Alberta CA Upholds Trial Judgment on Ownership of Natural Gas Rights

The Alberta Court of Appeal released its judgment in the matter of Signalta Resources Limited v. Dominion Exploration Canada Ltd., 2008 ABCA 437 on December 22, 2008. The appeal was brought by Signalta after Dominion defeated Signalta's claim at trial, which occurred for approximately one month in 2005. The Court of Appeal upheld the trial judgment and found against Signalta.

The trial and appeal concerned a claim made by Signalta that Dominion had drilled a very successful gas well into a strata of land that belonged to a gas unit, in which Signalta held the majority (85 per cent) interest and was operator. The well at issue was an extremely successful multi-million dollar gas well. Signalta's claim was based upon an exhibit to the original agreement forming the unit, which included the strata into which Dominion drilled in the unit (Dominion acknowledged fee simple title in the strata). However, that exhibit had been changed in 1992, before Dominion acquired its interest in the unit, and well before the well was drilled, to remove the strata from the unit.

Accordingly, Dominion's defence was based upon the revised agreement, which did not include that strata in the unit. Further, Dominion's defence was based upon the events and circumstances leading to the 1974 unit agreement, which in Dominion's view clearly reflected that the strata had never been contributed to the unit by any party able to do so.

In that respect, Dominion's defence was based upon the property principle of nemo dat. After hearing all the arguments, the judge in a 78-page judgment determined that the strata had never been contributed to the unit and that Dominion's defence accordingly prevailed. The Court of Appeal agreed.

Blake, Cassels & Graydon LLP acted for Dominion in this matter throughout, with a team comprised of David Tupper and Rich Bell, with the assistance of Darren Reed (who has since left the firm) at trial, and Abe Averbach for the appeal. Bill Corbett of the Field LLP firm represented Signalta.