Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership, 2010 SKQB 106

• Judge: Gabrielson, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: March 12, 2010
• Jurisdiction: Saskatchewan
• Citations: 2010 SKQB 106;(2010), 353 Sask.R. 217 (QB)

Potash Corp. v. Mosaic Potash (2010), 353 Sask.R. 217 (QB)

MLB headnote and full text

Temp. Cite: [2010] Sask.R. TBEd. AP.003

Potash Corporation of Saskatchewan Inc. (plaintiff/defendant by counterclaim) v. Mosaic Potash Esterhazy Limited Partnership (defendant/plaintiff by counterclaim)

(2009 Q.B.G. No. 666; 2010 SKQB 106)

Indexed As: Potash Corp. of Saskatchewan Inc. v. Mosaic Potash Esterhazy Limited Partnership

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Gabrielson, J.

March 12, 2010.

Summary:

Mosaic owned and operated the Esterhazy potash mine. Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine. In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice. In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then. PCS did not agree to the termination and commenced an action, seeking, inter alia, a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim). Mosaic applied under rules 173, 188 and 247 to strike or summarily dismiss the inflow claim and, alternatively, if those rules did not apply, asked the court to use its inherent jurisdiction to strike the inflow claim as statute barred.

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

Editor's Note: For related decisions regarding this action, see (2009), 347 Sask.R. 254 and  368 Sask.R. 115.

Courts - Topic 2004

Jurisdiction - General principles - Inherent jurisdiction - [See Practice - Topic 2201 ].

Practice - Topic 2201

Pleadings - Striking out pleadings - Jurisdiction - Mosaic owned and operated the Esterhazy potash mine - Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine - In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice - In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then - PCS did not agree to the termination and commenced an action, seeking, inter alia a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim) - Mosaic applied under rules 173, 188 and 247 to strike or summarily dismiss the inflow claim and, alternatively, if those rules did not apply, asked the court to use its inherent jurisdiction to strike the inflow claim as statute barred - The Saskatchewan Court of Queen's Bench dismissed the application - The inflow claim was not clearly time barred - There were issues of inadequate disclosure, discoverability and continuing breach - Even assuming that the court had inherent jurisdiction to strike the inflow claim, the court would not exercise that discretion here - See paragraphs 45 to 54.

Practice - Topic 2215

Pleadings - Striking out pleadings - Declaratory actions - [See first Practice - Topic 2230 ].

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - Mosaic owned and operated the Esterhazy potash mine - Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine - In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice - In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then - PCS did not agree to the termination and commenced an action, seeking, inter alia a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim) - Mosaic applied to strike the inflow claim under, inter alia, rule 173(a) as disclosing no cause of action - The Saskatchewan Court of Queen's Bench dismissed the application - The court rejected Mosaic's argument that the inflow claim should be struck because it was not a proper claim for declaratory relief, but rather one for damages arising from an alleged breach of the mining agreement - The court had a broad jurisdiction to grant declaratory relief in appropriate circumstances - It was not plain and obvious that the claim was not a proper cause of action here - It would be up to the trial judge, who would have an evidentiary basis, to determine whether the issues raised gave rise to declaratory relief - See paragraphs 17 to 31.

Practice - Topic 2230

Pleadings - Striking out pleadings - Grounds - Failure to disclose a cause of action or defence - Mosaic owned and operated the Esterhazy potash mine - Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine - In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice - In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then - PCS did not agree to the termination and commenced an action, seeking, inter alia a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim) - Mosaic applied to strike the inflow claim under, inter alia, rule 173(a) as disclosing no cause of action - The Saskatchewan Court of Queen's Bench dismissed the application - The court rejected Mosaic's argument that the inflow claim could be summarily struck under s. 19 of the Limitations Act because any breach of the mining agreement that gave rise to the inflow claim would have occurred prior to 1985 and would have been statute barred by at least 1991 - While there might be a legitimate defence that the inflow claim was statute barred, the merits of such a defence were not to be considered on an application to strike - Such a defence could be considered by the trial judge, but could not be the basis for striking a claim on a preliminary motion - See paragraphs 32 to 35.

Practice - Topic 2239

Pleadings - Striking out pleadings - Grounds - Abuse of process or delay - Mosaic owned and operated the Esterhazy potash mine - Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine - In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice - In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then - PCS did not agree to the termination and commenced an action, seeking, inter alia a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim) - Mosaic applied to strike the inflow claim under, inter alia, rule 173(e) - Mosaic asserted that the declaration sought was improper and was an abuse of process because declaratory relief was only sought to avoid a statute barred inflow claim - The Saskatchewan Court of Queen's Bench dismissed the application - There was no evidentiary basis on which to conclude that PCS's motives were improper - The merits of the inflow claim and its effect on Mosaic's obligation to deliver potash to PCS remained to be determined - Further, the statement of claim alleged improper concealment, discoverability and ongoing loss, all of which required a proper evidentiary basis for determination - Therefore, the inflow claim was not so devoid of merit as to be an abuse of process - See paragraphs 36 and 37.

Practice - Topic 2239.2

Pleadings - Striking out pleadings - Grounds - Actions prescribed or barred by limitation period - [See Practice - Topic 2201 , second Practice - Topic 2230 and Practice - Topic 2239 ].

Practice - Topic 4952

Admissions - What constitutes - [See Practice - Topic 5552 ].

Practice - Topic 5260

Trials - General - Trial of preliminary issues - General principles (incl. when available or appropriate) - Mosaic owned and operated the Esterhazy potash mine - Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine - In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice - In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then - PCS did not agree to the termination and commenced an action, seeking, inter alia a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim) - Mosaic applied for summary dismissal of the inflow claim under rule 188 (determination of a point of law) on the basis of the applicability of limitation periods - The Saskatchewan Court of Queen's Bench dismissed the application - Where, as here, issues such as continuous breach, improper concealment and discoverability were raised in the statement of claim, the court required either an agreed statement of facts or some other evidentiary basis on which to determine the issue - In the absence of an agreed statement of facts, whether the action was time-barred could only be determined by the trial judge - See paragraphs 38 to 44.

Practice - Topic 5552

Judgments and orders - Judgments on admissions - When available - Mosaic owned and operated the Esterhazy potash mine - Both Mosaic and Potash Corp. of Saskatchewan (PCS) owned potash reserves surrounding the mine - In 1971, Mosaic and PCS entered into an agreement under which Mosaic mined PCS reserves in a similar fashion as Mosaic mined its own reserves and in accordance with good mining practice - In April 2009, Mosaic gave notice that its obligation under the agreement would terminate in August 2010 as the PCS reserves would be fully mined by then - PCS did not agree to the termination and commenced an action, seeking, inter alia a declaration that Mosaic compensate PCS for losses arising from mining practices that led to mine flooding in 1985 and 1986 (the inflow claim) - Mosaic applied for summary dismissal of the inflow claim under rule 247 based on PCS's admissions that the inflow claim was based on breaches of the mining agreement that occurred prior to the flooding of the mine - Based on those admissions, Mosaic asserted that the inflow claim was statute barred - The Saskatchewan Court of Queen's Bench dismissed the application - The court was not satisfied that PCS made clear and unequivocal admissions that a cause of action arose prior to 1986 as alleged by Mosaic - Further, the statement of claim raised issues such as improper concealment, discoverability and continuous breach which were serious questions of law that could only be determined with an evidentiary basis after a trial - See paragraphs 45 to 48.

Practice - Topic 5652

Judgments and orders - Declaratory judgments - When available - General - [See first Practice - Topic 2230 and Practice - Topic 2239 ].

Practice - Topic 5707

Judgments and orders - Summary judgments - On an admission - Sufficiency of admission - [See Practice - Topic 5260 and Practice - Topic 5552 ].

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - [See Practice - Topic 5260 and Practice - Topic 5552 ].

Cases Noticed:

Hunt v. T & N plc et al., [1990] 2 S.C.R. 959; 117 N.R. 321, refd to. [para. 11].

Hunt v. Carey Canada Inc. - see Hunt v. T & N plc et al.

Sagon v. Royal Bank of Canada et al. (1992), 105 Sask.R. 133; 32 W.A.C. 133 (C.A.), refd to. [para. 13].

Yellowbird v. Samson Cree Nation No. 444 et al. (2006), 405 A.R. 333; 2006 ABQB 434, affd. (2008), 433 A.R. 350; 429 W.A.C. 350; 56 C.P.C.(6th) 24; 92 Alta. L.R.(4th) 235; 2008 ABCA 270, refd to. [para. 18].

Huang et al. v. Drinkwater et al. (2005), 372 A.R. 336; 2005 ABQB 40, refd to. [para. 18].

Huang v. Telus Corp. Pension Plan - see Huang et al. v. Drinkwater et al.

Bailey v. Canada (Attorney General) et al., [2008] O.T.C. Uned. K62; 2008 CarswellOnt 6100 (Sup. Ct.), refd to. [para. 18].

Western Leaseholds Ltd. v. Western Minerals Ltd. (1960), 22 D.L.R.(2d) 431 (Alta. C.A.), refd to. [para. 19].

Solosky v. Canada, [1980] 1 S.C.R. 821; 30 N.R. 380, refd to. [para. 22].

Coniagas Reduction Co. v. Hydro-Electric Power Commission of Ontario (1931), 40 O.W.N. 452 (H.C.), affd. (1932), 41 O.W.N. 132 (C.A.), affd. [1933] 3 W.W.R. 134 (P.C.), refd to. [para. 26].

Duval Corp. of Canada v. Saskatchewan (1976), 2 C.P.C. 236 (Sask. C.A.), refd to. [para. 30].

Semenoff v. Forrie (2008), 310 Sask.R. 158; 423 W.A.C. 158; 2008 SKCA 55, reving. (2007), 306 Sask.R. 13; 2007 SKQB 377, refd to. [para. 34].

Stagman v. Hamm, [1984] 5 W.W.R. 148; 34 Sask.R. 265 (C.A.), refd to. [para. 39].

Goertz v. Zmud (1995), 137 Sask.R. 289; 107 W.A.C. 289 (C.A.), refd to. [para. 40].

Jones v. Saskatoon Minor Hockey Association Inc., [2002] Sask.R. Uned. 109; 2002 SKQB 230, refd to. [para. 40].

Livingston v. Hewson (1991), 95 Sask.R. 170 (Q.B.), refd to. [para. 40].

Chisum Log Homes & Lumber Ltd. et al. v. Investment Saskatchewan Inc. et al., [2008] 2 W.W.R. 320; 303 Sask.R. 174 (Q.B.), refd to. [para. 41].

Pusch v. Freshair Enterprises Ltd. et al. (2007), 293 Sask.R. 289; 397 W.A.C. 289; 2007 SKCA 60, refd to. [para. 42].

Peixeiro v. Haberman, [1997] 3 S.C.R. 549; 217 N.R. 371; 103 O.A.C. 161, refd to. [para. 43].

ACL Holdings Ltd. v. St. Joseph's Hospital of Estevan et al., [1996] 6 W.W.R. 207; 143 Sask.R. 1 (Q.B.), refd to. [para. 47].

Amendt v. Canada Life Assurance Co. et al., [1999] Sask.R. Uned. 141 (Q.B.), refd to. [para. 50].

Rosetim Investments Inc. et al. v. BCE Inc. et al., [2008] Sask.R. Uned. 212; 68 C.P.C.(6th) 104; 2008 SKQB 452, refd to. [para. 52].

MacMillan Bloedel Ltd. v. Simpson et al., [1995] 4 S.C.R. 725; 191 N.R. 260; 68 B.C.A.C. 161; 112 W.A.C. 161, refd to. [para. 52].

Rimmer v. Adshead (2002), 217 Sask.R. 94; 265 W.A.C. 94; 2002 SKCA 12, refd to. [para. 52].

Aquino et al. v. First Choice Capital Fund Ltd. et al. (1999), 181 Sask.R. 73 (Q.B.), refd to. [para. 52].

First Choice Capital Fund Ltd. v. First Canadian Capital Corp. - see Aquino et al. v. First Choice Capital Fund Ltd. et al.

College Housing Co-operative Ltd. and College Housing Inc. v. Baxter Student Housing Ltd. and R.C. Baxter Ltd., [1976] 2 S.C.R. 475; 5 N.R. 515, refd to. [para. 53].

Authors and Works Noticed:

Jacob, I.H., The Inherent Jurisdiction of the Court (1970), 23 Current Legal Problems 23, p. 24 [para. 49].

Sarna, Lazar, The Law of Declaratory Judgments (3rd Ed. 2007), pp. 3 [para. 21]; 211 [para. 25].

Zamir, Itzhac, and Woolf, The Declaratory Judgment (3rd Ed. 2002), para. 1.02 [para. 17].

Counsel:

Douglas C. Hodson, Q.C., and David Haigh, Q.C., for the applicant, Mosaic;

Kent Thomson, Gordon J. Kuski, Q.C., and Amanda M. Quayle, for the respondent, PCS.

This application was heard by Gabrielson, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following fiat on March 12, 2010.