Norcen Energy Resources Ltd. v. Oakwood Petroleums Ltd., (1988) 92 A.R. 81 (QB)

• Judge: Forsyth, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: November 17, 1988
• Citations: (1988), 92 A.R. 81 (QB);1988 CanLII 3560 (AB QB);63 Alta LR (2d) 361;92 AR 81;72 CBR (ns) 1

Norcen Energy v. Oakwood Petroleums (1988), 92 A.R. 81 (QB)

MLB headnote and full text

In The Matter Of The Companies' Creditors Arrangement Act, R.S.C. 1970, c. C-25

And In The Matter Of Oakwood Petroleums Ltd.

And In The Matter Of An Application by Norcen Energy Resources Limited and Prairie Oil Royalties Company, Ltd.

And In The Matter Of An Intended Action between:

Norcen Energy Resources Limited and Prairie Oil Royalties Company Ltd. (applicants) v. Oakwood Petroleums Ltd. (respondent)

(No. 8801 14453)

Indexed As: Norcen Energy Resources Ltd. v. Oakwood Petroleums Ltd.

Alberta Court of Queen's Bench

Judicial District of Calgary

Forsyth, J.

November 17, 1988.

Summary:

In September 1988, Oakwood was declared a company to which the Companies' Creditors Arrangement Act applied. At the same time the court stayed all proceedings against Oakwood under certain oil and gas operating agreements. Norcen was involved in 20 oil and gas properties in which Oakwood was the operator. The 20 agreements provided for replacement of the operator if the operator became insolvent. Norcen applied for leave to remove Oakwood as operator under the 20 agreements.

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

Constitutional Law - Topic 6270

Federal jurisdiction (s. 91) - Bankruptcy and insolvency (s. 91(21)) - Scope of insolvency power - The Alberta Court of Queen's Bench interpreted s. 11 of the federal Companies' Creditors Arrangement Act so that the court's power to stay proceedings extended to proceedings by noncreditors against a debtor company - The Alberta Court of Queen's Bench held that such an interpretation was constitutionally valid, being a valid exercise of the federal government's power to enact insolvency legislation (see paragraphs 47 to 53).

Creditors and Debtors - Topic 8588

Debtors' relief legislation - Companies' Creditors Arrangement Act - Stay of proceedings against debtor - The Alberta Court of Queen's Bench held that s. 11 of the Companies' Creditors Arrangement Act granted a court the power to stay proceedings by noncreditors against a debtor company (see paragraphs 35 to 46).

Words and Phrases

Insolvent - The Alberta Court of Queen's Bench discussed the meaning of the word "insolvent" as found in an oil and gas operating agreement (see paragraphs 22 to 25).

Cases Noticed:

Duplain v. Cameron, [1961] S.C.R. 693, refd to. [para. 19].

Tri-Star Resources Ltd. v. J.C. Inter national Petroleum, [1987] 2 W.W.R. 141 (Alta. Q.B.), refd to. [para. 22].

Meridian Developments Inc. v. Toronto-Dominion Bank (1984), 53 A.R. 39; 52 C.B.R.(N.S.) 109, refd to. [para. 39].

Feifer v. Frame Manufacturing Corporation (1947), 28 C.B.R. 124 (Que C.A.), refd to. [para. 40].

Reference Re Companies' Creditors Arrangement Act, [1934] S.C.R. 659, refd to. [para. 49].

Multiple Access v. McCutcheon, [1982] 2 S.C.R. 161; 44 N.R. 181, refd to. [para. 53].

Foundation Company of Canada v. Thomas Fuller Construction Co. (1958) Limited, [1980] 1 S.C.R. 695; 30 N.R. 249, refd to. [para. 53].

Statutes Noticed:

Companies' Creditors Arrangement Act, R.S.C. 1970, c. C-25, sect. 11 [para. 17].

Constitution Act, 1867, sect. 91(21) [para. 48].

Authors and Works Noticed:

Driedger, E.A., Construction of Statutes, (2nd Ed.), p. 74 [para. 38].

Hogg, Constitutional Law of Canada (2nd Ed.), pp. 334-337 [para. 52].

Counsel:

J.J. Marshall and J.A. Legge, for Norcen Energy Resources Limited and Prairie Oil Royalties Company, Ltd.;

H.L. Kushner, for Attorney General of Alberta;

E.D. Tavender, Q.C., D. Lloyd and R. Wigham, for Oakwood Petroleums Ltd.;

K.N. Lambrecht, for the Attorney General of Canada;

A.L. Friend, for United Energy Inc.;

B.D. Newton and B. Tait, for the Bank of Montreal;

B. O'Leary, for the Royal Bank of Canada;

J.L. Ircandia, for Hong Kong Bank of Canada and Bank of America, Canada.

This application was heard by Forsyth, J., of the Alberta Court of Queen's Bench. The decision of Forsyth, J., was delivered at Calgary, Alberta, on November 17, 1988.