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April 3, 2003,  E.C.B. 18/02/236

 

Between: Home Oil Company Limited and Anderson Exploration Ltd.
now known as Devon Canada Corporation
Claimant
And: Franz Karl Schulte
Respondent
Before: Sharon I. Walls, Vice Chair
Appearances: Robert S. Cosburn, Counsel for the Claimants
Richard C. Secord, Counsel for the Respondent

 

REASONS FOR DECISION

1.  APPLICATION

[1]  This is an application by the claimants, Home Oil Company Limited and Anderson Exploration Ltd., for an order determining the compensation to which the respondent, Franz Schulte, is entitled as a result of the expropriation of a 15 metre (50 foot) statutory right of way for an existing gas pipeline through the subject lands owned by Mr. Schulte.

[2]  The jurisdiction of the Expropriation Compensation Board is derived from the Pipeline Act, R.S.B.C. 1996, c. 364 and the Railway Act, R.S.B.C. 1996, c. 395. Relevant sections of these Acts are set out below. Under section 16 of the Pipeline Act once the company has obtained a certificate, if the owner of the land does not agree to transfer the land for the pipeline then the company can take and appropriate the land it requires and Part 7 of the Railway Act applies. Part 7 of the Railway Act includes section 53 that provides for determination of compensation by the Expropriation Compensation Board under the Expropriation Act if the owner of the land does not accept the money offered in the prescribed Notice under section 50 of the Railway Act within a certain time frame of it being served on the owner. Other sections in Part 7 of the Railway Act provide procedures for what the company is to do with the award of compensation made by the Expropriation Compensation Board. If the person to whom the compensation is payable refuses to execute a proper conveyance, the award of compensation is deemed to be the title of the company to the land and can vest in a company the power to take possession of the land. I note that in contrast to expropriation procedures under the Expropriation Act, R.S.B.C. 1996, c. 125, the transfer of title to the expropriating authority occurs after the compensation hearing and is actually effected by the award of compensation by the board. In addition, it is the expropriating company which is generally styled as the "claimant" and the expropriated owner who is styled as the "respondent".

[3]  The respondent, Mr. Schulte, is the registered owner of the subject lands located to the north-west of Fort St. John, British Columbia. The subject lands consist of three legal parcels that total approximately 389 hectares (960 acres) of farm land and rough range land. A residence, a feed yard and a corral are located on the subject lands. Mr. Schulte acquired options to purchase each of the three parcels that make up the subject lands in 1980 and title for each of the three parcels was registered in his name between April and July 1981. At the time that he purchased the subject lands Mr. Schulte resided in Germany although he visited the lands before he purchased them. He now lives on the property with his family and keeps about 400 head of cattle on the subject lands.

[4]  Prior to Mr. Schulte's purchase of the subject lands, the claimant, Home Oil Company Limited, constructed an underground gas pipeline in 1978 that ran approximately 14 kilometres (8.7 miles) from a well to a tie in point on another pipeline that formed part of a gas gathering system. This pipeline runs underground through the three parcels that make up the subject lands. It was constructed in compliance with the requirements of the Pipe-lines Act, R.S.B.C. 1960, c. 284 and in accordance with the standards applicable for sour gas or gas containing hydrogen sulphide (which require thicker pipe). However, the evidence was that the gas that was carried in the pipeline in 2002 did not contain hydrogen sulphide. Fifteen metre or fifty foot wide statutory rights of way were signed by the private land owners through which the pipeline passed. On November 20, 1978 the Minister of Transport and Communications provided a Consent to Operate and a Certificate of Inspection for the pipeline. The pipeline has been in continuous operation since the fall of 1978.

[5]  Unfortunately, the statutory rights of way for the three legal lots that constitute the subject lands ultimately purchased by Mr. Schulte were never registered in the Prince George Land Title Office. As a result when Mr. Schulte bought the three parcels that constitute the subject lands in April and July 1981 there was nothing registered on the title of these lots that indicated the presence of any right of way or a gas pipeline contained within a right of way.

[6]  In the meantime there were changes in the corporate entity that owned the pipeline. In 1995, the Form A says that the claimant Anderson Exploration Ltd. acquired the undertakings of the claimant Home Oil Company Limited. In October 2001 Devon Acquisition Corporation amalgamated with Anderson Exploration Ltd. and in November 2001 the British Columbia Registrar of Companies issued a Certificate of a Change of Name from Devon Acquisition Corporation to Devon Canada Corporation. Home Oil, Anderson and Devon were all registered in British Columbia as extraprovincial companies and it appears that at least Anderson and Devon were companies incorporated under the laws of Canada.

[7]  At some point Mr. Schulte became aware of the pipeline and the claimants became aware that the statutory rights of way had never been deposited in the Prince George Land Title Office. Mr. Schulte asserts that if he had known that a sour gas pipeline ran under the subject lands he would never have bought the land. He wants the pipeline moved so that it no longer runs beneath his property. The claimants wish to carry out maintenance on the pipeline that runs through the subject lands owned by Mr. Schulte but are unable to do so because Mr. Schulte will not permit them on his land and they do not have a legal statutory right of way. As a result, the claimants commenced expropriation proceedings and a hearing was held in Fort St. John on September 4, 2002.

[8]  Counsel for the respondent made jurisdictional and procedural objections that were clearly set out in the Form B and were amplified at the hearing. At the request of the claimants the evidence on compensation was completed and the hearing adjourned pending written submissions on the jurisdictional and procedural issues. The claimants filed written submissions on October 3, 2002. The respondent filed their submissions on November 1, 2002. The claimants filed their reply on November 14, 2002.

 

2.  BACKGROUND

2.1  Subject lands

[9]  The subject lands are described as:

1. Parcel A (P18403) of the North 1/2of Section 30, Township 84, Range 21, West of the 6th Meridian, Peace River District (P.I.D.014-729-679) or ("Parcel A of North 1/2 of 30").

2. The West 1/2 of Section 19, Township 84, Range 21, West of the 6th Meridian, Peace River District (P.I.D.014-791-684) or ("West 1/2 of 19")

3. The South 1/2 of Section 30, Township 84, Range 21, West of the 6th Meridian, Peace River District (P.I.D.014-791-722) or ("South 1/2 of 30")

2.2  The Land that is Sought to be Expropriated

[10]  An affidavit from a British Columbia land surveyor, Richard Redfern, provided evidence as to the amount of land sought by the claimants for the statutory rights of way across the subject lands. Attached to Mr. Redfern's affidavit was a Plan dated April 9, 1981, showing the gas pipeline right of way across two of the three parcels making up the subject lands, the West 1/2of 19 and the South ½ of 30. This Plan is shown in the name of Home Oil Company Limited. Mr. Redfern states that he calculates that the total land required for the rights of way shown in this Plan at 3.0178 hectares (7.46 acres).

[11]  Mr. Redfern also attached an Explanatory Plan dated September 28, 2000 showing the gas pipeline right of way across the parcel that had been Crown land in 1978, Parcel A of the North ½ of 30. This Plan is shown in the name of Anderson Exploration Ltd. Mr. Redfern states that the area required for the statutory right of way in this Plan is 1.17 hectares (2.89 acres).

2.3  Chronology of Events

  • On May 19, 1978, the claimant, Home Oil Company Limited, applied under the applicable Pipe-lines Act to construct the pipeline.
  • On September 7, 1978, the Lieutenant Governor in Council granted approval to construct the pipeline under Certificate number 2561.
  • On November 20, 1978, the Minister of Transport and Communications provided a Consent to Operate and a Certificate of Inspection for the pipeline under Certificate number 2561.
  • In April and July 1981, Mr. Schulte acquired title to the subject lands.
  • On September 14, 1981, the Plan dated April 9, 1981 showing the gas pipeline right of way across two of the three parcels making up the subject lands (the West 1/2 of 19 and the South 1/2 of 30) together with book of reference was deposited in the Prince George Land Title Office under number 27616. The name on the Plan was Home Oil Company Limited.
  • In 1995, according to the Form A filed by the claimants, the claimant Anderson Exploration Ltd. acquired the undertakings of the claimant Home Oil Company Limited and their respective operations were amalgamated. The evidence was that Anderson Exploration Ltd. acquired the shares of Home Oil Company Limited but Home Oil continued as a corporate entity.
  • On September 29, 2000, the Explanatory Plan dated September 28, 2000 showing the gas pipeline right of way across the parcel that had been Crown land in 1978, Parcel A of the North 1/2 of 30 together with book of reference was deposited in the Prince George Land Title Office under number PGP 45976. The name on the Plan was Anderson Exploration Ltd.
  • On October 2, 2000, a Mr. Grainger of Anderson Exploration Ltd. wrote Mr. Schulte and attempted to negotiate with him about acquiring statutory rights of way for the pipeline across his property. This letter refers to an initial telephone conversation with Mr. Schulte in April 1999.
  • On February 8, 2001, the annual report of Home Oil Company Limited was filed in the British Columbia Corporate Registry.
  • On October 18, 2001, a Certificate of Amalgamation was issued pursuant to the Canada Business Corporations Act naming Devon Acquisition Corporation as the corporation resulting from the amalgamation of Anderson Exploration Ltd. and Devon Acquisition Corporation.
  • On October 23, 2001, an application was made to the Minister of Transportation on behalf of the claimant Anderson Exploration Ltd. for approval of the location of the existing pipeline pursuant to Section 14 of the Railway Act.
  • On November 14, 2001, a Certificate of Registration was issued by the British Columbia Registrar of Companies certifying that Anderson Exploration Ltd. had amalgamated with Devon Acquisition Corporation and that the amalgamated company is registered under the name Devon Acquisition Corporation.
  • On the same date, November 14, 2001, a Certificate of Change of Name was issued by the British Columbia Registrar of Companies certifying that Devon Acquisition Corporation had changed its name to Devon Canada Corporation.
  • On November 27, 2001, the Minister of Transportation declined to approve the location of the existing pipeline on the grounds that Section 14 of the Railway Act was not applicable and no approval of the location of the pipeline was required.
  • On February 21, 2002, the claimants Home Oil Company Limited and Anderson Exploration Ltd. sent the Registrar of the Prince George Land Title Office the profile for the pipeline, dated January 9, 2001, to complete the filing requirements under section 48 of the Railway Act.
  • On March 13, 2002, the claimants Home Oil Company Limited and Anderson Exploration Ltd. published a Notice in an unidentified newspaper pursuant to section 48 of the Railway Act.
  • On April 9, 2002, the claimants Home Oil Company Limited and Anderson Exploration Ltd. signed a Notice pursuant to section 50 of the Railway Act.
  • On May 23, 2002, this section 50 Notice was personally served on the respondent, Mr. Schulte.
  • On June 5, 2002, the claimants Home Oil Company Limited and Anderson Exploration Ltd. filed their Form A with the board seeking a written order determining the compensation to which the respondent was entitled.
  • On June 26, 2002, the respondent Mr. Schulte filed his Form B with the board raising jurisdictional and procedural issues.

 

3.  ISSUE

[12]  The first issue in this hearing is whether the board has jurisdiction to make an award for compensation if there have been defects in the procedure prescribed in the relevant acts, as alleged. If the board has jurisdiction the board has to decide compensation.

 

4.  POSITION OF THE PARTIES

4.1  Respondent's position

[13]  Mr. Schulte says that compensation for the statutory rights of way cannot be determined pursuant to section 53 of the Railway Act because of two procedural defects. One of these is that the claimants never obtained Ministerial approval for the location of the pipeline under section 14 of the Railway Act. The second is that the wrong corporate name was used in the Section 50 Railway Act Notice. Mr. Schulte says that when there are these procedural defects the board has jurisdiction to decide its own jurisdiction. The board can decide that it does not have jurisdiction and as a result refuse to make a determination of compensation.

4.2  Claimants' position

[14]  The claimants say that the board's only jurisdiction is to determine compensation. According to the claimants the board can not embark on any scrutiny of the procedural steps under the Pipeline Act or the Railway Act. It should award compensation as required under section 53 of the Railway Act without consideration of the two alleged procedural defects. In the alternative, the claimants say that a proper interpretation of the Pipeline Act and the Railway Act in these circumstances results in no Ministerial approval being needed under section 14 of the Railway Act. As to the use of the incorrect name, the claimants say that section 186 of the Canada Business Corporations Act R.S.C. 1985 c. C-44 answers that issue. Under section 186 the property of an amalgamating corporation continues to be the property of the amalgamated corporation. Existing claims are unaffected and an order in favour of an amalgamating corporation may be enforced by the amalgamated corporation.

 

5.  LEGISLATIVE FRAMEWORK

[15]  The relevant parts of the Pipeline Act are:

  (1) In this Act:
    "commission" means the commission established under section 2 of the Oil and Gas Commission Act;
    "company" means a person or corporation having authority under this Act or a special Act, having power to construct or operate pipelines to transport oil, gas or solids;
    "company pipeline" or "line" means a pipeline to transport oil, gas, solids or water that a company under this Act is authorized to construct or operate, and includes all branches, extensions, tanks, reservoirs, pumps, racks and loading facilities; interstation systems of communication by telephone, telegraph or radio; property and works connected with it;
    "gas" means a gaseous hydrocarbon;
    "pipeline" means a continuous conduit between 2 geographical locations through which oil, gas or solids is transported under pressure, and includes
      (a) a company pipeline,
      (b) all gathering and flow lines used in oil and gas fields to transmit oil and gas,
    … but does not include piping used in a gas distribution main as defined in the Gas Safety Act; …
    (2) Unless otherwise provided or the context otherwise requires, words and phrases in this Act have the same meaning as in the Railway Act. …
 
Part 3 — Location of Line
  Commission's approval required
  10  Except as this Act otherwise provides, a company must not begin to construct a section or part of a company pipeline until
      (a) the commission has issued a certificate granting the company leave to construct the line, and
      (b) the plan, profile and book of reference of the section or part of the proposed line have been approved by the commission.
  Plans, profile and book of reference
  12  (1) If the commission grants a certificate to a company giving leave to construct a pipeline, the company must prepare and submit to the commission a plan, profile and book of reference in duplicate, showing in detail all of the following:
      (a) the points in British Columbia between which and the route along which the pipeline is to be constructed, and any highway structure, bridge or work to be shown that is within 300 m of the proposed right of way of the pipeline;
      (b) the intended size and capacity of the pipeline;
      (c) the location and capacity of all proposed company stations, gate valves, check valves, tanks, surface reservoirs, pumps, racks, storage, loading and other terminal facilities, and connections of all kinds, on the line;
      (d) in the book of reference, a description of the portion of land proposed to be taken in each parcel of land to be traversed, giving particulars of the parcels, the area, length and width of the portion of each parcel to be taken, and the names of the owners and occupiers so far as they can be determined.
    (2) The plans and profiles must be on a scale of 1:10,000 or another suitable scale the commission directs.
    (3) The applicant must also forward all other plans and information related to the pipeline and its construction that the commission may require for the proper understanding of the plan, or for any other purpose.
  Approval of alterations
  15  (1) If a company requires a diversion, change or alteration to be made in its line or a portion of it, as already constructed or as merely located and approved, a plan, profile and book of reference of the portion proposed to be changed, showing the deviation, change or alteration proposed, must be submitted for the commission's approval.
    (2) If the plan, profile and book of reference of the portion of the line proposed to be changed have been approved by the commission and copies have been deposited as provided in this Act with respect to the original plan, profile and book of reference, the company may make the deviation, change or alteration, and all provisions of this Act apply to the portion of the line at any time changed or proposed to be changed, as they apply to the original line.
    (3) The commission may exempt a company from submitting the plan, profile and book of reference, as provided in this section, if the deviation, change or alteration is made or to be made
      (a) to lessen a curve,
      (b) reduce a gradient,
      (c) otherwise benefit a company pipeline, or
      (d) for any other purpose of public advantage the commission believes expedient,
      if the deviation, change or alteration does not exceed 90 m from the centre line of the company pipeline located or constructed in accordance with the plans, profiles and book of reference approved by the commission under this Act.
 
Part 4 -- Taking and Using of Land
  Appropriation of land
  16  (1) On obtaining a certificate, the company may take and appropriate for the purposes of its undertaking as much of the land or interests in it of any person as may be necessary for the building, construction, laying or operation of the pipeline.
    (2) The manner in which and terms on which the company may exercise the right to take and appropriate land or interest in it must be
      (a) in accordance with the terms of any agreement affected between the company and the owner of the land, other than Crown land, or an interest in it, or
      (b) in the absence of agreement, as set out in this Part.
    (3) Part 7 of the Railway Act applies to pipelines and necessary works and undertakings connected with them. …

[16]  The relevant parts of the Railway Act are:

 
Part 7 -- Acquisition of Land by Expropriation and Purchase
  Limitations as to extent of land taken
  34  (1) For a right of way, the land that may be taken without the consent of the owner must not exceed 100 feet in breadth, except in places where the rail level is or is proposed to be more than 5 feet above or below the surface of the adjacent land, when additional width may be taken sufficient to accommodate the slope and side ditches. …
  Premature contracts
  45  (1) Any contract or agreement made by any person authorized by this Act to convey land, either before the deposit of the plan, profile and book of reference, or before the setting out and ascertaining of the land required for the railway, is, if registered under the Land Title Act, binding at the price agreed on, if the land is afterwards so set out and ascertained within one year from the date of the contract or agreement, and although the land has in the meantime become the property of a third person after the registration or record.
    (2) Possession of the land may be taken and the agreement and price may be dealt with as if the price had been set by an award of arbitrators as provided in this Act, and the agreement has the force of and is in the place of an award. …
  Compensation or damages may be agreed on
  48  (1) After the expiration of 10 days from the deposit of the plan, profile and book of reference in the proper land title office, and after notice of it has been given in at least one newspaper, if any is published, in each of the districts and counties through which the railway is intended to pass, a company may apply to the owners of land, or to persons empowered to convey land or interested in land which may be taken, or which suffers damage from the taking of materials or the exercise of any of the powers granted for the railway, to make an agreement that seems expedient to both parties about the land or the compensation to be paid for it, or for the damages, or as to the mode in which the compensation is to be ascertained.
    (2) If the parties fail to agree, all questions that arise between them must be settled as provided in this Act.
  General notice
  49  (1) The deposit of a plan, profile and book of reference, and the notice of the deposit, is deemed to be a general notice to all parties of the land which will be required for the railway and works.
    (2) The date of the deposit is the date with reference to which compensation or damages must be ascertained, but if the company does not actually acquire title to the land within one year from the date of the deposit, then the date of the acquisition is the date with reference to which the compensation or damages must be ascertained.
  Notice to be served
  50  The notice served on the owners of land, or persons empowered to convey land or interested in land, must contain
      (a) a description of the land to be taken, or of the powers intended to be exercised with regard to any land described in it, and
      (b) a declaration of readiness to pay a certain sum or rent as compensation for the land or for damages.
  Certificate of surveyor
  51  The notice must be accompanied by the affidavit of a British Columbia land surveyor, who is a disinterested person, stating the following:
      (a) that the land, if the notice relates to the taking of land, is required for the railway or is within the limit of deviation allowed by this Act;
      (b) that he or she knows the land or the amount of damage likely to arise from the exercise of the powers;
      (c) that the sum offered is, in his or her opinion, a fair compensation for the land and the damages likely to arise. …
  Arbitration where sum offered not accepted
  53  (1) If, within 10 days after the service of the notice or within one month after the first publication of it, the owner or party referred to in section 50 does not give notice to a company that the owner or party accepts the sum offered by it, the amount of compensation must be determined by the Expropriation Compensation Board under the Expropriation Act.
    (2) The Expropriation Act applies to the determination of the amount of compensation.
  Payment of compensation into court
  54  (1) A company may pay an amount for compensation into court, with the interest on it for 6 months, and may deliver to the registrar of the court an authentic copy of a conveyance, or of an award or agreement if there is no conveyance, and register the conveyance, award or agreement in the proper land title office in any of the following circumstances:
      (a) if the company has reason to fear any claim, mortgage or encumbrance;
      (b) if any person to whom the compensation or annual rent or any part of it is payable refuses to execute a proper conveyance and guarantee;
      (c) if the person entitled to claim the compensation or annual rent cannot be found, or is unknown to the company;
      (d) if for any other reason the company considers it advisable.
    (2) The conveyance, or the award or agreement, is then deemed to be the title of the company to the land mentioned in it.
  Publication of notice
  55  (1) Notice of the payment and delivery, in the form and for the time the court appoints, must be published in the Gazette and in a newspaper published in the county in which the land is located, or, if there is no newspaper published in the county, then in a newspaper published in the nearest county to it in which a newspaper is published.
    (2) The notice must
      (a) state that the conveyance, agreement or award constituting the title of the company is obtained under this Act, and
      (b) call on all persons claiming an interest in or entitled to the land or any part of it to file their claims to the compensation or any part of it.
  Compensation in place of land
  56  (1) The compensation for any land which may be taken without the consent of the owner stands in the stead of that land.
    (2) As against a company, any claim to or encumbrance on the land or any portion of it must be converted into a claim to the compensation, or to that proportion of it.
    (3) A company is responsible when it has paid the compensation or any part of it to a person not entitled to receive it, saving always its recourse against that person.
  Effect of adjudication
  57  (1) All the claims filed must be received and adjudicated on by the court, and the adjudication on them forever bars all claims to the land or any part of it, including any dower, mortgage or encumbrance.
    (2) The court must make the appropriate order for the distribution, payment or investment of the compensation and for the security of the rights of all persons interested.
    (3) If the order for distribution, payment or investment is obtained within 6 months from the payment of the compensation into court, the court must direct a proportionate part of the interest to be returned to the company.
    (4) If from any error, fault or neglect of the company the order is not obtained until after 6 months have expired, the court must order the company to pay into court, as part of the compensation, the interest for the further period as is right.
    (5) The court may order that all or a part of the costs of the proceedings, including the proper allowances to witnesses, be paid by the company or by any other person.
  Right to take possession
  58  On payment or legal tender of the compensation or annual rent awarded or agreed on to the person entitled to receive it, or on the payment into court of the amount of the compensation, in the manner mentioned, the award or agreement vests in a company the power to promptly take possession of the land, or to exercise the right, or to do the thing for which the compensation or annual rent has been awarded or agreed on.

 

6.  ANALYSIS ON JURISDICTION AND PROCEDURAL ISSUES

6.1  Jurisdiction

[17]  The first issue to be decided is the board's jurisdiction.

[18]  Mr. Schulte submits that generally boards such as the Expropriation Compensation Board have jurisdiction to decide upon their own jurisdiction. Mr. Secord, counsel for Mr. Schulte, referred me to a number of Supreme Court of Canada cases including Reference Re Residential Tenancies Act, [1981] 1 S.C.R. 714; National Corn Grower's Association v. Canada (Canadian Import Tribunal), [1990] 2 S.C.R. 1324; and Cooper v. Canada (Human Rights Commission), [1996] 3 S.C.R. 854. He also cited a decision of this board McKinnon v. Duncan (City) (1992), 47 L.C.R. 47 (B.C.E.C.B.) where the board found that Duncan's expropriation by-law was void for uncertainty and as a result the board decided that it had no jurisdiction to determine compensation. Finally he referred me to the CED Western volume on Administrative Law, 3rd ed., para 371 which states: "A tribunal may lack jurisdiction because of the non-fulfilment of certain requirements upon which its authority expressly depends".

[19]  The claimants strongly oppose the respondent's position. They state that the board does not have the jurisdiction to do other than what is specifically authorized under the relevant statute. According to Mr. Cosburn, counsel for the claimants, section 26 and section 51 of the Expropriation Act, make it clear that the legislature contemplated that any validity of an expropriation under the Expropriation Act, was to be considered by the Supreme Court, not the board. Mr. Cosburn states that section 53 of the Railway Act is mandatory in its direction that the Expropriation Compensation Board must determine compensation. It does not confer jurisdiction on the Expropriation Compensation Board to do anything further. He submits that because the purpose of the Expropriation Compensation Board is to determine compensation, then the legislature could not have meant that the members of this board, who are not appointed on the basis of any expertise in the administration of railways or pipelines, nor for that matter on the basis of any expertise in interpreting statutes, can determine whether various procedural steps set out in the Railway Act have been followed. If Mr. Schulte wants to raise these issues he should go to the Supreme Court.

[20]  Mr. Cosburn referred me to the leave to appeal decision in Vancouver Marina (1971) Ltd. v. British Columbia (Minister of Transportation and Highways) (2001), 75 L.C.R. 316 (B.C.C.A.) and the standard of review to be applied when tribunals such as the Expropriation Compensation Board are interpreting legislation. He suggested that the Supreme Court of Canada cases referred to by Mr. Secord were not on point. However, Mr. Cosburn submitted that another case put forward by the respondent, Whitechapel Estates Ltd. v British Columbia (Ministry of Transportation and Highways) (1994), 54 L.C.R. 306 (B.C.E.C.B.), supported the board's not having jurisdiction to go beyond its statutory mandate. As to the board decision in McKinnon v. Duncan, Mr. Cosburn said that it was in his view wrongly decided on the point of declining jurisdiction after deciding that the expropriation bylaw was void for uncertainty.

[21]  I cannot accept the claimants' position. There is considerable authority to the contrary, although I was not much assisted by the authority provided by either counsel.

[22]  Sara Blake, in her book, Administrative Law in Canada, (Toronto: Butterworths, 1992), states at p. 99:

A tribunal may determine the scope of its own powers and must do so when its authority is questioned. It may interpret its enabling legislation to ascertain whether it has the power necessary to perform a specific act.

[23]  I note section 27(2) of the Interpretation Act, R.S.BC. 1996, c. 238 that provides:

  27  (2) If in an enactment power is given to a person to do or enforce the doing of an act or thing, all the powers that are necessary to enable the person to do or enforce the doing of the act or thing are also deemed to be given.

If the board has power to determine compensation, then it is deemed to have the power to decide whether it can proceed with an application to determine compensation when various procedural requirements may not have been fully met.

[24]  This issue was thoroughly canvassed in Matsqui Indian Band v. Canadian Pacific Ltd. (1995), 122 D.L.R. (4th) 129 (S.C.C.). The question was whether a strip of land (with a railway track) that passed through an Indian reserve and registered in the Land Title Office in the name of Canadian Pacific was land that was "in the reserve" and subject to taxation by the Indian band under the Indian Act. Pursuant to the Indian Act the bands passed bylaws that provided for an appeal from an assessment to either an assessment review committee or a board of review with a further appeal to the Federal Court. The parties were at odds as to whether the appeal tribunals could entertain questions going to jurisdiction. Canadian Pacific had brought an application for judicial review directly to the Federal Court requesting that the assessments be set aside on the basis that the strip of land in question was not "in the reserve". At this time no hearing had occurred at the appeal tribunal. The bands had objected and requested that Canadian Pacific's application for judicial review be struck out on the grounds that there was a right to appeal any ruling of the appeal tribunals that might be made to the Federal Court.

[25]  Major J. in one of the judgments for the majority made a distinction between questions that are clearly within the board's jurisdiction and questions that decide upon the board's jurisdiction. Relying on Dayco (Canada) Ltd. v. C.A.W.-Canada (1993), 102 D.L.R. (4th) 609 (S.C.C.) he stated that if the matter is brought to the appeal tribunals it will have jurisdiction to first consider the question as to whether the land was within the reserve although any decision on this issue is subject on appeal to the standard of correctness. Lamer C.J.C., in another judgment for the majority stated at para 23:

It is now settled that while the decisions of administrative tribunals lack the force of res judicata, nevertheless, tribunals may embark upon an examination of the boundaries of their jurisdiction. Of course they must be correct in any determination they make, and courts will generally afford such determinations little deference.

Lamer C.J.C. went on to say at para 29:

I therefore conclude that the Federal Court and the appeal tribunals established under section 83(3) of the Indian Act have concurrent jurisdiction to hear and decide the question of whether the respondent's land is "in the reserve".

[26]  Despite finding that the appeal tribunals had jurisdiction to consider this initial question that bore upon their jurisdiction, both Major J. and Lamer C.J.C. ultimately dismissed the appeal and allowed the application for judicial review of the assessments by the Federal Court to proceed. Major J. stated that when Canadian Pacific had brought the matter to the Federal Court first, they should not be required to go back and proceed through the appeals tribunal when the only issue was a fundamental one of lack of jurisdiction. Lamer C.J.C. found that there was a reasonable apprehension of bias flowing from the institutional structure of the appeal tribunals. However, I note that in the present case, unlike Matsqui, the preliminary questions about jurisdiction have been brought to the board in the course of an application to determine compensation.

[27]  The question of jurisdiction of this board under the same provisions in the Pipeline Act and Railway Act has been considered in a general way in BC Gas Inc. v. Lansdall (1992), 48 L.C.R. 209 (B.C.E.C.B.). This board reconciled the requirement under the Expropriation Act that owners whose land had been expropriated are entitled to compensation with the unusual procedure under the Pipeline Act and Railway Act, where title to the land is not transferred until after the compensation hearing. As in the present case, a pipeline had already been laid on Dr. Lansdall's land, although under quite different circumstances. The board described this as a permanent encroachment on his land. At p. 218 they concluded that "the entry on Dr. Lansdall's land by the gas utility constituted an "expropriation" of his interest … even though formal title thereto will not vest until our award is registered in the Land Title Office". As a result "we have … jurisdiction to award compensation pursuant to section [31] of the Expropriation Act". I do not necessarily agree that there would be no jurisdiction where the claimant had not already "encroached" on the property owner's land, but on the facts of the present case I do not need to make any determination of this issue.

[28]  Other decisions of this board have considered the issue of whether requirements under various Acts had been met such that the board could assume jurisdiction to determine compensation.

[29]  In Tancredi v. British Columbia (Minister of Transportation and Highways) (1995), 57 L.C.R. 154 (B.C.E.C.B.) this board considered whether it had jurisdiction to determine a damage claim under section 18 of the Water Act, R.S.B.C. 1979, c. 429 for the diversion of water from Wagg Creek by the Ministry of Transportation and Highways as part of the construction of an interchange. The board reviewed different sections of the Water Act and Part 5 of the Water Regulation, B.C. Reg. 204/88, and reached the conclusion at p. 166 that it had no jurisdiction to determine compensation under section 18 of the Water Act. Jurisdiction to determine compensation under this section presumably fell to the Supreme Court of British Columbia.

[30]  In McEachern v. British Columbia Hydro and Power Authority (1997), 60 L.C.R. 186 (B.C.E.C.B.) this board again considered the question of whether it had jurisdiction to determine compensation for the presence of a hydro pole and lines on the land of the claimant, Mr. McEachern, under section 16 of the Hydro and Power Authority Act, R.S.B.C. 1979, c. 188. After lengthy analysis of the facts, the common law and the provisions of the Hydro and Power Authority Act this board concluded that the requirements under section 16 of that Act had not been met. Because there had been no expropriation or exercise of a power of interference under section 16 of the Hydro and Power Authority Act, the board did not have jurisdiction to hear a compensation claim. Mr McEachern's remedy was to commence an action to recover damages and restrain or remove Hydro's works.

[31]  Another case in which the board considered its jurisdiction to award compensation was Frobeen v. Central Saanich (District) (1996), 58 L.C.R. 267 (B.C.E.C.B.). The preliminary issue in Frobeen was whether there was a statutory basis for compensation under the Municipal Act R.S.B.C. 1979, c. 290 as a result of a bylaw specifying a 30 metre set-back from the natural boundary of Sand Hill Creek, a setback that affected 38% of the claimants' property. After reviewing the facts and the legislation, the board concluded that the statutory prerequisites under sections 963 and 972 of the Municipal Act had been met and therefore under section 972, compensation was prohibited. As a result the board lacked jurisdiction to proceed. I note that Mr. Cosburn was counsel for the claimant in both Frobeen and McEachern.

[32]  In Denault v. Barclay, unreported, September 3, 2002, E.C.B. Control No. 41/00/226, there was a submission similar to that in this case that certain procedural steps under the Water Regulation had not occurred and as a result the application by the claimant, Denault, could not proceed. Denault, as a licensee under section 27 of the Water Act, sought to expropriate certain land from the Barclays that he submitted were required for the construction, maintenance, improvement or operation of works authorized under his licence. Denault's application was for the Expropriation Compensation Board to determine the legal nature and location of what was required, the character of the works to be constructed, and the governing terms and conditions of use. (Compensation to the Barclays for any such taking was to be determined at a subsequent hearing.) The chair, Robert Shorthouse, described the preliminary question at para 38:

The real issue, as I see it, is not that the board has a duty to enforce compliance with all procedural requirements under the relevant enactments. Rather, the board must be satisfied that it has the jurisdiction to proceed with an application when those procedural requirements have not been, or may not have been, fully met.

After an analysis of the statutory requirements under the Water Act and the Water Regulation and the facts of the case he went on to find at para 39:

… While there is no proof that these amendments resulted in any refiling of documents with the comptroller and the registrar, and in that sense it has not been shown that the procedural requirements have been perfected, I do not consider this defect to be fatal to the claimant's application, to deprive the board of jurisdiction already assumed, or to be incapable of being remedied if necessary at a later date but before an order of this board takes effect.

[33]  I find the facts in the Denault case more applicable than those in Whitechapel. In Whitechapel the board first determined that the statutory provisions requiring the respondent to produce an appraisal report pursuant to section [20] of the Expropriation Act did not apply when the expropriation had occurred prior to the Expropriation Act becoming law. The board then went on and found that it did not have jurisdiction to grant the extraordinary remedy of making a mandatory order for the creation and delivery of an appraisal report under section [20] when there was no statutory authority for it to do so. This is to be distinguished from the circumstances in the present case where the issue is whether the board has jurisdiction to consider if the alleged procedural defects prevent the board from embarking on the determination of compensation.

[34]  In summary, Matsqui establishes that this board, like any other tribunal, has jurisdiction to determine whether it has the jurisdiction to embark on the issue to be decided. The standard of review of correctness applies to many of the board's determinations; the fact that the standard of review is correctness does not deprive the board of jurisdiction. Tancredi, McEachern, Frobeen and Denault are all examples of cases where the board interpreted the requirements under the Water Act, the Water Regulation, the Hydro and Power Authority Act or the Municipal Act, including preliminary procedural requirements, in order to determine whether it had jurisdiction to proceed and assess compensation. In a number of the cases where the board has considered the issue of jurisdiction, it concluded that it had none. The procedural provisions under the Pipeline Act and the Railway Act are no different in kind than the procedural requirements under these other Acts. I conclude that the board has jurisdiction to determine whether or not it has jurisdiction to determine compensation.

6.2  Ministerial Approval

[35]  I must now consider the two procedural defects alleged by Mr. Schulte. The first of these is whether Ministerial approval under section 14 of the Railway Act is necessary for the existing gas pipeline.

[36]  The respondent, Mr. Schulte, pointed out in his Form B that he was not aware of any approval having been issued for the existing pipeline. In his submissions he said that the approvals issued in 1978 were for the construction and operation of the pipeline for Home Oil Company Limited and not for Anderson Exploration Ltd or Devon Canada Corporation. The claimants had attempted to obtain approval for the existing pipe line in 2001 and failed. The Railway Act provides at section 15 that once the Minister of Transportation has approved the location of the pipeline, a plan, profile and book of reference must be provided to the Minister for approval. In Part 7 of the Railway Act, at section 49, this plan, profile and book of reference are to be filed in the Land Title Office and this deposit is deemed to be general notice to all parties of the land which will be required. According to the respondent, the overall legislative scheme makes Ministerial approval a prerequisite for any determination of compensation by this board and the failure to obtain this Ministerial approval is fatal.

[37]  The claimants say that when the Oil & Gas Commission Act, the Pipeline Act and the Railway Act are reviewed together, the approval of the Minister under section 14 of the Railway Act is not necessary. They had sought this approval out of an abundance of caution. The existing pipeline was approved in 1978 and the failure of the claimants to register the statutory rights of way obtained in 1978 did not invalidate that approval.

[38]  I agree with the claimants (and the Minister of Transport) that the approval of the Minister under section 14 of the Railway Act is not necessary. When the Oil & Gas Commission Act, the Pipeline Act and the Railway Act are reviewed together, no approval under section 14 of the Railway Act is required. If the pipeline was being approved and constructed now, the procedures for certification and approval are found in the current Pipeline Act, and it would be the Oil and Gas Commission who approved any new pipeline. But in this case, as indicated above, the location of the pipeline has already been approved by the Lieutenant Governor in Council in 1978. Furthermore, following construction, the operation of this pipeline has already been certified, inspected and approved by the Minister of Transport and Communications, also in 1978. These approvals were pursuant to the procedures that were in effect at that time in the Pipe-lines Act. The subsequent changes in corporate structure of the company that owned the pipeline are irrelevant to the issue of approvals given for the location, construction and operation of the pipeline in 1978. There is nothing in the current legislation that compels any further approvals on the facts in this case. The only thing that remains to be done is to complete the transfer of the statutory rights of way to the claimants. Because the original statutory rights of way were not registered in the Prince George Land Title Office in 1978 new ones have to be obtained from the present owner. Under section 16(1) of the Pipeline Act, having obtained a certificate, the company may take land for the pipeline. If the owner does not agree to transfer the land for the pipeline then under 16(2) and 16(3) of the Pipeline Act, the company can expropriate the land under Part 7 of the Railway Act. Mr. Schulte is entitled to compensation for the land that is taken.

[39]  Part 7 of the Railway Act includes section 53 that provides for determination of compensation by the Expropriation Compensation Board under the Expropriation Act if the owner of the land does not accept the money offered in the prescribed Notice under section 50 of the Railway Act within a certain time frame of it being served on the owner. Under section 54 of the Railway Act, if the person to whom the compensation is payable refuses to execute a proper conveyance, the award of compensation by the Expropriation Compensation Board is deemed to be the title of the company to the land mentioned in the award. Under section 56 of the Railway Act, the compensation for an interest in land taken without the consent of the owner stands in the stead of that land and under section 58 the award vests in a company the power to take possession of the land on payment of the compensation awarded to the person or into court. All of these sections are included in Part 7 of the Railway Act that is invoked under section 16 of the current Pipeline Act. Section 14 of the Railway Act is not found in Part 7.

[40]  It is true that there is reference in section 15 and 16 of the Railway Act to preparing the plan, profile and book of reference following approval of the minister under section 14 of the Act, when later on in sections 48 and 49 in Part 7 these documents are to be deposited in the proper Land Title Office. However, as indicated above, the Lieutenant Governor in Council and the Minister of Transport and Communications provided approvals and consents in 1978. One of the Plans and books of reference for the existing pipeline was filed in the Land Title Office shortly after its construction in 1981, though the other filings occurred more recently. The legislation does not require new approvals before any of the outstanding statutory procedural steps such as further filings and notices for the existing pipeline are completed.

[41]  I conclude that no Ministerial approval under section 14 of the Railway Act (or indeed any further approval) is necessary for the existing pipeline.

6.3  Wrong Corporate Name

[42]  The second procedural defect alleged by Mr. Schulte is the use of the wrong corporate name in the Section 50 Railway Act Notice.

[43]  In 1995, according to the Form A filed by the claimants, the claimant Anderson Exploration Ltd. acquired the undertakings of the claimant Home Oil Company Limited and their respective operations were amalgamated although each retains assets in its own name. In November 2001 according to the Form A filed by the claimants, Devon Energy Corporation (sic) acquired the claimant Anderson, although again the Form A says that all three companies continue to hold assets and to varying extents operate in their own names.

[44]  The Form B filed by Mr. Schulte stated that the wrong company gave the Section 50 Notice as required under the Railway Act. He submits that after the date of the amalgamation in the fall of 2001, followed by the name change, the only proper entity was Devon Canada Corporation and not Anderson Exploration Ltd. As a result when the section 50 Notice under the Railway Act was signed on April 9, 2002 and served on the respondent on May 23, 2002, it should have been in the name of Devon Canada Corporation. Mr. Secord, counsel for the respondent, referred me to section 181 of the Canada Business Corporations Act, which provides that two or more corporations … may amalgamate and continue as one corporation (emphasis added). He also relied on Regina v. Black & Decker Manufacturing Co. Ltd. (1974), 43 D.L.R. (3d) 393 (S.C.C.). In that decision, Dickson J., speaking for the court, interpreted the word "amalgamate" in section 137 of the Canada Corporations Act, R.S.C. 1970, c. C-32, a provision similar to section 181. He stated at p 400:

… the end result is to coalesce to create a homogeneous whole. The analogies of a river formed by the confluence of two streams, or the creation of a single rope through the intertwining of strands have been suggested by others.

As a result of the wrong name being used the respondent says that compensation cannot be determined until a new section 50 Railway Act Notice in the correct corporate name is issued.

[45]  The claimants dispute this submission. First, they explain that the Plans filed in the Prince George Land Title Office showing the statutory rights of way were in the name of Home Oil with respect to the West 1/2 of 19 and the South 1/2 of 30 (in September 1981) and in the name of Anderson with respect to Parcel A of the North 1/2 of 30 (in September 2000). These corporate names have been carried through to the section 50 Notice and the Form A, as the award that is eventually registered in the Prince George Land Title Office must tie into these Plans.

[46]  Next they say that the amalgamating corporation's property, claims and liabilities continue on in the amalgamated corporation. They say that the decision of Dickson J. in Regina v. Black & Decker supports this position. They point to the following provisions found in section 186 of the Canada Business Corporations Act:

  186.  On the date shown in a certificate of amalgamation …
      (b) the property of each amalgamating corporation continues to be the property of the amalgamated corporation;
      (c) the amalgamated corporation continues to be liable for the obligations of each amalgamating corporation;
      (d) an existing cause of action, claim or liability to prosecution is unaffected; …
      (f) a conviction against, or ruling, order or judgment in favour of or against, an amalgamating corporation may be enforced by or against the amalgamated corporation; …

[47]  Finally, they submit that there is no justifiable reason to require that the Section 50 Notice under the Railway Act be reissued in the name of Devon Canada Corporation rather than Home Oil Company Limited and Anderson Exploration Ltd. The respondent is unaffected by the amalgamation and no one has been misled by the existing Section 50 Notice.

[48]  On the evidence that I received, Home Oil is still a legal entity that is registered with the British Columbia Registrar of Companies as an extraprovincial company. It had filed an annual report with the British Columbia Registrar of Companies on February 8, 2001. No objection is taken to Home Oil's name as the company acquiring the statutory right of way on West ½ of 19 and South ½ of 30 on the section 50 Railway Act Notice.

[49]  At the hearing counsel for the claimants applied to amend the pleadings to add now known as Devon Canada Corporation after Anderson Exploration Ltd. This application was unopposed and was supported by the evidence. As a result this amendment is allowed. The issue is then whether a section 50 Railway Act Notice using an earlier name for one of the corporate claimants, Anderson Exploration Ltd., is fatal to this application for compensation proceeding.

[50]  Both sides referred me to the provisions of the Canada Business Corporations Act. Section 186 does provide that the property of an amalgamating corporation continues to be the property of the amalgamated corporation and an existing action or claim by an amalgamating corporation can be continued by the amalgamated corporation. However, the opening words of section 186 are "on the date shown in a certificate of amalgamation". Anderson Exploration Ltd. amalgamated with Devon Acquisition Corporation and then changed its name to Devon Canada Corporation on November 14, 2001. When negotiations began with Mr. Schulte to acquire the statutory right of way in 1999 and 2000 Anderson Exploration Ltd. was the correct name of the company. However, when the section 50 Railway Act Notice was signed on April 9, 2002 and served on Mr. Schulte on May 23, 2002 it should have been issued in the name of Devon Canada Corporation as the proper legal entity at that time. In this case it is not an existing action by an amalgamating company at the date shown in the certificate of amalgamation but actions taken after the date of amalgamation in the name of the earlier amalgamating company. While section 186 does not resolve the issue in this case, the wording of section 186 and the case of Regina v. Black & Decker, do support the ongoing nature of the old amalgamating company and its property in the new amalgamated company.

[51]  I am assisted by a number of cases that were not provided by counsel. Haughton v. Heffley Creek (Waterworks District) (1997), 61 L.C.R. 265 (B.C.C.A.) is a case where there were also alleged procedural defects in the expropriation process. After passing a bylaw authorizing the expropriation the District filed an expropriation notice and the explanatory plan in the Land Title Office pursuant to the statutory procedures set out in the Expropriation Act. However, at the time that this was done the land sought to be expropriated was not within the respondent District. An application for judicial review by another person in identical circumstances at this stage resulted in the expropriating bylaw and the expropriation notice being set aside. See Don-Bar Holdings Ltd. v. Heffley Creek (Waterworks District) (1995), 55 L.C.R. 89 (B.C.S.C.). However, in Haughton, the District was eventually successful in having the subject land included within its boundaries and the District passed a second bylaw authorizing the expropriation and rescinding the first bylaw. Haughton brought a petition seeking judicial review after the second bylaw; he sought an order that the expropriation notice and the explanatory plan that were filed in the Land Title Office before there was any valid expropriation bylaw in place were a nullity. Blair J. dismissed the petition and the Court of Appeal dismissed the appeal. Relying on Erickson v. Kamloops (City) (1993), 50 L.C.R. 81 (B.C.S.C.), Blair J. held that the passing of a bylaw is not a condition precedent to the District invoking the Expropriation Act. The District can take the various steps in any order provided all of the required steps are taken before the expropriation is completed. The expropriation notice and the explanatory plan were not a nullity even though they were filed at a time when the District did not include the land that was to be expropriated. The Court of Appeal agreed with the trial judge's reasons.

[52]  The case of Seaside Acres Ltd. v. Pacific Coast Energy Corp. (1994), 52 L.C.R. 106 (B.C.C.A.) was also to do with alleged procedural defects. The Minister as the approving authority had approved the expropriation before the date of deemed service of the notice of expropriation, according to the procedural steps set out in the Expropriation Act. The claimant had brought a petition seeking judicial review to set aside the expropriation. The Supreme Court dismissed the petition and the Court of Appeal dismissed the appeal. Goldie J.A. speaking for the court stated that when the expropriation was for a linear development (and as a result the Minister's approval was automatic), the statutory sequence of steps did not apply. At p. 114 he made the following observation:

It is not material to the conclusion I have reached on the true meaning of the Act but I note Seaside was aware in October, 1989, that a right of way for an underground pipeline was required across its property and received actual notice of the commencement of the expropriation process on August 31, 1990. It cannot be said that there was any actual prejudice to Seaside in the Minister's approval being granted that day.

[53]  Finally, I note Denault v. Barclay, referred to above. In that case there was a submission that certain procedural steps with respect to service of amended documents on the water comptroller and the registrar under the Water Regulation and the Expropriation Act had not occurred and that as a result the application of the claimant, Mr. Denault, for a determination by this board of various aspects of the taking and the works to be constructed could not proceed. As already described, the Chair, Robert Shorthouse, stated that he did not find the alleged procedural defects to be fatal to the claimant's application.

[54]  In the present case the use of the earlier name of the corporation in the section 50 Railway Act Notice has been superseded by an application to determine compensation under the Expropriation Act. The Form A which is the initiating pleading for this application includes much of the substance of the section 50 Railway Act Notice, including the two specified provisions: a description of the land to be taken and a declaration of readiness to pay a certain sum as compensation for the land or damages. The Form A has been amended, to include the current corporate name. The expropriation, in which title to the statutory right of way is transferred to the claimants, has not yet been completed. The project is a long standing linear development. Relying particularly on Haughton v. Heffley Creek I conclude that the use of the earlier name of the corporation in the section 50 Railway Act Notice is not fatal to this application for a determination of compensation when all of the procedural requirements will be in place by the time of the actual vesting of title in the expropriating company. As the court said in Seaside, although it is not material to my decision I note that the respondent has had notice of the claimants wanting to acquire a statutory right of way across his property since at least April 1999. It cannot be said that there is any actual prejudice to the respondent as a result of the mistake in the section 50 Notice.

6.4  Conclusion on Jurisdiction and Procedural Defects

[55]  To summarize, I have decided that I have jurisdiction to consider the prior question as to whether I have jurisdiction to determine compensation in this matter. With respect to the two alleged procedural defects I have concluded the following:

       i When the Oil & Gas Commission Act, the Pipeline Act and the Railway Act are reviewed together, no approval by the minister under section 14 of the Railway Act is required, nor are further approvals of any kind required.
      ii The use of the earlier name of the corporation in the section 50 Railway Act Notice is not fatal to this application for a determination of compensation when the Form A has been amended to include the present legal name of the corporation.

Because I have not found either of the alleged procedural defects to be fatal I conclude that I have jurisdiction to proceed with the application to determine the compensation to be paid to Mr. Schulte for the statutory right of way on the subject lands.

 

7.  COMPENSATION

[56]  As indicated above the evidence on compensation was completed so that if the board decided that it did have jurisdiction, the determination of compensation could proceed without having to reconvene any further hearing.

[57]  Only one appraisal report was presented at the hearing. This was a report by W.W.G. McDonald of True North Realty Appraisals dated March 22, 2002 prepared for the claimants. Mr. McDonald was designated A.A.C.I. (Appraisal Institute of Canada), as well as R.I.(B.C.) by the Real Estate Institute of British Columbia as required by para 8 of the Expropriation Act General Regulation, B.C. Reg. 451/87. Mr. McDonald used the direct comparison approach relying on four sales of comparable properties. His opinion of value for the good cultured farm land on the subject lands was between $616 and $626 per acre. However he applied a bonus for Mr. Schulte's improvement of the soil through long range soil practices of between 35% and 40%. This led him to a final opinion of value for the good farm land of $858 per acre. The value for the rough range land was lower, at $382 to $385 per acre. After consideration of the bonus for improvement of the soil his final opinion of value for rough range land on the subject property was $530 per acre. The opinions of value were as of the date of his report, March 22, 2002. Mr. McDonald did not describe the rights of way nor provide any estimate of value for the rights of way.

[58]  Section 50 of the Railway Act provides that the Notice under this section must contain a description of the land to be taken as well as a declaration of readiness to pay a certain sum as compensation for the land. The Notice dated April 9, 2002 attaches the proposed Statutory Right of Way documents for the subject lands. Under section 51 of the Railway Act the Notice must be accompanied by an affidavit from a British Columbia land surveyor. The affidavit from Mr. Redfern states that the statutory right of way in the Plan for Parcel A of North 1/2 of 30 in the name of Anderson Exploration Ltd. is 1.17 hectares (2.89 acres). Mr. Redfern goes on to state that the statutory right of way in the Plan for West 1/2 of 19 and South 1/2 of 30 in the name of Home Oil Company Limited is 3.0178 hectares (7.46 acres).

[59]  The section 50 Railway Act Notice (and the Form A) also states that Anderson Exploration Ltd. is prepared to pay $501.93 as compensation for the statutory right of way on Parcel A of North 1/2 of 30. The Notice says that this sum is calculated by taking 50% of the fee simple value as determined by Mr. McDonald. The value as determined by Mr. McDonald is stated to be reduced by 50% to take into account the fact that the rights taken by Anderson in the statutory right of way allow continued use of the surface by Mr. Schulte, with only limited exceptions. Fifty per cent of the value of good farm land as determined by Mr. McDonald is stated to be $429 per hectare ($858 per hectare x 50%). With the statutory right of way on Parcel A of North 1/2 of 30 occupying 1.17 hectares the compensation for the statutory right of way is $501.93 ($429 x 1.17).

[60]  The Notice (and the Form A) goes on to provide that Home Oil Company Limited is prepared to pay $1,294.64 as compensation for the statutory right of way on West 1/2 of 19 and South 1/2 of 30. Again the value as determined by Mr. McDonald is stated to be reduced by 50% to take into account the fact that the rights taken by Home Oil allow continued use of the surface by Mr. Schulte. At the same 50% of the value of good farm land as determined by Mr. McDonald times the size of the statutory right of way on West 1/2 of 19 and South ½ of 30, compensation for this statutory right of way is $1,294.64 ($858 x 50% x 3.0178).

[61]  The section 50 Railway Act Notice also provided that each of the claimants were willing to pay $500 for disturbance damages (for a total of $1,000). The Form A denies that there is any injurious affection to the remaining lands or any disturbance damages when the pipeline is already in the ground.

[62]  Mr. McDonald did not attend the hearing and his assessment of value was not challenged at the hearing.

[63]  One of the factors to be determined is the date for assessment of damages. There was no discussion of this factor at the hearing. Section 49 of the Railway Act provides that the date of the deposit of plans in the Land Title Office (pursuant to section 48) is the date to which compensation or damages must be ascertained, but if the company does not actually acquire title to the land within one year then the date of acquisition is the date to which the compensation or damages must be ascertained. In this case one of the plans was filed in the Prince George Land Title Office on September 14, 1981 and the other was filed on September 29, 2000. However, the filings were not complete until the profile was filed in the Land Title Office on February 21, 2002. Mr. McDonald's report provides a valuation for good cultured farm land and for rough range land based on four comparable sales that occurred in 2001. Mr. McDonald's valuation is as of March 22, 2002. Mr. McDonald's report does not provide any reason to think that there is much volatility in the value of this farm land. In BC Gas Inc. v. Lansdall this board set out that under the same provisions the parties should use the date of the first day of the hearing as the date for assessment. Clearly there are practical difficulties with providing evidence of valuation at some date following a hearing when the company acquires title. I find Mr. McDonald's valuation of the fee simple value for good farm land applicable on February 21, 2002 and on the date of this decision. In any event the fact that valuation of the land in the statutory right of way has been enhanced in two different ways means that the date of the assessment for compensation for the market value of the statutory right of way is of less consequence. (The two methods by which the valuation has been enhanced are that all the land occupied by the statutory right of way has been valued as good farm land when some of it is rough range land and a bonus of 38% has been added to the original valuation per acre for soil improvement.)

[64]  Next I must consider the reduction of compensation by 50% because the proposed taking is a statutory right of way for an underground gas pipe line. The 50% reduction of the fee simple value to be applied was not challenged at the hearing. E.C.E. Todd in The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell, Toronto, 1992) discusses the determination of compensation for pipeline right of way. At p. 431 Professor Todd states that there are three elements to be considered: the value of the land impressed with the right of way, the residual rights to the owner and injurious affection to the remaining land. He goes on to observe that pipelines buried under agricultural land generally allow farming to continue with little if any disruption and that therefore the residual value to the farmer had to be taken into account. The Ontario Court of Appeal in Re International Pipe Line Co., [1955] O.W.N. 301 suggested consideration of the following factors in determining residual value: future maintenance of the pipeline, pipeline inspections, possible construction of additional lines, restrictions against building structures such as roadways or fences, liability of the owner to pay property taxes with respect to the land included in the right of way and the effect upon servicing the remaining land.

[65]  Counsel for the claimants referred me to 286684 B.C. Ltd. v. Colwood (City) (1999), 66 L.C.R. 148 (B.C.E.C.B.), in which this board awarded 75% of the fee simple value for an underground sewer pipe right of way that cut across the middle of a 2.66 hectare development property and therefore curtailed potential development of the parcel. There was evidence in this case that Colwood had settled with other owners for only 5% of the fee simple value. However, in those cases the right of way ran along the boundary of the property and because of setback provisions there was no effect on the residual value. In two related cases Cokato Dairy & Stock Farms Ltd. v. Fernie (City) (1994), 54 L.C.R. 199 (B.C.E.C.B.) and Jones v. Fernie (City) (1994), 54 L.C.R. 285 (B.C.E.C.B.), the board compensated the two agricultural owners for a sewer right-of-way at 50% of the fee simple value. In both of these cases, the board noted that the surface could still be used as it had been before the taking (horse pasturing in one case and hay growing in the other). The board also observed that given the minimum effect on the owner's use of the land, a smaller percentage than 50% might have been appropriate compensation if the respondent, Fernie, had not conceded 50% of the fee simple valuation. At the other extreme, in Mayfair Resources Corp. v. Greater Vancouver Water District (1997), 61 L.C.R. 183 (B.C.E.C.B.) the board awarded 100% of the fee simple value for a right of way for an underground water pipe on the grounds that the development potential of the property had been significantly diminished. There was more evidence on the decrease in development potential in Mayfair Resources then there was in 286684 B.C. Ltd. v. Colwood (City).

[66]  In the present case, the terms of the statutory right of way attached to the section 50 Railway Act Notice and the draft awards, provide that the land owner, Mr. Schulte, covenants that he will not do various things. These include refraining from creating or increasing any hazard to the pipeline; blasting on the subject lands without specific permission; and doing anything which might endanger or injure the pipeline or impair its operating efficiency. The covenants also include refraining from constructing any building or structure on the right of way, from placing pavement on the right of way, from planting any tree or shrub on the right of way, and from placing or operating any equipment on the right of way. The owner also covenants not to deposit any deleterious, or harmful, or polluting substance on the right of way. The owner is to permit access to the claimants, who are to pay compensation to the owner for damages to any building, crops, livestock, drains, culverts, corrals or fences on the right of way that is damaged by the claimants. Mr. Schulte retains the use of the surface of the statutory right of way after consideration of these exclusions and others contained in the statutory right of way. There was no discussion of the particular terms of the statutory right of way at the hearing.

[67]  The pipeline runs on a diagonal more or less through the middle of the three parcels that make up the subject property. For some time after acquiring the property Mr. Schulte was not aware of the pipeline running through it. His son discovered the pipeline when he was using an excavator to try and dig a rock out of one of the fields. Mr. Schulte told me his residence is located on the subject property to the north west of the pipeline. He has a stack yard where he stacks bales of hay that is located on the right of way. He also has an area where his cows calve and feed that has the right of way through the middle of it. I assume that these areas are demarcated with a fence. There was evidence that Mr. Schulte used equipment, including a tractor on the subject property. It would appear that the terms of the covenant restrict any fences that may exist for the stack yard and for the calving and feeding area as well as the operation of equipment. I assume that the cattle can continue to use the land contained in the right of way as range land and as a calving and feeding area. I was not given specific evidence on how Mr. Schulte's use of the property as a ranch may be curtailed by the terms of the statutory right of way. But on the face of the document it appears that there is some restriction to the residual value in the eyes of a willing purchaser, even though the use as range land can continue. On the evidence that I was given I conclude that 50% of the fee simple value of the farmland is appropriate.

[68]  Next I must consider the amount of compensation for the land contained in the statutory right of way. Although the amount of compensation set out in the section 50 Railway Act Notice and the Form A was not questioned, a review of the Notice indicates that it contains an error in its calculation. Mr. McDonald estimated the value of the subject lands at $858 per acre not per hectare. When the calculations are redone using $858 per acre and 50% of the fee simple value the compensation for the statutory right of way on Parcel A of North 1/2 of 30 is $1,240 and on West 1/2 of 19 and South 1/2 of 30, $3,199 ($858/0.4047 ha x 50% x 1.17 ha) and ($858/0.4047 ha x 50% x 3.0178 ha).

[69]  There was no evidence to support any claim for disturbance damages or injurious affection and so no award is made for these items.

[70]  There remains the issue of costs. Counsel for the claimants requested that the issue of costs be adjourned. Counsel for the respondent made no reference to costs. If I adjourn costs then further submissions or a further hearing will be required. In the absence of agreement on the need for adjournment and given the circumstances of this case I decline to adjourn costs. The board does not want to encourage a multiplicity of proceedings, especially where the amount of money involved is small.

[71]  In BC Gas Inc. v. Lansdall this board found that an owner under the same provisions was entitled to costs. The board observed that Part 6 of the Expropriation Act is entitled "Basis for Compensation" and sections [45] and [48] that provide for the awarding of costs to an expropriated owner are contained in Part 6.

[72]  There was no claim for costs by the respondent in the pleadings but the procedure of this claim is unusual with the claimants being the companies seeking to expropriate the right of way. The claimants may have submitted that Mr. Schulte's costs should be curtailed because of the manner in which he had dealt with the claimants and their application or because of a settlement offer that had been made that was greater than the eventual award. However, I note that this application would not have been necessary at all if the claimant Home Oil Company Limited had ensured that the statutory rights of way had been deposited in the Prince George Land Title Office in 1978 or 1979. In any event, following BC Gas Inc. v. Lansdall I find Mr. Schulte entitled to his costs pursuant to section 45 and the Tariff of Costs Regulation, B.C. Reg 189/99. Despite these somewhat lengthy reasons, this matter as presented was of less than ordinary difficulty and accordingly costs are awarded at Scale 1. Under section 45 these costs are to be determined by the chair if necessary.

[73]  Because of the procedures contained in the Railway Act the claimants provided me with two Draft Awards, one with respect to Home Oil Company Limited for the West 1/2 of 19 and South 1/2 of 30 and the other with respect to Anderson Exploration Ltd. now known as Devon Canada Corporation for Parcel A of North 1/2 of 30. Each of these awards consists of a statement of the compensation awarded by the board to the respondent, Mr. Schulte, a Statutory Right of Way and a Land Title Act Form C. While these documents have been included as part of the reasons that are provided to the parties I have not attached them to the reasons released to the public because they are lengthy and of marginal relevance.

 

THEREFORE IT IS ORDERED THAT

  1. The claimant Home Oil Company Limited. shall pay the respondent, Franz Schulte compensation in the amount of $3,199 for the statutory right of way over the West 1/2 of Section 19, Township 84, Range 21, West of the 6th Meridian, Peace River District (P.I.D.014-791-684) and the South 1/2 of Section 30, Township 84, Range 21, West of the 6th Meridian, Peace River District (P.I.D.014-791-722) as set out on the Plan showing Gas Pipe Line Right-of-Way deposited in the Land Title Office in Prince George, British Columbia on September 14, 1981 under No. 27616 pursuant to section 16 of the Pipeline Act and section 53 of the Railway Act.
  2. The claimant Anderson Exploration Ltd. now known as Devon Canada Corporation shall pay the respondent Franz Schulte compensation in the amount of $1,240 for the statutory right of way over Parcel A (P18403) of the North 1/2 of Section 30, Township 84, Range 21, West of the 6th Meridian, Peace River District (P.I.D.014-729-679) as shown on Explanatory Plan of Statutory Right of Way deposited in the Land Title Office in Prince George, British Columbia on September 29, 2000 under No. PGP 45976 pursuant to section 16 of the Pipeline Act and section 53 of the Railway Act.
  3. The claimants Home Oil Company Limited and Anderson Exploration Ltd. now known as Devon Canada Corporation shall pay the respondent Franz Schulte his reasonable costs pursuant to section 45 of the Expropriation Act and the Tariff of Costs Regulation, B.C. Reg 189/99 at Scale 1.
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