Gauntlet Energy Corp., Re, 2003 ABQB 718

• Judge: Kent, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: August 13, 2003
• Citations: 2003 ABQB 718;(2003), 336 A.R. 302 (QB)

Gauntlet Energy Corp., Re (2003), 336 A.R. 302 (QB)

MLB headnote and full text

Temp. Cite: [2003] A.R. TBEd. SE.008

In The Matter Of the Companies Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended;

And In The Matter Of the Business Corporations Act, R.S.A. 2000, c.B-9;

And In The Matter Of Gauntlet Energy Corporation.

(Action No. 0301-09612; 2003 ABQB 718)

Indexed As: Gauntlet Energy Corp., Re

Alberta Court of Queen's Bench

Judicial District of Calgary

Kent, J.

August 20, 2003.

Summary:

Gauntlet Energy Corp. and Pulse Data Inc. entered into three Project Management Agreements regarding seismic surveys. Before completing payment to Pulse for their services, Gauntlet entered into Companies' Creditors Arrangement Act proceedings. Pulse claimed priority to the seismic data.

The Alberta Court of Queen's Bench held that other creditors had priority over Pulse.

Company Law - Topic 5427.3

Borrowing - Debentures - Subordination clauses - Gauntlet Energy Corp. and Pulse Data Inc. entered into three Project Management Agreements regarding seismic surveys - Before completing payment to Pulse for their services, Gauntlet entered into Companies' Creditors Arrangement Act proceedings - Pulse claimed priority to the seismic data - Pulse argued that it had priority over the seismic data because the agreements contained a subordination clause - The Alberta Court of Queen's Bench rejected the argument - For a subordination clause to be enforceable, the wording had to be clear and specific that it intended to deal with the interests of the parties - The court held that the clause contained in the agreements was vague and self-contradictory and was therefore unenforceable - See paragraphs 49 to 56.

Creditors and Debtors - Topic 8581.2

Debtor's relief legislation - Companies' creditors arrangement legislation - Jurisdiction - Gauntlet Energy Corp. and Pulse Data Inc. entered into three Project Management Agreements regarding seismic surveys - Before completing payment to Pulse for their services, Gauntlet entered into Companies' Creditors Arrangement Act proceedings - Pulse claimed priority to the seismic data - Pulse argued that the court did not have jurisdiction to allow the sale of the seismic data as the title of the property had not yet been transferred to Gauntlet - The Alberta Court of Queen's Bench held that the seismic data was property within the parameters of the Personal Property Security Act and that Pulse's security interest did not have priority, therefore there was no reason why Gauntlet should not be allowed to sell the seismic data - See paragraphs 57 to 67.

Personal Property - Topic 2

General - Property - What constitutes - Gauntlet Energy Corp. and Pulse Data Inc. entered into three Project Management Agreements regarding seismic surveys - Before completing payment to Pulse for their services, Gauntlet entered into Companies' Creditors Arrangement Act proceedings - Pulse claimed priority to the seismic data - Pulse argued that the information contained in the seismic data reports was confidential and was neither property, nor governed by the Personal Property Security Act - The Alberta Court of Queen's Bench held that given that this case involved a determination of priority between creditors, not a breach of an equitable duty, the confidential information could be regarded as intangible personal property - Whether or not confidential information could be classified as personal property had to be decided on the facts of each case - See paragraphs 27 to 46.

Personal Property - Topic 6006

Security interests - General - Security interest defined - Gauntlet Energy Corp. and Pulse Data Inc. entered into three Project Management Agreements regarding seismic surveys - Before completing payment to Pulse for their services, Gauntlet entered into Companies' Creditors Arrangement Act proceedings - Pulse claimed priority to the seismic data - The Alberta Court of Queen's Bench held that the agreements between Gauntlet and Pulse were conditional sales agreements, because they provided for payment of the purchase price of the services over time with title remaining with Pulse until the payments were complete - Conditional sales were security interests under s. 3(1) of the Personal Property Security Act - See paragraphs 14 to 25.

Personal Property - Topic 6013

Security interests - General - Intangible personal property - What constitutes - [See Personal Property - Topic 2 ].

Personal Property - Topic 6063

Security interests - Registration - General -Requirement of registration - Gauntlet Energy Corp. and Pulse Data Inc. entered into three Project Management Agreements regarding seismic surveys - Before completing payment to Pulse for their services, Gauntlet entered into Companies' Creditors Arrangement Act proceedings - Pulse claimed priority to the seismic data - The Alberta Court of Queen's Bench held that the agreements constituted purchase-money security interests - Pulse's security interest had no priority over the other creditors' as Pulse had failed to register its interest 15 days after the day the security interest attached under s. 34(2)(b) of the Personal Property Security Act - See paragraphs 47 to 48.

Personal Property - Topic 6204

Security interests - Priorities - Debentures -[See Company Law - Topic 5427.3 ].

Personal Property - Topic 6426

Security interests - Purchase-money security interests - Priorities - [See Company Law - Topic 5427.3 and Personal Property - Topic 6063 ].

Cases Noticed:

Gladue v. Asset Recovery Management & Sales, [1997] A.J. No. 1251 (Q.B.), refd to. [para. 15].

Giffen (Bankrupt), Re, [1998] 1 S.C.R. 91; 222 N.R. 29; 101 B.C.A.C. 161; 164 W.A.C. 161, refd to. [para. 18].

Gimli Auto Ltd. et al. v. Canada Campers Inc. (Bankrupt) (1988) Ltd. (1998), 219 A.R. 166; 179 W.A.C. 166 (C.A.), refd to. [para. 22].

Thomas (Bankrupt), Re (2001), 301 A.R. 373 (Q.B. Reg.), refd to. [para. 23].

National Bank of Canada et al. v. Merit Energy Ltd. et al. (2001), 294 A.R. 1 (Q.B.), refd to. [para. 24].

Lumness, Re (1919), 46 O.L.R. 320; 17 O.W.N. 186; 51 D.L.R. 114 (C.A.), refd to. [para. 28].

Jones v. Skinner (1835), 5 L.J.N.S. Ch. 87, 90, refd to. [para. 28].

Roenisch v. Roenisch (1991), 103 A.R. 30; 85 D.L.R.(4th) 540 (Q.B.), refd to. [para. 29].

Petro Canada v. R., [2003] D.T.C. 94 (T.C.C.), refd to. [para. 30].

Axelrod (Bankrupt), Re; Seax Management Ltd. (Bankrupt), Re (1994), 16 O.R.(3d) 649 (Gen. Div.), affd. (1994), 74 O.A.C. 376; 20 O.R.(3d) 133 (C.A.), refd to. [para. 33].

McInerney v. MacDonald, [1992] 2 S.C.R. 138; 137 N.R. 35; 126 N.B.R.(2d) 271; 317 A.P.R. 271; 93 D.L.R.(4th) 415, refd to. [para. 34].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1; 44 B.L.R. 1, refd to. [para. 37].

Saltman Engineering Co. v. Campbell Engineering Co. (1948), 65 R.P.C. 203 (C.A.), refd to. [para. 37].

R. v. Stewart, [1988] 1 S.C.R. 963; 85 N.R. 171; 28 O.A.C. 219, refd to. [para. 39].

Matrox Electronic Systems v. Gaudreau, [1993] Q.J. No. 1228 (S.C.), refd to. [para. 42].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161, refd to. [para. 43].

Euroclean Canada Inc. v. Forest Glade Investments Ltd. and Mady (1985), 8 O.A.C. 1; 16 D.L.R.(4th) 289; 4 P.P.S.A.C. 271 (C.A.), refd to. [para. 50].

Chiips Inc. v. Skyview Hotels Ltd. (Receivership) et al. (1994), 155 A.R. 281; 73 W.A.C. 281; 21 Alta. L.R.(3d) 225 (C.A.), leave to appeal refused (1995), 188 N.R. 395 (S.C.C.), refd to. [para. 52].

DCD Industries (1995) Ltd. (Bankrupt), Re, [2002] A.R. Uned. 484 (Q.B.), refd to. [para. 54].

Norcen Energy Resources Ltd. v. Oakwood Petroleums Ltd. (1988), 92 A.R. 81; 72 C.B.R.(N.S.) 1; 63 Alta. L.R.(2d) 361 (Q.B.), refd to. [para. 58].

Luscar Ltd. et al. v. Smoky River Coal Ltd. et al. (1999), 237 A.R. 83; 197 W.A.C. 83 (C.A.), refd to. [para. 60].

Eaton (T.) Co., Re (1999), 14 C.B.R.(4th) 288 (Ont. S.C.), refd to. [para. 61].

Playdium Entertainment Corp. et al., Re, [2001] O.T.C. 828; 31 C.B.R.(4th) 302, additional reasons (2001), 31 C.B.R.(4th) 309 (Sup. Ct.), refd to. [para. 62].

Authors and Works Noticed:

Cuming, R.C.C. and Wood, R.J., Alberta Personal Property Security Act Handbook (4th Ed. 1998), pp. 30 [para. 27]; 51 [para. 16]; 67, 68 [para. 49].

Counsel:

Anthony J. Jordan, Q.C. (Gowlings), for the applicants, Pulse Data Inc.;

Douglas Nishimura (Burnet Duckworth & Palmer LLP), for Gauntlet Energy Corp.;

Sean F. Collins (Miller Thomson LLP), for Alberta Treasury Branches;

Josef G.A. Kruger (Borden Ladner Gervais LLP), for PricewaterhouseCoopers Inc.

This application was heard on August 13, 2003, by Kent, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following decision on August 20, 2003.