Category Archives: Contracts

Party Principally Interested in Thermal Recovery Succeeds on Appeal

By: Nigel Bankes

PDF Version: Party Principally Interested in Thermal Recovery Succeeds on Appeal

Case Commented On: IFP Technologies (Canada) Inc v EnCana Midstream and Marketing, 2017 ABCA 157 (CanLII)

The Court of Appeal by a majority (Chief Justice Fraser, Justice Rowbotham concurring;  Justice Watson dissenting) has concluded that a party (IFP Technologies) who acquired from PanCanadian Resources (PCR, now Encana) a 20% undivided interest in a set of oil and gas properties under the terms of a conveyancing document (denominated here as the Asset Exchange Agreement, AEA), retains a working interest in those properties even where other contemporaneous documents executed by the parties, including a joint operating agreement (JOA), purported to limit IFP’s interest to an interest in the production that occurs as a result of thermal processes and not as a result of primary production. As a result of its interpretation of the AEA, the majority concluded that IFP was entitled to an accounting for its proportionate share of the net revenue realized from primary production from the relevant properties (now held by Wiser – and most recently Canadian Forest Oil – pursuant to a farmout from PCR to Wiser). The Court also held that IFP had reasonably withheld its consent to Wiser’s acquisition of PCR’s interest in the lands. In reaching these conclusions the majority overruled Chief Justice Wittmann’s decision at trial (2014 ABQB 470 (CanLII)) acting in place of the Trial Judge, Justice Ron Stevens who (at para 48) died in spring 2014 without having been able to render judgement based on a trial which took place between January and June 2011. Continue reading →

For Golfers: A Classic Bailment Case with an Exclusion Clause Issue

By: Jonnette Watson Hamilton

PDF Version: For Golfers: A Classic Bailment Case with an Exclusion Clause Issue

Case Commented On: Bloomer v Connaught Golf Club, 2017 ABPC 105 (CanLII)

Bailment is an interesting legal concept because it is ubiquitous and because it is at the overlap of contract, property and tort law and yet is its own distinct area of law. However, because the issue in Bloomer v Connaught Golf Club involved an exclusion clause, the exclusive focus of Judge Derek G. Redman’s decision was on contract law (rather than the far more fascinating property law). This case is also factually simple, but those facts might disturb some readers. The Connaught Golf Club — which Mr. Bloomer was a member of — had agreed to store Mr. Bloomer’s golf clubs for him but was unable to find his golf clubs when he came in to play his daily golf game with his wife on June 24, 2016. In other words, the case is about a pro shop in Medicine Hat that lost a club member’s golf bag and its contents. Continue reading →

When are Late Payment of Rent Charges in Residential Tenancies Unenforceable?

By: Jonnette Watson Hamilton

PDF Version: When are Late Payment of Rent Charges in Residential Tenancies Unenforceable?

Case Commented On: 416566 Alberta Ltd. v Fothergill, 2017 ABPC 96 (CanLII)

This Provincial Court decision by Judge Jerry LeGrandeur, Associate Chief Judge, is of interest because he considers whether the fee a landlord charged for the late payment of rent was a valid pre-estimate of liquidated damages or an illegal penalty. If it is an estimate of damages, the tenant must pay the fee. If it is a penalty, it is unenforceable and the tenant does not have to pay the fee. Judge LeGrandeur’s decision was made under the Mobile Home Sites Tenancies Act, RSA 2000, c M-20, rather than the more often used Residential Tenancies Act, SA 2004, c R-17.1, but both statutes deal with late payment charges the same way: neither says anything at all about them. As a result, late payment fees can be included in leases and, if tenants agree to pay those fees by signing leases that include them, the tenants have to pay the late payment fees unless those fees are what the common law calls a “penalty.” Judge LeGrandeur’s decision, which is applicable to all types of residential tenancies, is welcome because there is a lack of direction in Alberta about how much can be charged for a late payment fee before it becomes an illegal penalty and unenforceable. Continue reading →

Residential Tenancy Agreements, Options to Purchase, In Terrorem Clauses, and Relief from Forfeiture

By: Jonnette Watson Hamilton 

PDF Version: Residential Tenancy Agreements, Options to Purchase, In Terrorem Clauses, and Relief from Forfeiture

Case Commented On: Dreamworks Ventures Ltd v Dye, 2017 ABPC 20 (CanLII)

This residential tenancy case, arising in the context of a rent-to-own arrangement, is light on the law. The dispute was primarily about the tenants’ responsibility for cleaning and painting after they left the house and this decision assesses the damages. Nevertheless, the case raised one interesting legal point. Judge Allan H. Lefever mentioned an in terrorem clause in connection with the Option to Purchase that had been granted to the tenants in return for a non-refundable $5,000 deposit that was part of the rent-to-own arrangements. While he mentions the clause, he did not discuss it because it was not relevant to the dispute. The in terrorem clause tried to scare the tenants to stop them from filing a caveat to protect their interest under the Option to Purchase. Can this in terrorem clause possibly be valid? This, it seems, is a difficult question to answer. Continue reading →

The Freedom to Contract Your Terms of Business (aka Spread Costs, Consequential Damages, Knock for Knock and Contract Interpretation Principles)

By: Nigel Bankes and Heather Lilles

PDF Version: The Freedom to Contract Your Terms of Business (aka Spread Costs, Consequential Damages, Knock for Knock and Contract Interpretation Principles)

Case Commented On: Transocean Drilling UK Ltd v Providence Resources Plc [2016] EWCA Civ 372, [2016] 2 Lloyd’s Rep 51, 165 Con LR 1, [2016] BLR 360

This decision of the English Court of Appeal (Civil Division) which came out earlier this year (April 2016) is well worth reading both for its treatment of the exclusion of liability for consequential damages and also for its modern approach to the interpretation of commercial contracts. As recognized by the Court, the case “raises some interesting questions about the freedom of two commercial parties to determine the terms on which they wish to do business” (para 1).

Transocean Drilling UK Ltd (Transocean), the owner of a semi-submersible drilling rig, entered into a contract with Providence Resources Plc (Providence) to drill an offshore appraisal well for Providence. On 18 December 2011, Transocean suspended drilling operations due to a misalignment of part of the blow-out preventer. Transocean resumed operations on 2 February 2012. The trial judge determined that the delay was caused by Transocean’s breach of contract. There was no appeal on that point, but Transocean did appeal that part of the judge’s decision in which he allowed Providence to recover the ‘spread costs’ that it had incurred as a result of the delay. The ‘spread costs’ were described (at para 10) as “the costs of personnel, equipment and services contracted [by Providence] from third parties which were wasted as a result of the delay. Examples given by the judge are well logging, well testing and cementing, mud engineers and mud logging services, geological services, diving and ROV (remotely operated vehicle) services, weather services, directional drilling services, and running casings.” Continue reading →