Geophysical Service Incorporated v Plains Midstream Canada ULC, 2022 ABKB 722

Court of King’s Bench of Alberta Citation: Geophysical Service Incorporated v Plains Midstream Canada ULC, 2022 ABKB 722 Date: 20221101 Docket: 1401 00646 Registry: Calgary Between: Geophysical Service Incorporated Plaintiff - and - Plains Midstream Canada ULC; BP Canada Energy Group ULC; and Companies A-Z Defendants _______________________________________________________ Reasons for Judgment of the Honourable Justice G.H. Poelman _______________________________________________________ Table of Contents I. Introduction . 2 II. Factual Background . 3 III. Principles of

Summary Judgment 3

IV. Principles of Contractual

Interpretation . 4 V. Transfer Fee Claim .. 4 A. Introduction . 4 B. Contractual Provisions . 7 C.

Interpretation . 8 VI. Equalization Claims . 10 A. Introduction . 10 B. Contractual Provisions . 11 C.

Interpretation . 12 D. Use of Data by Third Parties . 14 1. Introduction . 14 2. Arctic Areas . 14 3. East Coast Canada . 15 4. Conclusions . 15 VII. Balance of the Action . 16 VIII. Concluding Matters . 17 I. Introduction [ 1 ] The defendants, Plains Midstream Canada ULC (“Plains”) and BP Canada Energy Group ULC (“BP”) apply for

summary dismissal of claims made against them by Geophysical Service Incorporated (“GSI”). [ 2 ] There have been over 8 years of litigation in this action. Many of the claims in tort and contract were dismissed, withdrawn or removed over the last several years. Two substantive issues remain between the parties that relate to claims by GSI for licensing fees arising under an agreement pursuant to which BP was given access to proprietary seismic data. The parties have competing

summary judgment applications to address those issues, although GSI says with respect to one of them there should be a trial. [ 3 ] This judgment is based on a record involving many affidavits, transcripts of cross-examinations on those affidavits, numerous briefs and authorities. In addition, the parties submitted oral argument during a one-day hearing at the end of July 2022 II. Factual Background [ 4 ] GSI is a company primarily involved with the acquisition, processing and licensing of marine seismic data, the

interpretation of which is essential to exploring for oil and gas prospects. It acquired marine seismic data over specific regions, processed the data into a format useable for modelling or

interpretation, and then licensed the data on a non-exclusive basis to as many third parties as possible to recover on its investment. [ 5 ] BP and Plains are companies involved in the oil and gas industry in Canada, including exploration and development . Plains acquired BP’s Canadian natural gas liquids business, which did not include any seismic data held by BP. [ 6 ] BP and GSI entered into a contract dated March 15, 2022, entitled “GSI Master Seismic Data License Agreement” (“MDLA”).

It sets out the terms applicable to seismic data licensed by GSI to BP, covering various geographical areas as set out in a series of supplemental agreements made in 2002, 2003, 2004 and 2008. The areas of the seismic data are on the Canadian East Coast and Canadian Arctic. III. Principles of

Summary Judgment [ 7 ] The defendants and GSI seek

summary judgment on GSI’s claim for “transfer fees” it says were triggered by BP’s corporate rearrangement. Thus, the parties agree that the issue is capable of resolution summarily, although their cross-applications seek opposite results: GSI, judgment for transfer fees; the defendants, dismissal of the claim for transfer fees. [ 8 ] In addition, the defendants seek

summary judgment dismissing GSI’s claim for licensing fees alleged to be owing when third parties entered into joint venture agreements with BP in areas covered by GSI’s seismic data. These “equalization claims” involve

disputed questions of contractual

interpretation and some issues of fact. The defendants say all of this can be resolved on

summaryjudgment. GSI argues it must go to trial, although it concedes if its contractual position is not accepted it is unlikely to win on the facts. [9] Rule 7.3 (1) of the Alberta Rules of Court allows a party to apply “for

summary judgment in respect of all or part of a claim”on the ground that there is no defence to a claim, no merit to a claim, or the only real issue is the amount. [10] The modern test was established in Hryniak v Mauldin, 2014 SCC 7, as confirmed and elaborated on in several Alberta Courtof Appeal decisions, primarily Weir-Jones Technical Services Inc v Purolator Courier Ltd, 2019 ABCA 49. Briefly, there is “no genuineissue requiring a trial “when a motion for

summary judgment can be determined on a fair and just basis, which “will be the case whenthe process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is aproportionate, more expeditious and less expensive means to achieve a just result”: Hryniak, para 49.

This is the proper test fordetermining where this is “no merit” or “no defence” to a claim under rule 7.3: Weir-Jones, paras 15-16. [11] Whether it is possible to make the necessary findings of fact is tested on the actual record, not speculation on what type ofrecord might be available at trial.

In cases “where there is a ‘genuine issue requiring a trial’, it will be because there is a realistic prospectthat a trial will create a better record, but that conclusion must be based on the evidence before the judge and not speculation”: Weir-Jones, para 39 (original emphasis). [12] Rule 7.3 (2) requires an application to “be supported by an affidavit swearing positively that one or more of the grounds . . .[of no defence or no merit] have been met or by other evidence to the effect that the grounds have been met.” Thus, evidence is notrestricted to an affidavit but may include the totality of the evidence.

The rule 13.18(3) requirement that affidavits in support ofapplications that may dispose of a claim be sworn on the basis of personal knowledge must be interpreted with flexibility in cases wherethe parties are corporations and no one may be able to testify on personal knowledge – in which case, a key consideration is whether thesource of the information is reliable and would be admissible at trial: Saito v Lester Estate, 2021 ABCA 179, paras 11 and 13. IV. Principles of Contractual

Interpretation [13] The applicable principles of contractual

interpretation are set out authoritatively in several recent cases, especially SattvaCapital Corp v Creston Moly Corp, 2014 SCC 53, and IFP Technologies (Canada) Inc v EnCana Midstream and Marketing, 2017ABCA 157. The goal is to determine the objective intent of the parties when they made the contract, through the application of legalprinciples of

interpretation: IFP, para 79; Sattva, para 49. Contractual

interpretation is not concerned with the parties’ subjectiveunderstanding of their agreement, but what someone similarly situated would have reasonably understood: Nexxtep Resources Ltd vTalisman Energy Inc, 2013 ABCA 40, paras 21-22; Sattva, paras 47-49. To determine this intention, one looks to the words of thedocument read as a whole and the factual matrix: Sattva, para 79, citing Hall, Canadian Contractual

Interpretation Law, 2nd ed.(Markham: LexisNexis, 2012) at 33. [14] The starting point is the words of the contract – surrounding circumstances may be considered but cannot be used to deviatefrom the text to effectively create a new agreement: Sattva, para 57. Part of considering the factual matrix, or surrounding circumstances,is to take into account sound commercial principles and good business sense and avoid unrealistic or absurd

interpretations: IFP, para88. Commercial reasonableness must be approached objectively rather than from the perspective of only one of the contracting parties“since what might make good business sense to one party would not necessarily do so for the other”: Kentucky Fried Chicken Canada vScott’s Food Services Inc, (ONCA), para 27. V. Transfer Fee Claim A. Introduction [15] If BP, as licensee, sells its assets to another entity then the purchaser is entitled to a transfer of the MDLA or a license fromGSI on payment of a transfer fee. As an exception, however, clause 13.1(

b) of the MDLA says no transfer fee is payable when theacquisition is by a “Related Entity.” [16] GSI claims a transfer fee for “Project Clog” – a corporate tax reorganization completed in January 2013. Before thistransaction, Amoco Canada owned all the shares of BP (the licensee under the MDLA). In turn, through a number of interveningcorporations, all of Amoco’s shares were owned by BP p.l.c. [17] Through Project Clog, all the BP shares owned by Amoco were sold to BP Canada International.

As with Amoco, all of BPCanada International’s shares were owned indirectly by BP p.l.c. – there was one intervening corporation (BP Holdings Canada) thatdirectly owned all of BP Canada International’s shares and whose shares in turn all were directly owned by BP p.l.c. [18] A chart, reproduced below, illustrates the changes of corporate ownership and the change of BP’s direct parent corporation(from page 2 of exhibit 8 of Einarsson’s August 30, 2021 affidavit).

Diagram Description automatically generated [ 19 ] GSI says Project Clog triggered the obligation to pay a transfer fee; BP argues that no fee is payable because the purchaser of BP (the licensee) was a Related Entity. B. Contractual Provisions [ 20 ] Applicability of transfer fees is governed by clause 13.1.

With respect to the question of whether Project Clog triggered an obligation to pay a transfer fee (leaving aside the question of how much), the relevant parts are as follows: 13.1 Transfer Fees Acquisitions/Mergers: If an Acquiring Entity acquires Ownership or Control of the Licensee . . . it shall be entitled to a transfer of this Agreement . . . upon payment of the following transfer considerations 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 . . . [.] [ 21 ] There are other provisions that apply to Related Entity, important parts of which are as follows: 2.1 Grant: . . . GSI grants to the Licensee . . . a . . .

License to use the Seismic Data . . . for use in the Licensee’s and, subject to the terms hereof, its Related Entities’ own business operations and not for or on behalf of any other third party. 2.4 Breach by Related Entities, Consultants, etc.: [A]ny breach . . . by a Related Entity or by any Consultants, agents, employees, representatives, processors, contractors or other advisors of either the Licensee or any Related Entity, or by any Prospective Venture Participants or Prospective Purchasers or any of their respective Consultants, agents, employees, representatives, processors, contractors or other advisors shall be deemed to be a breach of this Agreement by the Licensee. 7.1 The Licensee shall not have the right to permit any other party, including a Related Entity, to view or make any use of the Seismic

Data . . .[.] If a Related Entity wishes to view or use the Seismic Data . . . the Related Entity must enter into a separate license agreement with GSI. Related Entities shall not be charged any additional licencing fees. [ 22 ] The defined terms necessary to interpret clause 13.1(

b) are the following: (a) “Acquiring Entity” means . . . an entity which is not a Related Entity and which directly or indirectly acquires . . . (ii) Ownership or Control of the Licensee, whether by purchase of voting securities . . . or otherwise including the rights to use the Seismic Data . . . (e) “Control” means the ability to control or determine, directly or indirectly, the management of the entity in question, whether by the election of one or more members of the board of directors or other governing body of such entity or by any other means; (i) “Ownership” means . . . at least 50% (or such lesser percentage which results in actual, de facto Control) of the outstanding common stock . . . (l) “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. [ 23 ] Taking into account these

definitions, clause 13.1(

b) can be restated, without the need for cross-referencing

definitions. It can be rephrased as follows: No transfer fee is payable where an entity [BP International Holdings] wholly owned by another entity [parent] which also wholly owns the licensee [BP] acquires, directly or indirectly, at least 50% of the licensee’s shares [Ownership] or such lesser amount as enables it to control, directly or indirectly, management of the licensee [Control]. It is common ground that determination of whether an entity is a Related Entity must be determined according to the facts existing just before closing of the transaction – Project Clog. C.

Interpretation [ 24 ] It is indisputable that BP Canada International (the purchaser) acquired ownership or control, directly or indirectly, of BP (the licensee) in Project Clog. The dispute is whether prior to closing, BP Canada International was “wholly owned” (an undefined term) by another entity that also wholly owned the licensee (BP). [ 25 ] Prior to the transaction, BP Canada International was owned 100 percent by another corporation (BP Holdings Canada) which was in turn owned 100 percent by BP p.l.c.

The licensee (BP) was owned 100 percent by Amoco Canada, which was owned 100 percent by another corporation, and so on through four corporations the last of which was owned 100 percent by BP p.l.c. (The chart reproduced above illustrates these ownership relationships.) [ 26 ] It can be said that BP p.l.c. had 100 percent ownership of two chains of corporations which, in turn, held 100 percent of BP and BP Canada International. Does this mean that BP p.l.c. “wholly owned” both BP and BP Canada International? [ 27 ] First it is necessary to consider the words of the contract. Both parties point out that the

definitions of Ownership and Control (words used in clause 13.1(b)) allow for each to be held “directly or indirectly.” GSI says that because no such express flexibility exists for the concept of “wholly owned” (an undefined term contained in the definition of Related Entity) that term must mean directly owned. BP argues the contrary: because the contract speaks of direct or indirect ownership in clause 13.1(

b) it would be inconsistent, looking at the contract as a whole, to limit “wholly owned” in the definition of Related Entity to direct ownership. Further, BP argues that common usage means one can own something directly or indirectly. [ 28 ] Clearly the defined words Ownership and Control are used in clause 13.1(

b) to describe the relationship between the Related Entity and licensee that meets the condition of no transfer fee being payable. Thus, a Related Entity may indirectly own or control the licensee.

The defined words, however, are not incorporated into the definition of Related Entity, which uses the undefined term “wholly owned.” [ 29 ] I cannot conclude from the fact that a defined term that includes “indirectly” owning or controlling an entity was not used in the Related Entity definition, that therefore “wholly owned” must mean, in effect, “wholly and directly owned.” Certainly the drafting could have been clearer, but we are left with the fact that different words were chosen. We must turn to look at the contract more broadly. [ 30 ] GSI points to the other uses of Related Entity in the MDLA.

Clause 2.1 grants BP the right to use the data only for use in its business and in a Related Entity’s business – a right to use for a Related Entity’s business, but not a transfer of data to the Related Entity.

If Related Entity meant an entity that indirectly owned the licensee (clause 1.1(l)(ii)) or was indirectly owned by an entity that indirectly own the licensee (iii), the distribution of the data within a corporate group would be too wide. [ 31 ] Likewise, GSI submits that clause 2.4 – which deems any breach of the MDLA by a broad range of persons and entities, including a Related Entity – to be a breach of the MDLA by the licensee, would cast too broad a net of liability on BP to be reasonable if BP’s

interpretation is accepted. Then, the licensee (BP) would have potential liability for entities in indirect ownership relationship with it. [ 32 ] Finally, GSI points to clause 7.11 pursuant to which the licensee shall not permit any other party, even a Related Entity, to view or make use of seismic data; but a Related Entity may, if it wishes to view or use the data, enter into a separate license agreement with GSI at no additional fee.

It is submitted that it would be against commercial sense, having regard to the value of the proprietary information, to allow entities not in a direct ownership relationship to obtain no-charge licenses. [ 33 ] Comparing these three provisions with use of Related Entity in clause 13.1 yields no strong conclusions. There are

commercial reasons why GSI might want to limit the potential number of entities which could purchase a license without paying a transfer fee (clause 13.1); why it might wish to limit the number of related businesses for whom the licensee could use data (clause 2.1); why it might allow the range of related entities for which the licensee could directly be liable to be more limited; and why it may wish to limit the number of related parties who could obtain a license from GSI without a fee. [ 34 ] There are countervailing commercial reasons that would motivate the BP group of companies to seek, in each of these areas, more flexibility to allow the seismic data to be used within its tightly-controlled corporate group.

BP points out that all the potential entities are ultimately owned entirely by BP p.l.c., so that no strangers outside of the BP group would have access to the data. In the case of Project Clog, the transaction “had no effect on the personnel involved with that seismic data, did not introduce any additional parties to the seismic data nor did it transfer ownership of the GSI seismic data to any other party inside or outside the BP ownership structure”: Keenan November 21, 2018 affidavit, para 4. [ 35 ] Both parties also rely on the factual matrix and commercial sense.

GSI submits that its business objectives were to impose conditions as strict as possible on sharing its seismic data. To allow parties with indirect ownership of the licensee to obtain access to the data without paying for it was inconsistent with its business purposes. [ 36 ] In contrast, BP acknowledges that there is commercial sense in allowing GSI to earn a fee when a “stranger” (not part of the BP group of companies) obtains access to GSI’s seismic data by, for example, a merger with one of the BP entities.

It submits that these concerns have no application when the licensee is acquired by a member of the same corporate family as part of an internal, in-house corporate reorganization. They point to the finding (albeit not involving indirect ownership issues) in Geophysical Service Incorporated v Plains Midstream Canada ULC , 2017 ABQB 462 , considering the same MDLA, where it was observed that the effect of a transaction “was to keep the seismic data in-house with BP Group to be used by the same people in the same office for the same purposes as it had been used previously by BP Canada.

The Seismic Data was not disclosed to any third parties by virtue of the transfer” (para 35). [ 37 ] Dictionary

definitions may sometimes assist in interpreting words used by parties, although they may not displace a meaning made clear by construing the contract as a whole in its factual matrix.

Not surprisingly, dictionary meanings offer little assistance here. [ 38 ] For example, the Canadian Oxford Dictionary , 2nd ed (2004) defines “wholly owned” as “designating a company all of whose shares are owned by another company ( a wholly owned subsidiary ) [original italics].” That begs the question of whether the ownership must be not only entire but direct. [ 39 ] The same dictionary defines “own” in its relevant parts as “belonging to oneself or itself, not another’s” (adjective); or “have as property, possess” (verb). These admit of both direct and indirect ownership. [ 40 ] GSI relies on

definitions contained in a repealed

section of the Companies Act , RSA 2000, c C-21 of “wholly owned subsidiary.” Again, it offers no guidance largely for reasons acknowledged by GSI in its brief. In addition, statutory

definitions are not necessarily consistent with common usage in every context. Indeed, one of the reasons

definitions are employed is that the precise meaning intended in a statute might be different from or more narrow than common usage. [ 41 ] Thus, we are brought back to the fundamental task of interpreting the words in the context of the contract as a whole, the factual matrix in which it was made, and a manner that accords with commercial sense.

Approached in that manner, I conclude, as argued by BP, that a Related Entity (BP Canada International) includes an entity that is indirectly but wholly owned by another entity (BP p.l.c.) that also indirectly but wholly owns the licensee (BP). [ 42 ] It is hard to understand why the parties would allow a purchaser of the licensee to own or control it indirectly (perhaps through a subsidiary and not necessarily even a wholly owned one); but require the purchaser of the licensee to be wholly and directly owned by a parent which also (before the transaction) wholly and directly owns the licensee.

Further, the sense of the contract as a whole is to allow use and transfer of the seismic data within BP’s wholly-owned (direct and indirect) corporate group, with reasonable restrictions and protections such as separate license agreements with GSI. This is consistent with the factual matrix and, from an objective perspective, protects the data and GSI’s entitlement to payment therefor, and BP’s to make reasonable use of the data for which it has paid even with corporate reorganizations that have no material effect on GSI’s interests.

In my view, to give effect to the words of all the provisions (including the detailed defined terms), “wholly owned” cannot be limited to direct ownership. VI. Equalization Claims A. Introduction [ 43 ] GSI claims entitlement to licensing fees for members of each exploration group involved in land areas covered by or within five miles of GSI data licensed under the MDLA. It asserts that it is contractually entitled to such fees regardless of whether members of such exploration groups ever saw or used the data.

It describes the claim as “the right to indemnity from BP Group for its failure to require third parties to equalize seismic data licensing fees over areas under joint exploration”: Einarsson affidavit, August 30, 2021, para 30. [ 44 ] BP argues that the contract requires some use of the data by an exploration group member to trigger the fee obligation. The evidence, it says, is that these members were never shown or given the data and, in many cases, there was no GSI data applicable to the areas covered by the exploration group. B.

Contractual Provisions [ 45 ] The subject matter of the MDLA is confidential seismic data owned by GSI, developed for use in oil and gas exploration. BP is in the business of oil and gas exploration and development and as part of its business uses seismic data such as that owned by GSI. The

business purpose of the MDLA, as is patent from the document and factual matrix evidence, is to enable BP to use GSI’s seismic data under the permitted conditions while providing renumeration to GSI for the use of its property and protection from unauthorized use by BP or any other entity. [ 46 ] The key provisions relevant to the equalization claims are found in clause 6 of the MDLA, entitled “Protection of Seismic Data, Work Product Derivatives and Reprocessed Seismic Data; Non-Disclosure; and Use by Third Parties.” It begins with clause 6.1 entitled “Protection,” by which BP acknowledges that GSI’s seismic data are confidential and agrees to take all reasonable measures to safeguard the data from unauthorized use or disclosure and provide at least the same degree of care and control over them as it exercises towards its own proprietary information. [ 47 ] Clause 6.2, under the heading “Non-Disclosure,” states that BP shall not show or disclose the data to any “other entity except in compliance with this Agreement and only for purposes specifically related to the Licensee’s authorized use”; and prior to any disclosure, will cause the third party to execute a confidentiality agreement. [ 48 ] The MDLA then sets out circumstances in which GSI’s seismic data may be used by others: clause 6.3, containing a number of subclauses, is entitled “Use by Third Parties.” Use is permitted, on conditions, by consultants, processors and storage contractors and disclosure is permitted to government agencies where required by law. [ 49 ] The parties’ dispute centres on clause 6.3(d), entitled “Use by Third Parties,” which states the following: (d) (Prospective Venture Participants and Prospective Purchasers) (

i) Upon the execution of a confidentiality agreement, the Seismic Data, . . . may be shown by the Licensee to its Prospective Venture Participants . . . provided that: (

A) such Seismic Data, Reprocessed Seismic Data or Work Product Derivatives are in a geographically localized area related to a single prospect, parcel, posting or nominated block not to exceed fifty (50) square miles in area; and (

B) such display is for the sole purpose of permitting the Prospective Venture Participants or Prospective Purchasers to evaluate their possible participation in such venture. . . . (ii) In the event that a Prospective Venture Participant . . . becomes a member of an Exploration Group, the rights of access to the Seismic Data . . . of such Prospective Venture Participant . . . shall cease immediately.

Each member of each Exploration Group shall be required to obtain a use-license from GSI for the applicable Seismic Data . . . then licensed to the Licensee in respect of the area which is the subject of the Exploration Group at the current group member licensing rates for such Seismic Data . . . Upon request GSI will supply current license rates for data based upon specific lines, total volume, whole or partial lines and other considerations set forth in the quote request. Parts of clause 6.3(d), non-material for present purposes, have been omitted. An additional clause, not quoted, is 6.3(

e) which sets out “Disclosure Restrictions,” such as where the data may be viewed, under what conditions and for how long. [ 50 ] Clause 6.3(

d) includes important terms that are defined in clause 1.1, material portions of which are as follows: (g) “Exploration Group” means . . . entities that have an understanding or agreement, formal or otherwise, with the Licensee . . . to join together to acquire or utilize petroleum, natural gas or hydrocarbon properties or interests . . . in areas covered by or within five (5) miles of any of the seismic data . . .; (k) “Prospective Venture Participants” means prospective investors and prospective participants with the Licensee taking steps for expressing an interest in . . . arrangements which may involve the acquisition or utilization of petroleum, natural gas or hydrocarbon properties or joint interests in . . . lands covered by or within five (5) miles of the seismic data . . . [.] [ 51 ] Finally, GSI seeks recovery from BP under the MDLA’s indemnity provision (clause 11.5, incorporating clause 2.4) for exploration group members’ failure to pay licensing fees to GSI.

C.

Interpretation [ 52 ] GSI’s

interpretation of clause 6.3(

d) is that the second sentence of (ii) stating that “each member of Exploration Group shall be required to obtain a use-license from GSC” for the relevant area covered by the data requires a sub-license regardless of whether the third party saw or used the data. As described in oral submissions, the argument is that the sub-license requirement is based on a deemed use: the mere fact that BP has GSI’s seismic data means that its joint venture partners, formal or otherwise, benefit as well.

It is the formation of an exploration group with BP that triggers the obligation for each member to obtain a license (July 11, 2022 brief, para 50). The second sentence of clause 6.3(d)(ii) is a stand-alone provision, independent of the provisions about potential partners having access to the data to decide whether to participate. [ 53 ] In my view, there is no foundation in the MDLA for such a broad application of GSI’s license fees entitlement.

It offends the basic requirement that contractual terms must be interpreted in light of the contract as a whole, not in isolation: Sattva , para 79, citing authority. [ 54 ] The context of the provision relied upon is important. The requirement that exploration group members obtain a sub-license appears in the second part of the second subclause of a main clause dealing with use by third parties, specifically prospective venture partners. The earlier parts of clause 6.3 – (

a) through (c) – deal with actual use of data by consultants, processors and storage contractors. Clause 6.3(d)(

i) allows BP, as licensee, to give a prospective participant access to the data on strict conditions for the purpose of evaluating possible participation in a venture. Clause 6.3(d)(ii) obviously is connected to (i), beginning with the words “in the event” that a prospective participant becomes an exploration group member, its rights of access to the data “shall cease immediately.” [ 55 ] The next sentence of clause 6.3(d)(ii), which GSI treats as independent of whether a prospective participant has seen the data,

is part of the same paragraph and under the

section dealing with and entitled “Prospective Venture Participants.” Its reference to exploration group members, in my view, is directly connected to such members referred to in the previous sentence – those who are prospective participants, had access to the data in that capacity, and whose rights to such access “shall cease immediately” upon becoming an exploration group member. [ 56 ] Given the context in which the provision relied upon by GSI appears, it would take very express words to support an

interpretation that any participant in a venture with BP, even if never granted access to the data as a prospective participant, became obligated to pay license fees. The contract contains no such express words. Instead, the MDLA links any obligation of equalization to prior access and use of the seismic data. This

interpretation is reinforced by the fact that pursuant to clause 11.5 (when read with clause 2.4), BP’s indemnity is for breaches of the MDLA by a broad list of third parties, including prospective venture participants, but notably not including members of exploration groups. [ 57 ] I find that the licencing fee obligation arises only if an exploration group member was given access to the data while considering whether to join as a venture partner – because then, upon joining the venture, it is fair to assume it received value from the data.

Its obligation to pay fees is not dependent on it ever using the data again. [ 58 ] My conclusion is consistent with the interpretive principle that the court should strive, where consistent with the contract as a whole, to arrive at a meaning that gives commercial or business efficacy to the bargain. GSI heavily relies on its submissions that GSI’s seismic data is very expensive to generate, has great value and therefore GSI had an objective of protecting it, even to the point of imposing harsh terms.

But that ignores the fact that its counterparties, such as BP, have their own business objectives such as purchasing access to seismic data on commercially-reasonable terms that do not freeze it out from potential partners who would have to enter into a licencing agreement for data they have never used and have no intention of using.

The suggestion in argument that everyone who partners with BP in an area covered by GSI’s seismic data necessarily benefits is unpersuasive and unfounded on the evidence. [ 59 ] It makes commercial sense that a prospective participant with BP who uses the data to evaluate a prospective deal should pay if it ever becomes part of an exploration group with interests covered by that data. It makes no commercial sense for a partner of BP to pay for seismic data it neither accessed nor used, nor is there any commercial reason why GSI should receive compensation therefor. D. Use of Data by Third Parties 1.

Introduction [ 60 ] The current version of the statement of claim alleges that exploration groups were formed for exploration and discovery activity in geographic areas covered by a number of specified regulatory licenses issued by the National Energy Board or the Canada- Newfoundland and Labrador Offshore Petroleum Board. The licenses are of three types: exploration license (“EL”), significant discovery license (“SDL”), and production license (not relevant for the areas at issue here).

Most of these are in the Beaufort Sea area of the Canadian Arctic; some are located in the offshore Newfoundland and Labrador area. [ 61 ] The disputed claims are now limited to “those contractual claims involving seismic data licensed pursuant to the MDLA from 2002 to the current date and exploration groups that formed within more recent times” (GSI July 11, 2022 brief, para 9). [ 62 ] As a preliminary matter, I will address GSI’s submissions that there is a triable issue because the credibility of BP’s primary deponent, Robert O. Ball, has been impugned.

I am not convinced by that argument. [ 63 ] One of the statements may have been untrue or incomplete, because at the time of one of his affidavits Mr. Ball was unaware of a fifth supplementary agreement. It is possible that GSI’s main deponent was likewise not aware of that agreement. In any event, there is no basis to doubt the credibility or reliability of Mr. Ball’s evidence in its essentials. On many material points, it is the only evidence. [ 64 ] Furthermore, the fact that not all of Mr. Ball’s evidence is direct personal knowledge is of no moment.

In matters of this nature, there is no requirement to call dozens of witnesses to establish matters that, as a matter of corporate practice, would be within the business knowledge of managers – whether at trial or on

summary judgment applications. 2.

Arctic Areas [ 65 ] The undisputed evidence is that only six of the Arctic properties pleaded in the statement of claim have any MDLA data associated with them: SDLs 37, 38, 39 and 41 (in the Shallow Beaufort area) and ELs 478 and 479 (Deepwater Beaufort): Einarsson August 30, 2021 affidavit, para 34. [ 66 ] Evidence adduced by BP is that all exploration activity in the four SDL areas ceased in about 1988 – well before the MDLA was executed (2002) and licencing of the first Arctic seismic data under the MDLA (Supplementary Agreement dated December 16, 2008): Ball May 29, 2019 affidavit, para 28; Ball transcript at 26-28.

BP’s partners and interest holders have come in and out without any contact with BP, and the lands have been dormant with no activity occurring on them: Ball transcript, at 27-28. [ 67 ] BP acquired ELs 478 and 479 in 2008 (along with EL 477) on its own without partners; it then undertook its own extensive, proprietary 3D seismic surveys in those parcels: Ball affidavit, para 47.

Exxon Mobile acquired EL 476 on its own and likewise conducted its own proprietary 3D seismic surveys in that area: ibid . [ 68 ] In 2010, BP and Exxon Mobile established a joint venture covering EL 476 (held by Exxon Mobile) and EL 477 (held by BP). (EL 477 is not one of the areas for which GSI licensed seismic data to BP: Einarsson August 30, 2021 affidavit, para 34.) [ 69 ] After establishing their joint venture for ELs 476 and 477, Exxon Mobile and BP shared each other’s proprietary 3D seismic data, but no 2D seismic data (and in particular, no GSI seismic data) was used or shared between BP and Exxon Mobile at any time: Ball

affidavit, para 47. [ 70 ] Of this group of ELs in Deepwater Beaufort (476, 477, 478 and 479) only 478 and 479 were the subject of GSI seismic data licensed to BP and BP has never had partners for those two areas: Ball transcript at 35-39. 3. East Coast Canada [ 71 ] There are three groups of lands covered by ELs in Newfoundland and Labrador over which some MDLA seismic data extends.

Exploration groups in these areas were all formed after GSI’s initial statement of claim and commencement of GSI litigation against other oil and gas companies and, according to BP’s evidence, for that reason data licensed from GSI was deliberately not used: not provided to BP’s own internal staff working on the prospects and not provided to prospective or actual joint participants: Martin affidavit, paras 25-26, 31, 34, 35, 37, and 45. [ 72 ] In addition, EL 1155 (for which a claim has also been made), is outside the five-mile buffer zone of any MDLA seismic data: Martin affidavit, para 49.

In any event, the joint venture formed with a third party for the area covered by EL 1155 did not involve the use of GSI data either by BP’s exploration team or its joint venture partner. [ 73 ] This evidence is not contradicted by GSI’s evidence and not challenged by GSI, except for some arguments about credibility and whether it is based on personal information. 4.

Conclusions [ 74 ] GSI’s claim for licensing fees from members of BP’s exploration group cannot succeed and must therefore be dismissed. [ 75 ] It could succeed only if a liability to pay licensing fees accrued for any exploration group member with interests in areas covered by the GSI data. Instead, I have found that GSI’s entitlement to such fees depends on whether an exploration group member was given access to the data.

The evidence establishes, without any serious dispute other than speculation, that none of the exploration group members for the areas at issue had access to the data. [ 76 ] In oral reply submissions, for the first time GSI argued that neither defendant had met its initial burden because there was no affidavit constituting even a bare denial of merit to GSI’s claim, as required by rule 7.3(2). To this, BP responded by referring to the first affidavit of Robert O.

Ball who, based on a 30-year career with Amoco and its successor, BP, swore to matters in his personal knowledge except where stated to be based on information, and after detailed evidence on the merits, concluded by stating “based on all of the above, GSI’s claims against the Defendants have no merit.” [ 77 ] Furthermore, as described above, the

summary judgment application does not hang on one affidavit. It must be determined on the whole of the evidence. In this case, that consists of many affidavits with attached exhibits and many transcripts of cross- examinations. The record before me enables a fair and just determination on the merits, both as to

interpretation of the MDLA and finding the necessary facts. VII. Balance of the Action [ 78 ] It remains to consider whether my decision on the transfer fees and equalization claims leaves any outstanding issue for trial. [ 79 ] The fourth amended statement of claim alleges that the defendants were members of exploration groups with partners who had their own license agreements with GSI and the defendants were required to enter into sub-license agreements with GSI or otherwise compensate it for its involvement.

The claims sound in the tort of interfering with contractual relations. [ 80 ] Similar allegations against another defendant were summarily dismissed in Geophysical Service Incorporated v Murphy Oil Company Ltd , 2017 ABQB 464 , affd 2018 ABCA 380 . In the matter before me, the uncontroverted evidence is that BP had no knowledge of the terms of any agreements between its partners and GSI and received no seismic data or related information from them. GSI has provided no evidence to the contrary. None of the counsel spent any time arguing these points.

They do not raise triable issues. [ 81 ] Plains’ involvement in the claims remaining in this action is limited to its position as the corporate successor of BP: fourth amended statement of claim paras 42 and 39. There are no allegations against Plains of wrongful acts. [ 82 ] As Eidsvik J. held in Geophysical v Murphy , clauses 13.1 and 13.5 create a duty on a licensee under the MDLA to give notice to GSI of a transaction that changes ownership or control of a licensee.

Even where no transfer fee is payable (because the purchaser is a Related Entity), it is GSI’s decision whether the MDLA will be transferred or there will be a new licence agreement in GSI’s current form. [ 83 ] By a series of transactions in April 2012, the shares of BP Canada Energy Company (“BP Co.”), the licensee under the MDLA, were sold by Amoco Canada International Holdings B.V. to Plains. Thereafter, Plains and BP Co. were amalgamated into Plains.

At closing, the only assets remaining in BP Co. were the Canadian natural gas liquids business; all of the non-natural gas liquids business, assets and liabilities, including the MDLA and all rights to seismic data were transferred to BP in the “Keep Transaction.” [ 84 ] GSI was not given notice of the transfer of the MDLA from BP Co. (now Plains) to BP. It sought

summary judgment against BP and Plains in proceedings before Eidsvik J. (referenced above as Geophysical v Plains ). She held that the transfer was between Related Entities and thus no transfer fee was payable. GSI would have, if given notice, the option to require a new license agreement. However, when it became aware of the transfer it did not exercise that right and did not sue for specific performance. There was no evidence that BP would not have entered into a new licence agreement if requested. Rather, it sued for a transfer fee.

[ 85 ] In her decision on GSI’s

summary judgment application, Eidsvik J. held that GSI had not proved for

summary judgment purposes any damages caused by breach of the notice requirements, and thus dismissed the application as against BP. It was dismissed as against Plains because it had never received any seismic data, acquiring only the natural gas liquids part of the business, and had no obligation to pay transfer fees for seismic data it never received (para 27). [ 86 ] Now, five years later, BP and Plains seek

summary dismissal of all remaining claims. In oral argument, for the first time, GSI suggested the breach of notice claim remains alive: Eidsvik J. denied GSI’s application for

summary judgment but not the action, because no

summary dismissal application was before her. [ 87 ] Now, there is a

summary dismissal application. There has been no additional evidence on this issue from GSI. The spectre of a possible remaining claim, perhaps for nominal damages arising from a technical breach with no loss, cannot be allowed to stand. The defendants have put forward a full record in support of their dismissal claim. It would be perverse to allow this claim for a technical breach of contract to survive in the absence of any evidence from the plaintiff since Eidsvik J. dismissed its

summary judgment application years ago. VIII. Concluding Matters [ 88 ] GSI submitted that because an application to compel undertaking responses had not yet been decided by Rooke A.C.J., it would be premature to award

summary judgment. I understand only two undertakings are at issue, and am not convinced that they are sufficiently material to affect these applications. [ 89 ] As this decision has addressed the only remaining issues in dispute, and I have concluded that the defendants are entitled to

summary dismissal in respect of them, it follows that the action in its entirety is dismissed. [ 90 ] The parties may

schedule a further appearance if there are matters of clarification they wish to address or if costs cannot be agreed upon. Heard on the 26 th day of July, 2022. Dated at the City of Calgary, Alberta this 1 st day of November, 2022. G.H. Poelman J.C.Q.B.A. Appearances: R.J. Daniel Gilborn, Lucinda A. Wong and P.A. Trudel for the Plaintiff David McKinnon for the Defendant Plains Midstream Canada ULC James W. Rose, KC, and Matthew R. Lindsay, KC for the Defendant BP Canada Energy Group ULC