Category: Contracts Page 3 of 12

Total Claims that its ROFR Rights Were Violated in the Sale of Teck’s Interest in the Fort Hills Project

On February 13, 2023

By: Nigel Bankes

Case commented on: TotalEnergies EP Canada Ltd v Suncor Energy Inc, 2023 ABKB 59 (CanLII).

PDF Version: Total Claims that its ROFR Rights Were Violated in the Sale of Teck’s Interest in the Fort Hills Project

Suncor, Total, and Teck all owned interests in the Fort Hills Oilsands Project (54%, 24.4%, and 21.5%, respectively). Teck agreed to sell its interest in the project to Suncor. The sale triggered a right of first refusal (ROFR) in the relevant agreement. The sale included some of Teck’s other assets (the other assets) but the sale was also subject to a condition precedent that required Teck to vote in favour of a proposed operating budget for the Project (the budget approval covenant). Suncor’s proposed operating budget had been hotly contested among the three partners for a number of years. Total and Teck had repeatedly voted against Suncor’s budget proposals, with the result that those budgets were not approved and operations had to revert to the last approved budget of 2021.

Novel Form of Agreement to Reserve Surface Rights Payments

By Nigel Bankes

On August 15, 2022

In Contracts, Property

By: Nigel Bankes

Case commented on: Schnell v Stene (Heidinger Estate), 2022 SKQB 146 (CanLII)

PDF version: Novel Form of Agreement to Reserve Surface Rights Payments

It is not uncommon for a vendor of agricultural lands in western Canada to seek to ensure that the vendor will continue to receive the benefit of surface rights payments payable under the terms of surface rights leases or right of entry orders. Perhaps the most common technique to achieve this result is by way of an agreement to assign rents. This will be effective so long as one is confident that such an agreement creates an interest in land that can be protected by way of caveat. In some jurisdictions legislation deems such an agreement to give rise to an interest in land, (see, for example, Law of Property Act, RSA 2000, c L-7 at s 63(1)(b)) whereas in other jurisdictions the point may be more debatable: (e.g. Alberta prior to the 1985 amendment to the Law of Property Act: see Webster v Brown, 2004 ABQB 321 (CanLII) and Canadian Crude Separators Inc. v Mychaluk, 1997 CanLII 14841 (AB QB), [1998] 1 WWR 545.

Must Creditors be “Analogous to Minority Shareholders” to Obtain Standing for Oppression?

By Jassmine Girgis

On February 17, 2021

In Contracts, Creditors’ Remedies

By: Jassmine Girgis

PDF Version: Must Creditors be “Analogous to Minority Shareholders” to Obtain Standing for Oppression?

Case Commented On: Pricewaterhouse Coopers Ltd v Perpetual Energy Inc, 2021 ABCA 16 (CanLII)

A creditor seeking an oppression remedy must qualify as a “proper person” to make an application. While deciding whether to grant standing, courts have at times maintained that a creditor must be in a position analogous to a minority shareholder. In Pricewaterhouse Coopers Ltd v Perpetual Energy Inc, 2021 ABCA 16 (CanLII) (Perpetual Energy), the Alberta Court of Appeal objected to the shorthand of that analogy while appearing to confirm its substance. This post will address when and how creditors can get complainant status under the oppression remedy, and the effect of the comment in Perpetual Energy on that understanding.

Consent Provisions in Long-Term Relational Contracts

By Nigel Bankes

On September 8, 2020

In Contracts, Oil & Gas

By: Nigel Bankes

PDF Version: Consent Provisions in Long-Term Relational Contracts

Case Commented On: Apache North Sea Ltd v Ineos FPS Ltd, [2020] EWHC 2081 (Comm)

The drafters of long-term relational contracts often have to deal with the uncertainties of future developments. One technique for doing so is to accord one party to the contract (A) a power to propose some development or other while affording to the other party (B) a power to withhold its consent to the development, but disciplining the consent power by stipulating that B cannot unreasonably withhold its consent. Such provisions have long been common in the landlord and tenant context but they are also common in other commercial contracts, including oil and gas contracts. For a recent Canadian example see IFP Technologies (Canada) Inc v EnCana Midstream and Marketing, 2017 ABCA 157 (CanLII) and my post on that decision here.

The Expansion of Unconscionability – The Supreme Court’s Uber Reach

By Jassmine Girgis

On July 23, 2020

In Access to Justice, Contracts, Supreme Court of Canada

By: Jassmine Girgis

PDF Version: The Expansion of Unconscionability – The Supreme Court’s Uber Reach

Case Commented On: Uber Technologies Inc v Heller, 2020 SCC 16 (CanLII)

Contracts of adhesion, or standard form agreements (SFAs) are oftentimes unfair. They are drafted by the stronger parties. Their provisions are dense and difficult to understand. The party signing does not have a say in their contents – they are take-it-or-leave-it agreements. They are usually lengthy and cannot feasibly be read in the short time it takes the parties to transact. Some of the more onerous terms are deeply embedded (hidden?) in the document. The contracts more often than not limit the liability of the drafting party at the expense of the other party. They ensure occupiers are not liable for negligence, including their own. And the list goes on.

We are not powerless against these contracts – common law and equitable doctrines protect weaker parties from harsh or onerous provisions. Is this enough? Probably not. Certainly the Supreme Court of Canada thought more should be done to protect weaker parties against SFAs in the case of Uber Technologies Inc v Heller, 2020 SCC 16 (CanLII). But instead of leaving this job to the legislature, as it should have, it expanded the reach of the doctrine of unconscionability without providing any substantial guidance or principles, thereby furnishing lower courts with an enormously powerful weapon to use against SFAs.