677960 Alberta Ltd. v. Petrokazakhstan Inc., 2013 ABQB 47

• Judge: Stevens, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 24, 2011
• Citations: 2013 ABQB 47;(2013), 555 A.R. 128 (QB)

677960 Alta. v. Petrokazakhstan Inc. (2013), 555 A.R. 128 (QB)

MLB headnote and full text

Temp. Cite: [2013] A.R. TBEd. FE.037

677960 Alberta Ltd. (plaintiff) v. Petrokazakhstan Inc. (defendant)

(0401 07521; 2013 ABQB 47)

Indexed As: 677960 Alberta Ltd. v. Petrokazakhstan Inc.

Alberta Court of Queen's Bench

Judicial District of Calgary

Stevens, J.

January 18, 2013.

Summary:

Hurricane Hydrocarbon Ltd. (HHL) acquired an oil and gas investment in Kazakhstan. Kazakhstan revoked the exploration licences. HHL sought protection from its creditors under the Companies' Creditors Arrangement Act (CCAA). The Plan of Arrangement was approved. 677960 Alberta Ltd. (677), did not submit a proof of claim to HHL, asserting that it was unaware of the CCAA proceedings. HHL's venture proved to be successful. After the CCAA proceedings were concluded, HHL was sold for more than $4 billion. HHL's name was changed to Petrokazakhstan Inc. (PKI). 677 sued PKI, in both contract and quantum meruit or unjust enrichment.

The Alberta Court of Queen's Bench dismissed the claim.

Creditors and Debtors - Topic 8582

Debtors' relief legislation - Companies' creditors arrangement legislation - Purpose of - The Alberta Court of Queen's Bench considered the law with respect to proceedings pursuant to the Companies' Creditors Arrangement Act (CCAA), including the purpose of the CCAA, and the law with respect to notice in CCAA proceedings - See paragraphs 95 and 96, 99 to 103, 108 and 109, 114.

Creditors and Debtors - Topic 8594.2

Debtors' relief legislation - Companies' creditors arrangement legislation - Arrangement - Participation - Provable claims (incl. time for) - [See second Creditors and Debtors - Topic 8596 ].

Creditors and Debtors - Topic 8596

Debtors' relief legislation - Companies' creditors arrangement legislation - Notice to creditors - [See Creditors and Debtors - Topic 8582 ].

Creditors and Debtors - Topic 8596

Debtors' relief legislation - Companies' creditors arrangement legislation - Notice to creditors - The plaintiff failed to establish its claim in contract or unjust enrichment against the defendant pursuant to guarantees of two agreements that were assigned to the plaintiff, relating to an oil and gas investment - Had the plaintiff established a claim in contract, the court would have found that the defendant's proceedings pursuant to the Companies' Creditors Arrangement Act (CCAA) operated to terminate its obligations to the plaintiff - The plaintiff maintained that it was not aware of the CCAA proceedings until after the claims bar date - The statutory notice requirement was augmented by the Claims Procedure Order (CPO) which required the Monitor to send notice to all "known creditors or potential creditors" and to place an advertisement announcing the proceedings in newspapers - The defendant concluded that the plaintiff was not a known or potential creditor, and complied with the public notice requirements set out in the CPO - The Alberta Court of Queen's Bench found that the public notice was adequate in the circumstances - "Whether the Plaintiff qualified as a creditor or potential creditor must be considered in light of the objectives of the CCAA and the particular circumstances" - The plaintiff was not an obvious creditor - Given the distant relationship between the parties and the reasonable belief on the part of the defendant that there was no contractual relationship, the defendant could not be expected to provide the plaintiff with personal notice of its CCAA status - "To do so would create an unreasonably high standard and an overburdensome requirement for CCAA companies to provide notice to an overly broad ambit of 'creditors'. The law does not expect a creditor to provide notice to every person with whom the debtor has had a prior business relationship." - While it was unfortunate that the plaintiff did not see any of the advertisements published, "this does not mean that the Court should now hold the Defendant responsible. The Defendant was required to provide public notice and they fulfilled this duty." - See paragraphs 92 to 120.

Damages - Topic 7401

Contracts - Quantum meruit - General - The defendant contested the plaintiff's claim for unjust enrichment on the grounds that the plaintiff did not specifically plead unjust enrichment in its statement of claim - The plaintiff argued that "there was an express reference to quantum meruit" and that since quantum meruit and unjust enrichment were interchangeable, the reference to quantum meruit should suffice - The Alberta Court of Queen's Bench was unable to find the express reference that the plaintiff referred to - In any event, the court disagreed with the submission that the terms quantum meruit and unjust enrichment were interchangeable - "The terms unjust enrichment and quantum meruit are not synonymous. While the terms are certainly related, they are not the same. Whereas quantum meruit is a remedy, unjust enrichment is a principle or a cause of action ... Quantum meruit can be either (1) contractual (where the court determines reasonable remuneration for services provided under a contract that did not specify a sum) or (2) restitutionary (where a remedy is available through unjust enrichment) ... The relationship between the two terms is that quantum meruit is one of the remedies to a claim for unjust enrichment." - See paragraphs 72 to 77.

Practice - Topic 2103

Pleadings - Amendment of pleadings - To remedy deficiency - [See Practice - Topic 2110 ].

Practice - Topic 2110

Pleadings - Amendment of pleadings - Adding new cause of action or "claim" - In closing arguments, the defendant contested the plaintiff's claim for unjust enrichment on the grounds that the plaintiff did not specifically plead unjust enrichment in its statement of claim - The Alberta Court of Queen's Bench considered whether it would be fundamentally unfair not to invite the plaintiff to amend its pleadings - After reviewing the case law, the court stated that "[t]he proper course of action in circumstances such as this where there is a deficiency in the pleadings would normally be to invite the Plaintiff [to] amend its pleadings. However, it is not fundamentally unfair not to invite the Plaintiff to amend its pleadings. Though I turned my mind to this possibility, I am persuaded ... that the claim would not succeed in any event and that it would therefore be pointless to invite an amendment. In addition, I have found that the Plaintiff's failure to plead was not fatal to the issue of unjust enrichment. Therefore, an invitation to amend would not be necessary." - See paragraphs 66 to 71.

Restitution - Topic 4

General principles - The principle of unjust enrichment - [See Damages - Topic 7401 ].

Restitution - Topic 10

General principles - Effect of a contract between the parties - [See Restitution - Topic 66 ].

Restitution - Topic 66

Unjust enrichment - General - Conditions precedent - The plaintiff claimed against the defendant pursuant to guarantees of two agreements that were assigned to the plaintiff, relating to an oil and gas investment in Kazakhstan - The plaintiff argued that the three elements of unjust enrichment were present - (1) an enrichment or benefit to the defendant - The plaintiff alleged that the defendant began as a corporation valued at some $3 million and grew to a value of $4.18 billion as a result of its work in Kazakhstan; and that the defendant would not have had the opportunity to explore and produce the specific oil fields in Kazakhstan without the plaintiff's support and guidance - (2) The plaintiff suffered a corresponding deprivation as it gave up rights to the fields yet received nothing as consideration in return - (3) There was no juristic reason for the deprivation - Revocation of the licences to explore for or produce oil from the fields constituted a juristic reason for the deprivation - Public policy considerations required that the defendant not be permitted to avoid paying the plaintiff for the opportunities that the plaintiff provided - The Alberta Court of Queen's Bench found that the plaintiff did not have a strong argument on any of the three elements of unjust enrichment - The parties agreed to a contract based on specific oil fields licences in Kazakhstan - When those licences were no longer in existence, the contracts ceased to exist - The contract was not deficient in its provisions for compensating the plaintiff and it was not unjustly terminated by the defendant - See paragraphs 78 to 91.

Restitution - Topic 101

Unjust enrichment - Bars - General - In closing arguments, the defendant contested the plaintiff's claim for unjust enrichment on the grounds that the plaintiff did not specifically plead unjust enrichment in its statement of claim - The Alberta Court of Queen's Bench stated that "[a]lthough the law is clear that a party must plead all the material facts on which they intend to rely at trial, it is apparent that pleadings need not name the specific cause of action." - The pleadings tangentially referred to some of the supporting facts for a claim to unjust enrichment - A paragraph of the amended statement of claim referred to the enrichment of the defendant as a result of the plaintiff's efforts - As for the second element of unjust enrichment, a corresponding deprivation to the plaintiff, the statement of claim "suggests, albeit weakly", a deprivation by virtue of the fact that the plaintiff had only been partially compensated for its efforts and contributions - However, while the first and second elements of unjust enrichment might be gleamed from the pleadings, the plaintiff did not disclose sufficient facts to support the final element of the unjust enrichment analysis, a lack of juristic reason for the deprivation - In the end result, the court held that the plaintiff failed to plead unjust enrichment in its statement of claim - See paragraphs 43 to 56.

Restitution - Topic 101

Unjust enrichment - Bars - General - In closing arguments, the defendant contested the plaintiff's claim for unjust enrichment on the grounds that the plaintiff did not specifically plead unjust enrichment - The plaintiff argued that the defendant should be estopped from relying on the fact that the plaintiff did not specifically plead unjust enrichment as they acquiesced to the argument during the proceedings - The Alberta Court of Queen's Bench, having concluded that the plaintiff's pleadings were deficient, turned to the question of whether its claim for unjust enrichment should be barred as a result - "While I find that the Plaintiff's pleadings were less than obvious on the point of unjust enrichment, I do not find that its failure to precisely and clearly plead unjust enrichment forecloses me from considering the merits of its claim" - The defendant's written submissions replied at length to the substantive merits of the claim for unjust enrichment - "Clearly, the Defendant was aware that the issue of unjust enrichment was on the table" - The court found that there would be no prejudice to the defendant in proceeding with the issue - As the defendant had not suffered as a result of the plaintiff's failure to properly plead the issue, the court found that the balancing of the plaintiff's failure to plead and the defendant's failure to make a timely objection weighed in favor of allowing the issue of unjust enrichment to proceed - See paragraphs 57 to 65.

Restitution - Topic 121

Unjust enrichment - Remedies - General - [See Damages - Topic 7401 ].

Restitution - Topic 781

Benefit acquired from the plaintiff - Recovery based on quantum meruit - General - [See Damages - Topic 7401 ].

Restitution - Topic 2505

Benefit acquired at defendant's request - Recovery based on quantum meruit - Work or services performed - General - [See Damages - Topic 7401 ].

Cases Noticed:

Wilde et al. v. Archean Energy Ltd. et al. (2007), 422 A.R. 41; 415 W.A.C. 41; 2007 ABCA 385, refd to. [para. 34].

Bank of British Columbia v. Turbo Resources Ltd. (1983), 46 A.R. 22 (C.A.), refd to. [para. 34].

Amerada Minerals Corp. of Canada Ltd. v. Mesa Petroleum (N.A.) Co. et al. (1986), 73 A.R. 172 (C.A.), refd to. [para. 34].

Wyman v. Vancouver Real Estate Board (1957), 22 W.W.R.(N.S.) 133 (B.C.C.A.), refd to. [para. 46].

Klemke Mining Corp. v. Shell Canada Ltd. et al. (2008), 433 A.R. 172; 429 W.A.C. 172; 2008 ABCA 257, refd to. [para. 46].

Parlee v. McFarlane (1999), 210 N.B.R.(2d) 284; 536 A.P.R. 284 (C.A.), refd to. [para. 47].

MDI Industrial Sales Ltd. v. McLean et al. (2000), 267 A.R. 394 (Q.B.), refd to. [para. 48].

Bartlett v. Murphy (2011), 374 N.B.R.(2d) 270; 965 A.P.R. 270; 2011 NBQB 139 (Fam. Div.), refd to. [para. 49].

Sandhu v. Sandhu, [2011] B.C.T.C. Uned. 294; 2011 BCSC 294, refd to. [para. 49].

Harelkin v. McKay et al., [2009] Sask.R. Uned. 11; 2009 SKQB 27, refd to. [para. 50].

Morris v. Makos et al., [2006] O.T.C. 658 (Sup. Ct.), refd to. [para. 51].

Dancovich v. Rast, [2002] A.R. Uned. 454; 2002 ABQB 907, refd to. [para. 52].

McAlpine (Robert) Ltd. v. Byrne Glass Enterprises Ltd. et al. (1998), 53 O.T.C. 1; 37 C.L.R.(2d) 38 (Gen. Div.), varied (2001), 141 O.A.C. 167; 7 C.L.R.(3d) 155 (C.A.), refd to. [para. 57].

McAlpine (Robert) Ltd. v. Woodbine Place Inc. - see McAlpine (Robert) Ltd. v. Byrne Glass Enterprises Ltd. et al.

Brophy v. Hutchinson (2003), 176 B.C.A.C. 258; 290 W.A.C. 258; 9 B.C.L.R.(4th) 46; 2003 BCCA 21, refd to. [para. 58].

Sornberger v. Canadian Pacific Railway Co. (1897), 24 O.R. 263 (C.A.), refd to. [para. 59].

Young v. Saanich Police Department et al., [2003] B.C.T.C. 926 (S.C.), affd. (2004), 200 B.C.A.C. 161; 327 W.A.C. 161; 26 B.C.L.R.(4th) 19; 2004 BCCA 224, refd to. [para. 67].

Jensen (J. Michael) Boat Sales Ltd. v. McAfee et al., [2004] B.C.A.C. Uned. 22; 2004 BCCA 48, refd to. [para. 68].

Burgener et al. v. Code Mortgage Investment Corp. et al., [2008] A.R. Uned. 453; 2008 ABQB 583, refd to. [para. 69].

Atir Enterprises Ltd. v. Briault (2008), 456 A.R. 1; 2008 ABQB 520, refd to. [para. 73].

Kaiman Estate v. Graham Estate, [2007] O.T.C. Uned. E31; 58 R.P.R.(4th) 305 (Sup. Ct.), affd. (2009), 245 O.A.C. 130; 2009 ONCA 77, refd to. [para. 74].

Kerr v. Baranow, [2011] 1 S.C.R. 269; 411 N.R. 200; 300 B.C.A.C. 1; 509 W.A.C. 1; 274 O.A.C. 1; 2011 SCC 10, refd to. [para. 83].

Harris v. Nugent et al. (1996), 193 A.R. 113; 135 W.A.C. 113 (C.A.), leave to appeal dismissed (1997), 221 N.R. 160; 212 A.R. 36; 168 W.A.C. 36 (S.C.C.), refd to. [para. 84].

Foundation Co. of Canada Ltd. v. United Grain Growers Ltd. et al. (1997), 91 B.C.A.C. 254; 148 W.A.C. 254; 34 B.C.L.R.(3d) 92 (C.A.), refd to. [para. 85].

Campeau v. Olympia & York Developments Ltd. (1992), 14 C.B.R.(3d) 303; 14 C.P.C.(3d) 339 (Ont. Gen. Div.), refd to. [para. 95].

Elan Corp. and Nova Metal Products Inc. v. Comiskey (1990), 41 O.A.C. 282; 1 O.R.(3d) 289 (C.A.), refd to. [para. 96].

Ivorylane Corp. v. Country Style Realty Ltd., [2004] O.T.C. 575 (Sup. Ct.), affd. (2005), 199 O.A.C. 1; 7 B.L.R.(4th) 15 (C.A.), dist. [para. 101].

Lindsay v. Transtec Canada Ltd. et al., [1994] B.C.T.C. Uned. D85; 99 B.C.L.R.(2d) 73 (S.C.), refd to. [para. 102].

Noma Co., Re, [2004] O.T.C. 1068 (Sup. Ct.), refd to. [para. 103].

Authors and Works Noticed:

Maddaugh, Peter D., and McCamus, John D., The Law of Restitution (2010), pp. 2-14 to 2-15 [para. 76].

Counsel:

L.M. Sali, Q.C., and K.J. Drozdowski, for the plaintiff;

A.J. Jordan, Q.C. and C.M. Sutherland, for the defendant.

This claim was heard on June 24, 2011, before Stevens, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following judgment and reasons for judgment, dated January 18, 2013.