Dau v. Murphy Oil Company Ltd., [1970] SCR 861

Supreme Court of Canada

Dau v. Murphy Oil Company Ltd., [1970] S.C.R. 861

Date: 1970-04-28

Bertha Margaret Dau and Donald Christian Dau Appellants;

and

Murphy Oil Company Ltd. Respondent.

1970: February 27, March 3; 1970: April 28.

Present: Martland, Judson, Ritchie, Hall and Spence JJ.

ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION

Compensation—Lands taken for well-site—Award of compensation—Value to owner—The Right of Entry Arbitration Act, R.S.A. 1955, c. 290.

On appeal from a judgment of the District Court, the Appellate Division of the Supreme Court of Alberta allowed the appeal, confirmed the award made by the Board of Arbitration on an application by the respondent under the provisions of The Right of Entry Arbitration Act, R.S.A. 1955, c. 290, and also directed that the matter be returned to the Board to consider what additional sum, if any, should be added to its original award by virtue of the fact that the highest and best use of the subject lands seemed to be as a site for the production of the underlying oil and gas. The appelants (the owners of the lands in question) appealed to this Court and the respondent cross-appealed.

Held: The appeal should be dismissed, the cross-appeal allowed and the judgment of the Appellate Division varied by deleting therefrom the direction for the return of the matter to the Board for further consideration.

The procedures provided for in The Right of Entry Arbitration Act were similar in nature to expropriation procedures, and when s. 20 of the Act provided that the Board of Arbitration, in determining compensation, might consider “the value of the land”, this meant value to the owner of the land. As in expropriation cases, the value to be paid for was the value to the owner and not the value to the taker.

The appellants were not the owners of the underlying oil and gas and therefore could not put the land to use as a site for the production of those substances. It would only be used for that purpose by the respondent, which did have the right to

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produce such oil and gas. The use of the land as a well-site did not represent any unusual potentiality to anyone other than the taker.

Point Gourde Quarrying and Transport Co. Ltd. v. Sub-lntendent of Crown Lands, [1947] A.C. 565, applied.

APPEAL and CROSS-APPEAL from a judgment of the Supreme Court of Alberta, Appellate Division[1], allowing an appeal from a judgment of Tavender D.C.J. Appeal dismissed and cross-appeal allowed.

R.S. Dinkel, for the appellants.

M.A. Putnam, for the respondent.

B.A. Crane, for the intervenant, the Attorney General of Alberta.

The judgment of the Court was delivered by

MARTLAND J.—This is an appeal from the Appellate Division of the Supreme Court of Alberta¹, which allowed the respondent’s appeal from a judgment of the District Court, confirmed the award made by the Board of Arbitration on an application by the respondent under the provisions of The Right of Entry Arbitration Act, R.S.A. 1955, c. 290 (hereinafter referred to as “the Act”), and which also directed that the matter be returned to the Board to consider what additional sum, if any, should be added to its original award by virtue of the fact that the highest and best use of the subject lands seemed to be as a site for the production of the underlying oil and gas. The judgment in the District Court had substantially increased the compensation which had been determined as payable by the respondent to the appellants by the Board. The Attorney General of Alberta is an intervenant on the appeal to this Court.

At the conclusion of the argument submitted on behalf of the appellants, the Court advised counsel that we were in agreement with those portions of

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the judgment of the Appellate Division which adjudged that the judgment of the District Court Judge should be set aside, and that the amounts of compensation awarded by the Board should be confirmed.

This left in issue only the direction “that the matter be returned to the Board which should consider what additional sum, if any, should be added to the award by virtue of the fact that the highest and best use of the subject lands seems to be as a site for the production of the underlying oil and gas”.

In my opinion, when s. 20 of the Act provided that the Board of Arbitration, in determining compensation, might consider “the value of the land”, this meant value to the owner of the land. The procedures provided for in this Act are similar in nature to expropriation procedures, even though an order of the Board does not give outright title to the surface of the lands affected; the rights granted by the order may, in certain events, be terminated by the Board; and jurisdiction is given to the Board to review, rescind, change, alter or vary its orders.

It is well settled, in expropriation cases, that the value to be paid for is the value to the owner, and not the value to the taker. Reading the Act in question here, as a whole, I see no basis for interpreting the words “value of the land” in s. 20(2) (a) as involving a different meaning. The value which the Board may consider is, in my opinion, value to the owner.

If this is so, it would not be proper, as directed by the Appellate Division, for the Board to consider an additional award by virtue of the fact that the highest and best use of the subject lands would be as a site for the production of the underlying oil and gas. The appellants could not put the land to that use, since they did not own the underlying oil and gas. It would only be used for that purpose by the respondent, which did have the right to produce such oil and gas. In the result, there was no unusual feature or potentiality about the surface of the land, in question here, other than the potentiality which would exist if the respondent obtained the right to use such land for the purposes envisioned by the Act. Any

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increase in its value as a potential well-site would be entirely due to the scheme underlying its acquisition.

In the result, I do not think that the use of the land as a well-site represents any unusual potentiality to anyone other than the taker. This case falls within the principles stated in Pointe Gourde Quarrying and Transport Company, Limited v. Sub-Intendent of Crown Lands[2], and is not analogous to Vyricherla Narayana Gajapatiraju v. Revenue Divisional Officer, Vizagapatam[3] or to Fraser v. The Queen[4].

Accordingly, I would delete from the judgment of the Appellate Division the paragraph which directs the return of the matter to the Board for further consideration.

In the result, the appeal should be dismissed, the cross-appeal allowed and the judgment of the Appellate Division varied by deleting therefrom the third paragraph of the operative portion of the judgment roll. There should be no order as to costs.

Appeal dismissed and cross-appeal allowed, both without costs.

Solicitors for the appellants: McLaws & Company, Calgary.

Solicitors for the respondent: MacKimmie, Matthews, Wood, Phillips & Smith, Calgary.