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.
By: Nigel Bankes
PDF Version: Hibernia Payout Account Dispute
Case Commented On: Newfoundland and Labrador v ExxonMobil Canada Properties, 2017 NLDT(G) 147, 2017 CanLII 56724 (NL SCTD)
This case involves an unsuccessful application by the Government of Newfoundland and Labrador to set aside an arbitral award dealing with the calculation of royalties with respect to the Hibernia project.
By: Nigel Bankes
PDF Version: An Operator of Gas Processing Facilities Does Not Have a Possessory Lien Under the Possessory Liens Act
Case Commented On: Cansearch Resources Ltd v Regent Resources Ltd, 2017 ABQB 535 (CanLII)
Cansearch and Regent jointly owned the Joffre Facility under the term of an agreement for the construction, ownership and operation (CO & O) of that facility (2008). Cansearch was appointed as operator. The CO & O agreement afforded Cansearch as operator an operator’s lien (cl 602(a)) in the following terms:
Effective from the Effective Date, Operator shall have a lien and charge, which is first and prior to any other lien, charge, mortgage or other security interest, with respect to the Function Unit Participations of each Owner in the Facility and such Owner’s share of Facility Products, to secure payment of such Owner’s proportionate share of the costs and expenses incurred by Operator for the Joint Account.
Cansearch never registered its Operator’s Lien pursuant to the Personal Property Security Act, RSA 2000, c P-7 (PPSA).
By: Nigel Bankes
PDF Version: Abandonment Expenses are for the Joint Account
Case Commented On: Spyglass Resources Corp v Bonavista Energy Corporation, 2017 ABQB 504 (CanLII)
In this decision Justice Jones rejected a series of technical arguments raised by the receiver of Spyglass (Ernst and Young) to resist payment of abandonment costs. The receiver had argued that Bonavista had abandoned co-owned assets for its own account rather than the joint account and that Bonavista was not able to set-off revenues attributable to Spyglass’s interest against Spyglass’s share of abandonment obligations.
By: Nigel Bankes
PDF Version: The Effect of Well Abandonment and Reclamation Obligations for the Valuation of Matrimonial Property
Case Commented On: Walker v Walker, 2017 SKQB 195 (CanLII)
Judicial decisions on the legal nature of abandonment and reclamation obligations may arise in the strangest of ways. Take this matrimonial property case, for example, in which Mr. Walker (Darcy) was seeking to argue that his assets should be discounted on the basis that a small oil and gas company (Outback) that he controlled had net abandonment and reclamation liabilities. Part of the challenge that he faced in making this argument was of course that the liabilities in question were the liabilities of the corporation. While a director or controlling mind of a corporation might ordinarily take some comfort from this state of affairs, in this case counsel for Darcy tried to suggest that his client would inevitably face personal liability under the terms of Saskatchewan’s The Environmental Management and Protection Act, 2010, SS 2010, c E-10.22 [EMPA] and The Oil and Gas Conservation Act, RSS 1978, c O-2 [OGCA] and s 59 of The Oil and Gas Conservation Regulations, 2012, RRS c O-2 Reg 6 [OGCR]. Actually the argument was even stranger insofar as Mrs. Walker (Becky) was also a director of the company (Outback) and thus might face the same liability should Darcy be correct.
By: Nigel Bankes
PDF Version: Liens Against Minerals Do Not Have Super Priority: Saskatchewan Court of Appeal Overrules Cenex
Case Commented On: National Bank of Canada v KNC Holdings Ltd., 2017 SKCA 57 (CanLII)
A unanimous five person panel of the Saskatchewan Court of Appeal has overruled the Court’s earlier decision in Canada Trust Co. v Cenex Ltd. (1982), 1982 CanLII 2651 (SK CA), 131 DLR (3d) 479 (Sask CA). Decided in 1982, Cenex concluded that s 12 of The Mechanics’ Lien Act, RSS 1978, c M-7, (then the relevant statute) created a super priority for mechanics’ liens filed against mineral interests and severed minerals on the basis that the lien was to attach to “all the estates and interests in the mineral concerned, other than the estate in fee simple in the mines and minerals …” (at para 11). Justice Hall writing for the Court in Cenex concluded that this language bound even the equity of the Royal Bank which held prior security under s 88 of the Bank Act, RSC 1970, c B-1 and debenture security. The effect of Justice Hall’s conclusion was to afford the lien holders a super priority.
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