A decommissioned pumpjack is shown at a wellhead on an oil and gas installation near Cremona, Alta., on October 29, 2016. Alberta farmers have file what may be the first class-action lawsuit over unpaid oil leases for use of their land. THE CANADIAN PRESS/Jeff McIntosh

Alberta farmers file what may be first class-action lawsuit over unpaid oil leases

Alberta farmers file what may be first class-action lawsuit over unpaid oil leases

CALGARY — Two Alberta landowners have filed what a lawyer says could be the first class-action lawsuit against an energy company for not making its lease payments.

“It’s a pretty clear contract,” said lawyer Matthew Farrell, who is representing Reinhold and Thyra Kautz of Strathmore, Alta., in their proposed class action against AlphaBow Energy Ltd. of Calgary.

“They’re supposed to pay every year and now (they’re) not. You can’t do that.”

In a statement of claim filed in Calgary on Nov. 4, the Kautzes allege AlphaBow has reneged on a lease agreement that compensates them for the oil and gas company’s access to and use of two parcels of land.

The document quotes a letter in May from AlphaBow, which says: “Due to the severe impact of the COVID crisis that the oil & gas industry is currently facing, AlphaBow Energy Ltd. is hereby advising that AlphaBow is deferring any and all surface rental payments for the time being.

“AlphaBow will review all outstanding rental payments in six months and will determine at that time what our plan is to catch up on outstanding rental obligations.”

A deal’s a deal, said Farrell.

“If I lose my job, I still have to pay my rent,” he said.

“When times are good, it’s not like (landowners) are given bonuses. If it’s OK to treat them that way when times are good, then the oil companies should be (paying) when times are bad.”

The lawsuit’s claims haven’t been tested in court. No statement of defence has been filed and an AlphaBow spokesperson didn’t respond to a request for comment.

The Kautzes are the only plaintiffs at this point and aren’t owed a large amount of money, Farell said. But he noted that AlphaBow has dealt with hundreds of landowners and he expects damages to add up as others join the class action, which has not been certified by the courts.

“It’s the kind of injustice class actions are designed to remedy.”

It’s the latest flashpoint for an industry struggling with low oil prices.

Earlier this year, many rural municipalities in the province learned that energy companies wouldn’t be paying a total of $173 million in municipal taxes. Alberta’s United Conservative government has since given industry a three-year exemption from property taxes on new wells or pipelines and has lowered taxes on older wells.

Lawyer Keith Wilson, who has worked on similar disputes between industry and landowners, said the lawsuit is groundbreaking.

“It’s the first time there has been any form of class action against oil companies. It’s a real sign of the extent to which the relationship and the normal institutions that have been in place to keep peace between two critical industries are faltering.”

Alberta’s Surface Rights Board does step in to adjudicate disputes and the provincial government has a mechanism for covering unpaid leases. Freedom-of-information documents obtained by The Narwhal magazine show Alberta paid $8 million in such claims last year.

Industry repaid about $300,000 of that, the documents say.

“It’s not right and it’s not fair,” Wilson said. “We’ve created a political culture in our province where no politician is prepared to deliver any bad news to an oil company or remind them of their obligations.”

This report by The Canadian Press was first published Nov. 10, 2020.

— By Bob Weber in Edmonton. Follow @row1960 on Twitter

The Canadian Press

crude oil

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

A stainless steel monolith is set up along the eastern slopes of the Rocky Mountains in Alberta, in a Jan. 15, 2021 story. (Photo by THE CANADIAN PRESS)
Alberta monolith comes with message to save eastern slopes of Rocky Mountains

Installed it with the help of volunteers after getting permission from private landowners

TSA officers wear protective masks at a security screening area at Seattle-Tacoma International Airport Monday, May 18, 2020, in SeaTac, Wash. Airlines say they are stepping up security on flights to Washington before next week’s inauguration of President-elect Joe Biden. Delta, United and Alaska airlines said Thursday, Jan. 14, 2021 they will bar passengers flying to Washington from putting guns in checked bags. (AP Photo/Elaine Thompson)
Most major US airlines ban guns in luggage for DC flights

Bans start Saturday and run through Inauguration Day until Jan. 23

Art McDonald, then the new head of the navy, addressed the audience at the Royal Canadian Navy change of command ceremony in Halifax on June 12, 2019. THE CANADIAN PRESS/Andrew Vaughan
New defence chief apologizes to victims of military sexual misconduct, hate

McDonald promised to work to root out discrimination and harassment

The provincial government released its 2021 wheat midge forecast recently. (File photo by The Canadian Press)
2021 forecast shows increase in wheat midge risk in parts of Alberta

The provincial government’s wheat midge forecast for 2021 shows an increase in… Continue reading

Alberta Chief Medical Officer of Health Dr. Deena Hinshaw said that after examining the evidence this week, the province determined it was safe to open some personal wellness businesses by appointment only. (photography by Chris Schwarz/Government of Alberta)
Alberta eases some COVID-19 restrictions

Salons, barbershops and other personal and wellness services will be open by appointment only

Lesser Slave Lake UCP MLA Pat Rehn. (Facebook)
Updated: Jason Kenney kicks Lesser Slave Lake MLA out of caucus

Pat Rehn will not be permitted to run for UCP nominations

blessing
Bentley Blessing Pantry continues to faithfully serve the community

‘We just wanted to make everyone aware that we are still here to serve you throughout this coming year.’

FILE - In this file photo dated Sunday, Nov. 29, 2020, Pope Francis holds his pastoral staff as he arrives to celebrate Mass, at St. Peter's Basilica. Pope Francis has changed church law to explicitly allow women to do more things during Mass, Monday Jan. 11, 2021, while reaffirming they cannot be priests. (AP Photo/Gregorio Borgia, FILE)
Pope says women can read at Mass, but still can’t be priests

Pope says women can read at Mass, but still can’t be priests

Winnipeg Jets' Patrik Laine (29) and Kyle Connor (81) celebrate Laine’s goal during opening game first period NHL action against the Calgary Flames, in Winnipeg, Thursday, Jan. 14, 2021. Laine scored his second goal of the game in overtime, and the Winnipeg Jets started their season with a 4-3 win over the Calgary Flames Thursday. THE CANADIAN PRESS/John Woods
Laine’s three-point night earns Winnipeg Jets 4-3 OT win over Calgary Flames

Laine’s three-point night earns Winnipeg Jets 4-3 OT win over Calgary Flames

Shin Wook Lim, 45, is shown in this undated police handout photo. A former Taekwondo Canada coach has been found guilty of sexual assault and other sex-related offences involving a teenage student. Shin Wook Lim pleaded not guilty to 15 charges involving two female students, including sexual assault and sexual interference. THE CANADIAN PRESS/HO - Toronto Police Services
Former Taekwondo Canada coach found guilty of sex-related offences involving student

Former Taekwondo Canada coach found guilty of sex-related offences involving student

Saskatchewan skip Sherry Anderson throws the stone while taking on N.W.T. at the Scotties Tournament of Hearts in Penticton, B.C., on Sunday, Jan. 28, 2018. THE CANADIAN PRESS/Sean Kilpatrick
Dunstone and Anderson to play for Saskatchewan, Brothers accepts Nova Scotia invite

Dunstone and Anderson to play for Saskatchewan, Brothers accepts Nova Scotia invite

Super Bowl champion and Kansas City Chiefs player Laurent Duvernay-Tardif speaks during a news conference prior to an event to celebrate his win in Montreal, Sunday, February 9, 2020. THE CANADIAN PRESS/Graham Hughes
Canadian Laurent Duvernay-Tardif still planning to resume football career with Chiefs

Canadian Laurent Duvernay-Tardif still planning to resume football career with Chiefs

Toronto FC's Ayo Akinola, left, vies for control of the ball with New England Revolution's Henry Kessler during the second half of an MLS soccer match, Wednesday, Oct. 7, 2020, in Foxborough, Mass. Akinola scored in the first half to help Toronto FC win 1-0. THE CANADIAN PRESS/AP-Steven Senne
Toronto FC’s Ayo Akinola unable to attend Canada camp due to injury

Toronto FC’s Ayo Akinola unable to attend Canada camp due to injury

Brent Hayden of Canada prepares for his 50m freestyle semifinal at the Olympic Games in London on Thursday August 2, 2012. THE CANADIAN PRESS/Frank Gunn
Canadian swimmer Brent Hayden hopes his swim comeback is for Tokyo

Canadian swimmer Brent Hayden hopes his swim comeback is for Tokyo

Most Read