Comments on: Ontario Court of Appeal holds that oil and gas lease continued by virtue of (late) payments under a unitization agreement http://ablawg.ca/2010/06/08/ontario-court-of-appeal-holds-that-oil-and-gas-lease-continued-by-virtue-of-late-payments-under-a-unitization-agreement/ Tue, 22 May 2012 09:43:50 +0000 http://wordpress.org/?v=2.3.3 By: Nigel http://ablawg.ca/2010/06/08/ontario-court-of-appeal-holds-that-oil-and-gas-lease-continued-by-virtue-of-late-payments-under-a-unitization-agreement/#comment-132601 Nigel Tue, 15 Feb 2011 01:00:05 +0000 http://ablawg.ca/2010/06/08/ontario-court-of-appeal-holds-that-oil-and-gas-lease-continued-by-virtue-of-late-payments-under-a-unitization-agreement/#comment-132601 Thanks Wallace. But as you may know the Supreme Court of Canada did not agree with us; or more precisely and correctly, it was evidently not persuaded that divergent lines of appellate authority as between Saskatchewan and Alberta on the one hand, and Ontario on the other, constituted a matter of national importance that the Court had to resolve. See McKinley Farms Ltd v Tribute Resources Inc, [2010] SCCA 284, November 18, 2010, leave to appeal denied. Thanks Wallace.

But as you may know the Supreme Court of Canada did not agree with us; or more precisely and correctly, it was evidently not persuaded that divergent lines of appellate authority as between Saskatchewan and Alberta on the one hand, and Ontario on the other, constituted a matter of national importance that the Court had to resolve.

See McKinley Farms Ltd v Tribute Resources Inc, [2010] SCCA 284, November 18, 2010, leave to appeal denied.

]]> By: wallacelang http://ablawg.ca/2010/06/08/ontario-court-of-appeal-holds-that-oil-and-gas-lease-continued-by-virtue-of-late-payments-under-a-unitization-agreement/#comment-132344 wallacelang Sun, 13 Feb 2011 23:37:51 +0000 http://ablawg.ca/2010/06/08/ontario-court-of-appeal-holds-that-oil-and-gas-lease-continued-by-virtue-of-late-payments-under-a-unitization-agreement/#comment-132344 your comment is well taken, there is no obligation on the part of the lessee to make the annual deeming payment just as there is no obligation in the lessee to pay delay rentals, to drill, or to produce. The default clause does not apply because there is no default. The Ontario court did not seem to give any weight to this reasoning which is well established in considering oil and gas leases. This form of Unit Operating Agreement has been widely used in Ontario and is designed to secure the production rights indefinitely while the lands are used for gas storage. your comment is well taken, there is no obligation on the part of the lessee to make the annual deeming payment just as there is no obligation in the lessee to pay delay rentals, to drill, or to produce. The default clause does not apply because there is no default. The Ontario court did not seem to give any weight to this reasoning which is well established in considering oil and gas leases.

This form of Unit Operating Agreement has been widely used in Ontario and is designed to secure the production rights indefinitely while the lands are used for gas storage.

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