Taylor et al. v. Scurry-Rainbow Oil (Sask.) Ltd. et al., (2001) 207 Sask.R. 266 (CA)

• Judge: Tallis, Sherstobitoff and Jackson, JJ.A.
• Court: Court of Appeal (Saskatchewan)
• Case Date: August 10, 2001
• Jurisdiction: Saskatchewan
• Citations: (2001), 207 Sask.R. 266 (CA);2001 SKCA 85

Taylor v. Scurry-Rainbow Oil (2001), 207 Sask.R. 266 (CA);

    247 W.A.C. 266

MLB headnote and full text

Temp. Cite: [2001] Sask.R. TBEd. AU.028

Scurry-Rainbow Oil (Sask.) Ltd. and Tarragon Oil and Gas Limited (appellants) v. Harry Ernest Taylor and Maxx Petroleum Ltd. (respondents)

(3091; 2001 SKCA 85)

Indexed As: Taylor et al. v. Scurry-Rainbow Oil (Sask.) Ltd. et al.

Saskatchewan Court of Appeal

Tallis, Sherstobitoff and Jackson, JJ.A.

August 10, 2001.

Summary:

Taylor and Maxx sued for a declaration that a mineral lease was void because it breached the rule against perpetuities. The defendant Tarragon counterclaimed against Maxx for breach of confidentiality. Tarragon sought an accounting and damages.

The Saskatchewan Court of Queen's Bench, in a decision reported 170 Sask.R. 222, allowed the action and the counterclaim. Tarragon appealed. Maxx cross-appealed.

The Saskatchewan Court of Appeal, Jackson, J.A., dissenting, allowed Tarragon's appeal. The cross-appeal was rendered moot.

Common Law - Topic 3224

Variation - Judicial variation - To meet changing circumstances - [See Perpetuities - Topic 1803 ].

Mines and Minerals - Topic 8129

Oil and gas - Leases - Top leases - [See Perpetuities - Topic 1803 ].

Perpetuities - Topic 1803

Rule against perpetuities - Interests to which the rule does not apply - Top leases - A 1950 oil and gas top lease was to take effect "Upon and until the event of the termination, cancellation, avoidance or expiration of" a 1949 drilling lease - The 1950 top lease was challenged on the basis that it offended the rule against perpetuities - The Saskatchewan Court of Appeal dismissed the challenge - After discussing the history, object and purpose of the rule against perpetuities, the court held that the 1950 top lease did not offend the policy behind the rule where its provisions encouraged commercial development and drilling activity on the land and, in a commercial sense, did not clog alienation - The court also held that since the socio-economic and political foundations to the rule no longer existed, it was open to it to consider the application of such rule in the context of a commercial instrument such as the top lease in question - The court rejected an argument that only the Legislature should change the rule - Common law rules could be tweaked to do justice between the parties when a rigid and mechanistic application of a rule would run counter to the object and purpose of the rule - See paragraphs 1 to 99.

Cases Noticed:

Meyers et al. v. Freeholders Oil Co., [1960] S.C.R. 761, refd to. [para. 4, footnote 2].

Prudential Trust Co. et al. v. Forseth et al., [1960] S.C.R. 210, refd to. [paras. 17, footnote 8; 73, footnote 23].

Prudential Trust Co. et al. v. Olson, [1960] S.C.R. 227, refd to. [paras. 17, footnote 8; 73, footnote 23].

Mifflin, Appeal, 121 Pa. St. 205; 15 A. 525, refd to. [para. 24, footnote 12].

Bunch et al. v. Nicks et al., 7 S.W. 563, consd. [para. 29, footnote 13].

Duke of Norfolk's Case (1682), 22 Eng. Rep. 931; (1681-1698), 3 Chan. Cas. 1, consd. [para. 35].

Lloyd v. Carew (1697), Show. Parl. Cas. 137 (H.L.), refd to. [para. 46].

Cadell v. Palmer, [1833] 7 Bli.(N.S.) 745; 5 Eng. Rep. 745 (Ch.), consd. [para. 47].

Irving Industries (Irving Wire Products Division) Ltd. et al. v. Canadian Long Island Petroleums Ltd. and Sadim Oil & Gas Co., [1975] 2 S.C.R. 715; 3 N.R. 430, consd. [paras. 48; 73, footnote 23; 154].

Scurry-Rainbow Oil Ltd. et al. v. Galloway Estate, [1993] 4 W.W.R. 454; 138 A.R. 321 (Q.B.), consd. [para. 50].

Nantt v. Puckett Energy Co. (1986), 382 N.W.2d 655 (N.D. Sup. Ct.), refd to. [para. 64].

Grynberg v. Amerada Hess Corp., 342 F. Supp. 1314 (D.C. Colo.), refd to. [para. 70, footnote 22].

Phelps v. Shropshire, 254 Miss. 777; 183 So.2d 158; 20 A.L.R.3d 1086, refd to. [para. 70, footnote 22].

Merchants National Bank v. Curtis, 98 N.H. 225; 97 A.2d 207, refd to. [para. 70, footnote 22].

Harris v. Minister of National Revenue, [1966] S.C.R. 489; 57 D.L.R.(2d) 403 refd to. [paras. 73, footnote 23; 148].

Jewish National Fund (Keren Kayemeth Le Israel) Inc. v. Schechter Estate, [1965] S.C.R. 784, refd to. [para. 73, footnote 23].

Frobisher Ltd. v. Canadian Pipelines & Petroleums Ltd. et al., [1960] S.C.R. 126, refd to. [para. 73, footnote 23].

Auld v. Scales, [1947] S.C.R. 543, refd to. [para. 73, footnote 23].

Weinblatt v. Kitchener (City), [1969] S.C.R. 157, refd to. [para. 73, footnote 23].

Gibson (J.E.) Holdings Ltd. v. Principle Investments Ltd., [1964] S.C.R. 424, refd to. [para. 73, footnote 23].

Halifax (City) v. Vaughan Construction Co., [1961] S.C.R. 715, refd to. [para. 73, footnote 23].

Jewish Home for the Aged of B.C. v. Toronto General Trusts Corp., [1961] S.C.R. 465, refd to. [para. 73, footnote 23].

Cox, Re, [1953] 1 S.C.R. 94, refd to. [para. 73, footnote 23].

Halifax School for the Blind v. Kelley Estate, [1937] S.C.R. 196, refd to. [para. 73, footnote 23].

Guardian Realty Co. of Canada v. Stark (John) & Co. (1922), 64 S.C.R. 207, refd to. [para. 73, footnote 23].

McFarland v. Hauser et al., [1979] 1 S.C.R. 337; 23 N.R. 362; 12 A.R. 332, refd to. [para. 73, footnote 23].

Hofer et al. v. Hofer et al. [1970] S.C.R. 958, refd to. [para. 73, footnote 23].

Towle Estate v. Minister of National Revenue, [1967] S.C.R. 133, refd to. [para. 73, footnote 23].

Crawford Estate v. Crawford et al., [1955] S.C.R. 184, refd to. [para. 73, footnote 23].

Royal Trust Co. et al. v. Crawford et al. - see Crawford Estate v. Crawford et al.

Beard et al. v. Barrett et al., [1955] S.C.R. 93, refd to. [para. 73, footnote 23].

Canadian Pacific Railway v. Turta (No. 2), [1954] S.C.R. 427, refd to. [para. 73, footnote 23].

Ernst v. Zwicker (1897), 27 S.C.R. 594, refd to. [para. 73, footnote 23].

Blackburn v. McCallum (1903), 33 S.C.R. 65, refd to. [para. 73, footnote 23].

Hammond Estate, Re, [1935] S.C.R. 550, refd to. [para. 73, footnote 23].

Fasken v. Fasken Estate, [1953] 2 S.C.R. 10, refd to. [para. 73, footnote 23].

Ganong Estate, Re, [1941] S.C.R. 125, refd to. [para. 73, footnote 23].

Hall (Arthur J.S.) & Co. v. Simons et al., [2000] 3 All E.R. 673; 258 N.R. 1, consd. [para. 75].

Rondel v. Worsley, [1967] 3 All E.R. 993 (H.L.), refd to. [para. 75].

Saif Ali v. Mitchell (Sydney) & Co. (A Firm) & Co. et al., [1978] 3 All E.R. 1033 (H.L.), refd to. [para. 75].

Demarco v. Ungaro (1979), 95 D.L.R.(3d) 385 (Ont. H.C.), refd to. [para. 76].

Morguard Investments Ltd. et al. v. De Savoye, [1990] 3 S.C.R. 1077; 122 N.R. 81; [1991] 2 W.W.R. 217; 76 D.L.R.(4th) 256; 52 B.C.L.R.(2d) 160, consd. [para. 79].

Emanuel v. Syman, [1908] 1 K.B. 302 (C.A.), refd to. [para. 80].

Wong v. DiGrazia, [1963] 386 P.2d 817; 35 Cal. Rptr. 241 (Cal. Sup. Ct.), consd. [para. 84].

Haggerty v. Oakland (City), 161 Cal. App.2d 407 (1st Dist.), refd to. [para. 83, footnote 26].

R. v. Salituro, [1991] 3 S.C.R. 654; 131 N.R. 161; 50 O.A.C. 125; 68 C.C.C.(3d) 289, consd. [paras. 88, 137].

Child and Family Services of Winnipeg Northwest v. D.F.G., [1997] 3 S.C.R. 925; 219 N.R. 241; 121 Man.R.(2d) 241; 158 W.A.C. 241, refd to. [paras. 88, footnote 28; 139].

Tolofson v. Jensen and Tolofson, [1994] 3 S.C.R. 1022; 175 N.R. 161; 77 O.A.C. 81; 51 B.C.A.C. 241; 84 W.A.C. 241; [1995] 1 W.W.R. 609; 120 D.L.R.(4th) 289; 100 B.C.L.R.(2d) 1; 7 M.V.R.(3d) 202, consd. [para. 91].

McLean v. Pettigrew, [1945] S.C.R. 62, refd to. [para. 93].

Canada Permanent Trust Co. v. Lasby et al., [1985] 1 W.W.R. 489 (Sask. Q.B.), refd to. [para. 112].

British Columbia Hydro & Power Authority v. Gregory Manufacturing Ltd. et al. (1978), 93 D.L.R.(3d) 503 (B.C.S.C.), refd to. [para. 112].

Wells v. Blain et al., [1927] 1 D.L.R. 687 (Sask. C.A.), refd to. [para. 112].

Co-operative Trust Co. of Canada v. Receveur, Hansen, Paslowski and Mahon (1985), 40 Sask.R. 315 (C.A.), refd to. [para. 112].

Canadian National Railways v. Canadian Pacific Ltd., [1979] 1 W.W.R. 358 (B.C.C.A.), refd to. [para. 112].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al. (1996), 79 B.C.A.C. 56; 129 W.A.C. 56; 23 B.C.L.R.(3d) 326 (C.A.), appeal allowed on other grounds, [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161, refd to. [para. 112].

Erehwon Exploration Ltd. v. Northstar Energy Corp. (1993), 147 A.R. 1; 15 Alta. L.R.(3d) 200 (Q.B.), refd to. [para. 112].

Stoltz, Wagner & Brown v. Duncan (1976), 417 F.Supp. 552 (U.S. Dist. Ct., W.D. Okla.), refd to. [para. 126].

Peveto v. Starkey (1982), 645 S.W.2d 770 (Tex. Sup. Ct.), refd to. [para. 126].

Hammans v. Bright & Co. (1996), 924 S.W.2d 168 (Tex. C.A.), refd to. [para. 126].

Lundy v. Maloney (1861), 11 U.C.C.P. 143, refd to. [para. 128].

Mann, Crossman & Paulin Ltd. v. Registrar of the Land Registry, [1918] 1 Ch. 202, refd to. [para. 128].

Murdoch v. Canadian Superior Oil Ltd. et al. (1968), 68 W.W.R.(N.S.) 390 (Alta. C.A.), affd. [1969] S.C.R. vi (note); 70 W.W.R.(N.S.) 768 (S.C.C.), refd to. [para. 132].

Canadian Superior Oil Ltd. et al. v. Paddon-Hughes Development Co. and Hambly, [1970] S.C.R. 932, refd to. [para. 132].

Dorsch v. Freeholders Oil Co. (1964), 48 W.W.R.(N.S.) 257 (Sask. C.A.), consd. [para. 134].

Porto Seguro Companhia De Seguros Gerais v. Belcan S.A. et al., [1997] 3 S.C.R. 1278; 220 N.R. 321, refd to. [para. 137].

D & S Developments Inc. v. Norac Systems International Inc. et al., [2000] Sask.R. Uned. 167 (C.A.), refd to. [para. 138].

Watkins v. Olafson et al., [1989] 2 S.C.R. 750; 100 N.R. 161; 61 Man.R.(2d) 81, refd to. [para. 139].

Ward et al. v. Van der Loeff et al., [1924] A.C. 653, consd. [para. 141].

Linkletter v. Walker (1965), 381 U.S. 618 (U.S. Sup. Ct.), refd to. [para. 147].

Erie R. Co. v. Tompkins (1938), 304 U.S. 64, refd to. [para. 147].

Canadian Export Gas & Oil Ltd. v. Flegal and Flegal, [1978] 1 W.W.R. 185; 9 A.R. 105 (T.D.), refd to. [paras. 148, 153].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57; 61 D.L.R.(4th) 14; 35 E.T.R. 1; 44 B.L.R. 1, refd to. [para. 159].

Cadbury Schweppes Inc. et al. v. FBI Foods Ltd. et al., [1999] 1 S.C.R. 142; 235 N.R. 30; 117 B.C.A.C. 161; 191 W.A.C. 161, refd to. [para. 166].

Attorney General v. Observer, The, [1988] 3 W.L.R. 776 (H.L.), refd to. [para. 168].

Seager v. Copydex Ltd. (No. 2), [1969] 2 All E.R. 718 (C.A.), consd. [para. 170].

Statutes Noticed:

Securities Act, R.S.S. 1940, c. 287, sect. 17a(1) [para. 16, footnote 7].

Authors and Works Noticed:

American Jurisprudence, 61 Am. Jur.2d, p. 62, para. 52 [para. 84, footnote 27].

Anger and Honsberger, The Law of Real Property (2nd Ed. 1985), pp. 443 [para. 151]; 447 [para. 115].

Cheshire, G.C., and Burn, E.H., Modern Law of Real Property (12th Ed.), p. 320 [para. 114].

Cheshire, G.C., Fifoot, C.H.S., and Furmston, M., The Law of Conflict (12th Ed. 1991), p. 477 [para. 132].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (2nd Ed. 1986), p. 138 [para. 132].

Fridman, Gerald Henry Louis, The Law of Contract in Canada (3rd Ed. 1994), p. 469 [para. 112].

Gray, J.C., The Rule against Perpetuities, (4th Ed. 1942), sect. 201 [paras. 21, 114].

Halsbury's Laws of England (4th Ed. 1976), vol. 35, p. 483 [para. 150]; p. 605, para. 1001 [para. 54]; p. 605, para. 1001, fn. 1 [para. 55]; p. 612, para. 1006 [para. 69]; p. 615, para. 1008 [paras. 22, 46, footnote 18]; p. 616, para. 1009 [para. 70, footnote 21]; p. 624, para. 1016 [para. 23, footnote 11].

Haskins, Extending the Grasp of the Dead Hand: Reflections on the Origins of the Rule Against Perpetuities (1977), 126 U. of Pa. L. Rev. 19, generally [para. 34, footnote 14]; pp. 43, 44 [para. 44, footnote 17].

Leach, Perpetuities in the Atomic Age: The Sperm Bank and the Fertile Decedent (1962), 48 A.B.A. J. 942, generally [para. 46, footnote 19].

McCamus, John, Equitable Compensation and Restitutionary Remedies: Recent Developments, Special Lectures of the Law Society of Upper Canada 1995: Law of Remedies: Principles and Proofs, pp. 326, 328 [para. 167]; 337 [para. 168].

McCamus, John, and Maddaugh, P.D., The Law of Restitution (1990), p. 676 [para. 169].

Megarry, R.E., and Wade, H.W.R., The Law of Real Property (3rd Ed. 1966), p. 218 [para. 115].

Morris, J.H.C., and Leach, W.B., The Rule against Perpetuities (2nd Ed. 1962), pp. 1, 2 [para. 115].

Oosterhoff, A.H., and Rayner, in Anger and Honsberger, The Law of Real Property (2nd Ed. 1985), pp. 443 [para. 151]; 447 [para. 115].

Roach, The Rule Against Perpetuities - The Validity of the Oil and Gas Top Deed in Texas After Peveto Starkey (1983), 35 Baylor L. Rev. 399, p. 409 [para. 15].

Roosevelt, Kermit III, A Little Theory is a Dangerous Thing: The Myth of Adjudicative Retroactivity (1999), 31 Conn. L. Rev. 1075, generally [para. 147].

Rotman, Leonard, Juice Formulation is not Rocket Science and other Observations: Cadbury Schweppes Inc. v. FBI Foods Ltd., 31 Ott. L. Rev. 243, pp. 248 [para. 167]; 264 [paras. 167, 168].

Schulyer, The New Biology and The Rule Against Perpetuities (1968), 15 U.C.L.A. L. Rev. 420, generally [para. 46, footnote 19].

Simes, Handbook of the Law of Future Interests (2nd Ed. 1966), p. 186 [para. 127].

Top Leases and the Rule against Perpetuities (1983), 10 Pepperdine L. Rev. 773, pp. 779 to 781 [para. 129].

Yaworski, Brian A., Perpetuities Problems in Farming Arrangements and Other Earning Arrangements, in Oil and Gas Title Opinions - Are They Necessary? How Are They Prepared? (1990), p. 2 [para. 152].

Ziff, Bruce H., Principles of Property Law (1993), p. 174 [paras. 112, 127].

Counsel:

Brian J. Scherman and David G. Gerecke, for the appellants;

James S. Ehmann and Keith D. Boyd, for the respondents.

This appeal was heard on September 26, 2000, by Tallis, Sherstobitoff and Jackson, JJ.A., of the Saskatchewan Court of Appeal.

The decision of the Court of Appeal was delivered on August 10, 2001, and the following reasons were filed:

Tallis, J.A. (Sherstobitoff, J.A., concurring) - see paragraphs 1 to 99;

Jackson, J.A. (dissenting) - see paragraphs 100 to 178.