Nova Scotia Business Capital Corp. v. Coxheath Gold Holdings Ltd. et al., (1994) 135 N.S.R.(2d) 259 (CA)

• Judge: Matthews, Jones and Freeman, JJ.A.
• Court: Court of Appeal of Nova Scotia (Canada)
• Case Date: October 21, 1994
• Jurisdiction: Nova Scotia
• Citations: (1994), 135 N.S.R.(2d) 259 (CA)

N.S. Business v. Coxheath Gold (1994), 135 N.S.R.(2d) 259 (CA);

  386 A.P.R. 259

MLB headnote and full text

Dennis Forgeron, Wilfred Moore, William Faulkner and Thomas Faulkner (appellants) v. Nova Scotia Business Capital Corp., a body corporate (respondent) and Coxheath Gold Mines Limited, a body corporate, and Michael J. Riddell and Doane Raymond Limited, Trustee under a Proposal in Bankruptcy made by Coxheath Gold Holdings Limited (respondents)

(C.A. No. 100225)

Indexed As: Nova Scotia Business Capital Corp. v. Coxheath Gold Holdings Ltd. et al.

Nova Scotia Court of Appeal

Matthews, Jones and Freeman, JJ.A.

October 21, 1994.

Summary:

Forgeron transferred mineral exploration licences to Coxheath, reserving a royalty interest. Forgeron then transferred his royalty interest to Moore, Faulkner and Faulkner (transferees). The transferees filed caveats with the Registrar of Mineral Rights under s. 88 of the Mineral Resources Act. Coxheath defaulted on a loan and a receiver was appointed. The receiver applied for a court order approving a sale of Coxheath's assets (including mining interests) free from any rights by the transferees. The issue was whether the royalty interests constituted an interest in land.

The Nova Scotia Supreme Court, in a judgment reported 128 N.S.R.(2d) 118; 359 A.P.R. 118, held that the royalty interests were contractual in nature (not an interest in land) and, accordingly, the receiver could sell the mining interests free of any rights claimed by the transferees. The transferees appealed.

The Nova Scotia Court of Appeal dis­missed the appeal.

Mines and Minerals - Topic 1768

Mining claims - Royalty agreements - Whether royalty rights constitute an inter­est in land - Forgeron transferred mineral exploration licences to Coxheath, reserving a royalty interest - Forgeron then trans­ferred his royalty interest to Moore, Faulkner and Faulkner (transferees) - The transferees filed caveats with the Registrar of Mineral Rights under s. 88 of the Min­eral Resources Act - The Nova Scotia Court of Appeal affirmed that an explora­tion licence under the Mineral Resources Act did not confer a proprietary right in the land or minerals covered by the lease - A proprietary right arose only when a licence holder obtained a lease under the Act - Accordingly, a royalty interest reserved on the transfer of an exploration licence also did not constitute an interest in the land or minerals.

Cases Noticed:

Saskatchewan Minerals v. Keyes, [1972] S.C.R. 703; 23 D.L.R.(3d) 573, refd to. [para. 12].

Milner, Re (1877), 11 N.S.R. 522 (C.A.), refd to. [para. 22].

Federal Business Development Bank v. Elcon Petroleum Maintenance Ltd., Royal Bank of Canada, Karrel and Henderson (1983), 58 N.S.R.(2d) 246; 123 A.P.R. 246 (T.D.), refd to. [para. 28].

Statutes Noticed:

Mineral Resources Act, S.N.S. 1975, c. 12, sect. 2(e), sect. 2(h), sect. 2(p) [para. 15]; sect. 3, sect. 4, sect. 38, sect. 39 [para. 16]; sect. 47, sect. 48, sect. 49 [para. 17]; sect. 59 [para. 18].

Mineral Resources Act, S.N.S. 1990, c. 18, sect. 38 [para. 19]; sect. 56, sect. 85(1) [para. 20].

Authors and Works Noticed:

Canadian Law of Mining (3rd Ed. 1993), p. 466 [para. 14].

Fridman, G.H.L., The Law of Contract in Canada (2nd Ed. 1986), pp. 741, 742 [para. 28].

Counsel:

R.A. Cluney, Q.C., for the appellants;

David P.S. Farrar and Claire E. Milton, for the respondent.

This appeal was heard on September 21, 1994, before Matthews, Jones and Freeman, JJ.A., of the Nova Scotia Court of Appeal.

On October 21, 1994, Jones, J.A., delivered the following judgment for the Court of Appeal.