Simon's Megalomaniacal Legal Resources

Resources - Aggregate Resource Act

. Lempiala Sand & Gravel Limited v. Ontario (Ministry of Northern Development, Mines, Natural Resources and Forestry)

In Lempiala Sand & Gravel Limited v. Ontario (Ministry of Northern Development, Mines, Natural Resources and Forestry) (Div Court, 2023) the Divisional Court considered a JR of decision by the Ministry of Northern Development, Mines, Natural Resources and Forestry (the 'Ministry') to grant an aggregate permit on Crown land to a competitor under the Aggregate Resources Act (ARA).

The basis of this JR appears to be under JRPA s.2(1)2 [ie. "(p)roceedings by way of an action for a declaration or for an injunction, or both, in relation to the exercise, refusal to exercise or proposed or purported exercise of a statutory power"] as a 'statutory power of decision' although, unusually, the permit issuance lacked any administrative tribunal appeal role or route. This lack appears to be a function of ARA s.43-44 where Crown land are not included in the Ontario Land Tribunal appeal/hearing system, which would otherwise apply to aggregate resources on private land. This legal configuration makes the case sort of a pure exercise of Vavilov JR doctrine, without any intervening tribunal substantive or procedural law. As well, as there is no statutory 'hearing' required, the Statutory Powers Procedure Act was not brought to bear [presumably by virtue of SPPA 3(1)]. There does not appear to have been any argument that a hearing might have been required as a matter of common law.

. 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al.

In 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al. (Div Court, 2022) the Divisional Court considered the appeal of an interlocutory order from the Local Planning Appeal Tribunal (LPAT) under the Aggregate Resources Act. The case is useful for it's basic consideration of the rarely-litigated area of law, and for it's detailed review of the law of the entitlements of an aggregate license-holder:

The Aggregate Act

[16] The object of the Aggregate Act is expressly set out in section 2:

The purposes of this Act are,

(a) to provide for the management of the aggregate resources of Ontario;

(b) to control and regulate aggregate operations on Crown and private lands;

(c) to require the rehabilitation of land from which aggregate has been excavated; and

(d) to minimize adverse impact on the environment in respect of aggregate operations.

[17] It is important to note that, during the 1990’s when Schneider and Maniplex were decided by the OMB, the objectives of the Aggregate Act were identical to those contained in the current legislation.

[18] Section 11 of the Aggregate Act sets out the procedure governing applications for licences. As part of the issuance process, the matter may be referred to the Tribunal for an adjudication. Section 11(8) of the Aggregate Act specifically provides the Tribunal with certain powers during such a hearing, including the power to impose conditions when granting licences:

Powers of Tribunal

(8) The following rules apply if an application is referred to the Tribunal:

1. The Tribunal may hold a hearing and direct the Minister to issue the licence subject to the prescribed conditions and to any additional conditions specified by the Tribunal, but the Minister may refuse to impose an additional condition specified by the Tribunal if he or she is of the opinion that the condition is not consistent with the purposes of this Act.

2. The Tribunal may hold a hearing and direct the Minister to refuse to issue the licence.

3. If the Tribunal is of the opinion that an objection referred to it is not made in good faith, is frivolous or vexatious, or is made only for the purpose of delay, the Tribunal may, without holding a hearing, on its own initiative or on a party’s motion, refuse to consider the objection. If consideration of all the objections referred to the Tribunal in connection with an application is refused in this way, the Tribunal may direct the Minister to issue the licence subject to the prescribed conditions.

4. If all of the parties to a hearing, other than the applicant, withdraw before the commencement of the hearing, the Tribunal may refer the application back to the Minister and the Minister shall decide whether to issue or refuse to issue the licence. [Emphasis added.]

[19] Section 13 of the Aggregate Act governs amendments to licences. This section also allows for a hearing at the Tribunal. Section 13(9) of the Aggregate Act states that the Tribunal has specific powers to impose conditions in hearings regarding amendments to licences:

Powers of Tribunal

(9) The Tribunal may direct the Minister to carry out, vary or rescind his or her proposal. [Emphasis added.]

[20] Specific to this case, sections 18(1) and (8) of the Aggregate Act govern the transfer of licences. Of note, these sections do not include the power to impose conditions on licence transfers:

Transfer of licence

18 (1) On application, the Minister may transfer a licence.

...

(8) The Local Planning Appeal Tribunal may direct the Minister to carry out or rescind his or her proposal.

....

Schneider and Maniplex

[31] As noted above, a key issue in the Tribunal’s ruling has to do with its interpretation of Schneider and Maniplex. The Tribunal distinguished these cases on the basis that the Aggregate Act, as it existed when Schneider and Maniplex were decided, empowered the OMB to make recommendations to the Minister when considering a licence transfer. While this is a relevant consideration, a further review of Schneider and Maniplex highlights another issue apposite to this appeal: the policies previously considered by the OMB.

[32] In Schneider, the OMB dealt with a situation where the OMB was asked to approve a non-consensual licence transfer. The OMB approved such a transfer and, at para. 19 and 20, the OMB recognized that an aggregate licence has an economic value:

The Board accepts that the resource may "belong" to the landowner, who in this case is the proposed recipient of the transferred licence, but the resource has no exchange value without an extraction licence. If a transfer is permitted, this owner will have been able to gain licence permission to extract the resource having paid no more than the fee required to apply for a transfer. He will not have occasioned any of the expenses ordinarily necessary to gain an extraction licence, yet he will be able to reap the remaining benefits of the resource.

Mr. Schneider says that this would not be fair. The Board agrees with this position. To ignore the economic value of the licence is to trivialize the process by which the licence is granted. The Board finds that the licence has value, a value that is some function of the resource and the value added by the applicant for the licence. The mere fact that Mr. Seip earnestly seeks to have the licence transferred is proof enough of the economic value to him of the licence.

[33] At paras. 21 and 22 of its decision, the OMB further found that, for policy reasons, financial compensation to the party losing an aggregate licence had to be considered by the OMB:

Furthermore, the Board believes that there may be important practical consequences that must be considered. Permitting an "automatic" transfer to the landowner after the lease has expired could have far-reaching undesirable implications for many current lessees and perhaps ultimately for the public. Some lessors of lands on which valid licences are held by others may decide not to renew their leases. Instead there may be some incentive to letting the lease lapse so that they can then keep the balance of the resource and gain the licence by "automatic transfer" from the current licensee for the mere price of an application fee. This and other possible consequences could yield uncertainty in the management of the resource that would not be consistent with the purposes of the Aggregate Resources Act, under Section 2, and with stated Ministry policy to maintain adequate supplies of the resource and protect the public's interest in an orderly marketplace for materials.

Consequently, the Board recommends to the Minister that the Minister consent to the transfer of the licence but as a matter of principle, the transfer of the licence be accompanied by some financial consideration. This is not to recognize the proposition that a licence is a right, or in some way, is akin to property. The Board would affirm that a licence is a privilege, held at the discretion of the Crown, and to be maintained upon satisfactory completion of certain obligations and conditions. Nevertheless, a licence when granted has value and can be seen to have economic value. Where a licence held by a licensee in good standing, is to be transferred without the consent of the licensee, compensation to balance the gains and losses of economic value between parties is warranted as part of the consideration of the merit of the transfer. [Emphasis added.]

[34] The OMB faced a similar situation in Maniplex. At paras. 21 to 23 of Maniplex, the OMB described its holdings in Schneider as follows:

In my view, Re Schneider stands for three things. First, the Minister can consent to transfer a licence without the consent of the licence holder. This does not mean that the licence must be transferred. It is still to be considered on its merits.

Second, a licence has value:

"The board accepts that the resource may "belong" to the landowner ... but the resource has no exchange value without an extraction licence. ..."

“To ignore the economic value of the licence is to trivialize the process by which the licence is granted. ... the licence has value, a value that is some function of the resource and the value added by the applicant for the licence."

Finally, there is the matter of equity: equity goes to the merits of the transfer, and compensation for the loss of the privileges granted by the licence goes to equity:

"Where a licence is held by a licensee in good standing, and is to be transferred without the consent of the licensee, compensation to balance the gains and losses of economic value between parties is warranted as part of the consideration of the merit of the transfer."

Mr. Polowin's submissions deal only with value added by the licence holder. They do not deal with the value added to the resource by the permission to extract that resource. Without that permission represented by the licence, the aggregate has no exchange value. As the Board held in Re Schneider a licence is not a right, or in some way akin to property, but a privilege held at the discretion of the Crown. Mr. Polowin's submissions do not take account of this privilege.

[35] Therefore, the OMB’s resort to equity occurred because the Aggregate Act did not explicitly contemplate a “hostile transfer” of a licence. Further, the Aggregate Act did not specifically direct the OMB to consider the financial positions of the transferor and the transferee as conditions precedent for the transfer of an aggregate licence. In Schneider and Maniplex, the OMB effectively held that principles of equity coupled with the policy objectives of the Aggregate Act required the OMB to consider such issues when determining whether to impose conditions on such a transfer.

Application to this Case

[36] In this case, the Tribunal stated in its decision that the sole relevant policy consideration was the need to “manage the supply of aggregate resources in a manner that protects the public interest. The public interest matters that the Minister and the Tribunal must have regard to do not include the financial interests of the landowner or the licensee”. As seen earlier in this decision, the OMB previously held it had to consider financial compensation when dealing with licence transfers. In the case before the court, therefore, the Tribunal effectively reversed course regarding this policy and found that the financial positions of the transferor and the transferee were no longer relevant considerations. Given the reasons in Schneider and Maniplex, the Tribunal needed to explain why this policy changed. Without such reasons, this court cannot provide a meaningful appellant review policy.

[37] Further, I agree that the Tribunal has no explicit power to make recommendations under the Aggregate Act. However, the doctrine of necessary implication is such that, if the previous policy regarding financial compensation remains in effect, the Tribunal must consider that policy when determining whether it has the power to enforce said policy as a result of necessary implication as described in ATCO Gas & Pipeline Ltd. It may yet be that the financial interests affected by the transfer may not meet the threshold associated with the doctrine of necessary implication. Such a finding, however, is a separate inquiry from whether, as a matter of policy, the Tribunal is capable of considering the financial interests of the affected parties.