AltaLink expropriated a right-of-way over a strip of land from an Alberta couple for an electrical transmission line. In a compensation hearing before the Alberta Surface Rights Board (the "Board"), the owners were denied compensation for injurious affection. The injurious affection they claimed was a loss in value of the remainder of their property that was not taken by AltaLink. The owners appealed the Board's decision to the Alberta Court of Queen's Bench and, on appeal, the Court reversed the decision of the Board and awarded the owners $125,780 in lost value plus interest.
The land in question consisted of two adjacent parcels containing approximately 230 acres, of which approximately 121 acres were cultivated. The owners had purchased the land in February, 2013 for $511,500, and they were aware at that time that AltaLink had received approval from the Alberta Utilities Commission to construct and operate the transmission line across the property. Prior to the purchase of the property, the new owners had rented the property for approximately 27 years, and it appears from the decision that they were able top purchase the property at below market value. The Board found that the market value at the time of the expropriation in 2014 (the date of valuation for the purpose of calculating compensation) was somewhere between $902,000 and $930,000.
The owners argued that the taking of the right-of-way resulted in a loss of value to the balance of the property that was not taken as right-of-way related to the presence of the right-of-way and the transmission line. They argued that their loss was not limited to the loss of value to the land as they were currently using it, but should be calculated based on their loss of ability to subdivide the property for new residential lots. But for the AltaLink right-of-way, the owners could subdivide and sell the individual lots. They put the value of their loss at 30% of the market value of the property.
The Court disagreed with the owners that the right-of-way would prevent the development of multiple residential lots, but accepted that the right-of-way would result in a loss in the value of the lots that could be created. On that basis, the Court would have calculated the compensation to be paid to the owners based on a market value loss of 15% (half of the 30% proposed by the owners), or approximately $131,000. The Court then ended by making a finding that the $125,780 that would have been awarded by the minority dissenting member of the Board (in the original hearing) was therefore reasonable and set compensation at that amount.
Taken on its own, the Court's ruling on loss of value to the remainder of the property based on loss of value of prospective subdivision lots is not remarkable. However, what is noteworthy is the Court's rejection of AltaLink's argument that no injurious affection compensation was payable at all because the market value of the property never fell below the amount the owners paid for the property. AltaLink argued, and the majority of the Board had agreed, that an award of injurious affection would result in a windfall for the owners because they had paid substantially less than market value for the property.
But the Board had incorrectly "focused on the financial loss to the landowners and not the loss in value of the remaining land ... they were suspicious that the negative impact of the transmission line had already been factored into the sale price." The Court ruled that "the fact that the Appellants purchased the land after the Respondent obtained a permit and license to build the line is of no consequence. The payment for injurious affection is based on the impact on the value of the remaining land, not the impact on the financial position of the owners. This does not result in a windfall or unjust enrichment to the Appellants because, until the line is removed, it will have a negative impact on the Land's value, which is an economic loss."
Read the decision at: Koch v Altalink Management Ltd.
Storm
Showing posts with label power transmission corridor. Show all posts
Showing posts with label power transmission corridor. Show all posts
Friday, February 3, 2017
Wednesday, December 11, 2013
Divisional Court comments on OEB approval of forms of landowner agreements
As part of its decisions to approve energy transmission projects, the Ontario Energy Board (OEB) approves the form of agreement to be offered to landowners affected by the approval. Recently, the Ontario Divisional Court decided an appeal of a decision to approve the construction of electricity transmission lines for a wind energy project in which the appellant argued that independent legal advice (ILA) clauses in the approved landowner agreements were "confusing, misleading and unfair".
The OEB may only approve a project where the applicant has satisfied the Board that it has offered or will offer to each landowner affected by the approved route, an agreement in a form approved by the Board.
The party that appealed the OEB decision was Conserve Our Rural Environment (CORE) Inc. It argued that the ILA clause in some of the 6 forms of land agreement to be approved was false and misleading because it gave the impression that the party requiring ILA was the tenant (the project proponent) rather than the landlord (the landowner). ILA was to be obtained by the tenant even though it was the tenant who had prepared the agreements.
The Divisional Court determined that the appeal was not on a question of law or jurisdiction, which was the only basis on which the appeal could be made. The OEB's authority to approve the form of contract is discretionary, and an arguably unreasonable exercise of discretion is not an error of law or jurisdiction. Therefore, the Court dismissed the appeal.
In the event that it was wrong in this determination, the Divisional Court also went on to decide the appeal as if a question of law or jurisdiction had been raised. It found that the applicable standard is one of reasonableness, and it found that the decision of the OEB was reasonable. The Court stated, "It is important to understand that what the Board approved was a form of agreement which is the subject of subsequent negotiation between the parties. It represents terms from which the party propounding the project may not unilaterally resile."
Read the decision at: Conserve Our Rural Environment v. Dufferin Wind Power Inc.
The OEB may only approve a project where the applicant has satisfied the Board that it has offered or will offer to each landowner affected by the approved route, an agreement in a form approved by the Board.
The party that appealed the OEB decision was Conserve Our Rural Environment (CORE) Inc. It argued that the ILA clause in some of the 6 forms of land agreement to be approved was false and misleading because it gave the impression that the party requiring ILA was the tenant (the project proponent) rather than the landlord (the landowner). ILA was to be obtained by the tenant even though it was the tenant who had prepared the agreements.
The Divisional Court determined that the appeal was not on a question of law or jurisdiction, which was the only basis on which the appeal could be made. The OEB's authority to approve the form of contract is discretionary, and an arguably unreasonable exercise of discretion is not an error of law or jurisdiction. Therefore, the Court dismissed the appeal.
In the event that it was wrong in this determination, the Divisional Court also went on to decide the appeal as if a question of law or jurisdiction had been raised. It found that the applicable standard is one of reasonableness, and it found that the decision of the OEB was reasonable. The Court stated, "It is important to understand that what the Board approved was a form of agreement which is the subject of subsequent negotiation between the parties. It represents terms from which the party propounding the project may not unilaterally resile."
Read the decision at: Conserve Our Rural Environment v. Dufferin Wind Power Inc.
Tuesday, January 24, 2012
Alberta Court rules in favour of landowner over crossing agreement
In 1948, CPR and Calgary Power Ltd. reached an agreement providing Calgary Power with the right to place three towers carrying power transmission wires on and over CPR property abutting the north side of 10th Avenue S.E. in the City of Calgary. The agreement also provided that either party could terminate the agreement by giving three months' notice, and on termination Calgary Power would be obligated to remove the towers and wires and make good any damage caused to the property. If the removal did not happen within one month of termination, CPR could undertake the work itself at the expense of Calgary Power or take ownership of the towers and wires. Under the agreement, Calgary Power was to pay to CPR an annual rental of $40.00.
Flash forward to more recent times. The power transmission facilities on the property have been expanded. The original agreement and subsequent amending agreements have been assigned by Calgary Power to a company called Enmax. CPR has sold its lands to a development company called Remington. Remington wanted to develop the former CPR lands and advised Enmax of the plans. Enmax told Remington that a 20 metre utility right-of-way would be required and that Remington would need to bear the cost of any changes, including the conversion of the overhead power lines to underground lines.
Remington's response to Enmax was to provide a notice of termination under the existing agreements. Enmax was directed to vacate the Remington lands (the former CPR lands) on or before June 30, 2005. Despite that direction, Enmax has refused to remove the transmission towers and lines from the lands. Remington says that its development will be severely compromised with the continued presence of high voltage transmission lines. It believes such a continued presence will acutely influence potential purchasers or tenants in its intended mixed use residential/commercial development.
Remington applied to the Court of Queen's Bench for orders requiring Enmax to vacate the lands. Enmax argued in response that the agreements between CPR and Calgary Power were personal contracts between a railway company and a utility company and could not be assigned to Remington without the consent of Enmax. There were also questions raised about whether the agreements actually created true rights-of-way or whether the rights granted were simply a personal licence which could not be assigned or transferred.
The Court found that the agreements did create utility rights-of-way, which through legislation were not subject to all of the Common Law rules surrounding valid easements and rights-of-way. Further, the Court ruled that if it was wrong about the nature of the agreements, and they did create mere licences, CPR still had the right to assign the agreements to Remington without the consent of Calgary Power or Enmax.
For those reasons, the Court found that Remington was entitled under the agreements to terminate and require Enmax to remove its facilities. Of course, that dealt only with the private relationship between the parties. The transmission facilities are also subject to public regulation by the Alberta Utilities Commission (AUC). The Court directed Enmax to make an application to the AUC to remove the transmission lines, and ruled that the lines could not be removed or relocated in the absence of an order from the AUC.
This decision is reminiscent of an earlier Alberta Court decision involving a landowner named Randolph Hill. He purchased land from a railway company and was assigned an agreement that gave him the right to require a pipeline company to remove its pipeline. The Court agreed that he had that right, but then the company simply went to the National Energy Board and obtained a Right of Entry Order. The ROE Order now permits the pipeline to remain in place and, further, allows the company to abandon the line in place.
Hill will no doubt be seeking compensation for this expropriation of his rights under the agreement. It will be interesting to see how much those rights are worth. What would someone pay for an agreement that would allow them to free their lands from the encumbrance of a pipeline corridor? That has to be worth a lot on the open market. Remington may very well find itself in a similar position. The AUC may decline to order the removal of the transmission lines, in which case Remington's rights under the CPR agreements will have effectively been expropriated.
Read the decision at: Remington Development Corporation v. Enmax Power Corporation.
Flash forward to more recent times. The power transmission facilities on the property have been expanded. The original agreement and subsequent amending agreements have been assigned by Calgary Power to a company called Enmax. CPR has sold its lands to a development company called Remington. Remington wanted to develop the former CPR lands and advised Enmax of the plans. Enmax told Remington that a 20 metre utility right-of-way would be required and that Remington would need to bear the cost of any changes, including the conversion of the overhead power lines to underground lines.
Remington's response to Enmax was to provide a notice of termination under the existing agreements. Enmax was directed to vacate the Remington lands (the former CPR lands) on or before June 30, 2005. Despite that direction, Enmax has refused to remove the transmission towers and lines from the lands. Remington says that its development will be severely compromised with the continued presence of high voltage transmission lines. It believes such a continued presence will acutely influence potential purchasers or tenants in its intended mixed use residential/commercial development.
Remington applied to the Court of Queen's Bench for orders requiring Enmax to vacate the lands. Enmax argued in response that the agreements between CPR and Calgary Power were personal contracts between a railway company and a utility company and could not be assigned to Remington without the consent of Enmax. There were also questions raised about whether the agreements actually created true rights-of-way or whether the rights granted were simply a personal licence which could not be assigned or transferred.
The Court found that the agreements did create utility rights-of-way, which through legislation were not subject to all of the Common Law rules surrounding valid easements and rights-of-way. Further, the Court ruled that if it was wrong about the nature of the agreements, and they did create mere licences, CPR still had the right to assign the agreements to Remington without the consent of Calgary Power or Enmax.
For those reasons, the Court found that Remington was entitled under the agreements to terminate and require Enmax to remove its facilities. Of course, that dealt only with the private relationship between the parties. The transmission facilities are also subject to public regulation by the Alberta Utilities Commission (AUC). The Court directed Enmax to make an application to the AUC to remove the transmission lines, and ruled that the lines could not be removed or relocated in the absence of an order from the AUC.
This decision is reminiscent of an earlier Alberta Court decision involving a landowner named Randolph Hill. He purchased land from a railway company and was assigned an agreement that gave him the right to require a pipeline company to remove its pipeline. The Court agreed that he had that right, but then the company simply went to the National Energy Board and obtained a Right of Entry Order. The ROE Order now permits the pipeline to remain in place and, further, allows the company to abandon the line in place.
Hill will no doubt be seeking compensation for this expropriation of his rights under the agreement. It will be interesting to see how much those rights are worth. What would someone pay for an agreement that would allow them to free their lands from the encumbrance of a pipeline corridor? That has to be worth a lot on the open market. Remington may very well find itself in a similar position. The AUC may decline to order the removal of the transmission lines, in which case Remington's rights under the CPR agreements will have effectively been expropriated.
Read the decision at: Remington Development Corporation v. Enmax Power Corporation.
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