BERNUM PETROLEUM LTD v BIRCH LAKE ENERGY INC, 2014 ABQB 652
1.4: Procedural orders
6.14: Appeal from master’s judgment or order
7.3: Summary Judgment (Application and decision)
The Defendant (“Birch Lake”) appealed an Order from a Master awarding Summary Judgment to the Plaintiff (“Bernum”). The parties entered into a joint operating agreement to acquire petroleum and natural gas leases to certain lands. Bernum obtained Summary Judgment with respect to a debt owed by Birch Lake. Birch Lake argued against Summary Judgment on the basis that Bernum was grossly negligent in its operation of the well and in failing to negotiate an extension of the lease. The Master held there was no evidence to support Birch Lake’s allegations of gross negligence and awarded Summary Judgment for the debt owed, but held that the issue of extension of the lease should proceed to Trial. Accordingly, the Master ordered that the Judgment in favour of Bernum be stayed pending a determination of the Counterclaim for damages in relation to the failure to extend the lease, as this issue presented an arguable case of set off. Bernum appealed the portion of the Master’s Order staying enforcement of the Summary Judgment.
At the Appeal, both parties produced additional evidence under Rule 6.14, which the Court noted was an Appeal de novo. The Court invited counsel to provide written submissions on the applicability of Rule 1.4(2)(h) to the circumstances in the event Summary Judgment was granted. The Court addressed the test for Summary Judgment stating that, traditionally, the bar on a Motion for Summary Judgment was high but in light of the recent Supreme Court of Canada’s decision in Hryniak v Mauldin, 2014 SCC 7, the Summary Judgment Rules are to be “interpreted broadly, with a focus on proportionality and affordable, efficient and just resolution”. The modern test for Summary Judgment, as confirmed by the Alberta Court of Appeal in Windsor v Canadian Pacific Railway Ltd, 2014 ABCA 108, requires an examination of the record to see if a disposition that is fair and just to both parties may be made on the existing record. Justice Pentelechuk stated that the test for Summary Judgment is now less stringent. In determining whether there is any issue of merit that genuinely requires Trial, the requirement is no longer “plain and obvious or clear or beyond doubt”.
Pentelechuk J. observed that Rule 1.4(2)(h) allows the Court the discretion to grant a Stay if appropriate. Though the Rule does not set out a test for a Stay of execution pending appeal, the longstanding tripartite test should apply: the party applying for a Stay must show that it has an arguable issue, it will suffer irreparable harm if the Stay is not granted, and the balance of convenience weighs in favour of granting the Stay.
After a consideration of the issues, Justice Pentelechuk agreed that there was a genuine issue to be tried in Birch Lake’s Counterclaim for damages. However, the Summary Judgment granted in favour of Bernum would not be set-off in relation to Birch Lake’s Counterclaim, pursuant to the Canadian Association of Landmen Operating Procedure. Therefore, the Appeal of the Stay was granted, but Birch Lake retained the ability to pursue its Counterclaim.View CanLII Details