LAND AND PROPERTY RIGHTS TRIBUNAL
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Citation: |
Brietzke v Ember Resources Inc, 2023 ABLPRT 903630 |
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Date: |
2023-06-14 |
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File No.: |
RC2022.0207 |
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Order No.: |
LPRT903630/2023 |
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Municipality: |
Kneehill County |
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In the matter of a proceeding commenced under section 36 of the Surface Rights Act, RSA |
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2000, c S-24 (the “Act”) |
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And in the matter of land in the Province of Alberta within the: |
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SE 1⁄4-4-32-25-W4M as described in Certificate of Title No. 961 019 340 +4 (the “Land”), particularly the area granted for a well site and access road for the 08-04-032-25W4M well, Alberta Energy Regulator Licence No. 0361926 (the “Site”). |
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Between: |
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Ember Resources Inc. and Bumper Development Corporation Ltd., |
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Operators, |
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- and - |
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James Ronald Brietzke, |
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Landowner/Applicant. |
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Before: |
Jerry Zezulka, Chair Tamara M. Bews (the “Panel”) |
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Appearances by written submissions:
For the Applicant: Paul Vasseur
For the Operators:
Bumper Development Corporation Ltd. None
Ember Resources Inc. None
SECTION 36(6) DIRECTION TO PAY
The Tribunal directs the Minister to pay out of the General Revenue Fund the sum of THREE THOUSAND ONE HUNDRED SIXTY and 00/100 DOLLARS ($3,160.00) (the “Compensation”) to James Ronald Brietzke of Three Hills in the Province of Alberta for compensation that became due in the years 2020 and 2021.
DECISION AND REASONS
[1] On January 12, 2022, the Applicants applied under section 36 of the Act seeking recovery of unpaid compensation due under a surface lease dated July 19, 2005 for the Site. The Applicant submits that Ember did not pay the full annual compensation amount of $3,530.00 due on July 19, 2020 and July 19, 2021. The Applicant claims $3,160.00 remains outstanding for the 2020 and 2021 Surface Lease years.
[2] By letters dated December 6, 2022, the Tribunal issued a Notice and Demand for Payment to Bumper Development Corporation Ltd. (Bumper) and Ember Resources Inc. (Ember). No response was received from Bumper or Ember to the Notice and Demand for Payments.
ISSUES
[3] The issues before the Panel are:
(1) Who is an Operator under section 36 of the Act?
(2) Is there money past due that has not been paid by the Operators to the Applicant under the Surface Lease?
(3) If money is past due and unpaid, is there any reason why the Tribunal should direct the Minister to pay a reduced amount?
(4) Should the Tribunal suspend and terminate the Operator’s entry rights?
(5) Should the Tribunal direct the Minister to pay the Applicants out of the General Revenue Fund under section 36(6) of the Act?
DECISION
[4] The Panel decides:
(1) Under section 36 of the Act, at the time of non-payment in 2020 and 2021, the Operators are Bumper Development Corporation Ltd. and Ember Resources Inc.
(2) Compensation of $3,160.00 is payable to the Applicant by the Operators, jointly, and the written evidence satisfactorily proves that it has not been paid for 2020 and 2021.
(3) There is no reason to direct the Minister to pay a reduced amount.
(4) There is no reason to delay the application further by issuing orders of suspension and termination because one of the named operators, Bumper Development Corporation Ltd., has been struck from Alberta Corporate Registry since June 2, 2017.
(5) A Direction to Pay shall issue forthwith.
ANALYSIS
1. Who is an operator under section 36 of the Act?
[5] For the purpose of recovery of compensation applications, the definition of the word operator is set by section 36(1) and (2) of the Act. Specifically, section 36(1) and (2) expands the definition of operator so that it has a broader meaning than in the rest of the Act.
Section 36(1)(c) – AER Licence Holder
[6] Under section 36(1)(c), the holder of a licence issued by the Alberta Energy Regulator (AER) is an operator. This includes the person who held the licence on the due date and successors to the licence. AER Well Licence No. 0361926 for the Site is in the name of Ember. The Panel finds that Ember is an operator under section 36(1)(c) on the Surface Lease 2020 and 2021 due dates.
Section 36(1)(d) – Working Interest Participants
[7] Under section 36(1)(d), working interest participants are Operators. An AER Well Summary Report Search dated February 24, 2023, for Well Licence No. 0361926 shows that Bumper (17.86%) and Ember Resources Inc. (82.14%) are working interest participants in this well, effective January 27, 2015. On that basis, the Panel finds Bumper and Ember are an operator under section 36(1)(d) on the Surface Lease 2021 due date.
2. Is there money past due and unpaid by the Operators to the Applicant under the Surface Lease?
[8] Certificate of Title No. 961 019 340 +4 confirms James Ronald Brietzke has owned the Land since January 24, 1996. Accordingly, the Panel finds that James Ronald Brietzke was the owner of the Land when the Surface Lease annual compensation was due in 2020 and 2021.
[9] The application and the Applicant’s declaration indicate that compensation of $3,160.00 is owed under the Surface Lease as follows:
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Year Requested |
Current Compensation Rate |
Amount Received |
Amount Claimed |
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2020 |
$3,530.00 |
$1,950.00* |
$1,580.00 |
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2021 |
$3,530.00 |
$1,950.00* |
$1,580.00 |
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Total |
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$3,160.00 |
Note: The Applicant indicates that he received partial payments of $1,950.00 from Ember.
[10] In support of his application and declaration, the Applicant provided:
a. A letter dated May 4, 2020 from Ember to James R. Brietzke which indicates, among other things, that:
i. The rental for the Surface Lease is up for review in 2020 under section 27 of the Act.
ii. Ember proposes to adjust the annual rental from $3,530.00 to $1,950.00 per year effective July 19, 2020.
iii. If the Applicant is in agreement, please acknowledge by dating, signing and returning the duplicate letter to Ember’s attention.
iv. Any payment directed to your account, including the cashing of any cheques, is not deemed as acceptance of this offer.
b. A copy of two Ember cheque remittances which includes the Surface Lease and Site. These remittances shows that the annual compensation paid for the Site was $1,950.00 for the periods from July 19, 2020 to July 18, 2021; and July 19, 2021 to July 18, 2022.
[11] An AER Well Summary Report dated December 6, 2022 for Well Licence No. 0361926 shows that the well associated with the Site is an issued well. Given that AER records show the well on the Site as issued, and not reclaimed, the Panel finds that the Surface Lease remains in effect.
[12] In the Panel’s view, the Applicant’s position appears to be that the Surface Lease was not amended to reduce the compensation from $3,530.00 to $1,950.00 per year effective July 19, 2020, such that $3,160.00 remains outstanding for the 2021 and 2022 Surface Lease years.
[13] The onus is on the Applicant to prove that the money is due and paid under the Surface Lease. The Panel notes that the Applicant’s declaration referenced the partial payments made by Ember and provided a copy of the Surface Lease and other documentary evidence related to the Surface Lease.
[14] In the absence of additional submissions, evidence and legal authorities being provided, the Panel finds that Ember’s proposed May 4, 2020 amendment to the Surface Lease is not legally binding on the Applicant. Accordingly, the Panel finds that the annual Surface Lease compensation due on July 19, 2020 and July 19, 2021 was $3,530.00.
[15] Furthermore, the Panel does not have the authority under section 36 of the Act to vary the annual compensation, but only to require or order the payment of annual unpaid compensation: see, e.g., Penner v Canstone Energy Ltd, 2021 ABLPRT 416 (CanLII) at paragraph 20.
[16] Having regard to the above, the Panel finds that compensation of $3,160.00 is still owed by the Operator to the Applicant for the 2020 and 2021 Surface Lease years.
3. If money is past due and unpaid, is there any reason why the Tribunal should direct the Minister to pay a reduced amount?
[17] Concerning the condition of the Site, the Applicant submitted, among other things, that: the Site is fenced, there is equipment or structures on the Site, and the Site is still being visited by workers. The Applicant’s position is the losses and impacts of the Site are still the same.
[18] In Devon Canada Corporation v Alberta (Surface Rights Board), 2003 ABQB 7, 337 AR 135 (“Devon”), the Court of King’s Bench considered the Tribunal’s responsibility when considering an order under s. 36(5) and (6) and held at paragraph 29:
... the function of sections 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 prove the existence of a lease and that rent has not been paid. Upon proof of such, in most cases, the province would then pay the rent and the operator would then face the province, seeking reimbursement from the operator.
... if the ... owner’s claim is unjustified, is patently absurd, or provides an unjust enrichment, the Board should be able to use its discretion under s. 36(6) to refuse to direct that Alberta taxpayers pay the rental arrears.
[19] According to Devon, the Panel's decision to direct the Minister to pay out of the General Revenue Fund is discretionary. This was confirmed by the Alberta Court of King’s Bench in Provident Energy Ltd v Alberta (Surface Rights Board), 2004 ABQB 650.
[20] In Praskach Farms Ltd. v Lexin Resources Ltd, 2020 ABSRB 85 (“Praskach”), the Tribunal concisely summarizes the scope of authority under section 36 of the Act, the factors to consider direct the Minister to pay either the full amount of Compensation owing or a reduced amount if payment if the full amount is unjustified. The Tribunal held (at paragraphs 10):
[10] There are two factors particularly important for considering annual compensation and whether directing the Minister to pay the full amount owing is unjustified. ... this is not a review of compensation under section 27, however, the loss of use and adverse effect are components of fair compensation which the Board can consider when determining if directing the Minister to pay the full amount owing is justified.
and this Panel adopts and applies the reasoning from Praskach.
[21] There is no evidence to convince the Panel that payment of the remaining compensation of $3,160.00 would result in overpayment to the Applicant. The Operator has active equipment and structures on the Site, including a producing coalbed methane well. The Panel finds that loss of use and adverse effect from the Site has continued to occur.
4. Should the Tribunal suspend and terminate the Operators’ entry rights under section 36(5) of the Act?
[22] Under section 36(5) of the Act, the Tribunal can suspend and terminate an Operators’ rights to access the Site when appropriate. There is no reason to delay the application here because one of the named operators, Bumper Development Corporation Ltd., has been struck from Alberta Corporate Registry since June 2, 2017. When a corporation is discontinued under the Business Corporations Act, it is no longer a corporation.
5. Should the Tribunal direct the Minister to pay the Applicant out of the General Revenue Fund under section 36(6) of the Act?
[23] The statutory pre-requisites for issuance of the Direction to Pay are that a written demand of the operator has been made under section 36(4) and that the operator has not proven to the Tribunal’s satisfaction that full payment has been made. Here, Notice and Demand for Payment under section 36(4) of the Act were made of the two named operators, Ember Resources Inc. and Bumper Development Corporation Ltd., on December 6, 2022. No responses were received from Ember Resources Inc. or Bumper Development Corporation Ltd. to the Notice and Demand for Payment regarding the $3,160.00 amount claimed.
[24] As noted above, the Panel found compensation of $3,160.00 is owed by the named operators to the Applicant for the 2020 and 2021 Surface Lease years. In the Panel’s view, there is no purpose in delaying the issuance of the Direction to Pay given the compensation have been outstanding for over two years.
[25] Accordingly, the Direction to Pay will issue immediately.
Dated at the Calgary in the Province of Alberta this 14th day of June, 2023.
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LAND AND PROPERTY RIGHTS TRIBUNAL |
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Tamara M. Bews, Member |
Correction Notice
Land and Property Rights Tribunal Order No. LPRT903630/2023 was corrected in accordance with Surface Rights Rule 36(2).
Description of the correction:
The final sentence of the Order was amended to read “Dated at the Calgary in the Province of Alberta this 14th day of June, 2023.”
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Miles Weatherall, Tribunal Member