Enbridge wants land to build replacement pipeline; Landowner refuses because no construction agreement in place; NEB gives Enbridge right to use land; Enbridge makes a huge mess; NEB issues stop work order - Why was Right of Entry granted in the first place?

The National Energy Board (NEB) has recently issued a stop work and compliance order to Enbridge Pipelines Inc. in connection with Enbridge's Line 3 Replacement project on a Manitoba farm property.  The Line 3 project is similar to the Line 6 replacements that took place in Michigan following the Marshall, MI rupture a few years ago - Enbridge leaves a rotting pipeline in place and takes more land to build a new line nearby. 

In this case, Enbridge was not able to obtain the land it needed from the landowner by agreement.  Enbridge then turned to the NEB for the right to take the land it needed for its new pipeline.  In fact, Enbridge appears to have made 25 applications for right of entry to the NEB, all of which were granted in spite of objections by many affected landowners.  The bases for the landowner objections included the fact that Enbridge had failed to negotiate a construction agreement with the landowners that would protect the integrity of the lands affected by the project.

The result?  A complete mess has been made of at least one of the properties involved in the project and it remains to be seen whether the NEB's order will make any difference for future projects.  Will the NEB rethink its relationship with companies like Enbridge?  Will the NEB be as quick to grant land rights to pipeline companies where they have failed to agree on environmental protection measures with landowners? 

Dead lawn points to neighbour's herbicides, but standard of proof not met

The Plaintiff in a Saskatchewan small claims suit alleged that the Defendant applied a substance in the back alley next to his property that caused damage to the Plaintiff's lawn.  The judge hearing the case was satisfied on a balance of probabilities that a substance from the back alley did migrate to the Plaintiff's lawn, either through run-off or leaching, and killed it.  This finding was supported by viva voce testimony, an investigation report, and photographs.  However, the judge was not satisfied on a balance of probabilities that the Defendant had anything to do with putting the substance into the back alley or that the substance came from the Defendant's property.

Of course, the judge accepted that the Plaintiff's suspicions about the Defendant's involvement were not unwarranted.  The Defendant was employed by a crop production services company and the Plaintiff's wife had seen the Defendant dump liquid in the back alley.  The Defendant told the Plaintiff that he has used glyphosate and Ally, and may have "mixed one a little strong".  The Defendant's yard is directly across the back alley from the Plaintiff's yard, and the alley slopes from the Defendant's yard to the Plaintiff's yard.  And there was no plant kill in any other yard in the area.

In spite of this circumstantial evidence, the judge did not find for the Plaintiff.  There was no evidence of what substance had actually killed the Plaintiff's lawn, and no samples had been taken from the back alley to test for chemicals in that area.  The Plaintiff suggested that the cost of testing for numerous substances until the correct one was found would be prohibitive, but it appears to have left the Plaintiff without the evidence necessary to prove the claim.

The Court dismissed the Plaintiff's claim, but (perhaps tellingly) made no order as to costs. 

Read the decision at: Charbonneau v Statchuk.

Combine repair dispute goes to the Ontario Agri Appeal Tribunal

In Ontario, the Farm Implements Act provides for the investigation and mediation of disputes related to the sale of farm equipment; where mediation fails, the dispute can be put to the Agriculture, Food and Rural Affairs Appeal Tribunal for a hearing.  Recently, the Tribunal ruled on a warranty claim involving a used 2008 Lexion 570R combine.  HF purchased the combine from EFE.  The original owner of the combine had purchased it from DP, and HF went back to DP for the service and repair of the combine.

In October of 2011, problems arose with the hydraulic pump and motor, and HF hired DP to fix the problems.  Over the next year and a half, the problems would be repaired and then reappear - each time DP would fix the problems and HF would pay for repairs.  However, following a final repair in late 2012, HF refused to pay the $25,698.10 invoice rendered by DP.  HF claimed that the repair was under warranty.  HF asked the Tribunal to absolve HF of its responsibility to pay the final invoice, and to require DP to pay various costs (including a $25,000 loss allegedly incurred when the combine was re-sold).

Section 16 of the Farm Implements Act provides for an implied warranty as to the quality of repair parts.  If a new repair part is purchased from an authorized dealer and is supplied by the same distributor who supplied the farm implement for which the part is intended, then there is an implied warranty that the repair part will be free from defects in material or work for a period of 90 days from purchase or, if purchased out of season of use, 90 days from the date it is first used by the purchaser in the next season of use.  It is also possible for the distributor or dealer to give a longer warranty.

In this case, DP was an authorized dealer and was the distributor who had first sold the combine to the original owner.  Further, DP had given a contractual warranty for 6 months, double the implied statutory warranty.  In spite of DP's argument to the contrary, the Tribunal determined that the warranty given covered both parts and labour (since a warranty for parts only would be no warranty at all - the parts themselves were already covered by a warranty from DP's supplier), and applied to the last repair in late 2012.

On this basis, the Tribunal ruled that HF would not have to pay for the final repair costs and that DP would have to reimburse HF for the costs it incurred after the fact in fixing the machine.  However, the Tribunal did not award damages related to machine downtime costs and trading loss to HF, finding that there was insufficient evidence concerning these claims.

Read the decision at: Holtrop Farms v. Delta Power Equipment.

Saskatchewan man loses appeal from conviction for stealing cattle

Farmer D was convicted of stealing cattle contrary to Section 338(2) of the Criminal Code and of fraudulently making a false or counterfeit mark on cattle contrary to Section 338(1)(b)(ii) of the Code.  D acknowledged at trial that he had sold the cattle in question, but said that he had believed they were part of his own herd.  His evidence was not accepted, resulting in his convictions.  Farmer D's appeal of the convictions has been dismissed by the Court of Appeal for Saskatchewan.

The evidence at trial was that, in late 2009, Farmer S noticed that 10 yearling Simmental heifers were missing from his herd.  He called neighbours about the missing heifers, including the wife of Farmer D.  A few days later, another neighbour told Farmer S that he had seen about 10 Simmental cattle in the ditch along a road near the farms of Farmer D and Farmer S.  At trial, the hired man of Farmer D also testified that he had seen the cattle in and near the ditch and that he had told Farmer D about them.

A few days later, Farmer S observed a cattle truck in the yard of Farmer D with someone chasing cattle to the yard.  Farmer S was suspicious and began calling livestock facilities in search of his cattle.  Ultimately, it was determined that Farmer D had sold Farmer S' missing cattle, after having tagged their ears with his own tags.  The yellow "dangle" tags and the radio frequency tags applied by Farmer S had been removed.  The trial judge did not believe that Farmer D had failed to realize he was dealing with Farmer S' cattle.  For instance, the trial judge said that it was not within the realm of possibility that all of the tags applied by Farmer S had fallen out; he concluded that Farmer D had removed the Farmer S tags and replaced them with his own tags before selling the cattle.

The Court of Appeal rejected both arguments advanced by Farmer D; first that the trial judge had misapprehended the evidence and reached unreasonable verdicts and, second, that the judge erred by ignoring or overlooking the testimony of Farmer D's wife and daughter.  On the first argument, the Court of Appeal reviewed the factual findings of the trial judge and found that he had not misapprehended the evidence, which "pointed strongly in the direction of [Farmer D's] guilt".  On the second argument, the Court of Appeal found that the evidence of Farmer D's wife was not material given that Farmer D acknowledged that he had sold cattle belonging to Farmer S.  The evidence of Farmer D's daughter was not helpful either; it only indicated as a general proposition that cattle sometimes lose tags (and not that it was possible for all 10 missing heifers to lose their tags).

Read the decision at: 2014 SKCA 44 (CanLII).

BC Supreme Court rules on dispute between municipality and pipeline company over upgrade costs

The City of Surrey planned to expand the Fraser Highway.  The expansion would necessitate the upgrade of a pipeline owned and operated by FortisBC Energy Inc. (formerly Terasen), and Fortis commenced an action against Surrey in respect of the allocation of cost for the upgrade.  Fortis claimed that it had been assigned rights originally held by the British Columbia Electric Company under a Trunk Line Agreement from 1956.  Under that agreement, Fortas argued, the costs of the pipeline upgrade work were to be allocated by agreement between the parties or, failing agreement, were to be determined by arbitration.

In the alternative, Fortis sought a declaration that the highway project constituted a de facto expropriation of its statutory right-of-way along with directions that would require Surrey to proceed with the expropriation in accordance with applicable legislation.   Finally, in the further alternative, Fortis claimed compensation for the costs it had incurred already to protect its pipeline and to accommodate Surrey's highway project on the basis of quantum meruit or unjust enrichment.

Surrey disputed the validity and the application of the Trunk Line Agreement, saying that it had been superseded by legislation that requires Fortis to pay the full cost of the upgrade work.  In any event, Surrey alleged that Fortis had fundamentally breached and repudiated the Agreement.  Surrey counterclaimed against Fortis including claims for negligence, nuisance, negligent misrepresentation, breach of fiduciary duty and breach of contract.

In reviewing the Trunk Line Agreement, the BC Supreme Court found that provincial pipeline legislation enacted in 1955 was not intended to prohibit, supersede or override agreements such as the Trunk Line Agreement.  The Court then reviewed regulations made pursuant to the legislation and again found that the Agreement was neither superseded nor rendered illegal by the regulations.  However, the Court found that Fortis had repudiated the Agreement by refusing to consent to the dedication of the statutory right-of-way lands at the highway "unless Surrey either agreed to create a fee simple lot over the portion of the highway crossing the Pipeline, were paid all of the cost of the Pipeline upgrade work".  This deprived Surrey of substantially the whole of the commercial benefit of the Trunk Line Agreement and constituted a breach which went to the root of that contract.  The Court found that Fortis repudiated the Agreement, that Surrey accepted the repudiation, and that the agreement was terminated and ceased to bind the parties.

In the absence of the Agreement, the allocation of costs was determined by the Pipeline Regulation.  The Regulation provided that costs must be shared equally by a municipality and a pipeline company where a new highway is built within a municipality by the municipality on an existing right-of-way or on a newly dedicated right-of-way.  The Court found that the application of the Regulation to the pipeline upgrade work did not constitute a de facto expropriation because it would not "constitute a taking of virtually all of the rights of Terasen Gas with respect to the SRW or Pipeline".

Read the decision at: FortisBC Energy Inc. v. Surrey (City).

Court of Appeal reverses ATV decision - ATVs for farming are not self-propelled implements of husbandry

About a year ago, I posted about an Ontario Superior Court decision that found that an ATV was a "self-propelled implement of husbandry" for the purposes of the Insurance Act.  A farmer was involved in an accident on the road while he was driving an uninsured ATV; the Court found that he was not barred from recovering damages for his injuries by the legislation that says no recovery is permitted where the person was operating an uninsured motor vehicle on a highway.  Self-propelled implements of husbandry are not considered motor vehicles.

The Ontario Court of Appeal has overturned this decision.  It found that the "motion judge correctly identified the purpose of the legislation before him but then adopted an interpretation that failed to give effect to that purpose.  He considered matters that were not pertinent to the excercise of statutory interpretation: whether the regulatory definitions were out of date, the views of the farming community, and the fact that Mr. Matheson was not at fault in the accident.  Consequently, he lost sight of the goal of determining the intent of the legislature."

The Court ruled that, " it was beyond the competence of the motion judge to conclude that Mr. Matheson’s ATV was a self-propelled implement of husbandry based on his opinion that the regulatory regime has not kept pace with changes in society, that ATVs need to be responded to appropriately by our laws, and that they need to be recognized as self-propelled implements of husbandry."  The applicable legislation, including the Off Road Vehicles Act, makes it clear that ATVs cannot be driven on land not occupied by the owner of the vehicle unless it is insured under a motor vehicle policy in accordance with the Insurance Act.  The Court commented that the Regulations "could not make clearer the legislative intent that a Honda ATV model TRX 200 is an off-road vehicle and not a self-propelled implement of husbandry."

Keep this in mind - "The issue is not whether farmers can operate ATVs used in agriculture on highways, but whether they can do so without insurance."  The answer is that they cannot operate ATVs on highways without insurance, at least not without being barred from recovery of damages for injury or death.

Read the decision at: Matheson v. Lewis.

Alberta conservation easement leads to fight over fence height restrictions, etc.

The Defendant in this case bought a large cattle ranch from the Nature Conservancy of Canada (NCC), the Plaintiff in the case.  The ranch lay on the eastern slopes of the Rockies within the migratory corridors of a wide array of species.  NCC thought that the ranch was strategically located for movement of wildlife in Alberta - the "North American Serengeti".  Before selling the ranch to the Defendant, the NCC registered a conservation easement against the title to the property to ensure, among other things, that the use of the property would not impede future wildlife migrations.

After purchasing the property, the Defendant landowner began to replace old fencing around the perimeter of the ranch.  He believed the new fencing would be more effective in restraining his bison, but still permit wildlife to migrate through the property.  NCC disagreed, saying that the Defendant had breached the terms of the conservation easement by building his fence higher than was allowed.  This would impede the migration of wildlife.

There were a large number of issues before the Alberta Court of Queen's Bench in this case (the written reasons comprise 605 paragraphs with 144 footnotes), including issues about the terms and applicability of the conservation easement.  On the issue of the alleged breach, the Court ruled that the parties had agreed on the following fence height restriction:

The Grantor may maintain, replace and repair the fences, roads, buildings, and other improvements located on the Property. If doing so with fences or roads, they are to be maintained, replaced or repaired at or near the existing ones. The Grantor may not build fences or roads in areas where none exists without the Grantee’s permission. The building of wildlife-proof fences is not permitted, except in localized areas as needed to control or prevent wildlife damage to haystacks, stored forage or domestic gardens. If any or all of the buildings are removed or destroyed, the Grantor may replace them with structures of a similar purpose at or near the same location within the existing 5 acre home site. Any building construction shall require the prior notice to the Grantee.

The Court found further that NCC failed to prove that the replacement fence that had been installed breached the agreed restrictions.  NCC failed to show that the Defendant placed the new fence in any new locations without permission and the evidence demonstrated that the fence was wildlife permeable.  In fact, the Court found that it was likely that the new fence restricted wildlife movement less than the old fence that it replaced.

Read the decision at: Nature Conservancy of Canada v Waterton Land Trust Ltd.

Court awards $3.6 million for contamination clean-up and $1.115 million for out-of-pocket costs

The Ontario Superior Court of Justice has awarded a property owner $3.6 million to clean-up petroleum hydrocarbon contamination from a neighbouring property, along with more than $1.115 million to cover out-of-pocket costs already expended in connection with the contamination.  Following a 12-day trial in Goderich and London, Justice Lynne Leitch found that underground storage tanks (USTs) at a concrete supply company's property were the source of contamination that had migrated onto a neighbouring commercial property.  She ruled that the defendant landowner was responsible to return the neighbouring landowner to the position it was in prior to the wrong committed.

The plaintiff landowner advanced its claims on the basis of the doctrine in Rylands v. Fletcher/Strict Liability, Nuisance, Negligence and Trespass.  The plaintiff's property was vacant until 1997 when a retail store operation was constructed there, and the evidence was that there had been no other use of the property prior to 1997.  The defendant's property was used for the production and sale of ready-mix concrete product, and the defendant also operated a fuel outlet on the property from the 1950s until 2012.  Original USTs were removed in 1989 and replaced by new USTs.   Justice Leitch noted, "It is fair to say that [the Defendant] used gasoline for many years with questionable UST system monitoring and maintenance practices and poor record keeping."

In 2007, the plaintiff landowner planned to build its own gas bar as part of its retail operation, and investigated the proposed site.  It was then that petroleum hydrocarbon contamination was detected.  From that point forward, the plaintiff undertook interim remediation steps and eventually commenced its action against the defendant landowner to recover the costs of the clean-up of its property.

Expert evidence was called by both parties, with the defendant's expert focusing on an opinion that the source of the contamination was, in fact, the plaintiff's property.  However, there was no evidence of soil contamination in the area where the defendant's expert postulated that a spill had occurred.  Considering all of the evidence, Justice Leitch concluded that the contamination came from the defendant's property: "There is no question that until 1989 leaded gasoline was stored on the "Defendant" Property in single-walled steel tanks, which were susceptible to corrosion and did not have a leak detection system."  She found the defendant liable on the basis of strict liability, nuisance, negligence and trespass.

What I find to be most interesting about the decision is the issue of damages.  Justice Leitch agreed with the plaintiff that it should be awarded $3.6 million, which is the estimated cost of remediation, including soil and groundwater remediation.  In addition, she awarded out-of pocket costs already incurred, bringing the total damages award up to about $4.8 million.  However, I was not able to see any reference in the decision to the actual value of the Plaintiff's property.  Although the Plaintiff did include a claim for loss of property value in its lawsuit, it did not pursue that claim at trial.  In reading the decision, I was expecting to see a discussion of the cost of the proposed remediation in relation to the value of the property as part of an analysis of the reasonableness of the damages award.  Perhaps the value of the property (including the retail operation) was so much greater than the cost of remediation that it was simply taken for granted that the cost of remediation was reasonable.

Read the decision at: Canadian Tire Real Estate Ltd. v. Huron Concrete Supply Ltd.

Manitoba Court determines that proposed pipeline is provincial, not federal

In a post last December, I reported about a case in Manitoba being fought over the jurisdiction of a proposed pipeline - federal or provincial.  A group of affected landowners had sought leave to appeal a decision of the Surface Rights Board and had also requested the judicial review of Manitoba's decision to approve the pipeline.  The leave to appeal matter was put on hold pending the outcome of the judicial review.  In January of this year, the Court of Queen's Bench issued its decision on the judicial review.

The landowners applied to the Court for an order declaring that the pipeline is interprovincial and, therefore, outside the jurisdiction of the Province of Manitoba.  They had previously applied to the National Energy Board (NEB) for the same order, but that application was rejected.

On the basis of the test set out in the Supreme Court of Canada decision in Westcoast Energy Inc. v. Canada (National Energy Board), the Court ruled that the Manitoba pipeline was provincial in nature and, therefore, within the jurisdiction of the Province.  The Court found that the EOG pipeline (the one at issue in the case) and the MIPL pipeline (the cross-border pipeline to which the EOG pipeline would connect) were not a single federal undertaking, and that the EOG pipeline is not integral to the operation of the MIPL pipeline.  On that basis, the EOG pipeline did not become part of the interprovincial MIPL pipeline for the purpose of determining its jurisdiction.  As the EOG pipeline is located within the boundaries of Manitoba, it is a provincial pipeline.

Read the decision at: Daniels et al v. EOG Resources et al.