Neufeld v Rifle Shot Oil Corp., 2018 SKCA 58

Court of Appeal for Saskatchewan Docket: CACV3229 Citation: Neufeld v Rifle Shot Oil Corp. , 2018 SKCA 58 Date: 2018-07-26 Between: 605499 Saskatchewan Ltd., 605857 Saskatchewan Ltd., Harold Neufeld, Pierre Neufeld, Alexander M. Neufeld, Nicholas H. Neufeld and Suzanne F.

Fischer (Owners, Occupants, and Applicants) Applicants/Prospective Appellants And Rifle Shot Oil Corp. (Operator and Respondent) Prospective Respondents And Surface Rights Arbitration Board Respondent Before: Jackson J.A. (in Chambers) Disposition: Application allowed On Application From: C.B. 2/18, Kindersley Application Heard: June 27, 2018 Counsel: Richard Gibbons for the Applicant Murray Douglas for the Respondent Jackson J.A. I.

Introduction [ 1 ] This is an application for leave to appeal a decision of the Saskatchewan Surface Rights Board [Board] under The Surface Rights Acquisition and Compensation Act , RSS 1978, c S-65 [ Surface Rights Act ]. The prospective appellants [collectively, the Neufelds] apply for leave to appeal Saskatchewan Surface Rights Board Order C.B. 2/18 (March 7, 2018) [Board Decision]. The prospective respondent is Rifle Shot Oil Corp. [Rifle Shot].

Rifle Shot currently holds 13 Right of Entry Orders on farmland owned by the Neufelds. [ 2 ] Prior to June of 2016, Tuscany Energy Ltd. [Tuscany] had held the Right of Entry Orders. Tuscany had applied for a hearing before the Board for the purposes of fixing compensation payable to the Neufelds in October of 2014. Before the compensation payable to the Neufelds had been determined, Tuscany made an assignment in bankruptcy.

As part of the liquidation of Tuscany’s assets, Rifle Shot acquired the Right of Entry Orders, pursuant to a court-ordered sale and vesting order made under the Bankruptcy and Insolvency Act , RSC 1985, c B-3 [ BIA ]. [ 3 ] The Board held a compensation hearing in January of 2018 to determine the compensation payable by Rifle Shot to the Neufelds. The Board issued its order and decision (with accompanying reasons) on March 7, 2018.

It selected November 1, 2016, as the “effective date of the purchase” (Board Decision at 2) by Rifle Shot of the Tuscany assets [the Effective Date] with the consequence that Rifle Shot would not be obliged to compensate the Neufelds with respect to any claim that they had against Tuscany prior to that date. [ 4 ] The Neufelds seek leave to appeal the Board Decision.

Among other grounds of appeal, they seek leave to appeal the Board’s determination that Rifle Shot did not assume Tuscany’s obligation to pay the Neufelds for the compensation due under the Right of Entry Orders for the period of time prior to the Effective Date.

An additional ground of appeal seeks access to agreements filed by other operators and challenges the Board’s ruling that The Freedom of Information and Protection of Privacy Act , SS 1990-91, c F-22.01 [ FOIPPA ], applies to the release of those agreements. [ 5 ] For the reasons that follow, I would grant leave to appeal pertaining to the applicability of FOIPPA only. Leave to appeal is refused with respect to all other grounds that the Neufelds have advanced. II. Right of Appeal [ 6 ] Decisions of the Board can be appealed to the Court of Appeal pursuant to the Surface Rights Act .

Section 71 grants a right of appeal subject to leave being granted on a question of law or jurisdiction: 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. [ 7 ] Subsections 72(2) and (3) provide that an order granting leave to appeal must state the grounds of appeal and that the rules of the Court of Appeal will apply generally to an appeal under s. 71: 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.

(3) Subject to the provisions of this

section and sections 71 and 73, the rules of the Court of Appeal shall apply mutatis mutandis to an appeal under

section 71 as if it were an appeal from a judge of the Court of Queen’s Bench, but no appeal books shall be required. [ 8 ] The leading authority with respect to granting leave to appeal under the Surface Rights Act is Fletcher Challenge Energy Canada Inc. v Sulz , 2001 SKCA 11 , [2001] 6 WWR 476 [ Fletcher ].

In Fletcher , the Court wrote that s. 72(2) requires that the order granting leave set out “the grounds in conventional fashion, rather than pose a series of questions, bearing in mind that only grounds of appeal based on questions of law or jurisdiction qualify for leave” (at para 44). [ 9 ] The analytical framework for when leave is granted under the Surface Rights Act stems from the Court of Appeal practice developed for the granting of leave for interlocutory decisions under s. 8 of The Court of Appeal Act, 2000 , SS 2000, c C-42.1.

To date, Rothmans, Benson & Hedges Inc. v Saskatchewan , 2002 SKCA 119 , 227 Sask R 121 [ Rothmans ], has been the controlling authority regarding the Court’s practice as to when and under what circumstances leave should be granted with respect to interlocutory matters.

The Rothmans framework has been modified for final orders such as Board orders (see Canadian Natural Resources Limited v Campbell , 2016 SKCA 87 at paras 6–8 [ CNRL ] ). [ 10 ] CNRL sets out the modified framework as follows: [7] Since this is an appeal from a final decision of the Board, the analytical framework contemplates a consideration of these factors: First : Is the proposed appeal of sufficient merit to warrant the attention of the Court of Appeal? - is it prima facie frivolous or vexatious? - is it prima facie destined to fail in any event, having regard to the nature of the issue and the scope of the right of appeal, for instance, or the nature of the adjudicative framework, such as that pertaining to the exercise of discretionary power?

Second : Is the proposed appeal of sufficient importance to the field of practice or the state of the law, or to the administration of justice generally, to warrant determination by the Court of Appeal? - does it materially affect the impugned order or decision? - does it raise a new or controversial or unusual issue? - does it raise a new or uncertain or unsettled point of law? - does it transcend the particular in its implications? [all emphasis in original, North Ridge ( 2015 SKCA 13 ) at para 55.] [8] In

summary terms, this means that an applicant for leave to appeal on a question of law must satisfy the following: (

a) identify a question of law; (

b) demonstrate that the appeal is of sufficient merit to justify leave being granted; and (

c) show that the appeal is of sufficient importance to warrant the attention of the Court. [ 11 ] I will now turn to the application before me bearing this framework in mind. III. The Neufelds’ Application for Leave to Appeal

[ 12 ] The Neufelds apply for leave to appeal in relation to the following grounds: [Ground A: Burden of Proof] The Board erred in placing the burden of proof upon the Respondent, the land owner. The operator (Rifle Shot Oil Corp.) should bear the burden of proof. [Ground B: Access to records held by the Board] The Board erred in its rejection of the application under

section 30 of the Surface Rights Acquisition and Compensation Act by denying access to the Board’s records and accounts. [Ground G: Salt water injection wells] The Board erred in determining that the purpose of the salt water injection well was not a surface right within the meaning of

section 2 of the Act . [Grounds C to F and I: Compensation prior to Rifle Shot’s acquisition] C. The Board erred in awarding compensation for a date other than the date of taking as represented by the date of the Right of Entry Orders. D. The Board erred in not awarding compensation from the date of the right of entry order to the current date. E. The Board erred in determining that compensation was properly payable from the date of the acquisition of the surface rights by the current operator Rifle Shot Oil Corp. F.

The Board erred in determining that as a matter of law notice of insolvency of Tuscany Energy Ltd. to the land owners (Appellants) mandated [the] effective date of the compensation order to be November 1, 2016. I. The Board erred in failing to award the value of the land pursuant to section 29(1)(2) of the Surface Rights Acquisition Compensation Act . [Ground H: Cumulative effect] The Board erred in failing to award compensation for cumulative effect pursuant to section 29(2)(

e) stating in error that the claim was “based on the fact of multiple operators on

section 2”. [Ground J: ER 10/12] The Board erred in awarding no compensation for ER 10/12. IV. Analysis A. Ground A: Burden of proof [ 13 ] The only argument that the Neufelds make on this point is the following: 16. It was apparent that the Board placed the burden of proof on the landowners throughout the hearing and treated the landowners as though the application was theirs. In fact, this hearing was a continuation of a matter which was commenced by Tuscany Energy and not the prospective appellants.

Throughout the decision of the Board, the evidence provided by the landowners was treated as though they were the applicants rather than Rifle Shot Oil Corp. [ 14 ] Assuming for the moment that it is possible to cast this issue as a question of law, the Neufelds have not persuaded me that leave should be granted in relation to it.

I say this for two principal reasons. [ 15 ] First, the Court addressed the question of onus in Fletcher : [25] Given the nature of the hearing contemplated by the Act , the requirement that the members of the Arbitration Board must meet and hear the parties implies that the applicant bears the burden of establishing his claim and the respondent by way of defence bears the burden of adducing evidence of specified facts relevant to its position . [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 . (Emphasis added.) The Neufelds’ submissions do not refer to Fletcher , in this context, or attempt to place their ground of appeal within its terms. [ 16 ] Second, in this Court, the burden is clearly on the applicant on an application for leave to appeal under s. 71 of the Surface Rights Act to persuade the Chambers judge that leave should be granted. The Neufelds’ argument on this point is a bare assertion of a

claim, with no explanation as to how it relates to the Board’s reasons – or in what way the outcome was affected by the Board’sapproach. [17] I understand the Neufelds’ claim that they, as a matter of circumstance, arising from Tuscany’s bankruptcy, have ended upbeing the applicant, and presenting their evidence first, and therefore presenting their oral argument first. This may, in anothercircumstance, result in a question of law for which leave could be granted; but in my view, something more must be put before aChambers judge than was presented in this application in order to obtain leave to appeal.

In my view, an applicant for leave should beable to say in what way the Board’s approach has led to an incorrect outcome. At the very least, an application must be more specificthan the Neufelds have been in this case. I would refuse leave in relation to this ground. B.

Ground B: Access to records held by the Board [18] As part of the case that the Neufelds presented to the Board they asked for access to the compensation agreements that havebeen submitted to the Board pursuant to s. 30 of the Surface Rights Act: Operator to file agreement with board 30 Every agreement entered into after the coming into force of this Act between an operator and an owner or between an operator and theoccupant, if any, with respect to compensation for any surface right mentioned in

section 23 shall be in writing and a copy of theagreement shall be filed by the operator with the board within thirty days after the date of execution thereof. [19] Citing s. 19 of FOIPPA, the Board held that these agreements are confidential and, as such, it is entitled to refuse access tothem: The Owner’s solicitor raised the issue of

Section 30 to allow access to leases filed at the Surface Rights Board. The Board recognizes theintent of

Section 30 of Surface Rights Acquisition and Compensation Act that requires the Operator to file surface compensationagreements, however, the dated Act does not address the confidentiality of the agreements. The Surface Rights Board of Arbitration issubject to The Freedom of Information and Protection of Privacy Act (FOIPPA). The Board is prescribed as a government institutionunder FOIPPA regulations.

Section 19 of FOIPPA states: “the head of a government institution shall refuse to give access to a record that contains financial, commercial or technical informationthat is supplied in confidence, implicitly or explicitly to a government institution by a third party”.

The Board stands by the FOIPPA that these compensation agreements are provided implicitly in confidence because there has been apractice by the Board that the agreements are privately negotiated arrangements which are expected to be confidential. (Board Decision at 5) [20] In their brief of law (at para 17), the Neufelds argue as follows: The statutory provisions of the Act are presumed purposive; they were placed in the Act for the purpose of furthering the granting ofsurface rights or their compensation.

The landowner has no access to a pattern of dealing; (see Fletcher Challenge Energy Canada v.Sulz, (2000), 2001 SKCA 11 , 203 Sask. R. 115; 240 W. A.C. 115) an important factor in assessing compensation. It ispresumed each

section in the legislation has a purpose. There is no expectation of privacy in a statute compelling disclosure to a publicbody, therefore citing Saskatchewan privacy legislation has no application. [21] In CNRL, the owners had applied to the Board to release copies of the s. 30 agreements prior to the compensation hearing. TheBoard denied the application, citing s. 19 of FOIPPA on that occasion as well.

After the compensation hearing, the owners applied to thisCourt for leave to appeal the Board’s decision fixing compensation on several grounds, including on the basis that the Board had erredby “failing to take notice of surface rights agreements” (at para 24) that had been filed with the Board under s. 30 of the Surface RightAct. The owners had not sought leave to appeal on the ground that they had been denied access to the agreements by virtue of FOIPPA(CNRL at para 24).

Ultimately, while I, as the Chambers judge, granted leave on other matters, I refused the application for leave toappeal in relation to the ground of appeal that the Board had failed to take notice of the s. 30 agreements: [24] … There may be something to this ground of appeal, but in light of this record and the submissions that I have received, I am notpersuaded that the Court would be able to make anything of it.

To paraphrase the words of the Court in Fletcher, when I test this groundof appeal against the actualities of the record, leave should not be granted in relation to it. [22] On this occasion, the applicants do seek leave to appeal on the ground that the Board erred by holding that FOIPPA preventsit from releasing the agreements that are required to be filed with it under s. 30 of the Surface Rights Act. In short, the Neufelds contendFOIPPA does not apply to s. 30 agreements.

Clearly this ground of appeal raises a question of law as to the applicability of FOIPPA inthis context. [23] The issue then becomes whether the ground of appeal is of sufficient merit and importance. Rifle Shot argues that there is nomerit to the appeal, saying FOIPPA applies and the Neufelds were required to apply to the Board under that Act, which they did not do.If they had applied and been denied, they could have initiated an application for a review to the Information and Privacy Commissioner(FOIPPA, s 49).

The Commissioner would then have been empowered to review the Board’s decision and to write a report makingrecommendations to an agency that has refused access to information in its possession (s. 55), thereafter leading to a right of appeal to theCourt of Queen’s Bench (s. 57(1)), with the possibility of a further right of appeal to this Court (The Court of Appeal Act, 2000, s. 7(2)).

With this background in mind, Rifle Shot relies on Nadler v College of Medicine, University of Saskatchewan , 2017 SKCA 89 , 33 Admin LR (6th) 124, to say that the Neufelds were required to pursue and exhaust the remedies provided by FOIPPA , rather than apply for leave to appeal directly to the Court of Appeal. [ 24 ] Rifle Shot’s argument on this point, however, assumes that FOIPPA applies, but that, of course, steps over the nub of the Neufelds’ argument, which is that FOIPPA does not apply to s. 30 agreements submitted to the Board.

Considered in this light, I have not been presented with any arguments to say that the ground of appeal, as identified, is prima facie destined to fail. As I interpret the Neufelds’ argument, they are saying that s. 30 of the Act serves a different and public purpose, which means that FOIPPA does not apply.

It may be that the panel of the Court hearing the appeal will decide that the Neufelds should follow the procedure set out in FOIPPA before it considers whether that Act applies, but the fact of that possibility occurring should not prevent leave from being granted at this point; granting leave will allow the Neufelds the opportunity to persuade the Court otherwise. [ 25 ] As to importance, the Neufelds have raised a new point of law.

It is also an important ground of appeal as it appears (at least on the face of the matter) that the Board has access to confidential information that may influence its decisions and the applicants appearing before it do not have the same access. [ 26 ] I note that this ground of appeal, which is broadly cast, may reveal other questions of law: notably, the determination of the effect of FOIPPA on a request for information from the Board when no application has been made under that Act.

Further, if the panel hearing the appeal finds that the Board should have granted access to the s. 30 agreements in some form, other questions of law will arise, such as what is the effect, if any, of such a determination on the decisions already made affecting the Neufelds’ compensation. [ 27 ] In sum, I grant leave to appeal this ground of appeal. C. Ground G: Salt water injection wells [ 28 ] Ground G asserts that the Board erred by not finding that a salt water injection well is a surface right within the meaning of the Surface Rights Act . Respectfully, this ground misreads the Board’s decision.

This is what the Board wrote on point: “The Owner argued the need for compensation for future risk due to a salt water injection well. The Board is restricted as it can only compensate under s.s. 29 and 47 of the Act for a loss. Within these sections the Board has no jurisdiction to compensate for a ‘potential risk’” (Board Decision at 4). [ 29 ] The Board’s use of the word “jurisdiction” is unfortunate in that the Board has the authority to determine whether a claim is compensable or not.

Thus, it is not a question of jurisdiction, but rather a question of defining the common terms used in the Surface Rights Act and applying the specific provision in question to the claim that has been put forward. This is a question of mixed fact and law for which no extricable question of law has been identified. I would refuse leave with respect to it. D. Grounds C to F and I: Compensation prior to Rifle Shot’s acquisition [ 30 ] These grounds are reproduced for ease of reference: C.

The Board erred in awarding compensation for a date other than the date of taking as represented by the date of the Right of Entry Orders. D. The Board erred in not awarding compensation from the date of the right of entry order to the current date. E. The Board erred in determining that compensation was properly payable from the date of the acquisition of the surface rights by the current operator Rifle Shot Oil Corp. F.

The Board erred in determining that as a matter of law notice of insolvency of Tuscany Energy Ltd. to the land owners (Appellants) mandated [the] effective date of the compensation order to be November 1, 2016. I. The Board erred in failing to award the value of the land pursuant to section 29(1)(2) of the Surface Rights Acquisition Compensation Act . [ 31 ] These grounds can be addressed collectively as they all relate to the type of liability that Rife Shot acquired by purchasing Tuscany’s assets in the 2016 bankruptcy proceedings.

Some additional background is required to address them. [ 32 ] In 2014, the Board had scheduled a hearing to fix the amount of compensation that Tuscany owed to the Neufelds. The Board adjourned the hearing, at the Neufelds’ request “to obtain an appraisal by the Owner” (Board Decision,

summary of evidence at para 15, p. 14).

When Pierre Neufeld testified before the Board this time, he “did not recall why they hadn’t proceeded”. [1] Before the adjourned hearing could be resumed, Tuscany had made an assignment into bankruptcy, and on June 30, 2016, a judge of the Court of Queen’s Bench appointed a Receiver. [ 33 ] The Neufelds filed proofs of claim for compensation claimed in relation to the 13 Right of Entry Orders and on November 22, 2016, with notice to Harold and Pierre Neufeld, the Receiver obtained a “Sale Approval and Vesting Order” vesting all of Tuscany’s interest in the “Purchased Assets” in Rifle Shot “free and clear of and from any and all security interests (whether contractual, statutory, or otherwise), hypothecs, caveats, mortgages, trusts or deemed trusts (whether contractual, statutory, or otherwise), liens, executions, levies, charges, or other financial or monetary claims, whether or not they have attached or been perfected, registered or filed and whether secured, unsecured or otherwise”, effective November 1, 2016. [ 34 ] The Neufelds argued before the Board that Rifle Shot assumed Tuscany’s obligation to pay compensation from the date Tuscany acquired the 13 Right of Way Orders.

On this point, the Board Decision held the following (at 3–4):

The Act does not grant the Board the ability to infringe or supersede other legislation to compensate the Owners for their losses prior to November 1, 2016. In the Board’s opinion the taking of lands prior to the Effective Date is beyond the Board’s ability to award compensation due to the insolvency of the prior operator (Tuscany Energy Ltd.) … . The Board is also of the opinion the Owner had received notification of a Vesting Order as defined in Operator Exhibit No. 2, Tab 57, from the Receiver responsible for the previous operator’s insolvency.

The Board’s view is the Owner should have acted to file for any potential losses at time of notification by the Receiver, and at that time, may have been compensated for losses prior to the Effective Date. [2] [ 35 ] Quite clearly, the Board has not characterized the issue correctly.

It is not a question of infringement or paramountcy, but rather it concerns the nature of the obligation that the holder of a right of entry order owes to the landowner and whether that interest can be extinguished by virtue of a sale and vesting order granted by a court acting under the BIA . [ 36 ] Counsel for the Neufelds asserts that “a surface rights lease is not a simple debt – it is an interest in land”. However, he makes no legal arguments to support such an assertion but rather makes this policy argument in his memorandum: 22.

Where pending surface rights litigation is commenced by an oil company against landowners, a purchasing company assumes the interest in land along with the unresolved compensation from the date of taking.

For the court to hold differently would allow energy corporations to defeat obligations under surface rights leases through bankruptcy. [ 37 ] In short, counsel has cited no authority that would allow me to conclude that an unregistered interest, claiming an as yet undetermined amount of compensation, survives a court order granted under the BIA expressly declaring that the purchaser acquires the right of entry order free from all interests. I would not grant leave in relation to these grounds. [ 38 ] Ground I requires specific mention.

This ground asserts that the Board erred by “failing to award the value of the land pursuant to section 29(1)(2) [ sic ]” of the Surface Rights Act . This ground can be rephrased as the following: the Board erred in ordering compensation that disregarded paragraphs 29(1)(a), (

g) and (

h) of the Surface Rights Act : Determination of compensation 29(1) For the purpose of determining the compensation to be paid for surface rights acquired by an operator, the board shall consider the following matters: (

a) the value of the land and the loss of use of the land or an interest therein acquired by the operator ; … (

g) any other matter peculiar to each case, including the cumulative effect , if any, of the surface rights previously acquired by the operator or by any other operators under a lease, agreement or right of entry existing at the time of acquisition of the surface rights with respect to the land; (

h) such other factors as the board deems proper, relevant and applicable. (Emphasis added.) [ 39 ] Paragraphs 29(1)(

a) and (

g) both use the phrase “acquired by the operator”. As such, this ground addresses the same issue as Grounds C to F, and fails for the same reasons. (No argument was made indicating the applicability of s. 29(2) to this ground of appeal.) E. Ground H: Cumulative effect [ 40 ] This ground asserts that the Board erred by failing to award compensation pursuant to s. 29(2)(

e) for cumulative effect. I have taken this as a reference to s. 29(1)(g), cited above. [ 41 ] The Board Decision described the evidence in relation to this issue under the heading “Summary of Evidence” (at 13 and 15): 11. Mr. [Pierre] Neufeld stated that all land was farmed together and he had concerns of additional corners and turns, overlapping and loss of use of his GPS as there was no straight-line farming due to all the installations. He said if sites were not needed then they should be abandoned. Mr.

Neufeld indicated that there was significant cumulative effect as it was difficult to farm around all the wells. … 20. In cross examination the solicitor for the Owner raised the question of Blackstock Formula being used for calculations of land value. Ms. Stebing said it was not, as the additional land taken was adjacent to other leased land and was not midfield or isolated from the rest of the lease.

Cumulative effect was also raised by counsel for the Owner but the witness stated she had not used this factor. [ 42 ] In oral argument before the Board, counsel for the Neufelds submitted that “cumulative effect should be taken into consideration because of the number of installations and the difficulty in farming around the sites” (summary of evidence at para 24, p. 16). [ 43 ] The Board declined to make an order providing compensation for cumulative effect (at 5):

A payment for cumulative effect was requested by the Owner for E.B. 2/11. The Operator stated that there was no evidence presented to address cumulative effect. The Board has reviewed the map (Operator’s Exhibit No. 3) and does not make an award for cumulative effect based on the fact of multiple Operators on

Section 2. One Operator should not be penalized for installations other than their own. [ 44 ] In my view, this ground of appeal does not raise an error of law. As presented, it is at best a mixed question of fact and law from which no question of law can be extracted. I am in agreement with Rifle Shot that the evidence submitted by the Neufelds was limited in scope and precluded the Board from making a broader order. The Board’s conclusion was based on the evidence that the Neufelds provided. F. Ground J: E.B. 10/12 [ 45 ] This ground asserts that the Board erred by not ordering compensation for E.B. 10/12.

Granted to Tuscany, E.B. 10/12 is another Right of Entry Order. Following receipt of that order, Tuscany built a pipeline in May of 2012. The Neufelds claim compensation that they say should have been paid by Tuscany before Rifle Shot acquired its interest via the bankruptcy process, or in other words, before the Effective Date. The Neufelds also assert that they are entitled to ongoing compensation for the flow line. [ 46 ] I have already addressed the first aspect of the Neufelds’ claim on this point.

In short, I refused leave on the question of whether an unquantified and unregistered claim for compensation under the Surface Rights Act survives a disposition in bankruptcy. [ 47 ] The second aspect of the Neufelds’ claim on this point is that the Board was obliged to order annual payments for flow lines after they have been constructed. This is a claim made pursuant to ss. 41 and 47 of the Surface Rights Act , specifically in relation to s. 47(2).

The relevant sections read as follows: Application of sections 42 to 52 41 Sections 42 to 52 apply to the acquisition of the following rights and land or interest therein that are required by an operator in respect of the surface of the land outside the well site, battery site and roadway: (

a) the right of entry upon lands lying upon the intended route of a flow line or service line for the purpose of making surveys, examinations and other necessary arrangements for fixing the site of the right of way for such line; (

b) the right to enter upon, use, occupy or take land or an interest therein for the purpose of laying, constructing, maintaining and repairing a flow line or service line. Determination of compensation 47

(1) Where the board is required to determine the compensation payable for rights acquired within the meaning of

section 41, it shall: (

a) determine the compensation to be paid under clauses (

a) and (

b) of that

section separately; (

b) in determining the compensation payable with respect to any surface rights acquired or to be acquired by the operator under clause (

b) of

section 41, consider the following: (

i) the value of the land and the loss of use of the land or an interest therein acquired by the operator; (ii) the area of land that is or may be permanently or temporarily damaged by the operations of the operator; (iii) payment or allowance for severance; (iv) the adverse effect on the remaining land by reason of severance; (

v) where an easement or other interest only in land is acquired, the value of the land included in the right of way or other interest determined according to subclause (

i) less the value of any rights of use or possession remaining to the owner with respect to such land; (vi) payment or allowance for nuisance, inconvenience, disturbance or noise to the owner that might be caused by arise from or in connection with the operations of the operator and damage, if any, to any adjoining land of the owner, and any other damage arising out of the acquisition of the land or interest therein or in conducting the operations of the operator, including damage to or loss of crop, pasture, fences and livestock; (vii) damage or loss to the occupant, if any, for any of the factors mentioned in subclauses (

i) to (vi) insofar as they relate thereto.

(2) The board may award to the owner and occupant, if any, additional compensation by way of annual rent for each year commencing with the anniversary date of the order of the board for a period not exceeding three years, an amount each year not exceeding fifty per cent of the total compensation as determined under subsection (1).

(3) The board may allow to the owner or occupant, if any, reasonable costs and expenses incurred by the owner or occupant relating to the hearing with respect to the acquisition of the rights mentioned in clause (

b) of

section 41 and shall fix the amounts thereof. (Emphasis added.) [ 48 ] In Holland Estate v Husky Oil Operations Ltd. , 2009 SKCA 109 , [2009] 12 WWR 381, leave had been granted, requiring the consideration of the following question: “Did the Board err by failing to award compensation pursuant to s. 47(2) of the Act and by ignoring evidence related to the need for ongoing compensation for flow lines?” (at para 15).

[ 49 ] In answering this question, the unanimous Court determined that s. 47(2) is a residual

section that empowers the Board to make compensation orders. The Board is not obliged to make payments pursuant to that subsection: [68] … it is not appropriate to read s. 47(2) as creating an entitlement to compensation which operates over and above what is comprehended by s. 47(1). Rather, s. 47(2) is best seen as a residual provision that empowers the Board, in its discretion, to award compensation by way of annual rent where, for some reason, the payments ordered pursuant to s. 47(1) do not represent fair and equitable compensation .

Section 47(2) should not be seen as some sort of independent basis for determining the amount of compensation owing to owners or occupants of land. [69] This is not to say that, in determining compensation levels under s. 47, the Board is free to ignore the ongoing detrimental effects of flow line and service line installation and operation. Damage or loss of this sort must be reflected in compensation levels. My point is simply that it need not be dealt with only by way of “annual rent” payable in relation to s. 47(2).

For example, in considering “loss of use of the land” under s. 47(1)(b)(i), the Board might determine that there will be some measure of crop loss over a period of three years and, as a result, it might award lump sum compensation in relation to “loss of use” taking into account all three years. If it used that approach, the Board would have no additional obligation to award compensation by way of “annual rent” for those years as might lie in the future.

Alternatively, however, the Board might take account of future crop losses by way of annual rent payments and award an immediate lump sum payment only in respect of losses which had already been incurred. [70] On this point, I note as well that, while s. 47(1) says the Board “shall” consider the factors listed in s. 47(1)(b)(

i) to (vii) in determining compensation levels, it says the Board “may” award compensation by way of annual rent. This too underlines the notion that the Board is under no legal obligation to order annual rent so long as, in choosing not to do so, it nonetheless takes account of the factors listed in s. 47(1)(

b) and ensures that the owners and occupiers of the land receive just and equitable compensation for surface rights. [71] As a result, I conclude the Board made no error in not awarding the Owners’ “annual rent”. (Emphasis added.) [ 50 ] Thus, as a matter of settled law, the Neufelds cannot claim compensation under this heading as of right. They must adduce evidence and persuade the Board that additional compensation is merited under s. 47(2). On a balancing of the factors of merit and importance that I must consider, this ground too should be dismissed. V.

Conclusion [ 51 ] In conclusion, leave is refused for this application on all grounds, except Ground B. Rifle Shot has been successful on most of the grounds, and the Neufelds on one. With this unequal success in mind, I would fix Rifle Shot’s costs at $400. “Jackson J.A.” Jackson J.A.