In reasons released on May 30, 2014, the B.C. Supreme Court set aside the B.C. Surface Rights Board’s compensation award to a landowner in northern B.C. and remitted the case back to the Board for reconsideration: Progress Energy Canada, Ltd. v. Salustro, 2014 BCSC 960. The case sets out some important principles as to how the Board should assess the compensation payable to a landowner under a surface lease.
The Board is the statutory decision maker set up to resolve disputes between landowners and companies that require access to private land to explore, develop, or produce Crown-owned subsurface resources such as oil, gas, and minerals. Its mandate includes determining the amount to be paid to a landowner for a company’s entry, occupation, and use of private land upon an application for rent review. Due to the lack of case law and inconsistencies that have emerged in the Board’s compensation awards, operators have in recent years faced unpredictable results in Board decisions following a rent review hearing initiated by a landowner.
The decision in Progress should provide much needed clarity as to the principles applicable to the Board in assessing the compensation payable to a landowner at a rent review hearing. Some of the key principles in the decision are as follows:
If a landowner brings an application for a rent review, the onus of proof is on the landowner.
This onus requires the landowner to establish ongoing prospective losses and to establish that any increase is warranted.
An award for loss of profits must be based on “actual ongoing losses and impacts as well as probable and reasonably foreseeable ongoing and recurring loss or damage that can be reasonably quantified”.
Evidence of a property having potential to be farmed is not the same as evidence demonstrating that a property is, or is intended to be, farmed. As such, evidence of a property having potential to be of agricultural use is not sufficient to determine that agricultural use of the property is reasonably probable and foreseeable.
Both the operator and the Board have 30 days to appeal the decision.