2024 ABEAB 12 Appeal Nos. 23-110-112-ID1
ALBERTA ENVIRONMENTAL APPEALS BOARD
Decision
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Date of Decision – March 28, 2024
IN THE MATTER OF sections 91, 92, 95, and 97 of the Environmental Protection and Enhancement Act, RSA 2000, c. E-12;
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IN THE MATTER OF appeals filed with respect to the decision of the Inspector, Regulatory Assurance Division North, Alberta Environment and Protected Areas, to issue Environmental Protection Order EPO-EPEA-35659-14 to Mantle Materials Group Ltd., previously JMB Crushing Systems Inc., Byron Levkulich, Director, Mantle Materials Group Ltd. and JMB Crushing Systems Inc., and Aaron Patsch, Director, Mantle Materials Group Ltd. and JMB Crushing Systems Inc.
Cite as: Stay Decision: Mantle Materials Group Ltd. et al. v. Inspector, Regulatory Assurance Division North, Alberta Environment and Protected Areas (28 March 2024), Appeal Nos. 23-110-112-IDl (AEAB), 2024 ABEAB 12.
BEFORE: |
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Barbara Johnston, Board Chair.
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PARTIES: |
Appellants: |
Mantle Materials Group Ltd., Byron Levkulich, and Aaron Patsch, represented by Alison Gray, Gowling WLG (Canada) LLP. |
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Inspector: |
Heather Dent, Inspector, Regulatory Assurance Division North, Alberta Environment and Protected Areas, represented by Vivienne Ball and Lee Plumb, Alberta Justice. |
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EXECUTIVE SUMMARY
The Inspector, Regulatory Assurance Division North, Alberta Environment and Protected Areas (Inspector) issued an Environmental Protection Order (the Order) under the Environmental Protection and Enhancement Act (EPEA) to Mantle Materials Group Ltd. (Mantle), Byron Levkulich, and Aaron Patsch (Appellants). Byron Levkulich and Aaron Patsch are directors of Mantle. The Orders directed Mantle to perform reclamation work with respect to a gravel pit located in the County of Smoky Lake (the Smoky Lake Pit).
The Environmental Appeals Board (the Board) received a Notice of Appeal from the Appellants accompanied by a request for a stay. The Board received submissions from the parties on whether a stay should be granted.
In considering the stay application, the Board asked the Appellants and the Inspector to answer the following questions:
1. What are the serious concerns of the Appellants that should be heard by the Board?
2. Would the Appellants suffer irreparable harm if the stay is refused?
3. Would the Appellants suffer greater harm if the stay is refused pending a decision of the Board on the appeal, than the harm that could occur from the granting of a stay?
4. Would the overall public interest warrant a stay?
The Board found the Appellants met the Board’s test for a stay. The Appellants raised serious concerns that the Order created an immediate obligation to reclaim the Smoky Lake Pit, irreparably harming Mantle’s ability to sell the Smoky Lake Pit as part of a restructuring proposal under the Bankruptcy and Insolvency Act (the BIA). The Appellants demonstrated that, if the Smoky Lake Pit was sold as part of the restructuring proposal under the BIA, the balance of convenience favoured the Appellants and the overall public interest warranted a stay because, the environmental obligations associated with the Smoky Lake Pit would be assumed by the purchaser in accordance with legislation and policy. Considering these factors together, the Board determined it was just and equitable to grant a stay. The Board granted a stay of the Order.
TABLE OF CONTENTS
5.1.1. Serious Concerns to be Heard by the Board
5.1.3. Balance of Convenience and Public Interest
5.2.1. Serious Concerns to be Heard by the Board
5.2.3. Balance of Convenience and Public Interest
6.3. Balance of Convenience and Public Interest
1. INTRODUCTION
[1] These are the Environmental Appeal Board’s (the “Board”) reasons for the Board’s decision regarding Mantle Materials Group Ltd. (“Mantle”), Byron Levkulich and Aaron Patsch (collectively the “Appellants”) application for a stay in respect of the decision of the Inspector, Regulatory Assurance Division North, Alberta Environment and Protected Areas (the “Inspector”), to issue Environmental Protection Order No. EPO-EPEA-35659-14 (the “Order”) to the Appellants under the Environmental Protection and Enhancement Act, RSA 2000, c. E-12 (“EPEA”)[1]. The Order directs Mantle to complete reclamation work and monitoring, as well as apply for a reclamation certificate for a gravel pit located in the County of Smoky Lake (the “Smoky Lake Pit”).
[2] On November 23, 2023, the Board received a Notices of Appeal from the Appellants together with a request for a stay of the Order.
[3] The Board reviewed the written submissions received from the Appellants and the Inspector (the “Parties”) and decided to issue a stay of the Order.
[4] The Board’s reasons for its December 18, 2023 decision are provided below.
2. BACKGROUND
[5] Byron Levkulich and Aaron Patsch are the former directors of JMB Crushing Systems Inc. (“JMB Crushing”) and 2161889 Alberta Ltd. (“216 Alberta”), and are the current directors of Mantle.
[6] JMB Crushing and 216 Alberta amalgamated and continued as Mantle on May 1, 2020, as part of a restructuring arrangement (the “CCAA Reorganization Transaction”) under Companies Creditors Arrangement Act, RSC 1985, c. C-36, as amended (“CCAA”).
[7] Mantle acquired the Smoky Lake Pit as part of CCAA Reorganization Transaction. Mantle operates the Smoky Lake Pit under Surface Material Lease 110025.
[8] On July 13, 2023, Mantle filed a Notice of Intention to Make a Proposal (the “Proposal Proceedings”) pursuant to section 50.4(1) of the Bankruptcy and Insolvency Act, RSC 1985, c. B-3 (the “BIA”).
[9] Mantle and the trustee under the Proposal Proceedings (the “Proposal Trustee”) commenced a sale and solicitation process (the “Sale Process”) for the active aggregate pits, including the Smoky Lake Pit, (the “Active Aggregate Pits”) acquired by Mantle as part of the CCAA Reorganization Transaction, with the intent of selling or assigning the Active Aggregate Pits to new owners.
[10] On October 18, 2023, the Inspector issued the Order against the Appellants, ordering amongst other things, that the Smoky Lake Pit be reclaimed by November 24, 2023, and that a reclamation certificate be applied for by January 1, 2025.
[11] On November 17, 2023, the Board received Notices of Appeal of the Order from the Appellants and a request for a stay.
[12] On November 22, 2023, the Board acknowledged receipt of the Notices of Appeal and requested that the Appellants provide additional information in support of their stay application.
[13] On November 29, 2023, the Board received the Appellants’ initial submissions respecting the stay application (the “Appellants’ Initial Submissions”).
[14] On December 7, 2023, the Board received the Inspector’s response submissions (the “Inspector’s Response Submissions”) and on December 13, 2023, the Board received the Appellants’ rebuttal submissions (the “Appellants’ Rebuttal Submissions”) regarding the stay.
[15] On December 18, 2023, the Board advised the Parties that the Board had reviewed the Parties’ submissions and that the Board had decided to grant the stay of the Order, which would remain in place until the appeal is addressed.
[16] These are the Board’s reasons for the decision.
3. Issues
[17] The Board received comments from the Appellants and the Inspector on the following questions regarding the stay application:
1. What are the serious concerns raised by the Appellants that should be heard by the Board?
2. Would the Appellants suffer irreparable harm if the stay is refused?
3. Would the Appellants suffer greater harm if the stay was refused pending a decision of the Board on the appeals, than the harm that could occur from the granting of a stay?
4. Would the overall public interest warrant a stay?
4. legislation and caselaw
[18] The fundamental question before the Board in a stay application is whether granting of the stay would be just and equitable in all the circumstances.[2]
[19] The Board’s the authority to grant a stay is found in section 97 of EPEA, which provides in part:
“(1) Subject to subsection (2), submitting a notice of appeal does not operate to stay the decision objected to.
(2) The Board may, on application of a party to a proceeding before the Board, stay a decision in respect of which a notice of appeal has been submitted.”
[20] Granting a stay is an extraordinary remedy. The Board adapted its test for a stay from the Supreme Court of Canada decision in RJR-MacDonald v. Canada (Attorney General), [1994] 1 SCR 311 (“RJR-MacDonald”) as stated in previous decisions.[3] The steps in the test, as stated by the Court in RJR-MacDonald, are:
“First, a preliminary assessment must be made of the merits of the case that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.”[4]
[21] The first step of the test requires the applicant to show there is a serious issue to be tried. The applicant must demonstrate through the evidence submitted that there is some basis for presenting an argument. Often when a stay application is made, the Board does not have all the evidence before it, therefore, “…a prolonged examination of the merits is generally neither necessary nor desirable.”[5]
[22] The second step of the test requires the Board to decide whether the applicant seeking the stay would suffer irreparable harm if the stay were not granted. It is the nature of the harm that is relevant, not its magnitude. The harm must not be quantifiable; that is, the harm to the applicant could not be satisfied in monetary terms, or one party could not collect damages from the other.
[23] Irreparable harm was defined by the Alberta Court of Appeal in Ominayak v. Norcen Energy Resources, 1985 ABCA 12 (“Ominayak”):
“By irreparable injury it is not meant that the injury is beyond the possibility of repair by money compensation but it must be of such a nature that no fair and reasonable redress may be had in a court of law and that to refuse the injunction would be a denial of justice.”[6]
[24] The party claiming that damages awarded as a remedy would be inadequate compensation for the harm done, must show there is a real risk that harm will occur. It cannot be mere speculation. Damages that third parties suffer can also be considered.[7]
[25] The third step in the test is the balance of convenience. Here the Board must determine which of the parties will suffer the greater harm from the granting or refusal of a stay pending a decision on the merits.”[8] The Board is required to weigh the burden the stay would impose on the Inspector against the benefit the Appellants would receive. This weighing is not strictly a cost-benefit analysis but, rather, a consideration of significant factors, such as the cumulative effect of granting a stay,[9] third parties who may suffer damage,[10] or the reputation and goodwill of a party will be affected.[11]
[26] In the third stage of the test, any alleged harm to the public is to be assessed. The public interest includes the “... concerns of society generally and the particular interests of identifiable groups.”[12] The environmental mandate of the Board requires the Board to consider whether the overall public interest would warrant the granting of a stay. As stated by the Board in Gas Plus Inc. and Handel Transport (Northern) Ltd. v. Director, Southern Region, Operations Division, Alberta Environment, 10-034 & 11-002-ID1, 2011 ABEAB 21 (“Gas Plus”):
“The Environmental mandate of this Board requires the public interest be considered in appeals before the Board. Therefore, the Board has assessed the public interest as a separate step in the test. The applicant and the respondent are given the opportunity to show the Board how granting or refusing the Stay affect the public interest… The effect on the public may sway the balance for one party over the other.” [13]
In this respect the Inspector is representing the environment and the public interest.
[27] In most cases, if all the steps of the test in RJR-MacDonald are not met a stay will not be granted. In all cases, however, as previously noted, the fundamental question before the Board remains whether the granting of a stay is just and equitable in the circumstances.[14] As stated by Justice Feth in the Alberta Court of Queen’s Bench decision in Cleanit Greenit Composting System Inc v. Director (Alberta Environment and Parks), 2022 ABQB 582, “[t]he factors guide the Court’s exercise of discretion but the fundamental question remains whether granting of a stay is just and equitable in all circumstances.”[15]
[28] Further, the Board notes in Cleanit Greenit, Justice Feth, found that “the three stages are not airtight compartments. To some extent, strength in one part of the analysis can compensate for weakness in another, especially the second and third branches which are ‘inexorably linked and should be considered together.’”[16] Together, all these factors guide the Board’s exercise of discretion.
[29] The standard of proof in a stay application is the balance of probabilities, and the onus is on the Appellants to establish that the stay test is met.[17]
5. submissions
[30] The Board has reviewed the evidence and arguments submitted by the Parties regarding the application to stay the Order. The following is a summary of the most salient submissions considered by the Board.
5.1. Appellants
[31] The Appellants submitted a stay should be granted as the test in RJR-MacDonald test was satisfied.
5.1.1. Serious Concerns to be Heard by the Board
[32] The Appellants submitted there are serious concerns to be heard by the Board. The Appellants submitted the test to be met at this stage was a low one and that the Appellants need only show the appeal was not frivolous and there is an arguable issue to be determined on appeal.[18]
[33] The Appellants argued that at issue in the appeal was whether the Inspector had the authority or the factual basis to issue the Order, and whether Mantle could complete the reclamation work and apply for the reclamation certificate by the deadlines set in the Order. The Appellants argued the Inspector did not have the authority to issue the Order as she erred by relying on her opinion that Mantle did not have the financial ability nor the intention of reclaiming the Smoky Lake Pit, which the Appellants asserted was factually incorrect. The Appellants noted they were served with the Order on November 14, 2023, and the Order required the reclamation work to be completed by November 24, 2023. The Appellants argued the ten-day deadline was unattainable.
[34] On this basis, the Appellants submitted there were serious issues to be considered by the Board and the first element of the RJR-MacDonald test was satisfied.
5.1.2. Irreparable Harm
[35] The Appellants submitted they would suffer irreparable harm if the stay was denied as the Order negatively impacted the Proposal Proceedings and the Sale Process in a manner that could not be compensated in damages and the success of the Sale Process was thwarted by the requirement the Smoky Lake Pit be reclaimed by November 24, 2023.
[36] The Appellants submitted the irreparable harm suffered by the Appellants was not speculative or hypothetical. The Order interfered with the Sale Process by creating an immediate liability to reclaim the Smoky Lake Pit. The Appellants argued the interference caused by the Order would negatively impact the marketing of the Smoky Lake Pit under the Sale Process and prevent Mantle from finding a third-party purchaser able to assume the associated environmental obligations. This would prevent Mantle from mitigating its environmental liabilities associated with the Smoky Lake Pit and from maximizing proceeds available through the Proposal Proceedings to address Mantle’s reclamation obligations, ahead of distribution to secured and unsecured creditors.
[37] The Appellants submitted that the irreparable harm is not that there is a failure to mine or sell the Smoky Lake Pit but that the Order interfered with the Sale Process because of the Inspector’s decision to proceed with enforcement action. The Appellants argued it is economic sense that the marketing of the Smoky Lake Pit would be harmed by the issuance of the Order because a purchaser is not going to be interested in purchasing an aggregate pit that must be reclaimed immediately to comply with the terms of an environmental protection order. The Appellants argued there should be no immediate obligation to reclaim the Smoky Lake Pit as the Appellants are marketing the Smoky Lake Pit under the Sale Process as an active operating aggregate pit with reclamation obligations to be assumed by the purchaser.
[38] The Appellants further submitted they suffered irreparable harm because the reclamation work required under the Order cannot be completed in the timelines ordered, causing the Appellants to be in breach of the Order and at risk of further regulatory action through no fault of their own. The Appellants submitted there is no assurance that financing for the immediate reclamation of the Smoky Lake Pit would be available in the context of the regulatory requirements of the Proposal Proceedings. The Appellants noted Byron Levkulich and Aaron Patsch do not have the financial ability to fund the immediate reclamation of the Smoky Lake Pit.
[39] On this basis, the Appellants submitted they would suffer irreparable harm if the Board did not grant a stay of the Order, and that the second element of the RJR-MacDonald test was satisfied.
5.1.3. Balance of Convenience and Public Interest
[40] On the balance of convenience, the Appellants submitted if the stay were denied, they would suffer greater harm.
[41] The Appellants submitted the Order was not required for the reclamation obligations to be accounted for in Mantle’s insolvency proceedings. The Appellants submitted the immediate obligation to reclaim the Smoky Lake Pit was not coextensive with the legal obligation to reclaim the pit pursuant to EPEA. It was the issuance of the Order that caused irreparable harm to the Appellants and tips the balance in favour of granting of the stay.
[42] The Appellants submitted Mantle, the Proposal Trustee and the Court are aware they must comply with Supreme Court of Canada decision in Orphan Well Association v. Grant Thornton Limited and ATB Financial, 2019 SCC 5 (“Redwater”), which the Appellants stated “stands for the proposition that any monies in the insolvent’s estate cannot be distributed to creditors until such time as any end-of-life reclamation obligations are completed.”[19] The Appellants argued that a stay was consistent with the Redwater decision as it allows for the Sale Process to proceed unfettered by the Order and offers the best opportunity for all associated reclamation obligations to be met.
[43] The Appellants acknowledged there is inherent uncertainty in bankruptcy proceedings. The Appellants argued that this uncertainty does not cause harm to the public interest and that “the best opportunity to ensure the reclamation obligations are ultimately met is through the sale of the Smoky Lake Pit.”[20] The Appellants noted that Alberta Environment and Protected Areas (“EPA”) has been updated on the status of the Proposal Proceedings at every step, including the provision of a copy of a confidential draft plan regarding how Mantle would address reclamation of any Active Aggregate Pits not sold during the Sale Process.[21] The Appellants submitted that EPA is aware certainty regarding the reclamation obligations associated with the Smoky Lake Pit will only be achieved once each step in the process is completed which is why a stay should be granted.
[44] The Appellants explained that Mantle had applied to convert the Proposal Proceedings to a CCAA proceeding. The Appellants noted the Proposal Trustee was of the view that the Proposal Proceedings, or their continuation under CCAA, were the best option for ensuring the environmental obligations associated with the Active Aggregate Pits are fulfilled:
“The Proposal Trustee is of the view that the most efficient manner currently available to discharge the Environmental Obligation[s] and sell the Active Pits is through the continuation of the [Proposal Proceedings] under the CCAA. Therefore, continuing Mantle’s restructuring under the CCAA benefits the public’s interest and the mandate of the AEPA, first by ensuring Environmental Obligations are satisfied, and secondly, maximizing the value of Mantle’s estate for the benefit of certain stakeholders…”[22] [Emphasis added by Appellants].
[45] The Appellants submitted their interests aligned with the public interest in seeing the Smoky Lake Pit reclaimed. The Appellants stated that one of the stated purposes of the Proposal Proceedings was to satisfy Mantle’s environmental obligations in a manner acceptable to EPA, which the Appellants submitted focused on the public interest and not the Appellants’ private interests. The Appellants argued that a stay of the Order would permit Mantle to market the Smoky Lake Pit under the Sale Process as an operating aggregate pit with significant reserves. The Appellants asserted a stay of the Order serves the public interest as a sale of the Smoky Lake Pit would require the purchaser to assume the associated environmental obligations in accordance with legislation and EPA policy, benefiting all stakeholders.
[46] The Appellants argued it was in the overall public interest to stay the Order because the value of the Smoky Lake Pit is greater than the cost of the associated environmental reclamation obligations. The Appellants submitted this makes the Smoky Lake Pit attractive to purchasers under the Sale Process and as discussed, if the Smoky Lake Pit is sold under the Sale Process, the purchaser would be required to assume the associated environmental obligations. Based on the foregoing, the Appellant submitted the balance of convenience favoured the Appellants, and the overall public interest warranted a stay. The Appellants submitted they had met the RJR-MacDonald test, and the Board should stay the Order.
5.2. Inspector
[47] The Inspector submitted the stay should be denied as the Appellants had not met the tripartite test in RJR-MacDonald.
5.2.1. Serious Concerns to be Heard by the Board
[48] The Inspector submitted there is no serious issue to be tried in this appeal. The Inspector submitted there are no specific requirements that must be met to satisfy this part of the test, the threshold was a low one, and the onus was on the Appellants to demonstrate on the evidence that there is some basis on which to present an argument.[23]
[49] The Inspector submitted the evidence established the Inspector had the authority to issue the Order so there was no serious issue to be heard by the Board. The Inspector submitted Mantle had not completed mining or reclamation activities since acquiring the Smoky Lake Pit under the CCAA Reorganization Transaction. The Inspector further submitted there was uncertainty regarding who, or how the Smoky Lake Pit would be reclaimed, so it was appropriate for the Inspector to issue the Order based on the Inspector’s opinion it was necessary to conserve and reclaim the Smoky Lake Pit.
[50] The Inspector further submitted there is no serious issue to be tried because the deadlines in the Order were reasonable. The Inspector argued the failure of the Appellants to meet the deadlines in the Order was not due to the unreasonableness of the deadlines, but due to the Appellants’ own inaction, and failure to reclaim or sell the Smoky Lake Pit in the two and a half years since the CCAA Reorganization Transaction.
[51] On this basis the Inspector submitted the Appellants had not met the first prong of the RJR-MacDonald test.
5.2.2. Irreparable Harm
[52] The Inspector submitted the Appellants had not met the second part of the RJR-MacDonald test.
[53] The Inspector stated that “irreparable” refers to the nature of the harm not the magnitude and is a harm that cannot be quantified in monetary terms nor be cured, usually because one party cannot collect damages from the other. The Inspector, citing RJR-MacDonald, submitted the issue to be decided was: “whether a refusal to grant relief could so adversely affect the applicants’ own interests that harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory applications.”[24]
[54] The Inspector submitted evidence of irreparable harm is required.[25] The Inspector argued any harm alleged by the Appellants was hypothetical or speculative, and not supported by evidence.
[55] The Inspector argued the issuance of the Order did not thwart the Proposal Proceedings or negatively impact the marketability of the Smoky Lake Pit under the Sale Process, the deadlines in the Order were reasonable, and that the Appellants did not suffer irreparable harm. The Inspector argued she had determined it was necessary to conserve and reclaim the Smoky Lake Pit and that the Order enforced pre-existing reclamation obligations. The Inspector further argued issuing the Order to reclaim the Smoky Lake Pit did not cause irreparable harm because the reclamation obligations already existed under the disposition for the pit, legislation and policy.
[56] The Inspector submitted the Appellants made no attempt to meet the deadlines set in the Order and any harm incurred was speculative and due to the Appellants’ own inaction. The Inspector argued the Appellants had over two years since the CCAA Restructuring Transaction to sell or assign the Smoky Lake Pit and had not done so and therefore, the Order did not cause or contribute to the failure of the Sale Process or any other sale of the Smoky Lake Pit. The Inspector submitted the Appellants did not provide any evidence of a failed sale or a required reduction in purchase price because of the issuance of the Order.
[57] In the alternative, the Inspector argued that if the Appellant suffered harm, it was financial in nature and was due to the Appellants’ own business decisions regarding the Smoky Lake Pit not the Order.[26]
[58] Based on the foregoing the Inspector submitted the Appellants would not suffer irreparable harm if the stay were denied.
5.2.3. Balance of Convenience and Public Interest
[59] The Inspector submitted the Appellants failed to satisfy the third part of the RJR-MacDonald test because the balance of convenience favours the public interest, and the Appellants must comply with the Order pending the outcome of the appeal.
[60] The Inspector submitted the balance of convenience test is a determination of which of the parties will suffer greater harm from the granting or refusal of the stay, pending the decision on the merits. The factors considered in assessing the balance of convenience vary in each case and are fact specific.[27]
[61] The Inspector submitted this is not a cost-benefit analysis but the balancing of the burden granting a stay would have on the public interest in the administration and effective enforcement of EPEA against the benefit to the Appellants if the stay is granted.[28]
[62] The Inspector submitted a stay of the Order would negatively impact EPA’s authority to take enforcement action under the Order and would harm the broader public interest inherent in the policies of the protection of the environment. As previously discussed, the Inspector was concerned about the financial ability and intent of the Appellants to reclaim the Smoky Lake Pit, and the uncertainty surrounding the outcome of the Proposal Proceedings. The Inspector argued that given the uncertainty about Mantle’s future, the Order was issued to protect the public interest by requiring Mantle to immediately reclaim the Smoky Lake Pit so as to ensure the failure to reclaim the Smoky Lake Pit would not continue indefinitely. The Inspector submitted the deadlines in the Order were reasonable as it was not in the public interest to establish deadlines beyond the 2023 operating season.
[63] The Inspector submitted that if the Appellants alleged the public interest is at risk if a stay is denied, the Appellants must demonstrate harm because private applicants are presumed to be pursuing their own private interests rather than those of the public at large.[29] The Inspector submitted, in the case of a public authority, the onus of demonstrating irreparable harm to the public interest is less than that of a private applicant and that harm to the public interest is presumed if the actions of the public authority are restrained.[30]
[64] The Inspector submitted the facts showed the Appellants were pursuing their own private interests by focusing on maximizing the funds available through the Proposal Proceedings for Mantle and its creditors rather than ensuring reclamation obligations for the Smoky Lake Pit were fulfilled or accounted for in the restructuring proceedings.
[65] The Inspector argued that denying a stay would be consistent with the decision of the Supreme Court of Canada in Redwater. The Inspector submitted that the Court in Redwater found that end-of-life environmental obligations must be completed before any creditors can recover money from the estate. The Inspector stated the objective of the Order was to ensure the pit was reclaimed immediately or accounted for in Mantle’s insolvency proceedings in accordance with Redwater.
[66] The Inspector submitted the third prong of the RJR-MacDonald test was not met and a stay should be denied by the Board.
6. ANALYSIS and findings
[67] The Board has the authority to grant a stay under section 97 of EPEA.[31]
[68] As previously noted, granting a stay is an extraordinary remedy. To guide the Board in its discretion, the Board has adapted its test for a stay from the Supreme Court of Canada decision in RJR-MacDonald:
“First, a preliminary assessment must be made of the merits of the case that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.”[32]
[69] These factors guide the Board’s exercise of its discretion in a stay application. However, “the three stages are not airtight compartments. To some extent, strength in one part of the analysis can compensate for weakness in another, especially the second and third branches which are ‘inexorably linked and should be considered together.’”[33] As stated by the Court in Cleanit Greenit, “… the fundamental question remains whether granting a stay is just and equitable in all the circumstances.”[34]
6.1. Serious Concerns
[70] At this step of the test, a Court usually undertakes “an extremely limited review of the case on the merits.”[35] As stated by the Court in Cleanit Greenit, “[t]his factor is generally a threshold to be satisfied, rather than an attempt to measure the strength of the applicant’s underlying claim.”[36] The first step of the test requires the Appellants to show there is a serious issue to be tried. As not all the evidence may be before the Board at the time the decision is made regarding the stay application, “…a prolonged examination of the merits is generally neither necessary nor desirable.”[37] The Appellants must demonstrate through the evidence submitted there is some basis on which to present an argument.
[71] The Appellants have raised concerns the Inspector did not have the authority to issue the Order and that the deadlines in the Order were unreasonable because they were unattainable.
[72] At this stage of the test, it is sufficient that the Appellants have shown a basis for their argument as required by the first part of the RJR-MacDonald test applied by the Board. In the Board’s view, the concerns raised by the Appellants directly relate to the Order and they are serious in nature.
[73] The Board notes the Parties have provided contradictory evidence regarding the status of progressive reclamation and mining at the Smoky Lake Pit and the overall intention of Mantle to reclaim the Smoky Lake Pit. It is in the Board’s view that these matters go to the merits of the appeal and are not part of the Board’s considerations in this stay application.
[74] The Board finds the first step of the test in RJR-MacDonald is met.
6.2. Irreparable Harm
[75] The second step in the test requires the decision-maker to decide whether the applicant seeking the stay would suffer irreparable harm if the stay was not granted. Irreparable harm is harm that cannot be quantified in monetary terms or harm that cannot be cured, usually because one party cannot collect damages from the other. As stated in Cleanit Greenit, citing RJR-MacDonald, “[t]he Court examines ‘whether a refusal to grant relief could so adversely affect the applicant’s own interests that harm could not be remedied if the eventual decision on the merits does not accord with the result of the interlocutory application.’”[38]
[76] It is the nature of the harm that is relevant, not its magnitude. The magnitude or extent of the harm is considered in the third step of the test when weighing the balance of convenience.[39]
[77] As well, the harm cannot be hypothetical or merely possible. As stated by the Court of King’s Bench in its decision in Alberta (Director of Public Lands Disposition Management Section, Land Policy and Programs Branch, Lands Division, Alberta Environment and Parks) v. Syncrude Canada Ltd., 2023 ABKB 447 (“Syncrude”):
“Harm that is speculative, hypothetical, or only arguable at best does not qualify as irreparable harm. Administrative inconvenience, without more, is not irreparable harm.” [40]
[78] Where the actual harm is financial, however, the evidence of irreparable harm must be clear and compelling because the nature of financial harm can be proven by concrete evidence. The evidence must demonstrate, at a convincing level of particularity, that there is a real probability that unavoidable irreparable harm will result unless a stay is granted.[41]
[79] The Board finds the Appellants suffered irreparable harm because the Order interfered with Mantle’s ability to sell the Smoky Lake Pit as part of the Proposal Proceedings. The Board is of the view the Order negatively affected the Sale Process by creating regulatory uncertainty and an immediate financial obligation to reclaim the Smoky Lake Pit. The Board concurs with the Appellants’ view that when determining an offer price, a prospective purchaser would take into consideration the regulatory risk that the Smoky Lake Pit is subject to an Order, the risk EPA may not withdraw or amend the Order, and compliance with the Order requires immediate reclamation of the Smoky Lake Pit prior to the commencement of any mining operations. These factors would negatively affect a valuation of the Smoky Lake Pit by a prospective purchaser in such a manner that the prospective purchaser may choose not to submit an offer or submit an offer at a reduced price. Moreover, the Inspector’s submissions that they would be willing to discuss the Order with prospective purchasers in the Board’s view is not sufficient to significantly reduce the uncertainty created by the Order.
[80] The Board finds that while the nature of the harm is financial, it is not possible to quantify the impact of the harm on the Sale Process as the Order was issued after the commencement of the Sale Process and prior to the final bid date. It is impossible to quantify the monetary impact of the regulatory uncertainty caused by the Order being issued because doing so would require a comparison of what a prospective purchaser would have offered had the Order not been issued during the Sale Process to what a successful purchaser paid for Smoky Lake Pit under the Sale Process.
[81] The Board finds that the second step of the RJR-MacDonald test has been met.
6.3. Balance of Convenience and Public Interest
[82] The final step of the RJR-MacDonald test requires the Board to consider the balance of convenience and the public interest. The balance of convenience is determined by asking, “...which of the parties will suffer the greater harm from the granting or refusal of an interlocutory injunction, pending a decision on the merits.”[42] The decision maker is required to weigh the burden the stay would impose on the respondent against the benefit the applicant would receive. This weighing is not strictly a cost-benefit analysis but, rather, a consideration of significant factors. The courts have considered factors such as the cumulative effect of granting a stay,[43] third parties who may suffer damage,[44] or if the reputation and goodwill of a party will be affected.[45]
[83] The courts have recognized that any alleged harm to the public is to be assessed at the third stage of the test. The public interest includes the “... concerns of society generally and the particular interests of identifiable groups.”[46]
[84] The Board appreciates that the Inspector has argued that the Order was issued to ensure the long-term reclamation obligations were accounted for in Mantle’s insolvency proceedings. However, it is the Board’s view that if a stay is denied, the acceleration of long-term reclamation obligations and the regulatory uncertainty caused by the issuance of the Order would cause more harm to the Appellants by interfering with the Proposal Proceedings and the Sale Process, than the public interest would suffer if a stay was issued and EPA’s ability to enforce the Order was delayed. The Board accepts the Appellants’ evidence that if the Smoky Lake Pit can be sold under the Sale Process, the associated environmental obligations will be assumed by the purchaser subject to legislative and regulatory requirements and on terms and conditions acceptable to EPA. The Board finds the assumption by the purchaser of the environmental obligations associated with the Smoky Lake Pit would be in the public interest.
[85] The Board is of the view that if the Inspector takes steps to enforce the Order, it will negatively impact the likelihood of the Smoky Lake Pit being sold as part of the Sale Process and it is uncertain if the Appellants will be able to finance the immediate reclamation the Smoky Lake Pit in the context of the regulatory requirements of the Proposal Proceedings. The Board finds it is not reasonable to expect a purchaser of the Smoky Lake Pit to complete end-of-life associated reclamation obligations before commencing mining operations and then at some time in the future, after reserves have been depleted, complete the same end-of-life reclamation obligations to satisfy regulatory and legislative requirements. Moreover, sand and gravel are a scarce resource in Alberta, and it is in the overall public interest to provide the best opportunity for the Smoky Lake Pit to be operated as an active aggregate pit, and to be reclaimed in due course at its end-of-life by the operator and in accordance with legislative and regulatory requirements.
[86] The Board finds the balance of convenience and the overall public interest warrant the issuance of a stay of the Order.
[87] The Board finds the test for granting a stay as set out in RJR-MacDonald has been met.
7. Is it just and equitable to grant a stay?
[88] The RJR-MacDonald test for a stay guides the Board’s exercise of discretion when considering a stay application, but the fundamental question before the Board remains whether granting a stay is just and equitable in all the circumstances.[47]
[89] The Board notes the Parties are taking steps to ensure the Smoky Lake Pit is reclaimed pursuant to regulatory and legislative requirements. Where the Parties disagree, is in the timing of the reclamation, by whom, and how this is best achieved. The Appellants have stated they do not have the financial means to immediately reclaim the Smoky Lake Pit, and if reclaimed, the Smoky Lake Pit would likely have to be removed from the Proposal Proceedings. None of the Parties benefit from the Appellants being unable to sell the Smoky Lake Pit in the Proposal Proceedings, or from Mantle becoming insolvent if forced to immediately reclaim the Smoky Lake Pit. This situation will not only cause harm to Mantle, but also leaves a great deal of uncertainty regarding the ultimate reclamation of the Smoky Lake Pit.
[90] A more just and equitable solution for the Parties is to grant a stay of the Order to allow time for the Proposal Proceedings to continue unimpeded by the Order. If the Proposal Proceedings are successfully concluded, the Parties may be able to meet their long-term objectives as the Smoky Lake Pit could be operated as an active aggregate pit and reclaimed at its end-of-life by the new operator in accordance with EPEA legislative and regulatory requirements. While this outcome is not guaranteed, it is preferable to the uncertainty created if Mantle were to become insolvent.
[91] In summary, the Board is of the view that granting a stay would be just and equitable and therefore, grants a stay of the Order.
8. DECISION
[92] On the application by the Appellants for a stay of the Order, the Board finds the Appellants have met the test for the stay. The Board finds the Appellants have raised serious issues, would suffer irreparable harm, the balance of convenience favours the Appellants, and that the overall public interest warrants a stay.
[93] The Board finds that it would be just and equitable to issue a stay of the Order.
[94] The Board grants a stay of Environmental Protection Order EPO-EPEA-35659-14. The stay will remain in effect until the appeals are resolved unless otherwise ordered by the Board or the Minister.
Dated on March 28, 2024, at Edmonton, Alberta.
“original signed by”
_____________________________
Barbara Johnston
Board Chair
[1] Environmental Protection Order No. EPO-EPEA-35659-14 issued on October 18, 2023, by the Inspector, Regulatory Assurance Division North, Environment and Protected Areas, to Mantle Materials Group Ltd., Byron Levkulich, Director, JMB Crushing Systems Inc. and Mantle Materials Group Ltd., and Aaron Patsch, Director, JMB Crushing Systems Inc. and Mantle Materials Group Ltd.
[2] Cleanit Greenit Composting System Inc v. Director (Alberta Environment and Parks), 2022 ABQB 582 (“Cleanit Greenit”) at paragraph 33.
[3] See Stay Decision: Gereluk v. Director, South Saskatchewan Region, Operations Division, Alberta Environment and Parks, re: Stone’s Jewellery Ltd. (23 November 2021), Appeal No. 20-002-ID1 (AEAB), 2021 ABEAB 34; Pryzbylski v. Director of Air and Water Approvals Division, Alberta Environmental Protection re: Cool Spring Farms Dairy Ltd. (1 April 1997), Appeal No. 96-070 (AEAB), 1997 ABEAB 5; Stelter v. Director of Air and Water Approvals Division, Alberta Environmental Protection, Stay Decision re: GMB Property Rentals Ltd. (14 May 1998), Appeal No. 97-051 (AEAB), 1998 ABEAB 16; and Stay Decision: Northcott v. Director, Northern Region, Regional Services, Alberta Environment, re: Lafarge Canada Inc. (11 January 2005), Appeal Nos. 04-009, 04-011, and 04-012-ID1 (AEAB), 2005 ABEAB 6.
[4] RJR-MacDonald at paragraph 43.
[5] RJR-MacDonald at paragraph 50.
[6] Ominayak at paragraph 31, citing The Law of Injunctions, 4th edition, volume 1 at page 34.
[7] Edmonton Northlands v. Edmonton Oilers Hockey Corp., 147 AR 113 (AB KB) (“Edmonton Northlands”) at paragraph 78.
[8] Manitoba (Attorney General) v. Metropolitan Stores, [1987] 1 SCR 110 at paragraph 36.
[9] MacMillan Bloedel v. Mullin, [1985] BCJ No. 2355 (CA) at paragraph 121.
[10] Edmonton Northlands at paragraph 78.
[11] Edmonton Northlands at paragraph 79.
[12] RJR-MacDonald at paragraph 66.
[13] Gas Plus at paragraph 65.
[14] Cleanit Greenit at paragraph 47.
[16] Cleanit Greenit at paragraph 32.
[17] Cleanit Greenit at paragraph 30.
[18] Appellants’ Initial Submissions at page 4.
[19] Appellants’ Rebuttal Submissions at page 3.
[20] Appellants’ Rebuttal Submissions at page 12.
[21] See Appellants’ Rebuttal Submissions at page 11 where the Appellants stated that the draft plan is confidential and has not been approved by the Court so could not be provided in these stay proceedings. The Appellants also noted EPA had an opportunity to comment on the draft.
[22] Appellants’ Rebuttal Submissions at page 14.
[23] Inspector’s Response Submissions at page 4.
[24] Inspector’s Response Submissions at page 6.
[25] See the Inspector’s Response Submissions at pages 6 and 7 where the Inspector, citing Cleanit Greenit, submitted:
1. the threat of irreparable harm must be met by the evidence;
2. the evidence must be “at a convincing level of particularity that demonstrates a real probability that unavoidable irreparable harm will result unless a stay is granted”;
3. evidence of hypothetical or merely possible harm is not sufficient; and
4. where the actual harm is financial, clear, and compelling evidence is required because the nature of the harm allows it to be proven by concrete evidence.
[26] See Inspector’s Response Submissions at pages 10 and 11, where the Inspector referred to the Affidavit of Byron Levkulich sworn August 7, 2023 at paragraph 34.
[27] Inspector’s Response Submissions at page 11.
[28] Inspector’s Response Submissions at page 11.
[29] Inspector’s Response Submissions at page 14.
[30] See Inspector’s Response Submissions at page 13 where the Inspector cited the following statement of the Supreme Court of Canada in RJR-MacDonald at paragraph 76:
“In the case of a public authority, the onus of demonstrating irreparable harm to the public interest is less than that of a private applicant. This is partly a function of the nature of the public authority and partly a function of the action sought to be enjoined. The test will nearly always be satisfied simply upon proof that the authority is charged with the duty of promoting or protecting the public interest and upon some indication that the impugned legislation, regulation, or activity was undertaken pursuant to that responsibility. Once these minimal requirements have been met, the court should in most cases assume that irreparable harm to the public interest would result from the restraint of that action.”
Further the Inspector at page 13 of the Inspector’s Response Submissions cited the following statement of the Court in Cleanit Greenit at paragraph 115:
“[H]arm to the public is presumed where the relief sought would restrain a government regulator from carrying out its mandate. Where a governmental authority is charged with promoting the public interest and actions are taken by that governmental authority in discharging that responsibility, a court must assume harm to the public if the actions are restrained.”
[31] Section 97 of EPEA provides in part:
“(1) Subject to subsection (2), submitting a notice of appeal does not operate to stay the decision objected to.
(2) The Board may, on application of a party to a proceeding, before the Board, stay a decision in respect of which a notice of appeal has been submitted.”
[32] RJR-MacDonald at paragraph 43.
[33] Cleanit Greenit at paragraph 32.
[34] Cleanit Greenit at paragraph 33.
[35] Cleanit Greenit at paragraph 47.
[36] Cleanit Greenit at paragraph 47.
[37] RJR-MacDonald at paragraph 50.
[38] Cleanit Greenit at paragraph 98 citing RJR-MacDonald at paragraph 30.
[39] Cleanit Greenit at paragraph 99. See also Alberta (Director of Public Lands Disposition Management Section, Land Policy and Programs Branch, Lands Division, Alberta Environment and Parks) v. Syncrude Canada Ltd, 2023 ABKB 447 at paragraph 52.
[40] Syncrude at paragraph 53.
[41] Cleanit Greenit at paragraph 100.
[42] Manitoba (Attorney General) v. Metropolitan Stores, [1987] 1 SCR 110 at paragraph 36.
[43] MacMillan Bloedel v. Mullin, [1985] BCJ No. 2355 (CA) at paragraph 121.
[44] Edmonton Northlands at paragraph 78.
[45] Edmonton Northlands at paragraph 79.
[46] RJR-MacDonald at paragraph 66.
[47] Cleanit Greenit at paragraph 33.