Geophysical Service Incorporated v Devon ARL Corporation, 2017 ABQB 463

Court of Queen’s Bench of Alberta Citation: Geophysical Service Incorporated v Devon ARL Corporation, 2017 ABQB 463 Date: 20170726 Docket: 1401 12230 Registry: Calgary Between: Geophysical Service Incorporated Plaintiff - and - Devon ARL Corporation, Devon Canada Corporation, Devon NEC Corporation and ABC Company Ltd. Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice K.M.

Eidsvik _______________________________________________________ Introduction [ 1 ] The Defendants, Devon ARL Corporation, Devon Canada Corporation, and Devon NEC Corporation (collectively, “Devon”) and the Plaintiff, Geophysical Service Incorporated (“GSI”), each bring applications for

summary judgment. Devon seeks dismissal of GSI’s entire claim, whereas GSI counters with an application for

summary judgment on three discrete contract-based claims: the Accessed Data Claim, the Submitted Data Claim, and the Transfer Fee Claim. [ 2 ] Devon seeks

summary dismissal of these claims, as well as the Exploration Groups Claim and claims in conversion, copyright infringement, unjust enrichment, and breach of confidence. In particular, Devon has argued forcefully that there is no merit to GSI’s Transfer Fee Claim for license fees for seismic data transferred from Anderson Exploration to Devon Canada Corp. Devon argues this claim was resolved and settled not long after it arose in 2001-2002.

[ 3 ] Devon further argues that many of GSI’s claims accrued well outside the 10-year limitation period or that GSI knew, or ought to have known, about its claims more than two years before filing its Original Statement of Claim on November 10, 2014. It filed a fourth amended Statement of Claim on June 24, 2015 (the “4x Amended Statement of Claim”). Devon filed its Statement of Defence on June 15, 2015 and an Amended Statement of Defence on June 30, 2015. [ 4 ] At the hearing, GSI conceded that only the Accessed Data claim had a sufficient factual foundation to support

summary judgment in its favour. It argued that all the other issues need to go to trial. In spite of GSI’s concession in relation to its own application, Devon’s application for

summary dismissal requires me to determine whether Devon is entitled to

summary dismissal of all or parts of GSI’s claim, including those aspects for which GSI argues there is an insufficient factual foundation. [ 5 ] The parties’ applications are part of a broader series of

summary judgment/dismissal applications brought by and against GSI in a number of actions (the “Sister Applications”). The decisions in the Sister Applications were filed concurrently with this one and include Geophysical Service Incorporated v Plains Midstream Canada ULC , 2017 ABQB 462 , Geophysical Service Incorporated v Murphy Oil Company Ltd , 2017 ABQB 464 , Geophysical Service Incorporated v Suncor Energy Inc , 2017 ABQB 465 , and Geophysical Service Incorporated v Encana Corporation , 2017 ABQB 466 .

Factual background [ 6 ] GSI is a company involved in the acquisition, collection, production, reproduction, processing, reprocessing and storage of seismic data. GSI licenses its seismic data to oil and gas companies for substantial license fees. [ 7 ] GSI, as licensor, entered into a General License Agreement with Anderson Exploration Ltd. (“Anderson”) on January 11, 2000 (the “2000 Anderson Agreement”). GSI and Anderson executed three supplemental agreements pursuant to the 2000 Anderson Agreement setting out the exact lines licensed by Anderson from GSI.

These lines were located primarily in the Mackenzie Delta and the Beaufort Sea. [ 8 ] In January 2001, Anderson and GSI entered into a Master Seismic Data License Agreement (the “2001 Anderson MDLA”). There is one supplemental agreement executed under the 2001 Anderson MDLA, licensing primarily East Coast data. [ 9 ] Anderson amalgamated with Devon Acquisition Corporation on October 18, 2001. Devon Acquisition Corporation changed its name to Devon Canada Corporation (“Devon Canada”) on October 25, 2001.

Devon Canada is the successor to Anderson’s interest in the 2000 Anderson Agreement and the 2001 Anderson MDLA. [ 10 ] GSI and Devon ARL, a separate Devon entity at the time, entered into two further Master Data Licensing Agreements in January and June 2002 (collectively, the “2002 Devon MDLAs”). Thus, there are four seismic license agreements at issue in this action:

i) the 2000 Anderson Agreement; ii) the 2001 Anderson MDLA; iii) the January 2002 Devon MDLA; and, iv) the June 2002 Devon MDLA.

In addition, there are a number of Supplemental Agreements under each of these MDLAs: Licensing Agreement Supplemental Agreements 2000 Anderson Agreement 3 supplemental agreements 2001 Anderson MDLA 1 supplemental agreement January 2002 Devon MDLA 4 supplemental agreements June 2002 Devon MDLA 1 supplemental agreement [ 11 ] Pursuant to a Distribution of Assets and Assumption of Liability Agreement dated December 17, 2009, Devon NEC assumed all of the assets and liabilities of Devon ARL.

Devon ARL was a wholly owned subsidiary of Devon NEC until January 15, 2016, when a certificate of surrender was issued to dissolve Devon ARL. Devon NEC is itself a wholly owned subsidiary of Devon Canada. Issues [ 12 ] The issues in this

summary judgment application are as follows: 1. Is GSI entitled to

summary judgment on its Accessed Data Claim? 2. Is Devon entitled to

summary dismissal of GSI’s Transfer Fee Claim? 3. Is Devon entitled to

summary dismissal of GSI’s Submitted Data Claim? 4. Is Devon entitled to

summary dismissal of GSI’s Exploration Groups Claim? 5. Is Devon entitled to

summary dismissal of GSI’s Audit Claim? 6. Is Devon entitled to

summary dismissal of all of GSI’s remaining claims? Legal Principles

1. Law of

summary judgment [ 13 ] The principles applicable to

summary judgment applications are set out in my reasons in the Sister Application, GSI v Plains Midstream Canada ULC . The main principle is to determine whether a disposition that is fair and just to both parties can be made on the existing record. If the judge can make the necessary findings of fact and apply the law to those facts, then

summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result than trial. [ 14 ] If material facts are in serious dispute, however, the record will not support a fair and just disposition by

summary judgment. Thus, if there is evidence on the record that could defeat the applicant at trial, then

summary judgment will not be granted. If, however, there are no material facts in serious dispute, then the court may go on to determine whether the claim is otherwise suitable for

summary determination. 2. Principles of contractual

interpretation [ 15 ] The key principles of contractual

interpretation are set out more fully in the Sister Application of GSI v Plains Midstream Canada ULC . The main principle is that contractual clauses to be considered within the context of the contract as a whole and its entire matrix, including the circumstances surrounding its creation. The court must search for an

interpretation that, from the whole of the contract, promotes or advances the true intent of the parties and commercial or business efficacy. Discussion [ 16 ] I will start with GSI’s

summary judgment application even though it was subsequent and in response to Devon’s

summary dismissal application. 1. Is GSI entitled to

summary judgment on its Accessed Data Claim? [ 17 ] GSI has long taken the position that its data is confidential and protected by copyright and that government regulatory bodies have no right to distribute it after the expiry of the privilege period in the Regulatory Regime, as that phrase is interpreted in my decision in Geophysical Service Incorporated v Encana Corporation , 2016 ABQB 230 , which was affirmed on appeal at 2017 ABCA 125 (the “Common Issues Decision”). [ 18 ] To protect its intellectual property rights, GSI inserted a clause into its licensing agreements prohibiting licensees from obtaining data from government agencies.

Clause 6.3(f)(iii) of the 2001 Anderson MDLA provides that if Anderson obtains GSI seismic data from a government body, it must notify GSI and pay a licensing fee at 150% the usual rate: 6.3(f)(iii) The Licensee shall not obtain, directly or indirectly from any source, seismic data from any governmental agency that is owned by GSI. GSI takes the position that the Access to Information Act prohibits release of this data by the Government.

In addition, other intellectual property laws of Canada prohibit the copying, dissemination, storage on any retrieval system or reproduction in any manner of this confidential information. Should the Licensee obtain any such seismic data it shall immediately notify GSI and enter into a Supplemental Agreement with respect to such seismic data at a licensing fee equal to 150% of the then current licensing fees charged by GSI for such Seismic Data and the Reprocessed Seismic Data, if any.

In addition, in the event that, as of the date hereof, the Licensee or any of its affiliates or Related Entities, or any of their respective agents, Consultants or representatives are in possession of any Seismic Data or Reprocessed Seismic Data that is owned by GSI, the Licensee shall cause such Seismic Data and Reprocessed Seismic Data to be destroyed immediately or the Licensee shall immediately enter into a license from GSI based on GSI’s current licensing fees. [Emphasis added.] [ 19 ] The parties executed the 2001 Anderson MDLA on January 1, 2001.

In March 2001, a mere three months after signing the 2001 Anderson MDLA, Anderson requested data program number 8624-G5-7P from the NEB (the “Accessed Data”). It received the data in either paper or mylar format in May 2001 and made a paper copy for its records. It returned the original to the NEB. [ 20 ] There is no dispute that Anderson knew, or ought to have known, that this was GSI data (there was even a label identifying the data as originating from GSI).

Devon takes the position, however, that because the regulated statutory privilege period had expired, Anderson was entitled to make its request and obtain the data without paying a licensing fee.

a) Did Anderson breach the MDLA? [ 21 ] Anderson signed an agreement in which it promised not to obtain data from government agencies and, if it did so, it promised to notify GSI and pay a licensing fee at 150% the usual fee. The Regulatory Regime and what it permits has no bearing on the issue in this case. Anderson clearly breached the 2001 Anderson MDLA. [ 22 ] Anderson merged with Devon in October 2001. Devon assumed responsibility for Anderson’s assets and liabilities.

It is possible, although not expressly established on the evidence, that Devon carried out a review of Anderson’s seismic assets as part of the Anderson/Devon merger transaction and gained some knowledge of its possession of the Accessed Data. If so, it did not give GSI notice. [ 23 ] It is also interesting to note that in its negotiations with GSI leading to the 2002 Devon MDLAs, Devon arranged for the removal of the government agency clause, quoted above.

The 2002 Devon MDLAs contain a much-weakened clause, from GSI’s perspective, that merely recognizes GSI’s position that the Access to Information Act does not permit disclosure. The portion regarding payment for data obtained from government agencies is gone, as is the portion making the licensee liable for unlicensed data in its possession as of the date of the MDLA. The revised clause contained in the 2002 Devon MDLAs reads as follows:

6.3(f)(ii) GSI notifies the Licensee that it takes the position that the Access to Information Act prohibits release of this data by the Government. In addition, other intellectual property laws of Canada prohibit the copying, dissemination, storage on any retrieval system or reproduction in any manner of this confidential information. [ 24 ] It is not clear on the evidence before me why this clause was weakened.

It could be because Devon was concerned about having accessed such data, or it may simply have been good solicitor’s work. [ 25 ] In 2007, Devon arranged for the digitization of all of its seismic data, which could possibly have given it another opportunity to notify GSI of its possession of the Accessed Data. [ 26 ] In any event, on all the evidence, I conclude that Anderson obtained the Accessed Data and this was a breach of the 2001 Anderson MDLA since Anderson (and later Devon) did not immediately notify GSI and did not enter into a supplemental license agreement for the data.

b) Two year limitation period: When did GSI have knowledge of its claim? [ 27 ] Devon argues that GSI knew, or ought to have known, of its claim as early as 2000, thus submits the claim is statute barred under s 3(1)(

a) of the Limitations Act , RSA 2000, c L-12. Between 2000 and 2003, GSI wrote to various industry members cautioning them not to copy GSI data. GSI brought a proceeding in the Federal Court seeking that court’s assistance for the fulfilment of its access to information requests. Initially, the government boards refused to identify the entities accessing GSI data. [ 28 ] The court ruled in GSI’s favour and ordered the government to fulfill GSI’s many requests seeking specific information about who had accessed its data over the 180-month period prior to March 1, 2000.

While these requests suggest GSI appreciated that companies were accessing its data from government agencies, the answers to these requests would not have caught the Accessed Data in this case, since Anderson obtained it in March 2001, subsequent to the date parameters of GSI’s search request. [ 29 ] In May 2012, GSI became increasingly concerned about protecting its seismic data rights. To this end, it sent audit request letters to a number of oil and gas companies.

The letter states that GSI had become aware of a number of instances where GSI data has been obtained from, requested by, sent to, accessed by, or provided to Government. Devon argues that this letter establishes GSI’s knowledge of its claim more than 2 years before it filed its Original Statement of Claim on November 10, 2014. I disagree. [ 30 ] Contrary to Devon’s assertion, I find that GSI’s general audit letter is not enough to establish knowledge of its claim against Anderson.

The letter simply reveals that it was aware of problems in general with third party access to its data and that it was attempting to investigate. It did not know the specific nature of the Anderson/Devon breach. In many ways, it would have had less reason to suspect Anderson/Devon than most companies, given the specific clause in the 2001 Anderson MDLA prohibiting access to government records and the positive obligation upon Anderson to notify GSI. [ 31 ] In November 2012, GSI submitted an access to information request to discover which oil and gas companies had requested access to its data stored with the NEB.

It received a response on January 21, 2013 that revealed that Anderson had obtained the Accessed Data in March or April 2001. GSI learned that Anderson had borrowed 26 lines of data from program number 8624-G5-7P. After a number of written requests from GSI, Devon finally admitted on August 19, 2014 that it had the Accessed Data and it provided GSI with a digital copy of the records in its possession. [ 32 ] I find that GSI was reasonably diligent in investigating its potential claims.

It had no reason to believe that a company with whom it had just negotiated a licensing agreement would obtain data in express violation of that agreement. The law is clear that suspicion is not enough to start the running of the limitations clock and there is no evidence to establish GSI’s actual knowledge of its claim against Anderson until it obtained the access to information response from the NEB in January 2013. GSI brought its Accessed Data Claim within the 2 year limitation period.

c) Ten year limitation period: Did Devon fraudulently conceal GSI’s claim? [ 33 ] Devon also argues that GSI’s claim is limitations barred by the ultimate 10-year limitation period in section 3(1) (

b) of the Limitations Act , since the alleged breach occurred in 2001, more than 10 years before the filing of GSI’s claim in 2014. GSI submits in response, relying on

section 4 of the Act, that Anderson and then Devon fraudulently concealed the injury and that the limitation clock did not begin to run until it learned of the breach in 2013. [ 34 ] Section 3(1) (

b) of the Limitations Act provides that if a claimant does not seek a remedial order within 10 years after the claim arose the defendant is entitled to immunity from liability in respect of the claim. Knowledge is not an element of the inquiry into the ultimate limitation period; it runs from the date of the breach or injury.

Section 4, however, suspends the operation of this ultimate limitation period in the event of concealment: 4(1) The operation of the limitation period provided by section 3(1)(

b) or (1.1)(

b) is suspended during any period of time that the defendant fraudulently conceals the fact that the injury for which a remedial order is sought has occurred.

(2) Under this section, the claimant has the burden of proving that the operation of the limitation period provided by section 3(1) (

b) or (1.1)(

b) was suspended. [ 35 ] Limitations statutes are statutes of repose, designed to ensure that plaintiffs act diligently in pursuit of their claims so that they can be decided upon the best evidence. Fraudulent concealment is an equitable principle aimed at preventing a limitation period from operating as an instrument of injustice: Milavsky v Milavsky , 2011 ABCA 231 at para 38 . [ 36 ] In WP v Alberta , 2014 ABCA 404 at para 33 , leave to appeal to the Supreme Court of Canada refused, the appeal court summarized what a plaintiff must establish to suspend the limitation period for fraudulent concealment:

…a party seeking to establish that fraudulent concealment suspends a limitation period must show that (1) the defendant perpetrated some kind of fraud; (2) the fraud concealed a material fact; and (3) the plaintiff exercised reasonable diligence to discover the fraud. [ 37 ] The plaintiffs in WP v Alberta brought allegations of physical, sexual and emotional abuse at the hands of the teachers, staff and other students at the Alberta School for the Deaf between 1959 and 1991. [ 38 ] The court concluded that the evidence did not make out fraudulent concealment of the plaintiffs’ claims.

There was no evidence that any of the plaintiffs were laboring under a misapprehension of the fact of having suffered an injury. While they might not have known until later that they could sue, that is not the same thing as having the fact of the wrongful conduct and its effects deliberately concealed from them. The court found that being told at the time not to discuss the abuse does not support an allegation of fraudulent concealment of the fact of the injury. [ 39 ] In establishing that the defendant perpetrated some kind of fraud, the case law states that fraudulent concealment has a broad meaning.

In Huet v Lynch , 2000 ABCA 97 , decided under the old Limitations of Actions Act , the court held that there must be a special relationship between the plaintiff and the defendant and unconscionable conduct. It is sufficient to establish such unconscionable conduct, in the context of a special relationship, to show that the defendant acted passively in failing to inform the plaintiff of some wrongdoing the defendant knowingly or recklessly committed, since by saying nothing the defendant kept the fact of the injury secret. [ 40 ] The court concluded that the defendants had concealed Ms.

Huet’s cause of action (the test under the old Act). It also found that she had acted with reasonable diligence; Ms. Huet had no reason to suspect that the defendants lacked the authority to detain her and treat her in hospital as they did. She was not required to obtain a copy of her hospital records to comb through them for possible fraud in the absence of evidence that ought to have put her on inquiry. [ 41 ] Similarly, I find that GSI had no reason, given the express notice clause in the 2001 Anderson MDLA, to investigate whether Anderson and later Devon had obtained GSI data from government agencies.

In the absence of notice that they had breached the contract, there was nothing to put GSI on inquiry. [ 42 ] Devon has argued that there is no special relationship between it and GSI, and that it was under no duty to disclose. This is an untenable argument given the clear and express contractual language. Anderson and then Devon had a duty to disclose any GSI data obtained from government agencies and to pay licensing fees for such data.

GSI was entitled to rely on Anderson’s contractual promise in this regard. [ 43 ] The recent Supreme Court of Canada decision in Bhasin v Hrynew , 2014 SCC 71 established that the common law of contract requires parties to perform contracts honestly and in good faith. The Supreme Court wrote at para 60: Commercial parties reasonably expect a basic level of honesty and good faith in contractual dealings.

While they remain at arm’s length and are not subject to the duties of a fiduciary, a basic level of honest conduct is necessary to the proper functioning of commerce. … [Emphasis added.] [ 44 ] GSI was entitled to rely on Anderson’s promise that it would give notice if it obtained data from the NEB.

Anderson was under a contractual and a common law duty not to lie or knowingly mislead GSI about a matter directly linked to the performance of the contract: Bhasin at para 73 . [ 45 ] GSI also relies on Xerex Exploration Ltd. v Petro-Canada , 2005 ABCA 224 in support of its position that Anderson and Devon had a duty to disclose. In Xerex , Petro-Canada improperly obtained information about the resources within a deep rights area licensed by Xerex and proceeded to negotiate a contract to its advantage in relation to those deep rights.

In other words, Petro Canada did something it should not have done and it did not disclose to Xerex that it had done so when negotiating the contract. [ 46 ] The court held that the manner in which Petro-Canada had acquired the information resulted in the imposition of a fiduciary duty, such that Petro-Canada had a duty to disclose the information when it negotiated its contract with Xerex. Its failure to disclose was a breach of fiduciary duty and the making of a misrepresentation by false statement.

The court imposed a fiduciary duty because it found it could not impose a duty of good faith in contractual performance. Here I do not need to determine whether there is a fiduciary duty between the parties, since Bhasin has established a duty of good faith in contractual performance, which is sufficient to deal with this claim. [ 47 ] Finally, Devon also argues that GSI’s pleadings are inadequate to raise fraudulent concealment; it states it must be specifically plead. Fraudulent concealment is a defence to Devon’s reliance upon the ultimate limitation period.

There is uncertainty in the law as to whether it must be specifically plead. In Milavsky , the court noted that the better practice is to plead fraudulent concealment in a Reply to a limitations defence. Regardless, I find that GSI has put concealment in issue via paragraphs 33 and 41 of its 4x Amended Statement of Claim, wherein it pleads that Anderson and Devon concealed the fact that Anderson had obtained and copied GSI data from the NEB. [ 48 ] I agree with GSI’s submissions on fraudulent concealment.

Clause 6.3(f)(iii) in the 2001 Anderson MDLA imposed a positive duty on Anderson to give GSI notice if it obtained GSI data from a government agency. Anderson was required to make such disclosure in good faith performance of its obligations under the agreement, as per the principles articulated in Bhasin . Anderson failed to disclose information it should have disclosed and in so doing, it concealed GSI’s claim. I find that GSI’s claim was fraudulently concealed within the meaning of the Limitations Act .

d) Conclusion on the Accessed Data Claim [ 49 ] In sum, Anderson breached the 2001 Anderson MDLA by obtaining the Accessed Data only months after entering into an agreement saying it would not do so. It then copied the data and did not disclose its actions to GSI, contrary to its positive obligation under the agreement. Devon, upon acquiring the Accessed Data from Anderson and negotiating its own MDLAs with GSI, did not advise GSI that it had possession of the Accessed Data. It remained in possession of the Accessed Data without disclosure to GSI.

[ 50 ] Anderson’s and Devon’s collective actions concealed from GSI the facts it needed to bring a claim. GSI learned of its claim only when it obtained the response to its access to information request that identified program number 8624-G5-7P in January 2013. Accordingly, this claim is not barred by the imitation period. GSI is entitled to

summary judgment for the liability portion of its Accessed Data Claim.

e) Damages for the Accessed Data Claim [ 51 ] In its pleadings at paragraph 41, GSI makes a broad claim for damages related to its Accessed Data Claim: As a result of Devon’s conduct of not informing GSI and concealing that it had the Accessed Data, refusing to return it, refusing to license it, and refusing to pay license fees invoiced, Devon has breached the terms of the Agreements and is liable to GSI for damages in the amount of USD $539,769.15 or more to be determined at trial.

GSI is still unaware of the full extent of all types and the number of copies made, distribution to third parties, prospective venture participants and exploration group members during and after the time in this area where the data was obtained, who also would have been required to license these Accessed Data. GSI seeks a full accounting in this regard. [ 52 ] Yet GSI’s evidence supports only a portion of this damages claim. GSI presented an invoice for USD $539,769.15 that it issued to Devon on August 29, 2014, not long after Devon confirmed its possession of the Accessed Data.

GSI calculated this license fee based on 1914.075 km of data x USD $188/km x 150%. According to Mr. Einarsson, GSI’s Chief Operating Officer and corporate representative in this action, the rate of USD $188/km was the rate effective April 12, 2012, the existing rate the time GSI learned of the breach. Devon did not dispute the accuracy of GSI’s calculation of the fee. [ 53 ] GSI calculated the fees owing based on the rates at the time of discovery of the breach, rather than at the time that the license fees should have been paid.

The contract says that the Licensee will pay 150% of the then current licensing fee , which could be interpreted to mean the fee current as of when the Licensee should have given notice, rather than when the breach was discovered. [ 54 ] Further, GSI’s invoice purports to carry a monthly interest rate of 1.5% (“1.5%/Mo. Interest Will Be Added to Accounts Over 30 Days). This was not included in the amount claimed in this application because later rates were used according to GSI’s oral submissions.

However, again, this does not coordinate with the agreement (although clearly GSI can walk away from damages if it so choses). Further, Devon offered to return or destroy the data in August 2014, but GSI refused its offer. It is unclear, given Devon’s offer, whether it should be liable for a monthly interest payment, even though it was not sought on this so called quid pro quo position GSI took. [ 55 ] In sum, there are numerous questions of fact and law related to damages, even beyond the issues that I have flagged, such that the proper assessment of damages cannot be determined on this record.

Accordingly I dismiss this portion of the

summary judgement application and send this assessment question to trial. 2. Is Devon entitled to

summary dismissal of GSI’s Transfer Fee Claims? [ 56 ] For the purposes of this application, the parties have accepted that the amalgamation between Anderson and Devon triggered the transfer provisions of the 2001 Anderson MDLA. The issue is whether Devon has already paid transfer fees in full settlement of this claim. Devon submits that this data was paid for under the supplemental agreements associated with the 2002 Devon MDLAs. GSI disagrees. The Evidence [ 57 ] The evidence indicates that GSI became aware of the Anderson/Devon amalgamation within a week of it happening. On October 23, 2001, Mr.

Einarsson, wrote to Devon and attached a detailed list of all “Anderson and Anderson predecessors and acquisitions that will be transferred to Devon.” The list identified all the data licensed under the 2000 Anderson Agreement and the 2001 Anderson MDLA, as well as data under preceding agreements.

In addition to the list of seismic data, the letter attaches an invoice (#3165) dated October 24, 2001 for $917,067.01, for “Transfer fees from Anderson Exploration to Devon Energy Corporation.” The invoice refers to an “attached list” of surveys, but also identifies generally East Coast Canada, Mackenzie Delta, Beaufort Sea, Alberta land, and Saskatchewan land. [ 58 ] On November 13, 2001, Mr. Einarsson again wrote to Devon. His letter explained how each license agreement held by Devon’s predecessors approached the transfer of data.

For example, the Home Oil agreement, dated June 6, 1986, does not address transfer fees at all, whereas the 2000 Anderson Agreement states that the data and license are non-transferrable without GSI’s written approval. Meanwhile, the 2001 Anderson MDLA at clause 13.1 provides for a 25% transfer fee. Mr. Einarsson’s letter goes on to state [referring to the 2001 Anderson MDLA]: As you may recall we negotiated from GSI’s normal 50% transfer fee to a reduced rate of 25% for an acquisition of all the assets and shares of Anderson, which apparently has occurred. ...

Based upon your request GSI is pleased to provide a value added offer regarding the transfer fees; in return for the timely payment of all invoiced transfer fees, and the timely execution of GSI’s license agreement with Devon for the large data set being transferred, GSI offers the following: ... [ 59 ] The details of the offer are not relevant. The importance of the letter and offer, according to Mr.

Jeff Allison, Manager of Geoscience Services at Devon, is that these letters and the initial transfer fee invoice (#3165) were the start of negotiations between GSI and Devon for the transfer fees owing in respect of the Anderson Agreements. Mr. Allison attests that the documentary record, attached as exhibits to his affidavit, indicate an intention to come to an agreement on the transfer fee issue; that is, an agreement on the amount of transfer fees Devon owed GSI for all data connected to the Anderson Agreements.

[ 60 ] On December 5, 2001, Mr. Einarsson wrote again, in response to a question from Devon, to clarify “what data was licensed under which agreements”. He explained that only a small amount of 2D data was licensed under the Home Oil agreement, while the rest of the data was licensed under the 2000 Anderson Agreement. For whatever reason, Mr. Einarsson’s December 5, 2001 letter does not reference the data licensed under the 2001 Anderson MDLA and its single supplemental agreement. The original list of data attached to Mr.

Einarsson’s October 23, 2001 letter, however, included data from both Anderson agreements. [ 61 ] The December 5, 2001 letter suggests that GSI and Devon disagreed on whether the Anderson/Devon amalgamation resulted in a transfer. Regardless, GSI offered a compromise proposal that included, among other things, reprocessed versions of the Anderson/Home licensed data and a special price for some other data. The offer was conditional on there being no material changes to the Devon license from the already negotiated Anderson license agreement and a timely execution of the new agreement prior to the 2001 year end.

Mr. Einarsson followed up with another letter dated December 14, 2001, extending the offer for an extra two weeks, into January 2002. In this later letter, Mr. Einarsson acknowledges his failure to mention, in the December 5 letter, the most recent Anderson licence agreement (the 2001 Anderson MDLA). He writes: “I forgot to add that all the data licensed under the recent Anderson license agreement is clearly subject to a negotiated low 25% transfer fees per the agreement terms.” [ 62 ] On January 1, 2002, GSI and Devon ARL entered into the January 2002 Devon MDLA.

In June 2002, GSI and Devon ARL entered into a second licensing agreement, the June 2002 Devon MDLA. Mr. Allison explained in his affidavit that the purpose of the June 2002 Devon MDLA was to document a reduction in transfer fees. Other than that, there were no material differences between the two 2002 Devon MDLAs. [ 63 ] Mr. Einarsson, in his affidavit sworn on September 2, 2015, echoes this rationale for the June 2002 Devon MDLA. He states that the terms of the 2002 Devon MDLAs are virtually identical.

In questioning, he agreed that the purpose of the June 2002 Devon MDLA was to permit Devon to use seismic data that had been licensed under the Anderson Agreements. Mr. Einarsson stated in his affidavit that, by the time of the June 2002 agreement, GSI had been made aware of the Devon acquisition of Anderson, including the transfer of some of the Anderson licensed data and had begun negotiating transfer fees and a license. The October 23, 2001 letter and transfer fee invoice make it clear, however, that GSI knew of the amalgamation much earlier than what Mr.

Einarsson recalls in his affidavit. [ 64 ] Nonetheless, Mr. Einarsson now swears that the June 2002 Devon MDLA did not cover all of the Anderson data. He alleges it did not include 10,348.7 km of data listed in Exhibit 8 to his affidavit, the “Other Anderson Data”. He claims that GSI was lead to believe that Devon had not acquired the Other Anderson Data from Anderson and that the data was destroyed or would be destroyed. GSI claims it only recently learned that the Other Anderson Data had not been destroyed and that it remains in Devon’s database.

The Exhibit 8 list includes all of the data licensed under the 2001 Anderson MDLA and some data licensed under other agreements with Devon’s predecessors (Home Oil, Canadian Roxy, and Ulster Petroleum). [ 65 ] The supplemental agreements to the 2002 Devon MDLAs identify the exact lines of seismic data for which Devon acquired a license.

Unfortunately, in the case of the first supplemental agreement under the January 2002 Devon MDLA, dated May 2, 2002, the agreement refers to an “attached list” of seismic data that, for unknown reasons, neither Devon nor GSI was able to produce. [ 66 ] The second supplemental agreement under the January 2002 Devon MDLA identifies five lines lists previously licensed under the Anderson 2000 agreement.

The third and fourth supplemental agreements under the January 2002 Devon MDLA (executed in September and December 2003 respectively), attach line lists that do not reference any data that was under the Anderson agreements (these agreements licensed new lines). [ 67 ] The supplemental agreement under the June 2002 Devon MDLA licenses a great volume of data, among which are all of the lines previously licensed by Anderson pursuant to the 2000 Anderson Agreement (including the five lines licensed under the second supplemental agreement under the January 2002 Devon MDLA, discussed above).

As such, all data licensed to Anderson under the 2000 Anderson Agreement became re-licensed to Devon under the June 2002 Devon MDLA. [ 68 ] The key issue is what happened to the data licensed to Anderson under the 2001 Anderson MDLA, since this data forms the bulk of the Other Anderson Data claim. Devon strongly argues that it settled the claim for transfer fees for the Other Anderson Data with GSI in 2002.

The documentary record supports Devon’s position. [ 69 ] Although, as mentioned above, the May 2002 supplemental agreement (under the January 2002 Devon MDLA) is missing its line list, it nevertheless provides some answers. It contains a unique clause that does not exist in any of the other Devon supplemental agreements.

The clause states: Some portions of the data are subject to a transfer fee pursuant to a Master License Agreement dated January 1, 2001 between GSI and Anderson Exploration Ltd. [the 2001 Anderson MDLA] Subject to payment of these transfer fee amounts … no fees are chargeable on the remainder of the data transferred hereunder. [ 70 ] This clause strongly suggests that the first supplemental agreement was intended to transfer the license for the data in Anderson’s possession pursuant to the 2001 Anderson MDLA (i.e. most of the lines in Exhibit 8) to Devon after the payment of transfer fees to GSI. [ 71 ] Importantly, at the same time as the first supplemental agreement (i.e. in May 2002), GSI sent Devon a list of data and two invoices, under cover of a letter dated May 1, 2002.

The data list includes all lines licensed to Anderson under the 2001 Anderson MDLA that now form part of GSI’s “Other Anderson Data” Transfer Fee claim (i.e. most of the lines in Exhibit 8). The item description on the invoices states: “Transfer fees – 25% of licensed data from Anderson Exploration Ltd. to Devon Energy Corporation.” GSI notes in the May 1, 2002 letter that, pursuant to paragraph 15.5 of the 2001 Anderson MDLA, GSI has the right to terminate the license in the event Devon does not pay the enclosed transfer fee.

Upon any such termination, any seismic data in Anderson/Devon’s possession or control would have to be returned to GSI. [ 72 ] GSI’s May 1, 2002 letter also includes a proposal regarding data acquired by Anderson’s and Devon’s other predecessor

corporations: Although it is GSI’s position that the data, personnel and activities of Home, Anderson etc. and Devon have been sufficiently commingled to provide for a beneficial transfer of the data to Devon, GSI proposes in lieu of transfer fees on GSI data covered by other earlier license agreements, that we simply include this data under the new license agreement we negotiated utilizing a supplemental agreement (attached) . This offer is made contingent upon Devon’s payment of the fees above.

Please indicate your acceptance of these terms by returning an executed supplemental agreement for our records. [Emphasis added.] [ 73 ] A subsequent letter, dated May 29, 2002, from GSI to Devon, appears to be a follow-up to the May 1, 2002 letter after a meeting between Devon and GSI. It has the same Re: line as the May 1 letter: “Agreement dated January 1, 2001 between Geophysical Service Inc. (“GSI”) and Anderson Exploration Ltd. (the “License Agreement”).” In the May 29, 2002 letter, Mr. Einarsson thanks Devon for its time and analysis on the issue.

He indicates that he has had a chance to review Devon’s proposal in detail and offers a number of concessions and counterproposals for consideration. The exact details of Mr. Einarsson’s proposal are not important, since Devon responded to the May 29, 2002 letter with its own letter and counterproposal that GSI ultimately accepted. [ 74 ] Devon wrote to clarify its proposal on June 17, 2002: We acknowledge receipt of your letter dated May 29, 2002. Your letter sets out your understanding of our proposal made in our May 29, 2002 meeting.

It is clear from your letter that you misunderstood the proposal I provided in the meeting and your reply is not acceptable. Devon is prepared to make the following offer. GSI can choose one of the following options: Option 1 Devon Canada will pay GSI a cash payment of $277,258.36 CDN as full and final settlement for all transfer fees … -OR- Option 2 Devon Canada will pay GSI a cash payment of $426,430.59 CDN and Devon Canada will be entitled to $213,215.30 CDN of GSI shelf data and the price charged to Devon Canada will be equal to 60% of GSI current list price for such data.

Such payment and seismic acquisition will be full and final settlement for all transfer fees … Regardless of which of the above options GSI chooses, Devon Canada and GSI will enter into a new Master License Agreement which will govern all legacy data going forward other than the data covered under the January 1, 2001 [sic 2002] Devon ARL Agreement (the “ARL Agreement”).

The new Master License Agreement will contain terms substantially the same as the ARL Agreement... [Emphasis added.] [ 75 ] On June 20, 2002, GSI accepted Devon’s offer, albeit reluctantly: “Although the offer is in Canadian dollars which falls well short of what GSI is contractually able to claim … We accept your proposal “Option 2” and have enclosed the same license agreement we last executed with the changes you requested in your offer which are incorporated into

article 13.1(a).” In the letter, GSI asks Devon to execute the second MDLA and return a copy for its records. GSI also enclosed an invoice consistent with Devon’s offer and Option 2. The item description stated it was for transfer fees pursuant to June 17, 2002 letter. [ 76 ] On July 2, 2002 Devon confirmed GSI’s acceptance of Option 2 and submitted payment to GSI. Its letter went on to state that “this payment will be full and final settlement for all transfer fees owing by Devon Canada and any of its affiliates to GSI …” Mr. Einarsson endorsed the bottom of this letter acknowledging receipt of the cheque. Mr.

Allison’s second affidavit includes a copy of the cheque dated June 26, 2002 sent to GSI. [ 77 ] In 2005, Devon undertook a cleanup of its seismic data base. Devon asked GSI to provide it with a list of all data that was licensed to Devon and its predecessors. GSI provided line lists that included all of the seismic data attributed to Anderson on Exhibit 8 of Mr. Einarsson’s affidavit that he now alleges is subject to transfer fees. Analysis [ 78 ] It is well established that each party to a

summary judgment application must put their best foot forward with respect to the material issues to be determined: Canada (Attorney General) v Lameman , 2008 SCC 14 . Neither party can resist an application for

summary judgment by referring to evidence that may be adduced in the future or by presenting mere allegations of fact that raise suspicions without any supporting evidence: Royal Bank of Canada v Levy , 2013 ABQB 381 at paras 28-29 . [ 79 ] An applicant for

summary judgment or dismissal is entitled to the order it seeks if the facts and law make its position unassailable; in other words, if its position is so compelling that the likelihood of success is very high: Access Mortgage Corporation

(2004) Limited v Arres Capital Inc. , 2014 ABCA 280 at para 45 , quoting from Beier v Proper Cat Construction , 2013 ABQB 351 at para 61 . [ 80 ] GSI argues that the facts surrounding this issue are too confusing and complex and that the issue needs to go to trial. In particular, GSI submits that without an Affidavit of Records or discovery, this court will not have a sufficient evidentiary record to decide the Transfer Fee Claim. I disagree. GSI had ample opportunity to question Devon’s affiants and to request undertakings to produce records.

Devon responded to a number of such undertaking requests. [ 81 ] Furthermore, Chief Justice Wittmann declined to order Devon to provide an Affidavit of Records before this application was heard, but instead ordered that Devon provide affidavits attesting that the affiant has reviewed all records in Devon’s possession pertinent to the issues raised in the

summary application and that all such relevant and material records have been produced. If a party was unable to comply with Wittmann CJ’s order, they were under an obligation to inform him in writing. [ 82 ] In response to this Order, Mr. Allison, Devon’s corporate representative, swore an affidavit that he and Mr. Deacon Rosamond reviewed all of the records pertaining to these cross-applications and that he had been advised that all relevant and material records had been disclosed. I find that I can make a fair and just determination of the Transfer Fee Claim on the record before me, even in the

absence of the line list associated with the May 2002 supplemental agreement under the January 2002 Devon MDLA. There is no reason to presume that a trial will permit the parties to find the missing line list that they could not locate to date. [ 83 ] I find that GSI sent invoices for transfer fees for all the Anderson data (licensed under the 2000 Anderson Agreement and the 2001 Anderson MDLA) in October 2001. The parties negotiated from that time until June 2002 to resolve the transfer fee dispute.

The first supplemental agreement under the January 2002 Devon MDLA, dated May 2, 2002 specifically mentions the 2001 Anderson MDLA and the invoices of the same date itemize transfer fees associated with this data. After further negotiation, GSI invoiced Devon pursuant to the terms of the June 17, 2002 settlement proposal from Devon and Devon paid the agreed upon settlement amount in full. Mr. Einarsson signed a letter dated July 2, 2002 accepting the reduced transfer fee “in full and final settlement for all transfer fees.” [ 84 ] Furthermore, there is nothing in the evidence to support Mr.

Einarsson’s bald assertion that he was told the Other Anderson Data would be destroyed. The documentation and Devon evidence does not substantiate Mr. Einarsson’s assertion in any way. Mr. Allison, in a second affidavit dated September 13, 2016, explains that he reviewed Devon’s records pertaining to GSI and was unable to locate any written offer, pursuant to clause 13.2 of the 2001 Anderson MDLA, to surrender or destroy the seismic data licensed under the 2001 Anderson MDLA. [ 85 ] Further, he attests to being unaware of any representation to GSI that Devon would be destroying any of the Other Anderson Data.

Furthermore, I note that if GSI understood that Devon would destroy the data, it had every right under the 2001 Anderson MDLA to seek proof, by way of statutory declaration, confirming such destruction. [ 86 ] In my view, Mr. Einarsson is mistaken in his recent recollection that Devon would destroy the data in dispute and this assertion is not enough to direct a trial on this issue. I find that I can make a fair and just determination on all of the record before me on this issue and that a trial would not illuminate matters further.

I rely on the Hryniak and Windsor cases for authority on this finding. [ 87 ] Devon also argues that the pleadings are deficient and that GSI did not properly plead its Transfer Fee Claim. GSI’s 4x Amended Statement of Claim makes general reference to breaches of contract, but does not specifically allege deficiencies with respect to transfer fees. GSI argues that its pleadings include allegations that Anderson and Devon should not have transferred or assigned its licensed data without its consent and without strict compliance with the terms of the agreements.

It argues it has also pleaded that there has been breach of contract and that the Transfer Fee Claim in relation to the Other Anderson Data is but a particular instance of the general pleading.

Considering my conclusion set out above, I need not decide this issue; however, I find it was plead in a general enough way for me to have dealt with it. [ 88 ] The chain of correspondence leading up to the settlement letter and the June 2002 Devon MDLA have provided the relevant contractual matrix to assist in understanding the mutual and objective intention of the parties: see IFP Technologies (Canada) Inc v Encana Midstream and Marketing , 2017 ABCA 157 at paras 80-84 .

I find that GSI knew of the transfer of all of the Anderson data to Devon and the parties negotiated and settled the Transfer Fee Claim in 2002. Conclusion on Settled Transfer Fee Claim [ 89 ] In sum, I conclude that GSI’s Transfer Fee claim for the Other Anderson Data fails. In my view, the record establishes that the transfer fee dispute was fully resolved by settlement in 2002. [ 90 ] I find that Devon re-licensed the 2000 Anderson Agreement data from GSI under the June 2002 Devon MDLA, while the 2001 Anderson MDLA data was transferred to Devon under the January 2002 Devon MDLA.

After six months of negotiation, Devon paid the agreed upon sum in full and final settlement of all transfer fees owing. The remaining data in Mr. Einarsson’s Exhibit 8 was licensed by GSI to Devon’s predecessors under agreements that GSI has not put into evidence. Regardless, GSI knew of the transfer of all data from Anderson to Devon and accepted and acknowledged payment of transfer fees for all legacy data owned by Anderson and its predecessors. [ 91 ] In light of all of the above, I need not address the parties’ limitations arguments. Devon is entitled to

summary dismissal of the Transfer Fee Claim. Does Devon owe damages for sharing between Devon entities? [ 92 ] GSI makes another transfer fee claim at paragraph 7 of the 4x Amended Statement of Claim alleging that Devon entities failed to enter in new license agreements with GSI before sharing or transferring seismic data between themselves: At no time, did Devon NEC or Devon Canada seek and obtain, as was required under the respective Agreements, GSI’s consent to nor did they enter into new license agreements with GSI upon the described acquisitions. [ 93 ] In his affidavit, Mr.

Einarsson alleges that Devon owes GSI more than $24 million for damages that GSI has suffered as a result of the ongoing sharing between Devon entities, yet Devon ARL, Devon NEC, and Devon Canada are Related Entities, as defined in the agreements. A “Related Entity” means “any corporation, partnership, trust or other entity which (

i) is wholly owned by the Licensee, (ii) wholly owns the Licensee; or (iii) is wholly owned by an entity in (

i) or (ii) above.” GSI acknowledges that the Devon entities are Related Entities at paragraph 6 of its 4x Amended Statement of Claim: “Devon ARL, Devon NEC and Devon Canada are “Related Entities”, as defined in the Agreements.” [ 94 ] Clause 13.1(

b) of the 2002 Devon MDLAs states that an Acquiring Entity “shall be entitled” to a transfer of the agreement, or at GSI’s option, to obtain a license to use the Seismic Data. If the Acquiring Entity is a Related Entity, then there is no charge for the new license: 13.1 Transfer Fees Acquisitions/Mergers: If an Acquiring Entity acquires Ownership or Control of the Licensee or otherwise acquires all or substantially all the assets of the Licensee, then such Acquiring Entity or any entity related to it shall be entitled to a transfer of this

Agreement or, at the option of GSI, to obtain a license, utilizing GSI’s then current form of license agreement, to use the Seismic Data … upon payment of the following transfer consideration to GSI: … (

b) in the case where Ownership or Control of the Licensee is acquired by a Related Entity, no transfer fee shall be payable ; and … [Emphasis added.] [ 95 ] Devon ARL notified GSI of the Devon internal reorganization by letter dated April 26, 2010. Mr. Allison attached a copy of the letter as an exhibit to his affidavit.

The letter explains Devon’s understanding that, pursuant to the June 2002 Devon MDLA, the internal reorganization would not trigger any transfer fees: We note that currently DRL [Devon ARL Corporation] and your company have entered into a Master Seismic Data License Agreement (“Agreement”) dated June 19, 2001 [sic 2002]. After due consideration to the wording of the Agreement, (including clause 13.1(

b) thereof) we note that our internal transaction is not restricted or subject to any costs and fees. Consequently, we hereby provide you with notice that this contract has been assigned internally from DRL to NEC. Please change your records in this regard. [ 96 ] Mr. Einarsson denies ever having seen this letter, however, the evidence also includes GSI correspondence in 2012 (including the audit letter discussed later in these reasons) addressed to Devon NEC, rather than Devon ARL.

Accordingly, whether GSI received the April 26, 2010 letter or not, it must have received notice at some point prior in order to address correspondence to Devon NEC in 2012. Further, and in any event, the April 26, 2010 letter shows that Devon made all reasonable efforts to comply with the terms of the June 2002 Devon MDLA. [ 97 ] I find that Devon fulfilled its obligations under its agreements with GSI. It gave GSI notice of the change of control between Devon entities. Although GSI had the option to require a new license, it chose not to exercise it.

Devon NEC was entitled to a transfer of the agreements without incurring a transfer fee and there was no breach. [ 98 ] Devon is entitled to

summary dismissal of this additional transfer fee claim. GSI’s claim for damages for sharing between Devon entities is dismissed. 3. Is Devon entitled to

summary dismissal of GSI’s Submitted Data Claim? [ 99 ] In 2002, Devon and Richland were parties to an option agreement to participate in an exploration license. Devon and Richland each licensed data from GSI in the area of the exploration license. [ 100 ] Devon carried out a technical evaluation of the exploration license and generated a report.

Richland submitted the report to the Canada Nova Scotia Offshore Petroleum Board (the “CNSOPB”) sometime between July 2002 and March 2003 and later applied for allowable expenditure credits as the interest representative authorized to do so. [ 101 ] The report contained 17 attachments. Neither Devon nor the CNSOPB has been able to find the attachments, despite repeated efforts. Mr. Einarsson speculates that the report and attachments would constitute “Work Product Derivatives”, as defined in the license agreements, and he also suggests that the report likely included GSI seismic data.

All that we know for certain, however, based on email correspondence from the CNSOPB, is that the CNSOPB only has a “paper shot point map” and a “very brief acquisition report.” [ 102 ] In its pleadings, GSI submits that the submission of the technical evaluation report was a breach of “the Agreements”, a defined term which is said to include the two Anderson agreements and the 2002 Devon MDLAs. In its submissions, however, GSI quotes the language of clause 6.3(

f) as it exists in the 2002 Devon MDLAs. This clause prohibits the submission of GSI seismic data to government agencies unless required by law: 6.3(f)(

i) This Agreement, the Seismic Data and the Reprocessed Seismic Data may be disclosed by the Licensee to federal or provincial government agencies only if, such disclosure is required by Canadian law in effect, from time to time. The Licensee agrees to immediately inform Licensor upon the receipt of any request or demand for disclosure made upon the Licensee by a government agency .

Licensor shall have the right to dispute with the government agency, such government agency’s right to access the Seismic Data and the Reprocessed Seismic Data at its sole expense and the Licensee shall provide Licensor with all information pertaining to the government request. [ 103 ] GSI argues that seeking allowable expenditure credits is not “required by law”, but is a choice made by exploration companies to recoup parts of deposits made to develop an exploration area.

Further, GSI states that it was never given notice of these submissions to government. [ 104 ] Devon submits that GSI’s argument ignores the business context in which the allowable expenditure credit program operates. In particular, it submits that the submissions were permitted by the Regulatory Regime, hence required by law. Finally, Devon argues that the agreements do not prohibit providing Work Product Derivatives, a defined term distinct from Seismic Data, to the CNSOPB and there is no evidence that Seismic Data, as opposed to a report containing Work Product Derivatives, was submitted.

Also, Devon points out that the report was submitted to the CNSOPB by Richland, not Devon, and that Devon should not be liable in any event. Analysis [ 105 ] I accept Devon’s arguments in part for the reasons set out in my decision in the Sister Application GSI v Encana . The allowable expenditure credits program is part of the overall context of oil and gas exploration and to claim these credits, Devon via Richland needed to submit the information they did, making such submissions “required by Canadian law” under the Regulatory Regime. No “request” or “demand” was made so the rest of clause 6.3(f)(

i) does not apply to require disclosure of any submission to GSI.

[ 106 ] Further and in any event, I find that GSI has not submitted any evidence to prove that Devon actually did submit any Seismic Data. GSI’s argument primarily alleges that the report was Work Product Derivative, which is not captured by clause 6.3(

f) of the MDLA. Is GSI’s Submitted Data Claim limitations barred? [ 107 ] Although I need not decide this issue considering my conclusion above I will set out my views on the limitation argument in this situation. Even if Devon submitted Seismic Data, this particular breach of contract would have occurred in 2002 or 2003, more than 10 years before GSI filed its claim. There is no issue of fraudulent concealment in relation to the Submitted Data Claim.

It is statute barred. [ 108 ] I also find that GSI had actual knowledge of its claim on July 10, 2012, and at the latest on August 20, 2012, more than two years before it filed its Original Statement of Claim. [ 109 ] On July 10, 2012, the CNSOPB provided information to GSI about GSI surveys submitted as a result of allowable expenditure claims.

The July 10, 2012 letter specifically identifies the program number that is the foundation of GSI’s claim here. [ 110 ] Furthermore, on August 20, 2012, GSI wrote to Devon stating that Devon had disclosed the Demascotia 1999 GSI Survey offshore Nova Scotia 825.413 km to the CNSOPB without GSI’s consent.

On August 28, 2012 Devon advised GSI by letter that “Devon cannot find any records or indications of ever disclosing the Demoscotia 1999 GSI Survey offshore Nova Scotia 825.413 km ... to any third party, including the CNSOPB government.” [ 111 ] This correspondence indicates that GSI had actual knowledge of Devon’s alleged submission of this information to the CNSOPB by the end of August 2012. [ 112 ] GSI argues that if I find that it had actual knowledge at this point, it submits that the knowledge of this potential claim was not enough to warrant bringing a proceeding, therefore all three requirements of the Limitation Act have not been complied with.

I do not accept this argument considering that GSI is seeking $2 million in damages for the breach of this claim. I agree that it was wise to include this claim along with the many others brought against Devon but it had enough information to assess that this alleged breach warranted a proceeding in my view. It should have brought this claim earlier. As a result, this claim is also limitation barred on this basis.

Conclusion on Submitted Data Claim [ 113 ] I find that I can make a fair and just determination on the record on this issue and find that there is no evidence of a breach of any of the agreements for the alleged submission of seismic data and in any event, any such claim is barred by the limitation period. GSI’s claim for the Submitted Data Claim is dismissed. 4. Is Devon entitled to

summary dismissal of GSI’s Exploration Groups Claim? [ 114 ] GSI alleges that Devon’s exploration activity in the Beaufort Sea involves 21 or more separate entities that fall under the definition of “Exploration Group” in the 2002 Devon MDLAs. GSI pleads that as Beaufort Exploration Group members these parties were required to enter use-licenses with GSI.

GSI seeks indemnity of more than $15 million for the instances in which these alleged Beaufort Exploration Group members did not enter into use-license agreements with GSI. [ 115 ] GSI also seeks an indemnity from Devon for alleged Atlantic Exploration Group Members (Suncor Energy Inc., ExxonMobil Canada Properties, Chevron Canada Limited, Husky Oil Operations Limited and Statoil), whom it says did not enter use-licenses with GSI in the areas including, but not limited to, Significant Discovery Licenses 200A, 200B, and 200C. [ 116 ] Devon argues that there has been no change in the working interest holdings for the exploration licenses since 1999, thus no new Exploration Groups.

More specifically, Devon submits that all of its interests in the Beaufort Sea predate the agreements pleaded by GSI. The affidavit evidence of Mr. Deacon-Rosamond, Manager of Land (minerals) at Devon Canada, shows that the joint ventures alleged to be Exploration Groups were formed between 1985 and 1999. [ 117 ] GSI has presented some evidence to suggest that Exploration Group membership in respect of some exploration licenses may have changed between 2010 and 2012.

a) Does Devon have an indemnification obligation? [ 118 ] Devon further submits that none of the agreements at issue contain an indemnity obligation in any event. The 2000 Anderson Agreement, under which the Beaufort data was first licensed, permits disclosure to third parties provided they are considering a joint venture. Consummating a joint venture results in termination of access to the data unless the party licenses it directly from GSI. [ 119 ] The 2001 Anderson MDLA and the 2002 Devon MDLAs contain essentially the same clause at 6.3(d)(

i) and (ii) regarding Prospective Venture Participants and Prospective Purchasers who become Exploration Group members. Prospective Venture Participants are entitled to view GSI seismic data, subject to specific terms, but their rights to access the data cease immediately on becoming Exploration Group members. [ 120 ] The 2002 Devon MDLAs place Devon under an obligation to notify the Exploration Group members that they will be required to obtain a use-license from GSI.

The 2001 Anderson MDLA, by contrast, simply states that “each member of each Exploration Group shall be required to obtain a use license from GSI”; there is no reference to Anderson’s obligation to notify the Exploration Group member.

[ 121 ] None of the agreements specifically set out the consequences to Devon if a third party declines to enter a use-license with GSI. There is no express indemnity obligation as there was in the Sister Application GSI v Suncor Energy . GSI argues that the indemnity provisions at clauses 2.4 and 11.5 of the 2002 Devon MDLAs contemplate indemnity for deemed breaches of the agreement by a number of parties including Prospective Venture Participants. [ 122 ] The existing record leaves too many questions open to

interpretation. It is not clear under which agreements GSI is bringing its claim, the 2002 Devon MDLAs only or also the Anderson agreements. Nor is it clear which parties meet the definition of Exploration Group member; the date upon which they became Exploration Group members; whether they signed a confidentiality agreement as Prospective Venture Participants; and, what data they may have already licensed versus what data they should have licensed. These issues need to be fully explored. [ 123 ] I am therefore reluctant to allow Devon’s

summary dismissal application on this portion of GSI’s claim. I do not feel confident that I can make a fair and just determination on the present record. Can the Exploration Groups Claim limitations arguments be decided? [ 124 ] In the alternative, Devon also submits that GSI’s Exploration Groups Claim can be dismissed because GSI had actual knowledge of its claim within the two year limitation period.

Devon points to a letter sent by GSI on August 20, 2012 to Devon seeking “written confirmation from Devon that it will honor the GSI request for indemnification due to other exploration group members failing to equalize data prior to September 7, 2012 to avoid further action by GSI to protect its property.” [ 125 ] On August 28, 2012 Devon advised GSI by letter that it would not accede to GSI’s request for indemnification: “Devon is not obligated to indemnify any parties with respect to any GSI data.” The evidence confirms that Mr.

Einarsson received the August 28, 2012 letter, yet GSI did not file its Original Statement of Claim until November 10, 2014. [ 126 ] Devon argues that these letters establish GSI’s knowledge of its entire Exploration Groups Claim. I find that the letters establish GSI’s knowledge in relation to its Atlantic Exploration Groups Claim only. GSI’s knowledge about the Beaufort Exploration Groups is unclear. [ 127 ] The two August letters make reference to earlier correspondence, which was put into evidence through Mr. Allison’s Response to Undertakings.

When the entire context of the exchange is examined, it is clear that it relates only to the Atlantic Exploration Groups and not at all to the Beaufort Exploration Groups. [ 128 ] In a May 4, 2012 letter to Devon, GSI identified and sought indemnification for the failure of alleged Exploration Group member Exxon to license data related to a large number of exploration licenses, including SDLs 200A, 200B, and 200C. GSI wrote: Due to the actions of ... Exxon, GSI seeks indemnification from you for their failure to equalize, and for all outstanding equalization obligations on each lease your company participates in.

To avoid further action by GSI, we require that you confirm to GSI in writing, within 30 days from the date of this letter, that you will completely indemnify GSI for these outstanding obligations of the other Exploration Group Members. [ 129 ] SDLs 200A, 200B and 200C are the licenses plead in the 4x Amended Statement of Claim in relation to the Atlantic Exploration Group.

There are no references in this entire chain of correspondence to the Beaufort Exploration Groups or even the Beaufort region. [ 130 ] I find that the totality of the documentary evidence establishes that GSI knew of the injury caused by Atlantic Exploration Group members. It did not need to know the exact membership of the Atlantic Exploration Groups. The principle of discoverability under the Limitations Act does not require perfect knowledge: De Shazo v Nations Energy Company Ltd. , 2005 ABCA 241 at para 31 .

On all the evidence, I find that GSI had enough knowledge of the Atlantic Exploration Group injury to bring a claim by August 2012, more than two years prior to filing its action. It is limitations barred. [ 131 ] I am unable to decide the limitations question in relation to the Beaufort Exploration Groups in this

summary dismissal application. On the evidence before me, GSI’s knowledge in relation to its Beaufort Exploration Groups Claim is unclear. The Beaufort Exploration Groups Claim therefore must go to trial. Conclusion on Exploration Groups Claim [ 132 ] The Atlantic Exploration Groups Claim is dismissed based on the limitation defence, but the Beaufort Exploration Groups Claim must go to trial because of the evidentiary issues mentioned above, and, on the limitation issue, because it is unclear when GSI knew about its Beaufort Exploration Groups Claim. It is not presently possible to come to a fair and just determination of that portion of the Exploration Group Claim on this

summary dismissal application. 5. Is Devon entitled to

summary dismissal of GSI’s Audit Claim? [ 133 ] GSI pleads at paragraph 35 of the 4x Amended Statement of Claim that it made an audit request under the Agreements “for all information available regarding the extent of the geographic areas of the Beaufort Exploration Groups and the Atlantic Exploration Groups” and that Devon’s refusal to provide such information or allow such an audit was a breach of the Agreements and caused GSI delay in becoming aware of its claims. [ 134 ] GSI also pleads, at paragraph 36, that its audit request letter also sought information regarding the Submitted Data and Accessed Data and that if Devon had complied with those requests, the parties could have reached a settlement or GSI could have

brought its action sooner. [ 135 ] Yet the May 8, 2012 audit request letter indicates only that GSI had become aware that its data was being “obtained from, requested by, sent to, accessed by, or was provided to Government” and it sought “full details” of each such instance, within 30 days from the date of the letter. There is no mention of any Exploration Groups or their geographic extent. [ 136 ] The pleadings refer to the audit clause in the “Agreements”; however, there is no audit clause in the 2000 Anderson Agreement.

The audit provision at clause 4.1 of the 2001 Anderson MDLA and the 2002 Devon MDLAs is identical and permit an audit of Devon’s working and/or storage premises to ensure compliance with the agreements. It does not give GSI the rights it requests in its letter, or the rights that it claims in its pleadings. [ 137 ] Most importantly, GSI demanded that Devon respond within 30 days to avoid further action by GSI.

Devon did not respond, yet GSI did not advance its contractual audit claim until November 10, 2014. [ 138 ] GSI’s audit claim was brought outside the limitation period, more than two years after it knew of its claim, and is dismissed. 6. Is Devon entitled to

summary dismissal of GSI’s other tort and copyright claims? [ 139 ] Devon seeks to dismiss GSI’s entire claim. In addition to the contract claims, GSI’s pleadings seek damages for Devon’s wrongful acts including conversion, copyright infringement and unjust enrichment, as well as indemnification by Devon for these same wrongful acts by others that have caused harm to GSI.

The pleadings generally claim that seismic material was improperly copied from Boards and other parties, that the data has been converted improperly, that Devon has been unjustly enriched to GSI’s detriment and that Devon breached its obligations of confidence. GSI argues that it has presented some evidence in support of these claims, while Devon did not focus its arguments on these grounds. [ 140 ] Paragraph 17 of the 4x Amended Statement of Claim pleads that for the purposes of this action, the seismic materials are comprised of three sets of data: (

a) the Accessed Data, (

b) the Beaufort Agreement Data and the Atlantic Agreement Data, and (

c) the Submitted Data. [ 141 ] As a result of my findings in the Common Issues Trial, the copyright, conversion, unjust enrichment and breach of confidence claims must fail in relation to the Accessed Data. Although Devon was in breach of contract in obtaining the Accessed Data from the Board, the Regulatory Regime permitted access and copying so there is no basis for GSI’s independent copyright or tort claims in relation to this Data.

Any damages because of the breach of the agreement, as discussed above, will be assessed at trial. [ 142 ] Similarly, there can be no conversion, unjust enrichment or breach of confidence in relation to the Submitted Data, because, to the extent that such Data may have been submitted (which has not been proven in my view), the Regulatory Regime allows for submission of such data for allowable expenditure credits. [ 143 ] Further, any complaints with respect to the Atlantic Agreement Data are barred because of the limitation period, as discussed above. [ 144 ] There remain potential claims with respect to the Beaufort Agreement Data.

These claims may also be barred by the limitation period, but I could not assess this on the record before me. There are allegations of misuse of this data the terms of which would likely be governed by the appropriate agreement in question, as opposed to general copyright or other tortious remedies. It is difficult to assess whether this is the case or not. As these claims, for now, are not dismissed in this

summary application on other grounds, for the reasons articulated above, I will not dismiss the more general claims for damages at this stage for the Beaufort Agreement Data. [ 145 ] In sum, damages for the wrongful acts as plead are dismissed except for those that might have occurred in reference to the Beaufort Agreement Data. Conclusion [ 146 ] In

summary, I conclude that Anderson/Devon breached the 2001 Anderson MDLA in relation to the Accessed Data. GSI is entitled to

summary judgment on the liability portion of its Accessed Data claim but the assessment of damages arising from this breach remains a question for trial. [ 147 ] Devon is entitled to

summary dismissal of GSI’s Submitted Data Claim, Transfer Fee Claim, the Audit Claim, the Atlantic Exploration Groups Claim and some of the tort and copyright claims as set out above. [ 148 ] The Beaufort Exploration Groups Claim should proceed to trial. Heard on the 18 th and 20 th days of January, 2017. Dated at the City of Calgary, Alberta this 26 th day of July, 2017.

K.M. Eidsvik J.C.Q.B.A. Appearances: Timothy C. Platnich, Caron & Partners LLP for the Plaintiff Doug Mills and Craig Alcock, Burnet Duckworth & Palmer LLP for the Devon Defendants