ABLawg

Production in meaningful quantities: commercial realities should inform the interpretation of an oil and gas lease

On September 15, 2011

PDF version: Production in meaningful quantities: commercial realities should inform the interpretation of an oil and gas lease

Case commented on: Omers Energy Inc. v Alberta (Energy Resources Conservation Board), 2011 ABCA 251

In important and rare “reasons for judgement reserved” the Alberta Court of Appeal, in unanimous reasons authored by Justice Carol Conrad, affirmed the decision of the Energy Resources Conservation Board (ERCB) to the effect that a petroleum and natural gas lease had expired in its secondary term in accordance with its own terms when the gas well (the 100/05-4 well) on the lands was unable to produce for more than very short periods of time (minutes or hours) because of large volumes of produced water. The lease in question (the CAPL 91 form) provided for continuation beyond the end of its primary term by “operations”; the term “operations” was defined to include “the production of any leased substances” and was further extended by the language of the shut-in wells clause which defined the existence of a well “capable of producing the leased substances” to serve as “operations” for the purposes of the habendum. Both the Board and the Court concluded that the lease could not be continued. The words “capable of producing” did not mean just any production no matter how miniscule the quantities, and instead must be read to mean “production in meaningful quantities”. Since it followed from this that the lease had expired, Omers was not entitled to maintain well licences for two other wells that it had drilled on the leased properties since it could no longer meet the requirements of s 16 of the Oil and Gas Conservation Act, RSA 2000, c O-6 to the effect that:

16(1) No person shall apply for or hold a licence for a well
(a) for the recovery of oil, gas or crude bitumen, or
(b) for any other authorized purpose
unless that person is a working interest participant and is entitled to the right to produce the oil, gas or crude bitumen from the well or to the right to drill or operate the well for the other authorized purpose, as the case may be.

ERCB Decision 2009-037 is available here.

Conflicts of Interest and Good Judgment

By Alice Woolley

On September 12, 2011

In Ethics and the Legal Profession

PDF version: Conflicts of Interest and Good Judgment

Case considered: Dow Chemical Canada Inc. v Nova Chemicals Corporation, 2011 ABQB 509

Previously on ABlawg I have suggested that outcomes in conflicts cases turn more on a judge’s overall impression of the facts and the equities than on the precise articulation and application of specific rules (here). A recent judgment of the Alberta Court of Queen’s Bench aligns with this perception, insofar as the outcome of the case seems closely linked to the judge’s assessment of the good faith and propriety of the conduct of the law firm alleged to be in conflict. The case also, though, shows the continued evolution of the principles that govern conflicts of interest. Specifically, Chief Justice Wittmann’s judgment provides new analysis of the principles governing what is necessary for a client to consent to a conflict in advance, how imputation rules operate in national firms, lawyers transferring between law firms, and the intersection between law society rules and judicial determinations in assessing conflicts. In this way the judgment may indicate that contrary to my earlier suggestion, conflicts cases are in fact like other legal judgments, with outcomes determined by a complex interplay of principles, rules, facts and, above all, the “judgment” of the judge, what in the context of moral decision-making David Luban and Michael Milleman have described as the ability to identify “which principle is most important given the particularities of the situation” (“Good Judgment: Ethics Teaching in Dark Times,” (1995-96) 9 Geo J of Legal Ethics 31 at 39). In other words, it’s not so much whether judges perceive lawyers to have been “good” or not, as it is whether judges perceive lawyers to have been good enough that the applicable principles do not require that they be removed from a file. This does mean that the interplay of fact and law matters more than the precise articulation of the law – i.e., that there is some legitimacy to my general feeling that the fights between the CBA and the Federation of Law Societies over the precise wording of conflicts rules is not a very good use of anyone’s time. But it does not mean that principles are irrelevant.

The Elephant in the Courtroom

By Shaun Fluker

On September 1, 2011

In Administrative Law, Environmental, Intervenors and Standing

PDF version: The Elephant in the Courtroom

Case Considered: Reece v Edmonton (City), 2011 ABCA 238

In March 2011 the Court of Appeal heard an appeal by Zoocheck Canada, People for the Ethical Treatment of Animals, and Tove Reece (collectively referred to as Zoocheck here) from Justice John Rooke’s August 2010 decision to strike Zoocheck’s application for a declaration that the City of Edmonton is violating the Animal Protection Act, RSA 2000 c. A-41 by keeping Lucy the Elephant in its Valley Zoo. See my previous ABlawg comment Lucy the Elephant v Edmonton (City) for some analysis of Justice Rooke’s decision (Reece v Edmonton (City), 2010 ABQB 538), the background concerning Lucy’s health problems and living conditions in the zoo, the applicable legislative framework, and the City’s motion to strike the Zoocheck application. In its August 2011 Reece v Edmonton (City) decision the Court of Appeal dismisses the Zoocheck appeal, with the majority written by Justice Frans Slatter upholding the finding at the Court of Queen’s Bench that the application for a declaration constitutes an abuse of process. In her lengthy dissenting opinion, Madame Justice Catherine Fraser rules the Zoocheck application is not an abuse of process and should go to trial. This Court of Appeal decision is noteworthy to me for three reasons: (1) the sharp contrast of legal theory underlying the majority and the dissent; (2) the environmental ethic informing Justice Fraser’s dissent; and (3) the comments made by Justice Fraser concerning the availability of public interest standing.

Da’naxda’xw/Awaetlala

By David Laidlaw

On August 29, 2011

In Aboriginal

PDF version: Da’naxda’xw/Awaetlala

Case considered: Da’naxda’xw/Awaetlala First Nation v British Columbia (Environment), 2011 BCSC 620 (“Da’naxda’xw/Awaetlala“)

In the Da’naxda’xw/Awaetlala case, Madam Justice Fisher was faced with a different type of duty to consult and accommodate issue.

While this is a British Columbia case it demonstrates even more the differences between British Columbia Court’s treatment of the duty to consult and accommodate and Alberta Courts (see here). Further it distinguishes the recent Alberta Court of Appeal decision in Tsuu T’ina Nation v Alberta (Minister of Environment), 2010 ABCA 137 on, I would suggest somewhat arguable distinctions (see here). Finally, this decision also distinguishes the Alberta Court of Appeal decision in R v Lefthand, 2007 ABCA 206.

In the Da’naxda’xw/Awaetlala, the petitioners sought judicial review of the Minister’s refusal to recommend a boundary variation of a conservation area that encompassed the First Nation’s traditional lands in order to accommodate a proposed hydro-electric power project (the “Project”). The twist was that the petitioners Da’naxda’xw/Awaetlala First Nation (“First Nation”) and Kleana Power Corporation (“Kleana”), the nominal project proponent, were seeking the variation.

A New Concord Between Bar and Academy? The Governor General’s Speech to the Canadian Bar Association

By Ian Holloway

On August 23, 2011

In Access to Justice, Ethics and the Legal Profession

PDF version: A New Concord Between Bar and Academy? The Governor General’s Speech to the Canadian Bar Association

It is hardly an everyday occurrence for a viceroy to call publicly for a meeting with law deans to talk about legal education. But that is exactly what happened last week in Halifax. In his speech to the annual conference of the Canadian Bar Association, Governor General David Johnston spoke extremely candidly about what he saw as the challenges facing the legal profession today. He did not mince words; the picture he painted of the reality of legal practice in Canada was not soothing. And he laid a stark challenge before all of us who claim to believe that lawyers are the key to the survival of the rule of law.