Scurry-Rainbow Oil Ltd. v. Kasha, (1996) 184 A.R. 177 (CA)

• Judge: Belzil, McFadyen and O'Leary, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: May 17, 1996
• Citations: (1996), 184 A.R. 177 (CA)

Scurry-Rainbow Oil Ltd. v. Kasha (1996), 184 A.R. 177 (CA);

    122 W.A.C. 177

MLB headnote and full text

Scurry-Rainbow Oil Limited on its own behalf and on behalf of all the other Gross Royalty Trust Certificate Holders in the Chester Frank Kasha Gross Royalty Trust interested in the validity of the Gross Royalty Trust Certificates (plaintiff/respondent) v. Edward J. Kasha and Verna L. Haljam (also known as Haljan) (defendants/appellants) and Estate of C. Donald Kasha, Bryan C. Kasha, Patricia Ann Cadrin (also known as Patricia Ann Kasha) and Montreal Trust Company of Canada (defendants)

(Appeal No. 9303-0767-AC)

Indexed As: Scurry-Rainbow Oil Ltd. v. Kasha

Alberta Court of Appeal

Belzil, McFadyen and

O'Leary, JJ.A.

May 17, 1996.

Summary:

The trustee under a Gross Royalty Trust Agreement brought an action against the current mineral holders to enforce the agree­ment.

The Alberta Court of Queen's Bench, in a decision reported 143 A.R. 308, allowed the action and held the agreement was an un­conditional assignment by the original owner of a 12.5% royalty to holders of royalty trust certificates. The current mineral holders appealed.

The Alberta Court of Appeal dismissed the appeal.

Mines and Minerals - Topic 8166

Oil and gas - Royalty agreements - Whether royalty rights constitute interest in land - During the currency of a lease to an oil company in 1951 the owners of the lands executed, in the form of a Gross Royalty Trust Agreement (GRTA), an assignment of the royalty to a trustee for holders of royalty certificates - The trustee registered a caveat - The issue arose as to whether the royalty interest constituted an interest in land that could support a caveat - The Alberta Court of Appeal stated that "barring very specific language manifesting a contrary intention, a royalty retained by a freehold mineral owner on the granting of a petroleum and natural gas lease is an interest in land. In my view, it is properly classified as a species of profit à prendre" - See paragraphs 40 and 50.

Mines and Minerals - Topic 8167

Oil and gas - Royalty agreements - Gross royalty trust agreement - During the cur­rency of a lease to an oil company in 1951 the owners of the lands executed, in the form of a Gross Royalty Trust Agree­ment (GRTA), an assignment of the roy­alty to a trustee for holders of royalty certificates, but also provided that the assignment was to continue whether or not the lease did, which it did not - The trustee registered a caveat against the lands - In 1993 the trustee sought to enforce the GRTA against the current owners - The Alberta Court of Queen's Bench held that the GRTA was an absolute and unequivo­cal assignment of the royalty to certificate holders and that the caveat was properly registered - The Alberta Court of Appeal dis­missed the current owners' appeal.

Perpetuities - Topic 715

Rule against perpetuities - Application of rule in general - Oil and gas royalties, assignment to trust - During the currency of a lease to an oil company in 1951 the owners of the lands executed, in the form of a Gross Royalty Trust Agreement (GRTA), an assignment of the royalty to a trustee for holders of royalty certificates, but also provided that the assignment was to continue whether or not the lease did, which it did not - In 1993 the trustee sought to enforce the GRTA against the current owners - The current owners submitted that GRTA, by conveying the interest existing after the expiry of the initial lease, contravened the rule against perpetuities - The Alberta Court of Appeal held that the rule was not contravened - See paragraphs 62 to 65.

Real Property - Topic 7262

Easements, licences and prescriptive rights - Profits à prendre - What constitutes - [See Mines and Minerals - Topic 8166 ].

Real Property - Topic 7925

Title - Registration of instruments - Caveats or cautions - Interests which may be protected - [See Mines and Minerals - Topic 8166 ].

Trusts - Topic 902

Trust property - General - Requirement of property as subject of trust - During the currency of a lease to an oil company in 1951 the owners of the lands executed, in the form of a Gross Royalty Trust Agree­ment (GRTA), an assignment of the roy­alty to a trustee for holders of royalty certificates, but also provided that the assignment was to continue whether or not the lease did, which it did not - In 1993 the trustee sought to enforce the GRTA against the current owners - The current owners submitted that, as regards the royalties payable under future leases, the trust was not properly constituted in that the trust property, the owners' royalties under subsequent leases, did not exist at the time the trust was created - The Alberta Court of Appeal held that the trust was properly constituted - See paragraphs 58 to 61.

Cases Noticed:

Scurry-Rainbow Oil Ltd. et al. v. Gallo­way Estate, [1993] 4 W.W.R. 454; 138 A.R. 321; 8 Alta. L.R.(3d) 225 (Q.B.), affd. (1994), 157 A.R. 65; 77 W.A.C. 65; 23 Alta. L.R.(3d) 193 (C.A.), leave to appeal denied (1995), 189 N.R. 237; 189 N.R. 238; 178 A.R. 77; 110 W.A.C. 77; 178 A.R. 78; 110 W.A.C. 78; 26 Alta. L.R.(3d) 1 (S.C.C.), consd. [para. 2].

Guaranty Trust Co. of Canada v. Hether­ington (1987), 77 A.R. 104; 50 Alta. L.R.(2d) 193 (Q.B.), varied [1989] 5 W.W.R. 340; 95 A.R. 261 (C.A.), consd. [para. 2].

Barrett et al. v. Krebs et al. (1995), 164 A.R. 218; 27 Alta. L.R.(3d) 27 (Q.B.), leave to reconsider denied (1995), 174 A.R. 59; 102 W.A.C. 59 (C.A.), consd. [para. 2].

Berkheiser & Berkheiser v. Glauster - see Berkheiser v. Berkheiser.

Berkheiser v. Berkheiser, [1957] S.C.R. 387, refd to. [para. 25].

Dawson v. Bell, [1946] 1 D.L.R. 327 (Ont. C.A.), refd to. [para. 29].

Bensett v. Reece (1969), 70 W.W.R.(N.S.) 705 (Sask. Q.B.), revd. [1973] 2 W.W.R. 497 (Sask. C.A.), refd to. [para. 29].

Saskatchewan Minerals v. Keyes, [1972] S.C.R. 703, consd. [para. 29].

Denver Joint Stock Land Bank of Denver v. Dixon et al. (1942), 122 P.2d 842 (Wyo. Sup. Ct.), consd. [para. 30].

Canadian National Railway v. Canadian Pacific Ltd., [1979] 1 W.W.R. 358; 95 D.L.R.(3d) 242 (B.C.C.A.), refd to. [para. 44].

Statutes Noticed:

Land Titles Act Clarification Act, S.A. 1956, c. 26, sect. 2 [para. 38].

Law of Property Act, R.S.A. 1980, c. L-8, sect. 59.1(1) [para. 38].

Real Property Statutes Amendment Act, S.A. 1985, c. 48, sect. 4(3) [para. 38].

Authors and Works Noticed:

Anson, W.R., The Law of Contracts (24th Ed. 1975), p. 149 [para. 43].

Chitty on Contracts (24th Ed. 1977), para. 713 [para. 44].

Summers, Oil and Gas (Perm. Ed.), vol. 3A, ch. 20, para. 572 [para. 25].

Waters, D.W.M., The Law of Trusts in Canada (2nd Ed. 1984), p. 146 [para. 58].

Counsel:

J.M. Hope, Q.C., and W.S. Schlosser, for the appellants;

R.A. McLennan, Q.C., and B.R. Burrows, Q.C., for the respondents.

This appeal was heard before Belzil, Mc­Fadyen and O'Leary, JJ.A., of the Alberta Court of Appeal.

On May 17, 1996, O'Leary, J.A., delivered the following judgment for the Court of Appeal.