Put off by their tenant’s abrupt decision to cease making its lease payments, two Alberta farmers have launched what may become the first class action lawsuit against unpaid oil leases—a far too common practice that weighs heavily on the public purse, and on rural landowners’ finances.
In a statement of claim filed in Calgary in early November, Reinhold and Thyra Kautz of Strathmore, Alberta, allege that Calgary-based AlphaBow Energy Ltd. “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,” reports The Canadian Press.
Cited in the Kautzes’ claim, adds CP, is a passage from a letter AlphaBow sent to the landowners in May, summarily advising them that, due to the economic impacts of the pandemic, the company would be “deferring any and all surface rental payments for the time being.” The company said it would “review all outstanding rental payments in six months” to decide when and how it would “catch up” on the rent.
Matthew Farrell, lawyer for the Kautzes, said AlphaBow is in clear breach of contract, and expressed disdain for the company’s rationale for withholding lease payments. “If I lose my job, I still have to pay my rent,” he said.
He added that while the amount of money owed the Kautzes themselves is relatively small, he expects that damages will add up as other landowners with whom the company has had dealings join the lawsuit.
When disagreements crop up between fossils and landowners, CP writes that “Alberta’s Surface Rights Board does step in to adjudicate disputes , and the provincial government has a mechanism for covering unpaid leases.” Citing documents obtained by The Narwhal under Freedom of Information laws, CP adds that Alberta “paid $8 million in such claims last year,” with industry ponying up “about $300,000” of that total.
Alberta litigator Keith Wilson told CP the assault on the public purse is “not right”—and not fair. “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,” he said.
