On January 24, 2008, a claim for approximately $100 million filed by Cargill Gas Marketing Ltd. (“Cargill”) against Alberta Northeast Gas Limited (“ANE”) in the Court of Queen's Bench of Alberta was entirely dismissed, following trial.
The claim alleged that ANE was mistakenly undercharged by Cargill and its predecessor for the term of two 15-year gas purchase contracts for the provision of natural gas from Alberta to the northeastern United States. ANE had entered into the two gas purchase contracts, as buyer, with Cargill, as seller. Cargill was the successor in interest to TransCanada Pipelines Ltd., which had been represented by its agent, Western Gas Marketing. The contracts took effect November 1, 1991, and terminated November 1, 2006.
The contracts called for the delivery of a specified volume of gas, which was to be paid for in part according to the heating value of the gas delivered. Throughout the life of the contracts, the heating value of the gas was calculated based on a number of assumptions, including that the gas was saturated with water, or “wet,” notwithstanding that the gas was actually delivered dry. Cargill argued that this calculation was a mistake, which resulted in ANE paying for less heating value than was actually delivered over the term of the contracts. The trial judge, however, ruled that the gas purchase contracts by their terms required that the heating value of the gas be calculated on a wet basis, notwithstanding that the gas was actually delivered dry. The court found in addition that the terms of the gas purchase contracts, which provided for a wet calculation, were consistent with common industry practice at the time the contracts were entered into. Cargill's lawsuit was dismissed in full, with costs awarded in favour of ANE.
ANE was represented by Anthony L. Friend, QC, (litigation) Nicholas M. Gretener (corporate) and Scott H.D. Bower (litigation) of Bennett Jones LLP. Cargill was represented by John (Jack) J. Marshall, QC, and Mary E. Comeau of Macleod Dixon LLP.
The claim alleged that ANE was mistakenly undercharged by Cargill and its predecessor for the term of two 15-year gas purchase contracts for the provision of natural gas from Alberta to the northeastern United States. ANE had entered into the two gas purchase contracts, as buyer, with Cargill, as seller. Cargill was the successor in interest to TransCanada Pipelines Ltd., which had been represented by its agent, Western Gas Marketing. The contracts took effect November 1, 1991, and terminated November 1, 2006.
The contracts called for the delivery of a specified volume of gas, which was to be paid for in part according to the heating value of the gas delivered. Throughout the life of the contracts, the heating value of the gas was calculated based on a number of assumptions, including that the gas was saturated with water, or “wet,” notwithstanding that the gas was actually delivered dry. Cargill argued that this calculation was a mistake, which resulted in ANE paying for less heating value than was actually delivered over the term of the contracts. The trial judge, however, ruled that the gas purchase contracts by their terms required that the heating value of the gas be calculated on a wet basis, notwithstanding that the gas was actually delivered dry. The court found in addition that the terms of the gas purchase contracts, which provided for a wet calculation, were consistent with common industry practice at the time the contracts were entered into. Cargill's lawsuit was dismissed in full, with costs awarded in favour of ANE.
ANE was represented by Anthony L. Friend, QC, (litigation) Nicholas M. Gretener (corporate) and Scott H.D. Bower (litigation) of Bennett Jones LLP. Cargill was represented by John (Jack) J. Marshall, QC, and Mary E. Comeau of Macleod Dixon LLP.
Lawyer(s)
Scott H. D. Bower
Mary E. Comeau
Anthony L. Friend
Nicholas M. Gretener
John J. Marshall