Canada: Surface Rights And Access To Minerals


In this decision, the Yukon Court of Appeal considered the applicability of Yukon mining legislation, and the ability of the City of Whitehorse to regulate or prohibit the mining of subsurface minerals under its planning, land use and development powers.

This case is an appeal from a decision discussed in Mining in the Courts, Vol. VIII. H. Coyne & Sons owned a subsurface mineral interest in two subsurface parcels in Whitehorse. Part of the surface area, Lot 1280, was transferred to a development company. Pursuant to the City's 2010 official community plan, 2012 zoning bylaw, and a subdivision application approval, the development company was permitted to construct a rural residential development on the lot and subdivide the land. The development company then denied Coyne access to the surface of the lot for exploration and mining activities. Coyne commenced an action in the Yukon Supreme Court seeking declaratory relief that would give Coyne rights of access. The Supreme Court of Yukon declined to grant the declarations. Coyne appealed.

The Court of Appeal upheld the lower court's decision, holding that Whitehorse's land use bylaws validly prohibited Coyne from using the surface to access its subsurface mining rights. Coyne had argued that the Yukon Municipal Act (Act) does not include the power to prohibit or regulate the mining of lands. The Court disagreed, finding that a broad and purposive interpretation of the words "use and development of land" in the Act includes the power to regulate or prohibit the mining of lands within Whitehorse (subject to any superior Territorial legislation). The Court also declined to grant declarations respecting Yukon mining legislation, in particular because Coyne had failed to give Yukon notice of its court proceeding in which the court would be required to opine on the meaning and scope of important legislation and regulations in Yukon.


In this case, the Registrar of Titles applied to the Saskatchewan Court of Queen's Bench by way of reference under the province's Land Titles Act in order to determine ownership in a dispute over a one-quarter interest in the minerals associated with a piece of land.

One respondent, the Great West Life Assurance Company (GWL), owned a plot of land, including its minerals. GWL later transferred surface title, but expressly reserved its mineral interest. A mistake on the subsequent certificate of title indicated that GWL's mineral interest passed with the surface title. After the transfer of title, the mineral interest was divided into quarters and passed to a number of individuals and corporations. The Registrar, after discovering the mistake, filed a caveat that the mineral interest belonging to GWL was mistakenly transferred, and that any subsequent transfer would be subject to GWL's mineral claim. The other respondent was Primrose Drilling Ventures Ltd., who, after purchasing a one-quarter interest in the minerals, disputed the validity of the caveat and asked to be treated as a bona fide purchaser for value.

The Court found that Primrose was not a bona fide purchaser, that GWL was wrongly deprived of its title to the minerals because of the Registry's mistake, and that GWL's ownership of the minerals was protected by the caveat. Among other findings, the Court noted that under the Land Titles Act, the Registrar may correct any error or omission in the land registry through a caveat, and that a purchaser who knowingly proceeds to acquire title in the face of the caveat at a minimum takes title with the caveat endorsed and risks indefeasibility of the title.


In this decision, the Ontario Court of Appeal clarified when a royalty interest constitutes an interest in the land.

The case involved Dianor Resources Inc., which had become insolvent. Dianor's main assets were a group of mining claims subject to a "Gross Overriding Royalty" held by 2350614 Ontario Inc. In the course of Dianor's insolvency proceedings, the Court granted the sale of the mining claims to Third Eye Capital Corporation. The Court held that the sale extinguished the royalty because it did not run with the land nor grant the holder of the royalty an interest in the lands over which Dianor held the mineral rights. 2350614 successfully appealed the decision.

The key issue on appeal was whether the royalty constituted an interest in the land under the test set out by the Supreme Court of Canada in Bank of Montreal v. Dynex Petroleum Ltd. 2002 SCC 7. The Court considered the Dynex test, which states that a royalty interest can be an interest in land if: (i) the language used to describe the interest is sufficiently precise to show that the parties intended the royalty to grant an interest in land, rather than a contractual right to a portion of the oil and gas substances recovered from the land; and (ii) the interest, out of which the royalty is carved, is itself an interest in land.

In finding that the royalty was an interest in land under the Dynex test, the Court offered guidance on the application of the test. Among other things, the Court confirmed that an interest in land does not require a right to enter the property to explore and extract minerals.

For more discussion of this decision, see McCarthy Tétrault's Mining Prospects blog post entitled "Ontario Court of Appeal clarifies when a royalty interest constitutes an interest in land".

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