Docket: CACV2628 Kenneth Ronald Rutherford v. Jennifer Rutherford, 2014 SKCA 118

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2014 SKCA 118 Date: 2014-11-18 Between: Docket: CACV2628 Kenneth Ronald Rutherford and Jennifer Rutherford Prospective Applicants - and - Husky Oil Operations Limited Prospective Respondent Coram: Whitmore J.A. (in Chambers) Counsel: Kenneth Rutherford representing himself Murray Douglas representing the Prospective Respondents Application: From: Saskatchewan Surface Rights Board Order C.B. 3/14 Heard: November 12, 2014 Disposition: Time to apply for leave extended; Leave granted with respect to reasonable apprehension of bias; Leave denied on remaining grounds of appeal Written Reasons: November 18, 2014

By: The Honourable Mr. Justice Whitmore Whitmore J.A. I. Introduction [ 1 ] The applicants, Kenneth Ronald Rutherford and Jennifer Rutherford (the Rutherfords), apply for an order extending the time within which they may apply for leave to appeal from the September 30, 2014, decision of the Saskatchewan Surface Rights Board Order C.B. 3/14. They also seek leave to appeal that order. [ 2 ] Husky Oil Operators Limited (Husky), being the prospective respondents, do not object to the Rutherfords’ application to extend the time within which to apply for leave.

Therefore, that extension is hereby granted, and I will deal only with the issue of whether leave should be granted. II. Analysis [ 3 ] The Notice of Motion seeks leave only with respect to Saskatchewan Surface Rights Board Order C.B. 3/14, but the Draft Notice of Appeal sets out that the Right of Entry Order issued by the Saskatchewan Surface Rights Board (the Board) on July 14, 2011, as E.B. 6/11 is also being appealed. [ 4 ] Significant time has elapsed since Order E.B. 6/11 was issued on July 14, 2011, and no request has been made to seek an extension of time within which to apply to appeal that order.

Further, s. 71 of The Surface Rights Acquisition and Compensation Act , RSS 1978, c S-65 (the Act ), which provides a right of appeal from decisions of the Board, expressly excludes an appeal from an order granting a right of entry: Appeal to Court of Appeal 71 Any person affected by an order, decision or determination of the board other than an order conferring a right of entry , or any person affected by an award of compensation made by the board, may: (

a) within: (

i) thirty days after the date on which the order, decision, determination or award is made; or (ii) such further time, not exceeding thirty days, as a judge of the Court of Appeal may allow upon an application made within thirty days after the date on which the order, decision, determination or award is made; and (

b) with leave of a judge of the Court of Appeal; appeal to the Court of Appeal against the order, decision, determination or award on a question of law or on a question concerning the jurisdiction of the board. (Emphasis added) [ 5 ] Therefore, leave is not granted to appeal from order E.B. 6/11. [ 6 ] Richards J.A. (as he then was) set out the criteria to consider in applications for leave to appeal under the Act in Profico Energy Management Ltd. v Watson , 2005 SKCA 57 , 262 Sask R 235 [ Profico ] and stated the following: [2] In order to obtain leave to appeal, the Applicant must cross three bridges.

First, as required by s. 71 of the Act , it must identify a question of law or a question concerning the jurisdiction of the Board. Second, it must establish that the question of law or jurisdiction is of sufficient merit to justify leave being granted.

Third, it must establish that the case is of enough importance to warrant the attention of the Court. [ 7 ] The right of appeal in s. 71 and s. 72 of the Act was further considered in Holland Estate v Husky Oil Operations Ltd. , 2008 SKCA 42 , 94 LCR 197 [ Holland Estate ], where the following was held by Wilkinson J.A.: 7 Leave can only be granted on a question of law or jurisdiction of sufficient importance to justify the appeal: Profico Energy Management Ltd. v.

Watson [2005 SKCA 57]. 8 In leave to appeal applications, the Court considers these questions on the basis of the evidence before the Board: Golden Eagle Oil & Gas Ltd. v. Richardson Farms Ltd [ (1975), 9 LCR 98 (Sask CA) ]. 9 Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests: Bue v.

Alliance Pipeline Ltd [2006 FC 713]. [ 8 ] In Schalk v Regina (City) , 2000 SKCA 140 [ Schalk ], this Court dealt with a similarly worded right of appeal under The Municipal

Board Act , SS 1988-89, c M-23.2.

Section 33.1 of The Municipal Board Act states a “person affected by an order … may appeal … against the order … on a question of law or on a question concerning the jurisdiction … with leave of a judge of the Court of Appeal.” [ 9 ] Bayda C.J.S. considered the right of appeal in s. 33.1 of The Municipal Board Act : [7] As I have noted, leave to appeal may be granted if two prerequisites are satisfied. The question must be one of law. It must be one that merits the consideration of the Court. [8] There is no doubt that in the present case the first prerequisite is satisfied.

The questions as I have recast them are clearly questions of law. It is the second prerequisite that causes the difficulty.

For a question to be sufficiently meritorious to place before the Court either the judge hearing the application for leave must have a doubt, if not a serious doubt, about whether the tribunal appealed from correctly decided the question, or the question must be of such broad importance that it deserves the attention of and the determination by a higher authority irrespective of whether the judge has any doubt about the correctness of the tribunal’s resolution. [ 10 ] Thus, Bayda C.J.S. explicitly suggests that both merit and importance are to be considered in deciding whether to grant leave to appeal. ( Schalk was decided prior to Rothmans, Benson and Hedges Inc. v Saskatchewan , 2002 SKCA 119 , 227 Sask R 121 [ Rothmans ] and Profico .) [ 11 ] In the case of Saskatoon (City) v North Ridge Development Corporation , 2013 SKCA 62 , 417 Sask R 64, Jackson J.A. considered an application for leave to appeal a decision of the Assessment Appeals Committee of the Saskatchewan Municipal Board pursuant to s. 33.1 of The Municipal Board Act .

Jackson J.A. held that the appropriate test to determine whether leave should be granted is the test established by Rothmans .

That is, whether the appeal is of sufficient merit to warrant the attention of the Court and of sufficient importance to the proceedings to warrant the determination by the Court. [ 12 ] Also, in Behenna v Rural Municipality of Rudy No. 284 , 2012 SKCA 14 , 385 Sask R 240, Lane J.A. applied the Rothmans ’s test to an application for leave pursuant to s. 33.1 of The Municipal Board Act . [ 13 ] Thus, while applications for leave to appeal under The Surface Rights Acquisition and Compensation Act have not explicitly considered the Rothmans ’s test, Richards J.A.’s decision in Profico clearly follows the Rothmans ’s criteria of merit and importance (with the additional requirement imposed by the statute that the proposed appeal be concerned with a question of law or jurisdiction).

Further, as a similar right of appeal under The Municipal Board Act has been interpreted using the Rothmans ’s test, it is appropriate that the Rothmans ’s test be applied to determine whether leave should be granted under an appeal from a decision of Saskatchewan Surface Rights Board pursuant to the Act . [ 14 ] With that in mind, I will consider whether to grant leave to appeal with respect to the following issues raised by the Rutherfords: (

a) The Board did not have jurisdiction to grant the prospective Respondent’s Application to the Board for a Right of Entry Order in the absence of evidence that the prospective Respondent acted in good faith in negotiating an agreement with the prospective Appellant that was substantially the same as the Application for a Right of Entry requested from and granted by the Surface Rights Board; (

b) The Surface Rights Board, both at the time of the Right of Entry hearing and at the time of the Compensation hearing, erred by continuing as constituted when requested by the prospective Appellants to excuse a member, or its members, based on their connection to the prospective Respondent through direct or indirect business relationships and the appearance of, or alternatively, reasonable apprehension of, bias; (

c) The Board erred when it failed in its duty of fairness to the prospective Appellants by ignoring the evidence presented and relying on prior decisions of the Surface Rights Board as setting the parameters of compensation without following or applying legal principles, particularly Smith v Alliance Pipeline Ltd ., 2011 SCC 7 , [2011] 1 SCR 160; and (

d) The Board made fundamental evidentiary errors including: (

i) admitting hearsay evidence; (ii) failing to exclude material witnesses; (iii) permitting expert opinion reports without disclosure or notice of the report; (iv) failing to allow Informed cross-examination of witnesses; (

v) interfering with and restricting the prospective Appellants right to make full answer; (vi) permitting the introduction of evidence of settlement discussions and “without prejudice” communications; and (vii) Introducing and prejudicially relying on the course of dealings between the Surface Rights Board and the prospective Appellants. (

a) The Question of Jurisdiction: [ 15 ] The Rutherfords question whether the Board had the jurisdiction to grant Husky a Right of Entry Order. As I have pointed out, there is no right to appeal from a Right of Entry Order. This ground of appeal must fail. It will not pass either branch of the test in Rothmans . (

b) Reasonable Apprehension of Bias: [ 16 ] Under the second ground of appeal, the Rutherfords claim the Board made an error continuing the hearing in the face of allegations of a reasonable apprehension of bias. This matter was initially raised in 2011 and again raised in 2014. The Board stated it had already

ruled on the matter in G.B. 6/11. The Board went on to say that the Board consists of people connected to the industry and so it could be argued there is always a potential for bias. The Board could not function in this way.

The Board was satisfied there was no new evidence and stated the previous ruling would stand. [ 17 ] In an application for leave to appeal a decision of the Alberta Utilities Commission ( Lavesta Area Group Inc. v Alberta (Energy and Utilities Board) , 2011 ABCA 108 ), Rowbotham J.A. stated the following with respect to a reasonable apprehension of bias: [16] A reasonable apprehension of bias captures the requirement that justice be seen to be done … The question is whether a reasonable, informed, person viewing the matter realistically and practically and having thought the matter through, would think it was possible that, consciously or unconsciously, the adjudicator would decide unfairly … Put another way, the test for reasonable apprehension of bias is “whether a reasonable and right-minded person, with full knowledge of the facts, would have a reasonable apprehension that the [adjudicator] was biased in relation to this case?” … [17] Included in the analysis of reasonable apprehension of bias is the presumption of impartiality.

The applicant must rebut this and as the respondents correctly point out, mere suspicion of bias is insufficient … . [ 18 ] While Husky has pointed out the reasons why the Board felt there was no bias in the case before me, I cannot say that this question is frivolous or without merit. Accordingly, the Rutherfords have satisfied the first branch of the test in Rothmans . [ 19 ] It is my further view that a question of a reasonable apprehension of bias transcends the facts of this particular case and raises issues of general importance. I therefore grant leave to appeal with respect to this ground of appeal. (

c) and (

d) Breach of Duty of Fairness and Evidentiary Errors: [ 20 ] Both of these grounds of appeal refer to procedures of the Board, so I will deal with them together. [ 21 ] While ignoring evidence may amount to an error in law, no specifics have been provided. A mere allegation cannot be sufficient to meet the first branch of the Rothmans ’s test. [ 22 ] Regarding the introduction of evidence, the Rutherfords claim that proper court procedures were not followed.

However, the law is clear that the Board may conduct its hearings as it deems appropriate, as long as the hearings are in accordance with the rules of natural justice. This Court stated the following in Fletcher Challenge Energy Canada Inc. v Sulz , 2001 SKCA 11 , 203 Sask R 115, relating to the Board: [ 23 ] Although the Board is not bound by the formality of judicial procedure, an arbitration before it is nonetheless the functional equivalent of a judicial or quasi-judicial proceeding.

Where a member of the Board is interested in a matter before the Board, the Lieutenant Governor in Council may appoint some disinterested person to act as a member of the Board in place of the interested member with respect to that matter only: See s. 11(1). The legislation is consistent with the traditional requirement of a “fair hearing” before a judicial or quasi-judicial tribunal. … [26] Although the Board of Arbitration is not bound by formal rules of evidence, it must have regard for the burden placed upon an applicant to prove the applicant’s claim.

Speaking generally, the burden is upon the party advancing the affirmative allegation – in this case, that the compensation payable under an earlier agreement is not just and equitable when tested against the statutory criteria. In such a case, the applicant bears the burden of persuasion with respect to primary facts essential to the claim. [27] [ The Surface Rights Acquisition and Compensation Act ] does enable the Board to perform a limited investigative role in the determination of just and equitable compensation.

Section 14 reads in material part: 14 The board may: (

a) hold sittings from time to time at such times and places in the province as it may deem expedient; (

b) enter upon and inspect or authorize any member of the board or other person to enter upon and inspect any place, building, works or other property directly or indirectly involved in any matter before the board; (

c) appoint or direct any person to inquire into and report upon any matter before the board. [23] Evidentiary issues such as admitting hearsay evidence and failing to exclude material witnesses are procedural matters within the discretion of the Board in setting its own rules. There is no evidence of failing to allow informed cross-examination of witnesses or of interfering with or restricting the Rutherfords’ right to make full answer. An unsworn document was tendered which I can accept as far as it amounts to argument, but cannot accept as evidence. No specifics of those allegations have been provided.

Thus, I am unable to say that these grounds of appeal have sufficient merit or importance to warrant the attention of this Court. Accordingly, leave is not granted with respect to these grounds of appeal. [ 24 ] The allegations of introducing “without prejudice” communications, and prejudicially relying on the course of dealings between the Board and the Rutherfords refer to documents that were filed at the Right of Entry hearing. As there is no right of appeal from the Right of Entry Order, the application for leave is dismissed with respect to that ground of appeal. III.

Conclusion [ 25 ] Section 72(2) of the Act states the following: Leave to appeal

72(2) An order granting leave to appeal shall: (

a) for the purposes of any appeal under

section 71 be deemed to be a notice of appeal; (

b) state the grounds of the appeal; and (

c) be served upon the respondent or his solicitor within fifteen days from the date of the order giving leave to appeal. [ 26 ] Accordingly, leave is granted with respect to the following ground: The Surface Rights Board … erred by continuing as constituted when requested by the prospective Appellants to excuse a member, or its members, based on their connection to the prospective Respondent through direct or indirect business relationships and the appearance of, or alternatively, reasonable apprehension of, bias. (Draft Notice of Appeal p. 2) [ 27 ] Leave to appeal in respect of the other grounds set out in the application for leave is dismissed.

Costs shall be in the cause. DATED at the City of Regina, in the Province of Saskatchewan, this 18th day of November, A.D. 2014. “Whitmore J.A.” Whitmore J.A.