Palouse Holdings Ltd. v. Chancellor Energy Resources Inc., (1990) 102 A.R. 373 (CA)

• Judge: Bracco, Hetherington and Stratton, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: February 16, 1990
• Citations: (1990), 102 A.R. 373 (CA)

Palouse Holdings v. Chancellor Energy (1990), 102 A.R. 373 (CA)

MLB headnote and full text

Palouse Holdings Ltd. (appellant) v. Chancellor Energy Resources Inc. (respondent)

(Appeal No. 10065)

Indexed As: Palouse Holdings Ltd. v. Chancellor Energy Resources Inc.

Alberta Court of Appeal

Bracco, Hetherington and Stratton, JJ.A.

February 16, 1990.

Summary:

Carlyon, a geologist, was the owner and sole employee of Palouse Holdings Ltd. Palouse entered an agreement with a junior oil company (Chancellor) whereby Palouse was to offer all oil and gas prospects to Chancellor and Chancellor had two weeks to elect to take up to a 100% working interest. A "promote" or "promoted interest" was the premium that some investors were willing to pay for the acquisition of a working interest. The agreement was silent as to who was entitled to the value of any "promotes".

Three prospects offered to Chancellor, in which Chancellor elected to take only a 25% working interest, resulted in "promotes" when investors were found by Palouse for the remaining 75%. Chancellor retained the value of the "promotes". Palouse brought an action against Chancellor, claiming it was entitled to the "promotes". The Alberta Court of Queen's Bench, in a judgment reported at paragraphs 44 to 86 below, interpreted expert evidence to find, as a fact, that Chancellor was entitled to the "promotes". Palouse appealed. The Alberta Court of Appeal allowed the appeal and ordered a new trial on the ground that the trial judge misinterpreted the expert's evidence and thereby erred in his fact finding. The court held that the expert's evidence did not support the conclusion reached by the trial judge.

Mines and Minerals - Topic 8250

Oil and gas - Exploration agreements - "Promotes" or "promoted interests" - Entitlement to - [See Practice - Topic 8800 below].

Practice - Topic 8800

Appeals - Duty of appellate court regarding fact findings by trial judge - Carlyon, a geologist, was the owner and sole employee of Palouse Holdings Ltd. - Palouse entered an agreement with a junior oil company (Chancellor) whereby Palouse was to offer all oil and gas prospects to Chancellor and Chancellor had two weeks to elect to take up to a 100% working interest - A "promote" or "promoted interest" was the premium that some investors were willing to pay for the acquisition of a working interest - The agreement was silent as to who was entitled to the value of any "promotes" - Three prospects offered to Chancellor, in which Chancellor elected to take only a 25% working interest, resulted in "promotes" when investors were found by Palouse for the remaining 75% - The Alberta Court of Queen's Bench, interpreted expert evidence to find, as a fact, that Chancellor was entitled to the "promotes" - The Alberta Court of Appeal ordered a new trial on the ground that the trial judge misinterpreted the expert's evidence and thereby erred in his fact finding - The court held that the expert's evidence did not support the conclusion reached by the trial judge.

Cases Noticed:

Weaver v. Buckle (1983), 42 A.R. 241 (C.A.), refd to. [para. 19].

Stein Estate v. Ship "Kathy K", [1976] 2 S.C.R. 802; 6 N.R. 359, refd to. [para. 20].

R. v. Maier (1989), 101 A.R. 126 (C.A.), refd to. [para. 21].

Kolesar Estate v. Joseph Brant Memorial Hospital and Malette, [1978] 1 S.C.R. 491; 15 N.R. 302, refd to. [para. 38].

Joyce v. Yeomans, [1981] 2 All E.R. 21, refd to. [para. 41].

Miller v. Minister of Pensions, [1947] 2 All E.R. 372, refd to. [para. 63].

Smith v. Smith and Smedman, [1952] 2 S.C.R. 312, refd to. [para. 64].

Luxor (Eastbourne) Limited v. Cooper, [1941] A.C. 108, refd to. [para. 81].

Guaranty Trust Company of Canada v. Hetherington et al. (1987), 77 A.R. 104, refd to. [para. 83].

Counsel:

K.T. Martens, for the appellant;

D.W. Lutz, for the respondent.

This appeal was heard before Bracco, Hetherington and Stratton, JJ.A., of the Alberta Court of Appeal.

On February 16, 1990, Stratton, J.A., delivered the following judgment for the Court of Appeal: