Author: Nigel Bankes Page 16 of 87

Nigel Bankes is emeritus professor of law at the University of Calgary. Prior to his retirement in June 2021 Nigel held the chair in natural resources law in the Faculty of Law.

Court of Appeal (England and Wales) Confirms High Court Decision on the Relationship Between a Farmout Agreement and an Operating Agreement

By Nigel Bankes

On January 4, 2021

In Oil & Gas

By: Nigel Bankes

PDF Version: Court of Appeal (England and Wales) Confirms High Court Decision on the Relationship Between a Farmout Agreement and an Operating Agreement

Decision Commented On: Apache North Sea Limited v Euroil Exploration Limited and Edison SPA, [2020] EWCA Civ 1397

In this decision, the Court of Appeal of England and Wales confirmed Judge Pelling’s decision in the High Court with respect to the drilling costs Apache was entitled to recover from Euroil under the terms of a farmout agreement (FOA) and its related joint operating agreement (JOA). I commented on Judge Pelling’s decision here and I refer readers to that earlier post for a more detailed statement of the facts, as well as references to Canadian decisions dealing with the relationship between an FOA and the JOA.

In that earlier post I suggested that the FOA at issue here would likely be denominated as a “farmout and participation agreement” in a Canadian context insofar as the drilling obligation was not a sole risk obligation of the farmee (Euroil) but rather was a shared risk operation for which Euroil was to cover only a percentage of the costs. The farmor, Apache, was to carry out the drilling operation as operator and was also responsible for a percentage of the costs.

Water for Coal Developments: Where Will It Come From?

By Nigel Bankes

On December 4, 2020

In Energy, Environmental, Protection of Species

By: Nigel Bankes and Cheryl Bradley

PDF Version: Water for Coal Developments: Where Will It Come From?

Matters Commented On: A Coal Development Policy for Alberta (1976, rescinded June 1, 2020); Oldman River Basin Water Allocation Order, Alta Reg 319/2003

The Government of Alberta (GoA) is hell-bent on facilitating the development of new coal mines in the Province. To that end, it purported to rescind the long-standing Coal Development Policy (CDP) of 1976 effective June 1, 2020. The CDP prevented development of coal resources in Category I lands on the eastern slopes of the Rockies and only permitted the development of new underground mines (rather than open-pit mines) in Category II lands (see Figure 1, below, also available here).

Forgery, Fraud and the Dower Act

By Nigel Bankes

On November 19, 2020

In Property

By: Nigel Bankes

PDF Version: Forgery, Fraud and the Dower Act

Case Commented On: Inland Financial Inc v Guapo, 2018 ABQB 162 (Master) (CanLII), aff’d 2019 ABQB 15 (CanLII), aff’d 2020 ABCA 381 (CanLII)

Jose Neeves Guapo and Maria Guapo, a married couple, owned a home registered in the names “Jose Guapo and Maria Guapo” as joint tenants. Their son, Jose Domingos Guapo, lived in the home but had no ownership interest in it. It is important to note that father and son shared the same first name and surname and that the name on the register did not include Jose Guapo Sr’s middle name. The Court of Appeal summarized the key facts as follows (at para 5):

Jose Guapo Jr persuaded his mother to apply through a broker to Inland Financial for a loan to be secured by a mortgage on the home. He had done this on 12 different occasions with different brokers for progressively larger amounts. Inland Financial approved the loan in the amount of $245,000. The mortgage documents to secure the loan were prepared by Inland Financial’s lawyers and signed by Maria Guapo and Jose Guapo Jr, impersonating his father, who had no knowledge of the transaction. Inland Financial thought the son owned the house with his mother particularly since they had both sworn a statutory declaration that they were the owners and the house was their principal residence. The mortgage was registered against the title to the home. Funds were advanced and used to pay out two previous mortgages, also fraudulently obtained by Jose Guapo Jr, and the balance of the funds were paid into a bank account in the names of Maria Guapo and Jose Guapo Jr. It is unclear whether Maria Guapo understood the nature of the transaction as she did not speak English and did only what her son instructed her to do. She had received a Grade 4 education in Portugal, at the lawyer’s office her son spoke to her only in Portugese (sic), and she testified through an interpreter at questioning. There is no evidence that she received any funds from the mortgages.

When Jose Guapo Jr defaulted on the mortgage payments Inland commenced foreclosure proceedings. Inland also sought personal judgment against Jose Guapo Jr but did not seek a personal remedy in fraud against Maria Guapo. Jose and Maria Guapo defended; the son was noted in default.

As the title to this post suggests, these facts potentially engaged both the Dower Act, RSA 2000, c D-15 and the Land Titles Act, RSA 2000, c L-4 (LTA). The Court of Appeal decided the case solely on the basis of the Dower Act while the judgments below addressed the implications of both statutes.

A Legal Regime for the Development of Geothermal Resources in Alberta

By Nigel Bankes

On October 24, 2020

In Energy, Oil & Gas

By: Nigel Bankes

PDF Version: A Legal Regime for the Development of Geothermal Resources in Alberta

Bill Commented On: Bill 36, Geothermal Resources Development Act, 2nd Sess, 30th Leg, Alberta, 2020 (first reading 20 October 2020)

The recognition of a “new” resource, whether that be the use of pore space for sequestering carbon dioxide or in this case the exploitation of geothermal energy (for a primer on geothermal energy see David Roberts, “Geothermal Energy Poised for a Big Breakout” Vox (21 October 2020)), often requires the creation of new legal and regulatory instruments (or adaptation of existing ones) to provide legal certainty for investors and to protect the public interest. Although the issues may vary for different “new” resources, such instruments will typically need to address the following types of questions: (1) who owns the resource in question and how may a developer acquire rights to the resource?; (2) what regulatory regime needs to be put in place to protect the public interest, including the environment? and; (3) what liability regime should we put in place to provide compensation in the event that third parties suffer harm and to ensure fulfillment of reclamation and abandonment obligations?

With the introduction of Bill 36, the Government of Alberta proposes to put in place a legal regime that will address these questions. In large part, the Bill addresses the second and third issues by drawing extensively on the Oil and Gas Conservation Act, RSA 2000 c O-6 as a model. I will not say much about that model in this post, but one well-known flaw of this model is that it has proven to be far too permissive. What I mean by permissive is that the model gives the Alberta Energy Regulator (AER) the power to make a lot of rules (e.g. rules for suspension and timely abandonment of wells) but it does not actually require that such rules be put in place. As a result, those rules may never be promulgated and the public interest not fully protected. See “Bill 12: A Small Step Forward in Managing Orphan Liabilities in Alberta”.

Another Manitoba Oil and Gas Lease Termination Decision

By Nigel Bankes

On October 16, 2020

In Energy, Oil & Gas

By: Nigel Bankes

PDF Version: Another Manitoba Oil and Gas Lease Termination Decision

Case Commented On: Fire Sky Energy Inc. v EverGro Energy Corporation, 2020 MBQB 133 (CanLII)

I am not sure what’s going on downstream of us these days, but we now have a third oil and gas lease termination case this year from “Friendly Manitoba.” I posted on the two earlier decisions here in April.

This one is fairly straightforward. EverGro held under a CAPL 88 MAN lease form with a three-year primary term commencing January 22, 2013 and filed a caveat to protect its interest. Fire Sky top leased the property on February 9, 2017 having formed the view that EverGro’s lease had expired.