(Judgement Day is a new feature profiling business-related Alberta court decisions.)

Xerex Exploration Ltd. won its case involving the penetration by Petro-Canada in a zone for which Xerex owned the deep drilling rights.

The property in question is an area west of Swan Hills where Petro-Canada owned the shallow rights. When drilling within 15 metres deeper than the base of the zone formation, an allowable penetration by their licence, Petro-Canada found oil shows, or stains.

A Petro-Canada representative called Xerex with an offer to acquire the deep-rights licence, but did not disclose the findings of their drilling.

Xerex agreed to transfer rights in exchange for three-per-cent gross overriding royalties. Learning later of Petro-Canada’s findings, Xerex filed a claim to reverse the transfer of rights.

The court judgement states: “Petro-Canada then infers that in the broadest sense, the events . . . did not cause Xerex to lose anything which had value to it and then suggests, without intending to sound cavalier, (that) Xerex had reason to be grateful.”

In referring to the three-per-cent royalties received by Xerex, the judgement says Petro-Canada points out “ironically, whatever ‘wrong’ Petro-Canada is alleged to have committed resulted in a tremendous benefit to Xerex.”

The Court of Queen’s Bench saw things differently on Sept. 2. For misrepresentation, incomplete disclosure and trespassing, the court instructed Petro-Canada to pay a little more than $8.1 million to Xerex, allowing 30 days for Xerex to submit an additional claim for interest.

THE WAITING GAME
Remington Development Corp., as agent for the landlord Investors Group Trust Co. Ltd., has at least 30 more days to wait to determine the value of its claim against its tenant, Alternative Fuel Systems Inc.

AFS had leased commercial space in Calgary from Remington, but found itself in financial difficulty when it lost its major customer.

AFS sought and obtained protection under the Companies’ Creditors Arrangement Act, and surrendered the premises to Remington.

As an unsecured creditor, Remington submitted a claim for about $4.2 million, comprising rent arrears plus damages, less rent paid and less the results of Remington’s mitigation.

AFS, however, said that under the Landlord’s Rights on Bankruptcy Act (LRBA), Remington’s recovery should be limited to no more than $95,739.99.

On September 2, the Court of Queen’s Bench denied AFS’s application and was given 30 days to submit a plan on what Remington’s claim should be.

PARTING PARCELS
Canada Life Assurance Co. was denied its claim to the title of a parcel of land near the Edmonton Airport.

Edmonton Regional Airports Authority had a leasehold interest on two parcels of land (the Airport parcel, and the West parcel.) Edmonton Airports subleased the Airport parcel to Axor Group Inc., which assigned the sublease to Edmax Real Estate Inc., which granted a leasehold mortgage and specific lease assignment to Canada Life.

Canada Life then entered a lease recognition agreement with the City of Edmonton and filed a caveat claiming an interest against both parcels. Edmonton Airports went to Court of Queen’s Bench, calling on Canada Life to show why the caveat against the West parcel should not be discharged.

On September 3, the court found that the agreement made between Canada Life and the city cannot be recognized as a caveat on the title of the West parcel, and ordered the caveat discharged.

(Cases taken from recent judgement records for Alberta’s Court of Appeal, Court of Queen’s Bench and provincial court.