submissions and evidence already provided.
[27] As indicated above, the order of the Court puts an end to any proceedings against EMBER and this Panel will rescind the original decision and orders as they relate to EMBER.
The Direction to Pay Order relied solely upon the original decision and orders, and therefore it must also be rescinded.
[28] However, the Panel finds that Trident was the holder of the licence issued by the Alberta Energy Regulator and therefore it was the operator at the time of non-payment. Unless the Tribunal receives satisfactory evidence that the compensation has been paid in full to the Landowner, an order shall issue with Trident Exploration (Alberta) Corp. as the operator, directing the Minister to pay the compensation of $3138.00.
This Panel is aware that there is a stay of proceedings with respect to Trident Exploration and that statutory and court ordered stays preclude the issuance of an order suspending and terminating access rights as against Trident. However, this Panel is of the view that the stay does not preclude the Tribunal from making a demand for payment. While court appointed receiver and manager of the assets of Trident may choose not to respond or take the position that the demand has been stayed, the requirement to issue the demand is mandatory under section 36(4). A failure to make the demand would result in the landowner being disentitled to relief under section 36(6). That is an interpretation that would undermine the fundamental objectives of the section 36 as clearly stated by the courts.
The original decision remains in effect insofar as the Landowner is concerned.
Allegation that the Landowner has failed to comply with the Rules
[29] EMBER suggests that the Landowner has violated the Surface Right Rules but makes no reference to a specific provision. Instead, EMBER takes the position that the Landowner has admitted that EMBER is not liable and that:
... incorrectly naming Ember as respondent Operator, EMBER and the Tribunal, have been put to unreasonable and excessive work and expense to respond.
[30] The difficult with the position taken by EMBER is that it is the Tribunal that names the Operator for the purposes of Notice and it is the Tribunal that decides whether an entity is in fact, an Operator. But for the new evidence in the form of the Court order, based on the documentation provided by the AER, the original panel was correct to name EMBER as the operator.
[31] Furthermore, an application under section 36 of the Act is not a law suit and it does not change the underlying contractual obligations between the parties. It is a statutorily created scheme to provide relief to landowners when operators fail to make annual payments. As Justice Sirrs noted in Devon Canada Corp. v. Surface Rights Board 2003 ABQB 7 (CanLII):
...the function of section 36(5) and 36(6) appears to me to provide the surface owner with some assurance that if they cooperate with providing the oil industry access to their lands, they need not fear the operator will not pay them.
The sections provide a pragmatic solution whereby the surface owner need only provide that existence of a lease and that rent has not been paid....(Para 29)
[32] Upon receiving written evidence that “satisfactorily proves non-payment, the Tribunal is required to send written notice to the Operator demanding full payment (Section 36(4)). The Tribunal is empowered by legislation to undertake searches of the records of government agencies, including the Alberta Energy Regulator to determine the identity of the operator(s). The records that were relied upon by the original panel identified EMBER as the current licence holder and 100% working interest participant.
[33] The Tribunal is clearly entitled to rely on the records of the Regulator that makes the decision regarding the well, the licensee and the working interest participants. The AER directives outline the responsibilities of the licence and approval holders, including timelines, to ensure that the information the AER has on file remains accurate. The legislative intent of section 36(1) cannot be that the Tribunal is expected to duplicate the work of the Regulator when it determines whether a corporation is a licensee or a working interest participant. The Courts have made it very clear that the Tribunal’s jurisdiction is ancillary to the AER (Windrift Ranches v. Alberta Surface Rights Board 1986 ABCA 158 (CanLII) at para 5 and Togstad v. Alberta (Surface Rights Board) 2014 ABQB 485, 2015 ABCA 192 at Para 7).
The Tribunal relies on approvals from the Regulator to grant Right of Entry Orders under the Act. Similarly, the Tribunal is entitled to rely on the records for the AER to establish whether a corporation is a licensee. The plain language of section 36(1) (c) specifically references “the holder of a licencee...issued by the Alberta Energy Regulator.”
[34] Based on the legislative scheme in Alberta that gives to the AER the responsibility to issue licences, it is reasonable to rely upon the documentation provided by the Regulator in absence of evidence to the contrary.
[35] It is only by virtue of the Order of the Court that EMBER is not responsible for past missed payments. This is precisely why responding to the Notice of Proceedings is so important. Had the information concerning the court order been provided, EMBER would not have been impacted by the decision and order.
[36] Accordingly, no fault lies with the Landowner. On that basis, this Panel will not make an order under Rule 7(1) for costs.
Dated at the City of Edmonton in the Province of Alberta on January 26, 2022.
|
LAND AND PROPERTY RIGHTS TRIBUNAL |
|
|
|
|
|
_________________________________________ |
|
Susan McRory, Chair |