Collection of Outstanding Taxes

Year: 2014

Number: 17-14M

Department: Saskatchewan Ministry of Government Relations

Midterm: Yes

WHEREAS most oil wells are drilled pursuant to a lease on agriculture land; and

WHEREAS recently, with respect to the sale of assets of certain oil companies, the Sale Approval and Vesting Orders issued by the Courts have ordered that the wells shall be transferred to the purchaser “…free and clear of all security interests, claim, estate, security, right, title, interest and liens, including but not limited to, claims, hypothecs, mortgages,  charges,  liens  (whether  contractual,  statutory  or  otherwise),  security interests, assignments, actions, levies, taxes…”; and

WHEREAS if a municipality wants to pursue collection of their outstanding taxes they must transfer these taxes to the property owner (farmer) and enforce them as a debt against the land or right off the taxes as uncollectible; and

BE   IT   RESOLVED   that   SARM   lobby   the   Provincial   Government   to   amend   The Municipalities Act so that it prohibits a Court from transferring ownership of oil wells free and clear of levies and taxes and make any purchaser responsible for any taxes owing on the oil wells.

MINISTRY OF GOVERNMENT RELATIONS' RESPONSE

•    Given this resolution deals with issues governed by other provincial and federal legislation relating to bankruptcy or insolvency, and is requesting a limitation on the courts, Government Relations will need to consult other provincial ministries such as Justice and Economy to determine if an amendment is appropriate or even possible.

•    For example, if the issue raised in the resolution relates to bankruptcy or insolvency, this issue would fall under federal jurisdiction, specifically:

  • The Bankruptcy and Insolvency Act (Canada), which governs, bankruptcies and receivership in Canada, and the roles and responsibilities of the Office of the Superintendent of Bankruptcy; and
  • The Companies' Creditors Arrangement Act (Canada), which provides short-term protection to a company owing more than $5 million, while the company prepares an offer to creditors for some form of payment .

•    In the meantime, the municipalities affected by the resolution may want to consider other methods for the collection of tax arrears available to municipalities including:

  • notice to a purchaser of oil or gas from a company that has tax arrears owing on resource production equipment, to remit the payment on the purchased oil or gas directly to the municipality;
  • a claim through Small Claims Court; and
  • issuing a distress warrant to recover the cost of tax arrears

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