Annual Compensation Decision for Landowners from Alberta Surface Rights Board overturned by Court

The Alberta Court of Queen's Bench has overturned a promising annual compensation decision made by the Surface Rights Board in Alberta . The SRB had ordered Enbridge Pipelines Inc. to pay landowners on the Waupisoo Pipeline an upfront payment for permanent rights-of-way and temporary work space as well as annual compensation into the future for ongoing impacts of the pipeline. Enbridge argued on appeal that the compensation award should have been decided on the "pattern of dealings" approach (i.e. what all of the other pipeline companies have been paying).

In its decision, the SRB found that there would be "ongoing and/or recurring compensable losses ... and ... it was only reasonable to award annual compensation since only an annual award provides for compensation that is contemporaneous with the events/factors that are attracting the award of compensation." To succeed on the appeal, the Court ruled that "Enbridge must establish that either the [SRB] decision, on its face, was unreasonable or that the new evidence introduced on appeal has the effect of making it so."

In the Court's view, the possibility of future losses was not a "cogent reason" to depart from a pattern of dealings approach, "unless perhaps a particular landowner's anticipated losses would be highly unusual and significant." Here's what the Court had to say about "pattern of dealings":

"From the perspective of harmony among neighbours with respect to compensation, nothing could be more divisive than learning that a neighbour received greater compensation for the RoW or TWS. Neighbours would understand, however, that if one of them sustains additional damages, he or she should receive additional compensation. If damages are not suffered, no additional compensation should be paid. However, for the simple acquisition of those rights associated with having a RoW through a landowner's property, ideally the operator should pay the same amount to each affected landowner. The best indicator of the appropriate amount is the [pattern of dealings] with those in the same vicinity. An established [pattern of dealings] evidences both an approach and a value negotiated between knowledgeable parties. The wisdom of the market place should prevail in those circumstances."

On that basis, the Court found that the SRB decision was unreasonable. My question to the Court would be how the pattern of dealings could possibly evidence negotiated value or "the wisdom of the market place" when one party has a right to expropriate the land of the other where no deal is reached. While it is the case that no landowner would want to find out that his or her neighbour is being paid more by the same pipeline company for the same land in the same area, the "pattern of dealings" approach seems likely to be a "race to the bottom" for landowners.

Read the Alberta Court of Queen's Bench decision in Enbridge Pipelines (Athabasca) Inc. v. Karpetz at:
http://www.canlii.org/en/ab/abqb/doc/2010/2010abqb108/2010abqb108.html