KASTEN ENERGY INC v WHITEMUD RESOURCES INC

The Applicant, Whitemud Resources Inc. (“Whitemud”), sought to appeal the decision of an Applications Judge granting Summary Judgment in favour of the Respondent, Kasten Energy Inc. (“Kasten”), and dismissing Whitemud’s Cross-Application for Summary Dismissal.

Kasten sought to recover amounts owing under a loan agreement (the “Agreement”). Whitemud argued that the claim was limitation-barred, as no Action was commenced within two years of the loan’s maturity date. Further, Whitemud contended that extensions of the maturity date and the assignment of its debt from Kasten to its subsidiary, Kasten Resources Inc. (“Kasten Resources”), were ineffective because they did not comply with the Agreement.

Justice Feasby confirmed that, pursuant to Rule 7.3(1)(a), Summary Judgment may be granted where there is no merit to a claim or no defence to a claim. The Court held that the record permitted the necessary findings of fact and application of the law. Accordingly, summary disposition was a proportionate means of resolving the dispute. Feasby J. further confirmed that, notwithstanding his criticism of the current process, an appeal from an Applications Judge remained a de novo hearing.

The Court held that the limitation period began to run on the original maturity date of the loan. However, applying sections 8 and 9 of the Limitations Act, RSA 2000, c L-12, Feasby J. found that Whitemud repeatedly acknowledged the debt in audited financial statements and a loan amending agreement, thereby restarting the limitation period. As no period greater than two years elapsed between acknowledgements, the Action was not statute-barred.

Feasby J. also rejected Whitemud’s argument that Kasten’s assignment of the debt to Kasten Resources was ineffective. Justice Feasby held that the Agreement’s assignment provisions were distinct from its amendment provision and did not require a formal written agreement among all parties. The Court found that Whitemud had received notice of, and consented to, the assignment, as evidenced by its audited financial statements and course of dealing.

In the result, Feasby J. granted Summary Judgment in favour of Kasten and dismissed Whitemud’s Cross-Application for Summary Dismissal. Justice Feasby directed that, if the parties were unable to agree on costs, they could provide written submissions and a Bill of Costs.