Category: Contracts Page 8 of 12

By: Nigel Bankes

PDF Version: Stewart Estate: Finalizing The Judgment Roll and Costs

Decisions commented on: Stewart Estate v TAQA North Ltd, 2016 ABCA 143 and Stewart Estate v TAQA North Ltd, 2016 ABCA 144

The Court of Appeal handed down its main decision in Stewart Estate v TAQA North Ltd, 2015 ABCA 357 (hereafter the main decision) in November 2015. In my post on the main decision I suggested that “while Stewart Estate is certainly a significant decision (which grapples with important issues including, the standard of review applicable to lease interpretation questions, the rules surrounding the termination of oil and gas leases and the question of remedies for wrongful production), it is ultimately a disappointing decision because, in the end, with three separate judgments, this three person panel of the Court agrees on very little.”

We now have two further decisions from the panel of the Court that heard the case, one decision settling the judgement roll (hereafter the judgment roll decision) and the second dealing with the costs award (the costs decision). The judgment roll decision expressly describes itself (at para 1) as providing supplementary reasons to the main decision. This post not does provide a systematic account of either of these decisions but it does aim to identify where these decisions have added to the reasoning in the main decision or have provided dicta that may be of interest beyond this case.

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By: Nigel Bankes

PDF Version: Unpaid AFE Amounts Constitute Liquidated Demands With No Right of Set-Off Under the 1990 CAPL Operating Procedure

Case Commented On: Talisman Energy Inc v Questerre Energy Corporation, 2015 ABQB 775 (MC)

This decision of Master Prowse offers an interesting example of careful parsing of the pleadings, and the agreed and contested facts, with a view to identifying possible issues for which summary judgment may be granted – while leaving the factually contested issues for a later trial. As in SemCAMS ULC v Blaze Energy Ltd. 2015 ABQB 218, (and see my post on that decision here) contractual language deeming billings to be liquidated demands and the “no set-off” provisions commonly found in oil and gas and other commercial agreements were important elements in the decision.

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By: Nigel Bankes

PDF Version: Court of Appeal Assesses Damages for Production on a Dead Oil and Gas Lease: An Important but Ultimately Disappointing Decision

Case Commented On: Stewart Estate v TAQA North Ltd, 2015 ABCA 357

Courts of Appeal have at least two important functions. The first is a corrective function – the power and the authority to take a second look at a problem and to reach a decision which more properly accords with the law. For a recent example which demonstrates the crucial importance of this role see the Court of Appeal’s review of Judge Camp’s infamous decision in R v Wagar, 2015 ABCA 327, which was the subject of important commentary by my colleagues, Professors Koshan and Woolley here and here. In many cases, the scope of that corrective function turns on the applicable standard of review: correctness, unreasonableness or overriding and palpable error. One of the important issues in Stewart Estate v TAQA North Ltd was the application of the Supreme Court of Canada’s decision in Creston Moly Corp v Sattva Capital Corp, 2014 SCC 53 (CanLII), [2014] 2 SCR 633 (Sattva) to the interpretation of oil and gas leases. Sattva is generally cited as authority for the proposition that unless there is an “extricable question of law”, a trial judge’s interpretation of a contract should generally be accorded deference. Thus, an appellate court should only intervene if it is of the view that the trial judge has made an overriding and palpable error – the traditional test for an appellate court’s assessment of a trial judge’s findings of fact. The principal rationale for applying the same test to contract interpretation issues as well as to findings of fact is that the rules on contractual interpretation allow a trial judge to take into account the factual and commercial matrix when assessing the intentions of the parties as revealed in the language used in the contract.

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By: Nigel Bankes

PDF Version: The Synthetic Transportation of Natural Gas

Case Commented On: Apache Canada Ltd v TransAlta Cogeneration LP, 2015 ABQB 650

In this decision Master Robertson concluded that the synthetic transportation of natural gas through a series of swap arrangements does not trigger the seller’s right of first refusal in a natural gas sales contract so as to allow the seller to re-acquire the gas, or that volume of gas, at the contract price and re-sell for its own account at the market price.

Apache agreed to sell natural gas to TAU for the specific purpose of fueling a cogeneration facility in Windsor, Ontario (the Windsor facility). The point of sale (i.e. where TAU took delivery of the gas) was Empress, Alberta. The contract had a 15-year term commencing in 1996. At that time, natural gas prices were depressed and Apache agreed to accept a fixed price with an escalation clause rather than a price determined by reference to an evolving spot market. Both parties clearly contemplated that TAU, having taken delivery of the gas at Empress, would transport that gas to its Windsor facility using TransCanada’s mainline and Union Gas’s facilities in Ontario. Indeed, the contract required TAU to arrange take-away pipeline capacity through agreements with “Buyer’s Transporters” (s.9.03) that were (at para 39):

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