Case considered: Montreal Trust Co v. Williston Wildcatters Corp., 2009 SKCA 85
PDF version: Williston Wildcatters: bluster no substitute for reasons and yet another judicially created leave and licence
Over the last decade we have seen litigation in both Saskatchewan and Alberta on the question of how to calculate damages where an operator continues to produce hydrocarbons on a dead lease. The Alberta case is Lady Freyberg v. Fletcher Challenge Oil and Gas, 2007 ABQB 353 (on the damages issue – following 2005 ABCA 46 on the lease validity issue). This matter has been settled on a confidential basis and unfortunately we cannot expect to see an appeal judgement on the damages question. I say “unfortunately” because the trial judgement seems to have proceeded on the basis that the continued production was tortious; but there is at least some ground for thinking that the operator’s activities were continued with the permission of a co-owner. If that is correct, then the co-owner/lessor’s claims should have been dealt with on the basis of a co-owner’s claim for an accounting of more than a just share received, rather than on the basis of tort (trespass or conversion). The Freyberg decision is the subject of lengthy comment by Chris Simard et al, “Lady Freyberg: Examples of How Contemporary Courts in Alberta Approach the Modern Business Realities of the Freehold Petroleum and Natural Gas Lease” (2009), 46 Alberta Law Review 299.