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REAL ESTATE "You have to understand the asset that you're buying to make sure there aren't any significant environmental problems that's going to increase the cost of the asset beyond what you thought it would be worth." — DAVID LEFEBVRE, STIKEMAN ELLIOTT LLP A corporate and securities lawyer, Lefebvre was instrumental in repre- senting China Petroleum & Chemical Corp. (known as Sinopec Group) in its recent acquisition of the Canadian- and Swiss-owned Addax Petroleum Corp. for $8.3 billion. While Addax does not have assets in Canada, last spring Sino- pec Group also purchased an additional 10-per-cent interest to attain a 50-per- cent ownership in Alberta's proposed Northern Lights oilsands project, viewed as an affirmation of China's interest in Canadian energy properties. When buying into a joint venture, the deal can be a relatively straightforward transfer, says Lefebvre. For instance, when Sinopec upped its share of the Northern Lights project, "the oilsands lease was held by the joint venture so there wasn't an actual change." Whereas an outright acquisition would require a change of title to place the Crown lease for the land into the new owner's name, which could mandate different terms and conditions. Much of the due diligence involving natural resource acquisitions requires lawyers to ensure the parties are com- pliant with provincial and federal environmental laws. "What you really do is go through your due diligence and see if there are any environmental issues before you buy the lease or the company," Lefebvre says. "You have to understand the asset that you're buying to make sure there aren't any significant environmen- tal problems that's going to increase the cost of the asset beyond what you thought it would be worth." The environmental issues are largely associated with how the site will be operated in compliance with the laws and, perhaps more importantly, how it will be rehabilitated once the operation winds down. "There are a whole host of environmental issues and areas that need to be addressed when investing in an oilsands project," says Alex MacWilliam, a partner at Fraser Milner Casgrain LLP's Calgary office and chairman of the firm's national environmental law group. Alberta is in the throes of develop- ing a registry of contaminated properties similar to registries in Ontario and Brit- ish Columbia, which MacWilliam says will be of great assistance to practitioners once it's up and running. "[C]ertainly for real estate lawyers, when they build that into their standard checklist when they're doing a deal, it will help because, in my view, there are a lot of traps out there for real estate lawyers relating to environmental matters and unless you're used to dealing with these things, it's easy to miss." Compliance requirements are the same for an acquisition from within the country or from abroad although clients seem to vary widely in their knowledge or acceptance of Canada's protections for natural resource exploration and development. MacWilliam says while working on a real estate deal for an American-based client last summer, their expectation of environmental due diligence exceeded that of most of his Canadian clients, largely because of the responsibilities and liabilities asserted by the United States courts. "On the flip side of that is when you get inves- tors whose environmental laws aren't as stringent, they may not be as in tune or concerned with environmental issues Tough times call for strict measures, that's why you need… Revised and updated! Editor-in-Chief: Harvey M. Haber, Q.C., LSM and numerous leading experts as contributors With contributions from numerous leading Canadian experts, Shopping Centre Leases has been considered the definitive text on the subject since its inception in 1976 and is now revised and updated. Whether your client is considering a lease or in the middle of a default, this resource provides the insight you need to guide your client through any situation in these uncertain economic times. This Second Edition includes a vast collection of articles as well as numerous precedents to draft agreements and a table of cases. Articles covered include: • Parties Capacity to Hold and Contract Property by Clifford S. Goldfarb and Zev Zlotnick • Insurance for Shopping Centres: Waivers of Subrogation, Releases and Indemnities – by Dawn Michaeloff • Renewals and Extensions of Terms by Lloyd F. Cornett • Lease Transfers: Assigning, Subletting and Change of Control by Stephen Posen • Landlord's Waiver of its Right to Forfeiture – A Practical Guide by Randall M. Rothbart • Distress, Bankruptcy and Receivership of Tenants by Frank H. Bennett • Selling a Tenant's Abandoned Property by Wolfgang Kaufmann … and much more Order your copy today. Hardbound • 1108 pp. • 2008 • $185 • P/C 0279010002 ISBN 978-0-88804-477-8 canadalawbook.ca MERGING TRADITION WITH TECHNOLOGY For a 30-day, no-risk evaluation call: 1.800.263.2037 Canada Law Book is a Division of The Cartwright Group Ltd • Prices subject to change without notice, to applicable taxes and shipping & handling. CL0909 www. C ANADIAN Law ye rmag.com SEPTEMBER 2009 21 Haber_shopping centre(CL 1-3sq).indd 1 7/29/09 9:35:22 AM