jones j

6.25: Preserving or protecting property or its value

Case Summary

The Defendant, Syncrude Canada Ltd. (“Syncrude”), applied for various pre-Judgment relief, including a Preservation Order under Rule 6.25. The Plaintiff, Athabasca Minerals Inc. (“Athabasca”), sued Syncrude, alleging an outstanding debt under a sand and gravel agreement, and asserting that the Defendant had removed surface materials from lands subject to the agreement without compensating the Plaintiff. The Defendant counterclaimed, alleging that the Plaintiff had wrongfully permitted excavation, removal and use of reclamation material from an area subject to one of Syncrude’s mineral leases which overlapped with the lands subject to the agreement between the parties. Syncrude then applied to, among other things, preserve all reclamation material within the boundaries of Syncrude’s mineral surface lease, as well as attach Athabasca’s management fees.

Jones J. noted that the Court’s authority to make a Preservation Order arises from Rule 6.25 which provides that “on application, the Court may make an order for the preservation or custody of property that is in dispute or that may be evidence in an action”. Jones J. observed that “judicial restraint must be exercised” when determining whether such an Order should be made, and the scope of the resulting Order.

The parties disagreed on the appropriate test for granting a Preservation Order: Syncrude argued that the Preservation Order is interlocutory injunctive relief, and the well-established tri-part test for an injunction was appropriate. Athabasca argued that the test for granting a Preservation Order is more onerous and requires considerations of the Civil Enforcement Act, RSA 2000, c-15. Jones J. held that the Civil Enforcement Act does not inform the test for a Preservation Order since the Civil Enforcement Act refers to the “defendant’s exigible property”, and a preservation order applies to property whose ownership is as yet undetermined.

Justice Jones considered whether a Preservation Order was warranted using the test for injunctive relief, and held that the evidence supported Athabasca’s argument that the Preservation Order would unduly hamper its cash flow and operation. The Court dismissed Syncrude’s Application.

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