Imperial Oil Ltd v Alberta (Minister of Transport), 2023 ABKB 115

Court of King’s Bench of Alberta Citation: Imperial Oil Ltd v Alberta (Minister of Transport), 2023 ABKB 115 Date: 20230228 Docket: 2003 16325 Registry: Edmonton Between: Imperial Oil Ltd Plaintiff - and - His Majesty the King in Right of the Province of Alberta, as represented by the Minister of Transport and the Town of Drayton Valley Defendants _______________________________________________________ Memorandum of Decision of the Honourable Justice J.M.

Ross _______________________________________________________ Introduction [ 1 ] The Plaintiff Imperial Oil Limited (Imperial) describes its action and application as follows: Her Majesty the Queen in right of Alberta as represented by the Minister of Transportation (the Crown) and the Town of Drayton Valley (the Town) have constructed a road on land owned by [Imperial]. Imperial did not consent to the construction of the road and first became aware of the road after construction was completed. The road has since been in continuous use by the public.

The Crown and the Town both refuse to purchase or expropriate the land pursuant to the statutory process, which should have been properly done prior to completion of the road.

Accordingly, Imperial has been forced to commence civil claims for trespass and nuisance. This application seeks

summary judgment against the Crown and the Town relating to the claims, as well as injunctive and/or declaratory relief requiring the Crown and Town purchase or expropriate the land or in the alternative, remove the road and restore the land. [ 2 ] The Crown resists Imperial’s application, and by cross-application seeks

summary dismissal of Imperial’s claim against it. The Crown asserts that it did not construct or direct construction of the road, and therefore cannot be held liable for Imperial’s damages. [ 3 ] The Town resists both Imperial’s application for

summary judgment against the Town, and the Crown’s application for

summary dismissal against Imperial. The Town argues that the record is insufficient to determine whether the construction of the road was undertaken by the Crown or the Town or both. Alternatively, if

summary judgment is granted against the Town, the Town seeks leave to preserve and protect its claim against the Crown for indemnity and contribution in accordance with its Notice of Claim against Co-Defendant. [ 4 ] This application was originally heard on December 7, 2022. It was adjourned to January 30, 2023, for the parties to explore the terms on which an expropriation proceeding might be commenced by the Town, with issues regarding the responsibility for payment between the Town and the Crown to be resolved at a later date, by Court order or settlement.

On January 30, 2023, the parties advised that they were unable to reach agreed terms for the commencement of expropriation proceedings; however, they had narrowed the issues raised in relation to the remedies sought by Imperial. That partial agreement will be reflected in the remedies

section of this decision. Evidence on the Application and Cross-Application [ 5 ] Imperial filed the affidavit of Mary Teasedale, Regional Portfolio Manager with Imperial. Ms. Teasedale was cross- examined on her affidavit and provided an answer to undertaking. The Crown filed two affidavits of Milo Steele, Property Manager with the Crown. Mr. Steele was also cross-examined on his affidavits and provided answers to undertakings. The Town filed no evidence in response to the application against it, but did cross-examine both Ms. Teasdale and Mr.

Steele. [ 6 ] In addition to the affidavits filed, the parties exchanged affidavits or records and had the opportunity to review and consider all relevant records produced. Facts [ 7 ] The land in question is located at 5816 50 th Avenue, Drayton Valley, Alberta (the Land). This was the site of a service station that was decommissioned in 2004-2005. [ 8 ] Prior to construction of the road that is the subject of Imperial’s action, the Land lay to the north of 50 th Avenue and east of a park reserve. Both 50 th Avenue and the park reserve are under the control and management of the Town.

Highway 22, a provincial highway in the control and management of the Crown, is located on the other side of the park reserve. [ 9 ] After construction of the road, a portion of 50 th Avenue is situated on the Land. 2006-2008 Communications between the Crown and Imperial [ 10 ] In September 2006, Lynn Murtha, property agent for the Crown, forwarded to Scott Pattyson, real estate manager for a subsidiary of Imperial, a plan showing right of way requirements for a new road proposed to provide an improved intersection at the junction of Highway 22 and 50 th Avenue (the Plan).

The Plan indicated that 0.22 acres of the southern portion of the Land would be required. Ms. Murtha forwarded to Mr. Pattyson a draft offer to sell the required portion of the Land. [ 11 ] Mr. Pattyson replied that the road construction as shown on the Plan would impede access to the remaining portion of the Land, and Imperial would need to enter into an access agreement with the adjoining landowner. Ms. Murtha advised that this was not the Crown’s intent and she would provide a revised plan with access to the Land, if this was possible. [ 12 ] In April 2008, Ms. Murtha and Tom Wisener, Mr.

Pattyson’s successor at Imperial, continued discussions regarding the access issue, and the purchase and sale. They agreed that each party would obtain an appraisal. [ 13 ] In June 2008, the Crown and Imperial exchanged appraisals. The Crown appraisal report, which addresses the "area required” indicated that the Crown would need to purchase the entirety of the Land. The report states: The proposed roadway widening requires a triangular area of land along the south and southwest portions of the parcel. The area required consists of 0.22 acres of open developed land.

The land required consists of much of the developable land on the subject property. In addition the taking would limit access to the subject property which would greatly hinder its development as a commercial property. Due to these issues the entire 0.84 acre lot will be acquired instead of just the required 0.22 acre area. [ 14 ] Mr. Wisener subsequently requested updates from the Crown, but did not receive a response. Memorandum of Agreement between the Crown and the Town [ 15 ] On August 1, 2008, the Crown and the Town entered into a Memorandum of Agreement regarding the Project.

Imperial was not a party to the Memorandum of Agreement nor aware of it until it was produced in this action.

[ 16 ] The Memorandum of Agreement provided in a

preamble: • The Town had proposed construction of Highway 22/50 th Avenue intersection improvements; • Ownership of the Highway is vested in the Crown; • Under

section 12 of the Public Highways Development Act, the Minster of Transportation may enter into an agreement with a municipality for the construction of highways within its boundaries; • The Minister, as a condition to the use of provincial funds for the construction of the highway, deemed it necessary to enter into an agreement with the Town to ensure the preservation and protection of the Highway as an efficient means of transportation. [ 17 ] The Memorandum of Agreement went on to provide that the Town would fund 100% of the cost of construction of the “Intersection Improvements of the Highway as shown in the [Plan]...in accordance with the detailed plans and specifications as required by the Minster (the Project). [ 18 ] Upon written approval of the Minister, the Town would administer a public tender to award a contract for the Project, and “before awarding the contract the [Town] shall submit to the Minister for his written approval its recommendations respecting such awarding together with details of all tenders received”. [ 19 ] The Crown would pay 100% of the costs of the contract for the Project work to a maximum amount in an attached

Schedule of Costs.

Cost overruns would require approval of the Minister. [ 20 ] The Minister had the right to inspect cost records, the work, and materials used in the Project and had “the right to require any modification or alteration in the Project to ensure its completion in accordance with the specifications. [ 21 ] The Town was responsible to administer the Project. [ 22 ] Upon completion of the Project, the Town would allow “free and complete use of the Highway”. 2009-2015 Completion of construction and further communications [ 23 ] In September 2009, Imperial became aware that the road had been constructed on the Land. Mr.

Wisener contacted Ms. Murtha and demanded that further work cease. Ms. Murtha advised that the Town had erroneously proceeded with construction of the road in August 2008, with funding from the Crown. She also advised that the Crown would purchase the entirety of the Land. [ 24 ] On January 21, 2010 counsel for Imperial advised Ms. Murtha that Imperial would consider an offer from the Crown to purchase the entirety of the Land. [ 25 ] On May 14, 2010, Ms.

Murtha confirmed that it was the Crown’s “intent to purchase the lands required for the Project”, and further offered to purchase the entire parcel, should Imperial wish to sell it. [ 26 ] In September 2015 Chad Grummet, property manager for Imperial, contacted Randy Buksa, property manager with the Crown, regarding the Land. He noted the 2010 offer by Ms. Murtha and that “dialogue on concluding the matter stalled inexplicably in early 2011 and no further progress was made”. He advised that Imperial wished to conclude the transaction. Mr.

Buksa responded that “after discussion and reflection we do not want to buy the entire parcel”. Mr. Grummet reiterated Imperial’s position that the entire parcel should be purchased by the Crown. [ 27 ] The email correspondence continued to October 2016, when there was an unsuccessful attempt to bring the Town into the negotiations. [ 28 ] In September 2018, Ms. Teasdale took over management of the matter, and began to negotiate with Mr. Steele. They discussed potentially resolving the matter through an agreement under

section 30 of the Expropriation Act whereby Imperial would transfer all or a portion of the Land to the Crown and proceed with an Application to Determine Compensation before the Alberta Land Compensation Board or the Court of Queen’s Bench in order to determine appropriate damages and costs. May 2020: the Crown states that civil action is appropriately addressed to the Town [ 29 ] In April 2020 Ms. Teasdale sent a letter to Mr. Steele setting out Imperial’s expectations with respect to a

section 30 agreement, and advising that if agreement was not reached, Imperial was prepared to commence legal proceedings. On May 4, 2020, Mr. Steele responded that the Crown would not enter into a

section 30 agreement, that he believed this was not appropriate as the Land was “not part of the provincial highway network and not adjacent to a provincial highway”, but situated in the Town fronting a local road and separated from Highway 22 by a strip of park reserve. He took the position that any expropriation or civil claim should be brought by or against the Town alone. Appropriateness of

Summary Judgment or

Summary Dismissal [ 30 ] Both Imperial’s application and the Crown’s cross-application are brought under Rule 7.3 of the Alberta Rules of Court. Both Imperial and the Crown take the position that the record is sufficient for purposes of Imperial’s application for

summary judgment and the Crown’s cross-application for

summary dismissal. They point out that in addition to the affidavits and cross-examinations completed for the applications, the parties have exchanged affidavits of records and had the opportunity to review all documents produced prior to

the application and cross-application. There is no suggestion that there are any other documents that would be of assistance in resolving the issues.

Given the documentary record, and the time that has passed since many of the interactions between representatives for Imperial and for the Crown, both Imperial and the Crown submit that the Court would not be in any better position to determine the issues raised following a trial. [ 31 ] Both Imperial and the Crown assert that the evidence meets the applicable standard of proving that there is no genuine issue requiring a trial: Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, 2019 ABCA 49 , at para 32 ( Weir-Jones ).

Their submissions directly contradict each other, as Imperial argues that it has proven the elements of its case for trespass and nuisance, and that there is no defence, while the Crown argues that it has proven that there is no merit to Imperial’s claims. However, they both submit that the application and the cross-application are suitable for

summary determination. [ 32 ] The Town objects that the record is insufficient to determine whether construction of the road was undertaken by the Crown or the Town or both. However, the Town did not file any evidence in response to Imperial’s application against it, despite the obligation on a respondent to a

summary judgment application to “put their best foot forward”, rather than speculate “about what might turn up in the future”: Weir-Jones at para 37 . If the Town wished to provide evidence that it did not undertake construction of the road, or that it did so jointly with the Crown, presumably it could have done so. Having chosen not to submit evidence, the burden on the Town remains that of demonstrating “a realistic prospect that a trial will create a better record”. That demonstration must be “based on the evidence… not speculation”: Weir-Jones at para 39 . The Town has not met this burden.

Its assertions are based on mere speculation. [ 33 ] I conclude that the evidence before me allows me to make the necessary findings of fact and to apply the law to the facts. I am further of the view that the application and cross-application provide a proportionate, more expeditious and less expensive means to achieve a just result. I conclude that I am able to reach “a fair and just determination on the merits” on both Imperial’s application and the Crown’s cross-application”: Weir-Jones at para 49 . Issues to be determined: [ 34 ] Imperial sets out the following issues: (

a) Are the Crown and the Town liable in trespass and nuisance? (

b) If yes, do either the Crown or the Town have a defence to liability pursuant to the: 1. Limitations Act , RSA 2000, c L-12 ; 2. Municipal Government Act , RSA 2000, c M-26 ; or 3. Proceedings against the Crown Act , RSA 2000, c P-25 ? (

c) If no, is Imperial entitled to certain injunctive and/or declaratory relief against the Crown and the Town? Are the Crown and the Town liable in trespass and nuisance? [ 35 ] The elements of the tort of trespass as set out in AM Gold Inc v Kaizen Discovery Inc, 2021 BCSC 515 , at para 337 are not disputed: There are three elements to trespass; (

a) The intrusion onto the land must be direct; (

b) The interference with land must be intentional or negligent; and (

c) The defendant’s interference with the land must be physical. [ 36 ] The evidence establishes the completion of a construction project to improve the intersection of 50 th Avenue and Highway 22. The Plan for the project indicated that a new road was to be constructed which would lie in part on the Land owned by Imperial. Aerial photographs and surveys after construction show the completed Project, with part of 50 th Avenue now located on the Land. [ 37 ] Construction of a road on the Land constitutes a direct intrusion.

The interference with the Land appears to have been intentional in that the Plan for the Project specifically contemplated placement of the new road on the Land, and negotiations were undertaken between the Crown and Imperial prior to the construction regarding a purchase by the Crown of all or a portion of the Land, for the purposes of the Project. Alternatively, if the Town, which was not involved in those negotiations, was unaware that the new road would be sited on the Land, the interference was negligent. The interference with the Land is physical.

The road is physically located on a portion of the Land, and the evidence is that with the presence of the new road, Imperial no longer has legal access to the remaining portion of the Land. [ 38 ] The evidence proves that the Town was involved in the construction. The construction took place on lands under the management and control of the Town. The Town entered into a Memorandum of Agreement with the Crown on August 1, 2008 regarding construction of the Project, and the construction was completed in 2009.

Under the Memorandum of Agreement, the Town agreed to fund the cost of construction, and the Crown agreed to reimburse costs of the construction contract to a specified maximum. The Town agreed to administer a public tender for the construction contract. The Town would award the contract, subject to approval by the Crown. The Town was responsible to administer the Project.

[39] In its brief, the Town argued that there was no direct evidence of its involvement in the construction.

However, I can drawreasonable inferences from the above circumstances, and from the Town’s failure to provide any evidence that would contradict thoseinferences, notwithstanding the Town’s obligation to provide its best case in response to Imperial’s application against it. [40] I conclude that the Town’s involvement in the construction of a road on the Land constituted a direct intrusion on the Land,that this interference with the Land was intentional or negligent, and that the interference was physical. [41] The real issue on the application and cross-application is whether the proved involvement of the Crown in the Projectamounts to trespass.

The Crown submits that its involvement was as follows: it was involved in negotiations, both before and afterconstruction, to purchase all or a portion of the Land, but the negotiations did not conclude in an agreement of purchase and sale. Itfunded the cost of construction undertaken by the Town. It was consulted by the Town in relation to the Project.

The Crown submits thatthis form of involvement does not amount to a direct intrusion or physical interference with the Land; that, effectively, the Crown did notconstruct the new road. [42] It is apparent that the Crown’s negotiating position regarding the purchase of the Land changed over time, and further that theCrown’s understanding or characterization of its involvement in the Project changed. But a change in position does not change the facts.Before and after the construction of the new road, the Crown had a direct involvement in the Project, which was independent of theTown’s involvement.

The negotiations between Imperial and the Crown from 2006 to 2015 related specifically to the Project, and toacquiring at least the portion of the Land that was required for the Project. These were not mere negotiations relating to a potentialpurchase; both before and after construction the negotiations pursued the fulfilment of a requirement for the Project. The Town was notinvolved in the negotiations during this time; the first (unsuccessful) attempt to involve the Town in negotiations occurred in 2016.

It wasnot until 2020, approximately 14 years after the Crown first contacted Imperial regarding acquiring a portion of the Land, that the Crowntook the position that Imperial should be pursuing its concerns with the Town. [43] The Crown relies on the Memorandum of Agreement to establish that its role in the Project was restricted to providing funds.But the Memorandum of Agreement indicates a much broader involvement than that. Indeed, the Crown’s witness, Mr.

Steele,acknowledged during cross-examination after being presented with the Memorandum of Agreement that the Crown also played aconsulting role on the Project. [44] In my view the Memorandum of Agreement indicates more that a consulting role, it indicates that the Crown had a direct interest in ensuring that the Project achieved its goal of improving the intersection of 50th Avenue and Highway 22, and that the Crownreserved powers under the Agreement to ensure that the Project did achieve that goal. The Crown had the right to approve or not approvethe construction contractor recommended by the Town.

The Crown had the right to inspect not only cost records, but also the work andmaterials used in the Project, and “the right to require any modification or alteration in the Project to ensure its completion in accordancewith the specifications”. The provision in the Memorandum of Agreement that, upon completion of the Project, the Town would allow“free and complete use of the Highway”, is also directed to the achievement of the Project’s goal.

The Crown was not merely aconsultant, it was involved in direction and control of the Project. [45] Construction of the road on the Land was an inherent and contemplated part of the Project undertaken by the Crown and theTown. As the construction constituted a trespass, those responsible for the direction and control of both the construction and the Projectthat required the construction, are liable in trespass. I am satisfied based on the evidence that both the Crown and the Town wereresponsible for the direction and control of the Project and the construction on the Land undertaken pursuant to the Project.

Both aretherefore liable in trespass. [46] The road remains on the Land and is in use by the public. During the hearing of the application, I was advised that no issue istaken that the continued presence of the road is a continuing trespass, and that the party or parties responsible for the construction aretherefore responsible for a continuing trespass. Given this concession it is unnecessary to consider the claim in nuisance. Is there a defence under the Limitations Act? [47] The Crown and the Town both pled the Limitations Act. However, the evidence is clear that the road has not been removedfrom the Land.

It is still present and in continuous use by the public. That is a continuing trespass, as conceded during the hearing, and sodescribed in Johnson v British Columbia Hydro and Power Authority, , at para 21 (BCSC): If a structure or other object is placed on another’s land, not only the initial intrusion but also failure to remove it constitute an actionablewrong.

There is a “continuing trespass” as long as the object remains… (Citing Fleming, The Law of Torts, 5th ed. (1977)) (See also Steward Estate v TAQA North Ltd, 2015 ABCA 357, at para 172) [48] Imperial has established that there is no defence based on the Limitations Act. Is there a defence under the Municipal Government Act? [49] The Town pled sections 527.2 and 528 of the Municipal Government Act. The statutory authority defence in

section 527.2does not apply to a cause of action based on tort.

Section 528 does not apply to torts that require a finding of intention or negligence,which the tort of trespass requires. [50] Imperial has established there is no defence based on the Municipal Government Act.

Is there a defence under the Proceedings against the Crown Act ? [ 51 ] The Crown pled the Proceedings against the Crown Act . The Act does not provide a statutory defence to liability. However,

section 17 limits the availability of injunctive relief. This is addressed in the remedies

section below.

Is Imperial entitled to injunctive or declaratory relief against the Crown and the Town? [ 52 ] The issues regarding this portion of the decision were narrowed by the parties at the continued hearing on January 30, 2023. [ 53 ] In its brief, Imperial sought mandatory injunctions against both the Crown and the Town requiring either or both of them to purchase or expropriate the Land or in the alternative, remove the road and restore the Land to its previous state. [ 54 ] During discussion at the continued hearing, the parties advised that while they were unable to agree on the terms of a direction that the Town commence an expropriation proceeding, they did agree that: • The Court should require the Town to commence an expropriation proceeding.

In light of

section 17 of the Proceedings against the Crown Act , Imperial would not pursue its claim for an injunction against the Crown; • There should be a direction from the Court to the tribunal hearing the expropriation proceeding that the expropriation is retroactive. I direct that the effective date of the expropriation is August 1, 2008, the date of the Memorandum of Agreement that set out the terms for construction to commence, and when construction commenced according to Ms.

Murtha’s communication with Imperial; • The requirement that the Town commence the expropriation proceeding is without prejudice to the Town’s claim against the Crown for indemnity and contribution in accordance with its Notice of Claim against Co-Defendant. That claim is not before the Court on this application and will have to be dealt with at a future date. [ 55 ] The parties were unable to agree whether the expropriation proceeding should relate to the entirety of the Land, or only the portion on which the road was constructed.

Imperial submitted that the Court should direct that the entire parcel be expropriated. The evidence is that the road as constructed prevents legal access to the remaining portion of the Land. This was recognized in the 2008 Crown’s appraisal report, which stated: The proposed roadway widening requires a triangular area of land along the south and southwest portions of the parcel. The area required consists of 0.22 acres of open developed land. The land required consists of much of the developable land on the subject property.

In addition the taking would limit access to the subject property which would greatly hinder its development as a commercial property. [ 56 ] Imperial submits that there is no evidence that contradicts this opinion of the Crown’s appraiser. [ 57 ] The Crown and the Town submit that the expropriation should apply to the .22 acres required for construction of the road.

Imperial could then seek compensation for injurious affection from the tribunal based on evidence as to the usability of the remaining portion of the Land. [ 58 ] The relief sought by Imperial included an injunction that the Land, not a portion of the Land, be expropriated by the Crown or the Town. The alternate relief, directing a purchase of the Land or removal of the road was not pursued, and the parties are agreed that the appropriate remedy is to direct that the Town commence an expropriation proceeding.

If the Crown or the Town wished to take issue with the relief sought, in particular to argue that any relief should relate to only a portion of the Land, it was incumbent on them to “put their best foot forward”. In other words, it was incumbent upon them to provide evidence that appropriate relief would relate to only a portion of the land. They did not do so. [ 59 ] I agree with Imperial that the uncontradicted evidence on the application supports that the relief directed appropriately relates to the entirety of the Land. Conclusion [ 60 ] Imperial’s application for

summary judgment providing that the Crown and the Town are jointly and severally liable to Imperial for trespass based on the construction and continuous presence of the road on the Land is granted. The Crown’s cross- application for

summary dismissal of Imperial’s claim against it is dismissed. [ 61 ] The remedy granted is a permanent mandatory injunction requiring that the Town expropriate the entirety of the Land. The expropriation is retroactive, effective August 1, 2008. [ 62 ] The expropriation is without prejudice to the Town’s claim against the Crown for indemnity and contribution in accordance with its Notice of Claim against Co-Defendant. [ 63 ] The parties may speak to me regarding further directions and costs if they are unable to agree.

Heard on the 7 th day of December, 2022 and the 30 th day of January, 2023. Dated at the City of Edmonton, Alberta this 28 th day of February, 2023. J.M. Ross J.C.K.B.A. Appearances: Alexandra Bochinski/Craig Brusnyk DLA Piper (Canada) LLP for the Plaintiff Andrea M. Simmonds/Tim Dooley, Alberta Justice Civil Law for the Crown Defendant James L. Hutson, DDC Lawyers LLP For the Defendant Town of Drayton Valley