Mining Orders

File No.: 2191 Board Order No.: 2191-1 ____________________

May 4, 2022

SURFACE RIGHTS BOARD

IN THE MATTER OF THE PETROLEUM AND NATURAL GAS ACT R.S.B.C., C. 361 AS AMENDED

BETWEEN:

AND:

AND IN THE MATTER OF DL 587 Lillooet District Chipmunk Place, PID 008-204-276 (The “Lands”)

Andrea Schaeppi and Thomas Kennedy

(APPLICANTS)

Bralorne Gold Mines Ltd. and Talikser Resources Ltd.

(RESPONDENTS)

BOARD ORDER

Heard:

SCHAEPPI, ET AL v. BRALORNE GOLD MINES LTD. ORDER 2191-1 Page 2

by Zoom March 31, 2022 and by written submissions closing April 8, 2022

Appearances: Brian Abraham, Barrister and Solicitor, for the Applicants Jennifer S. Nyland, Barrister and Solicitor, for the Respondents

INTRODUCTION AND ISSUE [1] Does the Surface Rights Board (the Board) have jurisdiction under the Mineral Tenure Act, R.S.B.C. 1996, c. 292 (the MTA) to resolve disputes between the surface owners of land and the owners of Crown granted minerals below the surface of the land arising from the mineral owner’s use and occupation of the surface for mining activities?

[2] Crown grants, granting outright ownership in subsurface minerals, are an historical method of acquiring mineral rights. I am told the Crown granting of minerals was phased out in or around 1957. Crown granted minerals are an interest in land registered in the Land Title Office.

[3] The MTA establishing current methods of acquiring rights to Crown owned minerals was first enacted in 1988. The current MTA gives rights to free miners to explore for minerals and requires the registration of mineral claims in an online registry (the Registry) maintained by the Chief Gold Commissioner. The owner of a claim registered in the Registry is known as a “recorded holder”. A recorded holder is entitled to the minerals held by the government situated downward from the inside boundaries of the claim subject to various legislative requirements and has the right to use and occupy the surface of a claim for exploration. A recorded holder’s interest in the minerals is a chattel interest.

[4] The MTA provides a dispute resolution process in accordance with which the Applicant owners of land applied to have the Board resolve disputes between them and

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the Respondent owners of Crown granted minerals. The Respondents submit the Board does not have jurisdiction.

[5] Whether the Board has jurisdiction to resolve matters in dispute between these parties is the only issue before me.

FACTS [6] The Applicants, Andrea Schaeppi and Thomas Kennedy (the Landowners), are the owners of Lands legally described as: DISTRICT LOT 587 LILOOET DISTRICT.

[7] The Respondent, Bralorne Gold Mines Ltd. (Bralorne), is the registered owner of a Crown granted mineral claim lying under the Lands (the Mineral Rights). The Respondent, Talikser Resources Ltd. (Talikser) is the owner of Bralorne.

[8] The Mineral Rights were originally granted by the Crown in 1901 under the then in force Mineral Act and were granted again in 1926 under the then in force Escheats Act. Bralorne is the successor in title to the Mineral Rights and the registered owner of those rights on the Title to the Lands.

[9] The 1901 Crown grant grants unto the grantees their heirs and assigns, “all minerals precious and base (save coal and petroleum) which may be found in veins, loads or rock in place, and whether such minerals are found separately or in combination with each other, under that Parcel or Lot of Land situated in Lillooet District, and numbered Lot Five hundred and eighty seven (587)…and known as the “Golden King” Mineral Claim, and the right to the use and possession of the surface of such mineral claim, including the use of all the timber thereon for the purpose of winning and getting from and out of such claim the minerals contained therein, including all operations connected therewith or with the business of mining.”

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[10] The grant contains a number of provisos, including “that the grant hereby made shall be subject to the laws for the time being in force respecting mineral claims”. The 1926 Crown grant is subject to the original provisos in the 1901 Crown grant.

[11] Bralorne and Talikser are free miners and are recorded holders of mineral claims under the MTA other than the Mineral Rights.

[12] Bralorne has a permit under the Mines Act to conduct mining activity on the Lands.

[13] On January 14, 2022, Bralorne gave notice to the Landowners pursuant to section 19(1) of the MTA of proposed mining activity on the Lands (the Notice). The relevant portions of section 19(1) of the MTA provide:

19 (1) A person must not begin a mining activity unless (a) the person first serves notice, in the prescribed form and manner, on (i) the owner, other than the government, of every surface area, …, and b) the prescribed period has elapsed from the date that notice was served under paragraph (a).

[14] Section 19(1.1) of the MTA permits the Chief Gold Commissioner to exempt a person from providing notice in prescribed circumstances. The Chief Gold Commissioner has not exempted Bralorne from providing notice.

[15] In the Notice, under the heading Free Miner or Mineral Title Holder Contact Information, Bralorne named itself as the Free Miner or Mineral Title Holder and named Talikser as the Company. The signatory to the Notice certifies that the information given in the application is “true and complete”. The Notice also states:

A person is required to serve notice in accordance with section 19 of the Mineral Tenure Act and is liable to compensate the owner of a surface area for loss or damage by the entry, occupation or use of that area. A free miner or mineral title

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holder has the right to enter upon and use the surface of private land for the exploration and development or production of minerals or placer minerals in the business of mining subject to the provisions of the Mineral Tenure Act, Mines Act and/or Mining Right of Way Act.

[16] Section 19(2) of the MTA establishes the obligation of free miners, recorded holders and those acting under or with the authority of a free miner or recorded holder, to compensate the owner of the surface of land for loss or damage caused by the entry occupation or use of the land by or on behalf of the free miner or recorded holder for location, exploration and development, or production of minerals.

[17] The remainder of section 19 of the MTA sets out a dispute resolution process commencing in section 19(3) with an application to the Chief Gold Commissioner. Section 19(3) provides:

(3) On receipt by the chief gold commissioner of an application from a free miner, recorded holder, owner or other person who, in the opinion of the chief gold commissioner, has a material interest in the surface, the chief gold commissioner must use his or her best efforts to settle issues in dispute between them arising from rights acquired under this Act in respect of entry, taking of right of way, use or occupation, security, rent or compensation.

[18] The Landowners applied to the Chief Gold Commissioner pursuant to section 19(3) of the MTA to settle issues in dispute relating to Bralorne’s proposed entry to the Lands.

[19] Upon the Chief Gold Commissioner being unable to resolve the dispute, the Landowners applied to the Board pursuant to section 19(4) of the MTA which provides:

(4) If the chief gold commissioner is unable to settle the dispute to the satisfaction of the parties to the dispute, the Surface Rights Board under the Petroleum and Natural Gas Act has, on application by a party to the dispute, authority to settle the issues in dispute and, for this purpose, Part 17 of the Petroleum and Natural Gas Act applies.

[20] The complete text of section 19 of the MTA is set out at Appendix “A”.

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SUBMISSIONS [21] The Respondents submit the dispute resolution provisions of the MTA do not apply to disputes between surface landowners and the owners of Crown granted minerals, and that consequently, the Board does not have jurisdiction to deal with the Landowners application. Bralorne submits its right to use the surface of the Lands for mining activities stems from the Crown grant and that any claim for compensation arising from its use of the surface of the Lands is governed by the common law of nuisance and must be advanced in court.

[22] The Respondents rely on B.C. Supreme Court decisions in Falkowski v. Osoyoos (Town) [1995] B.C.J. No. 857 (Falkowski #1), wherein Newbury J. expressed doubt that the dispute resolution provisions of the then in force Mineral Tenure Act applied to Crown granted minerals, and Falkowski v. Town of Osoyoos, 1998 CanLII 2817 (Falkowski #2), wherein MacDonald J. said the dispute resolution provisions in the then in force Mineral Tenure Act did not apply to Crown granted minerals.

[23] The Landowners submit that the decisions in Falkowski #1 and Falkowski #2 cannot be relied on statements of the law and are not binding on the Board.

[24] The Landowners submit that the proviso to the 1901 Crown grant that the grant “shall be subject to the laws for the time being in force respecting mineral claims”, and incorporated into the 1926 Crown grant, makes it clear that the dispute resolution provisions of the MTA apply.

[25] The Landowners submit further that section 19 of the MTA applies because Bralorne is a “person”, it is carrying out “mining activity”, it is a free miner or recorded holder, and it has a permit issued under section 10 of the Mines Act in accordance with section 14(2) of the MTA. The Landowners say Bralorne has submitted to the jurisdiction of the provisions of section 19 and attorned to the jurisdiction of the Board

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because it provided notice to them under section 19(1) of the MTA. They note that Bralorne is named as the free miner or recorder holder on the Notice.

[26] The Landowners refer to the definition in the MTA of “mineral lands” which includes Crown granted claims. They refer to the definition of “mineral claim” which includes a claim under one of the former Acts, arguing the Crown grant falls within this definition and noting the 1901 grant refers to the mineral Crown grant as a “mineral claim”.

ANALYSIS The Falkowski Decisions [27] In Falkowski #1, Mr. Falkowski was the registered owner of a Crown granted mineral claim covering an area near Osoyoos. The Town of Osoyoos expanded its boundaries to include part of the mineral claim area, changed the zoning to only permit uses of the land associated with a residential suburb, and transferred land overlapping part of the mineral claim to a real estate developer, who in accordance with an agreement with the town, began to construct roads, sewer pipes and other underground facilities for the servicing of a new residential development. Mr. Falkowski commenced an action against the town and developer for the injurious affection or expropriation of his interest. The developer applied to have the action against it dismissed on a summary trial basis.

[28] The grant contained the proviso “that the grant hereby made of the said minerals shall be subject to the laws for the time being in force respecting mineral lands held in fee simple”.

[29] Newbury, J. dismissed the application for summary dismissal on the basis that it would not be appropriate, either as a matter of fact or law, due to the complexity of the matter.

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[30] One of the defences advanced by the developer was that in order to be entitled to enter his mineral claim, Mr. Falkowski had to satisfy the requirements of what was then section 16 of the Mineral Tenure Act, which using similar language to the current sections 19(3) and 19(4) of the MTA gave the Chief Gold Commissioner and the predecessor to the Board the authority to resolve disputes. Justice Newbury expressed doubt that section 16 of the then Mineral Tenure Act applied to the holder of Crown granted mineral claims. She said:

On the law before me, I am doubtful that section 16 applies to the holder of a Crown-granted mineral claim in any event. Rather, it applies to free miners (which must mean qua free miners) and to “recorded holders”. The term “recorded holder” is defined to mean “a person whose name appears as the owner of the mineral title in the record of that title in the Gold Commissioner’s office of the mining division in which the title is located”. The section is silent about Crown grants made under the previous legislation and registered in the Land Titles registration system. Further, s-s. 24(2) of the Mineral Tenure Act states that the interest of a recorded holder of a claim is a chattel interest – a provision that is not apt to apply to Crown mineral grants, which have always been interests in land and registered as such. Thus even if an application had been made under s-s. 16(3) by one of the defendants as a person having a material interest in the surface, the section would not in my view “catch” Mr. Falkowski because he is not a “recorded holder”. [italics in original]

[31] At the trial of Mr. Falkowski’s claims (Falkowski #2), Macdonald J. found that both the town and developer were liable to Mr. Falkowski in nuisance for the loss incurred by him as a result of his inability to access and develop his mineral rights. Macdonald J. accepted that the dispute resolution provisions of the then in force Mineral Tenure Act did not apply, saying at para. 28:

There is an important distinction between crown granted mineral claims and mining leases on the one hand and mineral claims on the other. Crown grants and leases of mineral rights are an interest in land. A mineral claim is a chattel interest only. In addition, the current Mineral Tenure Act, S.B.C. 1988, c. 5, and in particular the dispute resolution procedures therein, does not apply to crown grants as the definition of “mineral title” therein includes only a “(staked) claim or lease”.

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[32] I accept that the statements quoted above from Falkowski #1 and Falkowski #2 respecting the application of the dispute resolution provisions in the then in force Mineral Tenure Act to Crown granted minerals are not binding upon me or conclusive as to the applicability of the dispute resolution provisions in the MTA. The provisions of the current section 19 have been amended since the then in force section 16. I agree with the Landowners that Newbury, J’s statement was obiter and consequently cannot be treated as a binding statement of the law. Macdonald, J. accepted without analysis that the dispute resolution provisions of the then in force Mineral Tenure Act did not apply to Crown granted minerals, however, the applicability of those provisions was not in issue before him, both parties accepting the action was properly brought in nuisance. Falkowski #2, likewise, therefore, does not provide a binding statement of the law on this issue.

[33] The more recent decision of the British Columbia Court of Appeal in Forty Ninth Ventures Ltd. v. British Columbia, 2005 BCCA 213 (Forty Ninth Ventures) describes the application of the MTA to Crown granted claims as “unclear”.

[34] Although I find the Falkowski decisions are not binding upon me, my analysis of the MTA leads me to the same conclusion. For the reasons that follow, I find the Board does not have jurisdiction to settle matters in dispute between landowners and the owners of Crown granted minerals arising from the mineral owner’s use of the land for mining purposes.

The Crown grant provides surface rights to the Lands [35] I accept that Bralorne’s right to use and occupy the surface of the Lands for mining activity comes from the grant itself and not from the MTA. The express words of the grant include: “the right to the use and possession of the surface of such mineral claim, including the use of all the timber thereon for the purpose of winning and getting from and out of such claim the minerals contained therein, including all operations connected therewith or with the business of mining.”

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[36] The Mineral Act in force at the time of the 1926 grant also expressly included the conveyance of surface rights for mining purposes in every Crown grant since April 12, 1893 (Mineral Act, R.S.B.C. 1924, c. 167, s. 23).

[37] The MTA grants surface rights for mining purposes to free miners (section 10), and to recorded holders subject to obtaining a permit under the Mines Act (section 14). The Landowners say Bralorne is a recorded holder and a free miner, and has a permit under the Mines Act. The permit under the Mines Act must be obtained by the owner, agent or manager of the mine, or any other person, before starting mining activity. However, the permit would be required to conduct mining activity with respect to the Mineral Rights regardless of whether Bralorne was also a free miner or a recorded holder of other mineral claims. Bralorne’s rights to the surface of the Lands for the purpose of winning and getting the minerals out of the Mineral Rights comes from the grant, not section 14 of the MTA. Bralorne is not exercising rights as a free miner or a recorded holder in exploring for or developing the minerals it owns under the Lands. It is exercising the surface rights conveyed with the grant of minerals. If Bralorne was not a free miner or a recorded holder of other mineral claims, it would still have surface rights to the Lands for the purpose of exploring for, developing and producing the granted minerals.

Liability to compensate [38] The liability to compensate surface owners for loss or damage in section 19(2) of the MTA extends to free miners and recorded holders, or any person acting under the authority of a free miner or recorded holder and applies to loss or damage caused by the entry, occupation or use of the area by or on behalf of the free miner or recorded holder for location, exploration and development, or production of minerals. If Bralorne causes loss or damage in its use or occupation of the Lands for mining activity, however, it will not be as a free miner or recorded holder or on behalf of a free miner or recorded holder of a mineral claim under the Lands. It is not exercising rights as a free

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miner or recorded holder in entering the Lands for mining purposes, and any loss or damage it may cause in doing so, will not be as a free miner or recorded holder, but as the owner of the minerals. That is not to say Bralorne may not have liability to the Landowners for loss or damage caused by its mining activities, only that such liability does not come from the MTA and its activity as a free miner or recorded holder but must be found in the common law. Again, if Bralorne was not also a free miner and not also a recorded holder with respect to other mineral claims and caused loss or damage to the Lands through its exercise of rights conveyed in the Crown grant, any liability for such loss or damage would have to be found in the common law.

Definitions in the MTA [39] The definition of “mineral lands” in the MTA includes Crown granted claims: "mineral lands" means lands in which minerals or placer minerals or the right to explore for, develop and produce minerals or placer minerals is vested in or reserved to the government, and includes Crown granted 2 post claims

[40] The MTA also provides definitions of “mineral claim”, “mineral title”, and “claim” as follows:

"mineral claim" means a claim to the minerals within an area which has been located or acquired by a method set out in the regulations and includes a claim to minerals recorded under one of the former Acts

"mineral title" means a claim or a lease "claim" means a mineral claim or a placer claim and includes a legacy claim [41] The Landowners submit that reading these definitions together, the legislation applies to Crown grants. A mineral title includes a claim; a claim is a claim to minerals and includes a claim under a former Act, which includes Crown grants. They note that both the 1901 and 1926 Crown grants describe the Crown grant as a “mineral claim”.

[42] I agree with the Respondents that the definition of “mineral claim” does not include the owner of a Crown granted mineral claim because a Crown granted mineral claim

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has not been “located or acquired by a method set out in the regulations” and is not “a claim to minerals recorded under one of the former Acts.” Granted minerals are not, and never have, been recorded in the mineral titles online registry established and maintained by the Chief Gold Commissioner.

[43] The Respondents provided me with a copy of the Mineral Act, R.S.B.C. 1924, c. 167 in force at the time of the 1926 Crown grant. Part III of that Act provides for the recording of mineral claims. Part IV sets out the procedure for obtaining Crown grants of mineral claims. Part V deals with conveyances and transfers. Section 74 distinguishes the recording requirements for recorded mineral claims and Crown granted mineral claims. Section 74(1) provides that “every conveyance, bill of sale, mortgage or other document of title relating to any mineral claim other than a mineral claim in respect of which a Crown grant has issued, shall be recorded with the Mining Recorder of the mining division in which the claim is situate…” (emphasis added). Section 74(3) requires that transfers of Crown granted mineral claims be “registered in the same manner as are other documents of title relating to the transfer of real estate, and all provisions of the “Land Registry Act” shall apply to such registration.”

[44] I accept the Respondents’ submission that the term “recorded under the former Acts” in the definition of “mineral claim” in the MTA refers to making an entry in the official books kept by the regional mining recorders for administering claims and leases of the minerals that were vested in the Crown under legislation from time to time in force respecting the recording of claims. It does not refer to Crown granted minerals which historically have not been recorded in the same manner but have been registered as interests in land under the land registry legislation from time to time in force.