Atcor Ltd. v. Continental Energy Marketing Ltd., (1996) 178 A.R. 372 (CA)

• Judge: Kerans, Irving and Russell, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: February 08, 1996
• Citations: (1996), 178 A.R. 372 (CA)

Atcor Ltd. v. Continental Energy (1996), 178 A.R. 372 (CA);

    110 W.A.C. 372

MLB headnote and full text

Atcor Ltd. (respondent/plaintiff/defendant by counterclaim) v. Continental Energy Marketing Ltd. (appellant/defendant/plaintiff by counterclaim)

(Appeal No. 94-15517)

Indexed As: Atcor Ltd. v. Continental Energy Marketing Ltd.

Alberta Court of Appeal

Kerans, Irving and Russell, JJ.A.

February 8, 1996.

Summary:

Atcor sought a declaration that its failure to supply gas to a buyer was occasioned by, or in consequence of, force majeure. The buyer submitted that, notwithstanding the force majeure event, the seller was required to prorate its available supply of gas.

The Alberta Court of Queen's Bench, in a decision reported at 161 A.R. 81, allowed Atcor's application, determining that Atcor validly claimed force majeure and was not required to prorate its available supply of gas. The buyer appealed.

The Alberta Court of Appeal allowed the appeal and ordered a new trial.

Contracts - Topic 2115

Terms - Express terms - Force majeure clauses - General - The Alberta Court of Appeal stated that a force majeure clause should address three questions: (1) how broad should be the definition of triggering events; (2) what impact must those events have on the party who invokes the clause; and (3) what effect should invocation have on the contractual obligation - See para­graph 12.

Contracts - Topic 2115

Terms - Express terms - Force majeure clauses - General - Atcor sought a dec­laration that its failure to supply gas to a buyer was occasioned by, or in con­sequence of, force majeure - The buyer submitted that intervening matters, not the event caused the non-performance and that Atcor was required to prorate its supply of gas - The trial judge determined that Atcor validly claimed force majeure and was not required to prorate its available supply of gas - The Alberta Court of Appeal ordered a new trial - The test was whether the event created, in commercial terms, a real and substantial problem that made performance unfeasible - To over­come the effect of the event, Atcor was obliged to mitigate by acquiring replace­ment gas if to do so was reasonable.

Cases Noticed:

Atlantic Paper Stock Ltd. et al. v. St. Anne-Nackawic Pulp and Paper Co. et al., [1976] 1 S.C.R. 580; 4 N.R. 539; 10 N.B.R.(2d) 513; 4 A.P.R. 513; 56 D.L.R.(3d) 409, affing (1974), 8 N.B.R.(2d) 207; 46 D.L.R.(3d) 732 (C.A.), refd to. [para. 12].

Wildhandel N.V. v. Tucker & Cross, [1975] 2 Lloyd's Rep. 240 (Comm. Ct.), refd to. [para. 15].

Bremer Handelsgesellschaft mbH v. Con­tinental Grain Co., [1983] 1 Lloyd's Rep. 269 (C.A.), refd to. [para. 19].

Intertradex S.A. v. Lesieur-Torteaux S.a.r.l., [1978] 2 Lloyd's Rep. 509 (C.A.), affing. [1977] 2 Lloyd's Rep. 146 (Q.B.), refd to. [para. 19].

Hong Guan & Co. v. Jumabhoy (R.) & Sons Ltd., [1960] 2 All E.R. 100 (P.C.), refd to. [para. 21].

Bremer Handelsgesellschaft mbH v. Vanden Avenne-Izegem P.V.B.A., [1978] 2 Lloyd's Rep. 109 (H.L.), refd to. [para. 23].

Jones (Tom) & Sons Ltd. v. Ontario (1981), 31 O.R.(2d) 649; 119 D.L.R.(3d) 684 (H.C.), refd to. [para. 30].

Tom Jones & Sons Ltd. - see Jones (Tom) & Sons Ltd.

Tradax Export S.A. v. Andre & Cie S.A., [1976] 1 Lloyd's Rep. 416 (C.A.), refd to. [para. 31].

Bremer Handelsgesellschaft mbH v. Bunge, [1983] 1 Lloyd's Rep. 476 (C.A.), refd to. [para. 31].

Exportelisa S.A. v. Giuseppe & Figli Soc. Coll., [1978] 1 Lloyd's Rep. 433 (C.A.), refd to. [para. 33].

Warinco AG v. Mauthner, [1978] 1 Lloyd's Rep. 151 (C.A.), refd to. [para. 33].

Parrish & Heimbecker Ltd. v. Gooding Lumber Ltd., [1968] 1 O.R. 716; 67 D.L.R.(2d) 495 (C.A.), leave to appeal refused [1968] S.C.R. viii, refd to. [para. 36].

Authors and Works Noticed:

Chitty on Contracts (26th Ed. 1989), p. 626 [para. 16].

Wright, Arthur J., Contractual Issues in Marketing Natural Gas in the 1990's (1990), 36 Rocky Mountain Mineral Law Institute 16.1, p. 16-4 [para. 36].

Counsel:

J.P. Peacock, Q.C., for the appel­lant/defendant and plaintiff by counter­claim;

B.C. Yorke-Slader, for the respon­dent/plaintiff and defendant by counter­claim.

This appeal was heard before Kerans, Irving and Russell, JJ.A., of the Alberta Court of Appeal. The following decision of the Court of Appeal was delivered on Feb­ruary 8, 1996, by Kerans, J.A.