“You mean those 99 year leases are still valid?” a reader asked after reading my Dec. 4, 2003 column.
She had inherited land from her father who had signed such a lease. She indicated her father wanted to get out of the lease after he signed it. She was researching the practices used in acquiring oil and gas leases in the 1940s and ’50s and found interesting stories about the lengths field agents went to get leases signed.
Based on my own research, I know there were allegations about questionable procedures used to obtain oil and gas rights. Sometimes homestead protection laws were overlooked. Competitors would offer landowners higher rates to break leases, company shares of questionable value were offered as lease payments, and royalties were offered on oil pools that never came into existence.
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There were numerous allegations of misrepresentation and fraud on the part of land agents. Another common practice was the taking of “top” leases that only came into force if an earlier oil and gas lease expired or rights to drill under it were not exercised.
In Fries vs. Imperial Oil, an agent asked a 14-year-old daughter to sign the homestead consent for her sick mother. A justice of the peace, travelling with the agent, certified that the wife had voluntarily signed the lease. The Saskatchewan Court of Appeal set aside the lease.
The Saskatchewan government established a royal commission in 1957 to examine the extent of fraud and misrepresentation in obtaining such rights. While the commission concluded that there was no widespread and deliberate campaign by oil companies to get mineral rights by fraud and misrepresentation, it said the companies had a moral duty to do everything possible to achieve a more satisfactory contractual relationship between themselves and the landowners.
The commission also found that agents were not always instructed as to the terms of contracts. The commission recommended that the right to conduct a homestead examination and certify that the wife had voluntarily signed be restricted to persons who were qualified to appreciate and discharge the responsibility.
The commission’s main recommendation was the establishment of a mineral contracts renegotiation board, which the government created in 1959. Its role was to help farmers renegotiate oil leases entered into with Prudential Trust, which acted as agent for many companies. Applications for renegotiation had to be made by June 30, 1960.
Over the years, I have argued that the old English rule of perpetuities – which requires future interests to be enforceable within 21 years – might be applied to some of the “top” leases. However, as I pointed out in my earlier column, Saskatchewan’s Court of Appeal ruled in 2001 that the English rule no longer applied in the province.
While there were allegations of questionable practices regarding the acquisition of oil rights in the 1940s and ’50s, that fact alone does not invalidate the leases. They are assumed valid and the onus is on the landowner to show that these leases are not valid.
Making a case that land agents misrepresented the leases would be difficult. You would have to find witnesses and documents dating back 50 years.
Given the passage of time and perhaps acceptance of rent payments, the argument would be that the landowner accepted the validity of the lease. There may also be difficulties in overcoming limitations periods.
Claims based on fraud must usually be advanced within six years, and claims regarding land within 10 years.
Don Purich is a former practising lawyer who is now involved in publishing, teaching and writing about legal issues. His columns are intended as general advice only. Individuals are encouraged to seek other opinions and/or personal counsel when dealing with legal matters.
