Business Development Bank of Canada v Quattro Exploration & Production Ltd, 2021 ABQB 638

Court of Queen’s Bench of Alberta Citation: Business Development Bank of Canada v Quattro Exploration & Production Ltd, 2021 ABQB 638 Date: 20210812 Docket: 1701 00143; 1901 06244 Registry: Calgary Between: 1701 00143 Business Development Bank of Canada Applicants - and - Quattro Exploration & Production Ltd Respondent And Between: 1901 06244 Orphan Well Association Applicants - and - Trident Exploration Corp Respondent

_______________________________________________________ Memorandum of Decision of the Honourable Madam Justice C. Dario _______________________________________________________ [ 1 ] The Applicants, Dorothea Holdings Ltd. and 1348321 Alberta Ltd., seek the lifting of a stay granted pursuant to a Receivership Order dated May 3, 2019, and certain declaratory relief relating to whether the Applicants were, due to the stay of proceedings, under a disability for the purposes of the Limitations Act, RSA 2000, c L-12 .

The Receiver’s opposition to this application is largely supported by the Orphan Well Association and Crescent Point Energy Corp. [ 2 ] The Applicants, who are the successors in interest to their respective individual principals, are each the freehold owner of mines and mineral rights on certain lands adjacent to the Battle River in Township 46 (the “Lands”). The Applicants are the lessors of petroleum and natural gas leases that affect the Lands, which were first executed in 1993 (the “Leases”). The various lessees have assigned their respective interests numerous times since then.

The leases are to an undivided half interest as joint-tenants in all mines and minerals except coal, located within, upon or under the said Lands. The Lands are subject to a farmout agreement and a well went into production in 2006 (the “Well”). It appears that the ultimate lessees at the time of this application are Quattro Exploration and Production Ltd. (“Quattro”) as to 50%, Trident Exploration (WX) Corp. and Trident Exploration (Alberta) Corp. (“Trident”) as to 30% and Crescent Point Energy Corp. as to 20%.

Trident holds the Leases in trust for the other parties. [ 3 ] Quattro became the replacement operator and licensee of the Well in October 2012. The Applicants had served default notices upon certain of the lessees or their predecessors in interest, including in August 2014, and again in April 2015. [ 4 ] I am advised Quattro made two proposals in August 2016. A Receiver was appointed over Quattro on February 2, 2017. The Well was shut in around November 2017. The Quattro Receiver renounced its interest in the Well on April 10, 2018.

The Alberta Energy Regulator (the “AER”) issued a closure/abandonment order to Quattro dated September 12, 2018 regarding the Well, facility and pipeline licenses.

On December 13, 2018, the Quattro Receiver obtained a discharge order such that it would be discharged subject to completing some final actions, which actions are now complete and the Receiver has been discharged. [ 5 ] On or prior to April 24, 2019, Trident also received an abandonment order from the AER regarding the Well and its associated interests. [ 6 ] On April 26, 2019, the Quattro Receiver entered into what is in effect a consent order (the “Quattro Lifting Order”) with the Applicants.

The order lifted the stay of proceedings in the Quattro Receivership, limited to the Receiver’s leasehold interests in the Leases. The Quattro Receiver consented to this on the basis that it had renounced its interests in the Well and Leases and thus it had no ongoing interest. While it maintained lifting the stay was unnecessary, it chose to enter into the Quattro Lifting Order, which prohibited any subsequent actions by the Applicants against Quattro or the Quattro Receiver, rather than expend the limited remaining funds disputing the Applicants’ claim.

The Court further imposed the condition that lifting the stay was subject to further argument and challenge by third parties who would subsequently be notified of the order in the course of any actions taken by the Applicants to enforce their rights under the Leases.

The Applicants’ further requests to be declared persons under a disability and its associated impact on limitation periods, was deferred until other interested parties could be notified of the application. [ 7 ] On May 3, 2019, one week after the Quattro Lifting Order was granted, the court appointed a receiver and trustee over Trident’s property, including its interest in the Leases.

The Applicants brought the present application, initially sought on July 14, 2020 and filed on or prior to September 16, 2020, however, the hearing was delayed for months as a result of scheduling conflicts in the midst of the global pandemic. [ 8 ] By way of further background, as part of this application, the third working interest owner, Crescent Point Energy Corp, provided the Court with evidence that it is not in default of the royalty obligations pertaining to its working interest in the Lease. [ 9 ] The Applicants seek certain orders and declarations in the present application, raising the following issues: 1) Whether it is appropriate to lift the stay in the circumstances of the Trident Receivership and with reference to the Applicants’ contractual and other rights. 2) Whether the Court should declare that the Applicants are and have been persons under a disability imposed by the stay and suspension of their rights and remedies under the leases by reason of the Quattro and Trident Receivership Orders, as well as the Quattro proposal of August 10 and 12, 2016. 3) If such declaration of being persons under a disability is granted, whether this is a declaration of rights and duties, legal relations or personal status such that this declaration is excluded from the definition of remedial order in the Limitations Act . 4) Whether the Court should grant a declaration that the limitation periods provided by the Limitations Act have been suspended to

the present time by the stays in the respective Receivership Orders and the proposal such that the disability imposed by the stays and proposals has been effective since August 10, 2016. [ 10 ] To add context to this application, the Applicants state they intend to pursue the predecessors in interest (the “specified assigns”) to each of Quattro and Trident with respect to their contractual obligations under the lease and their obligations pursuant to various legislative enactments, namely the Environmental Protection and Enhancement Act , RSA 2000, c E-12 , and the Oil and Gas Conservation Act , RSA 2000, c O-6 , to which they argue these predecessors in interest are contractually and statutorily bound.

The Applicants state that in order to enforce certain of these rights, they are required first to take certain steps from which they argue they have been estopped due to the stay of proceedings. While they give as an example of such estopped action a requirement under the respective Leases of providing 30 days’ notice of default, the Applicants have in fact sent notices of default in August 2019 to the Debtors and certain of the specified assigns after the Trident Receivership commenced. [ 11 ] The Applicants raise certain other defaults.

In particular, the Applicants focus mostly on the obligations of the predecessors in interest to remediate the Lands. They point to the Supreme Court’s decision in Orphan Well Association v Grant Thornton Ltd., 2019 SCC 5 (“ Redwater ”) as authority for their position that pursuing such relief does not offend the BIA ; rather, it is in keeping with provincial environmental protection legislation and is supported by the overarching statutory framework.

The Applicants also note that the predecessor in interest to Trident, Canlin Energy Corporation, transferred its interests only shortly before the Trident Receivership was commenced; they argue that there is a basis for Canlin’s joint and several liability as a consequence. No submissions were made as to the Applicants’ ability to enforce the regulatory requirements under these Acts (as compared to the respective regulator), other than the Applicants’ position that its authority comes from enforcing the terms of the Leases, which require compliance with statutory obligations.

While all of the trickle-down effects of Redwater have not yet been adjudicated, the impact of that decision on the claims the Applicants seek to make is not directly before the court presently. [i] [ 12 ] Paragraph 10 of the Quattro Receivership Order and paragraph 8 of the Trident Receivership Order prohibit any Person from commencing or continuing a Proceeding against the Debtor or the Property, except regarding a claim that might otherwise become barred by statute or an existing agreement if such proceeding is not brought before the stay is over. [ii] The Receivership Orders define a “Proceeding” as a proceeding or enforcement process in any court or tribunal, however, the term proceeding is not capitalized with reference to permitting proceedings regarding a claim that might otherwise become statute barred.

The term “Person” is broadly defined and includes not only creditors, but all individuals, firms, corporations, government bodies or agencies, or other entities having notice of the Order. Paragraphs 11 (Quattro) and 9 (Trident) in turn stay all rights and remedies against the Debtor, the Receiver, or affecting the Property (which includes, in this case, the Debtors’ interests in the Leases, Well and associated interests, collectively, the “ Subject Property ”).

The wording of the Trident Receivership Order is particularly strict and states: All rights and remedies of any Person, whether judicial or extra-judicial, statutory or non-statutory (including, without limitation, set-off rights) against or in respect of the Debtors or the Receiver or affecting the Property are hereby stayed and suspended and shall not be commenced, proceeded with or continued except with leave of this Court… [ 13 ] The Trident Receivership Order has an additional paragraph that is not in the Quattro Receivership Order.

Paragraph 10 of the Trident Receivership Order permits any party to take an action against the Debtor, notwithstanding the stay, where such an action must be taken to comply with statutory time limitations in order to preserve their rights at law. [iii] This exception-based right is limited to actions against the Debtor (as opposed to the Property). [ 14 ] Paragraph 33 of the Trident Receivership Order allows interested parties to seek to vary or amend the order. [ 15 ] The Applicants submit that the wording of these respective Receivership Orders prevented them from taking any enforcement steps, beyond serving the Notices of Default, with respect to interests they have in the Subject Property.

They also submit they were barred from taking steps to terminate the Leases. The Receiver’s position is that no permission was required to serve the notices of default on the predecessors to the Debtor’s interests or to commence proceedings. 1) Should the Court lift the stay? Quattro Receivership [ 16 ] Before turning to the issue of lifting the stay in the Trident Receivership, the Applicants seek a declaration affirming the lifting of the stay of proceedings granted by the Quattro Lifting Order.

A term of that Order was that a party without notice of the proceeding could make further arguments regarding the lifting of the stay. The request for this declaration has not been challenged by any party with notice of this application. At the time of the Quattro Lifting Order, the Applicants were unsecured creditors with respect to unpaid royalties in the Quattro Receivership and the Court had grounds to declare the provisions of the stay had no continuing operation in respect of the Applicants.

The trustee in bankruptcy had received a discharge order in December 2018. [ 17 ] In the December 13, 2018 Quattro Discharge Order, the Court confirmed that the discharge did not prejudice or affect the Applicants’ right to apply to vary paragraphs 10 and 11 of the Quattro Receivership Order in so far as those provisions may have related to any predecessor lessee to Quattro. Implicit in this statement is that after discharge, the stay was still in effect, despite the Discharge Order. T his Court affirms the lifting of the stay in the Quattro Lifting Order, while acknowledging it may have limited precedential

value, given the unique situation of lifting a stay of proceedings over assets that had already been renounced by the receiver where thereceiver was completing the steps to fulfil a Discharge Order and consented to lifting the stay. Trident Receivership [18] The present application during the currency of the Trident Receivership has slightly different considerations from those atplay in the Quattro Receivership.

At the time of the Trident Receivership, the Well was no longer operating and the parties appear to takeopposing positions regarding whether outstanding royalties (stemming back to the Quattro Receivership) remained due and thereforewhether the Applicants can be considered creditors in the Trident Receivership. [19] At the time of the application, the Trident Receiver had not yet renounced its interest in the Leases or Well, although it hadconfirmed months prior that it intended to do so.

I note, however, that on March 31, 2020, this Court granted a Limited Discharge Orderpermitting the Receiver to file a certificate to obtain a limited discharge from and over the approximately 2,948 well licenses remainingin the estate of the Debtor/Trident (including the Well in question) and the associated facilities and pipelines, which discharge could beobtained in several tranches.

The form of the Receiver’s certificate states that, at such time as the certificate is filed, the care and custodyof the discharged well licenses and the associated facilities and pipelines are transferred to the AER. [20] Although the stay set out in the Trident Receivership Order was not granted pursuant to

Part IV - sections 69 to 69.3 of theBIA the Receiver argues, relying on Alignvest Private Debt Ltd v Surefire Industries Ltd, 2015 ABQB 148 (“Alignvest”), that the testfor lifting the stay is the same as that found in

section 69.4 of the BIA. That provision states: 69.4 A creditor who is affected by the operation of sections 69 to 69.31 or any other person affected by the operation of section69.31 may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the courtmay make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied (

a) that the creditor or person is likely to be materially prejudiced by the continued operation of those sections; or (

b) that it is equitable on other grounds to make such a declaration. [21] A “creditor” is defined in the BIA as a person having a claim provable as a claim under that Act. The Receiver argues that theCourt may not exercise its authority to lift the stay in this case as the Applicants are not creditors. Specifically, the Applicants’ claimswere not proven against Trident in the Trident Receivership. [22] I do not see how this argument assists the Receiver’s position. The stays that can be lifted pursuant to

section 69.4 are limitedto those created pursuant to sections 69 to 69.31. Sections 69 to 69.3 create a stay only against certain types of actions by creditors, HerMajesty in right of Canada and Her Majesty in right of provinces, as well as staying certain enforcement actions regarding securityagreements; these stays do not apply more broadly: see ss. 69(1), 69.1(1), 69.2(1) and 69.3(1). The stay created by

section 69.31 appliesto any person, but is limited to certain actions against directors of the debtor corporation. Neither party is asserting that the stay referredto in

section 69.31 is at issue in this case. [23] The Receiver cannot argue both that the Applicants are subject to the stay provisions of the BIA as creditors, yet at the sametime argue that they do not qualify for the purpose of lifting the stay because they are not creditors. If the Receiver’s position is correctand the Applicants are not creditors under the BIA, neither the stay provisions of sections 69 through 69.3, nor the lifting provision ofsection 69.4 are applicable. To try to rigidly apply all of the conditions of

section 69.4 in this context is a misapplication of what wasmeant by the Court in Alignvest of taking guidance from the principles set out in that section. A party cannot be precluded from theopportunity to seek a lifting of the stay to which it is subject merely on the basis that it is not a “creditor”. [24] The Trident Receivership Order imposes the stay not only against “creditors”, as defined under the BIA, but also against any“Persons”, which includes any party having notice of the Receivership Order.

Although neither party made submissions regarding theCourt’s authority to grant the stay in this instance, the ostensible authority underlying the Receivership Order comes from sections 17and 18 of the Judicature Act: see the Alberta Queen’s Bench Template Receivership Order Explanatory Notes, revised January 2019.(This decision does not address the scope of that authority in the present case.) Stays granted pursuant to these provisions of theJudicature Act are not subject to the express conditions for lifting a stay set out in

section 69.4 of BIA; rather, the court sets theconditions and limitations of the stay, as well as directs when the stay shall be lifted and/or ceases to have effect.[iv] [25] In this case, there are two ways in which an interested party can proceed despite the stay: paragraph 8 permits thecommencement or continuation of a Proceeding with leave of the Court and paragraph 33 permits any interested party to apply to theCourt to vary or amend the Receivership Order on not less than 7 days’ notice to the Receiver and to any other party likely to be affectedby the order sought. [26] In exercising its jurisdiction to lift the stay, the Court assesses whether it is just in all the circumstances of the interestedparties to do so.

This analysis requires an evaluation of factors similar to those enumerated in

section 69.4 of the BIA; namely, whether aparty is likely to be materially prejudiced by the continued operation of the stay, or whether it is equitable on other grounds to make sucha declaration. The assessment in each case typically involves weighing the relative prejudice to the various interested parties in view ofthe totality of the circumstances: Alignvest at para 41 and Ford Credit Canada Ltd. v Welcome Ford Sales Ltd., 2010 ABQB 199 atpara 14.

In Ford Credit, Justice Thomas explained that the imposition of a stay in a receivership order involves the exercise ofdiscretionary powers by the Court and that these same discretionary powers are in play when deciding whether a stay should be lifted.Lifting the stay is not routine: there must be sound reasons to relieve against it, and the burden is on the Applicants to establish it is fairand justice to lift the stay: Ma v Toronto-Dominion Bank (2001), (ON CA), 143 OAC 52 at para 3. [27] There is another distinction between the present stay and those granted pursuant to sections 69 to 69.31 of the BIA, which isthat the latter all have built-in termination provisions (such as upon the discharge of the trustee per

section 69.3(1.1)). A stay granted

under sections 17 or 18 of the Judicature Act are subject to the duration and conditions of termination set by the Court. Neither theLimited Discharge Order of March 31, 2020, granted in this case, nor the current Alberta Template Discharge Order includes an expressprovision to end the stay. Yet, there is no apparent juristic basis to maintain the stay once a Trustee or Receiver has been discharged (orobtained a discharge with respect to the Subject Property).

An automatic termination of the stay upon the discharge of thetrustee/receiver may be an amendment for consideration in the next revision of the Alberta Queen’s Bench Template Receivership Orderor Alberta Template Discharge Order. [28] As already stated, the Applicants argue that the terms of the Trident Receivership Order preclude them from taking thenecessary steps to enforce their interests in the Subject Property even as it pertains to third parties.

The Trident Receiver’s position is thatlifting the stay is not required because, other than with respect to in rem relief regarding the Property, the Applicants are not preventedfrom seeking relief against parties other than the Debtor and the Receiver, namely the predecessor lessees. [29] Regarding the proceedings against the predecessors in interest under the Leases, the Court affirms that, despite the rigidwording of the Trident Receivership Order, the Applicants were permitted to issue the Notices of Default.

To the extent further actionsare required to preserve the limitation period, provided these steps do not involve in rem relief against the Property, the Court affirms theApplicants are entitled to take such steps without the further authorization of the Court. The exception to the stay permittingcommencement of an action will be ineffectual if this provision is not interpreted to permit all requisite actions to preserve the claim,either as expressly permitted in the Receivership Order or upon application to the Court: Royal Bank of Canada v Independent Electricand Controls Ltd., 2019 ABQB 513 at para 45.

The in rem relief sought in this case, however, requires the specific authorization of theCourt that is being sought in this application. [30] The Applicants state that the prejudice they will experience by maintaining the stay is the inability to pursue other remedies towhich they are entitled under the Leases that go beyond filing a statement of claim. They note that the Leases have not been terminatedand that, but for the stay, the Leases are still current.

They argue that while the stay is in place, they cannot carry on operations or effecttermination rights, default proceedings, conduct of operations, or enforce other present and future executory performance obligationsupon those affected by the enurement clause in the Leases. [31] Much of the Applicants’ claims appear to pertain to remediation of the Lands and the predecessors in interest’s allegedobligations in the wake of the Redwater decision.

With respect to continuing obligations of the lessees and their assigns (or in the contextof this claim, their predecessors in interest), the Applicants point to clause 10 of the Lease dealing with Conduct of Operations, whichobligates the lessee to conduct operations in compliance with all the provisions of any statute, regulation, orders or directives of anygovernment or governmental agency applicable to such operations.

The Applicants point to the provisions of the EnvironmentalProtection and Enhancement Act, which identify the persons responsible for and the duties of reclamation of the subject Lands (ss 1(tt),1(ddd), 1(mmm) and 1(aaaa), 2(a), 134(b), 137, and 146 (a), (f), and (m)), as well as provisions of the Oil and Gas Conservation Actregarding remediation and reclamation obligations in respect of wells (ss 1(eee) and 1(fff), 31(1) and 32). The Applicants also noteprovisions of the Lease addressing Indemnification (11), Default (15), Assignment (20) and Enurement (25).

The Applicants’ may alsobe making a claim for outstanding royalties and other payments against these predecessors in interest. [32] While the Applicants may not be pursuing remedies against the Debtors or their respective Receivers, they argue theseobligations still exist and form the basis of their claims against the predecessors in interest to the Debtors.

Since the Well has been shutin, other than the remediation obligations, much of the relief sought appears to be compensatory damages for breach of contract. [33] The Applicants further argue that the only interest of Trident affected by lifting the stay is the leasehold interest it acquired byassignment from the predecessor in interest Canlin, which it acquired just months prior to the Trident Receivership Order.

This recentassignment of interest in the months prior to the receivership may trigger remedies available to the Applicants that do not exist for otherparties affected by the stay pursuant to inter alia certain statutory provisions and the liability and reclamation regime they establish.These factors, combined with the fact the Leases are still active, the clear intent of the Receiver to disclaim, and the over four-and-a-half-year period the Subject Property has been subject to one receivership or the other (with rights likely suspended even longer given theinitial Quattro proposals), render the Applicants somewhat uniquely affected by the stay. [34] The Trident Receiver, together with the Orphan Well Association (the “OWA”), argue that there is no evidence that theregulatory regime (pursuant to which the well reclamation may proceed) is failing in this case.

While the Trident Receiver argues thelikelihood of success of the Applicants’ claims against the third party predecessors in interest is questionable, I note Justice Adams’comments in Re Francisco (1995), (ON SC), 32 CBR (3d) 29 at 29-30 (Ont Gen Div), affirmed (1996), (ON CA), 40 CBR (3d) 77 (Ont CA) that the merits of the application need not be considered in relation to lifting a stay: In considering an application for leave, the function of a bankruptcy court is not to inquire into the merits of the action sought to becommenced or continued.

Instead, the role is one of ensuring that sound reasons, consistent with the scheme of the Bankruptcy andInsolvency Act, R.S.C. 1985, c. B-3, exist for relieving against the otherwise automatic stay of proceedings. See also Ma v Toronto-Dominion Bank at para 2. [35] Regarding lifting the stay for the purpose of in rem relief, based on the terms of the Order proposed by the Applicants, theReceiver and Debtor would be shielded from the Applicants taking any action against them.

Despite this, the Receiver argues that if thestay is lifted, it would be in the position of having to defend applications brought by the Applicants pertaining to the Property until itsinterests in the Property are renounced, and would consequently incur the costs for such defence. [36] In Re Timecraft Group Inc., 2009 ABQB 217, Justice Bielby retroactively lifted the stay of proceedings under a receivershiporder to permit the filing of a claim against the bankrupt company and its directors in their personal capacity for an employee’s unpaidwages.

She noted that the employee’s claim was against assets that would not otherwise be available to other unsecured creditors (as aresult of directors’ liability insurance). She also found that the plaintiff had agreed not to go after the bankrupt company at all. This hasparallels in the case at bar, in which the Applicants seek to pursue predecessor lessees rather than Trident. [37] In assessing the totality of the circumstances, as well as the relative prejudice to the interested parties, this Court notes that the

Trident Receiver had stated an intention to renounce its interests in the Leases and Well many months prior to this application (which interests were not sold in either the Quattro or Trident Receiverships and which likely will be transferred to the AER and OWA), and has been given more than six months since the application to either renounce its interest and/or file its certificate to obtain a discharge pertaining to the Leases along with the associated facilities and pipelines.

As such, the Receiver has an available mechanism to eliminate the potential prejudice against it and has provided no explanation or reason for its delay in pursing these options. In light of these considerations, its arguments of how it would be prejudiced in this case are less convincing. [ 38 ] Given the passage of time and the Receiver’s opportunity to fully discharge its obligations and risks, thereby eliminating the complained of prejudice, balanced against the claims the Applicants are seeking to pursue, the equities at this point weigh in favour of the Applicants.

This is one of those instances where material prejudice may not be the guiding factor; rather, the equitable grounds that otherwise exist in light of all surrounding circumstances have greater weight. The receivership process is intended to be an efficient administration of the debtor’s property during which the Receiver is obligated to take into consideration the interest of all parties affected by the broad stay granted by the Court. [ 39 ] The Receiver has now had ample time, roughly a year, if not longer, to renounce or disclaim its interest in the Subject Property since declaring its intention to do so.

The Subject Property has been impacted first by the Quattro Receivership Order and then by the Trident Receivership Order for over four and a half years.

If the Receiver still has not done so, the Court grants it thirty (30) days from the date of this decision to renounce its interest in the Subject Property and/or file its certificate pertaining to it to obtain its automatic discharge, failing which, this Court lifts the stay with respect to the Subject Property effective 30 days from the date of this decision. [ 40 ] At such time as the Receiver files the Receiver’s Certificate pursuant to the Limited Discharge Order to obtain the partial discharge regarding the Subject Property , this Court confirms that the stay with respect to the Subject Property ceases.

This is consistent with the automatic termination of the stay pursuant to

section 69.3(1.1) in the BIA , which is conceptually similar in principle with the termination of the stay in the present case. [ 41 ] For clarity, independent of the lifting of the stay, the Applicants are entitled to take any steps required to preserve and commence their claims against predecessors in interest to the lessees, provided any such action does not require in rem relief in the Property. Once the Receiver disclaims the Subject Property, the stay for such Property ceases and there is no further need to lift the stay.

In the event the Receiver does not disclaim the Subject Property within 30 days granted herein, the stay with respect to the Subject Property is automatically lifted until it ceases upon the filing of the Receiver’s certificate. 2) Should the Court declare that the Applicants are persons under a disability imposed by the stays of proceedings under the Quattro and Trident Receivership Orders? [ 42 ]

Section 5 of the Limitations Act states: 5

(1) The operation of the limitation periods provided by this Act is suspended during any period of time that the claimant is a person under disability.

(2) The claimant has the burden of proving that the operation of the limitation periods provided by this Act was suspended under this section. [ 43 ] A “person under disability” is defined in

section 1(

h) as either: (

i) a represented adult as defined in the Adult Guardianship and Trusteeship Act or a person in respect of whom a certificate of incapacity is in effect under the Public Trustee Act , or (ii) an adult who is unable to make reasonable judgments in respect of matters relating to a claim; [ 44 ] This definition of “person under disability” in the Limitations Act is exhaustive; it is not open to additional criteria. While the predecessors in interest to the Applicants were natural persons, the current Applicants are corporate entities.

The Applicants have not met the definition under these provisions, which are clearly directed toward the decision-making capabilities of natural persons.

Even if this term were not restricted to natural persons, or if the term could be applied to the principals of the corporate entities, the Applicants’ “disability” occasioned by the stay of proceedings is not one of being unable to make reasonable judgements; rather, the issue is whether they are estopped from implementing their otherwise reasonable judgments by the stay. [ 45 ] The Applicants point to the provisions of the respective Receivership Orders, which limit their ability to act on certain rights and remedies otherwise available to them, and assert this constitutes a disability.

The Applicants argue that the disability is different from that experienced by other parties whose contracts are affected by the stay of proceedings, as the Leases are executory contracts with important ongoing performance obligations remaining in the contract . [ 46 ] While there is a distinction between executory and non-executory contracts, I do not interpret section 5(1) of the Limitations Act to mean any party to an executory contract that is subject to a stay is “unable to make reasonable judgments in respect of matters relating to a claim.” The receivership may limit and complicate decision making, and the existence of the stay may curtail the otherwise necessary actions required to enforce rights and may prevent persons affected from acting on their judgments, but this is not what the reference to a person under disability in this context means.

While the existence of the stay may have an impact on the limitation period, it does not create a disability within the meaning of

section 5 of the Limitations Act . [ 47 ] I do not find that the Applicants are “persons under a disability” as such term is defined in the Limitations Act .

3) Is a declaration of persons under a disability one of rights and duties, legalrelations or personal status? [48] If such declaration of persons under a disability is granted, the Applicants ask the court to clarify whether this is a declarationof rights and duties, legal relations or personal status to determine whether it is included or excluded from the definition of remedialorder undder s. 1(i)(

i) of the Limitations Act, and therefore whether such declaration is itself statute barred.

As the Court has not madesuch a declaration, it is unnecessary to answer this question. 4) Should the Court grant a declaration that the limitation period has beensuspended from August 10, 2016 to the present time by the stays in the respectiveReceivership Orders and the proposals? [49] The issue of whether the stay of enforcement in the Receivership Orders suspends the calculation of the limitation period asset out in the Limitations Act, independent of the sought-for declaration of disability, was briefly raised by the parties, although therewere limited submissions on this issue. [50] The case law considering the impact of stays of proceedings on limitation periods in the bankruptcy context suggests that theanalysis depends on the circumstances of each case, including the nature of the claim and the type of creditor.

Generally, the courts haveheld that in bankruptcy the limitation period ceases to run against claims when a bankruptcy occurs: see Ex parte Lancaster BankingCorp. (1879), 10 Ch D. 776 at p 784; Munns v Burn (1887), 35 Ch D. 266 (CA) at 270 and 271 (dealing with a claim of fraud);Lakehead Newsprint

(1990) Ltd. v 893499 Ontario Ltd. (2001), (ON SC), 23 CBR (4th) 170 (Ont Sup CtJ) at para38 and 29, additional reasons at 2001 CarswellOnt 136 (Ont Sup CtJ); reversed on other grounds (2001), (ON CA),28 CBR (4th) 53; Canada (Attorney General) v Fekete (1999), 1999 ABQB 269 , 242 A.R. 196 (Alta. Master); see also LloydW Houlden, Geoffrey B Morawetz and Dr. Janis P Sarra, Bankruptcy and Insolvency Law in Canada, 4th ed (Toronto: Thomson ReutersCanada, 2009, loose-leaf), Provable Claims and Statute of Limitations at G§47and the cases cited therein.

This principle may not applyto the rights and remedies of secured creditors relying on the security over their secured interests, even if the action is commenced afterthe bankruptcy occurs: see s 69.3(2) and Houlden, Morawetz & Sarra at G§47. [51] Houlden, Morawetz & Sarra explain that a determining factor of whether the stay of proceedings suspends the limitationperiod is if the claim is in the bankruptcy or is independent of it: The creditor’s ability to take proceedings against the debtor is stayed by the Act, and the stay of proceedings suspends the operation of the limitation period: Canada (Attorney General) v.

Fekete (1999), 1999 ABQB 269 , 10 C.B.R. (4th) 102, 242 A.R. 196, 1999CarswellAlta 297 (Alta. Master). The suspension ends when the trustee is discharged (s. 69.3(1), s. 69.3(1.1)), and the Statute ofLimitations commences to run again at that time: Canada (Attorney General) v. Fekete, supra. It is only in bankruptcy that time ceases to run and if a creditor seeks to recover a debt in proceedings not connected with bankruptcy,time does run: Re Benzon; Bower v.

Chetwynd, [1914] 2 Ch. 68 (C.A.). [52] While courts have generally held that the question of whether or not the stay stops the limitation period from running will be(at least in part) dependent on whether or not the claim is considered to be within or outside of the bankruptcy (see, for example, ReForsyth, 2011 BCSC 1203 at paras 14 and 15), the Ontario Court of Appeal expressed the same general principle somewhat differentlyin Re Diollo, 2013 ONCA 550 at paras 44-52 (alternate name: msi Spergel Inc. v I.F. Propco Holdings (Ontario) 36 Ltd.). [53] In Re Diollo, the Court was considering the effect of

section 195 of the BIA and whether the stay of proceedings suspendedthe limitation period during the period of appeal. The Court concluded that once bankruptcy proceedings commence, the parties areeffectively taken outside of the regular litigation process such that the statute of limitations is no longer relevant because the proceedingsfall under the BIA. If, however, a claim survives bankruptcy for whatever reason, the limitation period resumes, meaning that during thebankruptcy, the limitation period is suspended. Meanwhile, for claims outside the bankruptcy, the limitations clock continues to run. TheCourt stated at para 52: In my view, this proposition remains valid.

Section 69 of the BIA is not, as such, a provision that extends, suspends or varies a limitationperiod. It takes away creditors’ civil remedies and requires them to submit their claims through the bankruptcy process. The bar oncommencing or continuing proceedings serves this end and preserves the integrity of the bankruptcy process. In most cases, thelimitation period is of no further significance because creditors’ claims are dealt with in the bankruptcy. In the rare case, where thebankrupt is not discharged or the claim survives bankruptcy, the limitation period may resume running.

It also continues to run against acreditor who seeks to recover a debt in proceedings unconnected to the bankruptcy… [Emphasis added.] [54] It would be tremendously burdensome on litigants and the Courts if every claim within the bankruptcy was subject to thecontinued running of the limitation period. It would force creditors to file claims with the court - in addition to filing their claim with thetrustee in the bankruptcy - to preserve residual rights in the event the bankruptcy was not completed and the bankrupt not discharged.

Toaddress the running of the limitation period for those claims outside the bankruptcy process (as well as to reduce the circumstances inwhich it may be necessary to determine whether a claim falls within or outside the bankruptcy) the Receivership Orders in the presentcase (like the Alberta Template Receivership Order) allow a party to commence an action to preserve a limitation period without seeking

leave of the court to lift the stay. In many cases, this may be sufficient to ameliorate the potential prejudice in cases where the stay does not suspend the limitation period. [ 55 ] Neither party made submissions on whether there are different principles at play where the suspension is against non-creditors and imposed under the Judicature Act as opposed to the BIA .

Presumably, the non-creditor should not be in a worse circumstance than creditor with respect to the impact of the stay. [ 56 ] While the Trident and Quattro Receivership Orders contain provisions permitting persons to commence proceedings to preserve a limitation period without seeking leave of the court to lift the stay , this does not provide a full answer to the Applicants’ question of whether the limitation period has been suspended for all or part of the period of the stay.

At this time, the nature of the Applicants’ claims is not entirely clear, including whether their claims constitute claims in the bankruptcy or whether the claims fall outside of it, or if there is another juristic reason to consider the limitation period suspended during any portion of the respective receiverships.

This determination may require an assessment of the purpose and objectives of the stay and its practical effect on actions that it might suspend. [ 57 ] Once informed by a determination of whether the claim is inside or outside the bankruptcy, a further issue may be whether there are other acts that the Applicants were required to do prior to bringing a claim against the predecessors in interest and whether those steps were precluded due to the stays of proceedings, including the specific prohibitions regarding enforcement action against the “Property” of the respective Debtor, or whether the Applicants could have availed themselves of a court application to enable such actions.

Regarding the permissive language of the Receivership Order to commence actions, if the stay suspends the limitations period, one might ask not whether the claim could have been brought earlier, but whether the claim ought to have been brought earlier in light of the statutory regime and the objectives of the BIA . [ 58 ] Relatedly, t he question of when all the elements of discoverability pursuant the Limitations Act were triggered was not before me. For example, were the Applicants obligated to seek their remedy from the current lessees before reverting to the predecessors in interest.

If so, did the existence of the respective receiverships delay the commencement of the limitation period under section 3(1)(a) (iii)? Discoverability is a fact-based analysis: Lawless v. Anderson , 2011 ONCA 102 , at para 22 and 23 . It will be a determination of the Justice hearing the claim against the predecessors in interest to ascertain at what point the limitations period actually commenced.

The details of the claims against the third-party predecessors in interest need to be put before the court, and submissions made on this topic, to properly adjudicate this issue. [ 59 ] Since this analysis is a fact-based determination, until the specific claim is before the Court, it is not possible to declare that the limitation period was suspended by the stay of proceedings or the proposals.

Conclusion [ 60 ] The Court affirms the Quattro Lifting Order. [ 61 ] The Trident Receiver is granted 30 days to renounce its interest in the Subject Property and/or file its Receiver’s Certificate pursuant to the Limited Discharge Order to obtain the partial discharge regarding the Subject Property. After such 30-day period, if the Discharge has been obtained, the stay of proceedings against the Subject Property ceases, and if the Discharge has not been obtained, the application for lifting the stay with respect to the Subject Property is granted.

As the care and custody of the discharged well licenses and the associated facilities and pipelines will transfer to the AER, the Applicants may have statutory and other limitations imposed on them regarding such interests. This decision does not speak to such issues. [ 62 ] The balance of the application is denied. [ 63 ] Costs may be spoken to before me within 60 days if the parties are unable to agree. Heard on the 16 th day of November, 2020. Dated at the City of Calgary, Alberta this 12 th day of August, 2021. C. Dario J.C.Q.B.A. Appearances: Ronald J. Young

for the Applicants Kelsey Meyer for the Receiver Price Waterhouse Cooper Aaron Stephenson for Crescent Point Energy Corp. Jessica Cameron for Hardie & Kelly Inc. and Orphan Well Association Allison Sears for Direct Energy Marketing Ltd. [i] This Court is mindful that it must be careful not to inhibit the development of the common law by applying too strict a test to novelclaims: R v Imperial Tobacco, 2011 SCC 42, [2011] 3 SCR 45, and it is not apparent at this point that the Applicants’ claims will fail to have any reasonable prospect of success: Kripps v.

Touche Ross & Co., (BC CA), (1992) 94 DLR (4th) 284 at p. 309;O’Connor Associates Environmental Inc v MEC OP LLC, 2014 ABCA 140 at para 16. [ii] In both receiverships, the Receivership Orders contain parallel language, standard for Alberta receivership orders pertaining to thestay of proceedings. The provisions read: No Proceeding against or in respect of the Debtor(

s) or the Property shall be commenced or continued except with the written consent ofthe Receiver or with leave of this Court and any and all Proceedings currently under way against or in respect of the Debtor(

s) or theProperty are hereby stayed and suspended pending further Order of this Court, provided, however, that nothing in this Order shall: (i)prevent any Person from commencing a proceeding regarding a claim that might otherwise become barred by statute or an existingagreement if such proceeding is not commenced before the expiration of the stay provided by this paragraph; …. [Paragraph 10 QuattroOrder; Paragraph 8 Trident Order] [iii] Paragraph 10 of the Trident Order includes the following provision that is not in the Quattro Order: Nothing in this Order shall prevent any party from taking an action against the Debtors where such an action must be taken in order tocomply with statutory time limitations in order to preserve their rights at law, provided that no further steps shall be taken by such partyexcept in accordance with the other provisions of this Order, and notice in writing of such action be given to the Monitor at the firstavailable opportunity. [iv] The same is true if relying on other provisions within the BIA as a source for the Court’s authority to impose a stay, such as ordersdirecting a trustee to remedy an environmental condition or damage per

section 14.06(5), or in association with a bankruptcy order persection. 43(11). Those provisions similarly are not subject to the express conditions for lifting the stay set out in

section 69.4.