** HIGHLIGHTS ** *
- The Alberta Court of Queen's Bench has rejected the submissions of Alberta farmers and ranchers who claimed compensation under the Surface Rights Act (Alberta) for an electrical transmission line based upon compensation paid by Altalink to cross Indian Reserve lands, and compensation paid for wind turbine towers and cell towers. The Surface Rights Act does not give a right of compensation for expropriation, but only compensation following expropriation for the damage which result from the taking. The compensation paid to cross Indian lands, and for cell towers or wind turbines, is based upon unfettered free market negotiations, and cannot be compared to factors on which compensation is based under the Surface Rights Act. (Sproule v. Altalink Management Ltd., CALN/2015-007,  A.J. No. 255, Alberta Court of Queen's Bench)
** NEW CASE LAW **
Sproule v. Altalink Management Ltd.; CALN/2015-007, Full text:  A.J. No. 255; 2015 ABQB 153, Alberta Court of Queen's Bench, J.H. Langston, J., March 5, 2015.
Real Property -- Landowners Compensation for Electrical Transmission Lines -- Alberta Surface Rights Act -- No Compensation for Compulsory Taking.
Lloyd Sproule ("Sproule"), a southern Alberta farmer and rancher, and three other landowners (collectively the "Landowners"), appealed to the Alberta Court of Queen's Bench from a decision of the Surface Rights Board of Alberta (the "Board") concerning compensation claimed by the Landowners for an Altalink Management Ltd. ("Altalink") electrical transmission line from Pincher Creek to Lethbridge, Alberta.
The Landowners owned 10 parcels of land over which the transmission line passed.
The Board issued right of entry orders over all 10 parcels and later awarded compensation to the Landowners for the rights of entry and the transmission towers located within the rights of entry.
The Landowners took issue with the first year compensation of $3,750 per acre and annual compensation of $500 per tower.
All of the lands were either used for pasture, or were cultivated for farming. Some of Sproule's land was also used to generate electricity pursuant to agreements entered into with a wind energy developer.
The Board concluded that the highest and best use for the lands was both for agricultural purposes and wind turbine development.
Section 12(1) of the Surface Rights Act, RSA 2000, c. S-24 (the "Act") provides that operators have a right to enter lands for the construction and operation of transmission lines if they obtain either the consent of the landowner, or a right of entry order granted by the Board.
Section 15 of the Act provides that in order to obtain a right of entry order, the applicant must file an application, accompanied by the applicant's last offer to the landowner and proof that the offer was refused. Although landowners have the right to object, the Board has the authority to grant right of entry orders without holding a hearing.
Section 25 of the Act allows the Board to set compensation. It states:
"25(1) The Board, in determining the amount of compensation payable, may consider
- the amount the land granted to the operator might be expected to realize if sold in the open market by a willing seller to a willing buyer on the date the right of entry order was made.
- the per acre value, on the date the right of entry order was made, of the titled unit in which the land granted to the operator is located, based on the highest approved use of the land,
- the loss of use by the owner or occupant of the area granted to the operator,
- the adverse effect of the area granted to the operator on the remaining land of the owner or occupant and the nuisance, inconvenience and noise that might be caused by or arise from or in connection with the operations of the operator,
- the damage to the land in the area granted to the operator that might be caused by the operations of the operator, and
- any other factors that the Board considers proper under the circumstances."
The issues before the Court were:
- Whether the annual fees of $500 per year awarded by the Board were too low because they could not be justified when compared to money paid by cell tower and wind turbine owners for the occupation of similar sized parcels, or when compared to the compensation paid by Altalink to the Piikani First Nation for permission to build the transmission line across the Piikani Reserve.
- Whether certain of the lands have a highest and best use of wind turbine development, rather than wind turbine development and agricultural use.
The Landowners had filed a Notice of Constitutional Question claiming their rights had been infringed under the Charter and the Alberta Bill of Rights, however both of these arguments were abandoned after the hearing.
Decision: Langston, J. [at para. 54] dismissed the Landowners' appeal.
Langston, J. considered a number of issues:
(a) The standard of review:
Langston, J. observed [at para. 5] that Section 26 of the Act provides a right of appeal and that the appeal is in the form of a new hearing:
" ...There is also no issue that reasonableness is the appropriate standard of review on such an appeal. Nor is there any issue that this Court can scrutinize matters of fact but such scrutiny should consider the basis for the board's decision. Since the board has expertise in the matter of compensation those orders are entitled to deference. However, new evidence introduced on appeal may reflect the reasonableness of the board's decision."
(b) The Land Expropriation and Compensation Scheme created by the Act.
Langston, J. observed [at para. 11] that beyond the technical requirements stipulated by the Act that there are very few areas in which the Board can consider, let alone refuse to grant an application for a Right of Entry Order, relying on Mueller v Montana Alberta Tie Line, 2011 ABQB 738 (CanLII).
Langston, J. relied on the analysis of the compensation scheme summarized by Andrekson, J. in Sandboe v Coseka Resources Ltd., (1990) 1990 CanLII 5536 (AB QB), 74 Alta. LR (2d) 277, 108 AR 226 (QB) [at para. 13].
In Sandboe, Andrekson, J.:
- Observed that the Surface Rights Act provided a "statutory scheme expressly founded on compensation rather than valuation".
- Held that the Board's obligation to fix compensation is not restricted by land value, or loss of income. However, there is no mandate under the Act to over-compensate a surface owner. It would be an error to do so.
- Observed that the factors listed in the Act are not mutually exclusive. They need not all be considered and allow for "other factors" to be invoked in a proper case.
- Observed that using the Expropriation Land values are arbitrary and are not the sole means to determine appropriate compensation. It would be an error resulting in under compensation to a surface owner if the value per acre ascribed to the severed parcel was the value per acre of the entire parcel.
- Held that there is no provision in the Act to allow compensation for the compulsory taking.
- Observed that the Board has a wide discretion as to how to set compensation and to consider special or unique circumstances.
(c) Whether other compensation amounts for First Nations' lands, wind turbines and cellphone towers are relevant.
Langston, J. observed [at para. 28] that the Board did not consider the amounts paid to Sproule for wind turbines because wind turbines were not governed by the Act; and because wind generation turbines are based upon negotiated agreements and (in Sproule's case) were based on the percentage of revenue generated by the turbines which is totally different than the statutory scheme under the Act.
Langston, J. observed [at para. 29-32] that the Act did not apply to Reserve lands; that First Nations have the right to say "no" to transmission lines while private individuals do not and that the compensation paid to the First Nations ($440,000 per mile compared to the $60,000 per mile paid to Sproule) was based on the fact that the absence of an expropriation power for Reserve lands put the Reserve in a bargaining position which was vastly different from private landowners.
Langston, J. upheld the Board's decision and concluded that it made no error when it determined that the agreements made with the First Nations, and with respect to cell towers and wind turbines should be given no weight [at para. 36]. He held that "fairness" is not a relevant factor under the Act stating, at para. 37 and 38:
" While the landowners argue that the amounts paid for wind turbines and cell towers, and to the Piikani First Nation, all illustrate how the annual payments awarded to them are unfair, no one suggested what fair compensation would be, or even a formula for deriving a fair amount.
 The bigger problem faced by the landowners, however, is that "fairness" is not one of the relevant factors for determining compensation under the Surface Rights Act. Under the statutory compensation scheme, the test is what is the appropriate compensation for actual infringement on landowners' use?"
Langston, J., following Sandboe held that there was no provision in the Act which allowed compensation for a compulsory taking.
(d) Highest and best use and land value:
The Landowners argued that the land should not be valued at $3,750 per acre, but within a range between $5,787 to $10,810 per acre, based on the land value for wind farm lands.
The Landowners relied on the evidence of an expert witness with respect to the highest and best use of wind farm lands and that the Board's conclusion that there were two highest and best uses - one for wind turbine development and the other for agriculture - which the expert said were incompatible [at para. 42 and 43].
The Board had concluded [at para. 44] that because none of the area granted under the orders were on the portions of the land were where wind generation facilities existed at the effective date, a finding of a single highest and best use for wind farm development was not reasonable.
Langston, J. rejected the contention of the Landowners' expert, stating at para. 46 and 47, and para 52:
" To accept this argument would be to ignore what is actually occurring. Mr. Sproule is still running his farming operation as he did before; there is nothing impeding the overall farming operation except for the physical requirement to drive around the turbines. He gave no evidence about anything he wished to do differently in his farming operation that he was prevented from doing because he had entered the leases.
 So the two uses, wind turbine development and agriculture, are being simultaneously conducted without one subservient to the other.
 As Irving Oil Co and Sandboe discuss, the key concept of compensation for expropriation generally and for rights of entry under the Surface Rights Act is to place a value upon the actual infringement. In this case, the landowners have failed to show that the rights of entry lessen revenues from the existing turbines, that they in any way hinder the operations of the lessees under the current wind leases, or that they have hindered the possibility of any further wind energy development on any of their lands."
Langston, J. concluded [at para. 54]:
" ...The compensation amounts paid to the Piikani First Nation, and for wind turbines and cell phone towers, are not relevant considerations under s. 25 of the Surface Rights Act. The board did not err in finding two highest and best uses for the wind farm lands."
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