By Jensen, Randy on November 11, 2020.
A class-action lawsuit to be filed against a Calgary-based oil company on behalf of farmers who have not been paid their annual surface lease fees could set a precedent for the rest of the province of Alberta.
Guardian Law Group will be launching the class action against AlphaBow Energy Ltd. in the name of farmer Wilf Kautz on behalf of all farmers who have not been paid their annual surface lease payments by the company.
Guardian associate Mathew Farrell says enough is enough; AlphaBow Energy made a legally binding agreement to pay farmers their surface rights lease fees and it is time it paid.
“Farmers have always been not the priority when it comes to payments from oil companies because they are the little guy,” he says, “and their negotiating power is less than it should be. And that is especially true because it is not unusual for them not to have a choice when it comes to whether or not they are going to let this oil company on their lands. They essentially either get strong-armed and in some cases taken to the Surface Rights Board to secure access to their properties, and now they are not even getting paid the amounts they are supposed to be paid as agreed by the oil companies.”
Farrell acknowledges in many cases oil companies have been defaulting on the municipal taxes, and thus far the Kenney government has failed to intervene in that situation. Farrell was asked what chance does he think Guardian Law Group has in making AlphaBow Energy pay given the prevailing political winds and the economic downturn the industry has faced this year?
“Things were bad at the start of the oil crisis; especially when they were hit with double whammy of the trade war between the Russians and Saudi Arabia and a collapse in demand because of COVID,” he acknowledges.
“Oil prices are certainly not in their heyday now, but they are making money now. Prices are at about $35 a barrel and have been for months; so the notion that oil prices are so low it is physically impossible to pay, number one, is not something which is supported by the facts, and number two, more fundamentally, you made a deal, and you are supposed to be honouring that deal. It’s not fair to be downloading your debts onto these individual farmers.”
As for the political currents flowing through the situation, Farrell says the law simply does not care.
“Politicians are looking at this from a political perspective,” he explains, “and they are looking at it very practically going: Is it going to make us look good to make these oil companies do what they ought to do? Judges don’t look at things that way. They are not going to look at it and go ‘Is this going to make me look good? Do I have to curry favour with the oil companies?’ They don’t. They are going to be looking at what’s right, what’s fair, and what’s legal. And here, from a legal perspective, the law is on the side of the individual landowner because there is a clear agreement that says you are supposed to pay.”
Farrell admits it may take a while for the class action to wind its way through the court system, and he acknowledges it might just be the beginning of several more class-action lawsuits against other oil companies who are also not paying their surface leases to farmers.
“We’re picking them off one by one,” he says. “In this case there is a whole bunch of people who this oil company is doing this to, and the class-action lawsuit allows them all to gang up together and say, ‘This isn’t right.’ At this stage, one person is blowing the whistle, but many will be hearing the call, and it is entirely possible more people will come out of the woodwork and say ‘this is happening to me, too, but it’s a different company.’ Sometimes these things have a tendency to snowball.”
Farrell says any farmer affected by non-payment of surface leases by AlphaBow Energy Ltd. should contact Guardian Law Group. The Guardian Law Group website address is http://www.guardian.law.
The Herald sought comment from AlphaBow Energy Ltd. on the impending class-action lawsuit.
“AlphaBow’s response is that we will wait to see the details of the lawsuit and govern ourselves accordingly,” said the company’s Chief Operating Officer Rick Ironside in a statement released to the media late Tuesday afternoon.
“We note that all of the stakeholders in the Province of Alberta need to work together to solve the problems that are systemic and have evolved from fundamental changes to the business of natural gas in the western Canadian sedimentary basin. Many years of ongoing low natural gas prices have created a circumstance where producers can no longer withstand the burdens of municipal property taxes based on unrealistic asset values that cannot be appealed on a reasonable basis, ever increasing surface lease rentals and ongoing asset retirement obligations.”
“Companies like AlphaBow,” he concludes, “are doing everything we can to manage and survive these burdens and the recent COVID-19 pandemic has only made matters worse.
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