Just Freehold Energy Corp. v. Doef's Greenhouses Ltd. et al., 2023 ABKB 137

Court of King’s Bench of Alberta Citation: Just Freehold Energy Corp. v. Doef's Greenhouses Ltd. et al., 2023 ABKB 137 Date: 20230328 Docket: 2201 14380 Registry: Calgary Between: Just Freehold Energy Corp. Applicant - and - Doef's Greenhouses Ltd., EnerMerge Inc., and EnerMerge OPS Inc. Respondents Corrected judgment: A corrigendum was issued on March 27, 2023; the corrections have been made to the text and the corrigendum is appended to this judgment. _______________________________________________________ Endorsement of the Honourable Justice P.R.

Jeffrey _______________________________________________________ [ 1 ] Just Freehold Energy Corp. applies for an interim injunction to immediately end what it says has been, and continues to be, a trespass on its land (the “ Land ”). JFE leases the Land from the Respondent Doef’s Greenhouses Ltd. (“ Doef’s ”).

JFE is owned by BTG and one or both are successors to or affiliates of Horseshoe Power GP Ltd. (collectively, “ JFE ”). [ 2 ] JFE says the Respondents (Doef’s and the two EnerMerge companies) were involved in constructing a buried natural gas pipeline across the Land, without JFE’s consent. [ 3 ] I find as facts the following:

(

a) JFE has a valid and subsisting lease to the Land. (

b) The Respondents constructed and now operate a buried natural gas pipeline across the Land. (

c) JFE expressly objected to the construction of the pipeline on its Land. The Respondents nevertheless continued the work. The RCMP attended the Land and required the work cease. It did. Two days later construction work resumed. (

d) Other routes for the pipeline were available that would not use the Land, but the Respondents persisted with the route across the Land, later saying only that to them it “made the most sense”. (

e) There is no regulatory finding that the pipeline serves the public interest and necessity such that the routing of the pipeline across JFE’s Land enjoys some regulatory approval that might override JFE’s property rights. Similarly, there is no right of entry order or surface rights order that would override JFE’s property rights. (

f) To construct the pipeline, one or more of the three Respondents, or their agents, were on the Land. (

g) During construction one or more of the three Respondents, or their agents, disturbed, displaced, and reconfigured some of the Land. (

h) Since the construction, the pipeline has been placed into service and actively moves natural gas from off the Land, across the Land, and into a commercial greenhouse beyond the Land that is operated by Doef’s. (

i) Like the pipeline, the natural gas it transports is not the property of JFE but passes through JFE’s Land. (

j) Doef’s greenhouse has been supplied electrical energy from offsite generation, the arrangements for which have been the subject of litigation that involves these parties and/or their affiliates. The supply of electricity has become intermittent and less reliable. (

k) These trespass-related issues are occurring amid ongoing other litigation among the parties, their affiliates, and their predecessor corporations. That prevailing litigation appears to impair the parties’ ongoing commercial relationships.

There is a sense that the parties’ conduct in this pipeline dispute are part of their jockeying for position in that broader context, but neither party has persuaded me how that may be so, and if so, that it is relevant to this injunction application. [ 4 ] The Respondents oppose my granting an interim injunction saying, first, that there is no trespass here because JFE consented to their use of the Land or in the alternative, second, that their evidence and arguments on consent have sufficient merit that JFE does not have a “strong prima facie case” of trespass.

This is the standard JFE must meet on the first part of the 3-part injunction test (a strong prima facie case of trespass) to have an easier burden to meet on the remainder of the 3-part test for an injunction.

The Respondents say their evidence and arguments that JFE consented will prevail, but if not they at least show JFE does not have a strong prima facie case of trespass. [ 5 ] The interim injunction application was heard January 18 and 20, 2023. [ 6 ] The next business day, January 23, Doef’s wrote asking me to suspend consideration of the application in order to receive additional evidence (the “ Fresh Evidence ”). A further letter from Doef’s described the Fresh Evidence and explained how it said the Fresh Evidence satisfies the Palmer test. I address this threshold issue first.

Fresh Evidence [ 7 ] The proposed Fresh Evidence was described exactly as follows in the letter from Doef’s counsel: 1. On the afternoon of the 19th of January, the only remaining operational generator (DG5) went out of service, with reason being unknown at the time. The generator remained un-operational until January 27th. The only resource supplying heat to the greenhouse, including the housing and infrastructure owned by BTG, was the gas through the newly installed DGL gasline to DGL’s boilers in the facility. 2.

DG5, although, brought back into operation on the 27th, has since then been intermittently shut down, due to

what DGL surmises, are low power prices making operation of the generator unprofitable. 3. In addition, the Just gasline which runs into the power plant connected to the greenhouse, has an ancillaryvalve that was intended to provide gas to DGL’s boilers. This valve has now been padlocked in the closed position. [8] Doef’s’ letter gave the following reasons for the Fresh Evidence satisfying the Palmer test (from Palmer v The Queen, (SCC), [1980] 1 SCR 759): 1. Evidence should generally not be admitted if, by due diligence, it could have been adduced at trial. 2. The events described in the

summary above occurred during and immediately following the final day ofargument and continue at present. The evidence could not have been adduced during the course of proceedings. 3. The evidence must be relevant in the sense that it bears upon a decisive or potentially decisive issue in thetrial. 4. It is respectfully submitted that the evidence is relevant and bears directly on the issue of balance ofconvenience currently sub judice. 5. The evidence must be credible in the sense that it is reasonably capable of belief; and 6.

The evidence will lead in affidavit form and to some extent will include photographic evidence. 7. The evidence must be such that if believed it could reasonably, when taken with the other evidence adducedat trial, be expected to have affected the result. 8. Given the nature of the evidence, along with that which is currently before the Court, it is submitted that isfresh evidence could affect the result in terms of the Court’s consideration of the balance of convenience. [9] I disagree that the Fresh Evidence described satisfies the Palmer test.

Regarding criterion number 1. above, the loss of powerfrom the DG5 generator was known mid-way through the split hearing of the injunction application. The hearing began Wednesdayafternoon and, though booked for a half day, had to be continued for another half day Friday morning. The outage mentioned in theFresh Evidence occurred on the Thursday between the two halves of the hearing, before Doef’s counsel had finished his turn addressingthe Court. The Court could have been apprised of the development at the hearing, and the evidence could have been adduced at thehearing.

Further, the DG5 generator was back in service by January 27so that by the time counsel for Doef’s responded by letter to theCourt’s questions about the proposed Fresh Evidence, the outage had been resolved. [10] More significantly, the proposed Fresh Evidence does not satisfy criterion number 2. of the Palmer test. The decisive issue onthis application that permissible fresh evidence must bear on, is the strength of JFE’s position as to a trespass (or lack thereof) –specifically, whether any of the Respondents had JFE’s consent to cross the Land with the pipeline. The Fresh Evidence is irrelevant tothat issue.

There is no apparent link between the reliability of the current supply of electrical energy and the right of Doef’s to trespassonto the Lands (if it did) to construct a back-up supply of natural gas energy. [11] The Fresh Evidence would not alter my conclusion on the interim injunction application and therefore I am not prepared tostand down my deliberation and decision in order for the parties to extend the legal process debating the admissibility of the FreshEvidence. Doing so would be futile. [12] Doef’s argues the Fresh Evidence bears directly upon the balance of convenience component of the injunction test.

This mightbe true, but only while the named generator going out of service remains out of service. It did not remain out of service. That issueresolved January 27. To the extent there may be other causes of intermittent electricity service, those are commercial matters outside thescope of this interim injunction application. The dispute is about land use.

The reliability of other energy sources is not relevant to thatquestion. [13] Further, trespassing by an illegally placed pipeline (if that is what it is) does not become legal by virtue of extenuatingemergent circumstances that only have adverse private commercial effects (as opposed to, for example, trespassing to come to the aid ofsomeone in imminent risk of harm). Private commercial implications are typically addressed by proactive mitigative steps or riskreduction measures, not by trespass. [14] Criterion 3. of the Palmer test is not a factor here.

For the purposes of deciding whether to invite the parties to embark onfurther legal process about Doef’s requested Fresh Evidence, I have assumed it to all be credible and reasonably capable of belief. [15] Regarding criterion 4. of the Palmer test, I disagree that the Fresh Evidence can “be expected to affect the result”. First, asdescribed above, it is not relevant to the core issue on the interim injunction application (the strength of JFE’s case on trespass given theRespondents’ position JFE consented).

Second, criterion 4. sets a high bar: “reasonably … expected” to affect the result not “reasonablymight” affect the result. Here that high standard is not possible since the Fresh Evidence does not bear on the core issue. Even if theinterim injunction application were to turn on the balance of convenience, which it does not, the Fresh Evidence would not be sufficientto overcome the reasons I describe below for the balance of convenience favouring JFE. [16] Therefore, I decline Doef’s request to admit the Fresh Evidence onto the application record.

Tri-partite Test for Interim Injunction [17] I find JFE has demonstrated a strong prima facie case of trespass. [18] JFE’s lease is valid and entitles it to exclusive access to and use of the Land. The pipeline of the Respondents enters and

crosses that Land, and now continues to pass through it natural gas not owned by JFE. [ 19 ] There is insufficient merit to the Respondents’ protestations that they received JFE’s consent to the use of its Land or its “tacit consent” or that JFE implied it consented, to erode the strength of JFE’s claim of trespass to less than a strong prima facie case. [ 20 ] The Respondents have no documented consent from JFE.

No record of any kind that shows JFE consented has been produced, nor do the Respondents say one exists. [ 21 ] The Respondents say consent was given on JFE’s behalf orally, from Mr Murray who at the time was able to bind JFE’s interests. Yet this is impossible, since the timing of that purported consent predated the first contemplation of the pipeline and its routing across the Land.

The pipeline and its routing was contemplated at the earliest near the beginning of 2022; Mr Murray ceased his position with authority to bind JFE in July 2021. [ 22 ] The Respondents say their understanding of early arrangements was that there would be an “energy corridor” through JFE’s Land, and that was before the contemplation of the specific pipeline at issue.

However, (1) this concept of an energy corridor was only asserted much later in the legal process around this interim injunction application, not mentioned in the exchanges of information around the time of the first entry (at that time the Respondents’ efforts were trying to find a basis for asserting the lease was invalid – not that there was consent to the pipeline previously or to an energy corridor previously, and next the Respondents took the position they did not need JFE’s consent – which is a position inconsistent than this current argument that they have consent to an energy corridor), (2) there is no reference to any such corridor in the notice to JFE of the intended construction, (3) there is no written record of any such consent, (4) any such corridor for third party energy suppliers’ use makes no commercial sense for JFE (or its owner BTG) to have agreed to, since by consenting BTG would be undermining its position as sole energy supplier, and (5) any genuinely held understanding by the Respondents of consent to such an energy corridor would have been vanquished upon JFE’s written disapproval of any such use of its Land, which JFE communicated clearly and unequivocally before the trespass commenced.

I find there was no such energy corridor consented to by JFE. [ 23 ] The late in the day assertion of pre-existing consent to an energy corridor appears to be another in a series of after the fact rationalizations of the trespass, none borne out on the evidence. It is not unlike the Respondents’ very initial strategy in saying JFE’s lease was not valid.

After saying the lease was not valid, Doef’s requested a copy of the lease from JFE and then later requested JFE answer various questions about the history under the lease, all appearing to be looking for some basis in support of its earlier declaration the lease was no longer valid. That position was never substantiated by the evidence, was cogently refuted by JFE, and was not mentioned again by the Respondents as the legal process unfolded.

The Respondents moved on to other grounds to overcome their apparent trespass. [ 24 ] The Respondents appear unhappy that the pipeline routing they think is most sensible and suitable to them has not been permitted by JFE and so they are attempting by whatever arguments possible to justify after the fact their trespass.

All the evidence suggests JFE is correct, that the Respondents ignored JFE’s opposition to the entry upon its Land and seeks now to avoid the consequences of that unlawful disregard. [ 25 ] Any “tacit consent” as asserted by the Respondents did not survive beyond the time when JFE made it very clear it did not consent, prior to the first entry upon the Land with the pipeline construction. [ 26 ] The Respondents argue that there is no trespass because trespass requires an intrusion on exclusive rights and here there are none in respect of the Land.

Any assumed consent, based on the Respondents using the land for other purposes, like the Respondents regularly and frequently driving to the greenhouse across JFE’s Land, do not constitute JFE’s acquiescence or waiver entitling the Respondents to place and operate the pipeline on the Land, and certainly not beyond the time when JFE made it very clear it did not consent to the pipeline use of their Land. JFE made that clear prior to the first entry upon the Land with the pipeline construction.

Overlooking some trespasses, especially episodic nominal or de minimis trespasses, does not lose a landowner its right to protect against all other trespasses. Reciprocally, a landowner taking no issue with one kind of third party use of the land is not a permission for every other possible use by them thereafter. [ 27 ] Doef’s counsel conceded in his arguments that Doef fully expected the plaintiff [JFE] would say it did not consent and so Doef’s just gave notice and never asked for consent.

Under oath the Respondents rationalized their decision on the basis that, simply, “it made the most sense.” In forging ahead without consent, and in the face of JFE’s repeated express opposition, the Respondents’ trespass appears intentional, not accidental, deliberate, not considerate. [ 28 ] The Respondents point to the presence of other commodity supply lines proximate to their pipeline, and to other permitted uses of the Land by them.

They note that JFE’s well on the Land having been idle, disconnected from JFE’s pipeline for carrying production away from the well, and that the JFE delivery pipeline is in process of abandonment. None of that matters. It does not matter that the Respondents’ pipeline is close to the edge of the Land, rather than through the middle of it.

It does not matter that the prospect of JFE reviving and reconnecting its well is extraordinarily remote or that its ability to control vegetation/weeds around it are in no meaningful way impaired or that JFE has not demonstrated any planning to abandon its idle hydrocarbon production well and to reclaim the Land any time soon. [ 29 ] It does not matter for this issue of trespass that some other supplier of energy has threatened to cease that supply.

The evidence is clear that the pipeline could have served its objective without trespassing on JFE’s Land. [ 30 ] JFE has demonstrated a strong prima facie case of proving on a balance of probabilities that the Respondents have and continue to trespass on JFE’s Land. [ 31 ] On the basis of the foregoing, an injunction is typically automatic. It is characteristically awarded in circumstances where the trespass is a continuing one. [ 32 ] Injunctions are a form of equitable relief. Equity follows the law. The law upholds valid contractual agreements, like leases.

The courts typically enforce contracts, not under the guise of equity protect those who deliberately breach them, especially when they have alternatives to accomplish their purposes that do not require the breach. [ 33 ] Trespassing is presumed to cause irreparable harm; it is not necessary to prove de facto harm. Property rights are sedulously protected. To say the trespass can be remedied later, after a trial, is to suggest property can be expropriated unilaterally without statutory authority.

It cannot be. [ 34 ] In any event, JFE has demonstrated sufficient and irreparable harm by the impairment to its ability to satisfy regulatory requirements ties to its own uses of the Land and exposes it to risk of liability if it did nothing and then the high pressure natural gas pipeline impedes emergency access to other assets on the Land. [ 35 ] The balance of convenience favours JFE. The balance of convenience seeks to maintain the status quo as it existed before the alleged and apparent trespass.

Any adverse consequences on the Respondents of granting the interim injunction were entirely avoidable by the Respondents constructing its pipeline along any of the other alternative routes that did not involve the use of JFE’s Land. Therefore, any inconvenience faced by the Respondents if I grant the interim injunction appears to be of their own making; it was entirely avoidable. [ 36 ] JFE has demonstrated that the adverse impact of the trespass absent an interim injunction is greater than the impact on Respondents of an interim injunction.

The Respondents’ assertions of harm it will suffer if the injunction is granted did not hold up under cross-examination. The evidence suggests, rather, that the Respondents have made arrangements for, and operated for a long time upon, other sources of energy. [ 37 ] Finally, JFE has supplied the requisite undertaking as to damages, such that any loss to the Respondents occasioned by the granting of the requested interim injunction will only be short term if JFE fails to succeed on the final injunction application despite its strong prima facie case on this record.

Conclusion [ 38 ] For these reasons, I grant an interim injunction. [ 39 ] Even if I received the Fresh Evidence onto the hearing record as described, and assumed it all to be credible and accurate, I would still grant the interim injunction. The Fresh Evidence does not affect the compelling merits of the requested interim injunction. [ 40 ] The Respondents must immediately cease accessing the pipeline across the Land, cease use of the pipeline, and cease the flow of natural gas within the pipeline.

They are not required to purge the gas left in the line upon its shutdown, except if it becomes necessary for safety reasons or it is done as part of the process of removing the pipeline from the Land. In either case, JFE’s prior written consent is required. Not limiting the generality of that last requirement, JFE’s consent is required, acting reasonably, on the substance that is used to replace the gas stranded within the pipeline. [ 41 ] I do not order the immediate removal of the pipeline by the Respondents. That would invite its further trespass.

It shall be JFE’s decision whether to remove the pipeline, if so to dictate how and when to do so, and to oversee the actual work of removal. All reasonable costs of that removal shall be reimbursed by the Respondents or any one or more of them. Those costs must be paid in full no later than by the time all other court issues between the parties conclude. [ 42 ] It may be prudent for JFE to delay any removal of the pipeline until after a final determination of this trespass and injunction claim of JFE. But that is its choice.

If JFE delays the removal beyond the later of (i) 5 years from the date of this decision and (ii) 1 year after the final conclusion of all lawsuits among these parties, then its costs of removal shall no longer be the responsibility of the Respondents.

Any net salvage value of the pipeline after removal prior to the ‘later of’ date shall be the property of the Respondents. [ 43 ] Until the pipeline is removed, the Respondents may not access it without the written consent of JFE, such consent to not be unreasonably withheld. [ 44 ] Nothing in this decision should be construed as overriding or relieving the parties from complying with any regulatory requirement applicable to the pipeline, its contents, its operation, its abandonment and its removal. [ 45 ] Any other concerns or clarifications needed in respect of this decision may be addressed in open Court by arranging for that through my assistant, provided it occurs within 90 days.

Heard on the 18 th , 20 th and 27 th days of January, 2023. Dated at the City of Calgary, Alberta this 9 th day of March, 2023. P.R. Jeffrey J.C.K.B.A.

Appearances: Ryan Phillips Matthew Scott for the Just Freehold Energy Corp. Tom Stepper for the Doef’s Greenhouses Ltd. Tyler Derksen for the EnerMerge Inc. & EnerMerge OPS Inc. _______________________________________________________ Corrigendum of the Endorsement of The Honourable Justice P.R. Jeffrey _______________________________________________________ [1] Correction to Paragraph 27 now reads “ the Respondents’ trespass appears intentional not accidental, deliberate not considerate. ” [2] Correction to Paragraph 34 now reads “ requirements tied to its own uses of the Land ”