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Wednesday, June 16, 2010

Alberta Court of Appeal denies leave to pipeline landowners in compensation case

Back in February, I reported on a decision of the Alberta Court of Queen's Bench in which a decision of the Surface Rights Board awarding annual compensation to landowners was overturned and the "Pattern of Dealings" approach to compensation was again imposed (see: February 23, 2010).  The landowners involved sought leave to appeal the Court decision, but leave has now been denied by the Alberta Court of Appeal. 

In its decision, the Alberta Court of Appeal determined that the findings of the Court of Queen's Bench judge were reasonable and again upheld the "Pattern of Dealings" approach to compensation (i.e. the compensation to be awarded to a landowner may be determined by looking at the pattern of compensation paid by a company to other landowners in similar circumstances).  However, importantly, the Court did leave open the possibility for annual compensation in the right case - a "real" case for ongoing compensation rather than a "conjectural" one:
The principles providing for the determination of compensation for pipeline rights of way based on established patterns of dealings are well established in the industry and before the Board. In essence, the applicants believed they had established a novel basis for compensation by persuading this Board to invent a compromise position for compensation that allowed for an annual component in lieu of a larger lump sum payment. Macklin J. was not persuaded, on the record before him, that it was reasonable to include an annual component for future potential adverse effects to the applicants’ use of their land within the meaning of s. 25(1)(c) and 25(1)(d) of the Act because (a) the basis for doing so was conjectural and/or redundant to the rationale for the lump sum payment and (b) the procedural difficulty and cost of validating and reviewing an annual payment component every five years for each claimant would be unnecessarily burdensome having regard to the fact that there would again be a need to predict on an arbitrary basis the future from that point.
In deciding whether leave to appeal should be granted or denied in this case, it is not necessary for me to say, nor would I suggest, that an annual payment component cannot be considered to be a valid part of a compensation package for a subsurface pipeline. It is also unnecessary for me to say whether procedural cost and difficulty arising from five year reviews of annual payment components would be a valid reason to refuse an annual payment component if the basis for such were lifted from the conjectural to the real. It is, however, sufficient to say that, on the record before Macklin J. and the Board, it was reasonable for Macklin J. to conclude that an arguable justification for departing from the established PoD to include an annual payment component was not lifted from the conjectural or redundant and it was unreasonable for the Board to conclude otherwise. To disturb Macklin J.’s conclusions in those respects, having regard to the standard of review, would require a clear ground of appeal of arguable substance which does not exist here. [emphasis added]
Read the decision at: Enbridge Pipelines (Athabasca) Inc. v. Karpetz.